SGD20.5b Resilience Package worked though only a fraction of GIC, Temasek losses

The Economic Survey of 2009, released today by the Ministry of Trade and Industry, notes how the government fought the recession.

The centrepiece of Budget 2009 was the 20.5 billion Singapore dollar (SGD20.5 billion) Resilience Package, it says.

The stimulus worked. Singapore is out of the recession with overall unemployment down to 2.1 per cent.


Among Singapore citizens and permanent residents, the  unemployment rate fell to 3 per cent from 5 per cent with an estimated 60,100 residents out of work in December 2009.

The SGD20.5 billion (about $14.5 billion) Resilience Package was not only effective but cost-effective. It was a shoestring operation compared with the business activities of the two Singapore sovereign wealth funds.

The survey mentions the SGD5.1 billion the government allocated to help preserve jobs for Singaporeans.

That was only a fraction of the 11 billion Swiss francs (about SGD14.2 billion) the Government of Singapore Investment Corporation (GIC) invested in the Swiss bank, UBS.

GIC's paper losses on UBS alone could total about 7.85 billion Swiss francs — more than the entire outlay to protect jobs. GIC's UBS shares are now worth only about 3.15 billion Swiss francs, according to the Straits Times.

GIC, manager of more than $100 billion of Singapore's foreign reserves, "suffered a loss of more than 20 per cent in Singapore dollar terms in the financial year to 31 March 2009", according to its annual report.

Temasek Holdings also suffered losses. The Straits Times reported on June 3, 2009:

Between end-March to November 2008, Temasek incurred SGD32 billion of paper losses in the 10 largest Singapore-listed stocks it holds.

Finance Minister Tharman Shanmugaratnam released these figures in Parliament and stressed that more than half of the SGD58 billion loss in Temasek's portfolio in the eight months between March 31 and Nov 30, 2008 was due to the market slump.

So Temasek's losses alone were nearly three times more than the Resilience Package.

What made it so effective?

The Economic Survey recalls the five components of the Resilience Package:

• SGD5.1 billion to help preserve jobs for Singaporeans
• SGD5.8 billion in government capital for a Special Risk-Sharing Initiative (SRI) to stimulate bank lending
• SGD2.6 billion worth of tax measures and grants for businesses to enhance cash-flow and competitiveness
• SGD2.6 billion to support Singaporean households
• SGD4.4 billion for infrastructural developments and expanded provisions for education and healthcare to build a home for the future

The measures worked.

 Rise in employment

More than 2.99 million people were working by the end of 2009, up from 2.95 million in 2008.

"Total employment increased by 38,800 in 2009, as job gains in the second half of the year more than offset the losses in the first half," says the Economic Survey. "Job creation accelerated in the fourth quarter of 2009, supported by hirings for the year-end festivities and the integrated resorts."

The report does not say whether the bulk of the new jobs are permanent or, as in the previous quarter, short-term contracts.

Instead, it says:

The bulk of the employment gains came from the services producing industries, which added 32,100 workers in the fourth quarter of 2009…

Construction added 4,700 workers in the fourth quarter, bringing its total gains to 25,200 in 2009… manufacturing employment contracted by 43,000 in 2009.

Manufacturing lost more jobs this time than during the 2001 and 1998 recessions, says the report. "In past recessions, the construction sector  tended to account for more than half the employment decline", but this time it added more jobs.

The stimulus package saved jobs but could not prevent a drop in earnings.

The report says:

For the whole year, nominal average monthly earnings fell by 2.6 per cent, down from growth of 5.4 per cent in 2008. In real terms, average
earnings fell by 1.3 per cent, compared to growth of 3.8 per cent in 2008.