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Economic performance relies on the rule of law, says WP MP Jamus Lim

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4 years ago

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Upholding Singapore’s rule of law goes beyond the realm of jurisprudence and criminal justice — it will also impact the nation’s economic future, said the Workers’ Party (WP) Member of Parliament (MP) Jamus Lim.

Voicing his support on his fellow WP MP Sylvia Lim’s motion to review Singapore’s justice system in Parliament on Wednesday (4 November), Dr Lim said that the overall efficacy of Singapore’s judicial system is a “bread-and-butter” issue that has implications for business competitiveness and the country’s economic viability.

He went on to talk about the erosion of the rule of law globally in the past decade, including in Singapore.

“Because the success of the rule of law relies on the confidence of those who participate in it, it is critical that our judicial system does not merely provide for its reliability, but actually be perceived to be so,” said Dr Lim.

In order to illustrate his point, Dr Lim told the story of a city called Nagoles in the state of Sonora and another city of the same name in the state of Arizona.

Upon the erection of a permanent border between the two states following the First World War, the now-split city ended up on different paths.

Where one city had higher household incomes, life expectancies, and education, the other did not.

As a result, residents in Nagoles, Arizona fared better and enjoyed more economic stability and quality of life while the city of Nagoles, Sonora suffered worse health, more crime, and a significantly weaker economy.

The story, said Dr Lim, underscores the importance of legal-political institutions, such as the rule of law, in shaping economic outcomes.

Bringing it back to Singapore, Dr Lim said that the choice of the republic to adhere to the “sophisticated legal system” inherited from the British has served the country well, both in terms of natural justice and because the rule of law has been a cornerstone in the country’s business and commercial activities.

However, he warned that this inheritance should not be taken for granted.

“Globally, the rule of rule is in retreat. According to the World Justice Project, adherence to the rule of law has fallen for the third consecutive year since 2017,” said Dr Lim.

Like other nations, Singapore has also seen a decline in the rule of law, said Dr Lim, quoting the World Justice Project’s assessment of the quality of civil and criminal justice here. He also highlighted the World Economic Forum’s assessment of Singapore’s judicial independents which “continues to slide from its peak in 2008.”

Explaining that the rule of law will succeed when people believe that it works, Dr Lim argued that this is why careful reviews of the system are important.

He said: “The objective is to ensure that there is consistency between the intent of existing laws on the books—what is sometimes referred to as the de jure system—and the perceptions of how the law is practiced, the de facto system.”

“If the gap in perceptions becomes too large, the rule of law risks becoming disconnected and hence discounted by the public, to the detriment of much more than just justice per se,” said Dr Lim.

Citing empirical evidence, Dr Lim posited that “when the rule of law is compromised, economic performance suffers”.

As an example, he noted that the city of Seoul in South Korea produces 10 times the economic product of the entire economy of North Korea, despite the fact that the latter country seemed to be more prosperous in 1945 at the time of the partition.

“Now there are, of course, many reasons for the ultimate difference in economic outcomes of the two regions. But one major factor was that the North chose to pursue an institutional path that failed to respect the importance of the rule of law, while the South continued to do so,” said Dr Lim.

“Put simply, when people feel insecure about the rule of law, they invest less. They produce less. And even when they work and invest, they are less productive,” he said.

Therefore, flagging concerns on the perception of fairness, access and independence of Singapore’s justice system extends beyond the Parti Liyani case or other similar cases, said Dr Lim.

“It is also about the divergent fortunes of the Nogales and Koreas of the world. And when we underscore the importance of the rule of law, we are not only trafficking in the realm of our shared notions of justice, but in our common economic future as well,” he concluded.

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Economics

Thailand’s household debt reaches record high amid slow economic growth

Thailand’s household debt has surged to a record 606,378 baht per household, driven by slow economic growth and high living costs. A UTCC survey found 71.6% of households struggle to meet repayments. The government is working on measures to alleviate the burden.

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1 month ago

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13 September 2024

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Thailand’s household debt has soared to a record high, with many citizens struggling to manage loan repayments due to weak economic growth, declining incomes, and rising living costs, according to a recent survey.

The study, conducted by the University of the Thai Chamber of Commerce (UTCC) in early September, revealed an average household debt of 606,378 baht (S$23,600), marking an 8.4% increase from the previous year. This is the highest level of household debt recorded since the survey began in 2009.

The survey highlighted that 69.9% of this debt is attributed to formal lending, a decrease from 80.2% last year, while informal lending has risen to 30%. This shift is largely due to many individuals reaching their borrowing limits from formal financial institutions, forcing them to seek credit from informal sources such as loan sharks.

The study also noted that a significant number of households are facing difficulties meeting their financial obligations, with monthly debt payments averaging 18,787 baht, up from 16,742 baht the previous year. The delinquency rate stands at 71.6%.

The growing household debt is placing pressure on Thailand’s economy, the second largest in Southeast Asia, which is already grappling with high borrowing costs and sluggish exports amid a slow recovery in China, its main trading partner.

Both the government and the Bank of Thailand have raised concerns over the country’s total household debt, which reached 16.4 trillion baht, or 90.8% of gross domestic product (GDP), at the end of March 2024—one of the highest levels in Asia. The central bank has introduced measures aimed at reducing this ratio to 89% by next year.

For comparison, International Monetary Fund (IMF) data from 2022 shows household debt as a percentage of GDP at 67% in Malaysia and 48.6% in Singapore.

The UTCC survey, which polled 1,300 respondents from 1-7 September, found that the majority had experienced challenges repaying debt over the past year and expected to continue facing difficulties in the coming year.

UTCC President Thanavath Phonvichai expressed concern over the long-standing debt problem, stating that household debt is primarily incurred for daily expenses, housing, vehicles, and business operations, and does not necessarily undermine the overall economy. He added that the situation would improve once the domestic economy returns to strong growth.

In response to the debt crisis, the Federation of Thai Industries has reduced its 2024 target for domestic vehicle sales by 200,000 units to 550,000, citing high household debt and stricter lending conditions as key factors reducing demand.

Finance Minister Pichai Chunhavajira emphasized the urgency of addressing household debt and urged the Bank of Thailand to provide more support to retail borrowers. He also mentioned plans to engage with banks to explore further assistance measures for debtors.

Thailand’s newly appointed Prime Minister, Paetongtarn Shinawatra, has pledged to stimulate the economy immediately.

On Monday, the government announced plans to distribute 145 billion baht to state welfare cardholders starting next week.

This is part of a broader “digital wallet” program aimed at providing financial relief to up to 50 million people, although it now appears much of the support will be disbursed in cash.

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AFP

Top rice supplier India bans some exports

India, the world’s largest rice exporter, bans non-basmati white rice exports to ensure domestic availability and tackle rising prices amid global food crises, potentially impacting rice-dependent nations.

Published

1 year ago

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21 July 2023

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MUMBAI, INDIA —  The world’s biggest rice exporter India has banned some overseas sales of the grain “with immediate effect”, the government said, in a move that could drive international prices even higher.

Rice is a major world food staple and prices on international markets have soared to decade highs as the world grappled with the Covid pandemic, the war in Ukraine and the impact of the El Nino weather phenomenon on production levels.

India would ban exports of non-basmati white rice — which accounts for around a quarter of its total — the consumer affairs and food ministry said.

The move would “ensure adequate availability” and “allay the rise in prices in the domestic market”, it said in a statement late Thursday.

India accounts for more than 40 percent of all global rice shipments, so the decision could “risk exacerbating food insecurity in countries highly dependent on rice imports”, data analytics firm Gro Intelligence said in a note.

Countries expected to be hit by the ban include African nations, Turkey, Syria, and Pakistan — all of them already struggling with high food-price inflation — the firm added.

Global demand saw Indian exports of non-basmati white rice jump 35 percent year-on-year in the second quarter, the ministry said.

The increase came even after the government banned broken rice shipments and imposed a 20 percent export tax on white rice in September.

India exported 10.3 million tonnes of non-basmati white rice last year and Rabobank senior analyst Oscar Tjakra said alternative suppliers did not have spare capacity to fill the gap.

“Typically the major exporters are Thailand, Vietnam, and to some extent Pakistan and the US,” he told AFP. “They won’t have enough supply of rice to replace these.”

Moscow’s cancellation of the Black Sea grain deal that protected Ukrainian exports has already led to wheat prices creeping up, he pointed out.

“Obviously this will add to inflation around the world because rice can be used as a substitute for wheat.”

Rice prices in India rose 14-15 per cent in the year to March and the government “clearly viewed these as red lines from a domestic food security and inflation point of view”, rating agency Crisil’s research director Pushan Sharma said in a note.

India had already curbed exports of wheat and sugar last year to rein in prices.

— AFP

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