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Saturday, July 3, 2010 By

Singapore incomes to rise more slowly than before?

Working couples in Singapore, you have been warned.

The median income of households with two working members is likely to increase a little less in the next 10 years than it did in the past decade, based on what the minister said.

The government wants individual median income to go up from S$2,400 now to S$3,100 in 2010, Finance Minister Tharman Shanmugaratnam said yesterday.

That's less than a one-third increase — and less than the growth in the median household income in the last decade.

Median household income from work rose by a third from S$3,638 in 2000 to S$4,850 in 2009, according to Key Household Income Trends 2009, a paper issued by the Singapore Department of Statistics. Based on that report, I made this chart to write about the growing gap between average income and median income in Singapore.

median_and_average_income

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Wednesday, February 24, 2010 By

‘Singapore withdraws red carpet for foreigners’

Singapore withdraws red carpet for foreigners with eye on vote, says Bloomberg. The report, published by BusinessWeek, covers changes in government policy on immigration and foreign workers.

But is it right when it says, "The government’s shift, which includes higher school and medical fees for non-citizens, has spurred speculation that an election may be called as early as this year" ?

The Wall Street Journal reports Singapore moves to curtail immigration. It says:

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Tuesday, February 23, 2010 By

Foreign workers boosted economy and wages: Tharman

Foreign workers not only helped the Singapore economy to grow but also helped raise the median income of Singaporeans, Finance Minister Tharman Shanmugaratnam said in his Budget speech yesterday.

That contradicts a Wall Street Journal report last month, which I quoted in an earlier post.

The minister and the Journal both agree the foreign workers helped the economy to grow.

But their presence was a damper on productivity and blue-collar wages, according to the Journal.

Foreign workers — over a million strong — make up about a third of the Singapore workforce.

The median monthly income of people working full-time rose 0.5% from 2,590 Singapore dollars in June 2008 to 2,600 Singapore dollars in June 2009, after soaring 11% in 2008 and 7.7% in 2007, the Ministry of Manpower reported on November 30, 2009.

But many Singaporeans are unhappy about the influx of foreign workers.

The minister said there was a need to "moderate the growth of the foreign workforce", using a "price mechanism", like for any other product in the market.

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Tuesday, February 23, 2010 By

GIC’s UBS losses could amount to 3.9% of GDP

Finance Minister Tharman Shanmugaratnam said in his Budget speech yesterday that Singapore's "large" estimated basic deficit of 8.5 billion Singapore dollars (about $6 billion) for financial year 2009 amounted to 3.3 per cent of the gross domestic product.

The Government of Singapore Investment Corporation's paper losses on the Swiss bank, UBS, could amount to more than that.

The Straits Times reported earlier this month that, converting notes into UBS shares, GIC could lose 7.85 billion Swiss francs (about 10.26 billion Singapore dollars).

That would amount to 3.9 per cent of the GDP.

Singapore's 2009 GDP was about 257.64 billion Singapore dollars at current market prices, according to the 2009 Singapore Economic Survey by the Ministry of Transport and Industry.(See chart.)

The finance minister said:

Because our economy contracted by less than
expected last year, our budget position has also turned out better than
projected. The basic deficit (Operating Revenues minus Expenditures for
FY2009) is now estimated at 8.5 billion Singapore dollars compared to the 14.9 billion
Singapore dollars that was expected.

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Monday, February 1, 2010 By

Singapore to keep foreign workforce at one-third

Singapore should tighten policies on foreign workers in the city-state to ensure their number does not grow significantly from current levels, a committee led by Finance Minister Tharman Shanmugaratnam recommended today, reports Reuters.

"We cannot increase the number of foreign workers as liberally as we did over the last decade, or else we will run up against real physical and social limits," the government's economic strategies committee said in a report.

"This will also ensure that our economy's dependence on the foreign workforce over the long term does not grow significantly beyond current levels of about one-third of the total workforce."

Manpower Minister Gan Kim Yong, another member of the committee, told a media briefing: "We want to maintain the current balance as it is, which is about one-third."

The committee said the government could increase the foreign worker levies in a "gradual and phased manner" but did not say by how much.

Foreigners make up about 34 per cent of Singapore's population of 4.99 million, reported the Financial Times, as mentioned in my previous post.

Dow Jones Newswires reports the committee also recommends:

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Monday, February 1, 2010 By

Singapore immigration curb won’t hit professionals: FT

Singapore will try to reassure multinational companies that plans to tighten immigration will not affect white-collar expatriates, reports the Financial Times.

Foreigners make up about 34 per cent of the country’s population of 4.99 million, following a long period of high economic growth up to 2008 during which Singapore accepted up to 100,000 people each year.

A report by an economic review strategy committee chaired by Finance Minister Tharman Shanmugaratnam will say that the focus of reductions in the flow of foreigners must be on blue-collar workers, says the Financial Times.

This follows growing concern among locals, it adds. But Singapore has to remain open to highly skilled professionals, says the newspaper, quoting "a person familiar with the report".

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Thursday, December 31, 2009 By

Singapore GDP shrinks 2.1% despite 4th quarter jump

Lee-hsien-loong The Singapore economy shrank 2.1 per cent in 2009 despite growing 3.5 per cent in the fourth quarter, Prime Minister Lee Hsien Loong said in his New Year message today. The economy grew just 1.1 per cent in 2008.

Still, it's good news.

The economy is recovering and the government has been spot-on in its forecast that the gross domestic product would shrink by 2 to 2.5 per cent in 2009.

Now the government has to reduce unemployment, which has gone up to 5 per cent for the local population — Singapore citizens and permanent residents.

The economy grew in the fourth quarter despite manufacturing output dropping by 8.2 per cent in November from the previous year. Manufacturing accounts for about a quarter of the economy.

Clearly, the Prime Minister could not wait to share the good news. The figures were scheduled to be released only on January 4.

This is not taken lightly.

Finance Minister Tharman Shanmugaratnam will remember how some Business Times journalists were prosecuted under the Official State Secrets Act for reporting on the government’s preliminary, or “flash”, GDP estimates back in the early 1990s when he was director of the economics department of the Monetary Authority of Singapore.

But PM Lee, Finance Minister Tharman Shanmugaratnam and the whole government deserve congratulations for steering Singapore back to economic recovery.

PM Lee's predecessor, and now Senior Minister, Goh Chok Tong masterminded two economic recoveries — from the Asian currency crisis in the late 1990s and the Sars epidemic in the early 2000s — and now he has notched up one himself.

PM Lee said:

Our economy is growing again, and has recovered much of the ground since the recession began last year. Our fourth quarter growth is 3.5%, although for the whole year our growth is still negative, at -2.1%. Considering the anxious moments at the depth of the crisis, our subsequent recovery is something to take heart from.

He also had the good sense to acknowledge, even as the government gives more preference to Singaporeans, that Singapore has to remain an open-door economy for its own survival. He said:

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Monday, December 28, 2009 By

Tharman: We want private investment, not tax hike

Tharman_N509 Singapore Finance Minister Tharman Shanmugaratnam acknowledges Singapore has an unemployment problem. That is why Singapore doesn't want to raise income taxes — "certainly not corporate income taxes" — because "our key objective should be to see private investment grow, as the basis for long-term growth", he tells the International Monetary Fund's Finance and Development magazine.

He emerges as the odd man out among the Asians interviewed in one respect. He says growth will continue to depend on exports, which is true for Singapore, while others see the need to transform their economies. They are Ajith Cabraal, governor of the Central Bank of Sri Lanka; Shuli Hu, a leading Chinese journalist; Yung Chul Park from Seoul National University; and Raghuram Rajan, professor of finance at the University of Chicago and economic adviser to the Prime Minister of India. Read the interview here.

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Thursday, November 5, 2009 By

Tharman: Once upon a time in the West…

Tharman_N509 Singapore Finance Minister Tharman Shanmugaratnam knows his history.

While praising the "uniqueness" of Indian democracy, he defended the East Asian model by pointing out that democracy used to be limited in Britain and America too.

"It was not until 1930 that Britain got Universal Suffrage. The US did not get Universal Suffrage until 1965," he said.

He was referring to the 1965 Voting Rights Act which made it easier for Southern blacks to register to vote after the 1964 Civil Rights Act ended racial discrimination.

Britain gave the vote to women from the age of 21 only in 1928. Only older women, from the age of 30, had been allowed to vote in Britain since 1918. 

Mr Tharman recalled: "In Britain, before the Reform Act of 1832, only 1.8 per cent of the adults had the vote. After that Act, 2.7 per cent got the vote. After the Second Reform Act of 1884, 12.1 per cent got the vote."

But while democracy was limited, there was stability, economic growth and the middle class grew, he said.

Neatly, from there, he segued to the East Asian model. "A group of men (usually men) centralised power, planned in the long term interests of the country and executed those plans quite smoothly. Some of these countries did not hold elections…

"But, on the whole, the countries progressed. People received education, were empowered, the infrastructure developed, the economies grew steadily."

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Saturday, May 9, 2009 By

Economics 101 by Singapore’s finance minister

No, we don't have a Barack Obama in Singapore but we have some highly articulate, capable ministers who can hold their own in their fields against almost anyone in the world. Just watch Singapore Finance Minister Tharman Shanmugartnam speaking in Switzerland on the government's role in the light of the financial crisis. This clip appeared on the popular Singapore blog, The Online Citizen, which also has a writeup on what he said.

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