"'Supposing the world's richest man, Carlos Slim, comes to live in Singapore. The Gini coefficient will get worse. But I think Singapore will be better off. Even for the lower income Singaporeans, it will be better,"
- PM Lee, 27 Mar 2010 [Link]
For ordinary Singaporeans to benefit from rich people coming here a few things have to happen - they are here to create well paying jobs (and not exploit cheap labor), they pay taxes under a highly progressive tax structure, and they do not drive up the cost of living for Singaporeans. What you don't want is have rich people come here to compete for limited resources such as housing and medical services - they will price out your own citizens and local Singaporeans will lose out. There was a good point made by an American writer Joel Kotkin said that Singapore should not try to expand the middleclass by importing it - it is only beneficial if it is created from within our own society[Link]. Importing richer higher skilled foreigners can result in the formation an underclass and ultra-underclass among native Singaporeans as the cost of living is driven up by a rate not that cannot be matched by the growth of their incomes.
Very often importing foreigners makes the numbers look good e.g. Singapore is 4th highest in per capita wealth. You can get such achievements by attracting the likes of Jet Li, Jacky Chan and rich Indonesians by offering them a kind of tax haven to park their wealth here. However, this seldom translate to any benefits for ordinary Singaporeans less the few who work as investment bankers who are already overpaid for what they do thereby further widening the income gap even more.
Super-rich come to S'pore [Link]
Insight Down South
By Seah Chiang Nee
Many of working class living in the heartland do not see much benefit from having so many rich people around – but they feel the pain of rising costs.
A LUXURIOUS 7,072 sq ft penthouse at a prime district has just changed hands for S$30mil (RM71.46mil) in one of the most expensive deals on a per square foot basis. The buyer was a permanent resident from Hong Kong and the seller an Indian tycoon who had bought it in 2006 for S$17.3mil (RM41.21mil).
The cost of the triplex with five bedrooms and an 11m swimming pool worked out to S$4,242 per sq ft, a record in land-scarce Singapore.
Last June, an unknown Chinese national snapped up a bungalow on Sentosa Island for S$36mil (RM85.77mil), the highest paid for a residence here. The PR holder from China had considered the price a bargain, according to the agent who handled the sale.
These are among a rising number of wealthy foreigners – especially Chinese, Indians and Indonesians – who have made this city their family residence while doing business outside.
Asia’s growing wealth, particularly from China and India, is slowly making its way into Singapore. More Europeans, too, are parking their money here.
For a glimpse of a Singapore in, say, another 10 or 15 years, just take a picture of Monaca or Zurich and superimpose it on this island. What will emerge is a city of wealth – transient and abiding, a land of personal banking, celebrity-chef dinners, where Bentleys, Lamborghinis and Ferraris ply the street and branded goods will become daily items.
An example of the foreign presence can be gauged at Sentosa Cove, one of Singapore’s most posh and expensive waterfront projects.
More than 3,000 people now live there. They have come from 22 countries, the top five nationalities being Singaporeans (who make up 40%), Australians, Britons, Germans and Chinese.
“Singapore has opened up a lot in recent years and we’re drawing foreigners keen to park their money as well as live here,” a developer said.
The arrival of the nouveau riche has created new fortunes for Singapore’s upper middle class, but it has also widened the economic gap between the rich and the poor as few of the lower class derives much benefit from the phenomenon.
For the upper class, the story is clear. Last year the number of millionaires jumped by 26%. Currently, 11.8% of Singaporean households have at least US$1mil (RM3.09mil) in investible assets (excluding property) each.
Some recent headlines gave an indication of the change, good and bad.
A Singaporean billionaire, Peter Lim, has just made a US$507mil (RM1.56bil) bid to buy England’s Liverpool football team. And two Singaporeans displayed their wealth less gloriously at the casino tables. One, a company managing director of a seafood business, lost S$26mil (RM61.95mil) in just three days, while the second, who was in the latest Forbes list of Singapore’s 40 richest people, dropped S$100mil (RM238.27mil). Easy come, easy go!
Cashing in on it, Citibank last week launched an exclusive Ultima credit card for the super rich in Singapore where members must have S$5mil (RM11.9mil) and admitted only by invitation.
Some of the nouveau riche came because of their children’s education. Among them is action star Jet Li, who bought a bungalow for S$19.8mil (RM47.15mil) last year. He took up citizenship and sent daughter, Jane to study here.
Another new settler, US investment guru Jim Rogers, with a net worth of US$1.8bil (RM5.55bil), also came to send his daughter to the reputable Nanyang Primary School two years ago.
To ensure she got a better chance, Rogers and his wife had performed 40 hours of volunteer work, something the locals do.
Who are the richest foreigners living here?
The Forbes’ list of top 40 ranks China-born Zhong Sheng Jian, 48, as the fourth richest man in Singapore with a net worth of US$2.5bil (RM7.71bil). And 47 year-old Indian-born Sudhir Gupta, now a naturalised citizen is ranked 13th richest. He has a personal fortune estimated at US$320mil (RM987.3mil).
Seventeen percent of foreign buyers of high-end property in the first quarter are Chinese, and the number is rising. One out of five bought houses in prestigious multi-million dollar districts of 9 to 11, the Central Business District (CBD) and Sentosa.
Some salesmen have reported cases of Chinese buyers paying the down payment with a bag of cash, leading to suspicion they may be keen to cover the money trail.
Recently a growing number of foreigners have turned to buying landed properties.
Under the law foreigners, including PRs, cannot buy any property on land or any apartment with fewer than five storeys – except with special approval. Under its strategy of attracting the wealthy and talented to settle here, the government appears to be loosening the screw.
In the first half of this year, 150 such sales were allowed, most in the prime, rich areas.
Local critics are protesting against such sale of precious landed properties. “It is like selling the country’s Crown Jewels to outsiders,” one blogger wrote.
The influx of foreign wealth is not welcomed by all Singaporeans. Some see their cake becoming smaller and more expensive.
Many of working class citizens living in the heartland do not see much benefit from having so many rich people around – but they feel the pain of rising costs.
A polytechnic student asked: “And what happens to us when they suddenly take their money and go home?”