Archive for January, 2011

Rare insights into the mind of MM Lee

January 16, 2011

Dear Straits Times,

I refer to the 14 Jan 2011 reports:

– Rare insights into the mind of MM Lee
– Grilling the Minister Mentor
– Face to face with MM Lee

MM Lee believes the younger generation below 35 years do not know the threats from neighbouring countries and wants them to understand the hard truths about Singapore. But the truth of the matter is that many countries in even more dire situations have greater freedom, greater democracy. South Korea is one example. They recently had artillery shells rained on them killing people. They had a ship sunk not too long ago and servicemen lost their lives. South Korea face even greater threat than Singapore. Yet South Korea is freer and more democratic than us. That is the hard truth which MM Lee should acknowledge.

The issue is not about Singapore being vulnerable. That is never the question. The question is: should vulnerability be used as an excuse to rob Singaporeans of freedom and democracy? South Korea has clearly demonstrated that it shouldn’t be the case. Taiwan and Israel demonstrate that too.

MM Lee sounded so false when he said that convincing the interviewer is irrelevant. If convincing others is not irrelevant, why did he bother to argue so much? Why did he bother to write a book to convince others?

MM Lee insulted Mr Chan by saying that if he felt the same way at 46, he wouldn’t have learnt much. He should apply that insult to himself. He is more than 86 years old. Has he learnt anything about his own wrong doings? Has he made amends? Does he continue to think that he and his colleagues built this edifice that is Singapore? Does he not realise that the last reason you would attribute Singapore’s success to is himself?

The claim that for MM Lee, it is all about the welfare of millions of Singaporeans, is unconvincing considering that he continues to collect millions of dollars for himself every year. If he truly cares for the welfare of Singaporeans, he should donate the millions he earns every year to poor Singaporeans.

It is good to learn that MM Lee does not see profit in being loved. Singaporeans can take comfort in the knowledge that criticising him won’t lessen his profit.

It is strange for Mr Ignatius Low to feel more patriotic for Singapore through his inteview with MM Lee. Does he not know that being patriotic to MM Lee does not equate to being patriotic to Singapore?

MM Lee’s sensitivity to his loved ones doesn’t change the fact that he is about as kind and as fair as Stalin was to his opponents.

Whether it is service to the country for MM Lee is debatable. What is undeniable is his service to himself, millions of dollars every year.

Minimum wage, maximum attention

January 16, 2011

Dear Straits Times,

I refer to the 13 Jan 2011 report on the parliament debate on the minimum wage.

It was reported that almost all who spoke argued that the minimum wage would diminish the economy’s competitiveness and lead to unemployment for workers. That is not necessarily true. Wage related competitiveness applies to export industries, not to food courts, coffee shops and supermarkets which serve the local populace primarily. The minimum wage when applied to service industries catering primarily to the domestic market will not decrease our competitiveness or lead to unemployment since service jobs like waiters or cashiers cannot be outsourced to other countries.

The diversity in any one sector should not prevent us from asking ourselves what is a fair wage for more homogenous sectors. Categories within sectors like supermarket cashiers, food court cleaners are reasonably homogenous for minimum wage to be considered.

The supposed high wages preceding the 1985 recession has too often been blamed for causing companies to close down and for unemployment. But Page 208 to Page 212 of the book “Management of Success: The Moulding of Singapore” attributes Singapore‚Äôs 1985 recession to other factors such as the fall in global demand and fall in regional trade. Other explanations include the appreciation of the Singapore dollar and increased competition in petroleum refining and ship building from the Middle East.

The fact that Workfare is paid for by the Government doesn’t exempt us from asking ourselves what constitutes a fair wage for the respective low wage job categories. How do we know if low wage workers are currently being paid a fair wage? If not, do we continue to let companies underpay them and for the government pick up the tab. Is that right?

It is not hard to imagine a minimum wage that is 25% above the current wage. Using Mr Lim Swee Say’s example of a worker being paid $800 by an employer who is only willing to pay $1,000, a minimum wage that is 25% higher than $800 would be $1,000, exactly what the employer is able to pay but is somehow not paying.

Even if no one is confident that minimum wage is better than Workfare, it doesn’t mean that minimum wage is therefore worse or Workfare is better. Unless we can prove that minimum wage is indeed worse than Workfare, we have no basis to rule it out.

NTUC chief opposes minimum wage

January 16, 2011

Dear Straits Times,

I refer to the 13 Jan 2011 report on Mr Lim Swee Say’s arguments against the minimum wage.

Mr Lim says that a person earning $800 per month is more likely to lose his job if the minimum wage is set at $1200 when the employer can only pay $1,000. This is not necessarily true. For service sector jobs like waiters, cashiers, cooks and cleaners, the employer cannot fire his worker without also closing down his business. If he fires his $800 per month worker, who is going to serve customers, man the cashier, cook food or clean tables and plates? Furthermore, if the employer can pay $1,000, why is he only paying $800? Doesn’t this show that there is some form of exploitation by employers who are paying lower than they can?

Mr Lim says that an employer who can only pay $1,000 but is compelled to pay $1,200 will simply not give any more annual increments over and above $1,200. But since the employer can only pay $1,000, without the minimum wage, why would he even pay anything more than $1,000? With the minimum wage, the worker gets $1,200. Without the minimum wage, the worker gets at most $1,000 and $800 currently. So your example shows that the worker does get more with the minimum wage.

In a climate of depressed wages, the minimum wage helps boost wages. The so-called ‘maximum’ wage of $1,200 is still higher than the $800 that the worker is currently getting.

What’s being done for workers at the bottom

January 16, 2011

Dear Straits Times,

I refer to the 13th Jan 2011 report on what has been done for workers at the bottom.

While the bottom 20% of employed households saw their incomes grow by $6,900 (from $19,000 to $25,900) between 2000 and 2008, the corresponding HDB resale price index grew by $68,892 (from $270,454 to $339,346). It will take 10 years for the income growth to pay for the increase in HDB price and even longer if we consider interest payments.

The additional CPF grant of up to $40,000 cannot even cover the $68,892 rise in HDB resale price between 2000 and 2008. While 85% of the bottom 20% ‘own’ their flats, most of them are heavily indebted and will be forced to pay for their flats all their lives at the expense of retirement savings. The $242,000 in home equity minus outstanding loan is practically untouchable as far as the bottom 20% is concerned since most of them would be staying in smaller flats to begin with and won’t have much room for downgrading. Even if they can downgrade, they will have to pay for another price-inflated flat so the realisable gain will only be much less. Also, people must realise that there is no free meal in this world. What they can gain through selling their flats will be more than paid for by the higher prices that their children have to pay in future.

Therefore, the so-called high level of home ownership is in name only and not in substance for the bottom 20% since the high cost of home ownership comes at the expense of retirement savings. If paying for my future retirement needs means I have to forego my flat in the future, it means I am only temporarily holding on to my flat for now only.

The $64 million Medifund payout in 2009 and the $210 million Comcare payout since 2005 work out to be only $286 per person and $156 per person per year for the bottom 20%. The $400 million per year Workfare payout works out to be only $83 per worker per month. The $650 million in special transfers for the bottom 20% between 2007 and 2009 works out to be only $968 per household per year.

Ms Denise Phua says that increasing cleaners’ pay would mean hike in hawker food prices. But cleaners’ pay is only a fraction of stall rental charged by the government. Ultimately, the government has a bigger role to play in determining hawker food prices by determining how much rental to charge hawkers.

Mr Calvin Cheng says that some politicians have hoodwinked people into believing that the minimum wage is the magic medicine not paid for by ordinary Singaporeans. Exactly which statement by which politician says that? He says that provision shop owners, coffee shop owners who are our family, friends and neighbours will be the ones paying the minimum wage. Is he saying that if his family, friend or neighbour owns a coffee shop, they are entitled to exploit fellow Singaporeans by paying them unfairly low wages? Ultimately, minimum wage is not about penalising employers whether or not they are fellow Singaporeans. It is about asking ourselves what is a fair wage? Until that question is answered, we can’t even tell if we are penalising employers or rectifying a wrong that has been going on for many years already.

Singapore-Malaysia economies: Size doesn’t matter

January 2, 2011

Dear editor Nanyang Siang Pau,

I refer to your 10th Dec 2010 commentary on Singapore overtaking Malaysia in GDP which was carried by the Straits Times on 15 Dec 2010.

Do not be overly insulted by Singapore’s economic miracle. It is much easier for smaller countries to prosper compared to larger countries. The world’s wealthiest nations tend to be smaller nations.

Also, do not constrain Singapore to Southeast Asia for it is one of four East Asian tiger economies. Singapore’s prosperity tends to be associated with it being East Asian rather than its location in Southeast Asia. The other East Asian tiger economies have similarly grown manifold since 1965. In the context of East Asia, Singapore’s achievements are nothing out of the ordinary.

Singapore’s record 15% growth rate in 2010 is due to its accumulated mass import of foreigners in the preceding three years. If Malaysia were to suddenly increase its population by 25% overnight, it too would similarly find a spurt in growth due to growth in numbers. But this growth in numbers doesn’t necessarily translate to an improvement in the quality of the people’s lives.

Contrary to what you have described, Singapore was not known to be a poor little market in a dark corner of Asia. It was a British crown colony and has always been a bustling port and emporium.

Being resource rich doesn’t have to be a curse as Norway would demonstrate. The availability of rich resources tends to be the convenient scape goat for failure to achieve high GDP levels. But it is also possible that without rich resources, the situation might even be worse.

While 200,000 Malaysians have become American citizens, Singapore hasn’t fared any better. The following data is obtained from the World Bank’s “Migration and Remittances Factbook 2011”:

Singapore Malaysia
Stock of emigrants 297,200 1,481,200
Stock of immigrants 1,966,900 2,357,600
Total population 4,832,678 28,066,667
Non-immigrant population 2,865,778 25,709,067
Emigrant stock as % total population 6.1% 5.3%
Emigrant stock as % non-immigrant stock 10.4% 5.8%

The stock of emigrants of Singapore origin is 10.4% of our non-immigrant population. This percentage is far higher than Malaysia’s 5.8%. If high emigration rate is worrying, then Singapore has more to worry than Malaysia.

Buoyant property prices a sign of rising wealth

January 1, 2011

Dear Straits Times,

I refer to the letter by Mr Benjamin Ching dated 20 Dec 2010.

Mr Ching claims that the spike in housing prices is due to the government’s quick pace at getting us out of the financial crisis. He is wrong. Housing prices started to spike at the beginning of 2007 even before the financial crisis hit us. It is not that we got out of the financial crisis but rather, the financial crisis was resolved by the United States without which there can be no way for us to get out of the financial crisis.

90% home ownership doesn’t mean that 90% of Singapore residents own homes. According to the 2009 Singapore Statistics:

– there are 1,119,600 Singapore resident households
– home ownership rate = 88.8%

Therefore, number of Singapore resident owned homes = 0.888 * 1,119,600 = 994,205

Assuming each home is owned by a couple, number of Singapore resident home owners = 2 * 994,205 = 1,988,410

According to the 2009 Singapore Statistics too, number of Singapore residents = 3,733,900

Therefore, number of Singapore residents who do not own homes = 3,733,900 – 1,988,410 = 1,745,490

In other words 1,745,490 out of 3,733,900 or 47% of Singapore residents do not own homes. These Singapore residents, comprising mostly children and unmarried adults will not benefit from rising property values and will be forced to pay higher prices in the future. There is thus no reason for almost half of Singapore residents to be happy about rising property values.

The great rise in property prices only means wealth increase on paper for about half of the Singapore resident population. To realise this paper wealth, home owners must sell their price inflated homes without buying another price inflated home. That would mean putting up with other households or quitting Singapore altogether. For the other half of the Singapore resident population who do not own homes, there is no wealth increase but only increase in future mortgage liabilities due to increased prices.

So there is no net credit due because for every credit due, there is another discredit to be accounted for.

Property prices will rise as long as there are more people than current housing can adequately cater to. But that doesn’t mean that the situation is healthy or that it cannot be changed or controlled. The mass import of people has been going for years already. It will take more than the current slew of government measures to repair the damage already done.