Monthly Archives: January 2009

Singapore determined to master the storm


Read the updated version on my new blog:

Given these turbulent economic times, it’s not surprising that the Southeast Asian city-state of Singapore is also suffering from a deep recession.  Global demand for Singapore’s exports and services has collapsed since the financial crisis has spread to nearly every country on this planet and has emerged as a global economic crisis of unprecedented scale.

Since Singapore’s independence, it has become one of the richest nations worldwide with a modern high-tech and service industry relying on the country’s highly-skilled workforce. The combination of a capitalist society, a strong work ethic and smart government policies have proved extremely successful and have created numerous sources of income for the “Lion-city”. Despite its lack of raw materials, Singapore has become a major exporter and international financial and trade hub. Next to the pro-business and pro-export policy of the government, the excellent infrastructure has supported the country’s economic rise. The financial services and high-tech industry in addition to oil refining and re-exportation of imported and up-graded goods have been the foundation for Singapore’s economic success. However, Singapore’s strength in finance and international trade turned out to expose Singapore to the effects of the global economic crisis. (check out: Container lines are struggling with costly over-capacities and are slashing some routes resulting in a major setback for the world’s busiest port. When international trade suffers, so does Singapore’s economy.

As the Singaporean government has already admitted, the city-state is in it’s deepest recession ever. The GDP is expected to contract by 5% this year. Nevertheless, the country has an abundance of financial resources. The Finance Minister announced a $13.6 billion (20.5 billion Singapore dollars) economic stimulus package to ease the effect of the recession on the people and revive the economy. Considering the size of the stimulus, this is a bold and determined step. The money should be spent to preserve jobs by subsidizing wages, guaranteeing bank loans to help businesses and families in trouble. Employers receive help to pay part of the salaries and benefit from tax reductions in order to ensure that as many people as possible keep their jobs and incomes. To stimulate banks to lend money, the government shares the risk of bank lending and jumps in when a business fails to pay back. Huge investments in education healthcare and infrastructure are part of the package, too.  The advanced subway system is to be expanded, public housing projects receive more money, more roads and parks will be built.

Apart from these countermeasures, Singapore might also weaken its currency to tackle the recession. This should strengthen the city-state’s export sector. Besides, this measure could halt the fall in consumer prices and reduce deflation risks. A large share of the consumer goods sold in Singapore are previously imported. Therefore, a possible devaluation of the Singapore dollar would stop the price fall by making imports more expensive.

Despite the grim outlook for the this year, Singapore’s future is bright. The government has invested billions of dollars into biotech and chemicals as well as telecommunications which should ensure the continuation of the economic success story. Singapore will overcome this crisis as it managed the Asian crisis in the 1990s and the outbreak of SARS. Pfizer and Lanxess are just two examples of foreign companies that have invested hundreds of millions into new research & development facilities. Pharmaceuticals already contribute decisively to Singapore’s GDP. However, the fast-growing biotech sector is still in its infancy and requires massive investments. In the medium term, especially biotech could become a big money-spinner. Singapore attracts many bright-minds from abroad. Scientists from foreign countries are fascinated by the vast research opportunities. The country’s innovative high-tech industry is making strides towards surpassing other Asian high-tech centers in Japan, Taiwan and South Korea.

The bottom line is that Singapore was hit by the crisis at the wrong point in time since it proved to be still too dependent on the financial sector while prospective sunrise industries are not yet ready to fill the gap.

If you’re interested in how Singapore manages this crisis and prepares for the future, you will be able to get first-hand information right here. In April, I’ll travel to Singapore and report daily about this intriguing global city at the tip of the Malay Peninsula.


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I’m just one of the hundreds of millions of people from around the world who have witnessed Obama’s inauguration on TV and are enthusiastic and full of hope.  Since the entire world has been looking forward to this historic day, Obama probably had the biggest audience a TV broadcast has ever had so far.

President Barack Obama’s inaugural speech was absolutely amazing. First, it was really refreshing to hear a speech largely written by the speaker himself. Second, Mr. Obama addressed all major issues that will require his attention during his term as president of the United States. After he had mentioned what he is concerned about and what are the challenges facing the USA and the world in these times, President Obama highlighted that he’s determined to solve the problems. It is important that the current situation allows that unpleasant decisions can be passed more easily and quickly. Next to creating new jobs he is willing to “lay a new foundation for growth”. Unlike other heads of state, Obama appears to be aware that the number one objective should be to create new jobs and not protect existing  jobs. No country could afford to keep industries alive that have become uncompetitive. Even if the financial means were available, that would harm the innovative potential. As old industries are dying, new ones are emerging. I’m pretty sure that energy technology has the potential to create the most new jobs as well as to serve as a foundation of new prosperity.

Starting tomorrow morning, the Obama administration will begin working to improve health care, get the economy working again, address global warming and the energy issue. Furthermore, President Obama has the capacity to restore America’s reputation in the world, build alliances and avert conflicts.

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President Obama: the right person at the right time

This is definitely a historic day. This is the day Barack Obama takes office as the first African-American president of the United States of America. But far beyond that, Obama is the person who is most likely to bring about the change that this crisiss-torn planet desperately needs. Moreover, Obama can turn this crisis into an opportunity. Given the enormous importance the coming years will have on the course of history, I’m hopeful because Barack Obama appears to be the person who is capable of managing this crisis and bring the country back on track.

There are many people who breathe a sigh of relief since still President Bush leaves the White House forever. The world economy has barely been in such a bad shape as today. The global crisis affects all parts of the world which is unprecedented. Governments around the world are accumulating giant budget deficits in their struggle to avert a collapse of their economies. Power and influence have begun to shift eastwards, as wealth spreads eastwards and the Western nations have become dependent on oil and gas.

The U.S. in particular is facing one of the most challenging economic times since the Great Depression. Nevertheless, there can be hope that the negative trends of the past decades will be reversed. The bright side is that in times of crisis, there’s much more acceptance for fundamental reforms and restructuring measures. To adress the big issues of our life time, energy and global warming, Obama has the best conditions to work towards a solution to both problems and simoultaneously create a new source of wealth.

All the best to President Obama!

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being confronted with the reality of the global crisis, Dubai delays the “one kilometer tower”

Imre Solt

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Abu Dhabi and Daimler teaming up: oil, electric cars, eco-cities and lots of money


Dubai has become a synonym for superlatives. The bustling city on the coast of the Persian Gulf emerged into an international business hub and tourist destination in the matter of years. Althoug Dubai’s economy was built on the back of the oil industry, the emirate managed to reduce it’s dependence on oil exports – as Western countries ought to do – to a minimum. Today, revenues from the oil industry account  for less than 6% of Dubai’s GDP. When the construction boom set in at the beginning of the new millenium, an incredible numer of unique and creative construction projects drew lots of international attention to the “city of the future”. Some of the highlights: the Burj Al-Arab, Dubai’s best-known landmark, this 7-star hotel is probably the most frequently photographed hotel in the world; the palm-shaped artificial islands; the world’s tallest skyscraper (still under construction), the Burj Dubai.

Burj Dubai, photo by Imre Solt

Burj Dubai, photo by Imre Solt

Dubai has become a financial center for the entire region, is determined to become the #1 air traffic hub as the “Dubai World Central Airport” which is currently under construction will have the largest passenger capacity in the world (120 million a year) and probably the city with the fastest growing skyline.

However, Dubai’s boom has stunned. It really shouldn’t come as a surprise since the emirate’s economy is connected to the world economy even more than other countries’. In recent years, billions and billions of dollars were being invested into ever greater and more exciting projects. Consequently, the city has become the world’s largest construction site. Continously, new skyscrapers have been sprouting out of the ground. The currently tallest skyscraper in the world, the Burj Dubai, was still in the planning stage when property developers were thinking about adding yet another highlight to Dubai’s skyline, a one kilometer (3280 feet) tall tower. Feeling the pressure of an increasing amount of empty office space, a cooling economy, the first budget deficit in ages and falling real estate prices, the rulers of Dubai decided to delay the construction of the “Al Burj”.

Now that Dubai’s growth-obsessed government is scaling back investments, there can be no more doubts about the bad state of the world economy. Hotel occupancy in Dubai is down, financial firms are struggling to survive, oil revenues are down and property developers are over-burdened with credit.

Worries about the financial stability of some propery firms caused investors to withdraw money. Now it’s to be seen whether the government is about to regulate the property and construction sector more tightly. Where the basic idea has been “there are no limits”, authorities are likely to be stricter in the future.

On the one hand, Dubai has accumulated giant cash reserves, so the government has the financial means to step in where necessary, but on the other hand, Dubai’s economy and rulers have to prove  themselves in crisis management for the first time in more than a decade.

Imre Solt

photo by 


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giant solar power project in China


China has become a country with an apparently insatiable appetite for energy. Although China’s economy is slowing as the global meltdown crushes demand for Chinese goods, Chinese energy companies are busy importing ever more oil and coal and other commodities. Dependence on oil imports from politically unstable nations not only poses a threat to the U.S. and the Western world, but also to China. A supply interruption would have disastrous consequences for China’s stability and economic growth. This one of the reasons why China needs to embrace alternative sources of energy. Of course, China is being confronted with criticism from environmental organizations that it is doing too little to limit greenhouse gas emissions. But obviously, the Chinese government cares less about tree huggers than about economic and social stability as well as saving potential and future business opportunities. Solar power is the most promising source of energy we have and the solar industry will grow to a key industry over the next decade.

To ensure that China will have a stake in the future energy tech market and in order to diversify the energy generation process, China will build a giant solar power station in the Qaidam Basin, a very arid basin in Western China. The place is perfectly suitable to host the world’s largest solar power station as it has a high average of daily sunshine hours . In the first stage of the project, a 30 MW  solar power farm costing about $150 million is to be built by the China Technology Development Group and the Qinghai New Energy Group. Construction will begin this year.

The long-term power generating capacity goal is one gigawatt (1,000 megawatts) of solar power. The next largest photovoltaics project is a 0.5 gigawatt power plant in California.  (a modern nuclear power plant has a capacity of about 3,000 megawatts) 1,000 megawatts is really huge for a solar power plant. When and whether the construction of the second phase can start depends on the success of the first.

Environmentalists are unlikely to be satisfied with this step as they highlight that China’s investments in coal-fired power plants are way above those in clean energy, but there can be hope that once the Chinese government recognizes the profitability and opportunities of solar power, the investments into alternative energies will be scaled up. Chinese officials are well aware that a strong alternative energy sector is a necessity, not a waste of money to greenwash China’s image.

The announcement of this mammoth project helped to boost confidence within the solar industry which is suffering from the credit squeeze and recently lower energy prices. Most people seem to believe that the upcoming energy crisis is averted due to the lower energy consumption caused by the economic turmoil. However, the beginning of the supply shortage is just delayed. The more investments are being postponed, the more painful the rebound of energy prices will become.


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no party atmosphere in Detroit, but numerous electric cars

This year’s North American International Auto Show in Detroit is less glamorous than last year’s since the Big Three U.S. car makers are struggling to survive and even the industry leader Toyota will post an operating  for the first time in more than 70 years. General Motors and Chrysler averted bankruptcy last month due to emergency loans from the U.S. government. But this stop-gap solution won’t be enough to protect them from going bankrupt. The loss-making U.S. car makers are turning toward electric cars as their last hope and savior. Both, GM and Chrysler promised to launch mass production of some electric car models in 2010. Chrysler Vice Chairman Tom LaSorda said that the car maker is further ahead on developing electric vehicles than many had thought, but the company has kept them secret for quite some time. Chrysler unveiled three cars running on pure electricity: The ecoVoyager, the Jeep Renegade and the Dodge ZEO.

Dodge ZEO: (photo from by


GM is betting on the Chevrolet Volt which runs on electricity for the first 40 miles, and if necessary, the driving range can be extended to 400 miles. If the ride is longer than 40 miles, a generator kicks in and recharges the batteries. More than 75% of all Americans could commute to their workplaces daily without burning any gasoline. Overnight, the Chevy Volt can simply be plugged into any electric outlet and the batteries will be recharged completely after eight hours. Therefore, the Chevy Volt has an incredible fuel economy.  GM’s Vice President Bob Lutz also unveiled the Cadillac Converj concept car which also uses the “Voltec” electric drive technology as well as the same platform used to create the Volt. The Converj is a luxury range-extended electric car and also runs 40 miles on a charge. Ford plans to have numerous electric cars and hybrids in showrooms by 2011.  A semi-electric vehicle which can be recharged from a standard outlet is scheduled for 2012.

The public perception of GM, Ford and Chrysler has been completely contrary to what the car makers’ executives are aiming at now. Until recently, the trend in the American auto industry was toward bigger cars with more horsepower than ever before. Now the attention is on environmentally friendly and efficient electric cars.

As President-elect Barack  Obama is determined to reduce America’s dependence on foreign oil, the automakers are probably hopeful that he’ll help them to suvive in order to allow them to launch their electric cars in 2010. Obama’s target for 2015 is more than one million at least semi-electric cars on the streets.

Generally, the interest in electric cars is very high after gasoline prices reached record levels last summer. Now it’s essential that car makers manage to increase the availability of electric cars and reduce production costs since there’ll be huge demand as soon as oil prices shoot up again. With intensified research and mass production of  high capacity lithium-ion batteries setting in, the battery pack will become smaller and the storage capacity will increase. Prices are also expected to come down decisively. Nowadays, the cost of the battery pack makes up about  a third of the  price of an electric car.

Nex to GM and Chrysler, other American car makers such as Tesla Motors and Wrightspeed from Silicon Valley are entering the electric car market. The Tesla Roadster and the Wrightspeed X1 are electric sports cars that can can accelerate faster than a Ferrari and go some 300 miles and more on a single charge. The concept of these innovative Silicon Valley car makers is to introduce electric cars to the upper-segment market which makes sense as the cost of the battery pack is not that decisive.

Toyota which started producing hybrid cars more than 10 years ago unveiled plans to launch a fully electric compact car by 2012. The car is named “Urban Commuter” which perfectly describes where electric cars have the biggest potential. The range that is easily achievable today is sufficient to handle almost everyone’s daily driving. Especially for suburb-downtown commuters, electric cars make great sense. For the occasional road trip, the best solution is a rental car.

The German luxury car makers BMW and Daimler (Mercedes-Benz) are also developing electric vehicles. At the moment, they’re testing electric versions of their smallest cars: BMW’s electrified Mini will be available for leasing in southern California. The electric version of the microcar Smart is can be seen on streets in Berlin and London. The Mercedes-Benz BlueZero concept car was introduced in Detroit on Sunday. The car will be available in three configurations: a battery-electric version with a range of 124 miles, a model with a fuel-cell that allows a driving range of 248 miles and a range-extended electric car with a driving range of 372 miles.

The bottom line is that future cars will be smaller and using alternatives to gasoline. Especially electric cars will start replacing conventional cars step by step. In the medium-term, demand for electric cars from emerging countries could fast exceed demand from industrialized countries. (Check out China, India and other countries subsidizing gasoline to keep domestic prices down are forced to embrace electric cars)

More on electric cars:

“We’re reinventing the automobile” – Rick Wagoner, CEO and chairman of GM on the occasion of the grand old car maker’s 100th birthday

The electric car revolution is about to happen

Electric vehicles are competitive with gasoline-diven vehicles,0,

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grim outlook for the container shipping industry

The long-lasting boom in the container shipping industry ended abruptly last year when first high freight rates caused by record-high oil prices lowered demand and prompted companies to relocate production capacities closer to big consumer markets and towards the end of 2008, demand for consumer goods from recession-torn countries plummeted resulting in costly overcapacities. On the one hand, container lines could breath a sigh of relief since they don’t have to pay a fortune to fill up the tanks of their cargo vessels – at least not at this moment – but they’re strugglingto fill the decks of their ships with containers generatingenough revenue to cover operatingcosts. The surplus of cargo capacities is especially significant on the Europe-Asia routes as well as on the routes linkingNorth America to Asia. As shipyards continue workingoff the numerous orders from previous years, cargo capacities will continue climbing until 2012 unless orders are postponed and older ships put out of service in large numbers.

A wave of acquisitions and mergers appears inevitable. The consolidation process will let smaller freight lines disappear. The focus of the more dominant shippers is expected to shift to the routes to South America and the still growing economies of China and India which are permanently consuming more raw materials.

In the medium and long term, the outlook is not so bleak as global trade volumes will continue to grow as soon as consumer confidence recovers and postponed investments are due to be made. Therefore, the shipping industry just needs to find a solution to bridge the current trough. The bigger companies are likely to expand their control of the market and take over slots and terminals from smaller competitors which is to increase future profits. Port operators might also benefit in the l0ng term from acquiring smaller rivals.

Despite the current uncertainties and helplessness of the container shipping industry, the French container line CMA CGMappears to be willing to launch yet another new Europe-Asia route. The new service could be launched in summer while competitors are suspending services. According to the company, this step is aimed at securing”a leadership position in the Asian shipping market.”

The global economic downturn in addition to the crisis in the shipping industry hits the South-East Asian city-state of Singapore especially hard. The port of Singapore is the world’s busiest container port serving as a hub for South-East Asia. Next to the port, a large share of Singapore’s earnings comes from the financial industry which is obviously in the worst shape in decades. The country’s exports have also fallen and cash-strapped tourists from Western countries also tend to stay at home. Consequently, it’s not surprising that Singapore’s economy was contracting 12.5% in the fourth quarter. Nevertheless, Singapore’s government has control of an abundance of cash and currency reserves. Measures have already been taken to stimulate the economy, create new jobs and soften the effect on the people. In April, I’ll travel to Singapore to take a closer look at the economic situation there and give you insights on how this country, that has been extremely successful for decades works. I’m especially interested in how Singapore prepares for the future. In April, you can get first-hand information right here.

You can also take a look at my article from August when Asia-Europe shipping started to decline: Shrinking Asia -> Europe cargo volumes indicating an economic downturn in Europe


Filed under Economy, Global Issues