Main Implications Of Brexit To Singapore

One of the most talked about issues surrounding the world today is the Brexit. Brexit is shorter term that refers to “British Exit”. It is the strong vote of British people to detach themselves from the European Union (EU). This referendum impacted the global markets including that of Singapore’s.

For starters, Brexit contributed to the changes in exchange rates as the value of Pounds drop in its lowest level in decades. Aside from this shift in currency, the Brexit has implications in Singapore’s trade, properties, and investments.

CURRENCY

The British Pound is in its weaker state – as of the moment.

To illustrate, imagine Sally is a Singaporean expat who moved to United Kingdom 6 years ago. Being financially savvy, she made a plan to save some of her money for retirement back home. Since Sally kept a relatively huge sum of money in Pounds, she was surprised to find out that her funds are worth less than they were a week ago.

Aside from the individuals like Sally, British companies are affected by the weaker British currency. It will cost them more money to grow and expand their businesses here.

TRADE

Unlike other ASEAN countries, the Singapore government has concluded their negotiations for “Free Trade” with the European Union. Within the Free Trade agreement, any imports and exports between EU and Singapore are more affordable and are subjected to lesser restrictions. This greatly helped our transactions as we imported over S$44.46 Billion worth of goods and products from the EU last year.

An issue floats as majority of our EU trade was with the Brits. There seems to be an uncertainty whether Britain will have more or less bargaining power over Singapore after the Brexit.

PROPERTY

According to Knight Frank, Singaporeans lead the list of Asian buyers who patronized United Kingdom commercial properties in 2015. With the prevalent clamor of Singaporean buyers and the ambiguity of the British market, banks such as UOB and DBS had to act quickly.

In a statement, UOB says that they “will temporarily stop receiving foreign property loan applications for London properties.” While, DBS is advising its lenders to be more cautious.

INVESTMENT

Behind Japan and Hong Kong, Singapore ranks third as the largest investors in EU. This is why the population of the Singaporean investors will be surely affected. In particular, a stock called GL Ltd (SGX: B16) encompasses more than 5,000 hotel rooms in London. If the British currency will decrease further, it can pressure GL Ltd’s profit in Singapore dollars.

Image Credits: pixabay.com

Image Credits: pixabay.com

As a solution, experts suggest to diversify your investments in terms of currency exposure.

Let me close with the post that PM Lee Hsien Loong published in his Facebook page:

https://www.facebook.com/leehsienloong/posts/1142353405827364
“Singapore will continue to cultivate our ties with Britain, which is a long standing friend and partner. We hope in time the uncertainty will diminish, and we will make the best of the new reality.”

Sources: 1, 2, & 3

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What On Earth Is A Sharing Economy?

Is it possible to live in a world where you can carpool with a stranger during an emergency? How about dining at someone’s home or hiring an experienced chef with a swipe of a finger?

With a “sharing economy”, all these are possible!

According to Investopedia, a sharing economy is…“an economic model in which individuals are able to borrow or rent assets owned by someone else. The sharing economy model is most likely to be used when the price of a particular asset is high and the asset is not fully utilized all the time.”

United States, Europe, Seoul, Australia, and other parts of the globe have shifted from a consumer market to a sharing one. In these places, people use technology to rent, lend, and exchange goods and services rather than purchasing them from shops or companies. Considering the scarcity of some resources in the country as well as its technological advancements, experts suggest that a sharing economy is an untapped realm with great potential for Singaporeans.

April Rinne, a consultant and World Economic Forum Young Global Leader, expressed that a sharing economy can help a society to become more sustainable. And is it not what Singapore aims to accomplish?

In fact, in the Sustainable Singapore Blueprint 2015, the state set up a collective vision that includes being a zero waste nation by 2030. A sharing economy fosters activities that enable people to share and earn income from underused assets such as apartments, cars, clothing, and tools.

There are several benefits that a sharing economy can bring to a nation such as reducing environmental waste impact, redefining the materialistic ideal, increasing efficiency in transport, as well as cutting energy and water consumption.

Sharing economy helps to reduce the environmental waste impact and extend the longevity of items. For example, The Freecycle Network™ allows people to give and receive re-usable items to divert them from the landfills. 9,104,727 users post ads of pre-loved items and give them freely to people that would want to take it. Interestingly, I saw one post from Singapore that offered “lofted twin beds with desks underneath”.

A sharing economy also helps to redefine our materialistic ideal as it encourages to sell or share our possessions. You see, we grew accustomed of having material goods as a measure of success. We believe that the more we have, the more society will perceive us as wealthy and happy. But the truth is, having all these designer goods or lavish cars will never satisfy us. It will only make us craving for more. In a sharing economy, you can easily buy and rent clothes online.

Aside from sharing our possessions, a sharing economy supports the idea of community transportation. By community transportation I mean that people can rent cars from companies, carpool with strangers, and pay for a ride from the people in their neighborhood. A good model for this is Uber. Uber allows you to get a taxi or share a ride with other people through a mobile service.

Lastly, a sharing economy allows you to cut on the accommodation costs as well as energy and water consumption thru services like Airbnb and Couchsurfing. In 2014, a study found that sharing homes had considerably lesser energy and water consumption, greenhouse gases, and accumulated waster compared to hotels. The current situation of home sharing in Singapore depends on the Urban Redevelopment Authority (URA). The URA is re-assessing the law which considers that it is illegal for an individual to rent out their home for stays shorter than 6 months.

Image Credits: pixabay.com

Image Credits: pixabay.com

For individuals, companies, and the society at large, a sharing economy presents a myriad of opportunities to invent new streams of revenue, solve social issues, and to create community resilience. If this idea is successfully achieved, Singapore can just boost its productivity levels significantly.

Sources: 1 & 2

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