Quora Answer: Would the USA Respond with Military Might Should China Invade Hong Kong?

The following is my answer to a Quora question: “Would the USA really respond with military might should China invade Hong Kong in the near future?”

Hong Kong is a part of China.  China cannot invade itself.  Hong Kong has limited self-governance, but it is not an independent sovereign entity.  China already has troops based in Hong Kong, quartered near the old governor’s residence.

The US has no legal justification to invade Hong Kong, since that would be invading Chinese sovereign territory.  I cannot see any scenario where that would end well.  China is a near peer adversary with territorial advantage.  The US has to secure a thousand-mile logistics supply line from bases in South Korea and Japan, bases well within reach of China’s tactical missile envelope.

HNW Attitudes towards Insurance

The following are some of the findings of a 2020 survey of high net worth individuals’ and their views on insurance as a financial instrument, and part of their portfolio.  This was conducted by AIA and Ernst & Young.  In an uncertain economic environment, high net worth individuals tend to buy more insurance because it is safer than most other assets, excluding gold.  This makes sense because the more wealth we have, the more we have to lose.

Quora Answer: Why Do Criminals Use Luxury Goods to Launder Money?

The following is my answer to a Quora question: “Why do criminals use luxury goods to launder money?”

Money laundering is the process of legitimising the proceeds of criminal or illegal activities.  There are many methods, but they all involve the creation of transaction history.  Luxury goods are useful because of two reasons.

The first reason is that they have a high value, meaning that lesser transactions are needed to justify the existence of the funds in the placement and layering part of money laundering.  A single painting could be valued at $1 million.  How many bottles of orange juice do I have to claim to sell to put that equivalent on the books?

The second reason is that luxury goods have variable value, according to demand and scarcity, and appreciate significantly in a short period of time.  For example, that $1 million worth of bottles of orange juice will likely decrease in value with time due to depreciation, and shelf life.  That same painting could be appraised at a higher value than when it is bought.  This discrepancy in book value and appraised value can be played around with.

Quora Answer: Why Do Companies Move Regional Headquarters from Hong Kong to Singapore, Not Taiwan?

The following is my answer to a Quora question: “Why do companies move regional headquarters from Hong Kong to Singapore, but not Taiwan?”

In the ease of doing business and competitiveness index, Singapore ranks a lot higher than Taiwan.  Taiwan used to be one of the Four Asian Tigers, with Singapore, Hong Kong, and South Korea, but lost its way in the last decade or so, through bad policies, factional politics, and increasing diplomatic isolation.

Secondly, companies consider costs, and Singapore has a lower tax rate than Taiwan for companies and individuals.  Taiwan’s corporate tax is higher, and although it does not have a separate capital gains tax, it is factored into the income tax.  Singapore does not have a capital gains tax, separate or integrated.  Taiwan does have a lower VAT, at 5%, compared to Singapore’s 7% GST.  However, this is a consumption tax, and the cost can be passed on.

Finally, Taiwan has a difficult relationship with China, and businesses want access to the Chinese market.  Singapore has no such encumbrance, being a wholly sovereign nation, instead of a renegade province.  This means Singapore has better access to international banking networks, making it easier to move funds into and out of China.  FDI from China may be problematic.

Quora Answer: Why Did Singapore Announce a Lockdown Up to 01st June 2020?

The following is my answer to a Quora question: “Why did Singapore suddenly announce a lockdown up to 01st June?  What went wrong in Singapore?”

Nothing went wrong.  The assumption here is that this circuit breaker, as the government calls it, is a policy failure.  It is a reaction to a developing situation, and that is how governments are supposed to work.  The lockdown has succeeded in mitigating the spread of the infection among the wider populace.  That makes it a policy success.  That it was done quickly, and a multi-ministerial task force delegated to address the testing, welfare, healthcare, and logistics of thousands of workers is a testament to efficiency.

There was a policy blindspot pertaining to the worker dormitories, and they proved to be excellent incubators due to the number of people in close proximity.  That is not a policy failure.  That is a management failure, and it will most certainly be addressed by policy.

Firstly, it highlights Singapore’s excessive reliance on cheap foreign labour.  This is something businesses in Singapore need to address, in partnership with the government.  We need to consider more automation, and wean sectors of our economy off their narcotic of cheap labour.  This means relooking the fundamental structure of businesses in these sectors.

Secondly, it highlights that the way dormitories are run in Singapore need more scrutiny.  Too many people are in the rooms,  no matter how clean they are.  The facilities are not adequate.  Considering the wealth of Singapore, this is not adequate.

The large number of infections reported should be understood in the context of the number of tests done.  Other countries in Southeast Asia have smaller numbers of official cases, but that is only because they do not have the resources or the system to test such numbers.  Relative to the population, and number of infections, the death rate is miniscule.

Quora Answer: Why Did Singapore Use Gurkhas to Secure the Kim-Trump Summit instead of the SAF?

The following is my answer to a Quora question: “Why did Singapore use Gurkhas to secure the Kim-Trump summit, instead of the SAF?”

In reality, the Gurkha Contingent is the most obvious and public unit used to secure the venue.  They are a tiny cog in a vast security apparatus.  They are newsworthy because they are unusual, and they take attention away from the various specialist teams that work best in the shadows.  There are hundreds of specialist teams, including the entire intelligence apparatus that will be mobilised to secure the venue.  The work goes beyond just having guards at the place dignitaries meet, or stay.  People are deployed at points of entry into the country, and personnel are sent to certain other nations to coordinate with their native intelligence agencies.

In addition to the Army and the Home Team, the Navy and Air Force are deployed.  They look out for everything from hijacked supertankers, to civilian aircraft turned into suicide bombs.  There will be sniper teams, specialist units to clear the routes of potential IEDs, and observer teams.  There are command centres that collate and analyse all feeds, one based near the venue, and one in a bunker.

One of the reasons why Singapore gets chosen for these events is because the operational security team is experienced and efficient.  This can be seen in the fact that hundreds are picked up in sweeps, and hundreds more denied entry, and hardly any of this makes it into the news.

Quora Answer: Why are the USA & Singapore Treated with Greater Respect Than China?

The following is my answer to a Quora question: “Why are the USA and Singapore, with debt to GDP in excess of 100%, treated with greater economic respect than China, with a ratio of below 60%?”

The question is ambiguous.  What do you mean by “greater economic respect”?  I take it you mean credibility?   What we can do is take a look at the numbers.  As of 01^st May 2020, the federal debt is US$24.95 trillion.  Although it is a staggering number, it is still less than 80% of GDP.  It is projected to rise to around 100% of GDP before the end of the decade.  Much of that debt is held internally, by other branches of the US government, by American corporations, pension funds and other entities.  Whilst the US has the largest external debt, less than 30% of it is actually held by foreign entities, including sovereign entities.  Despite the political brouhaha in the US, as long as that debt interest is sustained by GDP growth, it is not a cause of concern for investors.  Also, the US Dollar being the currency of refuge, and the currency for most trades, means that the United States can get away with this level of debt.

Singapore’s national debt was around 130% of GDP at the end of 2019, and will likely rise because of the pandemic lockdown.  Like the US, most of that debt is held internally, the vast majority borrowing from the Central provident Fund.  Additionally, Singapore has a huge Reserve, with estimates ranging from the hundreds of billions to over a trillion.  Singapore has two sovereign wealth funds, and a separate foreign reserve under MAS that is over US$300 million.  As such, that debt is very much sustainable.

China’s debt to GDP ratio is estimated at over 300% of GDP, which is more than the US and Singapore.  This is hard to quantify because China is very secretive about her borrowings, and has this habit of borrowing through state-owned enterprises and other entities.  There is no question here about the size and strength of the Chinese economy.  No one sane s predicting that China will suffer an economic collapse anytime soon.  China has the largest GDP overall, and the GDP PPP is the largest in the world by some distance.

When it comes to credibility, however, China suffers because her penchant of wanting to control the narrative despite the facts makes her distrusted.  No one takes the official economic data of China at face value, because the Chinese are not honest about their numbers.  Even the most mundane data is treated like state secrets.