UPDATE : MOTOR trade associations representing hundreds of car dealers are doing the unthinkable: petitioning the Government to cut certificate of entitlement (COE) supply in the wake of plunging prices. The Singapore Vehicle Traders Association and the Automotive Importers and Exporters Association said nosediving COE prices - which culminated in a crash yesterday - will drive down the cost of new cars, killing the market for second-hand vehicles. Mr Neo Nam Heng, president of both trade associations, said the sector is heavily reliant on used car sales and reducing the number of COEs is necessary to 'save the industry from collapse' MY RESPONSE: Sorry guys but COE is used to control congestion not your profits. Having said that we have 2 things in Singapore with prices that wildly when boom turns to bust causing much pain sometimes estasy depending on your luck - COE and property. It is hard to ask the govt to bailout businessmen such as 2nd hand car dealers but they do have my sympathy as they operate in a somewhat "crazy" market.
The small car COE fell to $2. The other categories saw falls of around 50%.
Today I went to the hawker centre to my usual nasi lemak stall - the stall started selling $2 nasi lemak to compete against another nearby which has been doing it for 1 yr ..before this his average price was about $2.50 depending on what you ordered. A few months ago, I wrote in this blog that we will see a deflationary recession and inflation will be history at least for the next few months. Petrol prices are now at the lowest in 20 months. Rice has fallen ...so has the price of sugar and other commodities. The only people still raising prices are our state owned monopolies. With 33,000 HDB flats in default, I wonder if housing price is the next shoe to drop. With the economy slowing and foreign workers who can't find jobs returning home, we may see a drop in rental.
My friends in the banking sector are extremely fearful after the 900 job cuts at DBS and the Citigroups announcement to layoff 50,000 people worldwide. Will the govt ever come clean and tell us the number of unemployed Singaporeans - instead of lumping it with other residents so we don't know how many are unemployed. With 8% of HDB flats with outstanding loans in default...wouldn't that point to an unemployment higher than the official of 2,3% for "residents".
A few of my friends in the semiconductor industry told me they will not be getting their 13th month - while they are not retrenching, things have slowed to a crawl.
Anecdotal evidence point to the economy falling off a cliff. It is in a state of shock and many in dire straits have not surfaced yet - imagine we have 8% people defaulting on HDB loans in past 3 months when the economy just started weakening ...how many people will default in the next 12 months as the economy worsens. At some point, sufferers will start popping up en mass (at Hong Lim?). The govt appears to slow again and falling back on its mantra - retraining, job creation etc. What is needed is direct and immediate help - no more dithering. As a Singaporean, I really shudder to think what will happen if we go into next year with the lack of leadership we have seen in the past few months. Maybe the PAP Ivory Tower is now so tall they don't know what is happening at the ground.
It is a case of "can't believe until you see it". Until today, nobody believed the COE can drop to $2....nobody can believe there will be large number of people in affluent Singapore in dire straits. It is going to come....I'm very sure and I hate to see people suffering because we have leadership perpetually in denial. When they see jobless people, they say jobs are plentiful just don't be fussy. When people can't afford electricity, they tell these people they are using too much electricity and install a meter to force them to cut down. When people say flats are too expensive, they reply that people are buying flats that are too big ...please choose smaller ones. When people say they can't afford medical care, they reply that people would take better care of their health if medical care is more expensive....they say people will neglect their health just to use subsidised health care if it is not expensive enough. This type of logic worries me as we enter the worse recession in decades. Just look at govt behavior during the minibonds saga. This is a leadership that looks ready to abandon the people in their hour of need - they will deny, they will blame the people for their plight.