Temasek, GST, Ministerial Pay Increases

Thanks to NMP Ms. Olsen for once again casting the spotlight on Temasek. Your indirect drive for greater transparency and accountability is great! Right down my alley if I may say so please.

While there's been almost overly much ado about Temasek given its Shin 'scandal' - I hope this write up is not sub-judice by Thai standards since they are the apparent plaintiffs - it seems that almost everyone has forgotten about GIC.

[Quote] from GIC's website (link in title of article, I hope) : GIC is a global investment management company established in 1981 to manage Singapore's foreign reserves. With a network of seven offices in key financial capitals around the world, GIC invests internationally in equities, fixed income, foreign exchange, commodities, money markets, alternative investments, real estate and private equity. Since our inception, we have grown from managing a few billion dollars, to well above US$100 billion today. With a portfolio this size, we are now amongst the world's largest fund management companies. [End quote]

So while Singaporeans at large are concerned with the flinging of a couple of billion dollars out the front door I wonder who is being seriously concerned about an amount far greater in magnitude that is being silently managed out the back door vis-a-vis press and mainstream media spotlighting.

Oh, don't get me wrong. I'm definitely concerned as a tax paying (direct and indirect as well as 'clandestine') Singaporean but as blogged previously, the more I write the more questions I end up with. In no small part due to the internet the Shin deal was blown wide open because it was first blasted it the Thai dailies. Deja vu General Election 2006 ... the local press had to print a tiny assed picture of the WP Hougang rally and subsequently other AP rallies because it was all over the internet otherwise its credibility would be at stake. Recall how PM Lee vigourously defended the 'accuracy' of the press vis-a-vis the internet as a medium of information right after GE 2006 {but of course we remember Mr. Brown's redition of the 'mai hum' snafu where the various print and non-print media all carried different versions eh?}. I wonder which is spin and which is not. You make up your own mind.

Back to reality: with GIC in the background now running around with SGD $150B it kind of begs the question again on raising GST. In fact it queries and/or renders the entire budgeting debate somewhat a farcical obsolescence. Top it off with the fact that we know that laws in Singapore can be virtually passed overnight it makes one wonder ........


Does it all make sense? Does the government know something that the people don't?

Is the government seeing a worldwide recession coming up in late 2007 / early 2008 given the dramatic drop in demand forecaster post Beijing 2008 for all international trade figures and is fiscally preparing for it while letting Singaporeans have a self-funded trip on workfare and the progress package?

FUBAR man.

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Elsewhere in the news .... China is about to raise its foreign corporate tax rate from a preferential 15% to the 'local standard' of 33% ..... while Singapore is choosing to lower it from 20% to 18%? Being a little bit over competitive are we?

By all accounts China is apparently (from what can be read and interpolated or deduced) going to level out social inequities by raising corporate tax. The same cannot be said of Singapore bearing in mind that Singapore is going to become a cheap place to generate profits out of despite the relatively higher labour cost here. I'm sure companies are aware of the maxim that 'you get what you pay for.' I believe in the value of Singaporean labour, does the PAP?

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And to top off the past two months' worth of idle chatter about the raise in GST it becomes apparent when one finds out - after the GST chatter is almost dead - that:

[Quote] THE pay of ministers and civil servants is expected to go up soon, after the Government announces salary revisions next month.

But there will not be a 'uniform, across-the-board large revision' for all 60,000 civil servants.

This is unlike 2000, when pay went up by an average of 13 per cent across the board.

This time round, increases will depend on how far civil servants' pay has lagged behind the private sector, said Defence Minister Teo Chee Hean, who oversees civil service matters.

Services with pay lagging significantly behind the private sector will get bigger adjustments, while those closer to the market will get smaller ones, he said.

For example, pay in the Administrative Service has not been revised since 2000 and has fallen sharply behind private sector salaries in the past two years.

Such civil servants are likely to get bigger rises to keep pace with the private sector.

Salaries of ministers, judges and statutory appointment-holders are pegged to the Administrative Service salary structure, so their pay is also expected to rise when the changes are announced.

Another important change is that salaries will be linked more closely to performance.
Mr Teo disclosed these changes in Parliament yesterday following questions from several MPs.
'As private sector wages rise, the wages of civil servants cannot remain stagnant,' he said.

'We do not aim to lead private sector salaries, but we must keep pace.

'If we are not responsive, we will lose our ability to recruit and keep able people. This will do great harm to Singapore as we would have lost one key advantage over other countries - a clean, competent and effective civil service.'

Mr Teo said the public sector had felt the impact of the tightening labour market. He made a similar point in November last year, when he said salaries were likely to rise.
For example, more civil servants are resigning. The resignation rate rose from 4.8 per cent in 2005 to 5.7 per cent last year.

The problem is more severe in some services. The management executive service for graduates saw resignations rise from 7.4 per cent in 2005 to 10.6 per cent last year. At entry grade, the resignation rate is 25 per cent.

While attrition rates in other services are not yet high, 'we should not wait till these services are bleeding badly before we move to retain and maintain competitiveness', said Mr Teo.
Ms Annie Yap, CEO of recruitment firm GMP, said salaries tend to be higher in the private sector.

While starting wages in the public and private sectors are similar, private sector salaries tend to be 10 to 20 per cent higher for top wage earners, she said.

Mr Teo explained that the new salary structure will tie pay more closely to performance, in line with private sector practice, where about 25 per cent or more of pay depends on performance.

This is a good principle to follow, to 'reward deserving civil servants and sustain a high-performance culture in the civil service', said Mr Teo.

Asked how the civil service ensures good outcomes, he acknowledged that it has no financial bottom line. But part of senior officers' pay is linked to Gross Domestic Product growth.

'We feel that is also a good way of getting senior civil servants...to focus on outcomes of that type,' he said. [End Quote]


So we learn a lesson in Media and Politics: Never put the words 'tax' and 'pay' in the same time frame or in the same article / speech. Failure to do so will awaken Singaporeans to some of the purposes of taxation in Singapore. I wonder if anyone else attended the same undergrad class in Media and Politics in UC Berkeley.