The Swift-led Recovery
By TAN Kee Wee
(MediaCorp 938LIVE’s Money Talks, Thursday, 31 July
2008, 7.50 am and 7.20 pm)
More than 2 million US homes are expected to be
foreclosed this year as the result of the housing bust. This
makes up about 2% of the total number of homes. If it sounds
like a lot to you, it probably is.
If the same proportion of homes in Singapore was
foreclosed, that would be about 22,000 homes. Of course,
Singapore is not facing a property bust. But some pessimists
think we are heading in this direction.
Feeding such pessimism is a report released last
Saturday by the URA. This revealed that prices of private homes
in the second quarter barely moved, making it the worst showing
in four years.
The pessimists must be asking – Is this the beginning
of the decline for all of us? The answer depends on how we see
At the micro level, the drop in property prices is
often a disaster to those with personal stakes. But from the
overall perspective, when someone suffers a loss, another can
be expected to benefit from it.
This compensating principle and the ability of the
economic system to heal itself and find its way back to
vitality is usually forgotten. More economists should transmit
this broad-minded vision to all of us.
That most do not is understandable. We’re only human.
Since most economists come from the financial community, we’re
only voicing the depressing effects of what’s happening in the
So allow me to tell you an interesting story about the
creation of a man-made industry in the Malaysian state of
Kelantan. In the aftermath of the Asian Currency Crisis in
1997-98, many businesses went bust. In Kelantan, many factories
and buildings were abandoned as a result.
If the Malaysian government had stepped in with
bailouts, these businesses could have been kept alive. But only
barely alive because basically their businesses had gone over
to China for good.
The Kelantan property market could have remained
over-supplied. But one enterprising businessman decided to try
out birds’ nests farming in one of those abandoned buildings.
He converted one into a nesting home for one species of the
swiftlets, whose edible nests are highly prized as a delicacy
by the Chinese.
Of course it’s not as easy as creating a cave-like
space for them. The right humidity level must be kept. An audio
system had to be installed to play sounds of swiftlets chirping
and mating to attract the migrating swiftlets into the
After some trial and error, the right formula was
found. Profits started to roll in. Its success subsequently
drew others into the business. Over the next ten years, the
industry grew by leaps and bounds. Today, Malaysia is the
world’s third largest exporter of birds’ nests, behind
Indonesia and Thailand.
If you were to drive through the towns and countryside
of Kelantan today, you’ll be able to see hundreds of shophouses
and low-storey buildings all dedicated to birds’ nests
Unlike the traditional farming in caves, which can be
dangerous and whose supply is restricted, the sky’s the limit
for the Malaysian birds’ nests farming industry.
According to one report, the Indonesian tsunami in
2004 gave the Malaysian industry another boost by diverting a
lot of migrating swiftlets away from Indonesia to
There you have it. Someone could benefit from
another’s misfortune. Since we’re talking about birds, when an
egg is broken, it could either go to waste, it could be held
together with scotchtape, or it could be transformed into a
delicious plate of omelette.
The current noise over falling property prices and
rising inflation may be the sound of many eggs being broken.
Eventually, it may turn out to be a good thing for many people.
This is not to say that the pain is not real. It is. But so is
the strength of the economic system.