TR EMERITUS

By Eugene Yeo and Jeremy Koh PRIME Minister Lee Hsien Loong has described the $20.5 billion Resilience Package as a 'very decisive Budget' that aims to help see Singaporeans through the difficult economic times ahead. Much has been said about the Budget lately with most PAP ministers and MPs, labor union leaders, employers and ordinary Singaporeans echoing the Prime Minister's words. The package consists chiefly of measures to help companies save jobs, retain workers and to keep them afloat during the economic downturn. Measures to help households include doubling of GST credits and a personal income tax rebate of 20% which was unchanged from last year. The government had argued that the most effective way to help Singaporeans cope with the recession is to save their jobs through supporting the employers. However, it does little to address glaring long-term deficiencies in our corporatist economic model. The S$20.5 billion ($13.7 billion) package — a whopping 8% of GDP — looks like past stimulus plans instead of a forward looking economic blueprint to retool our export-oriented economy. Why does Singapore suffer the most from the global economic turmoil as compared to our nearest neighbor Malaysia ? For far too long, we have been overly dependent on external trade while certain government policies like the compulsory CPF saving scheme and the high prices of public housing squeeze the middle class dry and dilute their spending power in the domestic economy. Singapore’s economy would be more resilient if it were better balanced. Consumption composes only about 40% of GDP — far less than other developed Asian economies, nearer to 55%. (read Wall Street Journal's commentary here) The best way to prevent companies from retrenching workers and shutting down is to provide a steady flow of  businesses for them. Only when there is demand will there be supply. The government's incentives to the business sector are only temporary measures to tide them over these hard times and does not generate a demand for their services or products. Why is our domestic consumption so low as compared to other developed Asian countries like Japan, South Korea or Hong Kong ? Take the example the average Singapore worker earning a median pay of $2,500 a month to support his family of four - his wife and two children. He takes home $2,000 after contributing 20% of his pay to his CPF. Assuming his CPF is enough to pay for his monthly mortage, all he has is $2,000 for the living expenses of his entire family. How much spare cash does he still have to spend ? The limited spending power of Singapore's middle class is the real scourge of the current malaise pervading every sector of our economy and we will be able to shower the storm better had we have a greater domestic consumption. The GST credits and personal income tax rebates provide more relief to the lower-income group who does not spend much anyway than the middle income group. We propose two measures which will put extra cash in the pockets of the middle class almost immediately: 1. Decoupling the price of newly built HDB flats from the resale market: New HDB flats are currently sold at 70% of the resale value of neighoring flats. With the HDB resale market being popped up artificially by downgraders from private homes and foreigners, this impose a heavy strain financially on newly-wed couples looking for their first home. Public housing must be kept cheap and its prices should reflect current economic realities on the ground. Singaporeans should not be allowed to spend more than a certain percentage, e.g. 15% of their monthly salaries on servicing their housing loans. Those whose incomes failed to reach the benchmark should be offered rental flats instead. The prices of new HDB flats should be pegged to the median pay of the average Singapore worker, calculated based on the amount the average worker will need to fork out over a 30 year period. For example, 15% of $2,500 gives us a monthly installment of $375, and a loan of $135,000 which middle-income households can afford easily. 2. Reducing employeers' CPF contribution to 10% or less: An extra 10% cash for each Singapore worker to bring home monthly will translate to greater spending power beyond basic subsistence levels. Less Singaporeans will need cash handouts which the government can redirect to give more to the lower-income groups to lift them out of poverty. Upon the recovery of the economy, Singaporeans can be encouraged to buy life annuities and health insurances from private insurance firms to supplement their CPF and medisave. CPF has already failed in its original function of serving as retirement funds for Singaporeans. How many of us can afford to depend on our CPF when we retire ? The government should stop meddling in the personal finances of its citizens and allowed them to manage their own hard-earned savings. Singaporeans have one of the highest saving rates in the world at 34.5%. We are also home to the richest sovereign wealth funds in the region with Temasek and GIC amassing assets of more than $100 billion dollars combined. Why then do we have less spending power compared to our counterparts elsewhere ? Why can't we retire comfortably in our golden years and instead have to continue working for as long as we can ? Why are there still homeless Singaporeans with no roofs over their heads in a developed country like ours ? There is something fundamentally wrong in our corporatist model and it is time we rectify it. Singaporeans from three generations - our grandparents, parents and now ourselves have contributed immensely to build up these SWFs through our CPF contributions and HDB flats purchases and yet they can afford to lose billion of dollars in failed overseas investments with impunity. Reducing both the employees' CPF contribution and prices of new HDB flats will benefit every Singaporean far more than GST credits and cash handouts. It is time we reduce our contribution to Temasek and GIC unless they are made to be accountable to the people like the Norwegian Pension Fund which publishes an annual statement of account for every Norwegian with a stake in it.  Read More →

By Fang Zhi Yuan, Senior writer I am heartened by Prime Minister Lee Hsien Loong's  call for families to draw closer together during these hard times. For far too long, we have been so pre-occupied with the rat race that we have neglected our families and friends. (Read Prime Minister's speech here) In order for us to spend quality time with our families and to bring up the next generation, we need to have the means to procure a decent standard of living for them and a politically stable climate free from any strife or conflict. How can one afford to even spend time at home if he has to work 2 jobs a day to support his family ? Prime Minister ended his speech by exhorting us to "be grateful for what we have in Singapore - a stable society, a sound economy, and a reputation which draws talent, investment and jobs to our shores. We must continue building on these strengths, so that we will emerge stronger from this crisis, ready to thrive in what will be a very different and more challenging world." While I am thankful in a way for the stable society and sound economy we have enjoyed over the years, I hope our leaders are aware of the potential pitfalls lying ahead. In spite of the apparent social stability we have now, there exists hidden undercurrents of tension and discontent beneath which will erupt eventually when the conditions are ripe.  There has been a growing disgruntlement and disenchantment on the ground for quite some time now from certain groups who are feeling increasingly marginalized by some of the government's policies. Our over-reliance on foreign labor has led to a depression of the wages of both the blue and white collar workers who are feeling the pinch of the economic downturn. CPF has failed miserably in its function as a retirement fund for the lower income group who are facing a grim and uncertain future with no social safety net put in place to prevent them for being stuck in a vicious cycle of perpetual poverty and deprivation. The educated professionals and managers who are retrenched in their 40s and 50s have to manage their expectations in taking up a lower-paying job which does not commensurate with their academic qualifications. The middle income group will be squeezed harder as they do not qualify for cash handouts and workfare from the government and yet their monthly incomes are barely enough to provide for their families. Many undergraduates who had borrowed heavily from the banks to pay for their tuition fees will be burdened with debts if they are unable to secure a decent-paying job upon graduation. In the past, a university degree is generally regarded as the ticket to a better life, but not so anymore. Gone are the good old days when graduates earn enough to purchase a home of their own and start a family within 5 years. Now they will be considering themselves lucky if they are able to land a job. I graduated in 2002 in the aftermath of the 911 terrorist attack. Even though the economy is growing at a slow pace of 1 to 2% then, jobs are still plentiful for graduates. An engineer often command a starting pay of $2,500 to $2,800. Chemical Engineers were especially hard sought after and could earn more than $3,000 if they have first class honors. A lawyer earned about $4,000 after finishing his/her pupillage and a first year medical officer more than $3,000 monthly. Administrative executives can expect a salary range of $2,200 to $2,500 while those in the banking and finance industry could earn more than $5,000 a month exclusive of commission and bonuses. In today's job market where jobs are scarce, fresh graduates have to compete with recently retrenched middle-aged managers and executives who have more experience than them and foreign workers willing to put up with lower pay and longer working hours. As a result, their starting pay is very much reduced and they have little bargaining rights to negotiate for better working conditions. Take for example a graduate earning a median pay of $2,500 a month and needs to repay $700 for his study loans, subtracting his CPF contribution of $500, he will only take back $1,300 in real cash. Assuming he needs to spend $600 on food and transport, he will have $700 left. Is $700 enough to pay for the monthly mortage of a 3 room HDB flat ? It may be enough, but will he and his wife be able to raise a child ? Singaporeans have been asked by the government to lower their expectations accordingly with our economy in dire straits. Tell that to a senior level manager who used to earn $7,000 a month and now have to slog daily as a taxi-driver for less than half his usual pay or a fresh graduate whose parents had invested heavily to put him through to university and now suddenly find himself getting less than what he bargained for with a low-paying job as a contract worker. Please do not get me wrong, I am not blaming the government for the economic woes we are in now and neither am I disparaging these Singaporeans for not being contented with their lot. We must not forget that every one of us have aspirations in life and human nature is such that we tend to blame external parties for unfulfilled dreams and the government often becomes the most convenient scapegoat. The government's draconian laws curbing civil rights and space give few channels for unhappy citizens to vent their anger and let off steam so as to speak. Besides, years of political repression have made much of the population docile and tamed with few daring to express their dissent openly in public. While we will not see a massive protest against the government happening any time soon at Hong Lim Park or elsewhere, we may encounter a rise in petty crimes such as vandalizing of public properties, bizzare physical assaults on MPs and civil servants. Divorces, child/spouse abuse and suicides may also rise and there will be more depressed and anxious Singaporeans seeking help from psychiatrists. On the whole, the impending crisis will not shake the fundamentals of our economy and neither will it rock the foundation of our nation. The present political status quo with one single ruling party controlling the entire government including both its executive and legislative wings and an essentially non-existent, feeble opposition will continue to remain. An election called now is likely to return the ruling party to power with an increased margin. In such extraordinary times, it pays to be extra careful and aware of the possible dangers lying ahead. We can no longer rely on past accolades and successes alone to steer us safely out of stormy waters. Let's not take our social stability for granted and expect the unexpected.  Read More →

By David Wu, Guest Columnist 'What is Singapore's national costume?' I could not think of a satisfactory answer to my friend's question, since there are so many types of dress that Singaporeans can identify with. Then came the perhaps unsurprising answer: 'The defamation suit of course!' Chee Soon Juan, the self-termed Singapore rebel, is probably the synonym for the defamation action in modern day Singapore. While I am not going to proceed to discuss the merits of his pursuits, I will put forth a case why ignoring his often exaggerated remarks may be the better solution. If you seek the advice of any lawyer, he would probably advise you that a pauper like Chee is not worth suing. He is already bankrupt and is therefore not afraid of any additional sanction that seeks to deprive him of his possessions. What he would probably fear losing, I would think, is exactly what these defamation suits give him: the attention of the public. The media coverage on Chee has always been focused on his brushes with the law, and thus inadvertently bringing attention to his cause and beliefs. While the man may believe himself to be a martyr, it is difficult to connect his position with someone like Gandhi or Aung San Suu Kyi, since not many would pay attention to his preachings if he was left alone. The only similarity between them is perhaps that they were all subject to government prosecution, something that arguably is Chee's presently most valuable possession. Chee ingeniously uses the courtroom as his soapbox, and his portal to influence public opinion. It is therefore not a surprise that he commits the offence of defamation over and over again, to the extent that some may think he actually enjoys it. In the United Kingdom in the 1980s, the British government banned a book called the Spycatcher, written by an ex-MI5 agent Peter Wright, in which he made bold claims about the misdoings of the government. The book itself might not have gotten much readership if left alone, and the few who did read it might not have believed its contents. Nevertheless, the enthusiasm the authorities showed to prevent the book from being published made everyone curious about what they wanted to hide. The book went on to become an international best-seller, published in every other country but the United Kingdom. If the defamation suits did any good besides depriving Chee of his materialistic possessions, it would have been the fact that doubts are raised in the public mind about the veracity of his claims. Why would the government pay so much attention to silencing him if it was just baseless nonsense? It is human nature to be curious about what we are prevented from knowing, even when most of the time we would admit that if we knew in the first place we probably wouldn't have bothered to find out. Moreover, the government's attempts to silence Chee merely made him a fighter for the freedom of speech in the eyes of Western media. The American philosopher Thomas Scanlon believed that an essential part of a democracy is that citizens should be given the autonomy to receive information freely and evaluate its truth for themselves. Although most of us would agree that it is necessary for the government to protect society from dangerous racist hate speech or the promotion of terrorism, we would also agree that the public is capable to make the correct judgement in Chee's case. The times have changed since the threat of Communist sedition and the significant improvement in education standards means that the majority of Singaporeans can be trusted to distinguish truth from falsity, especially in unsubstantiated claims such as Chee's. Even if a minority of people believed these allegations, the importance of the right to the freedom of expression means that we should allow speech, especially when even more people might have believed it to be true if it was suppressed through prosecution. The free 'marketplace of ideas', as it is suggested in the United States, would mean that only the truth would emerge unscathed through the scrutiny of public opinion. The truth is naked, and it requires no additional help from the authorities. The Singapore government has often been criticised for being a nanny-state, and I believe that the populace has now matured enough to be not easily swayed by the boisterous claims of a demagogue. Looking from the point of the defamed politicians, it is true that their reputations have been attacked. Nonetheless, the fact that they willingly entered into the public eye when they decided to run for office should mean a greater tolerance towards such accusations, and the willingness to put themselves up for public scrutiny to clarify matters. Moreover, even if only the false statements were censored, such liability to prosecution would have a 'chilling effect' on important investigative journalism or other constructive criticisms towards those in power. Such restraints against free speech would only be viewed as undemocratic, as were the Napoleonic laws prohibiting the criticism of government officials. John Stuart Mill has argued powerfully that the government should not have an 'assumption of infallibility' and allow criticisms on its policies, since they 'ought to be moved by the consideration that, however true it may be, if it is not fully, frequently, and fearlessly discussed, it will be held as a dead dogma, not a living truth'. The ability of the Singapore government is evident in its good governance and recognised throughout the world. Politicians should therefore not prevent accusations that are clearly not true, but rather to clarify these false claims to make their reputations even stronger. It is often that a sore-loser accuses the winner of cheating, but the true champion always chooses to take such allegations in his stride.  Read More →