Land Transport Master Plan 2013.

If you have yet to do so, watch this video.



Looks good. Don't you agree?

I will be 59 years old by 2030. It seems that all the improvements will be just in time for my golden years. :)

Related posts:
1. Can Singapore really house 6.9m people?
2. How to get free rides on buses?
3. Tea with AK71: Nightmare at Bugis.

Tea with Matthew Seah: Thoughts on having a regional common currency (Part 1).

The Euro is a common currency for members of the European Union. When it was implemented, there was much hype on the new currency. However, over the years, the member nations are in a state of inequality in income, welfare, employment, prices, etc.  Is it really feasible to have a common currency? Should ASEAN have a common currency like the Euro? 


With the integration of our stock exchanges, one might be thinking about whether a common currency is feasible in ASEAN, especially those in the upper echelon within each member country in ASEAN. (I think policy makers in Singapore are probably thinking of integrating, and they are using the European Union as a case study.)

I would go through the pros and the cons of having a common currency. Let’s start with the advantages:

A common currency creates ease of trade and investment among countries under the common currency area. This allows for the facilitation of trading of material goods as well as services, thereby promoting income growth within the region, by the reduction of transaction costs in cross-border trades, removal of exchange rates’ bid-ask spread, and the removal of the exchange rates’ volatility. 

A single currency also implies having a central bank (like that of the European Central Bank). Having a central bank with note-issuing powers provides the necessary liquidity to cater for inter-ASEAN payment using a single currency.

Under a floating exchange rate system, volatility in exchange rates tends to be disproportionately greater than the underlying economic fundamentals of the affected economy. We can see this in the day to day fluctuations in the exchange rates between member countries even though the economy of each country is pretty much the same (just like a business, the underlying fundamentals of a country takes a long time to change, perhaps even longer than individual companies). This volatility creates much uncertainty, which in turn, creates unexpected losses and diminishing returns on investment. As a result, a floating exchange rate system discourages cross-border trade and reduces overall economic growth, especially among small and medium sized enterprises. A common currency can therefore potentially negate the adverse effects of having a floating exchange rate system, where there is no worry of potential losses caused by exchange rate changes.

A common currency area allows factor mobility within the ASEAN region, factors such as labour and capital. As such, individual ASEAN nations can focus on developing their comparative advantage while workers immigrate through the region to countries where the workers feel can develop their niche in specialisation. Wages and price flexibility further improves labour mobility within the region.

With a single currency, a consumer can easily compare prices of a product between countries, creating efficiency in market pricing. Thus a single currency would create a more uniform price within ASEAN and enhances competition among business entities.

Skilled labor and experts in various fields such as pharmaceuticals, petrochemicals, finance etc. can better serve member states and provide their expertise to benefit the region as a whole.

Although there are benefits, there are many challenges and obstacles hampering the integration of a common currency area in ASEAN. It is also not feasible for ASEAN to have a common currency area for now. In order for a common currency area to be successful, the member states must have similar business cycles, economic development and structures, absence of legal, cultural, and linguistic barriers that would limit mobility, wage flexibility, and a stabilised transfer system.

In Part 2, Matthew considers the challenges to having an ASEAN common currency: Part 2.

Related post:
Mr. Lee Kuan Yew on the Eurozone crisis.