I refer to the report “S’pore’s long-term prospects depend on right policies, right politics” (Channel News Asia, May 1).http://www.channelnewsasia.com/stories/singaporelocalnews/view/1125939/1/.html
I was watching the documentary movie “Inside Job”,http://www.sonyclassics.com/insidejob/ , which won the Best Documentary Award of the New York Film Critics Circle, on the flight back to Singapore from Monaco.
What struck me was that there may be some similarities between the circumstances and events leading to and following the recent financial crisis, in the United States and Singapore.Issues that matter?
Longest working hours
Americans are workig the longest hours ever in histoy.
Singaporeans are also working the longest ever in our history – in fact, Singaporeans now have the longest hours worked per week in the world, at 46.6 hours. (Report on Labout Force in Singapore 2010http://www.mom.gov.sg/Documents/statistics-publications/manpower-supply/report-labour-2010/mrsd_2010LabourForce.pdf
and 2010 Census http://www.singstat.gov.sg/pubn/popn/C2010sr3/cop2010sr3.pdf)
Income gap widening
The income gap is the highest ever in American history.
The income gap between the rich and poor as measured by the Gini coefficient, at 42.5 in 2009, for Singapore, has been ranked as the second highest amongst 38 countries with very high human development. http://www.pressrun.net/weblog/2010/07/gini-coefficient-income-gap-in-singapore-and-elsewhere.html
Unrelentless economic growth
The United States had an almost 40-year economic boom.
Singapore has also had one of the best economic booms in the world over the last 40 years or so.
Record debt levels
Debt levels just before the crisis, were at its highest ever in the United States.
So are debt levels in Singapore.
To what extent has our higest public housing home ownership rate in the world of over 85 per cent, contributed to Singapore’s debt levels?
Predatory lending?
Moneylenders were allowed to charge whatever interest rates they like last year, against the previous cap of 18 per cent per annum.
The number of pages of advertisements offering credit in a daily newspaper, triples over the last year or so.
Credit card debts are at a record high in Singapore, as was the case in the United States before the collapse.
About 1.2 million people in Singapore hold credit cards, with total credit cards of about six million plus another 1.2 million supplementary cards.
About 300,000 have not paid their credt card bills in full for more than three consecutive months, and about 59,000 may be deliquent as they did not even pay the minimum required every month.(“More credit card holders not paying their bills in full”, Channel News Asia, Oct 25)
http://www.channelnewsasia.com/stories/singaporelocalnews/view/1089254/1/.html
Estate tax abolished
Estate tax, income and other taxes were cut in the United States.
Estate tax has been abolished in Singapore and income tax rates for the higher income have been cut too.
Pay conflicts of interest?
One of the primary causes of the financial crisis was the conflict of interest of the financial industry giving contributions, consulting work, board seats, and lobbying politicians in the United States, to allow the unrelentless growth of the industry and the economy, with minimal check and balances or regulation – in particular the compensation packages of Chief Executive Officers (CEOs), senior corporate officers and board members.
Singapore’s politicians are the highest paid in the world.
Could paying a GDP bonus to Ministers be a possible conflict of interest as it may be an incentive to grow the economy regardless of the consequences like foreigners taking Singaporeans’ jobs, housing, etc.
The parallel here may be akin to the U.S financial industry’s unrelentless growth in booked profits and pay, regardess of the risks and undesirable consequences to consumers and citizens.
Independent academic research
Conflicts of interest whereby academics in th United States were paid handsomely by the financial industry, which may have tainted their idependence of research, media presentations and interviews, etc.
When was the last time that you read in the media in Singapore, about a well researched critical academic analysis on the more contentious issues affecting Singaporeans, like CPF, HDB, healthcare affordaility, etc?
Sub-prime crisis
Just before the financial crisis, the sub-prime delinquency rate in the United States was I uderstand less than seven per cent.
In contrast, HDB Concessionary and HDB bank loans in arrears over three months have been estimated to be as high as seven per cent historically (HDB bank loan statistics are not available, and HDB loan statistics have only been sparingly disclosed occasionally, as and when questons were asked in Parliament).(“HDB home loan defaults on the rise”, ST, Jan 5, 2009)
http://www.asiaone.com/Business/My+Money/Property/Story/A1Story20090105-112414.html
In conclusion, given the above parallels between Singapore and the United States before and after the financial crisis, what does the future hold for Singapore’s long-term prospects, and are we pursuing the right policies, right politics?
Leong Sze Hian
