Figures, facts and fallacies

Dear Dr Tan Khee Giap,

I refer to your comments on the UBS Prices and Earnings Report 2009 which was carried by the Straits Times on 3 May 2011.

You complained about the UBS’s understating of the percentage of professionals, managers and executives (PMETs) in Singapore which tended to understate our true average wage. But most of the first world cities ahead of us in the UBS list also had their percentage of PMETs in their workforces understated. Hence, any disadvantage that we suffer would likewise be suffered by them as well. So this does not explain why our gross hourly wage is not even half that of New York’s.

You complained about the UBS excluding CPF from our net wage which is used to pay for housing, medical and education expenses. But having for paid all these, how much is left over for retirement? We must recognise that the net wage in Western cities essentially refers to consumable income after deducting for retirement needs. To compare apple to apple, our net wage should also be net of retirement funds. Since our CPF is our retirement funds, our net wage should therefore be net of CPF.

You complained about the UBS’s use of European goods and services to reflect costs. You said this biases up our cost of living since Western goods tend to be more expensive in Asian cities. But Western services are not cheap compared to Asian services. Plumbing, car repair, window works, electrical works, house renovation and so on are much more expensive in Western cities than in Asian cities. Also, a significant number of items in the basket of goods are no longer Western consumption items but have become global consumption items. Items like skirt, shoes, shirt, jeans, socks, computers, IPods, MP3 player, refrigerator, LCD TV, digital camera, vacuum cleaner, hair dryer, phone bills, Internet connection, movie tickets and so on have all become global consumption items. Western food items like McDonald’s, KFC, Coca Cola and so on have become global consumption food items. Also, Western bread and Asian noodles are both made from wheat and are therefore subjected to the same global wheat pricing.

You complained about the UBS using private housing rents to calculate price levels when the majority of Singaporeans live in flats where rental is 30% cheaper. But if you refer to Page 10 of the UBS report, it clearly states that gross or net hourly pay is calculated excluding rent. Our HDB flats are more expensive than private housing in Western cities. If the UBS factored in rents, we would have fallen even further back in the rankings.

You complained about the UBS putting Singapore’s electronics and household appliance prices higher than Mumbai’s. Anecdotally, you said this is not true because visitors from India spend much on electronics here. But it is possible that Indian electronics products are not the latest so our Indian visitors are coming to buy the latest to bring back home rather than to buy the same things at a cheaper price.

Finally, you constructed your own index which puts Singapore in a much better light. You said it is based on official sources of monthly wages but adjusted to account for slightly different national statistics for different countries. All these sound very dubious. Show us your sources so that we can verify them independently. Show us your adjustments so that we can judge their reasonableness.

You set out to point out the fallacies in the UBS report. You ended up producing your own fallacious arguments that put shame on you and the Lee Kuan Yew School of Public Policy.

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