Archive for the ‘Political economy’ Category

The “new poor” revisited

In Political economy, Political governance on 08/02/2012 at 6:05 am

“Tan Jee Say, an opposition politician, said such global accolades [“the top marks S’pore scores in global surveys on the ease of doing business and low corruption levels”] often had little bearing on the lives of Singaporeans, many of whom who have seen their incomes stagnate over the past decade” (article), reminded me of what the Sage (not Stag) of Hougang said in 1997 or 1998 during the Asian financial crisis.

Low Thia Khiang (then the sole WP MP) spoke of the “new poor” and was roundly condemned and attacked by PAP ministers and MPs, and the local media for using of this term.

Well he was right wasn’t he? “The new poor” S’porean is a growing species. Leong Sze Hian pointed out a few days ago that wages have stagnated for many S’poreans for the last ten years:

10 Years – hardly any increase?

If we look at the data for the last 10 years, for example, the income of Singapore citizens at the 20th percentile level, grew by only 25%, from $1,200 in 2001 to $1,500 in 2011 (excluding employer CPF contributions).

In real terms, I estimate the annualized growth to be about 0.2%.

This is a far cry from the 2.2% real annualized growth for the last five years (including employer CPF contributions).

(Full article)

And the “new poor” continue to face the triple whammy of high living costs, low wages & purchasing power.

And didn’t Low have foresight when he asked in the late 90s for help for the “new poor? Something that was again rubbished by government ministers, PAP MPs and the local media, but which is now the part of the PAP’s strategy for regaining lost ground in the next general election: Bread and perhaps Circuses. The government is even planning to strengthen the almost non-existent social safety net, something which was taboo in the past.

So while S’poreans are rightly upset with the silence of the WP (Low is the leader) and MP Yaw (a married man) over whether Yaw had an affair with another married WP member, let’s not go overboard in flaming the WP, even though Yaw’s demotion (OK resigning as Treasurer and leaving the party’s politburo) tells us everything.

Cut it some slack because Low got the issue of the “new poor” spot on all those many years ago, and because he (and Chiam) kept the flame of opposition alive in parliament and on the ground, when it was most unfashionable to be associated with the Opposition.  Example: one TJS was quietly working away in fund management. Remember too, Low has played a big part (he became the party leader in 2001?) in the WP becoming the force it has become. And finally, he did nuture two next generation leaders Yee Jann Jong and Gerald Giam.

So while I think the WP is damaging itself by being more PAP than the PAP itself by refusing to comment on “rumours” about Yaw, let’s hope the damage done is not too great.

In case if anyone is wondering, the WP did not pay me for this “ad”.

A final mean, very mean, unrelated tot: “Is TJS speaking from experience when he talks of ‘incomes stagnate’?”. Declaration of interest: My income has collapsed in the last decade. And even then it was a fraction of what I was earning in the mid 90s. I was, and am, part of the “new poor”. But no need to cry for me. Being poor is relative as Grace Fu and friends should realise.

And anyway:

Let what will be, be.

Tis labor lost thus to all doors to crawl,
Take thy good fortune, and thy bad withal;
Know for a surety each must play his game,
As from heaven’s dice-box fate’s dice chance to fall.


Rolls-Royce’s S’pore workers more productive than UK workers

In Economy, Political economy on 05/02/2012 at 5:21 am

Bang balls, SDP, NSP, KennethJ and TJS. Hey not all the govmin’s initiatives fail. Witness this new aero engine plant.  And S’pore-based workers can be more productive than British ones: by six days.

What the report does not tell us is that SIA’s (along with Qantas’ ) Airbus 380s use RR engines. RR only has a 9% share of the Western-made aircraft engine market share.  This again shows that there are benefits to Singapore in SIA being owned by the state. Bang yr balls harder SDP, NSP, KennethJ and TJS.

Fairness: What is it?

In Political economy, Political governance on 03/02/2012 at 1:40 pm

When one Tan Kin Lian was attempting a political career (while pretending not to do so) and, later, a presidential bid, the one thing that irritated me no end was his constant call for “fairness”. And when asked to define it, he said it is common sense.

I wish this had been written then so that I could post it, to get my blood pressure down.


fairness is, as Scott Adams, the creator of Dilbert, puts it, “a concept invented so dumb people could participate in arguments”.

To get a “fair shot” is to be offered the opportunity to participate fully and succeed within the country’s institutions … Conservatives who strenuously object to the idea that the American system should aim at “equality of outcomes” will sometimes affirm “equality of opportunity” as an alternative. But this is a mistake. To really equalise opportunity requires precisely the sort of intolerably constant, comprehensive, invasive redistribution conservatives rightly believe to be required for the equalisation of outcomes. If one is prepared to accept substantial inequalities in outcome, it follows that one is also prepared to accept substantial inequalities in opportunity.

Getting a fair shot doesn’t require equalising opportunity so much as ensuring that everyone has a good enough chance in life. The content of “good enough” is of course open to debate, but most Americans seem to agree that access to a good education is the greater part of a “good enough” and thus fair shot. Naturally, there is strong partisan disagreement over the kinds of education reform that will do right by young Americans. And there is also disagreement over elements of a “fair shot” beyond education. For example, many liberals believe workers don’t have a fair shot at achieving a decent level of economic security without robust collective-bargaining rights. And many conservatives believe that an overly-strong labour movement invites outsourcing by raising domestic costs, and thereby deprives American workers of a fair shot at employment. There may be some fact of the matter about which policies are most likely to benefit students or workers. But if one is more fair then the other, how would we know?

What is it to do one’s “fair share”? In small groups, it’s clear enough. If my friend and I are shoveling the front walk, my fair share of shoveling, and his, is about half. Often we adjust for differences in ability. If I am big and strong and my friend is small and frail, his fair share may be as much as he can manage. That won’t mean that the whole remainder is my fair share, though. If we’re going to get the walk shoveled, I may have to do a bit more than my fair share. These things get complicated quickly. That’s why the question of what it means for an American do his or her fair share, qua citizen, is completely baffling.

Are you doing your fair share? How would one know? Actually, I just made myself feel slightly guilty for not going to med school and joining Médecins Sans Frontières. But unless government can come up with a way of taxing the leisure of people who aren’t doing as much as they might for kith and country, I reckon I’ll just stick to part-time pro blogging and let all you 9-to-5 suckers finance the necessary road-building and foreigner-bombing.

tempts me to agree with Mr Adams when he argues that fairness is “purely subjective”. But I’ll resist the temptation. I don’t think judgments of fairness are entirely whimsical. It really is unfair to eat more than your share of the cake, or to do less than your share of the shoveling, or to get ahead by flouting reasonable rules to which others faithfully adhere.

Not so easy, is it TKL?

S’pore Property: But would banks be allowed to?

In Banks, Economy, Political economy, Political governance, Property on 27/01/2012 at 11:42 am

Mortgage rates make the difference

So what contributed to the recent decoupling of Singapore and Hong Kong home prices?

The simple answer is mortgage rates.

Driven by strong loan growth and rising loan-to-deposit ratios, Hong Kong banks have raised their mortgage rate spreads since early this year [2011]. This has resulted in higher mortgage rates and reduced demand for residential properties, which in turn led to the slide in private home prices since September.

On the other hand, the Government’s property cooling efforts have so far been thwarted by very low mortgage rates. With base interest rates remaining near record lows and Singapore banks charging very low mortgage spreads, affordability remains high.

However, there is a risk that Singapore mortgage rates would rise next year from their current low levels. Like their Hong Kong peers, Singapore banks have also experienced strong loan growth over the past year, which in turn has pushed up their loan-to-deposit ratios – although it must be said that ratios in Singapore dollars are generally still low.

Moreover, with the debt crisis that is plaguing the European Union, there has been anecdotal evidence that some European banks are pulling back their credit lines in Singapore to help boost capital ratios as required by the EU debt plan. If these banks continue to deleverage, it could result in less competition in the lending market for Singapore banks, which may then feel comfortable enough to raise their lending spreads, including mortgage spreads.

In fact, during the 2008/2009 global financial crisis, local banks such as UOB and OCBC were able to increase their net interest margins as foreign banks reduced their lending activities in Singapore.

Thus, while the recent decoupling in Singapore and Hong Kong residential property prices may make for an interesting read, we do not expect it to last for long, especially with the latest round of cooling measures introduced in Singapore.

Should happen as this UBS analyst postulated in late Dec 2011. But if the government thinks property prices will tank, not juz fall a little, the local banks will “do the right thing” by home owners, but not investors. It has happened before. In the crisis in the mid 80s, when many home owners had negative equity, the banks “did the right thing” and did not ask for more equity. Home owners had gd reason to vote PAP.  



The Dark Side is preparing for 2016 GE

In Political economy, Political governance on 27/01/2012 at 5:33 am

(Or “Why the PAP could turn the tables in the next GE: if the Opposition remains complacent)

Although what the PAP is doing is observable to the Opposition parties and their fellow travellers on the Internet, they seem blind or indifferent to the PAP’s actions, or both, because of their assumptions and prejudices. Worse, the major Opposition parties are complacent, what with the problems at WP, NSP and SPP (More of this on Monday in a CNY Special — gossip I heard while feasting and gambling).

Two Sundays ago, (as part of his ang pow strategy?) PM promised that, despite the economy slowing down, the government would improve the education and public transport systems, and build more homes so that young couples can start their families. These remarks were made at a Lunar New Year event  in his Teck Ghee constituency, part of the Ang Mo Kio GRC. He also officiated at the re-opening of a wet market and food centre where he said more of such markets will be built over the next few years, with the aim of keeping food prices affordable. Not long ago, such markets were being to a commercial company which promptly increased rentals. He said nothing then. And the HDB and Comrade Mah gave grumblers the finger.

Then last Saturday in his CNY message he said Having children is ultimately a personal decision for families to make, but Government will do its part to reduce the anxieties and burdens of parenthood. Baby Bonuses already help families with the costs of raising children. We are also doing more to help parents balance work and parent­hood, including extending maternity and childcare leave, and encouraging companies to offer flexible working arrangements for employees with children. We are committed to helping young couples obtain their first HDB flat as soon as possible. With government support, childcare has become more affordable, and childcare centres are expanding and providing many more places than before. The critical factor now is not more financial incentives, but creating the supportive social climate and attitudes that will encourage couples to have more children.

This presses so many “hot” buttons: freedom to choose to have babies, social environment, financial help in raising children and affordable housing for the young.

What with the building of more public  flats (despite the slowndown, and possible recession, Comrade Mah must be rolling his eyes in disbelief) and now taking a serious attitude towards other issues that upset voters (transport, education and the rising cost of living and the cost of raising a family, social and monetary, it looks like the government and the PAP have learnt the lesson that “It’s the voters, stupid”.

In the past, we would be told to tighten our belts to survive the slowdown. But given the still high levels, by global standards, of ministerial pay, and Grace Fu’s bitching about her pay cut, it would not be politic to tell S’poreans to lower their expectations. Better to follow the Roman emperors who made sure the populace of Rome had plenty of bread and circuses (gladitorial games). And S’pore has the money, despite what the SDP and Goh Meng Seng say. Even SDP’s most famous ex-member says so. To TJS, S$60bn from the reserves is “small change”. So does Citi, an investment bank**.

Even as late as November, I wasn’t too sure if the PAP and government had learnt the lessom of the May and August elections. In November, newbie PAP acting junior minister (and ex army brigader) was leading raids on foreign workers quarters. Judging from his remarks on Facebook, I assumed he wanted to see if the quarters were fit for human habitation, not whether there were illegal FT workers.

I was thinking to myself, he had better focus on the latter, given that the PAP is perceived by many true blue S’poreans as the “Pro Alien Party” and that the PAP should learn from the HK experience.

The once popular pro-democracy Civic Party suffered a series of defeats in neighborhood council elections in October last year in HK, as pro-Beijing politicians successfully tapped anti-immigrant sentiment as well as public hostility toward environmental measures perceived as harming employment and increasing the government’s construction costs.

The Civic Party had been gaining ground in previous elections, but ran into trouble this year as lawyers who are prominent in the party took on social and environmental causes that were unpopular among many Hong Kong residents. The most divisive issue has been whether more than 200,000 household workers, mostly from the Philippines and Indonesia, can eventually become eligible for citizenship.

The government and governing PAP is focusing on issues that affect the lives of ordinary S’poreans, shumething the Opposition parties especially the SDP have done for a long time. I hope bleeding heart liberals (especially those writing on or reading blogs like TOC) understand why. There are no votes (and eyeballs) to be won in helping foreigners, convicted criminals and dolphins.

Charity begins at home. Or to put it more nicely, “Conserve compassion: S’poreans come first, second and last”.

Build more homes, improve education and public transport, and keep the cost-of-living from rising too fast; and we shall see that the following comment by Catherine Lim is nothing but liberal, anti-PAP, bourgeois, elitist wishful thinking, “”PAP fatigue” among Singaporeans that is a result of PAP’s lack of nurturing Singaporeans politically, and failing to provide the proper environment for political education and growth.”

And who will care then if ministers pay themselves millions of dollars. I mean even the WP’s “base’ ministerial salary is $852,500 versus the PAP’s $1.1m. Waz 25%? The voters know that if the WP becomes part of the government, they will take the difference and keep quiet. I mean I don’t hear the WP MPs offering to take S$11,000 each, and publicly donating the balance to a charity.

One way the PAP and government can go wrong is that the PAP and govmin don’t do “circuses”. They don’t know how to spend tax-payers’ monies entertaining voters.

The other way is that they love FTs too much, thereby negating the message they are trying to send S’poreans that “S’poreans matter”. We are always hearing that less FTs, less propsperity from the local MSM, quoting alll manner of ministers, officials and “experts”, usually from local universities (esp from SMU) and broking houeses. The latest is variation on the theme that FTs are good for S’pore: yesterday, ST reported an economist from Merrill Lynch, an investment bank, as saying, “Part of the reason for the sticky inflation is that policies such as the tightening of the inflow of foreign workers are keeping wage costs high. These are being passed onto the consumer.” Knowing the reputation of the economist in question, ST most probably left out the other factors he cited, focusing on FT shortage.

FT love also means that the measures to cut back FTs will be not be serious, and enforced lightly, annoying S’poreans.

So there is al to fight for. The PAP’s continued decline is not assured, neither is its revival.


*In a report dated December 2011, Citi said meeting higher expenditure needs without running a fiscal deficit will not be a problem for Singapore’s government. While the fiscal surplus may shrink, its economist estimates that the government can draw on an additional $1-3 billion in net investment returns, without breaching the 50% cap on the amount of long-term expected real returns on reserves.

An annoying ministerial boilerplate remark

In Economy, Political economy, Political governance on 13/01/2012 at 5:35 am

It was reported by CNA that DPM Teo Chee Hean (one of the better ministers in my view) “said the government’s focus is on ensuring that Singapore remains the best home for all Singaporeans.

‘Beyond developing an attractive living environment and a thriving economy which sustains good jobs for its citizens, Singapore also needs to strengthen the bonds that Singaporeans have with one another and with the country.”

My bitch is about “good jobs for its citizens”. If anything the government has attempted to “developing an attractive living environment and a thriving economy” by making it difficult for the wages of citizens to rise despite rising housing prices and cost of living expenses. It does this via its “FTs are most welcomed” policy, which keeps wage costs down. To be fair, the FT policy also helps keep property prices up. See next posting.

It is a fact that FT HR employees aggressively pitch to the employers, the merits of their compatriots. I know a manager in an MNC wanting to employ a S’pore-trained lawyer, being sent nothing but the CVs of Filipino-trained  lawyers by his, you guessed it, Filipino FT HR manager.

Even though it has now promised to moderate this policy, it has not changed its views on the importance of this policy. Hence its constant ministerial refrain that less FTs means less GDP growth and less jobs for S’poreans. And the constructive, nation building media and academics from SMU keep on harping on the unhappiness of employers who want cheap FTs, and the costs to the economy (including less full time jobs for ploy grads).

S’poreans got money meh?

In Economy, Political economy on 06/01/2012 at 7:15 am

The SDP, KennethJ, Lina Chiam and many regular contributors to TOC and TR are forever harping that standards of living for the majority of S’poreans have dropped since the 1990s. I take these comments with a large pinch of salt, even though I am an agnostic when it came to the claims of the PAP and government that living standards had improved throughout the noughties. (What am I supposed to think when the CEO of HDB tells me that shrinking flats means a higher standard of living for occupants? Yes I am misquoting but not that blatant leh.) 

They would say that wouldn’t they?

Still I was surprised yesterday evening when catching up with the local propoganda sheets, I read, While Singapore has 900,000 HDB flats and 557,000 car park lots  [or 619 for every 1000 flats by my calculations], Mr Khaw noted the problem of car park shortages was mostly felt in older HDB estates, which were built under old car park provision norms. In estates with four-room flats for example, 560 car park lots were planned for every 1,000 flats.

“This was adequate in the past but not any more. More Singaporeans now own cars and some own more than one car,” said Mr Khaw, who noted that 5 per cent of HDB households own two or more cars. The equivalent norm now is 710 car park lots for every 1,000 flats. With these new norms, Mr Khaw assured that new HDB flats would come with adequate car parks. Today on 24 December.

This means that despite rising public housing prices and COE prices, more HDB dwellers (remember over 80% of S’poreans live in HDB flats) are owning cars than ever before.

Of course, this could be another Khawism like his S$8 heart operation.

Assuming, Khaw was not fibbing about the numbers, will the SDP, KennethJ, Lina Chiam or the many regular contributors to TOC and TR Emeritus who are forever harping that standards of living for the majority of S’poreans have fallen, explain how come so many ordinary S’poreans are rich enough to own cars (some even two) despite rising COE and HDB prices?

Does this have anything to do with the easy availability of credit? And if so, is it good or bad for S’pore?

Maybe the 60% of voters who voted PAP are not deft? And one LKY is right to wonder why 40% of the voters are not gtrateful to him and the PAP.

Come on PAP critics. The silence is deafening.

What the news of the numbers of PRs owning HDB flats (and how it was reported) tells us

In Political economy, Political governance, Property on 29/11/2011 at 6:31 pm

(I waited eight days after the data on PRs owning HDB flats came out because I wanted to see if the local MSM would give a favourable-  to the government- spin on the data, which the MSM could reasonably do. The MSM was silent.)

Last Tueday, BT reported that  S’pore permanent residents (PRs) owned some 48,700 HDB flats as at September 2011 , according to the Ministry of National Development. It was answering a PAP MP’s question. According to this, there were approximately 1,038,473 flats as of May 201o.

This means that 4.7% of HDB flats are owned by PRs. So those lurid figures (over 20%, if I remember correctly) claimed by TR are not true.

It was also reported that 39,100 units in the 3rd Quarter 2011, are rented out. Assuming that the rentees are all FTs (PRs and other foreigners), a not unfair assumption, this means only 8.5% of the flats are occupied by FTs. Again, nothing near what TR claimed (over 30% from memory). 

Now as PRs are 13.9% of the resident population or 10.2% of the total population*, and PRs and other FTs 37.1% of the total population, these HDB numbers indicate that PRs and other FTs cannot be a major cause of HDB price rises. If  the 8.5% of the flats are occupied by FTs were 30- 40% (in line with their share of the population), then they would be a major cause of price rises. So Mah was right to he said that PRs and other FTs had no or little effect on public housing prices?

The way to look at this piece of data in relation to all the data made available is that FTs  have an effect (disproportionate perhaps?) because the supply was not keeping pace with demand given the influx of FTs. Khaw’s programme of building a surplus buffer is an admission that there was insufficient supply when the FTs were flooding in, courtesy of the government that we voted in in 2006.

No surprise then that the government and PAP spin doctors, and ST and MediaCorp staff missed telling us shumething important. This piece of info shows that Minister Mah did not know the numbers, or was fibbing when he said that PRs and FTs had no or little effect on public housing prices. They had an effect because he goofed, and then was in denial.  Hence the silence when the local MSM or spin doctors could have rubbished TR’s assertions, and the belief that FTs are the the major cause for HDB price rises?

This piece of information helps give some perspective to the ongoing (often heated and irrational on both sides) debate on public housing and immigration. Yet it only appeared in BT, which is behind a pay wall most of the day. Later Yahoo! reported it. This reminds me of what David Boey in a letter to Voices wrote, ” [R]elevant information is sometimes unavailable to the public or is not presented in a consistent format to facilitate analysis.”

How true and sad. Can fix this lack of info or not, PM? Will be a test of your promise of more openness, and change.


*”Singapore’s total population stood at 5.18 million as at end-June 2011. There were 3.79 million Singapore residents, comprising 3.26 million Singapore citizens and 0.53 million permanent residents, and 1.39 million non-resident foreigners, ” Department of Statistics report released on September 28th 2011.

“Singapore’s total population stood at 5.18 million as at end-June 2011. There were 3.79 million Singapore residents, comprising 3.26 million Singapore citizens and 0.53 million permanent residents, and 1.39 million non-resident foreigners.”

Why moving ministers around or out is gd for everyone cont’d

In Economy, Political economy, Political governance, Uncategorized on 24/11/2011 at 6:02 pm

(This piece is a continuation of Let me be clear: My analysis of the u/m minister’s performance is based on publicly available data. I am drawing reasonable inferences by connecting the dots. Nothing personal against the minister. In fact, the minister is a better example than Tan Jee Say, of a poor boy made gd under the system in place in the 70s and 80s. BTW, he and TJS were both born in 1954 and were in RI. )

There is still one cabinet minister who underperformed twice, possibly thrice and who is still in the cabinet. 

Lim Hng Kiang was HDB minister from 1994 to 1999, and has to take part of the blame that there was oversupply in the early noughties, something that Mah is blamed for. Mah took the lesson to heart and proceeded to build too few flats resulting in a world first: public housing prices rising in a recession.

He then became Health minister and told us complacently that we had to accept that people had to die in the SARS epidemic. Rumour is that one LKY did not buy into this when his wife fell ill and it was feared she might have contracted SARS. In August 2003 (after the worst of the epidemic had passed), Khaw became health minister and started reforming the public health system.

Lim Hng Kiang has been the Trade & Industry minister since 2004. S’pore is once again facing an economic slowdown , the second in three years because two of our main drivers of growth are not diversified. The exports of pills and electronics tend to move in the same direction.

Is the failure to develop new and diversified drivers of growth partly his fault? We had a recession in 2008- 2009 and a looming slowdown today because the main drivers were correlated. Whatever happened to the plans articulated by then DPM Lee Hsien Loong in the early noughties to have less correlated drivers of growth?

As he has been in the ministry for about seven years, how come we are seeing no changes in the drivers of growth?

And remember the wikileak cable from the US embassy here,  “The MPs, who were all members of the ruling People’s Action Party (PAP), indicated that Island could not rely on MTI (and EMA) to stand up to Temasek because MTI Minister LIM Hng Kiang is “weak” and not part of the PAP “inner circle,” Reading claimed.”

So why is he still in the cabinet? PM should follow his dad’s policy of ruthless execution of underperformers, not his successor’s and his (pre May 2011) tolerance of underperformers.  His dad must be aware of what  Bertolt Brecht, the famous Marxist and German playwright, meant when he wrote, “The finest plans have always been spoiled by the littleness of them that should carry them out. Even emperors can’t do it all by themselves.”

If you are reading this M John, please realise that the best RI boys are not necessarily those with high academic credentials like yrself, Goh Chok Tong, Hng Kiang, Raymond Lim or Tan Jee Say, who then become highly paid ministers like Goh and the Lims. Think rather of self-made billionaires like Peter Lim and A Hussain. One juz has an ordinary degree and the other never went to university. They are the people who do RI proud, not the scholars turned civil servants/ soldiers turned ministers who one can reasonably (but nastily) argue are effectively on state welfare from age 18 until they die.

It is sad that according to a junior minister 60% of the poor who need help don’t want welfare. Yet there are underperforming millionaires, living off the state.

Why are trains overcrowded, but not the port or airport?

In Infrastructure, Political economy, Political governance on 17/11/2011 at 6:21 pm

When I read on Wednesday that Singapore is improving the International Cruise Terminal with the aim of seeing the number of berths double by the second quarter of next year, it reminded me of the constant planning and work that goes into upgrading S’pore’s links with the rest of the world, which I contrasted with the reasons (excuses?) given for the overcrowding on our trains, which according to a media report on Sunday would take up to 2018 to resolve, and which led to the usual howls from netizens that there was bad planning by a government that didn’t care about commuters comfort.

I remembered a few years ago analysing how forward looking was S’pore when it came to developing the airport. S’pore was always planning to grow the airport so that it would never get congested. This was unlike Thailand. A few months after the new airport was finally open a few years back after failing to be completed on time, the new airport was working beyond its planned maximum capacity, resulting in congestion and delays.

I remembered remarking in a report that this could never happen here. S’pore was always expanding capacity, knowing that it took time to build infrastructure. It never wanted the airport to look like a congested, overcrowded slum. It gave a bad impression to visitors.

Likewise the port.  It is  always expanding capacity and erring its projections on the side of overcapacity rather than congestion. And it’s doing the same for the cruise terminal. Singapore is investing heavily in cruise infrastructure to ensure the industry becomes a driver of growth for the tourism sector.

If the government errs, it errs on the side of overcapacity, not undercapacity. It feels that the demand would be there, and even if it didn’t materialise as planned, the spare capacity would attract demand.Contrast this spending with what happened in public housing and trensport. In this Donald Low explains why the government became wary of building more public train lines and public housing. It all has to do with projections that went wrong in the 1990s.

The contrast in the spending patterns seem to show that comfort and well-being of S’poreans are not as important to the government as securing the engines of economic growth? In the name of latter, building to meet possible demand seems to be in order, but not when it comes to the former? Why not?

Note that the plans for development of the rail, sea and air transport links are made within the transport ministry, whose spending plans are scruternised by the finance ministry. Yet the approach seems different between domestic and international links.

S’poreans are rich

In Economy, Political economy on 08/11/2011 at 4:20 pm

Wonder why!/FabricationsAboutThePAP or YPAP or SDP don’t tell us things like these? Don’t know economics or money not enough?

Healthcare: Who is subsidising whom?

In Political economy, Political governance on 12/10/2011 at 8:30 am

So, we the people, are going to get more help from the government; and in particular the Health Ministry will do more to help those suffering from chronic illnesses. My friend who suffers from a chronic illness will be hoping the government walks the talk.

He tells me that the cost of buying “unsubsidised” medicine in Johor Bahru is more or less the same as the same “subsidised” medicine bought from SingHealth via a polyclinic. As the price of the medicine bought from SingHealth is roughly half that charged by a private clinic here, he thinks that is why the govmin claims it is “subsidising” the medicine bought from SingHealth.

He thinks maybe the government’s medicine procurement policies are inefficient. How come a profit-making M’sian pharmist chain can match SingHealth’s prices? Or maybe that the government is paying the drug makers more so that they will make pills here and invest in R&D facilities here.

In other words, are polyclinic patients subsidising rich MNCs so that the government can boast of its success in attracting drug companies to set up pill-making plants and R&D facilities here? Their presence here, incidentally, boosts GDP growth and, indirectly, the bonuses of ministers and senior civil servants.

S’poreans have long asked where’s the subsidy in public housing? The government ties itself in knots, trying to explain where is the subsidy. So much so that many S’poreans don’t believe that there is such a subsidy.

So here’s another “subsidy” that should be queried by the public.

On a wider point, ordinary S’poreans should join the Opposition and activists in querying how the government defines any “subsidy”. We are unlikely to get straight answers, but the questioning ensures that they know that we are not daft.

S’pore: The trouble with AAA-status

In Economy, Political economy on 10/08/2011 at 6:59 am

Singapore is one of the few remaining AAA sovereign borrowers, especially one without any fiscal issues.

So money will pour in, interest rates will drop, and property prices will fly.

The banking system may soon have more cash deposits than it knows what to do with. In the 1970s in  Switzerland, banks were paid to accept deposits i.e. negative interest rates.

This is a tough problem to solve. If our central allows the exchange rate appreciate  in order to slow the inflow, a more expensive Singapore dollar will hurt exports and tourism. If it doesn’t act, then Singapore will face significant inflationary pressures. House prices will fly even higher, SBS, SMRT and the electricity suppliers will fleece us even more, and CPF rates will drop to 0.1%, if not negative. We will pay the government interest on our forced savings. OK I exaggerate on the likihood of this.

Even the late Dr Goh Keng Swee might not have been able to solve this problem.

S’pore still has AAA- status

In Political economy on 09/08/2011 at 6:21 am

So all those S’poreans who believe that their CPF monies are not safe, should think again.

As the US loses AAA, where is a safe harbour?

In Economy, Political economy on 08/08/2011 at 2:50 pm

Nowhere as everything is priced in US$. In the 1970s, a US Treasury Secretary said to the Europeans and Japanese, “Our dollar, your problem”.

Today, the US should say to China etc, “Our debt, your problem”.

“If I owe you a pound, I have a problem; but if I owe you a million, the problem is yours,” John Maynard Keynes

Spending S$4.9bn justification for S$470bn +++ reserves?

In Political economy, Political governance on 24/05/2011 at 9:37 am

President S R Nathan said recently that the recent recession, in which the government for the first time sought his office’s approval to draw on reserves, has validated the need for Singapore to have strong national reserves.

He must be talking of the S$4.9bn that was used to fund the government budget in 2009 and which has since been returned.

Juz taking into account the monies managed by GIC, and Temasek’s funds,  our reserves then were at least S$470.3bn. This means that only 1% were used to fund the recession budget.

Do we need such massive reserves when we draw-down so little, given that the reserves are not the result of nature’s bounty but of the people’s savings.

SingTel dividend helps pays the bills

In Political economy, Political governance on 22/05/2011 at 10:20 am

SingTel is paying a dividend of S$0.258 a share.

For those S’poreans like me who have kept the SingTel shares we were allocated all those many yrs ago, the money is coming in handy. I still have the 1667 shares I was allocated and this means I will get S$430.09. Peanuts compared to the 8 months bonuses’ coming the way of ministers, but for a retiree (with no pension, only CPF) any little bit helps.

Sigh: once a upon a time S$500 was “peanuts”; not any longer.

Give PM a 100 days

In Political economy on 20/05/2011 at 5:35 am

PM after the election said he had listened to the voters. I for one was sceptical, thinking it was 1984 all over again, when newbie LHL said the PAP had to listen. The PAP fixed the system instead.

But he has turned from Clark Kent look-a-like into a tiger that has got ministerial duds to want to get out. The dysfunctional duo, MM and SM, have left (after publicly stating they wanted out). The three stooges (Wong, Nah and Lim) are no longer ministers, after telling him privately before the GE that they wanted to quit. If you believe this …

Since six ministers have “retired” (the sixth is Cry Baby Lim), let’s give him the benefit of the doubt. Let’s give him 100 days to prove to us he is walking the walk of listening to us and amending policies to meet our concerns.

Wondering abt the origin of the term “100 days”?

It originally refered to Napoleon’s return from exile on Elba to Paris on 20 March 1815 and the second restoration of King Louis XVIII on 8 July 1815 (a period of 111 days). During this period, he became emperor again, fought and lost the battle of Waterloo, and abdicated again.

BTW empty vessels seem to be making the most noise. The SDP and RP seem to be releasing media releases left, right and centre. Both parties did not do well. The RP even had to borrow candidates from SPP to field teams.

Returning to the past

In Political economy, Political governance on 15/04/2011 at 5:54 am

Lucky Tan reminds that we have been here before. While the GRC helped to retain seats for the PAP …  If nothing was done, there was a good chance the PAP would lose a few GRCs in the 1991 elections. The PAP had 2 choices – fix their policies so that ordinary Singaporeans will benefit from them or tweak the system to retain their dominance. The PAP chose to do the later by linking votes to estate upgrading … sad to say their “kiasu” nature got the better of them and the % votes for the PAP went up after that.

Well we are back to 1991, and the PAP has the choice of listening or tweaking again, to avoid losing a few GRCs. It is clear from the PM that the PAP “don’t do listening”. NTUC minister’s “Deaf frogs” comment comes to mind.

So it’s tweaking the system again.  But what can it tweak? The PAP is still trying the upgrading approach. But I’m sure the PAP knows that this is not enough, so what else can it do? What is the 2011 equvalent of upgrading for PAP areas? 

I don’t think there is one major new tweak, but here are several tweaks that it can do.

Given the reserves that the PAP-managed town councils have built-up, the PAP could offer voters the carrot of lower maintenance charges. The town councils could even afford to pay part of the utility bills of poorer residents.

The excuse: allievating inflation pressures, is now a better use of town council reserves since inflation is so much higher than bank deposit rates.

The the government can increase welfare spending and use the PA to administer it.  

I’m sure that the combi of asset enhancement,, smaller bills for residents in PAP areas, and increased welfare spending via the PA will win the PAP the Kiasu votes, juz as asset enhancement in PAP areas did in 1991.

The disconnect that matters

In Political economy on 31/03/2011 at 6:36 am

The disconnect that matters is not the one that exists between what the government does and what the media says. It is the one between what the media says and what people actually think about their lives, blogged Alistar Campbell, once Tony Blair’s spin doctor.

In S’pore, the disconnect is even worse. The disconnect is between what SPH, MediaCorp and government say and the facts on the ground as perceived by reasonable people.

Anyone relying on SPH, MediaCorp and government statements for their understanding of Singapore would have believed that there was no poverty here; that social workers would deliver delicious cooked meals to welfare receipients; that all FTs were talented people that S’pore needed; that FTs did not put a cap or drive down on the salaries of S;porean PMETS; that the liberal immigration policies did not strain the public transport and housing, and social infrastructures; that public security was good; and that ministers were all worth a lot more than they were being paid. Read the rest of this entry »

RP: Boorish behaviour

In Political economy on 24/02/2011 at 6:02 am

When the news broke that there were resignations from RP, the Sec-Gen issued a statement. It made allegations and insinuations abt those who had quit:

— The timing of this departure, its highly co-ordinated and planned manner and the way the individuals then went to the Press, hardly seems an appropriate response to personal incompatibility.

— an action designed to do maximum damage to The Reform Party and gain maximum publicity for the political careers of the individuals involved.

then there was an account of an “ang pow” incident which seemed to insinuate that there could be corruption (although the Sec-Gen denied making an allegation of corruption.)

Contrast this with the response of Tony Tan and Hazel Phua. They wrote, In the short one year plus that we have been in the Reform Party, although we have our disagreements, we have also seen the SG’s drive and dedication.  Since we cannot achieve agreement, we do not wish to be in his way. 

They also answered the “ang pow” allegation, an explanation that sounds reasonable, though $400 sounds a bit too  rich for kids.

The Sec-Gen is a gd economist, speaker and writer. But he is no gentleman as this statement shows and his petulance over the leaking of his letter to SDA showed.

Now not being a gentleman may not be be important in S’pore*, but being accident prone is. Can anyone trust a guy who has been involved in disrupting three parties: SPP, SDA and now his own RP?

*Example- the letters of condolences that MM, PM and SM sent to the sons of JBJ

Waz the point of stability?

In Economy, Political economy on 22/02/2011 at 8:43 am

We are told that stability is to be prefered over democracy because investors want stability. But the rapid collapse of the autocratic governments in Tunisa, Egypy and Libya should make one reflect whether stability is over-rated. These countries economies and politics are now in utter chaos.

India, S Korea, M’sia, Indonesia, the Philippines and Taiwan (with their messy democracies) are safer places to invest in. They may be less stable than places like Libya and Egypt, but they don’t go from stability to chaos in 21 days.

S’pore Inc: 21 years and still in transition?

In Corporate governance, Political economy on 18/02/2011 at 6:34 am

All my old colleagues have left. I am alone of the old team. I am staying on for a while to help the transition. According to “Confucius Confounded: Analects of Lee Kuan Yew” by Francis Seow, Forward by Dr M, this was said by LKY at Davos in February 1990.

As it’s 21 years since MM said this, we can only conclude that for MM, time passes very slowly: the US is on its fourth president (two of them serving two terms), China has had several leadership changes, M’sia is on its third PM, and Indonesia has had five presidents.

And little us are still transiting leaders?

But maybe the on-going transition is the fault of GCT and LHL? They are slow learners, GCT not mustering his ABCs by the time he stepped down as PM?

BTW, in 1990, the Internet had yet to spin its web, the US was the unchallenged Hegemon and China wasn’t yet an economic superpower.

How time flies, outside S’pore’s political system.

Better and funnier than Hard Truths

In Political economy, Wit on 15/02/2011 at 3:15 pm

Get hold of this: “Confucius Confounded: Analects of Lee Kuan Yew” by Francis Seow, Forward by Dr M.

Like Hard Truths, it quotes MM. But unlike HT, it keeps its quotes pithy and concise. MM should have consulted Francis Seow, and not ST, on how to produce a book that the young will want to read.

Sumehow I doubt any bookseller will bring this in.

Why PAP can’t do coups or violence

In Economy, Political economy on 13/02/2011 at 6:21 am

Sumetime back I flippantly blogged on a “Klingon election”.

Seriously this or military intervention is unlikely because it will shake confidence in the rationality of the PAP internationally, especially its willingness observe the letter of internationally accepted rules.

S’pore is trying to attract foreigners to set up oil  and chemical plants, and R&D facilities here. These projects are expensive and have long lead times. So if there is military intervention or “Klingon election”, they will fear that somewhere down the line, their expensive investments may be at risk.

Then there is plan to get more MNCs to base their regional HQs here. Overturning a “freak” result will scare them away because they want a quiet place.

And then there is the attempt to build a wealth mgt centre to rival Switzerland. Would people want to keep their money in a country where there is a military intervention or “Klingon election”? Next time, their assets could be seized. Read the rest of this entry »

S’pore Inc: The Achievement Test

In Political economy on 06/02/2011 at 2:53 pm

Here’s an idea (from the NYT) that could make a difference in the usually sterile election debates.

The best way to measure government is not by volume, but by what you might call the Achievement Test. Does a given policy arouse energy, foster skills, spur social mobility and help people transform their lives?

Translated into the S’pore context: Do the govmin policies on say casinos, housing, FTs, breeding, transport, education or R&D arouse energy, foster skills, spur social mobility and help people transform their lives?


MM and Lucky Tan could both be wrong

In Political economy on 28/01/2011 at 5:28 am

MM and Lucky Tan disagree on many things (see this piece by Lucky) But as the piece shows they agree that if the PAP cannot deliver material prosperity, it will get kicked out fast. They of course disagree on whether the PAP is delivering prosperity, and what is prosperity

But they both could be wrong on the PAP quickly losing power if the PAP cannot deliver prosperity. Think Japan and the LDP. After holding power continuously from its inception in 1955 (with the exception of a ten-month period in 1993–1994), Japan’s Liberal Democratic Party (LDP) lost control of the national government only in September 2009. This despite failing to fix the economy for 16 years. An economy that had crashed after a huge bubble had burst in the early 1990s.

One reason, among several. The people knew the LDP was incompetent but they tot the Opposition was worse. So they kept voting LDP, in the hope that the LDP would get its act together, until they decided that the Opposition could not do any worse. Note the party in power, the JDP, since 2009 has been lurching from crisis to crisis.

Improve Workfare not press for Minimum Wage

In Economy, Political economy, Political governance, Public Administration on 13/10/2010 at 6:34 am

By arguing the case for minimum wages, the SDP, Tan Kin Lian, RP etc are allowing the govmin to get away with being mean to the poor under the present arrangement which does have an element of “minimum wage”.

Tharman said in February this year that the enhanced Workfare scheme will cost the government S$100 million annually and benefit around 400,000 low-wage workers. S$100 million in the S’pore context is “peanuts”. It is 0.3% of the operating expenses under the latest Budget*.

And Workfare payments end up largely locked up in never-never CPF land. OK I’m being unfair, but the fact is that the poor need cash now. Yes they will need it in the future, but when you are living hand-to-mouth, and hungering for hawker or restaurant food (as the welfare minister insinuates), you need $ now.

So the Opposition and others like TKL  should be pressing for more to be spent on Workfare and for more $ to be disbursed today rather than at 65. The govmin cannot argue against Workfare, juz how much to give, and when to give it. The government will have a hard time defending the tiny amount set aside for Workfare.

BTW, I’m surprised that the do-gooders have not raised Kaushik Basu’s suggestion of how to help the poor.

Kaushik Basu of Cornell University and chief economic adviser to India’s finance ministry says it is not enough that the income of the bottom 20% rise at the same percentage rate as the average. Instead, they should get an equal absolute share of the income the economy.

Let’s translate this into S’pore terms.According to the CIA Fact Book, in US$ terms (using purchasing price parity) the S’pore’s GDP was US$235.7 billion. Based on MTI’s latest growth estimate of 4.5-6.5% growth in 2010, this would work out to GDP of US$246.3 — US$251.0bn. The increase would be S$10.6 — 15.3bn. If this formula were adopted the poorest 20% would get S$2.1 –3.1bn.

And election winner? A one-off transfer of US$2.1 or S$3.1 billion to the poorest 20% of S’poreans. Less than GIC’s paper loss on its investment on UBS or Temasek’s realised loss on Merrill Lynch.

And as it’s one-off, there is no fear of welfarism creeping in. The govmin is right to be fearful of welfare getting out of hand. The BBC reported that 40% of UK  govmin expenditure goes to welfare payments. Talk of entitlements running riot.

Update — Academic research supports PAP view

Update in Dec 2010

*This may give the impression that that is all govmin spends on Workfare. If so I apologise.  “[A] total of $1.65 billion in the last five years, or $400 million a year, to help 400,000 low-income workers” ,the PM reminded in November. So the spending in Workfare is now S$500m or 1.5% of the operating expenses under the latest Budget. Still peanuts and remember the Kiddie Games cost S$387m. It was budgeted at S$122m. And yes I know that 1.65bn divided by 5, doesn’t equal 400m. Taz why I quoted PM.

Update on 4 January 2011

The meanness of Workfare in $

A gd writeup on the nitty gritty of WF