"a compulsory annuity scheme, which pays out only to those after the age of 85, would be depending on the poor, the sick and those without longevity genes to support the healthier and better off"
Path of convenience, a future of despair...
Rich enjoy free hold properties [link], old have magical calculation to afford food forever...
Ministers enjoy high salary, all fine and dandy...
Sounds like the weak subsidising the strong to me, no morals, just law of the (concrete) jungle...
Singapore is afterall, just another cowboy country; we have no dignity.
Sep 29, 2007
Compulsory annuity scheme unfair to the poor, sick and those without longevity genes
AS SINGAPOREANS begin to live longer and as our society begins to age, there is this fear that this would put a great strain on the taxpayers and other resources.
To alleviate this problem, the conventional thinking is that the aged should have enough money to take care of themselves. Hence, the idea of a compulsory annuity scheme has been mooted where a pooled contribution would allow any survivor beyond 85 years of age to draw out a monthly sum of income.
Though the Government does not believe in giving out handouts because this would mean having to tax the people more, a compulsory annuity or compulsory longevity insurance would actually be doing just that. Once we strip off the veneer of fanciful names, we will see that as long as it is compulsory and non-refundable, such a scheme would, in fact, be a kind of taxation to finance a handout that will be given to those who have managed to live beyond 85 years old.
A scheme like this would have been laudable if it is not so inequitable. Statistics have shown that the poor, the people with chronic illnesses and those in the lower social class and without a family tend to die earlier than those in the higher social class.
This means that such a compulsory annuity scheme, which pays out only to those after the age of 85, would be depending on the poor, the sick and those without longevity genes to support the healthier and better off.
Furthermore, many of those who live beyond 85 are likely to be those who really do not need the 'handouts'.
The problem of a bulging population of dependents is not something new. After World War II, a baby boom did give governments such a headache. The pressure on governments then was even greater, given the depleted resources of a post-war economy. There were no reserves to fall back on.
In Singapore then, the rate of unemployment was high. Half the population was illiterate and there were not enough schools for the young. Living conditions were appalling. In other words, the majority of the population lived in poverty and filth and always under threat of disease and crime.
The government then had to build standpipes for people to have free water to bathe, wash their clothes and cook their food. It had to provide free health care, free mass vaccinations, free mobile X-rays and free hospitalisation for the poor. Money was not only spent on building schools, it was also spent on free milk to nourish the children who were suffering from poor nutrition and free textbooks for those who could not afford them. Cheap housing had to be built to provide decent living quarters for a growing population and recreation facilities for youths to keep them off the streets.
The problem then, if not more, was no less severe than what we will be facing in future. Statistics projected to 2030 showing only four people who are able to support one aged person are often quoted to show the gravity of the future problem. Is this figure any worse than the number of dependents that had to be supported by one provider in the period after the war?
These same baby boomers who had given governments problems when they were growing up are now part of the elderly boomers who are growing old.
What are the issues facing the governments then and now? Is the problem going to be greater in future than then?
In the past, the need for employment, housing, education, health care, utilities, transport and social facilities was urgent. They were all major items. Now the only big-ticket item is health care. There is no reason why with sensible health-care policies, the high cost of health care could not be overcome. In the past, the Maternal and Child Health Clinics and the School Health Clinics provided very good health care to both the growing baby boomers and their mothers. There is no reason why a similar basic health-care system could not be developed to care for the elderly. Good health care does not necessarily mean executive-class health care.
One of the reasons why many elderly boomers do not have enough money for their retirement is that a lot of their savings was eaten away by expensive health care, some of which may merely be adding a bit of quantity to life without giving it any quality.
Thus, the approach that was used to tackle the problems of the baby boomers should be transposed to tackle the problems of the elderly boomers. We cannot expect a paltry monthly annuity payout to do this. There is no way to avoid government interventions, the involvement of the state agencies and society to deal with the problem.
We need to rationalise health care, especially for chronic diseases and end-of-life care, so as not to make health care a burden to the patient, the family or the state. We have to develop greater social support for the elderly. As with child care, we now need government-subsidised day-care centres, nursing homes and community hospitals. We need to introduce parent-care leave and no-pay leave for people who want to take time off to look after an ailing parent. Instead of the Baby Bonus scheme, we can have elderly-parent bonus scheme and exemption of maid levy for the totally-dependent elderly. A similar scheme like health education and home visits that nurses used to do for rural Singapore could be used for home-bound elderly.
A compulsory annuity scheme that is non-refundable is not only inequitable. By implicitly telling the very old that they have to take care of themselves, we are giving out the signal that the old aged no longer need the family and the society to take care of them. What kind of society would we be if families and society try to wash their hands off the old elderly?
There is no reason why we cannot overcome that problem of the elderly boomers if families, society and the Government put their shoulders together against the wheel. Even if some money is spent, it is worth every cent if what we get in the end is a more compassionate and enlightened society.
After all, with all the prosperity generated by the elderly boomers during their prime, whatever programme would merely be a gesture of gratitude from a country to the people who have served it well.
Dr Wong Wee Nam
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
http://www.straitstimes.com/ST+Forum/Online+Story/STIStory_162177.html
Showing posts with label Taxes (all). Show all posts
Showing posts with label Taxes (all). Show all posts
Sunday, October 21, 2007
SG govt expenditure2006
Fr 'SG in fig 07': http://www.singstat.gov.sg/pubn/reference/sif2007.pdf
In short:2006:
Tot Opr expenditure: $23,463M
Edu spend: $5,684M
Health: $1,764M
Defence: $11,973M
$5,600 psf for penthouse new high in property price here
$297,000p.a. for the next 99yrs (every-yr),
Dear 'foreigner', (if your $$ is legitimate): thank you for your faith in Singapore's ability to contribute to your future.
I think:
1) You are a responsible person, understanding that SG's defence costs $11B p.a. and are willing to play your part through investing in a leasehold property that depreciates @ $297K p.a. In return for your interest in Singapore, I'm sure our citizens (trough various NS liabilities) will safeguard your property like their own- with their lives.
2) I salute your vision and integrity.
- -
Rich Singaporeans should realize that they are 'Defrauding' the govt of $2.03B p.a. through their support for freehold property laws in a land scarce developed country.
ERP, COE, water conservation taxes, GST, medisave etc are all well established pay per use systems.
SLA has already legislated that new 99yr-leasehold land shall be valued at 96% its freehold worth.
Can SG afford $2.03B p.a. annual subsidy to the rich?
Why hurry to implement means testing, annuity schemes?
$2.03B donation to the rich?
***FREEHOLD HAS NO PLACE IN A LAND SCARCE DEVELOPED CITY***
& MBT must stop copying the British crappy property laws...
Anyhow, thank you foreigner, given your contribution, I hope the next GST increase can be delayed by a short while...
($297k pa= $280k +4%prop tax, 1% bc 99yr, 1% maintenance fee )
------
$5,600 psf for penthouse new high in property price here
BT 12.10.2007
53rd-storey Orchard Residences unit fetches over $28m
By KALPANA RASHIWALA
A NEW record property price for Singapore has been set, even though fewer sales are being made in high-end residential projects since the time of the US sub-prime mortgage crisis.
CapitaLand and Sun Hung Kai Properties are said to have sold earlier this week a penthouse on the 53rd storey of The Orchard Residences for about $5,600 per square foot (psf), or over $28 million. This surpasses the previous benchmark of $5,500 psf set in August when a 54th storey penthouse fetched about $27.8 million.
This means that all four penthouses in the 99-year leasehold development are now sold.
The developers are said to have sold about 73 per cent of the total 175 units in the condo. The buyer of the final penthouse sold this week is believed to be a foreigner. The 5,048 sq ft unit has five bedrooms, a study and a family room.
A stone's throw away, Wheelock Properties (Singapore) is said to have sold more than 30 apartments at its freehold Scotts Square since the official launch of the project on Sept 28.
The developer is said to have largely maintained its average price at around the $4,000 psf mark from its preview in July, when it sold about half of the project's 338 apartments.
Over in Sentosa Cove, Ho Bee has sold 38 of the 50 units it has released so far in its 91-unit condo, Turquoise, since late September. The units have been sold at prices ranging from nearly $2,500 psf to $2,770 psf.
The average price is about $2,600 psf, Ho Bee Investment executive director Ong Chong Hua said when contacted by BT yesterday. Buyers of the 38 units - which include four penthouses - were an equal mix of foreigners and Singaporeans, he said.
Apartments at the 99-year leasehold Turquoise typically cost around $5.3 million for a three-bedroom unit, $6.4 million for a four-bedder and around $9.3 million for a penthouse.
DTZ Debenham Tie Leung executive director (residential) Margaret Thean acknowledges that buyers, both local and foreign, have been more cautious after the stock market setback at the time of the US sub-prime mortgage crisis.
'But we still see activity going on. For the high-end projects, we've not noticed any withdrawal of liquidity. The only difference is that prospective buyers are more cautious, doing more calculations and being more selective in their choice of investment before making a commitment,' she said.
Market watchers also say that the recovery in the stock market in recent weeks has led to a return of confidence in the property market, as seen in a pick-up in subsales activity lately.
Over in the Seletar Hills area, Tong Eng Brothers unit Fairview Developments is launching two landed developments. One is the freehold 8 @ Stratton, comprising eight cluster semi-detached houses priced at $1.98 million to $2.2 million.
The houses have built-up areas ranging from 3,595 sq ft to 3,649 sq ft and strata areas of 4,930 sq ft to 5,145 sq ft. The second project is Nim Green, a collection of just three terrace houses - a corner unit with an asking price of $2.5 million and two intermediate units with a price tag of about $2 million.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
http://forums.condosingapore.com/showthread.php?t=2758
Dear 'foreigner', (if your $$ is legitimate): thank you for your faith in Singapore's ability to contribute to your future.
I think:
1) You are a responsible person, understanding that SG's defence costs $11B p.a. and are willing to play your part through investing in a leasehold property that depreciates @ $297K p.a. In return for your interest in Singapore, I'm sure our citizens (trough various NS liabilities) will safeguard your property like their own- with their lives.
2) I salute your vision and integrity.
- -
Rich Singaporeans should realize that they are 'Defrauding' the govt of $2.03B p.a. through their support for freehold property laws in a land scarce developed country.
ERP, COE, water conservation taxes, GST, medisave etc are all well established pay per use systems.
SLA has already legislated that new 99yr-leasehold land shall be valued at 96% its freehold worth.
Can SG afford $2.03B p.a. annual subsidy to the rich?
Why hurry to implement means testing, annuity schemes?
$2.03B donation to the rich?
***FREEHOLD HAS NO PLACE IN A LAND SCARCE DEVELOPED CITY***
& MBT must stop copying the British crappy property laws...
Anyhow, thank you foreigner, given your contribution, I hope the next GST increase can be delayed by a short while...
($297k pa= $280k +4%prop tax, 1% bc 99yr, 1% maintenance fee )
------
$5,600 psf for penthouse new high in property price here
BT 12.10.2007
53rd-storey Orchard Residences unit fetches over $28m
By KALPANA RASHIWALA
A NEW record property price for Singapore has been set, even though fewer sales are being made in high-end residential projects since the time of the US sub-prime mortgage crisis.
CapitaLand and Sun Hung Kai Properties are said to have sold earlier this week a penthouse on the 53rd storey of The Orchard Residences for about $5,600 per square foot (psf), or over $28 million. This surpasses the previous benchmark of $5,500 psf set in August when a 54th storey penthouse fetched about $27.8 million.
This means that all four penthouses in the 99-year leasehold development are now sold.
The developers are said to have sold about 73 per cent of the total 175 units in the condo. The buyer of the final penthouse sold this week is believed to be a foreigner. The 5,048 sq ft unit has five bedrooms, a study and a family room.
A stone's throw away, Wheelock Properties (Singapore) is said to have sold more than 30 apartments at its freehold Scotts Square since the official launch of the project on Sept 28.
The developer is said to have largely maintained its average price at around the $4,000 psf mark from its preview in July, when it sold about half of the project's 338 apartments.
Over in Sentosa Cove, Ho Bee has sold 38 of the 50 units it has released so far in its 91-unit condo, Turquoise, since late September. The units have been sold at prices ranging from nearly $2,500 psf to $2,770 psf.
The average price is about $2,600 psf, Ho Bee Investment executive director Ong Chong Hua said when contacted by BT yesterday. Buyers of the 38 units - which include four penthouses - were an equal mix of foreigners and Singaporeans, he said.
Apartments at the 99-year leasehold Turquoise typically cost around $5.3 million for a three-bedroom unit, $6.4 million for a four-bedder and around $9.3 million for a penthouse.
DTZ Debenham Tie Leung executive director (residential) Margaret Thean acknowledges that buyers, both local and foreign, have been more cautious after the stock market setback at the time of the US sub-prime mortgage crisis.
'But we still see activity going on. For the high-end projects, we've not noticed any withdrawal of liquidity. The only difference is that prospective buyers are more cautious, doing more calculations and being more selective in their choice of investment before making a commitment,' she said.
Market watchers also say that the recovery in the stock market in recent weeks has led to a return of confidence in the property market, as seen in a pick-up in subsales activity lately.
Over in the Seletar Hills area, Tong Eng Brothers unit Fairview Developments is launching two landed developments. One is the freehold 8 @ Stratton, comprising eight cluster semi-detached houses priced at $1.98 million to $2.2 million.
The houses have built-up areas ranging from 3,595 sq ft to 3,649 sq ft and strata areas of 4,930 sq ft to 5,145 sq ft. The second project is Nim Green, a collection of just three terrace houses - a corner unit with an asking price of $2.5 million and two intermediate units with a price tag of about $2 million.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
http://forums.condosingapore.com/showthread.php?t=2758
No need to raise GST if land sales seen as revenue
STI Home > ST Forum > Story > Print
Feb 3, 2007
No need to raise GST if land sales seen as revenue
THERE has been much debate in the media about the proposed Goods and Services Tax (GST) hike.
The crux of the official argument is that the hike is needed to fund Workfare, and a cut in corporate-tax rates for Singapore to remain attractive to investors.
I am all in favour of a balanced Budget but we have unfortunately adopted a super- conservative approach in budgeting that fails to present a fair view of the true economics of the numbers. Government land 'sales', which contribute a huge chunk of revenue, have been ignored.
I am convinced that the Budget can be balanced without a GST hike if land 'sales', which are a true cash inflow, are included in Budget calculations.
The Government does not actually sell land; it sells leases, most of which are 99 years or less. In due course, the land reverts to the state or the leases are topped up, for example, the Marina Bay integrated resort has delivered $1 billion to the Treasury on a 30-year lease.
Hence, the cash inflow is similar to rental income and thus recurring in nature. Indeed, not including government land sales in Budget calculations as part of operating revenue is an economic distortion.
The impending two-point hike in GST will raise an additional $1.5 billion in revenue but data from the Ministry of Finance website shows that proceeds from land sales are in excess of this amount. At $4 billion per annum, revenue from land sales is about 2 per cent of GDP or about 14 per cent of government expenditure.
Ignoring the value of land sales is like a household with an income of $100,000 per annum refusing to bank $14,000 cheques.
The GST hike is also expected to further stunt the domestic economy which, despite its small size relative to GDP, employs the majority of the workforce. We need a vibrant domestic economy for local entrepreneurship to flourish. Also, virtually all the MNCs that we court today and local big boys were once small companies selling to the domestic community.
Joseph Chong Thiam Fook
--------------------------------------------------------------------------------
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
http://www.straitstimes.com/portal/site/STI/menuitem.c2aef3d65baca16abb31f610a06310a0/?vgnextoid=7532758920e39010VgnVCM1000000a35010aRCRD&vgnextfmt=vgnartid:d212076185380110VgnVCM100000430a0a0aRCRD:vgnpdate:1170539940000
Feb 3, 2007
No need to raise GST if land sales seen as revenue
THERE has been much debate in the media about the proposed Goods and Services Tax (GST) hike.
The crux of the official argument is that the hike is needed to fund Workfare, and a cut in corporate-tax rates for Singapore to remain attractive to investors.
I am all in favour of a balanced Budget but we have unfortunately adopted a super- conservative approach in budgeting that fails to present a fair view of the true economics of the numbers. Government land 'sales', which contribute a huge chunk of revenue, have been ignored.
I am convinced that the Budget can be balanced without a GST hike if land 'sales', which are a true cash inflow, are included in Budget calculations.
The Government does not actually sell land; it sells leases, most of which are 99 years or less. In due course, the land reverts to the state or the leases are topped up, for example, the Marina Bay integrated resort has delivered $1 billion to the Treasury on a 30-year lease.
Hence, the cash inflow is similar to rental income and thus recurring in nature. Indeed, not including government land sales in Budget calculations as part of operating revenue is an economic distortion.
The impending two-point hike in GST will raise an additional $1.5 billion in revenue but data from the Ministry of Finance website shows that proceeds from land sales are in excess of this amount. At $4 billion per annum, revenue from land sales is about 2 per cent of GDP or about 14 per cent of government expenditure.
Ignoring the value of land sales is like a household with an income of $100,000 per annum refusing to bank $14,000 cheques.
The GST hike is also expected to further stunt the domestic economy which, despite its small size relative to GDP, employs the majority of the workforce. We need a vibrant domestic economy for local entrepreneurship to flourish. Also, virtually all the MNCs that we court today and local big boys were once small companies selling to the domestic community.
Joseph Chong Thiam Fook
--------------------------------------------------------------------------------
Copyright © 2007 Singapore Press Holdings. All rights reserved. Privacy Statement & Condition of Access
http://www.straitstimes.com/portal/site/STI/menuitem.c2aef3d65baca16abb31f610a06310a0/?vgnextoid=7532758920e39010VgnVCM1000000a35010aRCRD&vgnextfmt=vgnartid:d212076185380110VgnVCM100000430a0a0aRCRD:vgnpdate:1170539940000
Rise in land development charge will allow fair sharing of property gains
MBT "Rise in land development charge will allow fair sharing of property gains "
22 July 2007 2106 hrs
SINGAPORE : The primary intention of the land development charge increase is not to slow down the frenzied property market.
National Development Minister Mah Bow Tan says the aim is to facilitate a fair sharing of the enhancement in the value of the land.
Last Wednesday, the government announced an increase in the land development charge from 50 to 70 per cent.
Experts were split, with some saying it would slow down the en bloc sales frenzy as developers would have to fork out more for land.
This would in turn stem rising rental costs as fewer redevelopments mean fewer apartments torn down.
But others said the bullish market sentiments would override that.
Weighing in, the National Development Minister says the impact on en bloc sales will be minimal and underlines the rationale behind the charge.
He says: "The development charge is to take some of that increase in value to go and improve the infrastructure. Roads, rail, power, whatever. Because you know when you increase the plot ratio - build more flats, build to a higher level - you need to provide the infrastructure. So that's what the development charge is. You could say it's a tax on the increase in the value as a result of government action."
So depending on the stipulated land use, some projects may not be affected.
Mr Mah says: "When you look at the different en bloc sales you'll realise that some en bloc sales actually do not incur development charge at all, partly because they are actually able already to develop up to a higher intensity. So, the government doesn't have to go in and change the planning parameters."
He notes that a recession in 1985 led to the downward revision of the land development charge.
But now that the property market has more than recovered, it is time to reinstate things.
Mr Mah says: "It's what we feel to be a fair share of the enhancement of the value of the land. So that's why during this time, the market is healthy, we decided it's timely for us to go back to the original."
He says the current squeeze will only last a short while as he expects ample supply to come in over the next 2 or 3 years in various categories.
And to further ensure smooth functioning of the market, there should be comprehensive information sharing by analysts and developers.
He says: "This is not just government coming out with such information. I think developers and analysts should also make it a point when they put out information that they should put it out based on facts, not based on speculation. And if they do publish information based on their own analysis of the situation, I think it's important for them to upfront say so, so that people know."
"It's not just the government agencies putting out information. It's very important to make sure that you keep publishing out this information so everybody knows, so they don't get spooked, panicked by one particular headline, one report in the papers about record prices here or record rentals there."
In all, Mr Mah says the property market will continue to be monitored with sustainable growth in mind, and more land will be released through the government land sales programme if necessary
http://forums.hardwarezone.com/showpost.php?p=24747096&postcount=65
22 July 2007 2106 hrs
SINGAPORE : The primary intention of the land development charge increase is not to slow down the frenzied property market.
National Development Minister Mah Bow Tan says the aim is to facilitate a fair sharing of the enhancement in the value of the land.
Last Wednesday, the government announced an increase in the land development charge from 50 to 70 per cent.
Experts were split, with some saying it would slow down the en bloc sales frenzy as developers would have to fork out more for land.
This would in turn stem rising rental costs as fewer redevelopments mean fewer apartments torn down.
But others said the bullish market sentiments would override that.
Weighing in, the National Development Minister says the impact on en bloc sales will be minimal and underlines the rationale behind the charge.
He says: "The development charge is to take some of that increase in value to go and improve the infrastructure. Roads, rail, power, whatever. Because you know when you increase the plot ratio - build more flats, build to a higher level - you need to provide the infrastructure. So that's what the development charge is. You could say it's a tax on the increase in the value as a result of government action."
So depending on the stipulated land use, some projects may not be affected.
Mr Mah says: "When you look at the different en bloc sales you'll realise that some en bloc sales actually do not incur development charge at all, partly because they are actually able already to develop up to a higher intensity. So, the government doesn't have to go in and change the planning parameters."
He notes that a recession in 1985 led to the downward revision of the land development charge.
But now that the property market has more than recovered, it is time to reinstate things.
Mr Mah says: "It's what we feel to be a fair share of the enhancement of the value of the land. So that's why during this time, the market is healthy, we decided it's timely for us to go back to the original."
He says the current squeeze will only last a short while as he expects ample supply to come in over the next 2 or 3 years in various categories.
And to further ensure smooth functioning of the market, there should be comprehensive information sharing by analysts and developers.
He says: "This is not just government coming out with such information. I think developers and analysts should also make it a point when they put out information that they should put it out based on facts, not based on speculation. And if they do publish information based on their own analysis of the situation, I think it's important for them to upfront say so, so that people know."
"It's not just the government agencies putting out information. It's very important to make sure that you keep publishing out this information so everybody knows, so they don't get spooked, panicked by one particular headline, one report in the papers about record prices here or record rentals there."
In all, Mr Mah says the property market will continue to be monitored with sustainable growth in mind, and more land will be released through the government land sales programme if necessary
http://forums.hardwarezone.com/showpost.php?p=24747096&postcount=65
Singapore's Rich-Poor Divide
HOW COME THE RICH-POOR DIVIDE DOES NOT CLOSE DESPITE BEING THERE BEFORE AND CORRECTING THE PROBLEM? WHAT ARE WE MISSING?
Singapore Swing
The island's economy is booming. So why are so many citizens worse off than they were 10 years ago?
- Singapore's Rich-Poor Divide
By Sonia Kolesnikov-Jessop (Newsweek International)
Jan. 29, 2007 issue - Tiny Singapore, with its population of 4.3 million, is often lauded for the way it has embraced globalization to maximum advantage. In the last decade, the city-state has opened its doors wide to foreign investment and talent, slashed corporate taxes, offered incentives to nurture strategic industries (such as biotech, pharmaceuticals and financial services) and cut free-trade deals with a host of other countries. The payoff has seemed clear: over the past three years, Singapore's economy has averaged 7.6 percent growth—a staggering pace for an industrialized state—and created new jobs at a rate any European government would envy.
There's only one problem: average citizens have yet to reap the benefits. New statistics reveal that middle-class households have tasted none of Singapore's spectacular growth, and that the island's poorest 30 percent are worse off than they were five years ago. "Although we have seen very strong growth, we're experiencing this new phenomenon of median real-wage stagnation and low-income decline," says Yeoh Lam Keong, vice president of the Economic Society of Singapore. This predicament is hardly unique. Wages and salaries are stagnating across the industrial world. What's surprising is that even a country famous for its smart and transparent leadership has been unable to prevent the gains of globalization from flowing mostly to rich individuals and multinational corporations. In its bid to adapt Singapore's economy to international competition, the government has tried hard to reduce business costs. This has meant slashing labor prices, which has helped push wages down. According to official figures, over the past five years Singapore's wealthiest 10 percent have seen their income rise by 2.3 percent annually (and that doesn't include nonwage earnings such as capital gains or dividends). At the same time, the poorest 10 percent have suffered a staggering 4.3 percent drop in their salaries each year. The government has also allowed employers to cut their contributions to Singapore's Central Provident Fund, which pays for pensions, public housing, medical expenses and educatn on.
Together, these factors have led to lower-than-expected private consumption, which has risen by just 3 percent in the past two years. "Private consumer spending has been the weak link in this current expansion," says Chua Hak Bin, an economist at Citigroup Global Markets in Singapore. This has, in turn, stung Singapore's large retail sector. "It is evident that [they] are not the big winners from high growth," says Manu Bhaskaran, a director of the U.S.-based Centennial Group.
Foreign competition is also hurting. Contractor Tan Boon Soo is one of many Singaporeans feeling the pinch. He installs windows for a living but laments "cutthroat competition" from contract laborers, who have flooded the island from places such as Indonesia and Bangladesh. Unskilled workers like street sweepers and security guards are also finding themselves undercut by immigrants willing to work for less. This is forcing native Singaporeans to change occupations or work harder for less money. "They talk about growth, but I don't see it," says Tan. "Maybe the bankers are doing well, but construction has not been. I'm worse off now than I was in 1997."
All this could spell big trouble. "If these trends continue unchecked," warns Yeoh, "we could begin to get the formation of an underclass [and] the makings of social instability." Such an underclass was never part of Singapore's grand plan. Now its leaders must figure out how to prevent one from emerging without relying on the kind of welfare programs they often deride. Last year the government launched an experimental workfare program that gave low-wage earners bonus pay of up to $780. Now Prime Minister Lee Hsien Loong's government is con- sidering making the program permanent in an effort to thin the ranks of the working poor.
"We will try out different forms, but the principle will be the same—help yourself [and] we will help you," the prime minister told lawmakers last November. "It's essential for us to tilt the balance in favor of lower-income Singaporeans because globalization is going to strain our social compact."
Lee has already announced that he'll make Singapore's rich-poor divide a major focus of his annual budget speech next month.
If knowing is half the battle, it could be an important first step.
© 2007 Newsweek, Inc.
http://www.lopn.net/ST_Casestudy22_Richpoor.html
Singapore Swing
The island's economy is booming. So why are so many citizens worse off than they were 10 years ago?
- Singapore's Rich-Poor Divide
By Sonia Kolesnikov-Jessop (Newsweek International)
Jan. 29, 2007 issue - Tiny Singapore, with its population of 4.3 million, is often lauded for the way it has embraced globalization to maximum advantage. In the last decade, the city-state has opened its doors wide to foreign investment and talent, slashed corporate taxes, offered incentives to nurture strategic industries (such as biotech, pharmaceuticals and financial services) and cut free-trade deals with a host of other countries. The payoff has seemed clear: over the past three years, Singapore's economy has averaged 7.6 percent growth—a staggering pace for an industrialized state—and created new jobs at a rate any European government would envy.
There's only one problem: average citizens have yet to reap the benefits. New statistics reveal that middle-class households have tasted none of Singapore's spectacular growth, and that the island's poorest 30 percent are worse off than they were five years ago. "Although we have seen very strong growth, we're experiencing this new phenomenon of median real-wage stagnation and low-income decline," says Yeoh Lam Keong, vice president of the Economic Society of Singapore. This predicament is hardly unique. Wages and salaries are stagnating across the industrial world. What's surprising is that even a country famous for its smart and transparent leadership has been unable to prevent the gains of globalization from flowing mostly to rich individuals and multinational corporations. In its bid to adapt Singapore's economy to international competition, the government has tried hard to reduce business costs. This has meant slashing labor prices, which has helped push wages down. According to official figures, over the past five years Singapore's wealthiest 10 percent have seen their income rise by 2.3 percent annually (and that doesn't include nonwage earnings such as capital gains or dividends). At the same time, the poorest 10 percent have suffered a staggering 4.3 percent drop in their salaries each year. The government has also allowed employers to cut their contributions to Singapore's Central Provident Fund, which pays for pensions, public housing, medical expenses and educatn on.
Together, these factors have led to lower-than-expected private consumption, which has risen by just 3 percent in the past two years. "Private consumer spending has been the weak link in this current expansion," says Chua Hak Bin, an economist at Citigroup Global Markets in Singapore. This has, in turn, stung Singapore's large retail sector. "It is evident that [they] are not the big winners from high growth," says Manu Bhaskaran, a director of the U.S.-based Centennial Group.
Foreign competition is also hurting. Contractor Tan Boon Soo is one of many Singaporeans feeling the pinch. He installs windows for a living but laments "cutthroat competition" from contract laborers, who have flooded the island from places such as Indonesia and Bangladesh. Unskilled workers like street sweepers and security guards are also finding themselves undercut by immigrants willing to work for less. This is forcing native Singaporeans to change occupations or work harder for less money. "They talk about growth, but I don't see it," says Tan. "Maybe the bankers are doing well, but construction has not been. I'm worse off now than I was in 1997."
All this could spell big trouble. "If these trends continue unchecked," warns Yeoh, "we could begin to get the formation of an underclass [and] the makings of social instability." Such an underclass was never part of Singapore's grand plan. Now its leaders must figure out how to prevent one from emerging without relying on the kind of welfare programs they often deride. Last year the government launched an experimental workfare program that gave low-wage earners bonus pay of up to $780. Now Prime Minister Lee Hsien Loong's government is con- sidering making the program permanent in an effort to thin the ranks of the working poor.
"We will try out different forms, but the principle will be the same—help yourself [and] we will help you," the prime minister told lawmakers last November. "It's essential for us to tilt the balance in favor of lower-income Singaporeans because globalization is going to strain our social compact."
Lee has already announced that he'll make Singapore's rich-poor divide a major focus of his annual budget speech next month.
If knowing is half the battle, it could be an important first step.
© 2007 Newsweek, Inc.
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