TR EMERITUS

Written by Our Correspondent After being embarrassed in Parliament by WP MP Low Thia Kiang's demolition of the labor movement's ineptitude to help lower wage workers in Singapore, one would expect Minister Lim Swee Say and NTUC Secretary-General to come up with a robust argument to counter him. Instead, he used an unheard fable about a "kingdom of frogs" to brush aside Mr Low's criticisms. "The story goes that in a kingdom of frogs, the tallest tower in the world is built for an annual competition. And when the event is held, many aim to become the champion by making it to the top, but fail as they are discouraged by the audience, who warn that the climb is too dangerous. All except one frog who did reach the top. And when asked afterwards why he ignored the crowd, the frog said: 'I'm deaf. I can't hear them'", he said. The gist of Mr Lim's message: Despite criticisms from Mr Low, the labour movement will continue to address problems faced by low-income Singaoreans. "We never give up. We are like the little frog. We are deaf to all these criticisms. So instead of telling us that low-wage workers are having problems, why not be part of the solution?," he was quoted as saying in the Straits Times. As expected, the Straits Times tried to portray Mr Lim as the "victim" and pinning the blame on Mr Low for criticizing without offering solutions. Being paid almost $2 million dollars a year, Mr Lim ought to realize that it is the duty of MPs to ask questions and criticize if necessary in Parliament as in all modern democracies in the world. If he cannot stand the heat in the kitchen, he should get out of it! The onus is on Mr Lim to answer the questions posed by Mr Low and not to counter-challenge him to be "part of the solution". The key role of the opposition is to check on the ruling party and to hold it accountable for its words and actions and not to do offer solutions for it to govern the nation. If Mr Lim wants Mr Low to offer solutions, then he should be prepared to give Mr Low a job in NTUC or other government committees and pay him a salary commensurate with his services. Mr Lim also reminded Mr Low that "the government always paid special attention to low-income earners and had introduced programmes like Workfare to supplement their income", but the fact remains that low wage Singaporeans are still struggling due to direct competition from cheaper foreign workers. Furthermore, Mr Low did offer a solution to scrap the foreign worker levy and to refine the dependency ratio to moderate the inflow of foreign workers. Mr Lim's attitude epitomizes a wider problem pervading the entire PAP - the inability to listen to others and accept feedback and criticisms in good faith. As the recent parliamentary sessions had shown, the PAP MPs are completely out of touch with the ground. It will be apt to describe them as a "kingdom of frogs" living in their own wells.  Read More →

Written by our Correspondent In yet another sign that the ruling party is fast losing touch with the ground, another PAP MP Seah Kian Peng has spoken out forcefully in support of immigrants. Not satisfied with a mega $10 million dollar Community Integration Fund unveiled by Minister Dr Vivian Balakrishnan last year to tackle a snowballing problem that is largely its own doing - the inability of the immigrants to assimilate into Singapore society as too many of them have come within too short a period of time, Mr Seah now calls on more spending to make the newcomers feel "part of us." "First, we need to make sure that they are called new Singaporeans rather than new migrants. They are not even new migrants - they are an old hand at migrating, and want a new life. They want to settle down and to make Singapore a new home," he said during the parliamentary session yesterday. Due to the PAP's liberal immigration policies, foreigners now make up 36 percent of Singapore's population, up from 14 percent in 1990. Of the remaining 64 percent who are citizens, an increasing number are born overseas. According to figures from the Home Affairs Ministry, there were over 70,000 PRs and 20,000 new citizens in 2008. Two out of every three PR applicants are successful and there is no minimum residency period unlike in other countries. "We have not done any large scale survey, we do not know their problems but we have already gone ahead and decided that the funds will go towards organizing activities.....What we ought to do is first - find out what new Singaporeans need, and then target funding at helping them meet these needs," he added. Instead of spending precious public resources to find out what the new immigrants need, why not ask what Singaporeans really need? Why should taxpayers' monies be used to pay for a glaring mistake made by the PAP? If it had not opened the floodgates to accept so many foreigners at the same time, will we be experiencing problems in integrating them now? There are few incentives for the newcomers to fraternize and reach out to the native Singaporeans as so many of their compatriots are already in Singapore that they don't feel out of place. As a result, they tend to congregate among themselves within a closely-knitted community leading to the emergence of ethnic enclaves in the HDB heartlands. Had the PAP slowed down the intake of foreigners and exercised more discretion in the selection of those to become new citizens, we will not need to spend a single cent more on such ineffective integration policies. With elections around the corner, this may be another gimmick to woo the new citizens to the PAP's side and shore up its flagging support base. Singaporeans should send a strong message to the PAP in the next general election that they will not allow anymore public monies to be spent on the immigrants. Perhaps Mr Seah should set up a fund contributed by all PAP MPs to sponsor his own "integration" programs since he is so infatuated with the new citizens and whatever.  Read More →

OPINION There was much discussion and debate lately on the economic problems faced by Singapore now and in the future. The measures outlined in the Budget announced lately by Finance Minister Tharman only deal with the "symptoms" of the problem and not the root cause. Though Singapore is now technically a first world developed economy, it has yet to make the transition from a manufacturing-based to a knowledge-based technologically advanced economy. Due to our heavy dependence on MNCs, we need to keep labor costs down to prevent them from relocating elsewhere. However, time is fast running out for Singapore as China, India and Vietnam catch up with us. We can never compete with them in terms of cheap labor which they have in abundance. Yet, Singapore's lackluster SME sector is still unable to wean off its perennial addiction to foreign workers and measures taken to boost productivity will not succeed unless wholesale changes are made to revamp the entire political economy. 1. Obsolete political system meant to perpetuate PAP's political hegemony forever: The root cause of Singapore's economic woes lies in its political system which is engineered to keep the PAP in power forever, as admitted unwittingly by Law Minister Shanmugam himself when he spoke of the need to have a "strong and effective" party in place to lead Singapore last year and corroborated by Prime Minister Lee Hsien Loong earlier who revealed unashamedly that a one-party system is the only ideal political system in Singapore due to the lack of talents. And of course, let us not forget his infamous speech in 2006 when he threatened to "fix" the opposition if more of them were to get elected into parliament. PM Lee clearly does not understand or appreciate the importance of checks and balances in the system. To put it succinctly, when the government is "strong", the citizenry will be "weak" and vice versa. A "strong" government may be crucial in the formative years of Singapore's development but is now becoming a major obstacle as its economy becomes developed when the private sector should spear-head the economic growth like in the other Asian Tigers and not the state which is ill-equipped to do so. In Singapore, the nanny state plays all the four roles simultaneously - managerial, regulatory, financing and sponsorship, leaving a feeble, unimaginative and weak citizenry which lacks the qualities to survive, let alone thrive in a new knowledge-based economy. 2. Control of the economy via sovereign wealth funds and government-linked companies: To ensure that the PAP is kept in power forever, control of Singapore's economy is absolutely essential without which the emergence of an independent commercial class will press for changes in the political landscape. Singapore's two sovereign wealth funds GIC and Temasek Holdings are controlled indirectly by the PAP, the former is chaired by its octogenarian leader Lee Kuan Yew and the latter by his daughter-in-law Ho Ching. Temasek Holding in turn, own stakes in major Singapore companies such as DBS, Capitaland and SIA. The access to public funds give these companies an unfair advantage over its domestic competitors. These gigantic state-linked companies also employ large number of Singaporeans together with the civil service thereby helping to keep the citizenry subversient as they tend to vote for the ruling party out of fear of losing their jobs or missing out on promotion if they fail to do so. It is hardly surprisingly that quite a number of civil servants and staff of pseudo-PAP organizations like NTUC and Town Councils are card-carrying members of the PAP and grassroots leaders as well. 3. Weak SME sector: Due to the presence of heavy-weights supported by the state which controls more than half of Singapore's domestic economy, Singapore's SME sector is very weak compared to Hong Kong, Taiwan and South Korea. SMEs in Singapore doomed to remain "small" and have few chances of emerging from the shadows of these GLCs. Even Singapore's only internationally recognized brand name Creative Technologies is founded in the United States and not in Singapore. Taiwan has Acer, BenQ, TSM, South Korea has Samsung, LG and Hyundai. What about Singapore? According to prominent U.S. political economist Professor Huang Yasheng, "Singapore and Malaysia had weaker domestic firms in part due to a deliberate governmental bias against private local firms, mainly in the 1960s and 1970s, so foreign firms held a more substantial relative advantage. But in Taiwan, the government provided a sponsorship and financing role, not a managerial role as in Singapore and Malaysia. Capital in Taiwan and Hong Kong went to the most efficient firms, including small, start-up entrepreneurial firms, and was not based on the political or ethnic status of such firms." (Source: Harvard Business School) 4. Lack of entrepreneurial spirit and flair among Singaporeans: The insular political system and rigid education system in Singapore do not foster independent-thinking, creativity and entrepreneurship among Singaporeans as these attributes require an environment which allow for critical thinking and questioning of authorities to develop and thrive. Many Singapore students are only contented to secure a stable job upon graduation. Few will dare to start new ventures on their own. The situation is further exacerbated by the government offering scholarships to bright college students which deprive the private sector of the talents it so desperately needs. Though Singapore has one of the most educated workforce in the world, Singaporeans are ill-suited for a knowledge-based economy which require a completely different mindset altogether. To quote from Professor Huang Yasheng again: "Extremely attractive compensation packages in the public sector also mean that the most talented people in Singapore want to work for the government. The private sector is far less lucrative and attracts lesser talents. In the long run, this will be detrimental to the development of a vibrant private sector in Singapore." (Source: Harvard Business School) 5. Chronic dependence on foreign direct investments: Being an export-based economy of which manufacturing still forms a major component, Singapore is heavily dependent on MNCs for investments and of course the bottomline of these companies is profits which necessitates large number of foreign workers to keep labor costs low. The above five factors explain the anomalies and asymmetries prevalent in Singapore's economic system and performance: 1. Impressive GDP growth averaging 5 percent per annum: Singapore has averaged between 3 - 8 percent growth during the past decade saved for the recession year of 2008, an impressive figure for a developed economy. This is made possible by the PAP's liberal immigration policies which allow Singapore companies to hire cheap foreign workers easily, thereby keeping labor costs down while boosting the output and hence GDP at the same time. Unfortunately, the growth is not fueled by gains in productivity nor innovation and research and is likely to slow down in the near future as companies relocate to cheaper destinations elsewhere. 2. Low productivity rates: A detailed report released by the U.S. department of labor last year revealed that Singapore saw the steepest decline among 17 developed countries in productivity at a massive 6.6 percent in 2008. Productivity rates had been decreasing for the last three years and it averaged only 0.7 percent for the past decade. This unusual phenomenon can be attributed chiefly to the easy availability of foreign labor which discourages companies to invest in innovation to boost productivity. (read article here) 3. Stagnant wages: Due to the relentless influx of foreign workers, the median wages of ordinary Singaporeans have remained stagnant at $2,600 for the last decade. The median household income actually saw a decrease by 3 percent to about $4,700 last year. This is hardly surprising as the PAP's ultra-liberal labor policies do not contain any safeguards to protect the interests of Singapore workers unlike in Australia, Hong Kong and Taiwan. Foreigners are allowed to compete with Singaporeans directly who are naturally disadvantaged by their comparative higher labor costs and National Service obligations for the males. 4. Low domestic purchasing power: As a result of stagnant wages and high inflation rate caused partly by the inflow of foreigners, Singaporeans have the lowest domestic purchasing power among the Asian Tigers though they live in the second richest country in Asia by GDP per capita. According to a landmark UBS study last year, Singaporeans have a low purchasing power of only 39.9, comparable to Kuala Lumpur (39.5), Warsaw (34.0) and Bogota (33.7). Other countries in the Asia-Pacific region which are ahead of us are Tokyo (82.2), Auckland (68.9), Taipei (58.9), Hong Kong (58.1) and Seoul (57.4). (read article here) 5. Highest income gap among developed countries: The lop-sided economic policies of the PAP only benefit the rich and well-connected businessmen and not ordinary Singaporeans. Employers are the ultimate beneficiaries of the easy availability of cheap foreign workers which keep business costs down and increase their profit margins. On the other hand, the wages of Singaporeans are depressed artificially by the presence of foreign workers. As a result, the rich becomes richer while the poor becomes poorer leading to a very unequal society. Singapore's income gap has widened considerably in the last decade and is the highest among the thirty most developed economies in the world after Hong Kong. 6. Low standards of living: Though Singapore is technically a first world developed country, the majority of Singaporeans do not enjoy a quality of life commensurate with citizens of an economically advanced nation due to low wages and domestic purchasing power, stressful lifestyle, high cost of living, especially that of public housing which erodes savings leaving little for retirement, the lack of a comprehensive social safety net and basic political freedoms. Singapore is ranked a pathetic 70th position by Irish lifestyle magazine International Living and 53th position by the Economist Unit in terms of quality of life in the world, below Japan, South Korea, Taiwan, Hong Kong and even some developing countries like Slovenia, Croatia and of all places, Romania. Moving ahead or behind? Singapore is now at a crossroads. We cannot afford to continue growing on the back of cheap foreign labor for long as it is inevitable that other countries like China, India and Vietnam will soon catch up with us leading to an exodus of MNCs. We need a complete revamp and restructuring of the economy to make the transformation instead of half-hearted cosmetic changes which will not address the underlying cause of the malaise. The PAP knows exactly where the problem lies, but it is unable or unwilling to relinquish control of Singapore's economy because doing so will be tantamount to dismantling its own power support base. In a recent speech made at the Civil Service College, prominent MIT political economist Professor Huang Yasheng urged Singapore to “rethink” its state management model which has “milked this system for all it is worth.” “The private sector is the best way to grow the economy. It has the most productive, most innovative and entrepreneurial culture. The state-owned enterprise system doesn’t give you that….You are already hitting the wall. Retaining this strategy could mean sacrificing future growth that is possible only through a bigger, more dynamic private sector,” he said. He also opined that Singapore should expand its private sector in order to compete with China and India: “Maybe a better way is for the government to fund more basic research and then allow universities, private equity firms, venture capital firms and rich individuals to take care of the rest. That is because even when the state sector is well managed, it is not as innovative as the private sector, he says. From a technological development point of view, you need a bigger private sector to compete, to come up with new products, processes and technologies, to better compete with India and China.” Without liberalizing both the economy and political landscape to allow for freedom of speech, independent and critical thinking and innovation to thrive, Singapore can never hope to compete with the likes of Hong Kong, South Korea and Taiwan. Singapore risks becoming an economic basket-case if it does not overhaul its economic system in the next 20 years or so - the income gap will continue to widen, the exodus of young Singaporeans to greener pastures elsewhere will increase and they will be replaced by new immigrants from China, India and other countries, the birth rates will plummet as citizens reconsider their futures, the erosion of national identity will worsen and eventually we will lose our sovereignty and becoming either a dependency of China or reunite with Malaysia again. The only solution in sight is to privatize Temasek Holdings and GIC and channel its returns to a pension fund for Singaporeans, dismantle the GLC system and remove the "deadwoods", allow for freedom of speech and assembly, liberalize the media completely to allow new players to emerge, reform the electoral system and abolish the GRC system to permit genuine political competition and multi-party politics and lastly to institutionalize a system of checks and balances and clear separation of powers between the executive and legislative branches of the government. The transition period may be painful, but without changing with times, Singapore is doomed to fade into oblivion sooner rather than later. The PAP is not only part of the problem, but the root cause of the economic woes and uncertainties we are facing right now. Without reforming the political system, we can never make the necessary changes to our economy which will soon consign us to the rubbish bins of history. Copyright © The Temasek Review.   Related articles: 1. U.S. Labor dept: Singapore has steepest productivity decline 2. How PAP screws up Singapore’s labor productivity by opening its doors to foreign workers 3. Singapore has the lowest wages and domestic spending purchasing power among the Asian Tigers 4. Moving towards a Russian standard of living 5. Why Singaporeans are paupers in a first world economy 6. The Singapore Way 7. DPM Teo Chee Hean praises Singapore government for progress made in past productivity drives 8. Pitching the case for genuine democracy in Singapore  Read More →