Archive for October, 2010

S’pore tops list of least corrupt nations

October 31, 2010

Dear Straits Times,

I refer to the 27 Oct 2010 Straits Times report of Singapore’s sharing of the top spot with Denmark and New Zealand as the least corrupt nations in the latest ranking by Transparency International (TI).

According to TI, corruption is defined as the abuse of entrusted power for private gain. Singapore ministers have been paying themselves million dollar salaries for many years now. Their million dollar gains cannot be public gain but must be private gain instead. Since their million dollar salaries have been set by themselves and the ministries they control, the use of entrusted power for private gain is also clear and unambiguous. The remaining word in TI’s definition of corruption ‘abuse’ is more open to interpretation and debate. According to the dictionary, ‘abuse’ refers to ‘wrong and improper use’. We need to ask ourselves whether setting million dollar salaries for ourselves is right or wrong, proper or improper.

Transparency International can do a simple survey on the population of Singapore with one simple question: “Is it right or wrong, proper or improper for ministers to pay themselves million dollar salaries?” Until that question is answered, how can we know if there has been abuse or not?

Alternatively, do we assume that everything that an elected government does must be right and proper bearing in mind some unique electoral circumstances we have in Singapore? In Singapore, we have:

– the Group Representative Constituency (GRC) where several electoral territories are contested as one, effectively allowing one strong incumbent to win several seats by himself

– for many years until recently, the tying of HDB upgrading to voting which is effectively a form of vote buying

– the amalgamation of all paid newspapers into one company whose shares are largely owned by government linked companies and whose chairman has always been important ex-ministers

If Singapore ranks amongst third world nations in the World Press Freedom Index, surely we can’t be as transparent as TI makes us out to be?


IMF praises S’pore for managing capital inflows

October 31, 2010

Dear Straits Times,

I refer to the 26 Oct 2010 Straits Times report of the IMF press statements made in Singapore on 25 Oct 2010 (Press Release No. 10/397, “IMF Sees Singapore Reflecting Regional Trends: A Strong Rebound but with Challenges Rising”).

The IMF did not particularly praise Singapore. In the same press statement, IMF said:
“We welcome the steps so far taken by policymakers (of many countries in the region) to address inflation risks and limit the build-up of financial vulnerabilities.”
“Developments in Singapore closely follow and highlight these regional trends and challenges.”
Thus, the measures taken by Singapore are nothing out of the extraordinary compared to those taken by other countries in the region and the IMF praise extends to these countries as well.

The statement “the authorities have rightly introduced macroprudential and other measures to forestall excessive exuberance and meet the growing demand for housing.” should not be viewed as Singapore being singled out for praise by the IMF. This is because four days earlier in Jarkarta, the IMF said:

“We have seen a growing number of countries in Asia taking macro-prudential measures to help deal with these capital flows as one of several policies to manage the inflows.”

Thus, macroprudential measures have been rightly introduced not only in Singapore but in a growing number of countries in Asia as well.

Furthermore, government measures to curb property speculation and to boost housing supply came three years late by which time property prices have already shot up by more than 50%. If any praise should be given, it should be given to those citizens who been clamouring without success for the government to take action for the past three years.

DBS Bank’s Irvin Seah exudes frivolity and nonchalance in echoing the government’s view that speculation is mainly caused by locals. Whether by locals or by foreigners, how can speculation be possible without the rapid increase in property prices fueled by a fundamental mismatch in supply and demand for housing?

Singapore Economic Policy Forum 2010 – Opening Address

October 30, 2010

Dear Mr Ravi Menon,

I refer to your opening address at the Singapore Economic Policy Forum 2010 as reported by Straits Times on 25 Oct 2010.

Singapore’s effort to address asset price inflation is an example of the government’s lack of foresight which necessitated the address of an issue that ought to have been prevented in the first place.

Describing the various steps involved in picking winners doesn’t make our industrial policy any more than just picking winners.

The IT revolution that not only transformed the US economy but the economy of the entire world as well didn’t stem from any concerted US government action but from the laissez faire actions of a multitude of US entrepreneurs that included Bill Gates, Steve Jobs and many others. This is the clearest example which shows that you don’t need government action to develop an industry, you need entrepreneurs.

While taking pride in our growing of the petroleum refining industry in the 1960s and 1970s, do not forget to mention the influential Dr Albert Winsemius who was instrumental in helping to bring in big oil companies like Shell and Esso.

The amalgamation of the seven islands through land reclamation is no more innovative than the other land reclamations to increase the size of the Singapore island. The innovation involved in all these land reclamations lies with the technological know how to reclaim land which belongs to the individual or company who invented or discovered it.

The success from our government’s activist role in developing the petrochemical industry does not imply that a laissez faire approach would not have succeeded. For every government promoted success in Singapore, there is a laissez faire nurtured counterpart in Hong Kong which shows that government activism is not the only path to success.

While your illustration of the history of our electronics industry reads like a continuous success story, in reality, there has been at least one instance where the government failed to read the signs of change in the electronics industry and our country suffered as a consequence. In between our success with hard disk manufacturing and our recent foray into solar manufacturing was the mass exodus of electronics firms to China in the early part of this decade which you forgot to mention.

The assertion that the government has never subsidised or bailed out firms is debatable. In the aftermath of the 1997 Asian Financial Crisis, all commercial banks suffered heavily. The merger of DBS and POSB at that time certainly helped to improve the overall financial position of DBS.

There is nothing exceptional with the fact that our credit schemes worked during the Global Financial Crisis given that many nations around the world adopted similar schemes that worked too.

It is not true that the government intervened substantially to make home ownership affordable to the vast majority. The vast majority of Singaporeans slogged for a lifetime to pay for their HDB flats. Until recently, the government did absolutely nothing even as HDB flat price shot up by more than 50% in just three years. The supposed subsidy of $30,000 or $40,000 cannot even cover the price increase over the last three years. To the country as a whole, housing as an appreciating asset does not promote social mobility, financial security or a sense of belonging. An appreciating asset is also an inflating liability for future buyers. While the social mobility and financial security of the house owner improve, those of the future house buyer deteriorate. The house owner’s sense of pride and belonging comes at the expense of the future house buyer’s sense of helplessness and wretchedness.

Housing cannot be viewed as a social safety net. As the name implies, a social safety net is a safety net provided by society. The house is an asset owned by the individual, not by society.

The mistakes and failures exemplified by the recent Global Financial Crisis show that the government is simply not brilliant enough, not forward looking enough to understand the complex and uncertain world that we live in.

S’poreans driving private property market, says Mah

October 27, 2010

Dear Mr Mah,

I refer to the 19 Oct 2010 Straits Times report that it is Singaporeans who are driving up the private property market. As far as genuine home buyers are concerned, no one wants to drive up home prices and end up paying high prices be it Singaporeans or otherwise. The buying frenzy by genuine home buyers is quite simply due to the fact that housing supply cannot meet housing demand fuelled by the rapid influx of foreigners. Thus, it matters not whether it is Singaporeans, PRs or foreigners who are buying up property. The crux of the matter is that there is not enough to go around because the government did not push out enough land for housing to accommodate the huge influx of foreigners.

It matters not too who is actively engaged in sub-sale activities. What matters is the sharp rise in property prices making sub-sale activities profitable. This sharp rise in property prices again, is due to the imbalance between supply and demand of housing.

Thus, no matter how we look at it, the root cause can always be traced back to the imbalance between supply and demand of housing due to poor government planning.

Prosecutor: Baseless attack on judiciary

October 27, 2010

Dear Deputy Senior State Council,

I refer to the 19 Oct 2010 Straits Times report of your court arguments against Mr Alan Shadrake.

You said that (part of) the title of Mr Shadrake’s book “Singapore Justice in the Dock” clearly suggests that the book is out to judge the judges of Singapore. However, the word ‘justice’ doesn’t clearly refer to judges. It more likely refers to judgement. Our Chief Justice has recently conceded that there is nothing wrong with judging judgements. Hence, there is nothing wrong with the title of the book and the word ‘justice’ should not be misinterpreted as ‘judges’.

As far as I know, all judicial outcomes involving political figures have always ended in favour of the ruling party. While that doesn’t necessarily constitute compliance on the part of our judges, the outcome has nonetheless always been the muzzling of political dissent.

Take the recent case of MM and PM Lee’s suing of the IHT for stating the Lee political dynasty as a matter of fact. Since it is the Lee family making an accusation on the IHT, shouldn’t the onus be on the Lee family to prove their case as required under the principle of innocent until proven guilty? So the first thing the court should have done is to require the Lee family to show that a statement of the fact that the Singapore prime ministership has spanned across generations in the Lee family is indeed an insinuation of nepotism. Until the Lee family has proven that, why should the IHT be required to answer any charges to prove its own innocence? Wouldn’t that constitute guilty until proven innocent instead?

Idealistic citizens help push bar for public servants

October 24, 2010

Dear Mr Eddie Teo,

I refer to the 24 Oct 2010 Straits Times report of your opening address at the Singapore Seminar 2010.

Singapore is not unique in spending large sums of money on scholarships for top students. East Asian nations in general award scholarships to their top students. Also, we have been awarding scholarships for much longer than 49 years. MM Lee and Dr Lim Boon Keng were recipients of the Queen’s scholarship, the predecessor to our modern day President’s scholarship.

Taiwan is not much bigger than Singapore and is also not well endowed with natural resources. But Taiwan prospered just the same despite its theatrical parliamentary fights and corruption. Taiwan shows that we not only can survive but can prosper too with some degree of ‘bad’ government.

We are not victims of our own success, we are victims of our own bragging. There is a price to pay for bragging. We claim to be world class in everything only to find ourselves sandwiched like sardines every morning. We claim to have great vision and to be forward looking only to find ourselves getting caught off guard in one crisis after another. We do not expect the government to do the impossible. Is it so impossible to balance demand and supply of flats? Most of the land belongs to the government. The flood gates to immigration are also controlled by the government. What is so impossible when both are within your control?

It is not that the people are less forgiving now. If you read through all the forum letters by the HDB and its minister throughout the period when property prices were shooting up like a rocket, they read like denials rather than explanations when the truth is so plain obvious to everyone.

Comparing Singapore with Hong Kong, Taiwan and South Korea, the price we pay for success is so much higher even though we are not much more successful than them. If we truly want to call ourselves a first world nation, we must move away from benchmarking ourselves against third world countries and finding solace in just solving poverty, hunger and ill health problems which have largely been solved many decades ago. To continue to cling on to these benchmarks even as our society has progressed well beyond them would be most idealistic indeed.

Furthermore, as property prices soar and soak up our hard earned money, many Singaporeans are experiencing modern day poverty. According to the 18 Sept 2010 Straits Times report ‘1 in 7 Americans living in poverty’, 14.3 percent of Americans live below the poverty line of US$21,954 a year for a family of four in cash income before tax. If we use the purchasing power parity conversion rate of 1.054 given in IMF’s World Economic Outlook Database, the equivalent poverty line for Singapore is SGD $23,140 a year for a family of four or SGD $482 per month per family member. This figure falls in the middle of the 11th to 20th decile of employed Singapore households as given in the ‘Key Household Income Trends, 2009’ published by the Singapore Department of Statistics in February 2010. Thus, about 15% of Singaporeans have fallen below our ‘equivalent’ poverty line. So even as we pride ourselves for having lifted ourselves from the poverty of Third World Countries, we have a significant minority that continues to be plagued by modern day poverty.

ILO warms to NTUC’s labour ways

October 24, 2010

Dear Mr Lim,

I refer to the 13 Oct 2010 Straits Times report of your arguments against the minimum wage law.

You said our turnaround is proof that we should stick to the status quo and eschew the minimum wage law. However, our turnaround doesn’t mean that other ways will not lead to a turnaround. Our turnaround hasn’t changed the fact that many of the lowest wages continue to suffer depressed wages.

You said our labour practices should serve long term interests and that we should do what is right for Singapore. But there are many examples of policies that were implemented for the long term interests of Singapore but that which turned out to be wrong for Singapore. ‘Stop-at-two’, ‘electronics-only’, ‘grow-at-all-costs’ are examples of such policies.

You said globalisation of jobs can’t be prevented. That is not entirely true. It is true only for manufacturing jobs but it is not true for local service jobs. Can a cashier job at NTUC be globalised to China? Can a waitering job be globalised to China? Thus, even though Singapore is one of the most export oriented economies, there is a sizeable labour force participating in the local service industry that does not lend itself to the full brunt of globalisation.

Minimum wage policy won’t work: Employers, labour chief

October 24, 2010

Dear Mr Lim,

I refer to the 13 Oct 2010 Straits Times report of your arguments against the minimum wage law.

You said if the minimum wage is set too high, companies would cut labour or investments. However, the argument doesn’t apply to the local service industry. If a food and beverage company chooses to cut labour, service level would drop and customers would go to competitor outlets. Similarly, if the same company chooses to save on investments like the coffee making machine, then it won’t produce good coffee and again customers would leave. Thus, cutting headcount or trimming workers’ benefits and training won’t work in the context of the local service industry which depends on service to win customers.

While minimum wage raises cost, that cost is only a fraction of the humongous rental bill that is the major cost determinant for doing business in Singapore.

The causal link between minimum wage and negative employment effects found in the US refers to teenagers and welfare mums. Exceptions to these groups can be easily built into the minimum wage law.

Not every job can be re-designed for higher skills and there is a limit to how much a skill can be upgraded. For example, no matter how skilled a cashier is, there is only that many customers he or she can serve in a given time. There is a limit to what skills upgrading can achieve. Skills upgrading is a not a ladder that we can continuously climb to reach the heavenly state where everyone has a minimum decent wage.

SNEF on why minimum wage won’t work

October 23, 2010

Dear SNEF,

I refer to the 13 Oct 2010 Straits Times report of your arguments against the minimum wage law.

You said that Germany and other European nations achieved a narrow income gap without a minimum wage. But Germany and other European nations have very strong and independent labour movements that effectively secure good wages for workers. In other words, the labour movements set minimum wages for their respective industries through collective agreements. Also, Germany and other European nations have very generous welfare benefits that effectively act as a minimum wage. If an employer doesn’t pay more than what a jobless can obtain from welfare benefits, the jobless will simply have no incentive to take up the job.

The buying up of scarce resources such as land and properties by top income earners essentially causes these items to become even more scarce and even more expensive. The resulting inflation is in effect a ‘collapsing’ of real wages as things become more expensive even as nominal wages remain stagnant. Since minimum wage is well known for preventing the ‘collapsing’ of wages, nominal or real, it should therefore be useful to us.

The argument that jobs move abroad due to high wages only applies to manufacturing operations, not service sector jobs. While factories may move to China and still produce for the rest of the world, coffee shops, restaurants and supermarkets which primarily serve Singaporeans cannot move to China and still serve Singaporeans.

As far as the local service industry is concerned, it is not labour costs but rental costs that really soak up revenues. The inflation due to wage increase is nothing compared to inflation due to high rental costs.

The Jul 2009 Asian Wall Street Journal article basically refers to the negative employment effects on teenagers and welfare moms. Exclusions for these groups can always be built into the minimum wage law just like the exclusions on domestic helpers in Hong Kong’s minimum wage law.

Page 208 to Page 212 of the book ‘Management of Success: The Moulding of Singapore’ provide alternative explanations to Singapore’s recession in 1985/1986. The fall in international demand which affected the other East Asian dragons as well was one key reason. The fall in regional trade due to problems in Malaysia and Indonesia was another. Yet, high wages was singled out by the government perhaps to justify wage cutting measures which is quite often the de facto method with which we deal with recessions.

There were other explanations for the 1985/1986 recession – appreciation of the Singapore dollar and increased competition in petroleum refining and ship building from the Middle East. In fact, if we refer to Chart 5-1 on Page 31 of the book ‘Singapore – a Case Study in Rapid Development’, throughout the period from 1972 right up to 1982, productivity always exceeded real wages. Thus, there is no truth to the assertion that the high wage policy from 1979 to 1981 caused the recession of 1985/1986.

Temasek asks anti-Govt website to change name

October 17, 2010

Dear Temasek Holdings,

I refer to the 16 Oct 2010 Straits Times report of your letter requesting the Temasek Review website to stop using the good name of ‘Temasek Review’.

While Temasek Holdings has been naming its annual reports ‘Temasek Review’ since 2004, it doesn’t automatically translate to the fact that the great majority of Singaporeans know this. The supposed stakeholders with which the name ‘Temasek Review’ has become well known are probably Temasek Holdings’ partners which cannot be significantly numerous considering that Temasek Holdings is not even a public listed company so the great majority of Singaporeans would have no use for Temasek Holdings’ annual reports.

Thus, it seems unfair and unreasonable that Temasek Holdings should claim that the Temasek Review website has capitalised on the goodwill and reputation of the name of your annual reports since there is hardly any proof that many people read your annual reports. It would be good if Temasek Holdings can provide download statistics to prove the ‘reputation’ of the Temasek review annual reports and show that it is indeed significant compared to the traffic that the Temasek Review website has been getting.

What is misleading is probably Temasek Holding’s claim that your ‘Temasek Review’ annual reports have a certain ‘reputation’. An independent survey can be commissioned to find out how many Singaporeans actually know that a ‘Temasek Review’ annual report actually exists or how many actually got to know of it only after reading about it in the news recently. To claim ‘reputation’ when there is none would indeed be irresponsible.

Temasek Holdings should not quote the principles of transparency, accountability and responsibility unless it is also willing to abide by those same principles. On the basis of transparency, accountability and responsibility, I humbly request that Temasek Holdings provide download statistics for its annual reports and also commission an independent survey supervised and monitored by both the PAP and the opposition parties to find out what percentage of Singaporeans actually know that the ‘Temasek Review’ annual report actually exists before reading about it in the news recently.