Indian man arrested after 6 years of overstaying

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PUBLISHED : 21 Dec 2023 at 11:44

Indian man arrested after 6 years of overstaying
An immigration police officer examined a rented room of an Indian man, right, who was alleged to have operated as an illegal money lender in Muang district, Nonthaburi.
(Photo: Traffic radio station website FM91bkk.com)

NONTHABURI: Immigration police on Wednesday arrested an Indian man who was alleged to have operated as an illegal money lender and discovered that he had overstayed in the country for over six years.

Pol Col Somkiat Sonchai, the Nonthaburi immigration chief, said the 39-year-old man, identified only as Kay, was arrested in front of a rented room at Moo 3 village in tambon Bang Rak Noi of Muang district.

The arrest followed an investigation into foreign nationals involved in illegal money lending, aligning with the government’s policy to address the problem of informal debts.

Local residents informed immigration police that an Indian man had been unlawfully lending money to vendors at markets in Tambon Sai Ma. He typically used a motorcycle to collect amortised repayments from debtors there.

Acting on the information, the police successfully arrested the Indian individual.

During a subsequent search of his travel documents, it was found that he had overstayed in the country for over six years, or 2,366 days. A workbook for recording debt repayments was also found in his room.

In an initial investigation, the man denied being involved in money lending, claiming that the book belonged to a fellow Indian national.

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ICAEW: Resilient economic momentum in Malaysia and SEA, but outlook ahead remains cautious

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Oxford Economics projects Malaysian economy to grow by 4.3% in 2023
2024 Budget shows govt exercising fiscal discipline, reduce budget deficit

Economic momentum has picked up in Q3 2023 in Southeast Asia, but there are concerns about potential headwinds in 2024, finds Oxford Economics in its recent research commissioned by the Institute of…Continue Reading

Kishida’s stimulus too little, too late for flagging Japan

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Japanese Prime Minister Fumio Kishida announced a new fiscal stimulus program in response to a fall in his cabinet’s approval rating. His approval rating, which peaked at 59% in June 2022, plunged to 29% in November 2023 and hit a low of 17.1% in December.

Despite a reshuffle of the cabinet aimed at strengthening female representation, it has proven ineffective in alleviating growing political discontent. Japanese “voters have grown increasingly disillusioned with the administration’s ability to address the country’s social and economic woes.” 

The reason for the political turmoil is higher inflation, which has painfully eroded the purchasing power of Japanese households, as wage increases have consistently lagged behind rising prices.

Kishida asserts that the new fiscal stimulus program — exceeding 17 trillion yen (US$118.3 billion) — aims to overcome deflation and put the economy back on track. The package includes temporary tax cuts of 40,000 yen ($275) per person and payouts of 70,000 yen ($480) to low-income households. 

Subsidies for gasoline and utility bills have been provided to dampen consumer price inflation. Together with spending by local governments and state-guaranteed loans, the size of the package amounts to 21.8 trillion yen ($149 billion). 

While this initiative focuses on aiding low-income households and the regions outside the economic centers, which have suffered over three decades of stagnation, there are major problems to overcome.

Similar to numerous previous fiscal stimulus programs, the relief will only be short-term. The persistent low-interest rate in Japan keeps paralyzing the productivity gains of Japanese corporations. 

Japanese Prime Minister Fumio Kishida is pulling the fiscal lever. Image: Screengrab / ABC News

The government projects a growth rate of 1.2% between 2023–26. The projection seems far too optimistic, as the fundamental economic problems of Japan, including negative growth and distribution effects of persistent monetary and fiscal expansion, remain unresolved.

Though tax cuts may have a positive impact on consumption, persistent inflation continues to weaken growth through declining real wages. As the financing of the additional expenditures and lower tax revenues remains unclear, government debt is likely to increase further. 

With about two-thirds of Kishida’s fiscal stimulus relying on debt financing, uncertainty about the future macroeconomic policy has increased. The situation could result in decreased consumption and investment.

The global monetary environment has changed. Under former prime minister Shinzo Abe, the combination of expansionary monetary and fiscal policy was sustainable, because other large central banks such as the US Federal Reserve kept interest rates low as well. 

With the US Federal Reserve continuing to increase the federal funds rate along with the European Central Bank since March 2022, the Bank of Japan is caught on the wrong foot.

If the Bank of Japan were to follow the monetary policy of the US Federal Reserve, the government’s interest rate payments on the immense stock of government debt — equivalent to more than 260% of GDP — would hike. 

This could lead to blocked expenditure obligations and a further decline in Kishida’s approval ratings. Large valuation losses on the Bank of Japan’s substantial holdings of government bonds could impose an additional burden on taxpayers. This explains why the Bank of Japan continues to stick to its close-to-zero yield curve targeting.

The Bank of Japan’s approach has revived carry trades, allowing investors to raise funds at low costs in Japan and invest them, for instance, in US government bonds. The US Treasury bills with a 10-year maturity yield of 4.23%, compared to the 0.77% of 10-year Japanese government bonds. 

This has exerted strong depreciative pressure on the Japanese yen, which has lost 40% of its value since January 2021.

As the US Federal Reserve may keep interest rates high for longer, the depreciative pressure may persist. The continuous rise in the prices of imported goods, including raw materials, would contribute to an increase in energy and food prices.

Kishida faces a delicate situation and may be forced to choose between a Truss or an Erdogan scenario. If the Bank of Japan tightens the money supply to strengthen the yen and contain inflation while the Japanese government maintains high deficits, financial markets may lose trust in the sustainability of Japanese government finances. 

Interest rates on Japanese government bonds could hike, in the same way as the United Kingdom’s interest rates hiked when former United Kingdom prime minister Liz Truss announced tax cuts without sufficient financing, coinciding with the Bank of England raising interest rates.

Japan’s yen keeps getting weaker. Image: Asia Times Files / AFP / Getty

Alternatively, if the Bank of Japan buys more government bonds, both yen depreciation and inflation would accelerate, reminiscent of Turkey under President Recep Tayyip Erdogan. 

While the depreciation would benefit large export-oriented Japanese corporations, rising consumer prices would hurt major parts of the population, posing a political problem for Kishida. Facing unappealing scenarios, Kishida can only hope for a financial crisis in the United States that would force the US Federal Reserve to cut interest rates. 

In this scenario, a revival of Abenomics as “Kishidanomics” could ensue, though Japan’s main economic problems – namely low growth and high inequality – would persist.

Gunther Schnabl is Professor of Economic Policy and International Economics at Leipzig University.

This article was originally published by East Asia Forum and is republished under a Creative Commons license.

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Bank of Japan’s Ueda can’t quit QE, either

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The Bank of Japan’s decision to leave interest rates unchanged on Tuesday (December 19) has more to do with events in 1999 than 2023.

Twenty-four years ago, the BOJ became the first major central bank to slash borrowing costs to zero. Over the next two years, in 2000 and 2001, it pioneered quantitative easing (QE).

Two-plus decades of free money has a way of warping economic dynamics. Over time, Japan gave new meaning to the concept of “economic capture” as the public and private sectors grew dependent upon QE.

This phenomenon more than anything else explains why Governor Kazuo Ueda is keeping the BOJ largely on autopilot. As the yen surges in anticipation of a BOJ “tapering,” Japan Inc is already nervously on alert and announcing downward revisions to earnings guidance.

This is fast removing the last of the risk tolerance that Ueda’s team might have had since April, when he took the helm. Back then, expectations were high that the BOJ would exit QE.

Instead, Ueda’s team made some minor tweaks to yield levels, but zero steps in the way of monetary tightening. In doing so, the BOJ missed its window to begin normalizing Japan’s rate environment.

More recently, the economy contracted 2.9% in the July-September period from the previous quarter. This is fanning fears Asia’s second-biggest economy is in recession as China slows and elevated US yields crimp global demand.

Add in the yen’s surge and it’s hard to see Ueda thinking now is an opportune moment to begin a pivot away from QE. (The yen declined 1% today on the BOJ’s decision to hold rates steady.)

That’s especially so given the BOJ’s policies these past 10 years. Since then, the central bank supersized its balance sheet in ways no other Group of Seven nation institution ever had.

Bank of Japan Governor Kazuo Ueda is between a rock and hard policy place. Image: Twitter / Screengrab

Taking a more aggressive approach to ending deflation was exactly what Ueda’s predecessor, Haruhiko Kuroda, was hired to do. In 2013, then-prime minister Shinzo Abe tapped Kuroda to grease the skids for history’s greatest monetary onslaught.

Kuroda didn’t disappoint. He cornered the government bond market and gorged on stocks via exchange-traded funds. By 2018, the BOJ’s balance sheet was bigger than Japan’s US$4.8 trillion economy. The BOJ also became the top holder of Nikkei Stock Average and Topix index stocks.

But now that Japan is veering toward another recession, the question is whether the economy can withstand higher borrowing costs.

“The recent run of data has left the Bank of Japan in a difficult spot,” says Stefan Angrick, senior economist at Moody’s Analytics.

Angrick adds that “private consumption is treading water as wage gains trail inflation and employment conditions soften. Exports, which benefited from a rebound in car shipments and foreign tourism early in 2023, have been broadly trending sideways as weak global demand has capped growth.”

At the same time, GDP in the third quarter disappointed. Fresh fiscal support will keep the economy from sinking. “But,” Angrick says, “we don’t expect output to see major gains until the middle of 2024 as domestic and external demand stay on hold throughout the first half.”

And now, the BOJ is essentially trapped. Kuroda could have at least set the stage for exiting QE. On December 20, 2022, he tested the financial waters by letting 10-year yields rise as high as 0.5%. The moves sent shockwaves across global markets and the yen skyrocketed.

“With extremely high uncertainties surrounding economies and financial markets at home and abroad, the Bank will patiently continue with monetary easing, while nimbly responding to developments in economic activity and prices, as well as financial conditions,” the BOJ said.

Katsutoshi Inadome, senior strategist at SuMi TRUST, says “we expect” a policy “change is very likely next year. We believe it is likely the BOJ will raise interest rates in 2024″ after the central bank gets “a clearer view of forthcoming wage increases.”

Inadome adds that the BOJ “doesn’t want to start hiking at the same time the US begins cutting, so ideally it wants to begin its own policy changes before the US switches its policy.”

To be sure, Kuroda could have at least set the stage for an exit from QE. On December 20, 2022, he tested the financial waters by letting 10-year yields rise as high as 0.5%. The move sent shockwaves across global markets and the yen skyrocketing.

Bank of Japan Governor Haruhiko Kuroda is listening closely and watching the financial markets and the yen's strength. Photo: AFP/The Yomiuri Shimbun
Haruhiko Kuroda could quit QE, either. Photo: Asia Times Files / AFP / Yomiuri Shimbun

Kuroda never tried again. Between December and April, when he retired, Kuroda avoided any notable steps that might unnerve markets. Basically, Kuroda punted the hard decisions forward so that Ueda could make them.

Since then, Team Ueda let 10-year yields top 0.5% in July. Once markets registered their shock, the BOJ spent the next several days racing to buy assets to communicate no big changes were afoot. The same in October, when the BOJ let yields top 1%.

It’s a pattern that’s played out since 1999 more times than economists can count. And one that’s now limiting the BOJ’s options.

The yen’s powerful rally these last 10 days was driven more by events in Washington than Tokyo. As the US Federal Reserve signaled a likely end to its most aggressive tightening cycle since the mid-1990s, the dollar fell.

As the yen rose, rather innocuous comments by Ueda about the BOJ keeping its options open accelerated the yen’s ascent.

Now, Ueda finds himself in an impossible place — between global markets clamoring for action and domestic tensions telling him this isn’t the moment. 

“A hawkish signal from the BOJ has the potential to push the US dollar to the yen below the 140 level, even with prevailing oversold conditions,” says Ipek Ozkardeskaya, senior analyst at Swissquote Bandank. “Conversely, should the BOJ disappoint the market once more, any price rallies could draw the attention of top sellers.”

Among the tensions with which the BOJ is contending: the lowest approval ratings of Prime Minister Fumio Kishida’s two-plus year reign.

Kishida’s 17% support rate makes US President Joe Biden almost seem popular. It reflects both political scandals and inflation outpacing both GDP and wage growth. That Japan may be in a recession hardly helps.

Though the BOJ is technically independent, Kishida’s ruling Liberal Democratic Party (LDP) knows how to make life difficult for hawkish BOJ governors. This dynamic often has the BOJ pulling punches to avoid controversy.

The China factor is its own wildcard. With China growing the slowest in 30 years and the property sector in chaos, Japan has reason to worry Asia’s biggest economy will be exporting deflation in 2024.

Virtually everyone agrees the BOJ must begin normalizing interest rates as soon as possible. Not only have 24 years of zero rates warped credit markets, but they have also deadened the “animal spirits” needed to reinvigorate Japanese innovation and competitiveness.

But it’s hard to imagine the process beginning with the threat of more US Fed rate hikes hovering over Japan Inc. Despite widespread expectations that the Fed is done tightening, US inflation remains well above Tokyo’s 2% comfort zone amid historically tight labor markets.

Japan’s economy could he tilting toward a recession. Image: Twitter

Japan has the opposite challenge. The big question on Ueda’s mind is being confident he’s “gathered sufficient evidence of a virtuous wage-price cycle,” says currency strategist Carol Kong at the Commonwealth Bank of Australia.

Japanese consumer prices rose 2.9% in October from a year earlier. Though down from a 4.2% rate in January, a 41-year high, inflation has now increased for at least 17 consecutive months.

Worse, it’s the “bad” kind of inflation — imported thanks to elevated energy and food prices, not organic pressures at home.

Over the last two-plus decades of QE — and especially the last 10 years — ultraloose BOJ policies sought to generate “demand-pull” inflation as strong consumption drove companies to hike prices and fatten paychecks.

Instead, Japan’s inflation is of the “cost-push” variety. It owes far more to Vladimir Putin’s Ukraine invasion than BOJ easing. This is exactly the opposite of what Ueda’s predecessor Kuroda intended between 2013 and 2023. 

At the same time, surveys show that Japan’s 126 million-person population economy isn’t enjoying this “victory” over deflation. Prices are rising faster than wages, an unwelcome dynamic that’s hurting household confidence.

This tension explains why Kishida’s approval numbers are mired in the low 40s, at best. Speaking at the United Nations General Assembly meeting recently, Kishida described the economy as “currently still not fully stable.”

He pledged that Tokyo will unveil “measures to counter inflation” and “social measures to counter declining population.”

It’s a rough political environment for Ueda to navigate. But it’s one created by the events of 1999. And it suggests the BOJ will hold rates near zero longer than many investors realize.

Follow William Pesek on X, formerly Twitter, at @WilliamPesek

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UK, Japan, Italy joint fighter program faces turbulence

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Italy, Japan and the United Kingdom have signed a new treaty under the Global Combat Air Program (GCAP) to develop a sixth-generation stealth fighter by 2035, according to a Breaking Defense report.

The program will be headquartered in the UK, though a specific location was not disclosed in a UK Ministry of Defense press release. Breaking Defense says the program plans to launch its development phase in 2025 and start deliveries a decade later in 2035.

A Japanese national will serve as the program’s first chief executive officer while an Italian official will be tapped as the first leader of a separate “joint business construct” headquartered in the UK. The leadership of each structure will rotate between the partner countries, the report said.

UK Defense Secretary Grant Shapps stated that the UK-based headquarters will enable collaboration and at-pace decision-making working with Italy and Japan’s defense industries to deliver an outstanding aircraft.

The Breaking Defense report says the GCAP partnership could quickly expand, with Saudi Arabia expected to join GCAP “in due course,” though the Japanese government reportedly opposes the Gulf monarchy’s bid.

GCAP is one of several sixth-generation fighter aircraft programs active in the West, with the Future Combat Aircraft System (FCAS) effort in Europe set to select a fighter design for the program by 2025.  

At the same time, the US plans to award a winning design for its Next Generation Air Dominance (NGAD) fighter by next year and enter it into service by 2030. The GCAP program is underpinned by several ambitious strategic objectives from each of its stakeholders, both collectively and individually.

Concept art of the possible design for the US Air Force’s future Next Generation Air Dominance stealth fighter. Image: Boeing

In a June 2023 article for defense-aerospace.com, Jon Hemler mentions that GCAP aims to boost each member’s national defense, strengthen regional security in Europe for NATO, offset Chinese threats in the Pacific and produce an exportable next-generation fighter for the European and Pacific defense markets.

Hemler notes that the GCAP fighter will have advanced technologies for stealth, weapons delivery and manned-unmanned teaming.

Asia Times noted in December 2022 that for the UK, the GCAP program will bolster its strategic autonomy by giving it a robust national combat air sector to defend its interests without relying on others and reassert its image and credibility as an independent military power, which is increasingly in doubt.

Increasingly expensive tranche upgrades for the UK’s aging Eurofighter Typhoon fleet and the F-35’s non-optimization for air superiority missions may also have driven the UK to the GCAP next-generation fighter program.

As for Japan, Takeshi Sakade mentions in a May 2023 East Asia Forum article that Tokyo initially focused on “Japan-led development” for its Mitsubishi F-X fighter project, but as the US was reluctant to support Japan-led development through technology transfers, Japan opted for the UK as its primary partner for its next-gen fighter.

Sakade says that the GCAP’s success depends on expanding the number of production aircraft, achieving economy of scale and reducing the learning curve through European and Asia-Pacific exports, competing against the French-Spanish-German Future Combat Air System (FCAS) and South Korea’s KF-21 fighter programs.

As for Italy, David Cenciotti notes in a March 2023 article for The Aviationist that Rome aims for the GCAP to replace its legacy Eurofighters and the need for a next-generation combat aircraft that can achieve multi-domain effects during combat operations. As the ongoing Ukraine war has shown, such capabilities are essential in a strategic environment characterized by great power competition, Cenciotti notes.  

Noting Saudi Arabia’s interest in the GCAP program, Joe Saballa mentions in an August 2023 article for Defense Post that unexpected delays in Saudi Arabia’s Eurofighter Typhoon order signed five years ago and the UK’s suspension of arms sales to Riyadh due to human rights concerns prompted the oil-rich nation to consider joining the GCAP program.

Asia Times noted in February 2022 that Saudi Arabia may be opting to buy fewer weapons from the US, including sophisticated fighter jets, as its arms purchases from the US have been criticized as overpriced, politically motivated and geared towards buying the most advanced and expensive systems regardless of Middle East nation’s actual security needs.

Saballa notes that Japan is opposed to Saudi Arabia’s participation in the GCAP program. Tokyo has reportedly said that including Saudi Arabia in the GCAP project would complicate which countries are allowed to purchase the aircraft and bringing in another country at this stage of the GCAP’s development would only delay production.

He also notes that while Saudi Arabia promised a sizeable financial contribution, Japan is doubtful that it can contribute any meaningful technology to the project.

Shigeto Kondo notes in a September 2023 Afkar article that including Saudi Arabia in the GCAP project would strengthen Japan’s ties with Saudi Arabia, which is currently Tokyo’s largest energy provider.

Riyadh’s inclusion would also help Japan to diversify and broaden its influence with Saudi Arabia as a major player in the Global South and prevent potential adversaries such as China and Russia from gaining leverage by selling the kingdom sophisticated military equipment.

However, the GCAP project may face difficulties taking off. In an April 2023 article for the Royal United Services Institute (RUSI), Justin Bronk mentions that the funding committed by GCAP stakeholders so far falls well short of the amount needed for a credible next-generation fighter program.

The F-35 could put the GCAP out of business. Image: US Air Force / Master Sgt. Donald R Allen

Bronk argues that the GCAP program is unlikely to produce a viable competitor to the US-made F-35 for the UK, Japan’s, or Italy’s operational requirements or the global export market.

As of 2022, the US had spent over US$412 billion on the F-35’s development and production with international partners, including the UK, Japan, and Italy, already contributing billions in funding, outstripping their committed financing to the GCAP program. 

Bronk also says that Lockheed Martin and other US aircraft manufacturers have experience building advanced aircraft that GCAP stakeholders need and that constant upgrades to the F-35 can make it a viable competitor to the GCAP, defeating the rationale for developing a next-generation fighter from the ground up.

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‘We can’t find the owner’: Staff forced to take leave as Chinese firms struggle

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At the central economic work conference last week, which laid out key economic tasks for 2024, China’s top leadership said development was the biggest political priority, and pledged to exhaust all efforts to consolidate economic growth, including more policies to stabilise the job situation, support the private sector and increase household incomes.Continue Reading

Pork glut still hurting farmers

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Pork glut still hurting farmers
Deputy Agriculture and Cooperatives Minister Chaiya Phromma (Government House photo)

The smuggling of pork has caused prices to collapse in the domestic market, hurting the incomes of pig farmers all across the country.

In an interview with the Bangkok Post, Deputy Agriculture and Cooperatives Minister, Chaiya Phromma, vowed to clamp down on smuggling to protect farmers’ livelihoods, adding the illegal activity puts the general public at risk of exposure to contaminated products.    

How did the crackdown start?

Last year, there was a serious shortage of pork in the local market due to the outbreak of African swine fever (ASF) in the region.

In response to the scarcity, some companies decided to illegally bring in pork from overseas so they could cash in on the high demand.

At the time, Thailand did not have a policy to import pork from abroad, as the previous administration wanted to promote the domestic pig industry. 

Soon after assuming office, Prime Minister Srettha Thavisin announced a crackdown on pork smuggling, ordering various agencies to deal with the problem.

This order led to the seizure of 161 shipping containers at Laem Chabang Port in the middle of this year.

The containers were found to hold 4,025 tonnes of pork worth about 483 million baht.

Our investigation has led us to the culprits, which included employees of shipping companies, import companies, investors, wholesalers and more.

The case is now under investigation by the Department of Special Investigation.

Where did it come from? 

DSI’s investigation found some of the pork was brought in from Brazil, other products from all over Europe. 

We believe the illegal shipment originated from supermarkets in these regions, which are obliged to destroy their frozen meats after a year or so in storage.

Instead of getting destroyed, the “expired” pork was shipped to be sold in developing countries instead, including Thailand.

The companies involved in the smuggling declared the containers seized in Laem Chabang contained frozen salmon. 

We believe that over 2,000 shipping containers have been imported during the course of the year, causing the domestic prices of pork to collapse.

We are also working with the Ministry of Finance to check these companies’ tax payment records, to calculate the losses incurred by the state from the false customs declarations.

What has happened to it?

We destroyed a huge amount in September by burning and/or burying it in landfills, but local communities have protested out of fear such methods will have an impact on their health and the environment.

We’ve asked the military for assistance in preparing a disposal site.

The Royal Thai Navy has agreed to set aside an area on their land, which will be prepared and supervised by the Department of Livestock Development, the Department of Customs, the Department of Special Investigation and the private sector.

How’s the probe going? 

The Department of Special Investigation is trying to find the mastermind behind the smuggling. The Ministry of Agriculture and Cooperatives cannot provide any information on the matter, as it is an ongoing investigation.

This was a complex operation backed by a national crime syndicate with a lot of capital. Any politicians found to be involved will face strict legal action.  

Now is not the right time to point a finger at anyone, as the investigation is still ongoing. I’m sure we will catch the big fish.

Was a giant retailer involved?

To be fair to the retailer that is currently under investigation (a reference to Makro, which was raided by DSI earlier), authorities were able to find all invoices and documents pertaining to their imported pork.

It is a publicly listed company, so everything had to be done transparently.

While it did at one stage source pork intestines from a company whose owner has been arrested on smuggling charges, records indicated they terminated the contract due to concerns about quality.

What’s the plan for farmers?

We plan to launch soft loans to pig farmers so that they can restart their businesses.

To prop up the price of live pigs in the market, the ministry will continue its crackdown on pork smuggling. Aggressive suppression is the solution.

Things are now on the right track.

People won’t have to worry about food safety because the Department of Livestock Development has come up with a series of good practices for livestock farmers.

Moreover, the ministry will also reach out to other countries so pig farmers can sell their livestock in underserved, alternative markets as an alternative source of income.

Currently, the agriculture sector contributes about 8.5% to Thailand’s Gross Domestic Product (GDP), 65% of which is from crops while less than 20% is from livestock.

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Commentary: The price isn’t right when there’s unjust profiteering

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Anti-profiteering laws, while crucial for protecting consumers, face several challenges in practice. 

What constitutes profiteering may be too vague, making it difficult to distinguish legitimate price increases from unfair exploitation. A possible solution is to clearly define “unreasonable price increase” in legislation, considering factors such as percentage increase exceeding a specific threshold (for example, 20 per cent within a short timeframe), disproportionate price hikes compared to cost increases, and significant deviation from average industry profit margins.

Second, establishing a business’ true cost structure and profit margin can be difficult, hindering effective enforcement. A possible solution is to implement mandatory cost reporting requirements for specific industries or businesses exceeding certain market share thresholds. For example, the UK requires businesses to provide the Competition and Markets Authority (CMA) with cost information relevant to their investigation of potential anti-competitive practices.

Third, stringent anti-profiteering regulations can discourage businesses, potentially hindering economic growth and innovation. A possible solution is to implement a tiered approach, focusing on essential goods and services while allowing for more flexibility in non-essential sectors.

Fourth, regulations could be implemented requiring companies to set and achieve specific social impact goals, such as providing affordable goods and services, in addition to financial goals. This would incentivise companies to prioritise social benefits over maximising profits. Tax breaks or other incentives could be offered to companies that demonstrably prioritise social impact and lower prices. This would financially reward companies that align with public interest goals.

In Singapore, the Consumer Protection (Fair Trading) Act 2003 (CPFTA) prohibits a range of unfair trade practices, including misleading pricing and price gouging. Businesses found violating the CPFTA can face significant penalties.

The Competition and Consumer Commission of Singapore (CCCS) investigates and enforces competition laws to prevent anti-competitive conduct and ensure fair pricing in the market. The CCCS has issued the Guidelines on Price Transparency for businesses to promote transparency in their pricing practices.

It might be worth considering if the CPFTA could be amended to introduce the definition of profiteering to include factors beyond misleading pricing, such as unreasonable price hikes exceeding a specific threshold and sudden and substantial profit increases.

The CCCS could be empowered to directly investigate and prosecute cases of profiteering, not just anti-competitive conduct. This would allow for a more comprehensive and targeted approach. A system could be established for government agencies to monitor prices in key sectors, especially those providing essential goods and services, to identify and address potential profiteering practices.

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Finally, some good news on interest rates

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If you’re trying to build up your savings account, these are happy times. For years, you earned almost nothing on your savings, even if you parked them in certificates of deposit. Today you can get a 5.5% CD without much difficulty.

If you’re in the market to buy a house, these are definitely not happy times. With mortgage rates around 7%, monthly payments will be out of range for many potential buyers. Would-be home sellers with low-rate mortgages aren’t inclined to list, which makes houses scarcer and pushes prices higher. As a Wall Street Journal headline recently put it, “The Math for Buying a Home No Longer Works.”

If you’re a farmer or other business person who normally borrows operating money and occasionally investment money, today’s rates make you want to tear your hair out. Many farmers have scrambled to find ways to borrow less.

In the economy generally, business fixed investment is down. It hardly needs saying that a prolonged period of rates at today’s levels would be very bad for economic growth.

And worse for the federal budget. Interest costs on the federal debt have risen 39% this year from the year before and 91% from three years ago, to $659 billion. According to the Committee for a Responsible Federal Budget, those interest costs now equal 2.5% of the nation’s GDP, up from 1.6% in 2020. They’re the third largest federal expenditure category after Social Security, Medicare and defense, and in shooting distance of overtaking defense.

It would, in other words, be good in many ways and for many people, savers excepted, for interest rates to come down. Good news: The odds of them coming down are improving.

Thanks mainly to some very good inflation news, Federal Reserve policymakers have become more dovish. At their meeting on December 12 and 13, they not only left their benchmark interest rate unchanged for the fourth month in a row after 11 consecutive increases, they seem increasingly unlikely to be raising interest rates again, and they projected (projected, not promised) that they will cut rates three times next year. They didn’t indicate when they’d start cutting.

In their latest quarterly Survey of Economic Projections, the Fed policymakers forecast that their benchmark rate would be 4.6% at the end of next year, down from 5.4% at the end of 2023, with further declines to 3.9% at the end of 2025 and 2.9% at the end of 2026. In September they had forecast that the 2024 ending rate would be 5.1%.

This dovishness represents a real change from as recently as six weeks ago. At its meeting ending November 1, the Fed seemed much less certain about whether the decline in inflation was sustainable. Markets seemed to agree. The yield on the 10-year Treasury note had recently hit 5%.

Since then, inflation has continued to soften. By the most-used measures, it’s down to around 3% and by one less-used measure down near the Fed’s 2% target. Using the Fed’s preferred measure, the policymakers projected inflation would end this year running at a 2.8% rate, down from their 3.3% projection in September. They forecast it would end next year at 2.4%.

That would still be above the Fed’s target. But at the post-meeting press conference Fed Chair Jerome Powell said the Fed would not wait for 2% to begin cutting once it felt assured inflation was on a sustainable path to 2%.

In addition to the good news on inflation, the job market has cooled; while there are still more jobs than job seekers economy-wide, the gap is closing rapidly. The Fed doesn’t want a recession, but a hot labor market leaves worries about inflation heading north again.

After the Fed announced its latest decision and released the Survey of Economic Projections, the yield on the 10-year was 4.02%, down nearly 20 basis points on the day.

Much has changed on the interest-rate front in recent weeks. (DTN graphic)
Much has changed on the interest-rate front in recent weeks. (DTN graphic)

Now please, farmers and other business borrowers, take this news with the normal caveats about when to tally poultry. There’s always the danger that a surprise future turnaround in inflation will force the Fed to reconsider its dovishness.

While Powell indicated policymakers think interest rates have peaked, they haven’t taken a rate increase off the table. “No one is declaring victory; that would be premature,” Powell warned at the press conference.

Still, six weeks ago there was good news (no rate increase) and bad news (inflation uncertainty) about interest rates. The news from the latest Fed meeting as well as from financial markets is just plain good.

Former longtime Wall Street Journal Asia correspondent and editor Urban Lehner is editor emeritus of DTN/The Progressive Farmer. 

This article, originally published on December 14 by the latter news organization and now republished by Asia Times with permission, is © Copyright 2023 DTN/The Progressive Farmer. All rights reserved. Follow Urban Lehner on Twitter (X) @urbanize

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