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Thread: What is the impact on country if $ is remitted out?

  1. #1
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    Default What is the impact on country if $ is remitted out?

    I am curious. There are a lot of foreign workers working in Singapore. They earn a lot of $ and send them home monthly. What is the impact on a country's economy when there are a lot of money being remitted out of it? So if 80% of a country workforce are foreign workers, what does it mean for that countries economy?

    Anyone knows. Please enlightened me. Thanks.

  2. #2

    Default Re: What is the impact on country if $ is remitted out?

    from what little i remember in econmics, money earned would help strengthen economy by spending thru the multiplyer effect. eg, I earn $1000, spent $900 buying a 2nd hand lens from "A". "A" spend 500 of the 900 he got on a playstation 3 from the shop owner, owner pays the supplier $400 etc etc.. so $1000 earned actually generates more than a $1000 in a ecomony.

    However, if $1000 is remitted, Singapore loses ($900 + $500 + $400 .. = $1800) $1800 (opportunity cost) instead of just $1000.
    Anyway, savings have the same effect, cause money is not spent. So spend more pls.. hehe

  3. #3
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    Default Re: What is the impact on country if $ is remitted out?

    Any difference if the money is remitted or the foreigner brings the S$ home, ie less money in local circulation?

  4. #4

    Default Re: What is the impact on country if $ is remitted out?

    jus curious, does these 'remitting $' concern u?

  5. #5

    Default Re: What is the impact on country if $ is remitted out?

    Quote Originally Posted by ManWearPants View Post
    I am curious. There are a lot of foreign workers working in Singapore. They earn a lot of $ and send them home monthly. What is the impact on a country's economy when there are a lot of money being remitted out of it? So if 80% of a country workforce are foreign workers, what does it mean for that countries economy?

    Anyone knows. Please enlightened me. Thanks.
    sounds like dubai.

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    Default Re: What is the impact on country if $ is remitted out?

    Quote Originally Posted by Jollin View Post
    jus curious, does these 'remitting $' concern u?
    Of course. I am thinking of opening a money remittance. You want to use?
    Last edited by ManWearPants; 12th July 2010 at 01:58 AM.

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    Default Re: What is the impact on country if $ is remitted out?

    Quote Originally Posted by pokiemon View Post
    sounds like dubai.
    Yes, alot of ME countries are also reliant on foreign workers.

  8. #8

    Default Re: What is the impact on country if $ is remitted out?

    NO wonder we see the prices of resell flats going higher & higher; And the Mrt is barely able to cope with the huge capacity of passengers in a daily basis. It's getting more crowded.

    Expect smaller flats in future cos we will be like HongKong in near future.

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    Default Re: What is the impact on country if $ is remitted out?

    Quote Originally Posted by johnlim View Post
    NO wonder we see the prices of resell flats going higher & higher; And the Mrt is barely able to cope with the huge capacity of passengers in a daily basis. It's getting more crowded.

    Expect smaller flats in future cos we will be like HongKong in near future.
    err...this thread is not about the # of foreign workers but the impact of money being transferred out of Singapore in large amount.

  10. #10

    Default Re: What is the impact on country if $ is remitted out?

    It is of course no good if big amounts are transferred out as the effects of money circulation within the economy is stopped. No taxes are collected from these amounts as well as the amounts fall below taxable income.

    However, u have to balance this against the amount of money coming in. Investments by MNCs setting up plants and operations here, investment by financial institutions transferring their operations here, additional tax revenue collected from these institutions and individuals. There is also inflow of funds due to property purchases by foreigners. These foreigners also aid in the circulation of money as they spend their incomes here.

    So all in all, if u look at the big picture, if the inflows are way greater than the outflows then the net is positive and it is good for the country overall. Like the chinese saying, "small money dont flow out, big money wont flow in"

  11. #11

    Default Re: What is the impact on country if $ is remitted out?

    Money transferred out of the country will have to be exchanged (unless the foreigner workers' families are going to spend SGD in their home countries) on the forex market. In large sustained amounts, this will lead to a weaker Singapore Dollar - which will make prices in Singapore go up as most of our goods are imported. Conversely, it will help the manufacturing and export industries as a weaker SGD means cheaper Singapore products overseas.

    However, to actually effect changes on this scale - the foreign workers must be remitting billions of SGD every day - a highly unlikely scenario.

    If pure SGD is moved out (say into a SGD account with BoA or Barclays overseas) with no trading on the foreign exchange market - then I don't think it makes any difference except perhaps a draw on liquidity on our local banks.
    Last edited by frankchn; 12th July 2010 at 01:31 PM.
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    Default Re: What is the impact on country if $ is remitted out?

    we use foreign talents help us make money from other countries, i think more money is coming in than money is going out...

    i dun think money is just flowing 1 direction...
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    Default Re: What is the impact on country if $ is remitted out?

    Case A - construction worker. Stay in a dorm provided by employer. Transport by employer in a pick-up. But, he still got to spend money in drinks, food, cigarette and so on. After payday, goes down to Little India to have a few beer with friends.... Less than 50% of what her earns remitted back home.

    Case B - employment pass holder, S pass, P pass or whatever. Spends money on rent, transport, food, and other living expenses. Not much money left at the end of the month to remit back home.

    At the end of the tour of duty, they would buy LCD TV, notebook computer and other gifts for uncle, sisters etc to bring home.

    Remember they also contribute to the budget terminal, budget airline, taxis and so forth.

    Remittance co are controlled by MAS. I guess MAS knows how much is remitted each month and to which country.
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  14. #14

    Default Re: What is the impact on country if $ is remitted out?

    Quote Originally Posted by flowerpot View Post
    we use foreign talents help us make money from other countries, i think more money is coming in than money is going out...

    i dun think money is just flowing 1 direction...
    Well said. I think many singaporeans nowadays like to paint the picture that foreigners are here to take their jobs. Hang out at edmw and you get what I mean. But without malaysian accountants, indian programmers or philipino call centre staff how is singapore's economy expected to grow?

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    Default Re: What is the impact on country if $ is remitted out?

    Quote Originally Posted by victorlee10 View Post
    Well said. I think many singaporeans nowadays like to paint the picture that foreigners are here to take their jobs. Hang out at edmw and you get what I mean. But without malaysian accountants, indian programmers or philipino call centre staff how is singapore's economy expected to grow?
    As mentioned, this thread is not aimed at scrutinizing foreign workers. I am trying to find out how the outflow of money has an impact on economy. I know nuts about economics.

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    Default Re: What is the impact on country if $ is remitted out?

    Quote Originally Posted by flowerpot View Post
    we use foreign talents help us make money from other countries, i think more money is coming in than money is going out...

    i dun think money is just flowing 1 direction...
    If you look at the kind of investments that we have made overseas. Most have not made any actual returns. They are mostly forecasted returns, projections. So far I only know of losses or potential losses. But then again we are not talking directly about foreign workers/talents.

    I just want to understand if for example 5 billion is remitted, brought out from Singapore every month, what does it mean for the country affected. Consider this is a one way scenario, whereby there is no influx of cashflow. What if these money are all brought back to foreign countries and held by foreign banks? Will the country collaspe due to a lack of local currency in circulation? Can the MAS print more money to make up for the shortfall of money in circulation? Who and what determines how much money is in circulation?
    Last edited by ManWearPants; 12th July 2010 at 04:02 PM.

  17. #17

    Default Re: What is the impact on country if $ is remitted out?

    Quote Originally Posted by ManWearPants View Post
    I just want to understand if for example 5 billion is remitted, brought out from Singapore every month, what does it mean for the country affected. Consider this is a one way scenario, whereby there is no influx of cashflow.
    5 billion SGD a month is nothing - there is no significant effect on Singapore's economy apart from the exchange rate weakening by two or three percentage points. If Singapore has 2 million foreign workers, then each of them must remit SGD2,500 to make up 5 billion dollars - highly improbable.
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    Default Re: What is the impact on country if $ is remitted out?

    Quote Originally Posted by frankchn View Post
    5 billion SGD a month is nothing - there is no significant effect on Singapore's economy apart from the exchange rate weakening by two or three percentage points. If Singapore has 2 million foreign workers, then each of them must remit SGD2,500 to make up 5 billion dollars - highly improbable.
    You are assuming that the 2 million are blue collar workers. There are alot of white collar foreign workers in Singapore. So 5 bil is not improbable. 5bil x 12 = 60 bil per year. What does 60bil deficit have effect on Singapore economy?
    Last edited by ManWearPants; 12th July 2010 at 04:03 PM.

  19. #19

    Default Re: What is the impact on country if $ is remitted out?

    Quote Originally Posted by ManWearPants View Post
    What if these money are all brought back to foreign countries and held by foreign banks? Will the country collaspe due to a lack of local currency in circulation? Can the MAS print more money to make up for the shortfall of money in circulation? Who and what determines how much money is in circulation?
    Even if we assume that none of the foreign workers actually convert their money from SGD to their local currency but deposit the money into SGD denominated accounts in foreign banks, the foreign banks will still have to lend the money out to earn interest - usually on interbank markets. So the money is recirculated into the banking system.

    If we further assume that they take 5 billion SGD out of the banking system and stuffed under their collective mattresses - MAS can effectively print more money by lowering bank capitalization ratios or selling Singapore dollars on the foreign exchange market.
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  20. #20

    Default Re: What is the impact on country if $ is remitted out?

    Quote Originally Posted by ManWearPants View Post
    You are assuming that the 2 million are blue collar workers. There are alot of white collar foreign workers in Singapore. So 5 bil is not improbable. 5bil x 12 = 60 bil per year. What does 60bil deficit have effect on Singapore economy?
    Some percentage point drops in the exchange rate resulting in a weaker Singapore dollar against other currencies. Otherwise I don't see a problem.
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