The Free Economy

By Uncle Cheng

“Nothing in life is free”. We have all heard people say that. Yet I am beginning to wonder if it is still true. Nowadays so many things seem to be free. It is a perplexing phenomenon of the modern world.

Evidently it is a strict law of economics that somebody somewhere always has to pick up the bill — i.e. nothing is ever free of charge. But how to explain then the free newspapers and free telephone calls that are thrown at us? It seems the public are being showered with goods and information for which we are not being asked to pay a cent. We are living in an amazing economy full of freebies.

Wherever you look goods and information, which we once had to pay for, are now available for free. It is not just free newspapers on the MTR. When did you last have to buy a ballpoint pen, a diary or a calendar? DVDs are given to us as promotional items or we can buy them for virtually nothing.

Of course the internet is the biggest driver of this free economy. It is an odd paradox that in this age when intellectual property matters more than ever before in history, digital information is increasingly free. The internet is full of free articles, videos, and vast archives of data. Dictionaries, books, images and just about anything imaginable are legally available for free on the internet. Why buy a dictionary when it can be sourced free on the web?

Then there is something called “open-source” free software like Linux which means computer users no longer have to buy expensive Microsoft software. Email addresses, which used to be charged for, are now free. Computer memory is now available for free from Yahoo and Google.

These changes are happening at an astonishing speed. Not many years ago it could cost HK$20 a minute to phone overseas. Such a cost today is unimaginable. In fact we can now use the internet to make phone calls free of charge. Google’s CEO, who should know about such things, says mobile phones will be complimentary items financed by advertisers. An American professor predicts phone calls to any destination worldwide will cost the same minimal price, which in the case of the U.S. means between 1 and 2 US cents a minute. That would mean the cost of calling Guangzhou from Hong Kong would be the same to Buenos Aires.

I also read that even food is being given away. Tesco supermarkets in Europe have been distributing free tins of beans. Websites enable consumers to check where food is free (freesite or ourfreestuff).

Where the free economy is having by far the biggest effect is in the world of intellectual property. The cost of distributing information has quite simply crashed. Think of it like this. If you read a publication on the internet it does not matter to the publisher if you are one of 1,000 readers or one of 1 million readers — the cost is the same. Maybe it is only a matter of time before all intellectual property is free of charge.

Old accounting methods are being turned upside down. Financial institutions used to sell investment analysis but give it away free. An internet user who prints a newspaper article bears the cost that was once borne by the publisher. A whole new business world is being created at record speed. A new invention is the “freemium,” which is a marketing ploy to tempt consumers with free items before selling then extras at premium high prices. The phone website Skype has a neat trick — members call one another for nothing but must pay to call non-members. Publishers have learnt that readers of their free-to-view websites can be made to pay for special interest items like football games.

Unfortunately there are some prices that are immune to the internet. Restaurants for example. The cost of eating out just goes up and up. I will be horrified when a meal in my favourite restaurant costs $1,000 a head and it will be little consolation that the cost of a hour-long phone call to San Francisco is only $10.

Sophie's note: Sigh, Sophie has been blogging for free. Sophie has not earned any money to buy dog biscuits, which are not free in the real or virtual world.

Slave on a mission

It's quite heartening to see more young people increasingly involved in social work.

The pix shows a former "slave" of dad and a little girl as part of her recent church mission to Colombia. Slave has obviously brought joy to the little girl and many other kids during the mission.

Dad should do some volunteer work too.

Malaysia's brain drain or trouble drain?

There's nothing new about Malaysia's massive brain drain woes, especially to neighbouring Singapore. Malaysia's Tony Pua (pix from his blog) wrote about it eloquently in an article that was first published in the country's New Straits Times. The article subsequently appeared in Singapore's The Straits Times.

What Tony said is true. He lamented at how the Malaysian economy is marginally bigger than resource-scarce Singapore although the island is 480 times smaller than Malaysia. He pointed out that while Malaysia’s economy of US$130 billion is still larger than Singapore’s US$117 billion, the latter is only smaller by some 11 per cent.

"And if the rate of growth currently experienced in both countries persists for the next decade, then our tiny neighbour could soon boast a larger economy than Malaysia," Tony wrote.

He said that it all boils down to one simple single factor — human capital. Or more precisely, Singapore's "near compulsive obsession" with human capital, both in terms of enhancing its local citizenry as well as attracting the best foreign talent. This, Tony said, has probably resulted in Singapore having the highest concentration of top brains per square foot in the region, if not the world.

Tony should know Singapore well. He founded Singapore-listed IT company Cyber Village and is now the economic adviser to Lim Guan Eng, who is the secretary-general of Malaysia's opposition party Democratic Action Party.

But what was not mentioned explicitly in the article was Malaysia's race-based policy known as the bumiputra policy. The point was probably left out deliberately to help avoid stirring the hornet's nest in Malaysia, which is always emotionally charged when it comes to racial and religious issues.

The bumiputra policy, which was aimed at improving the livelihood of the predominant Malay community after the racial riots in 1969, has simply alienated many non-Malays in the country. The policy has persisted until today although the social re-engineering policy was supposed to have a shelf life of twenty years.

It's therefore unsurprising that many Malaysians -- especially Chinese and Indians -- have moved to Singapore and elsewhere. Some have given up their Malaysian citizenship, as mentioned in Tony's article.

Tony -- who has a degree in Philosophy, Politics & Economics from Oxford University --correctly pointed out that Malaysia must do more to boost the "all-important qualitative element of uncompromising search for the best-qualified educators and an education policy which rewards academic rigour, critical thinking and analytical intelligence."

But will the Malaysian government do so? I doubt it despite all the rhetoric.

After so many years, there is still a lingering feeling that the Malay political leadership sees the outflow of Chinese and Indians to Singapore and elsewhere not as a brain drain.

The outflow of well-educated non-Malays is probably still seen as a "trouble drain; it drains trouble out of Malaysia," as quipped by the late Malaysian PM Tun Razak in the 1970s. The quote was captured in former Singapore PM Lee Kuan Yew's memoirs.

Grand old Shanghai

Uncle Fatso has reached Shanghai and is waxing lyrical about the city. Hope he can send more pix to show the people in the bustling city, and the grandeur of the city and the Bund.

By Uncle Fatso in Shanghai

Shanghai, with a population of more than 18.8 million people, is one of the most populous and developed cities in the People's Republic of China.

The city -- situated on the estuary of Yangtze River or Chang Jiang -- had an early start. It was already the largest and most prosperous city in Asia by the 1930s.

Known as "the Oriental Paris", Shanghai is a shopper's paradise. It has also emerged as the financial capital of China. In the early 1990s, the Shanghai government launched a series of new strategies to attract foreign investments. The biggest move was to open up Pudong, once a rural area of Shanghai. The strategies succeeded, and now Pudong has become the financial district of Shanghai, with a lot of skyscrapers.

But Shanghai has become one of the the most polluted cities in the world due to rapid and unbridled industrial development in the past few years.

Nevertheless, Shanghai is still a fascinating mix of East and West. It has one of the richest collections of art deco buildings in the world, thanks to its legacy as a Western concession at the turn of the 20th century.

Cuti-Cuti Singapura*

(Pix: Singapore's main shopping thoroughfare Orchard Road during a Christmas light-up in 2005. Source: Wikipedia). *Cuti-Cuti means holiday in Malay. The title of this post is a little play on words on Malaysia's tourism drive called Cuti-Cuti Malaysia. Singapura is, of course, the Malay name of Singapore.

Will we ever see the reversal in the flow of tourists between Singapore and Malaysia?

Traditionally, more Singaporeans visit Malaysia than vice versa due to many reasons. One reason is the mighty Singapore dollar, which stretches the spending power of Singaporeans across the causeway at the current exchange rate of more than RM2.20 for each S$1. Apart from the strong Sing dollar, many Malaysians have been deterred from shopping in Singapore over the years due to the rapid development of its own shopping landscape.

But Singapore has come up with a creative way to target visitors from its closest neighbour, with a foreign exchange angle.

According to an advertisement and news reports, the Singapore Tourism Board (STB) said Malaysians could enjoy selected tourist destinations in Singapore at half price between May 25 and June 30.

The selected attractions include the Singapore Zoo, Sentosa island and even a ride on the big DHL balloon in the middle of the city, according to a full-page ad placed in Malaysian newspapers over the weekend.

STB Southern Malaysia area director Alfred Poon said Malaysians who wanted to take a ride on the Singapore River, for example, would pay RM12 (S$5.30) instead of S$12, according to The Star. To qualify for the offer, Malaysians will have to produce their passports with valid embarkation cards. Malaysians can either pay discounted fares in RM or the equivalent in S$.

The trick may just work in the short term. But in the longer term, Singapore and Malaysia must make it even easier for greater cross-border movement of people in order to generate more tourist activities on both sides of the causeway.

Will Singapore scrap the vehicle entry fee for Malaysian cars entering Singapore? Will Singapore eventually allow a less restrictive and direct bus service from Senai Airport in Johor to Singapore? Will Singapore and Malaysia scrap the toll rates at the causeway and the Second Link?

Will the proposed bullet train service between the Malaysian capital of Kuala Lumpur and Singapore take off? Will the proposed MRT network in the southern Malaysian city of Johor Baru be connected to Singapore?

Will budget airlines be allowed to compete freely with Singapore Airlines and Malaysia Airlines when the popular KL-Singapore route is liberalised next year?

Will yachts and ships be allowed to sail more freely between the two countries without being delayed by immigration checks in the middle of the seas by coast guards in patrol boats?

Apart from better infrastructure, both sides must improve immigration clearance at the causeway, the clogged artery linking Singapore and Malaysia.

And lastly, will Singapore and Malaysia jumpstart the bridge project to replace the ageing causeway?