I wrote yesterday that the 1.8 billion Singapore dollars ($1.27 billion) in benefits that Singaporeans will be getting in a budget surplus sharing package is less than one-fifth the amount Singapore is investing in Citigroup. I was having a little fun, knowing the local newspapers would never publish such comparisons. They highlight the benefits instead. But I don’t think what the government is doing for Singapore can be measured in dollars and cents only. Let’s not forget the intangibles — the quality of life in Singapore.
People may have greater social security in the West. But we enjoy peace and stability, an excellent public transport network, a good education system and great amenities. Home ownership is as high as 93 percent and unemployment fell to as low as 1.6 percent in December, according to the Department of Statistics. These are remarkable figures.
Of course, there’s a huge income gap: the per capita income from work for the top 10 percent of the employed households last year was 7,940 Singapore dollars — more than twice as much for the next 10 percent (3,460 Singapore dollars) and more than 25 times times as much as for the poorest 10 percent (310 Singapore dollars).
Among Singapore’s major trading partners, only Hong Kong has a wider income gap. Singapore’s Gini coefficient — a measure of income inequality — was 0.46 last year, according to the government. The corresponding figures for
- Hong Kong 0.523 (survey year 2001)
- Malaysia 0.461 (2002)
- Thailand 0.420 (2002)
- Indonesia 0.363 (2005)
- China 0.469(2004)
- Philippines 0.445 (2003)
- India 0.368 (2004)
- Japan 0.381 (2002)
- South Korea 0.351 (2006)
- Australia 0.352 (1994 )
- New Zealand 0.362 (1997)
- UK 0.340 (2005)
- US 0.450 (2007)
But the government is trying to address this problem. One reason the income tax for top earners was not reduced from 20 percent could be a desire to narrow the gap.
The government has consistently given more benefits to the poor and now it is also trying to help the middle class. And even the richest are taxed less in Singapore than in most countries. Their interests cannot be ignored by Singapore, which has to attract rich businessmen and top professionals to sustain the economy.
Singapore is lucky to enjoy good government. Isn’t it surprising that a little island with less than five million people and no natural resources has become Asia’s second richest country, able to help out banking giants like Citigroup and UBS with billions of dollars?Would it have been possible without wise economic policies?
Singapore’s ministers may not be Barack Obamas. The government says they have to be paid million-dollar salaries to keep them in public service. But there’s no question they are doing a great job.
The government, to its credit, is refreshingly candid. Finance Minister Tharman Shanmugaratnam, presenting the budget for this year yesterday, acknowledged that the Goods and Services Tax hike from 5 percent to 7 percent in July last year fuelled inflation, which hit 4.4 percent in December, the highest in 25 years, though he pointed out the tax hike was offset by benefits to the people.
Singapore cannot avoid inflation, he said, with food and oil prices rising around the world. He ruled out price controls. They are hardly feasible in a country like Singapore, which has to import everything from food to water. Yes, India, an oil importer, has fuel subsidies. But, unlike Singapore, India is self-sufficient in many ways.
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