High housing costs and office rents prompt highest levelof dissatisfaction since 2006

More pain ahead?

High housing costs and office rents prompt highest levelof dissatisfaction since 2006

Wednesday • July 23, 2008


CHRISTIE LOH and CHEOW XIN YI


christie@mediacorp.com.sg


INCREASINGLY frustrated by cost pressures and a shortage of places for their children at international schools, American companies foresee yet more pain ahead, including a recession back home. This, they say, will hurt their Asia operations.

The American Chamber of Commerce in Singapore conducted its sixth annual survey of its members last month and found that 76 per cent of 130 senior executives polled online thought the United States would suffer a recession this year.

Within this group, most believed the downturn would last 12 to 18 months or what is known as a U-shaped recession — the scenario sandwiched between a short-term “V-shaped” bounce and a long-term “L-shaped” slump.

“The impact will be more related to the perceptions of our parent company in the US as they struggle to deal with their economic realities, and much less to do with the realities of the Asian economic scene,” said one unnamed executive surveyed from the Asian subsidiary of a US multi-national firm.

Others, such as AmCham member Lance Hardesty, think it is perhaps premature to pinpoint a recession on the horizon.

“I think the economy right now is just holding its breath to see what happens with the US Presidential elections,” Mr Hardesty, who runs engineering consultancy RW Beck here, told Today.

There was, however, wide consensus on the impact of any US recession on business in Asia: 80 per cent of the respondents foresaw “negative” repercussions. This makes American executives in Singapore, whose jobs are mostly regional and not confined to a single country, more bearish compared to their peers in Vietnam, Thailand, Malaysia and the Philippines.

Already, US businesses here are feeling the heat from inflation. Some 74 per cent of the respondents were disgruntled with housing costs and office rents in Singapore. That is the highest level of dissatisfaction since 2006, when AmCham began surveying these concerns.

To fight inflation, the Monetary Authority of Singapore (MAS) has allowed the Singapore dollar to appreciate to lower effective import costs.

But the central bank “needs to do more”, opined Mr Lee Jong-Wha, head of the Asian Development Bank’s (ADB) office of regional economic integration, during a conference here yesterday.

He said a “tighter monetary policy” could be balanced with fiscal policy, such as by increasing public expenditure, to ensure economic growth.

:The ADB predicts inflation in Singapore to hit 5.8 per cent this year, after last year’s 2.1 per cent.

:High prices have also found their way into education, with expatriates stumping out money to secure places in prestigious schools. Half of those polled by AmCham felt that a lack of adequate space at international schools could affect their company’s decision to hire foreign employees.

:The chamber formed a committee in April to look into solving the problem.

:As in previous surveys, the majority were satisfied with the infrastructure and business climate here. Despite recession fears and cost frustrations, 57 per cent of those polled foresaw their Singapore workforce growing, while 71 per cent planned to expand in South-east Asia.


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