Asean Community To Kick In By End 2015

The Asean Community officially declared on Sunday morning (Nov 22) by leaders of the 10 member states of Asean, in a landmark moment promising greater regional integration for the 48-year-old grouping.

Twelve years in the making, the foremost goal of the Asean Community is to turn the region into a truly single market with a free flow of goods, capital and skilled labour across borders.

All 10 leaders, including Singapore Prime Minister Lee Hsien Loong, signed a declaration on the establishment of the Asean Community, which will come into effect on Dec 31, as well as a declaration on a blueprint for taking the grouping forward over the next 10 years.

Asean countries have already done away with most tariff barriers in practice and raising the competitiveness of Asean's manufacturing industry in global markets.

The combined GDP of Asean economies is expected to grow from US$2.6 trillion to US$4.7 trillion by 2020. Seen as a bloc it will be the seventh largest economy today, and has the potential to be the fourth largest in the world as early as 2030.

Source: Straits Times

Singapore Drops To 2nd Place In Built Asset Wealth Per Capita

Built Asset Wealth Per Capita

 Image:  Arcadis

Image: Arcadis

Singapore which took top spot in 2013 with USD 156,000 per person, has fallen into 2nd place in terms of built asset wealth per capita, clocking in at USD 192,000 per capita behind Qatar’s USD 198,000, according to the latest (2015) Arcadis Global Built Asset Wealth Index conducted by the Centre for Economics and Business Research (Cebr).  

The 2015 index, calculating the productivity and economic value of infrastructures and buildings of 32 countries – which collectively represents around 87% of global GDP - also forecasts how this distribution of built asset wealth is likely to change over the next decade. 

Brief highlights of 2015 Global Built Asset Wealth Index Report
• Over the past two years, these countries have invested a net total of US$8 trillion in built asset stock, which totalled an estimated USD 218 trillion in built asset wealth, the equivalent to US$30,700 per person alive today.

• China has the largest built asset stock in the world with a total of US$47.6 trillion, overtaking the US total of US$36.8 trillion. Since 2000, China has aggressively invested USD33 trillion into its built assets.

• Qataris replace Singaporeans as the richest built asset population with a built asset wealth of US$198,000 per capita.

• Many G7 economies have seen a net de-investment through depreciation of their built assets since 2012. In Europe, only Poland, Spain, Belgium and Turkey have managed to increase their stock of built assets.


Spotlight on Singapore
The sustained economic performance of Singapore is reflected in its continual and focused investment in infrastructure,  retention of its high end manufacturing industry and a willingness to diversify into low cost alternatives.

Jurong East, bolstered by the future development of the High Speed Rail link between Singapore and Malaysia, with a terminal there, is emerging as a viable low cost occupancy commercial hub alternative to the Central Business District for many international organizations.

Such structured decentralization activities will continue to stretch the asset base into lower cost areas of Singapore, bringing a new diversity of wealth creating asset types.

Global DeBt And Deleveraging - Record debt could spur economies into another crisis - study

According to a McKinsey study, not only has government debt continued to rise, but so have household and corporate debt in many countries.

Global debt has soared by $57 trillion since the outbreak of the financial crisis in 2007 to reach $199 trillion at the end of 2014. Debt to GDP ratio increased from 269% to 286%, raising questions about financial stability and the potential threat of another crisis.

Research by consultants McKinsey in 47 countries report that:
“After the 2008 financial crisis and the longest and deepest global recession since World War II, it was widely expected that the world’s economies would deleverage. It has not happened. Instead, debt continues to grow in nearly all countries, in both absolute terms and relative to GDP. This creates fresh risks in some countries and limits growth prospects in many,”

“Higher levels of debt pose questions about financial stability and whether some countries face the risk of a crisis.”

“We conclude that, absent additional steps and new approaches, business leaders should expect that debt will be a drag on GDP growth and continue to create volatility and fragility in financial markets,”

China’s debt is rising rapidly. Fueled by real estate and shadow banking, China’s total debt
quadrupled from $7 trillion in 2007 to $28 trillion by mid-2014 which represents 282% of GDP.

It is clear that deleveraging is rare and that solutions are in short supply. Deleveraging is confined to a few sectors in some countries such as Argentina, Romania, Egypt, Saudi Arabia and Israel which managed to cut their debt.

Geographically, Ireland debt to GDP ratio increase 172%, Japan 64% and remains the world’s highest at 400%. China’s total debt, as a percentage of GDP, now exceeds that of the United States.

One piece of good news: the financial sector has deleveraged, and the most damaging elements of shadow banking in the crisis are declining. Shadow banking has retreated but non‑bank credit remains important

For corporations, non‑bank sources account for nearly all new credit growth since 2008. These intermediaries can help fill the gap as bank lending remains constrained in the new regulatory environment.

Households borrow more. In the four “core” crisis countries that were hit hard—the United
States, the United Kingdom, Spain, and Ireland—households have deleveraged. But in many
other countries, household debt-to-income ratios have continued to grow, and in some cases
far exceed the peak levels in the crisis countries

Source: McKinsey Global Institute