By Tim McLaughlin
NEW YORK, June 27 (Reuters) – The wealth of the world’s rich and super rich surged 11.2 percent to $37.2 trillion last year but the elite group gave less than 1 percent of their net worth to charity, a study released on Wednesday said.
For the first time, the 11th annual World Wealth Report detailed philanthropic giving, and estimated that high net worth individuals turned over $285 billion to charitable causes in 2006. That’s equivalent to someone worth $100,000 giving about $766 to charity, or 0.76 percent of their wealth.
The 11th annual report said, however, that rich people — led by the ultra wealthy — are increasing the financial resources, time and thought that they donate to charities.
Merrill Lynch & Co. , the world’s largest brokerage, and Capgemini, a global consulting company, released the wealth report, which showed the largest growth of high net worth individuals happening in Singapore and India. Singapore’s wealthy population rose 21.2 percent and India’s grew 20.5 percent.
High net worth individuals are defined as people with at least $1 million in net assets excluding their primary residences. The double-digit growth of their assets — a pace unseen in several years — was fueled by gains from emerging economies such as India and China and wealth accumulation by the ultra rich.
The ranks of the world’s ultra rich — individuals with at least $30 million in assets not including their primary residences — increased 11.3 percent to 94,970, the report said. Total wealth accumulation for this group rose last year by 16.8 percent to $13.1 trillion, the report said.
The report estimated that there were 9.5 million people worldwide with at least $1 million in net assets.
The United States has the most wealthy people, followed by Japan and then Germany, according to the report’s researchers.
Merrill Lynch and Capgemini said they examined the “investments of passion” of the wealthy and found that luxury collectibles such as vintage yachts and automobilies selling for hundreds of thousands of dollars were among the top items.
The report also said Boeing Co.’s wide-body private jets are being customized at about $150 million each as mobile mansions.
In 2006, wealthy people shifted more of their money into real estate investments, at times liquidating some of their holdings in hedge funds to do this, the report said.
Insight Down South
By Seah Chiang Nee, 16 June 2007
Prices of everything, including daily necessities, are rising and people, particularly the middle class and the lower-income group, are feeling it the most. There are no signs of letting up and what is hurting Singaporeans may be a boon to its neighbours.
MIDDLE class Singaporeans are being weighed down by rising costs of daily necessities that seem to show no sign of abatement.
Hardly a week passes without a report or two of some service or bread-and-butter item becoming more expensive and biting into people’s fixed incomes.
The surge started with condos (one that cost S$1mil or RM2.2 a year ago is now S$1.3mil or RM2.9) and cars, moving to the MRT, buses, taxis, hospitals, polyclinics, mail and utilities.
The latest one hit some 750,000 households who subscribe to cable TV. They will soon have to pay S$4 (RM8.99) more for the Basic Package – and a whooping S$15 or RM33 (up from S$5 or RM11) for the sports channels that televise English football.
This has got soccer fans hopping mad with some threatening to cancel subscription, an unlikely solution since cable television is a monopoly run by a single operator.
It is also the most important source of entertainment for the Singapore family, which is embittered at the arbitrary hike and the absence of a market alternative.
In recent weeks, inflation worsened as merchants jumped into the bandwagon, hiking prices in restaurants, supermarkets, food courts, coffee shops and retail outlets.
This affects the budget of every Singaporean but the hardest hit are the middle class and lower-income workers.
To put it in perspective, not all shops everywhere are doing it and those that do are not raising prices for every single item in their premises.
It is a sporadic, selective practice that depends on the person and the location. Some are reluctant to charge more for fear of losing customers.
A stall near my home has just hiked his nasi lemak and mee rebus from S$2 to S$2.20 (RM4.50 to RM4.95). Across the road, a glass of sugar cane water is up 20 cents (44 sen) to S$1.20 (RM2.70).
In some places – but not all – chicken rice, the closest to a national dish here, now costs 50 cents (RM1.10) more at S$3.50 (RM7.70). Condensed milk, bubble tea and Campbell soup have become dearer.
For consumers, the worst is to come. On July 1, Singaporeans will have to pay a higher Goods and Services Tax (GST) when it is increased from 5 to 7%.
“The price increases look unstoppable and the government is either unable or unwilling to take action to deal with it,” said a retired teacher.
In the government’s view, inflation here is largely imported or due to globalisation and represents only an insignificant rise in the Consumer Price Index.
The only watchdog, the Consumers Association of Singapore (CASE), has been a relative bystander especially when the perpetrator is the government or a Temasek-linked company.
Inflation is not only a Singaporean phenomenon. It is also threatening stronger economies like the US and China, which are considering higher interest rates to dampen it.
With an expected growth of 6% this year, Singapore is not spared.
But the government’s strong business role and preoccupation with the bottom line are part of the dilemma.
There are other official causes. Firstly, the authorities themselves had started the ball rolling when they raised charges for public services like education, hospitals and utilities.
Secondly, the government is Singapore’s biggest landowner, owning some 70% of it and thus has a powerful say on prices. Rents in Temasek-controlled commercial and shopping properties have risen significantly.
The impact on the retail trade is inevitable.
In addition some of these linked companies operate a total or near-monopoly services that limit market competition.
“Monopolistic price increases have happened all too often,” a commentator of current affairs observed.
“It is time the ministers form a committee to look into government monopoly or cartel collusion to fix prices to ensure there is no infringement of the Fair Trading Act”.
What is more worrying is structural inflation.
As it speeds towards becoming into a global city with a large number of rich and talented foreigners, Singapore would likely take on a new high-cost structure.
Becoming another city like New York, Tokyo or Paris, stirs excitement, but the cost of living is bound to take after them as well.
The present predicament may be a sign of things to come. Singapore’s economy is gradually favouring the businessman over the ordinary worker.
Some economists think the price surge will eventually settle back when the economy slows.
“But many of the basic food prices, once raised, will not become cheaper ever again,” exclaimed a housewife. “We’re stuck with them.”
There is rumbling in the heartland where 85% of Singaporeans live. The price hikes of basic goods and services are hurting many citizens with average or low incomes.
The government is watching with some concern, although it has so far taken little public steps to combat the snowballing increases.
When the GST increase comes into effect next month, the Singaporean pocket will be hit even harder. He will have to pay a 7% tax of almost every product or service, unless an exemption is stipulated.
The authorities are dishing out S$100-S$400 (RM220-RM880) a year to each adult over next four years to mitigate its impact. The poorer people get the higher sum.
Apart from possible political fallout, the government will likely want to prevent higher costs from derailing its strategy of attracting foreign investment and talent.
Already American businessmen have complained that spiralling rents are creating problems for them, forcing a number to relocate elsewhere.
Cases of condo rents at choice areas rising up to by 50-70% once a lease expires have been growing, a trend that could benefit Singapore’s neighbours.