Sunday, November 19, 2006

More Good Years Coming Right Up!

So .... the election pundits were right. (Singapore Pools should start a bet on when GST will reach 10%) GST did go up. Technically not till next year but all of us in Singapore knows how legislation / governmental policy is made in the last five years. Once its announced its as good as done.

7% consumption tax on a $126B (2005 CIA World Factbook estimate) GDP. Roughly works out to be $8.8B a year. Not including other indirect or direct taxes which take the figure up easily twice or more (personal income tax, corporate tax, ERP, COE, Parf, you name it).

What does one do with so much money? Is Singapore reaching a stage in developmental spending that rivals the US where (in the movie Independence Day) a hammer cost $25k and a toilet seat costs $30k now is it? Does porking go on in the Singapore budget?

Sure we have a high standard of living (as claimed) and just a few firm shades under developed nation status pay scales (GHSS survey median of $2,750 - about USD $1,720 - or close to that) and out civil service employs about 40% of the population directly and otherwise (gotta include FTs there now). Where does all the money go?

Social welfare? The PM claims that 'welfare' is a dirty word, so there, we have no welfare to speak of. Of course we have 'workfare' but isn't the whole concept of workfare detrimental the the normal operating circumstance of market forces and an open economy in which the government professes to believe in? If this is the case then there will certainly be more good years coming right up!

Then again I could be wrong. The first day of Parliamentary debates saw PAP MP Seng Han Thong (sp?) claiming that he was giving out so much charity from his CDC kitty that he has had to request for more. And I may be wrong but I think I heard him say that the government in 2005 (or the past year, whichever that was) spent $6B on social / welfare related spending.

So what exactly is it that we have in Singapore? Welfare? Workfare? Behind-the-scenes-fare? The only fare I know as a middle income Singaporean living in a HDB flat is that transport fares are going up! But now the Tranport Minister is considering what was raised by WP during GE2006 - to essentially nationalise public transportation - for the good of the people! What happened to respect for intellectual property?

Let's do a quick review on the recent announcements concerning the main tax areas in Singapore:

1. GST - up
2. ERP - mostly likely up once the distance based system comes online (remember the joke about being ERPed once you leave your carpark?)
3. Income Tax - trying to go down but more beneficial it appears to the upper crust
4. Corporate Taxes - 'must come down if we are to remain more competitive'
5. 'Sin' Taxes are going up - gambling, drinks, smokes but these taxes apparently just dissappear into thin air I think

I'm sticking a finger in the air and saying that we should expect a few good things to come our way.

A. CPF contributions from employers will be cut again soon - of course to make Singapore more wage competitive! But why are we fighting on wage competitiveness for blue collar jobs when we could open up our Universities more (in other articles) and compete on white collar jobs regionally and internationally? Sure help the bottom rung as all the Ministers have suggested but perhaps the best way is to help us help ourselves.

The government has spent an inordinate amount of time, money and manpower trying to understand 'The Cluetrain Manifesto' and visiting 'The Bootstrap Institute (Gary Hamel)' among other international personas / institutes so why are we still sticking to Mandarin like policies with regard to education and future employability?

B. Health insurance is already on the way up. All it takes is to start with a few dollars. Which dear Minister Khaw has already spoken on. No doubt the intentions are good but this is an area that deserves special attention because everyone, including the present government, knows that this is a critical and fundamental pillar of society.

Singaporeans should prepare themselves for a healthcare model that will see companies refusing to provide medical and/or medical insurance due to the 'exorbitant' cost of medicine in Singapore (which relative to Inda - wage comparison here - though they have some good facilities as well) vis-a-vis the climate for attracting corporations to bunk in Singapore. Which by the way should receive a review since now modern corporations are surely and steadily getting rid of physical locations where feasible. (Hint: you probably can't prop up the commercial market, which drives the housing market, forever.)

Apologies but I should repeat here what was written elsewhere. Sure! Go ahead and fund a global standards medical hub but get the foreigners to pay Full Rates + to subsidize Singaporeans. Raffles Hospital and Mount Elizabeth (among others) are crawling with people who have bank accounts that would take Singapore decades to spend if we all went on 100% welfare today!

Yep, I know its all been gripe so far. But a few things could work to make the gripes go away. A few thing could make Singaporeans better citizens and more participative citizens. And that's what today's Government wants is it not?

i. Transparency - and I'm not only talking about Temasek deals that went right or left. I'm talking about opening up non-security sensitive Ministry (Mindef only actually) budgets and governmental budgets to allow Singaporeans to question and critique or actually support spending in. Publish the balance sheet in detail. How much received from where exactly and how much is going where exactly and why. Not so summed up high level corporate numbers which nobody can decifer.

ii. Transparency - why are policies made the way they are and can the 'consultative' process begin a little earlier? Like say before the announcement in Parliament which we all know is as good as done and dusted? Agreed that it can be a bitch to handle 200k responses but it will certainly be more productive for the country as a whole rather then have the civil service in general running around like headless chickens attending to the whims and half-baked fancies of some 'higher ups' with two gagillion revisions of a presentation and proposal only to have it all scrapped two hours before the deal is inked. I mean for goondus' sake man! We are paying top brains to write and re-write papers? Whatever happened to value for money?

Besides, if the consultation were truly a consultative process and taxation is truly an inevitable part of the growth of our nation then I'm sure that the citizens would be more pleased to help out. For one there will be no articles of this nature.

iii. Healthcare, Housing & Education (as an intangible form of investment) - are our spending priorities in the right order? Healthcare should not be free but do we need the latest in technology to treat the everyday (forgive my simplification here as I'm not medically trained)? Is public housing in Singapore truly subsidised? Really? And virtually no other country is giving out scholarships the way Singapore is giving out to foreign students. Foreign students usually pay a premium so that the locals are subsidized yet here we are, Singaporeans, paying more in taxes to truly subsidize foreign students.

Note: no animosity to foreigners or foreign students - some of you add to the diversity which Singapore needs. Only animosity to governmental policies.

Thanks for the comments!

Hi everyone,

thanks for your comments be they positive or otherwise.

I hope there is no confusion between 'freedom of expression' and 'freedom to create mischief.' If there is I apologise.

Future Jobs for Singaporeans? Or not?

And while PAP MPs & Ministers are going on and on about closing the gap and catching those who fall through the cracks, not that this is a bad thing, i reiterate my call for more pro-activity in a similar capacity through secondary school and beyond and especially through University.

Singaporeans of the future cannot afford not to have an option to pursue a University degree at later points in life then through only a standard and PAP determined route. Life is far more variable then what a bureaucracy with its policies and possibly outdated modus-operandi would like it to be.

To the Education Ministry I say this: while the government is attempting to balance between keeping the country afloat and keeping its citizens employable you are perhaps not moving fast enough or radical enough to keep up. And its not about throwing money at it in terms of more spanking new multi million dollar buildings. Its about the mind set. Its about removing artificial barriers such as quotas for certain faculties (and perhaps gender) and for Universities as a whole that distort market forces.

November 12, 2006
On the Contrary

A Boom in Jobs, and Fear


AMERICA’S biggest export, it sometimes seems, is jobs. A shocking new study a consulting firm whose specialty is helping big business improve back-office operations, says the Fortune 500 companies could save $58 billion annually by moving more of these activities offshore.

But the truly shocking thing about this number is how small it is. Last year, the Fortune 500 had revenue of $9.1 trillion. Moving more back-office operations overseas, in other words, could cut costs by way less than 1 percent of sales. A nice boost to profits, but hardly earth-shaking.
Here at home, meanwhile, it’s raining jobs — an estimated 5.8 million new ones in just five years, according to a recent Labor Department report. The government’s household employment survey showed a gain of 437,000 jobs in October alone. Unemployment that month fell to just 4.4 percent, a 5½-year low.

Jobs are so abundant that investors are worried that the Federal Reserve may delay making interest rate cuts, lest inflation revive. The concern is that all these new jobs may lead employers to bid up wages, heaven forbid.

There are so many jobs, in fact, that we can’t fill them all ourselves. Instead, we rely on millions of immigrants to pick up the slack. The supply of employment opportunities in this country was demonstrated by President Bush’s recent authorization of a 700-mile fence along the Mexican border. There is gainful employment here, and plenty of it.

Don’t let the recent election-season rhetoric fool you. The nature of American work is changing, but jobs are abundant, and the dynamic nature of the economy is one reason that they will remain so. Outsourcing isn’t likely to change this in the foreseeable future, and I suspect that it’s even helping to sustain domestic job growth by promoting efficiency and thereby freeing capital for better uses. We even gain jobs by insourcing — by receiving jobs from other countries.

Toyota and Honda, for example, have thousands of employees in the United States.
While Hackett says that “increased use of offshore resources may impact up to 1.47 million general and administrative jobs,” the Organization for International Investment, a business group representing American units of foreign companies, says that such domestic subsidiaries employ 5.4 million people in this country. In all likelihood, that total will grow.

SO the real issue isn’t saving jobs. It’s helping those whose skills suddenly become obsolete to adjust to the new world around them. The big new job gains, for example, mask continuing job losses in manufacturing as well as recent declines in construction employment, meaning more bad news for people who work with their hands. That, in turn, suggests more income inequality ahead. Washington, despite its recent track record of bungling on so many fronts, will need to play a role in helping these people and their communities adjust, and unfortunately that’s one job we can’t easily send offshore.

Nor is it one that we can expect the private sector to handle. Troubled by soaring health care costs, companies are withdrawing from their longstanding role as providers of medical insurance. They’ve also moved away from providing long-term job security or traditional defined-benefit pensions. Maybe that style of employment no longer suits a changing world, or maybe corporations are too busy back-dating executive stock options to worry about taking care of their rank-and-file employees.

Either way, companies are getting out of the social welfare business — and I say good riddance. What business is really good at, aside from generating wealth, is generating jobs. Social welfare is the business of government.

Some important questions were rarely debated in the recent election. What should be done — and what can be done — for the losers in this time of rapid economic change? How much inequality are we willing to accept? What do we want our society to look like? And, perhaps most important, is our government up to the job of changing the picture?

The next big election is in 2008, and some presidential candidate may yet make a splash by promising to clamp down on free trade, curtail immigration and embrace isolationism, all in the name of protecting American workers. That would be a far more effective job-destruction strategy than the outsourcing that may yet become a campaign issue.

Daniel Akst is a journalist and novelist who writes often about business. E-mail: