Saturday, January 30, 2010

Man in White : Silence on key issues..

In a recent seminar, ‘Men in Black or White: History as Media Event in Singapore’, jointly organised by the National University of Singapore’s Asia Research Institute and the National Library[Link], historians argued that the book:

a. Was inadequate in its coverage of the merger with Malaysia.

b. Failed to answer the question of whether Lim Chin Siong and other Barisan Socialis members were communists.

Historians were also disappointed that the book failed to discuss the PAP’s resignation from the Socialist International in 1976. I thought that was rather straight forward - the PAP was found to be fake socialists and were about to be expelled from Socialist International so they resigned instead to save face. Other disappointments with book include lack of discussion about Devan Nair’s resignation from the Presidency in 1985 and Operation Spectrum in 1987 - yep, all the unglorious past of the PAP govt.

Since I own the last few remaining copies of the Fajar the monthly organ of the University Socialist Club which was published during the merger period, I have scanned a number of Fajar articles related to the merger issue and Lim Chin Siong.













The Fajar carried out a Gallup Poll on 12-15 July 1962 in Tanjong Pagar constituency to find out how many would support merger. To ensure its impartiality, they engaged members of the public representatives of civic organisation to count the votes. The poll showed that 90% of the people were against the White Paper on the merger. If the merger referendum was conducted as a simple YES/NO vote to the merger, it would have been defeated. The PAP presented the electorate with a Hobson's choice, a kind of trick question with 3 options all leading to merger and no option to reject a merger with Malaysia :


  • Option A: All Singapore citizens would automatically become citizens of Malaysia, and Singapore would retain a degree of autonomy and state power, such as over labour and education. Singapore would also get to keep its language policies, such as to retain using all four major languages, English, Mandarin, Malay and Tamil.
  • Option B: Singapore would become a federal state like that of the other eleven states, with no more autonomy than the other states would, thus ceding control over issues such as labour and education policies to the federal government in Kuala Lumpur. This also meant that there would be less multilingualism - only English and Malay would be used for official purposes, and possibly education. Only those born in Singapore or descended from the Singapore-born would become citizens of Malaysia. There would also be proportionate representation in Parliament from Singapore.
  • Option C: Singapore would enter on terms no less favorable than the Borneo territories, Sabah and Sarawak, both whom were also discussing merger with Malaysia. This was to ensure that Malaysia would not discriminate along racial lines, as that would mean discriminating against Sabah and Sarawak, which were predominantly Bumiputra as well.

Many consider the referendum to be undemocratic - the PAP had all its bases covered because blank votes were counted as option A[Wikipedia] . Isn't that interesting history of how a false undemocratic choice was presented to the people? Following the referendum, the PAP declared it had strong support for merger.

Now for the other issue : Were Lim Chin Siong and Barisan Socialis members communists? Lets start with what Wikipedia says:

Declassified British documents [1] reveal that Lim was not the Communist he was and is painted in history textbooks in Singapore. In a starkly revealing essay, Dr Greg Poulgrain of Griffith University observes that the British Governor of Singapore and his Chief Secretary in their reports to London stated that the police found no evidence to establish that Lim was Communist. During Lim's rallies, the British and anticommunist Chief Minister Lim Yew Hock incited riots among the unionists and students in attendance. Lee Kuan Yew later used these incidents as reasons to imprison Lim under the charge of Communism, after Lim split from PAP to spearhead the Barisan Sosialis. From being courted as a co-founder of the PAP, Lim was later banished to England; his immense popularity with the Singapore people did not go down well with Lee who feared that Lim might supersede and displace him. Chin Peng, the leader of the MCP, stated that the Malaya Communist Party had never controlled and manipulated Lim Chin Siong and Barisan Sosialis as Lee Kuan Yew had accused.

It is thus unsettling how many Singaporeans still believe that Lim was a Communist simply because he was painted so by Lee despite conclusive and consistent proof to the contrary.

The British actually objected to arresting Lim Chin Siong because they did not believe he was a communist and at that point in time was involved in a constitutional struggle[Link]. What was this constitutional struggle about? It was about securing the democratic freedoms and the empowerment of Singaporeans. In a recent interview, Dr. Poh Soo Kai, explained why they left the PAP to form the Barisan Socialis:

"The Big Six – Mr Lim, Mr Fong Swee Suan, Mr Woodhull, Mr Dominic Puthucheary, Mr S.T. Bani and Mr Jamit Singh – had stated that while they supported the PAP in the coming by-election, they would not compromise on issues such as detention without trial and freedoms of press, speech, assembly and organisation. Dr Poh argues that these statements amounted to a ‘request’, not an ‘ultimatum’. But Mr Lee, he says, saw this as a challenge to the PAP leadership and decided to make the split."

- Dr. Poh Soo Kai, Straits Times Interview "Dr. Poh:Why I parted company with PAP", 27 Dec 2009.

Here's an article by Lim Chin Siong on the Constitutional Struggle published in the Fajar (Aug 1961)












They (Barisan Socialis) were engaged in a struggle for democracy in Singapore, freedom and empowerment of ordinary citizens and were about to succeed at the coming elections before they were arrested and detained without trial. 50 years later, Singaporeans live in a semi-authoritarian state still struggling for their basic right to assemble and to speak freely. Elections have been tweaked to preserve PAP's dominance and Singapore ranks very low in press freedom. The same laws that were used to detain these people still exist in Singapore today. Today our leaders look to communist China hoping that its success and rise will vindicate what they have done in Singapore i.e. trading away civil liberties for economic gains. It is very clear to me who stood on the side of the people, freedom, human rights and democracy ...and who stood against. Was Lim Chin Siong a communist? Only in the fiction of PAP men written to promote myths about their righteousness and greatness.

Friday, January 29, 2010

On Transport Again....

My posting on 24 Jan 2010 about the transport system and Goh Meng Seng's analysis of the ridership/capacity figures drew a lively discussion in the comments section - 100+ comments. Some suggested there were other reasons for overcrowding on the trains such as the taxi fare hike that cause taxi riders like myself to switch to the MRT - this may be a contributing factor however the total # of taxis in Singapore is 20+ thousand compared with the roughly 150K population increase per year. Without finer statistics, people can keep on arguing about obscure possibilities and improbable realities.

I suggest people who want to debate about this further can also do it with MM Lee because he said essentially the same thing as Goh Meng Seng:
.
We’ve grown in the last five years by just importing labour. Now, the people feel uncomfortable, there are too many foreigners. Trains are overcrowded with foreigners, buses too, property prices have gone up because foreigners with permanent residence are buying into the market. ”
- MM Lee 28 Jan 2010 Straits Times
.
I'm glad MM Lee suddenly turned around and agree with what netizens have been saying all along about housing and transport. The first step to fixing problems is to admit they exist and stop denying. Netizens were not in disagreement with the govt for the sake of opposing it - they disagreed because they were felt strongly that they were right. I'm happy MM Lee sees our side - however, some may suspect that elections which have to be held this year or next has something to do with this.

Thursday, January 28, 2010

MM Lee : You must be daft!

"As Singaporeans lament about rising flat prices, he said they ought to understand the Government sells them at a subsidised price, below market rate, so that they can own an asset that will appreciate in value over the years. It adds to their wealth and this is asset-enhancing policy Mr Lee believes citizens should not find fault with. If they do, they must be 'daft', he said at a dialogue during a housing conference as part of a series of events to mark the Housing Board's (HDB) 50th anniversary." - ChannelnewsAsia[Link]

Hardly a week goes by without our leaders demeaning ordinary Singaporeans. 'Daft' means stupid. MM Lee said that those who are unhappy with rising HDB prices are stupid - which means most netizens, house hunters for whom prices have risen beyond their reach...and many ordinary Singaporeans are stupid. Very interesting remark especially after the world just had the biggest financial crisis in the past 70 years caused by American banks that believed housing prices can only go up. Housing prices should rise in tandem with sustainable increases in median income. If it rises faster than income, it means that home buyers have to take up more debt to service their housing loans. It does not take rocket science to tell you that debt levels cannot keep rising and at some point prices have to come down. The problem with fast rising property prices is that it is not sustainable and many will be crushed when it comes down.

In 1998, a woman wrote to the ST forum about how she bought a new flat from HDB at the height of the housing bubble in 1996 but end up with a loss of $80-$100K a few years later because new flats sold by HDB in her area had fallen by that amount. Well I think it is really daft to think that property prices are a one way street. Just look at Japan after their property prices rose continuously for decades to hit a high in 1991:


Sunday, January 24, 2010

More on Transport...

In my previous posting, I explained that to satisfy Singaporeans' demand for transport, the quality of the public transport has to be improve sufficiently to reduce the demand for cars. To do this public transport companies have to be focussed primarily on improving service quality and cannot be distracted by the need to make profit for shareholders which is the case today.

Goh Meng Seng in his latest blog posting did an analysis of ridership figures[Link] on the SMRT and this is what he found:


Figures were taken from Singapore's Yearbook of Statistics 2009.
Basically, we had a population growth of 17.2% from 2003-2008 but the SMRT car kilometers was reduced by 13% during the same period. What this means is that the trains are packed roughly 30% more from 2003-2008. So the complaints of Singaporeans who say that the trains are more cramped and stuffy these days are not imagined. During this period, as service quality fell, the public transport fares went up many times.

The poorer service quality will up Singaporeans' desire to own and use cars - but the number of COEs is limited and our roads have limited capacity. COE shoots up and ERP goes up. Just 2 days ago, the govt announced that the ERP at 3 gantries will increase by a whopping 30%[Link] but that is really nothing new as ERP hikes are a regular affair[Link]. All these hikes do nothing to meet demand ...they are suppose to depress demand by hurting people in the pocket. Like I said in my previous posting the income inequality means all these hikes hurt lower middle income families hardest and create further mismatch between people's needs and distribution of a scarce resource- these hikes do not distinguish between the needs of a father has to send his child for to the hospital in a taxi and someone in a Mercedes on his way to the golf course.

There is good reason for people to be unhappy with the system. It is designed to maximise govt revenue & minimise expenditure, make good profits for GLC companies and their shareholders but failed to meet the needs of a growing population and the desire of the people for a better quality of life. In crowded land scarce cities, there has to be nothing to distract govts from it primary goal of meeting the transport needs of the people and satisfy rising expectations for better transport - the effort requires tremendous commitment and resources - anything less will naturally lead to unhappiness. There is nothing surprising about Singaporeans being unhappy with this system of COE+ERP+"for profit" public transport because it is a system that has fallen far far behind the rising aspirations of Singaporeans.

Thursday, January 21, 2010

COE @ $20K...rationing your dreams.

The COE for all categories of cars has breached $20K[Link] - car dealers accurately predicted this in Sep 2009 when the govt cut the number of COEs by 16%[Link]. Yes, what to do? More people want cars and Singapore has only so many roads so we have to ration car ownership and control the use of cars. The COE is a unique solution and the ERP is fairly unique - some countries collect toll for the use of highways but the ERP is a finer grained solution controling the use of stretches of roads that are congested. If the COE system is necessary - we were told that we will have crippling traffic jams without the COE, why haven't cities without COE fallen apart? Why are we the only ones with COE?..I'll answer this later.

In many countries, having a family car is very common if not a necessity but in Singapore it is considered a luxury and owning one is dream for many working class families. Because the number of COEs is fixed every year depending on the number of cars deregistered and allowing for a small limited growth, it is build into the system that many, if not most, families will never own a car. By importing more people who also compete for the limited number of COEs, even fewer Singaporeans can realise this dream.

The COE is allocated based on a bidding system i.e. it is allocated based on ability to pay rather than a person's needs. A family with 3 children has no priority over the teenage son of a tycoon - it is all decided based on who can spend more money. Now superimpose this COE system on a society with the highest level of income inequality in the developed world...hmmm what do you get? Then you supplement this with a 'for profit' public transport system which has shareholders to answer to. What you get is a transport system that people are constantly unsatisfied with. Cars are not going to the people who need it - families with children or individuals with disability but to people with money ...and a public transport system that has to tradeoff between service quality and profits for shareholders. Caught is this system is the working class father who has to carry his baby's stroller up a sardine packed bus and the mother who has to carry the baby and perhaps control a toddler who can't get a seat because the bus is packed and the tired Singaporean on the priority seat has closed his eyes and pretended to doze off.

Today as I was getting onto the MRT, I noticed that they have hired a woman wearing gloves at the platform. What are the gloves for? This woman will instruct the people on crowded trains to 'move to the center'. If they are too deaf or too stubborn, she will start using her hands to move them- that is why she needs the gloves. Why can't a supposedly world class govt run a public transport to maximise comfort for commuters without hiving it off to profit-seeking shareholders who want passengers to be packed like cattle so they can maximise their profits?

Now for the great mystery - why do we need the COE system when no other city's transport system has collapsed without implementing it? Why doesn't Seoul of pop. density double that of Singapore need to have COE? What about Tokyo....why hasn't it collapsed from a traffic gridlock without COE? What about Taipei which has a population density 1.5 times that of Singapore? We ended up with this unique COE system that brought in more revenue for the PAP govt from car ownership than any other govt in the world and we also have the one of the most profitable, if not the most profitable public transport system per capita (aka SMRT) in the world....actually the public transport system in most countries lose money. So what is the explanation for this great mystery?

The demand for cars depends a lot on the quality of service of the public transport system. If you take 2 hours driving to work, you will switch to the MRT if it gets you there in 1 hour. This is why most Tokyo residents leave their cars at home and take the subway - 1 in 2 households in Tokyo own cars[Link] but less than 10% use it to get to work. Most govts curb the growth of the car population and usage by investing heavily in public transport to make the network extensive and rides comfortable to lower the demand for cars[Link]. The Taipei subway for example arrives at less than 1 minute intervals during peak hours. In Seoul, the public transport network in up and running before people start moving into new residential areas to encourage them to use the public transport instead of buying cars.

By implementing its unique COE + ERP system, the PAP has been able to create a new source of revenue. At the same time, there is less pressure to improve the public transport rapidly now that the govt is able to control the absolute number of cars - the shares in public transport company have been sold to profit seeking shareholders and the public transport company now has to generate profit to distribute as dividends to these shareholders .No other city even those with far higher population density has needed to curb car population using a vehicle quota system....and no other govt in the world has been able to collect more revenue from car ownership than the PAP.

Wednesday, January 20, 2010

More People step forward......

We rarely see better news than this for Singapore opposition parties. Mr. Tony Tan, an ex-SAF scholar, who was with the SAF until 2001 and left the service to successfully start a chain of tuition centres called SmartLab and his wife, Hazel Poa, who was with the admin service, have joined the Reform Party. Scholars previously co-opted into the system are not expected to do this and Hazel Poa expressed some apprehension because it might affect her relationship with her former colleagues.

I believe many scholars/ex-scholars are positioned high enough to have a good look at the system and do not agree with various PAP policies but while they are bonded and employed by the system, they do their work honestly and efficiently because the system is largely top down thus too difficult to change from within.


Given PAP's position on the political compass, you can probably (& naturally) find more people with dissenting views than people who agree with them. However, the PAP co-opted many talented people through the scholarship system and its large network of GLCs. If you look through the resumes of MPs, many of them belong to GLCs, national universities etc, it is implicit(?) that they will not be able to keep these posts if they join the opposition e.g. PAP MP Wee Siew Khim has a job at ST Eng & Chee lost his shortly after joining SDP. This construct which exists primarily to maintain PAP's dominance by denying political alternatives of talent has led to political ossification and does not serve the interests of ordinary citizens. However, over time the system has become saturated and they can't keep all talents within the system i.e. today only colonels and generals transit to GLC positions e.g. General Ng Yat Chung to Temasek, while lower ranking officers leave the service & the system. At the same time, many middleclass families send their children to local universities and top overseas universities without scholarships. We should see more qualified people with passion and conviction stepping forward to join opposition parties. The PAP will recruit from its usual sources....the same old reluctant politician types - those who are selected and persuaded to serve as part-time MPs...and those who have to paid millions to leave their high paying GLC jobs to serve as ministers.

Hazel Poa maintains a blog [Link]
You can meet Tony & Hazel at the next Reform Party Seminar[Link for details]:
23 Jan 2010, 1:30pm
Berkshire School Pte Ltd,
100 Beach Road #02-19A,
Shaw Towers, Singapore 189702.
Topic: Education

Tuesday, January 19, 2010

Minister Shanmugam : Don't Blame Foreigners....

At a meet the people dialogue a citizen rose to express his concerns about the govt's liberal immigration policy which caused the price of housing to rise.

The Straits Times reported that "he complained" and the key message from Minister Shanmugam to the resident was: "it is unfair to cast foreigners as villian".

So that is the PAP govt's strategy now? Anyone saying that the expansion in population has led to high housing prices is COMPLAINING and UNFAIRLY CASTING FOREIGNERS AS VILLIANS.

So much for engaging the public with PAP's superior logic and intellect.

Actually, where is the logic anyway?

"The first misconception is that somehow there are five million people and that's putting pressure on all of us. It doesn't.'Of the five million, 3.2 million are citizens and roughly 500,000 are permanent residents (PRs). The remaining 1.3 million are here on temporary work permits and they 'impose no burden' on the public housing system" - Minister Shanmugam.

Yes, he expects us to believe an additional 1.8M people added to a land scarce island 'impose no burden on the public housing'. So where are those on work permits staying? At the beach? ...opps. those at the beach are ultra-underclassed displaced by PAP policy. People on work permits need a place to stay. They either rent rooms in HDB flats causing rental yields to rise - higher rental yields lead to higher prices. Some rent private condos - many sharing one unit. This pushes up the prices of private property making it unreachable for many families who now have to look for public housing.

What Shanmugam said is absurd. It is an insult to Singaporeans' intelligence.

------------------
Don't Blame Foreigners[Link]

The Law Minister's key message: It is unfair to cast foreigners as the villains driving up the prices of HDB flats. --

PHOTO: BT MIDWAY through an hour-long dialogue with Law Minister K. Shanmugam on Sunday, 58-year-old Wee Kai Fatt stood up and gave voice to the claims of many coffeeshop pundits here.The senior engineer complained about the foreigner-fuelled population boom, saying he was shocked when he heard there were five million people living in Singapore. This influx of foreigners, he added, has caused HDB home prices to skyrocket.Taking it all in, Mr Shanmugam took pains to clarify what he said were several misconceptions in Mr Wee's statement.The Law Minister's key message: It is unfair to cast foreigners as the villains driving up the prices of HDB flats.Speaking at the end of his three-hour visit to Yew Tee constituency in Hong Kah GRC, he said: 'The first misconception is that somehow there are five million people and that's putting pressure on all of us. It doesn't.'Of the five million, 3.2 million are citizens and roughly 500,000 are permanent residents (PRs). The remaining 1.3 million are here on temporary work permits and they 'impose no burden' on the public housing system, said Mr Shanmugam, who is also the Second Home Affairs Minister.

Friday, January 15, 2010

PAP's little economic trick unravels...


In his famous article The Myth of Asia's Miracle (1994), Nobel Prize winner Paul Krugmen wrote:

"But it is only when one actually does the quantitative accounting that the astonishing result emerges: all of Singapore's growth can be explained by increases in measured inputs."

The factors leading to the rapid growth of the Singapore, wrote Krugman, were one-off - a dramatic improvement in education of our workforce & the share of employed rising from 27 to 51% of the population. Krugman concluded that "Singapore is unlikely to achieve future growth rates comparable to those of the past".

Krugman was wrong! Singapore grew by 8.1% in 2005, 6.4% in 2006, 7.9% in 2007 and 7.7% in 2008[Link]. Krugman could never imagine in 1994 that the PAP govt will resort to massive import of foreign labor to boost the GDP growth:

“Between 2005 and 2009, Singapore’s population surged by roughly 150,000 people a year to 5 million—among the fastest rates ever there—with 75% or more of the increase coming from foreigners,” Wall Street Journal (see report below).


More input, more growth. Put aside the hard work of improving efficiency and technical progress, and just expand the population.


"The influx helped boost Singapore’s economy in the short run by creating new demand for goods and services and helping manufacturers keep labor costs low. Developers built apartments and posh shopping centers for the new arrivals." - Wall Street Journal


The population growth was great for property developers, service providers like telcos and manufacturers. Many of these are GLCs.

"At the same time, though, foreign workers have driven up real estate and other prices and made the city-state’s roads and subways more congested. Their arrival has kept local blue-collar wages lower than they would be otherwise, exacerbating Singapore’s gap between rich and poor" - Wall Street Journal

The effects of this massive influx have been largely negative for the ordinary citizens especially the poor whose living standards have fallen sharply in recent years.

The foreign labor policy implementation has been deceptive. We were initially told that they were needed to complement the local labor to bring in skills that did not exist in Singapore. Then we were told that they were here to create jobs for Singaporeans. We were also told that they were needed because of our low fertility rate. Recently, we were told the Chinese workers are needed to sustain Singapore-China ties[Link].

Singaporeans expressed concern about this policy as early as 2000. These concerns grew louder and louder. 2 years ago, I attended a 'meet the MP' dialogue and a resident stood up to express unhappiness over the policy. Some where in his long winded explanation the MP told the resident "not to be small minded". There is nothing small minded about Singaporeans' concerns about this policy. We don't have anything personal against the thousands of individuals who are here to seek a better life for themselves and their families - most of us would do the same if we are in their shoes. In fact it is important that these workers are treated well when they are here in Singapore and their rights as workers protected and respected because poor treatment of these workers will spread to Singaporeans especially those working for low wages. Singaporeans are not asking the govt to keep foreigners out...all we are asking for is for its implementation to result in benefits for ordinary Singaporeans. However, this may not be so easy for the PAP govt to do...

Over the years, the interests of the PAP has expanded beyond that of ordinary Singaporeans. Its large network of GLCs and TLCs provides high paying jobs for the elites in the establishment. PAP leaders are selected from a power-elite network [Link] whose loyalty is to a system that rewarded and benefited them rather than Singapore and ordinary Singaporeans. For the PAP govt, this internal selection process has primacy over general elections ....the PAP govt has had no qualms about modifying election rules - GRCs to parachute newcomers, linking flat upgrading to votes, repressing the opposition etc. All these moves to take the power of choice from ordinary Singaporeans. In their corporatist model, Singapore is Singapore Inc and our PM is the CEO and ministers, the board of directors. Elections are secondary because leaders are selected and appointed to their positions. When you understand this, you will begin to see that the PAP govt policies are consistent with this model. Raising of transport fares during recession to prevent fall in profits, increasing foreign labor as the income gap expands and massive reserves buildup at the expense of ordinary Singaporeans' ability to retire.

If you have any doubts about what the PAP govt really is, it should disappear once you look at the outcome of the foreign labor policy. The foreign influx increased as income gap rose, cost of living rose, structural unemployment worsened and living standards fell. As long as GDP grew and corporate profits rose, ordinary Singaporeans were made to shoulder the burden of the negative effects of PAP policies. The only little kink in this system and model of govt is the one-man one-vote system. Despite the rules limiting the activities of political opponents, control of the media and the unfair playing field (GRCs and estate upgrading), the PAP exposed its own insecurity[Link] by tweaking the system yet again with the 'cooling day' to gain an advantage. They have not found a way to remove the one-man one-vote system without completely losing their legitimacy. Other tweaks have been considered along the way:

"And whether you have one-man, one-vote or some-men, one vote or other men, two votes, those are forms which should be worked out. I'm not intellectually convinced that one-man, one-vote is the best. We practice it because that's what the British bequeathed us and we haven't really found a need to challenge that. But I'm convinced, personally, that we would have a better system if we gave every man over the age of 40 who has a family two votes because he's likely to be more careful, voting also for his children. He is more likely to vote in a serious way than a capricious young man under 30. But we haven't found it necessary yet. If it became necessary we should do it. At the same time, once a person gets beyond 65, then it is a problem. Between the ages of 40 and 60 is ideal, and at 60 they should go back to one vote, but that will be difficult to arrange"

- Lee Kuan Yew in an Interview with Fareed Zakaria[Link]

Maybe one day they will suggest that newly converted citizens be given 2 votes since they have been exposed to 2 different systems, they will be appreciate the PAP system better....and so on. It is because the one-man one-vote system is still around and the PAP govt need to conduct elections soon that we get this concilatory message[Link] from PM Lee on New Year day that the foreign influx will be 'moderated' and the benefits of economic growth will be shared among all citizens - the same PM didn't hesitate to up his ministers' pay and hike the GST almost immediately after the last elections. There is really no excuse for Singaporeans not to understand how this govt work and what they have to do to secure their own future and that of their children. Whatever the PM says today, the size for foreign population (now 36%) is set to continue rising until Singaporeans become a minority in the own country because that is the path of least resistance to satisfy the extensive interests of the PAP govt. Unless Singaporeans make the right decisions at the next elections, things will not change and the outcome for ordinary citizens can easily be predicted.

-----------------------------------
Singapore's Expat Surge Fuels Economic Fears
By PATRICK BARTA And TOM WRIGHT
SINGAPORE—For years, this rich city-state has marketed itself as one of the world's most open economies.
But as Singapore recovers from recession, its residents are questioning a key part of the country's economic model: its long-standing openness to foreigners.

Singapore Struggles with Immigration Issues1:55
As Singapore grapples with an uncertain future amid weak demand for its exports to the U.S. and Europe, it faces a sensitive subject: the role of foreign labor in sustaining its multi-decade economic boom.
Singapore has thrown open its doors to bankers and expatriates in recent years, making it easy in many cases to establish residency and hastening the country's emergence as an Asian version of Dubai. It also welcomed low-skilled laborers from Bangladesh and other developing countries to help man construction sites and factories.
The goal was to capture more Asian wealth and offset Singapore's low birth rate with immigrants, spurring economic growth. But the push has also fueled discontent, turning immigration into a red-hot political issue in a country where dissent is still tightly controlled by the government.
Between 2005 and 2009, Singapore's population surged by roughly 150,000 people a year to 5 million—among the fastest rates ever there—with 75% or more of the increase coming from foreigners. In-migration continued in 2009 despite expectations it would collapse because of the global recession.
The influx helped boost Singapore's economy in the short run by creating new demand for goods and services and helping manufacturers keep labor costs low. Developers built apartments and posh shopping centers for the new arrivals.
View Full Image Reuters
Crowds gather at the Ministry of Manpower amid a wage dispute.

By some estimates, a third or more of Singapore's 6.8% average annual growth from 2003 to 2008 came from the expansion of its labor force, primarily expatriates, allowing Singapore to post growth more commonly associated with poor developing nations.
At the same time, though, foreign workers have driven up real estate and other prices and made the city-state's roads and subways more congested. Their arrival has kept local blue-collar wages lower than they would be otherwise, exacerbating Singapore's gap between rich and poor.
Some economists say the most damaging effect of the immigration is that the influx appears to be putting a lid on productivity gains, as manufacturers rely on cheap imported labor instead of making their businesses more efficient. Labor productivity, or output per employee, fell 7.8% in 2008 and 0.8% in 207—a phenomenon that could eventually translate into lower standards of living.

Lee Ah Lee, a 58-year-old who makes 850 Singapore dollars a month (about US$600) clearing tables in a cafeteria, says the flood of immigrants has made it hard to make ends meet by pushing down blue-collar pay in Singapore, which has no legal minimum wage. Sitting nearby in a drab apartment block built by Singapore's Housing Development Board, a state-owned body that constructs and sells subsidized housing, 79-year-old Lee Kwang Joo says low-skilled foreign workers are often housed in corporate dormitories, meaning they have no housing costs and can survive on lower pay.
On Temasek Review, a Web site dedicated to Singaporean affairs, one writer recently warned Singaporeans would be "replaced" as "3rd class citizens" by foreigners, while another said that immigration "will emerge as the single most important issue" in Singapore's next general election, due by 2011.
Immigration "kept our economic growth high but, at a tremendous cost," says Kenneth Jeyaretnam, the secretary-general of Singapore's Reform Party, a small opposition party founded in 2008. Relying on foreign labor to help boost growth is unsustainable, adds Choy Keen Meng, an assistant professor of economics at Singapore's Nanyang Technological University. He says a better model would involve the reining in immigration and accepting that Singapore is becoming a more mature economy like the U.S. or Europe, with a long-term growth rate of 3% to 5% a year.
Singapore, unlike many of its neighbors, has a reputation for reliable public services and minimal corruption. Its openness to foreign investment is one reason why gross domestic product is expected to rebound to 4.5% this year, according to the Asian Development Bank, from a contraction of 2.1% in 2009.
Still, Prime Minister Lee Hsien Loong, speaking at a Singapore university in September, said there was a need to be "mindful of how quickly our society can absorb and integrate" new arrivals, and vowed to curb immigration.
The government is also studying immigration as part of a wide-ranging review of the city-state's economic model launched in 2009. Results of the review, due this month,are expected to include steps to diversify Singapore's economy and reduce its reliance on exports to the United States and Europe by boosting domestic consumption, among other things.
Yet people familiar with the government's plans say it is unlikely to press for deep cuts in immigration, and will aim to find other ways to restore productivity growth. Singapore remains committed to a long-term goal of increasing the population to 6.5 million, though it would do so by prioritizing high-skilled residents as opposed to blue-collar workers.
Immigration "is not a weakness, it's a strength," said one person familiar with the long-term economic planning process. "People want to come here, why not make use of that strength?"
Serious cuts to immigration could also generate a backlash from other interests—notably the factory owners and real-estate developers who rely heavily on foreign arrivals. Many employers complain that local Singaporeans, accustomed to a higher standard of living than most other Southeast Asians, are unwilling to take on menial jobs, and are likely to resist further tightening of foreign labor supply.
Write to Patrick Barta at patrick.barta@wsj.com and Tom Wright at tom.wright@wsj.com

International Living Quality of Life Ranking

Singapore takes 70th spot on the quality of life ranking by International Living.

http://www1.internationalliving.com/qofl2010/

Singapore is way below Japan, S.Korea and Taiwan.

Thursday, January 14, 2010

EAP - Employment Assistance Payment

"This will ensure that the payments do not impose undue burdens on employers or become an easy alternative to re-employing workers, he said. He was responding to a concern raised in Parliament by Member of Parliament Lee Bee Wah (Ang Mo Kio GRC) that the EAP may burden small and medium enterprises, and cause some to lay off their ageing workers to avoid the payouts. " - CNA Report.

No...I'm not going to criticise Lee Bee Wah for being pro-business or suggesting businesses will resort to unethical behavior.

If you haven't been following what is going on, as usual, here is a summary:

1. A increasing number of our workers are ageing - by 2030, 20% will reach > 65 years of age.
2. The govt is working on a set of guidelines to encourage employers to rehire workers who reach retirement age of 62 and have good performance and are healthy.
3. It has been suggested that 3 months before the employee is retired, a rehire plan should be offered to him.
4. If the company can't reemploy him and has to let him go, they should pay a sum of money to assist the retired worker - they are working on guidelines for this sum. This payout is known as Employment Assistance Payment (EAP).

Lee Bee Wah was saying that if there is compensation involved, companies may act unethically and layoff/sack workers before they retire to avoid this payout.

There are other fears:

But during an hour-long dialogue following his announcement, several union leaders voiced concerns that some companies might use the EAP as a way to get rid of older workers.
Labour chief Lim Swee Say, who was on the panel that includes Mr Gan and Singapore National Employers Federation (SNEF) president Stephen Lee, allayed their fears by pledging that the labour movement would intervene in such cases.
He pointed to the labour movement's current focus on building a more inclusive workforce with a CBF (cheaper, better and faster) economy.[Link]


What the above paragraph is saying is once EAP is in place, companies who want to get rid of older retired workers can do it with a clear conscience since the govt stipulated an EAP amount.

Currently a set of draft guidelines has been released in Nov 2009 [Link]and this will form the core of the law to be passed by 2012 for re-employment up to age 65, and later, up to 67.

I've been following the development of these guidelines for some time and listening to some of the feedback and it really dawned on my how much working world has changed - from my father's time when he stepped into the workforce 45 years ago, the day I joined the work force and the young people entering the workforce today. My dad worked as a technician in various companies and had 3 jobs in life time - every job he took, the companies had pension plan for workers who stayed with the company for a decade or 2....the company would like to you to stay for as long as possible and would reward you for your loyalty as a worker. My dad is 70 years old today and his last job came with full pension and some medical benefits. Looking back at the day I joined the workforce more than 15 yrs ago, although the pension schemes of my father's time were gone, employers were expected to keep workers for long periods so there were generous compensations when they retrenched workers - one month pay for every year with the company.

In today's hire-and-fire world, more often than not, the young people joining the workforce are put on 1 year or 2 year contracts. They are easily laid off once projects are over and companies don't need them. Because of this hire and fire mentality, companies are reluctant to train staff. It was common during my time for IT professionals to spend the 1st year attending courses paid by the company. IBM in the early 90s spent 1 year to train each sales engineer because in those days they were expected to stay 5-10 years or even longer.Today, it is quite common for me to interview young people who had three jobs in 5 years and what sometimes impresses me is they paid for all the IT certification courses they attended out of their own pockets to improve their employability.

It is estimated that workers joining today's workforce with change jobs 10-14 times[Link]. I really wonder if loyality among workers still has any value. If a worker has a job and is heading towards his retirement,say in 2020, it is likely that he is on that job for less than 3 years. The retirement day is similar to an 'end of contract'. If the company needs him, they will keep him ...if the company doesn't, they pay a minimum compensation and let him go. The only difference the new set of guidelines makes is the company has to pay the aged worker a small sum to send him off to his retirement. Even then, as MP Lee Bee Wah mentioned companies can get unethical and avoid the payment.

IMHO, the real solution to all this is to have a tighter labour market. Companies keep older workers longer if it is not so easy to hire new younger workers easily. The guidelines the MoM is trying to push out will not be effective so long as they have a liberal foreign worker policy.

Looking at how working life and job stability has changed over the years, what is really the selling point of the PAP's CBF (cheaper, better, faster) system? Where are we racing towards? Struggle more for less...less job security, less benefits? We seem to be working harder than we did in the past not for a better life but a tougher less secure future. Work longer, work forever, work faster ..work cheaper...really what is the end goal of all this? What really is the selling point...and how are younger people expected to support such a system?!

-----------------------

Guidelines to state size of retirement payout Minimum and maximum sums for the Employment Assistance Payment will be stipulated.
Dawn Tay
Wed, Jan 13, 2010my paper


UPCOMING re-employment guidelines will include recommendations on how much companies need to pay their older workers who have hit retirement age, if the businesses no longer have jobs for them.
Minimum and maximum sums for the Employment Assistance Payment (EAP) will be stipulated, said Manpower Minister Gan Kim Yong yesterday.

This will ensure that the payments do not impose undue burdens on employers or become an easy alternative to re-employing workers, he said.
He was responding to a concern raised in Parliament by Member of Parliament Lee Bee Wah (Ang Mo Kio GRC) that the EAP may burden small and medium enterprises, and cause some to lay off their ageing workers to avoid the payouts. The EAP aims to tide such workers over the
period when they are looking for another job.
It is among proposals to facilitate the re-hiring of older workers which will form the core of a law to be passed by 2012 for the re-hiring of workers aged up to 65 and, subsequently, up to 67.

Wednesday, January 13, 2010

HIgh HDB Prices : Curbing the surge....

Today's TNP headlines : 2 Room HDB flat near Chinatown fetches record price $245K. Couple pay $45K above valuation. Sellers make $100K profit after 2 years.

I'm surprised that Minister Mah who for the most of 1 year kept repeating the phrase "HDB flats are affordable" has recently said that he was caught "off guard". I'll show why it is so ridiculous for him to say that because as a minister in charge of housing he is suppose to track the demand and supply situation. He also said recently the way for HDB to sell cheaply is to have the buyers sell it back to HDB later on.....he has no other ideas?

"The whole question is, do we peg HDB flats to the market, or whether we follow another system. And that other system is what some countries use. In other words, I sell you a flat at fixed price, when you sell the flat, you have to sell it back to me also at a fixed price. In other words, you are not allowed to profit from the flat. There you can keep flat prices fixed."

- Minister Mah Bow Tan [Link]

Singaporeans have the highest savings rate in the world thanks to the CPF scheme. We set aside 34.% of our income for CPF until age 50 beyond which the rate drops. In the past the CPF rate was 50% and CPF cannot be used servicing HDB loans. Even with low returns, 50% is more than enough to retire comfortably. Because HDB's mandate is to provide affordable homes and Singaporeans pay for HDB flats from their disposable income after CPF deductions, it meant that HDB cannot increase its prices too quickly. Singaporeans had enough to retire and homes were affordable under the old scheme.

After the CPF was liberalised for private housing in 1988 (to fund 100% of a private house) and for public housing in 1991, prices of homes saw a large increase:

"Regression models are used to show that interest rates, income growth rates and the supply of housing have not played a statistically significant role in the determination of private housing prices in Singapore between 1975 and 1994. Instead, private housing prices in Singapore were highly correlated with the prices for public-sector-built housing. Moreover, the timing of government policies relating to the use of compulsory savings for private housing finance purposes, the liberalisation of rules on public housing ownership criterion as well as for housing finance had a significant impact on private housing prices. "
- Research Paper, Government Policies and Private Housing Prices in Singapore

The authors of the above paper believed the large surge in property prices that peaked in 1996 was caused by CPF liberalisation. Before liberalisation, the price movements were quite tame:



The increase following CPF liberalisation for housing was huge - outstripping income rise.
You may or may not agree with the authors' conclusion that the price increase is due to CPF liberalisation (some may argue it was due to optimism) but the end result is the same. CPF savings meant for retirement became tied up in housing i.e. the money moved from CPF to HDB and from the HDB to GIC to build up those massive reserves. Yes, and from the GIC, part of it went to those famous western banks, Stuyvesant town[Link] etc. and all other wonderful investments we get to hear about from time to time.

After they hit a peak in 1996, govt's antispeculative measures and the historic Asian Crisis caused the prices soften and stabilise at a generally high level around which they fluctuated until 2007 to 2009. The high price of housing meant that Singaporeans have to retire with less money and work longer. It also has other side effects - Singaporeans have less disposal income as servicing property debt over a long period of 25-30 years meant that the quality of life is not what it should be in a 1st world country. Servicing such huge debts for housing over long periods also make Singaporeans financially vulnerable - job loss or pay cuts can lead to defaults on housing loans. One in 12 HDB loans are in default....that is roughly one or two on every floor for every block of flat.

"Nobody, no matter how prescient, no matter how clever, would have been able to predict that this is what is going to happen this year. All of us were caught off-guard" - Minister Mah Bow Tan, Dec 2009

The above statement is hard to swallow because a simple look at demand and supply tells you a big shortfall was building up.


Figures from Tan Kin Lian's blog which was taken from 2009 Yearbook of Statistics[Link].

The table shows that the total population has increase by 17.6% (8.6% for residents) over the past 5 years but the number of new homes increased only by 1.2%. As minister who is responsible for the supply of public housing, how can Mr. Mah say he is caught by surprise? How can he plan the supply without looking at the demand situation?...Isn't this something fundamental to what he has to do? ...yes and we are told they have to be paid millions for 'super' competence...I really wonder.

It is very clear what the main cause of 2009's HDB price surge is. HDB wasted so much time trying to get us to believe that HDB flats are affordable as prices rose to new record levels instead of fixing the demand-supply problem. Singaporeans who needed homes paid for someone else's poor planning and policies.

Now that we have gotten to the point where Mr. Mah admitted that he was 'caught off-guard', they will at least try to fix the immediate situation so that prices will cool off (before the coming elections). We will however be left with the long term problem of high housing costs taking away a large part of retirement savings, taking away our quality of life and causing Singaporeans to have large household debts and hence less financial security. What can be done?

One feasible suggestion I've seen on the Internet is to reduce the loan tenure gradually to 15-20 years. Shortening this, helps Singaporeans to be free of their housing debt earlier and enables them to start accumulating savings for retirement. The main problem is many Singaporeans have already purchased homes at high prices so pushing prices down will have a negative wealth effect. Therefore, shortening of loan tenure has to be done gradually and only during periods when housing prices are on the rise to curb the rate of increase rather than cause a fall. Over time, prices should rise in pace with increase in median income and a far healthier situation can emerge. The other approach is to limit the amount of CPF money that can be used...but that has to be seen in a larger context as my main concern with CPF is the low fixed returns relative to inflation so proper management of CPF has to come first.

Monday, January 11, 2010

Sickness in Wealth and Poverty....

The story about Tang Wee Sung's kidney transplant over the weekend[Link] probably helped the public to understand the pain that Mr. Tang had to go through before he received his kidney. The full story itself is an interesting one and can used to illustrate various aspects and features of our system.

In June 2008, Mr. Tang was caught trying to buy a kidney for transplant from an Indonesian. He was jailed for one day and fined $17,000 for that offence. The case involved one of our top private hospitals. Following the case, the law was changed to allow people who donate their kidneys to get monetary compensation from the recipient or a voluntary organisation. A similar case involving a liver transplant in one of the 2 Slim 10 victims did not trigger such a debate or change in 2002. There were 2 victims of the side effects Slim 10 - an actress known as Andrea De Cruz and another woman called Selvarani Raja. Raja's family found a willing donor[Link] but the MOH refused to allow the transplant. There 500+ patients waiting for kidney transplants every year but only 80 transplants are done in Singapore. It is an open secret that richer kidney patients have been going to China & Phillipines for kidneys. The poorer ones on dialysis die earlier because they can't afford to go overseas. ..and this has been going on for many years. Somehow, it is only when the same tragedy befell on Tang, a retail tycoon, that the govt felt motivated enough to change the laws. In an incredible twist of fate, Tang received the kidney of one of Singapore's most notorious criminals, former triad leader, Tan Chor Jin aka One Eyed Dragon who was executed for murder.

There is only country in the developed world where the income inequality is higher than that of America - that country is Singapore. In Singapore, there are 750,000 uninsured citizens this number is far higher per capita than the number of uninsured people that trigger the healthcare crisis in America[Link]. In Obama's health care plan, there will be coverage for those with pre-existing conditions - this problem remains unsolved in Singapore - thousands of people with pre-existing conditions cannot get insurance and face the risk of financial distress and ruin. Under Obama's health care plan, there will be limits to what a person has to pay at hospital out of his own pocket. In Singapore, we are all painted this beautiful picture of a wonderful health care system that is the envy of the world - one that works and is affordable. Many people believe this because they have not gotten ill or have fallen through one of its cracks.

The other day I met an old friend with her boyfriend of 10 years. I jokingly asked them when I'll be "or kong" (fined) for their wedding. They told me sadly they will not be getting married. You see my friend was transplanted with an artificial heart valve when her natural one was destroyed during a bout of rheumatic fever when she was 12 years old. She needs regular medication and checkups. She had a number of small strokes due to blood clots and the risk of something major happening is not small. However, the reason they have decided not to get married is not because of the direct effects of her ill health - her boyfriend loves her and is willing to stand by her in 'sickness and in health'. They are not getting married because once they form a family, her medical burden will be passed on to her boy friend. He works as an engineer and with the new means testing rules his Medisave account will be completely drained once he becomes her husband. He also needs to take care of the medical need of his parents who are too old to be insured and have pre-existing conditions. I tell you this story to illustrate how health care policies affect people in ways you cannot imagine and how unaware people are of its negative aspects until they are affected by it.

Unfortunately for ordinary Singaporeans, the problems they have with the health care system is usually different from what magnates like Tang face with the system. If it is something like kidney transplant that eventually hit someone like Tang, the change comes quickly, almost overnight, to address the problem. However, most of the problems ordinary Singaporeans face such as how to finance their medical bill when they are seriously ill and their retirement will never become problems of the rich so these problems will take a long long time for the PAP govt to solve.

Sunday, January 10, 2010

Opposition Election Strategy - Part 2

A political compass is a 2 dimension model used to label political thoughts. The vertical axis measures one's opinion in the social sense in terms of how much political freedom an individual should have. The horizontal axis represents the one's view of how the economy should be run - towards the left more socialistic and right we have capitalistic style of economic management.

There is a survey online that you can take to see where you are on this political compass[Link].

Where do we put the PAP govt on this compass?



The PAP is somewhere on the upper right hand side. Suppose you gather a group of people to decide what kind of govt they would like to have. If they are not under the fear or danger (war) , they will naturally not give up their civil liberties, and if they are not under severe economic strain...and there are competent people that represent various parts of the political compass and a free press, what you usually get is usually a govt in the square box.

In a one man one vote system is actually quite hard to hold power staying out of the square. The electorate will naturally want to use their votes to get a govt within the box. So how does the PAP stay there for so long? Before we answer that question, I would like to roll back to a time when everything was in a political flux 50 years ago. How did the PAP get dominant power in the first place?

From the chart above showing % of votes for the PAP, you can see the PAP did not start with dominant power in 1959 elections. A large fraction broke off to form the Barisan Socialis and losses at 2 by-elections meant that PAP hang on to power with a fragile 1 seat majority. The Barisan Socialis was formed because leftwing members disagreed with PAP on various matters:

"The Big Six – Mr Lim, Mr Fong Swee Suan, Mr Woodhull, Mr Dominic Puthucheary, Mr S.T. Bani and Mr Jamit Singh – had stated that while they supported the PAP in the coming by-election, they would not compromise on issues such as detention without trial and freedoms of press, speech, assembly and organisation" - Straits Times, 27 Dec 2009[Link]

Lim Chin Siong in a Fajar article dated Aug 1961 written shortly after the formation of Barisan Socialis explained the importance of democracy and freedom because without these, people in newly independent countries previously exploited by colonialists will again later find themselves dominated and controled in a way no different from colonialism.

The Barisan Socialis had a good chance of winning the 1963 elections if not for Operation Cold Store (Feb 1963) which detained 111 leftwing activists including key members of Barisan Socialis. The weakened Barisan Socialist led by Lee Siew Choh still won 13 of the 57 seats in the Sept 1963 elections and the PAP had only 47% of the votes - the opposition had fewer seats because their support was concentrated in a few areas.

The PAP govt won by a landslide in 1968 when the Barisan Socialis boycotted the elections. The PAP then went on to win 3 more elections with 70% or more of the votes. These wins can be attributed to a weakened/repressed opposition and one-off rapid economic transformation. During this period the HDB's successful housing program improved the lives many citizens who moved from villages to housing estates. Along the way, swept by the rapid economic growth across most if not all East Asian countries, the PAP took the opportunity to repressed it opponents, shutdown independent newspapers e.g. Singapore Herald closed in 1971 when its license was revoked by the govt. The PAP soon had control over the media and a climate of fear was prevalent among the people. People were too afraid to join the opposition.

However, even with all its advantages, support for the PAP started slipping after the 1980 elections. Seeing the slippage, the PAP govt changed the rules to have GRCs in 1988. The votes it secured hit a low of 61% in 1991. With this level of support, if not for the GRC, they would have lost, maybe 10 or more seats because the 61% cannot be spread evenly across the constituencies - GRCs have the effect averaging the votes of the combined constituencies. Even with GRCs, the PAP's support was still falling, so in 1992, the PAP govt announced it will link votes to HDB upgrading right down to the number of votes for the PAP in each block[Link]. This form of pork barrel politics immediately resulted in improved results for the PAP in the next 2 elections before it started slipping again in the 2006 elections. During the 2006 elections, the PAP was announcing $400M-$500M upgrading packages all over the place but still couldn't stop the slip in support.

I walked through some amount of election history to illustrate several key points:
  • The one-off economic transformation earned widespread support for the PAP in the late 60s to late 70s is no longer possible.
  • The support for the PAP slipped with every election during the 1980-1991 period even with its control of the media & repression of opposition.
  • The PAP changed election rules and used estate upgrading to push up its votes. The also controlled the media and repressed opponents to deny the people a choice.

The one man one vote system will always pose a challenge to the PAP because of where it is positioned ideologically in the political spectrum (out of the box). Its policies are frequently unpopular among the vast majority of the voters e.g. GST hikes to cut corporate taxes..only the businesses are happy. Many vote for the PAP although they don't like the PAP policies for one of following reasons:

  • The linking of votes to upgrading.
  • They believe the myth that the PAP is super-competent, honest and efficient even though they don't agree the policies, they are willing to tolerate them. We know that this is a myth because when the same problems occur in a number of countries and the PAP handles no better than other govts - e.g. minibond issue, SARS, capture of MAS Selamat (Malaysians did it). Other govts appear to have many problems because they run countries 10-100 times the size of Singapore not because they are less competent.
  • The opposition appears weak and often portrayed as less competent by the state media.

There is little the opposition can do about estate upgrading. To overcome PAP's media control, the Internet can be harnassed to help ordinary citizens make more accurate assessments of PAP's performance. The most important thing for the opposition is the recruitment of new members. Since the PAP is so far out on the political compass, there should be a large number of pool of qualified people who do not share their views. The opposition parties should pro-actively reach out to them through seminars, talks and walkabouts.

The PAP in the past 4 years implemented a number of policies that have negatively affected a large number of ordinary Singaporeans. The most unpopular and the most poorly executed one is the foreign talent policy. The PAP govt has not been able to explain this policy clearly with regard to the number of foreigners needed and how the policy can benefit Singaporeans. So far all the direct results of this policy appear negative for ordinary Singaporeans. The next most important issue is the income gap - the fruits of economic development has not be equitably distributed among Singaporeans. A large number became worse off and many fear they will be worse off in the coming years. The 3rd issue is the cost of living which has risen sharply especially the cost of housing. The cost of housing rose much faster than the rise in income - this undermine families' ability to upgrade and young couples ability to own a home.

I believe the wind is blowing in the direction of the opposition for the coming elections. The opposition needs just to unfurl its sail to catch it - move into action, campaign passionately and confidently. Many of you think it is impossible for our opposition to achieve something as spectacular as opposition in Malaysia. Don't forget before their big win, most people also thought it would be impossible. Badawi had 64% of the votes in the 2001 elections and LHL was not too far ahead with 66% of the votes (for the PAP) during the 2006 elections.

Saturday, January 09, 2010

The China Hype....

Recently MM Lee made a comparison of the Chinese economy and Indian economy and he concluded that India is not in the same league as China[Link].

There is widespread belief that China's economy is an unstoppable juggernaut destined to rapidly overtake the rest of the world. In Singapore, the leaders are probably hopefully that the Chinese are successful with their system because it will vindicate the way Singapore is being run -economy first...democracy, justice & people's rights are secondary.
.
The rapid growth in China has masked many of its long term problems. Large income gap, corruption and social instability. Hundreds if not thousands of riots occur in China annually[Link]. The system of justice is primitive. Recently, there are reports of dissidents thrown into mental hospitals[Link]and protestors were put in black jails and tortured[">Link].
.
China's rapid economic growth is what masks all the problems with its unusual system. We all saw what happened to political systems that were not democratic when their economies falthered during the Asian Crisis.

-----------
Is China's economy headed for a crash?

David Barboza, New York Times News Service, 9 January 2010, 01:54am

"Dubai times 1,000 — or worse"
SHANGHAI: James Chanos built one of the largest fortunes on Wall Street by foreseeing the collapse of Enron and other highflying companies whose stories were too good to be true.Now Chanos, a wealthy hedge fund investor, is working to bust the myth of the biggest conglomerate of all: China Inc.As most of the world bets on China to help lift the global economy out of recession, Chanos is warning that China's hyperstimulated economy is headed for a crash, rather than the sustained boom that most economists predict.

Its surging real estate sector, buoyed by a flood of speculative capital, looks like "Dubai times 1,000 — or worse", he frets. He even suspects that Beijing is cooking its books, faking, among other things, its eye-popping growth rates of more than 8%. "Bubbles are best identified by credit excesses, not valuation excesses," he said in a recent appearance on CNBC. "And there's no bigger creditexcess than in China." He is planning a speech later this month at the University of Oxford to drive home his point.As America's pre-eminent short-seller — he bets big money that companies' strategies will fail — Chanos's narrative runs counter to the prevailing wisdom on China. Economists and governments expect Chinese growth momentum to continue this year, buoyed by what remains of a $586 billion government stimulus program that began last year, meant to lift exports and consumption among Chinese consumers.Still, betting against China will not be easy. Because foreigners are restricted from investing in stocks listed inside China, Chanos has said he is searching for other ways to make his bets, including focusing on construction- and infrastructure-related companies that sell cement, coal and steel.Chanos, whose hedge fund, Kynikos Associates, has $6 billion under management, is hardly the only skeptic on China. But he is certainly the most prominent and vocal. He has been spreading the view that the China miracle is blinding investors to the risk that the country is producing far too much.

Thursday, January 07, 2010

Singaporean workers clocked longest hours....

For many years, Singapore workers were ranked No. 1 in the world for more than a decade [Link]. The work the longest hours and have the highest savings rate in the world. Yet many Singaporeans find it hard to make ends meet and have enough to retire.
.
"Only workers in Iceland - which nearly went bankrupt - put in almost as many hours as Singaporeans in 2008 and Q1 2009" - BT Report[Link]
.
Wonder where all this work is leading to? MM Lee had demeaning things to say about Singaporeans not striving hard enough. So Singaporeans work the longest hours in the world but this not enough for the PAP govt? We are still not competitive enough. ...although we are the best workforce in the world, we are not good enough for this elitist govt that is paid the highest salaries in the world.
"Without the PAP, we would not have today's Singapore....."
- Editorial, Petir, 30 Oct 2007[Link]
.
The thing that I really didn't like about the NatGeo article on Singapore wasn't just what MM Lee said about Singaporeans but also the myth perpetuated by the article. It gave all the credit for Singapore's success to the PAP govt and much of it went to MM. The Singapore workforce that build the economy consisted mainly of children of laborers and coolies who grew up in the postwar years. A tough bunch similar to those in Japan, S. Korea, Hong Kong and Taiwan...all successful countries in their own right but we never hear people say S. Korea's success is due solely to its govt or that the Japan's LDP is singlehandedly responsible for Japan's industrialisation. The PAP took away not just our rights and freedom, they also took the credit for the success of this country from the hundreds of thousands of hardworking citizens that formed the number 1 workforce in the world. While they took all the merit and paid themselves handsomely, many ordinary citizens have to struggle with the high cost of living and retirement.
-----------------
S'pore workers clock up longest work hours: ILO [Link]
DESPITE the recession that hit towards the end of 2008, Singapore workers still clocked up the most hours, says a report by the International Labour Organisation (ILO).
Shorter work weeks and temporary lay-offs introduced to save jobs during the downturn trimmed working hours here to below the mandatory cap of 44 a week - but only slightly.
With working hours still way above 40 a week, Singaporeans put in more hours than workers in 12 other countries used for comparison in the recent report, an update on ILO's Global Wages Report 2008-09 released in November 2008.
The report shows 11 of these 13 countries posted a fall in working time in 2008 and the first three months of 2009, compared with 2007.
Average working hours in the 13 countries declined from 39 to 38.2 per week.
'Men and women have both been affected,' the report says. 'Among the six examples with disaggregated data, we find that hours worked by women declined from 36.4 to 35.8, while hours worked by men declined from 40.7 to 40.'
The report says the cuts in hours contributed much to slower growth in monthly wages, which eased from an average 4.3 per cent to 1.4 per cent for 53 countries.
'Overall, while a majority of countries could maintain declining but positive wage growth in 2008, more than a quarter experienced flat or falling monthly wages in real terms,' the report says.
One of them is Singapore, where real wages slipped one per cent. The others include the US (zero per cent), Germany (-0.6 per cent), Switzerland (-0.7), Japan (-0.9),
South Korea (-1.5) and Iceland (-4.8).
Wages fell 3.6 per cent in Taiwan and 6.2 per cent in Hong Kong.
'Compared with the annual average of 2008, real wages in the first quarter of 2009 fell in more than half of the 35 countries for which data is available,' the report says.
Although the report was released recently and quotes International Monetary Fund figures from October 2009, it does not go beyond June last year.
Working hours overall, including those in Singapore, should have fallen further as the recession deepened in Q2 2009. And that means wages as well.
'The picture on wages is likely to get worse in 2009 - despite the beginning of a possible economic recovery,' the report says.
Only workers in Iceland - which nearly went bankrupt - put in almost as many hours as Singaporeans in 2008 and Q1 2009.
South Korean workers, who, like Singaporeans, are expected to work 44 hours a week, clocked up fewer than 40.
Taiwanese workers also put in fewer hours, while the Japanese held constant.

Wednesday, January 06, 2010

Opposition Election Strategy - Part 1

Alex Au wrote a series of articles on opposition:

Two oppositions, and why in the long run, they may not matter at all, part 1
Two oppositions, and why in the long run, they may not matter at all, part 2
Two oppositions, and why in the long run, they may not matter at all, part 3

You should read his essay in the original form so that you don't miss any of his arguments. But in case you don't have time, as usual, I've done a summary:

1. There are 2 oppositions - "On the one side, we have those who are quick to protest their fealty to the king ("my lord, we will always play by your rules, no way civil disobedience") and who adopt the same measure and meaning of 'credibility' as the king. The other side contests both." Those in the 1st camp 'with an aversion to playing it tougher' resembling the mainstream of our society - risk averse in almost everything they do.

2. There is an array of issues that form dissent against the govt. They are:

  • Stress and pace of life

  • Economic equity

  • Communal interests (issues related to race and religion)

  • Civil liberties/social justice
These are pitted against the govt credo of economic growth & tight, honest, efficient and effective govt.

3. There is a core group of opposition supporters forming 25-40% of the voters - they strongly dislike or hate the PAP. Once they are infected with this hate, it is hard for the PAP to win them over. The support level for the opposition is stuck at this level because the rest of the voters do not share this strong dislike for the PAP.

3. Opposition parties deal with this situation in two ways - one fan the hatred so that it spreads, two to make reasonable criticisms of the PAP policy so that 'middle of the road' voters come onboard. The 2nd approach is harder because the opposition lacks resources like policy think-tanks and as many opposition party members are actually motivated by 'visceral dislike' for the PAP, all this looks like a chore. The end result is an opposition that lacks a coherent platform.

4. The WP's approach to try to sell a big manifesto in 9 days of campaigning in the last elections was a mistake because there wasn't enough time for the people to digest it. Instead, it should have been done over as a long term task - engaging people with alternative ideas and collecting feedback + fine tuning. They also need to reduce the alternative proposals to in key ideas for better retention in public's mind. To do this the WP has to be very coherent in its philosophical positioning - socialists, left or right? Today it is not so clear where they are. The lack of philosophical coherency, makes it hard for WP to criticise the govt because they cannot establish position in a continuum of policy options e.g. how much to subsidise medical fees on a scale of 0% to 100%.

5. A example of coherent positioning is the SDP. People may not like them but they know the SDP's position on civil liberties. However, the SDP is far less successful with 'branding' on economic issues.

6. That WP tries to sell itself as a watchdog is a cop out. Only people who already don't trust the govt will support them for this and it does not help to expand the core base.

7. The PAP does not hog the center ground in its policy making sometimes taking to extreme views e.g. stress is good for you on the pace of life issue. This gives plenty of ground for the opposition to formulate alternatives and occupy the center with ideas more supportable by the public.

8. If there is a change in the habits of opposition parties, will there be a change in the vote count?
9. The 3rd part of his essay looks at the possibility of a split in the PAP and in the long run. This has happened in several other countries with dominant parties. So the real show may be what happens within the PAP rather than what goes on in the opposition.

Before reading Alex's essay, I gave the issue of opposition election strategy plenty of thought and came to a completely different conclusion. My belief it is far harder for PAP to retain its dominance in future elections regardless of what the opposition does (as long as they don't fumble too badly). In fact it is the PAP that has to reposition itself. As Alex correctly pointed out, very often Singaporeans are asked to swallow policy options/decisions that are clearly at the extreme end - will Singaporeans continue to accept this or will they do something about it.

My next posting will look at the issue of election strategy more broadly and walk you through the arguments that led to my conclusion.

Tuesday, January 05, 2010

The Burj Dubai

They must have budgeted for this spectacular show at the opening of the Burj before they had problems with those huge debts. The extravagance is quite unbelievable - see it for yourself:



The opening of world's tallest buildings very often coincided with financial crisis at the places they were build. These buildings are physical representations of financial hubris in the country or city that decided to have them. Lots of easy money (credit) flows when they decide to build them and by the time they are finished, the bubble bursts and boom turns bust. One good example is Petronas Twin Towers. When they were completed in 1998, Malaysia was in the throes of the Asian Crisis. The opening of The Empire State Building coincided with the Great Depression[Link] and was vacant for many years. Very often when planned, these buildings look viable in booming economies but when they open, they become losers.