Somewhere Over Alaska – What a fascinating time to have been in Singapore this past weekend. Concurrent with the Singapore Formula One Grand Prix, the country hosted the Singapore Summit 2015, their version of Davos in Asia (I was an invited guest of one of my firm’s investors and was honored to have been included). Both of these events were within a week of the national elections which returned Prime Minister Lee Hsien Loong and the ruling People’s Action Party to office with 69.9% of the vote, winning 83 of the 89 seats in Parliament.
My visit was also on the heels of two relevant events in the States: the decision to not raise interest rates and the second Presidential debate – both of which I often felt that I had to apologize for. Late last week, once the U.S. Federal Reserve announced its decision, the Singapore Strait Times Index traded off only 0.5% (some had expected greater volatility – the Singapore dollar actually strengthened). When it came to the Presidential debate, I was at a loss to explain to my hosts what that was all about. Was it a game show? Was it reality TV? Was it serious? That last question was the most difficult to answer.
Prime Minister Lee, who was extraordinarily gracious, spoke to the group over lunch, readily acknowledging his commitment to “leadership renewal” whereby he would announce a new Cabinet next week with a set of younger ministers. The ruling party had only secured 60% of the vote during the last General Election in 2011, in large measure due to issues around an influx of foreign laborers, access to affordable healthcare and the aging population (more later), rising housing prices, inequitable distribution of wealth – many of the same issues “addressed” in some measure in the U.S. Presidential debate last week. Interestingly, well more than half the population of Singapore had not yet to be born at the time of the country’s independence in 1965, and with voting being compulsory, the eight smaller opposition parties thought that they would have a much greater voice coming out of this election. That was not to be.
Many expressed great relief with the outcome of the election, pointing to the turmoil that was witnessed in Hong Kong as smaller opposition groups also demanded greater representation there. While faced with many of the same issues in Hong Kong, notwithstanding the fact that China does not claim ownership of Singapore, the Prime Minister appears to have set an agenda to address many of these difficult issues.
As McKinsey & Company pointed out in a regional analysis of Asia recently, this part of the world is dealing with a set of very disruptive forces – all evident and playing themselves out in Singapore today: (i) high degree of urbanization, (ii) technological advancements creating new sets of winners and losers, (iii) aging population and the impact on economic productivity, and (iv) global interconnectedness and trade flows.
A number of the healthcare initiatives are striking and promise to keep Singapore on the leading edge of care. The new National Cancer Center to be completed in 2020 will address issues around cancer which claimed 30% of the 19,000 deaths in 2014 in Singapore. This new center is expected to be one of the leading Asian centers for cancer research and education, often provided in partnership with U.S. academic and medical centers. The new National Heart Center was opened in 2014 and by 2020 a major new 550-bed community hospital will open in collaboration with Singapore General Hospital (which today handles 2,500 patients per week). The Strait Times had a headline this weekend stating that the National Sciences Authority will now allow the importation of non-approved therapeutics on a “named patient” basis to ensure people are getting state-of-the-art care.
But much of the attention this weekend was on the Grand Prix, which initially was thought to be in jeopardy given the level of haze that had settled over the city. At this time of year, many of the plantations in Indonesia “slash and burn” their fields which caused smoke to drift east creating a sooty fog over the city-state. Thankfully, the rains earlier in the week moved the Pollutant Standards Index from the unhealthy to moderate range of 70 – 92 PSI. Evidently, prior to the wet weather, the readings eclipsed 200 PSI which caused race organizers to stock up on something called “protective respiratory masks.”
Starting after the Singapore Summit this week is the TechVentures conference which was to bring together the entrepreneurial community across the region. Analysts estimate that there are 55,000 start-up’s in Singapore which employ at least one person, and that in 2014, 5,400 companies raised some amount of capital. The Asian Venture Capital Journal reported that $324 million of venture capital was invested in Singapore in 2014 (which is 10x that invested in Hong Kong), although other sources report that as much as $850 million (which would include the numerous government grant and loan programs) was invested in the start-up community in Singapore.
All of this activity must be paying off to some extent. RBC Wealth Management earlier this year announced that the Asia-Pacific region now has more millionaires than that of North America, furthering inflaming Candidate Trump (“make America great again…”). Evidently there are now 4.672 million Asian millionaires which share 28% of the $56.4 trillion of global wealth. Given the regional volatility, the report goes on to state that Asians keep 23% of their wealth in cash.