Singapore is the 7th least corrupt country in the world, according to Transparency International’s latest annual review that draws on a mix of business and government sources for its rankings.

The island city-state moved up one spot from 8th in 2015 to 7th this year in the Corruption Perceptions Index 2016. However, it’s score of 84 points was one lower than last year, The Straits Times reported.

Singapore was also the only Asian state to make the top ten of least corrupt countries.

Meanwhile, Somalia, South Sudan, North Korea and Syria are perceived to be the most corrupt countries.

Somalia has held the undesirable title as the world’s most corrupt country for the past ten years, with a score of 10, which ranks countries’ public sector from zero to 100.

Countries with a lower score are deemed to be more corrupt, and are generally characterized by impunity for corruption, poor governance and weak institutions, the report said.

Second from the bottom is South Sudan, a relatively new country which only gained its independence from Sudan six years ago, with a score of 11. The third most corrupt country is North Korea, followed by Syria, a war-torn country which is presently seeing a massive outflow of refugees.

Countries in the Middle East suffered the worst declines on the corruption index, led by Qatar which fell 10 scores from the previous year due to scandals such as FIFA’s decision to host the World Cup 2022 in Qatar amid reports of migrant workers abuse, Transparency International said.

The German lobbying group warned that more countries’ scores fell instead of improving from the previous year, creating a “vicious circle between corruption, unequal distribution of power in society and unequal distribution of wealth,” the report said.

The continuous cycle of corruption fueling social inequality has led to disenchanted citizens across the globe, who then turn to populist politicians, Transparency International said.

But, populist leaders are likely to worsen the issue of corruption.

“In countries with populist or autocratic leaders, we often see democracies in decline and a disturbing pattern of attempts to crack down on civil society, limit press freedom, and weaken the independence of the judiciary,” Jose Ugaz, Chair of Transparency International, said in a media statement.

“Instead of tackling crony capitalism, those leaders usually install even worse forms of corrupt systems,” Ugaz added.

Hungary and Turkey, which are experiencing the rise of autocratic leaders, have seen their corruption scores fall, while Argentina having ousted a populist government late in 2015 is showing signs of improvement, Transparency International said.

The Berlin-based non-governmental organisation called for governments to step up on “deep-rooted systemic reforms” that target corruption.

Such reforms need to include the disclosure through public registries of those who own companies and sanctions on those who aid in the movement of corrupt money flows across borders, the organisation said, pointing to the Panama Papers, which was 11.5 million leaked documents that revealed how businesses, wealthy individuals and even politicians exploit offshore tax regimes.

European nations were among the highest ranked on the Corruption Perceptions Index, occupying four out of the top five slots.

Denmark and New Zealand were tied in first place as the world’s cleanest countries, followed by Finland, Sweden and Switzerland.

The top 10 ranked nations perceived to be the least corrupt are:

1. Denmark

2. New Zealand

3. Finland

4. Sweden

5. Switzerland

6. Norway

7. Singapore

8. Netherlands

9. Canada

10. Germany

And the most corrupt countries as ranked on the Corruption Perceptions Index 2016 are:

1. Somalia

2. South Sudan

3. North Korea

4. Syria

5. Yemen

6. Sudan

7. Libya

8. Afghanistan

9. Guinea-Bissau

10. Venezuela

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2015-05-27 17:49:11

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Football officials detained as US corruption probe rocks FIFA

Source: AFP, Reuters

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The misuse of industrial space has become rampant, and with tenants having settled into units in new strata projects offering office-like designs and proximity to transport nodes, the trend has become even more conspicuous.

Businesses ranging from law firms and real-estate agencies to accounting and tax advisory firms, recruitment agencies, training providers, commercial schools and boutique investment firms have taken up units in industrial premises such as Oxley BizHub, UB. One, AZ @ Paya Lebar, CT Hub in Kallang, and One Commonwealth.

Market watchers are decidedly split in their views on how hard the government should come down on this issue.

The Business Times visited various industrial premises and found so many businesses operating there which fall outside the approved uses for industrial space, that it would be unfair to single out some names and leave out others.

For example, other than office users, Oxley BizHub in Ubi houses a pay-per-use study area, a spa and even a geomancy-service provider.

CT Hub in Kallang has become a hub for the offices of religious organisations.

Industrial units in these projects zoned Business-1 (B1) are mostly sold to investors and end-users.

It is clear that the unauthorised trades operating there are drawn to these B1 developments by their lower rents vis-a-vis commercial property rents and proximity to MRT stations.

Current asking rents in Oxley BizHub are around S$2 to S$3 per square foot (psf) a month; at CT Hub, industrial units available for rent now start at S$3 psf.

Rents for office space in Paya Lebar Square, on the other hand, are between S$4 and S$6 psf, based on online listings.

But under the guidelines of the Urban Redevelopment Authority (URA), buildings approved for industrial use are meant primarily for activities such as manufacturing and warehousing; certain types of e-business and media activities may also be allowed.

Under a 60-40 rule, at least 60 per cent of total gross space of the development has to be used for core industrial activities, and up to 40 per cent for ancillary uses.

In strata projects, units also have to comply with the 60-40 rule.

A check by BT found that, among the religious organisations that have huddled in CT Hub, only one has obtained written permission for the factory units it owns to be primarily used for video production and storage.

Over at WCEGA Plaza, an older strata B1 building in Bukit Batok Crescent, at least six units are used as places of worship.

URA guidelines bar the conversion of factory units into places of worship or offices for religious organisations, though the common facilities of the building or the ancillary spaces within each factory unit can be considered for religious use in a “limited and non-exclusive” way.

Amid slowing economic growth and generally high commercial rents in Singapore, these unauthorised users of these spaces have found empathy among some industry watchers.

Chia Siew Chuin, CBRE director of industrial and logistics for Asia, said the government should first offer cost-effective alternatives before deciding to enforce its planning guidelines and clamp down on these users.

“The various government agencies should long have studied this issue together with the private sector to update and redefine the trades that are allowed in industrial premises,” she said.

Concurring with her, SLP International executive director Nicholas Mak said the owners of these industrial units may have found themselves weighing between leasing the space to an unauthorised user and defaulting on their mortgage.

On the other hand, International Property Advisor’s key executive officer Ku Swee Yong said that having office users in B1 space will raise rental costs for legitimate B1 users, many of whom are struggling small and medium-sized enterprises (SMEs).

“Office landlords are also losing corporate tenants who are happy to operate in the grey area of leasing B1 space slated for factory use and operating their business there,” he said.

At the same time, there are also B1 landlords who are willing to accept office users under a “factory use” lease contract.

The playing field is thus tilted against rule-abiding parties.

Mr Ku added: “Honest property agents are struggling, in this economic downturn, to find landlords and tenants with solid integrity who will stick with the government guidelines.”

The downturn in the residential market may have catalysed this problem.

When multiple rounds of residential cooling measures sent investors piling into the industrial segment between 2010 and 2013, the unwitting ones among them snapped up strata units in industrial developments in the hope of getting high rental yields – and some of these were sold by housing agents unfamiliar with the rules for industrial space.

But industrial brokers say that the majority of the occupants should know better, because the government stipulated in 2012 that sale-and-purchase agreements or tenancy agreements must spell out the approved use of the property.

A spokesman from the Council for Estate Agencies (CEA) told BT that property agencies and agents must be fully conversant with and must comply with the relevant rules and regulations on property transactions.

“CEA can take disciplinary action against property agencies and agents if they are found to have facilitated property transactions that led to the unauthorised use of industrial sites,” he said.

Clearly, the misuse of industrial space has been exacerbated by the proliferation of shoebox units in projects built without the right specifications for genuine industrialists.

But even in older industrial buildings such as Halcyon Building in Jalan Pemimpin and Midview City in Sin Ming, non-authorised users can be found.

An industrial broker who declined to be named remarked that there is no urgency for the relevant authorities to clean up unauthorised industrial-space users because there may be no other takers for the space amid receding demand among industrialists.

The authorities are also perceived to be sensitive to the plight of SMEs amid the economic downturn.

In response to BT’s queries, a URA spokeswoman said: “Where unauthorised uses in specific industrial units are brought to our attention, these will be investigated and enforcement action will be taken on both the operator and property owner if an infringement is ascertained. For example, we more recently took action against a number of units in industrial buildings such as Oxley BizHub, Midview City and CT Hub.”

One Pemimpin, where URA reportedly undertook enforcement action on unauthorised trades back in 2013, was about 30 to 40 per cent vacant when BT visited it this month.

Meanwhile, net demand for industrial space islandwide has withered, dropping 66.2 per cent year on year in the first nine months of 2016 to about 1.13 million sq ft, based on JTC’s data on change in occupied space.

This was mainly due to negative net demand in the Central Region (stretching from Bishan to the Southern Islands and Queenstown to Marine Parade) and the East Region.

CBRE’s Ms Chia noted that high vacancies in these projects could be due to the already ample space in the B1 market.

The sputtering manufacturing sector still faces headwinds despite an uptick in output in the fourth quarter.

Because of relocation costs, industrialists may be put off moving into newer projects, even if these are built to suitable specifications, she added.

BT’s observations bear this out. At 9 Tagore Lane and North Spring BizHub in Yishun, newly completed ramp-up factories offer access to every floor for trucks.

The units here have been sold out by developers – but lie largely vacant.

lynkhoo@sph.com.sg

This article was first published on January 25, 2017.
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Singapore is switching gears to shore up its internationalisation efforts, and is urging other member states of a failed Pacific Rim trade pact to do the same.

But even as the city-state works to grow its external pie amid plans to restructure its economy, observers warned of risks down the road for Singapore’s growth and also its financial stability as the US retreats from world trade.

US President Donald Trump on Monday signed an executive order to withdraw the world’s largest economy from the 12-member Trans-Pacific Partnership (TPP).

The pact needs at least six countries representing 85 per cent of economic output of the Pacific Rim grouping to be ratified; Mr Trump’s order effectively killed the deal.

Leaders of TPP member countries, however, have in recent days held out hope that there would be some way in which the deal can still be ratified.

Singapore’s Ministry of Trade and Industry (MTI) struck a different tone on Tuesday. Its spokesman, in response to queries from The Business Times, said: “The US has indicated that it will pull out of the TPP agreement. Without the participation of the US, the TPP agreement as signed cannot come into effect.”

Instead, the MTI is looking at other regional integration initiatives such as the Regional Comprehensive Economic Partnership (RCEP) and the proposal for a free trade area of the Asia-Pacific.

“Singapore will continue to participate in these initiatives,” said the spokesman.

“We will have to discuss the way forward with the other TPP partners. Each of the partners will have to carefully study the new balance of benefits.”

The TPP’s demise comes just days before Singapore is expected to introduce a seminal report on how it will restructure its economy as its workforce ages and cost of labour rises.

Expanding overseas is expected to be a key pillar in the Committee on the Future Economy (CFE) report. Singapore’s leaders have been urging firms to do so in CFE-related events.

Song Seng Wun, economist at CIMB in Singapore, noted that with the TPP out of the picture, there are now fewer ways in which Singapore can participate in global trade.

“Even though we have a free-trade agreement with the US, there’s this huge obstacle in the way now, we really have to find our way around it,” he said.

And if Mr Trump’s decision on Monday is indicative of more protectionist measures to come, observers are worried about risks to global fiscal stability and in Singapore.

This is because, when combined with fiscal stimulus, America’s retreat from global trade may result in higher domestic consumer inflation.

This will prompt the US Federal Reserve to raise interest rates faster, said Chang Wei Liang, foreign exchange strategist at Mizuho Bank in Singapore.

“To us, this could pose a more severe test for emerging Asian currencies than trade alone.”

Faster rate hikes also spells trouble for Singapore’s “domestic-facing industries, which are weighed down by high household leverage”, said Joseph Incalcaterra, HSBC’s economist in Hong Kong.

But for now, the immediate financial fallout from the TPP’s demise seems limited; capital markets and currencies held relatively steady on Monday and Tuesday on both sides of the Pacific.

It was also not expected to have dealt a big blow to global trade, as global trade flows were already weakening in the months before, said observers.

Mahamoud Islam, senior Asia economist at Euler Hermes in Hong Kong, noted that early trade data showing that US dollar-denominated exports over the full year in 2016 fell in China by 7.7 per cent, in South Korea (-5.9 per cent) and Singapore (-4.9 per cent).

“We expect a limited improvement in 2017,” he said.

Alice Fulwood, Singapore-based economist at UBS, said the TPP’s death knell is also unlikely to have impacted companies’ decisions because it was uncertain that the US could ratify the deal even before Mr Trump signed the order.

“This uncertainty will likely have prevented companies and individuals from acting on expectations that it (the TPP) would proceed.”

However, early rumblings from the US’ exit from the TPP could be seen in Japan’s stock market and a dip in the US dollar.

Investors seemed to be spooked by Mr Trump’s focus on protectionism, as seen by his order to withdraw the US from the TPP on his first full day in office, as opposed to fiscal stimulus.

This notion was further reinforced by US Treasury Secretary nominee Steven Mnuchin’s comment that an “excessively strong dollar” is not good for the economy in the near term.

Emmanuel Ng, foreign exchange strategist at Singapore’s OCBC, warned of the prolonged effect of the US’ protectionist overtures in a Tuesday note.

If Mr Trump does not follow up with fiscal stimulus, “expect the broad US dollar to continue to capitulate lower across the board”, he wrote.

Meanwhile, political repercussions were starting to be felt from the TPP’s failure.

After having drummed up domestic support for the TPP, leaders from member countries are now faced with the stark reality of having to deliver on the promises of the pact.

Australian Prime Minister Malcolm Turnbull reiterated his focus on workers on Tuesday: “Losing the United States from the TPP is a big loss … but we are not about to walk away from our commitment to Australian jobs.”

This article was first published on January 25, 2017.
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