S’pore No.1 in debt, No.1 in gross assets?

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When insurance and pensions were the largest asset class at 46 per cent as Michael Heise stated, could S’pore still keep the position of No.1 in Asia for gross financial assets?

I refer to the article “S’pore is No. 1 in Asia for gross financial assets” (Straits Times, Sep 28).

It states that “Singaporeans have net financial assets of about €89,570 (S$143,000) on average, putting the country at seventh among the top 10 richest nations, according to a new report yesterday.

It found that the net financial assets of households here rose 9.6 per cent last year – “the fastest rate in the last four years”.

Net financial assets are those such as bank deposits and insurance minus liabilities like loans.”

With regard to “Singapore was third in Asia in net terms, but took the top spot in gross terms or before debt, beating Japan and Taiwan, said the Allianz Global Wealth Report, which analysed 53 territories” – since our gini (inequality) is the highest in Asia – this “top spot in gross terms or before debt” accolade may need to be taken with a pinch of salt.

“Japan was third with €96,890, Taiwan at No. 5 with €92,360, and together with Singapore, are the only Asian names in the top 10.”

 

“Gross financial assets – the sum of assets such as bank deposits, securities and insurance assets – per capita here was around €125,645 as at Dec 31 last year.”

As to “The report said Singapore’s solid performance could be due to reasons such as debt growth remaining in the doldrums last year, so debt ratios continued to decline. However, it noted that debt ratios – total liabilities as a percentage of total assets – are still relatively high at 73.7 per cent” – I looked at the report and it states that “Singapore with highest per capita debt (in Asia) – Debt per capita 2016 by country, in EUR”.

Singapore’s debt per capita at 36,075 euros is a whopping 49 per cent higher than second ranked South Korea’s 24,200 euros.

So, is there something wrong with the subject Straits Times news report which said that “Singapore’s per capita liabilities was €36,075 at the end of last year, among the highest in Asia” – when in fact according to the report – Singapore’s debt is actually the highest in Asia?

By the way, our Press Freedom Ranking is at 151st in the world.

As to “On the other hand, asset growth accelerated considerably in 2016, reaching 7.4 per cent, mainly due to high growth of insurance and pensions assets, whose share in the asset portfolio of Singaporean households is higher than in all other Asian countries at 46.3 per cent,” said Allianz.

Allianz chief economist Michael Heise said in a statement: “Households in Singapore have accumulated quite a lot of pension assets… (reflecting) the design of the Singaporean pension system with its strong second pillar of funded obligations.

For Singapore, insurance and pensions was the largest asset class at 46 per cent while bank deposits made up 37 per cent” – I understand that Singapore’s relatively high assets may need to be evaluated from the context that a lot of it may be in their HDB flat which may not be so easily monetised for retirement, and as much as $52,000 (the current maximum CPF Basic Healthcare Sum (BHS) which increases every year) that one may have to keep in one’s Medisave Account – is also not disposable income in retirement.

Leong Sze Hian

About the Author

Leong
Leong Sze Hian has served as president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), invited to speak more than 200 times in over 30 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of Indonesia and Brunei. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.