something i stumbled across on the net ... just to share with
you ...
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Since 1996 Singapore's authorities have accelerated deregulation in
the financial and telecommunications sectors. Data from the US
Department of Commerce on returns to US companies show that,
compared with the Asian average, Singapore no longer provides the
superior rate of return it once did. Once a premium economy
charging premium prices, it is now a less-than-premium economy -
but is still charging premium prices.
Although Lee Hsien Loong has stated his determination to create a
more flexible wage structure, some analysts feel that such
wage-centered strategies may not suffice in reinventing the
Singapore economy. At best, such measures will merely be
perfunctory, because Singaporean wages to begin with have not
deviated from market levels. What matters more are land, regulatory
and transportation costs, which the Singaporean government
exercises considerable control over.
According to Manu Bhaskaran, the head of Washington-based advisory
firm Centennial Research, "Singapore's competitiveness problem is
cumulatively due to distortions in land prices [and its effects on
wages and rentals], high transportation costs resulting from the
government's forceful anti-congestion policies [which drive up the
cost of distribution and logistics] and high regulatory
costs."
Indeed, the prices of major inputs - land, labor and capital - in
Singapore are substantially influenced by the government. This is
because the government, through its Housing Development Authority,
owns most of the land, effectively becoming the monopoly
supplier.
The incremental supply of labor is controlled by the government
through its grip on foreign-worker inflows. Singapore's financial
capital is also heavily influenced by government, as the biggest
players are all government-linked companies with ties that extend
to the Lee family. Lee Hsien Loong's wife, Madam Ho Ching, for
instance, is the chairperson of Temasek Holdings, Singapore's
state-owned investment company, and his brother Lee Hsien Yang is
the chief executive officer of Singapore Telecommunications Ltd
(SingTel). Lee Kuan Yew has also remained a key board member of
various government-linked companies.
Hence, without adequate measures to retrench the role of the state,
the economy under Lee Hsien Loong will restructure in the manner it
always has, with companies laying off workers, cutting wages,
squeezing subcontractors' margins and forcing landlords to cut
rentals.
Aside from producing deflationary headwinds in Singapore's economy,
such moves are bound to make Lee Hsien Loong appear even more aloof
and indifferent to the welfare of the average Singaporean - a
reputation he has been battling hard to disprove.
Meanwhile, some of the challenges facing Singapore are growing due
to Malaysia's and other neighboring countries' plans to lower their
operation costs. These competitive challenges will encourage
further policy reforms to pare down the cost of operation in
Singapore.
But even then, to be truly effective Lee Hsien Loong has to
reconsider the role of government in the economy, manifested most
profoundly in the form of powerful government-linked companies such
as Temasek, Sembawang and SingTel.
Without a bold and conceptual rethink of the island state's
economic and social policies, Lee Hsien Loong will likely govern
Singapore with the same substance and essence of what his legendary
father has bequeathed. When that occurs, charges of dynastic
succession may well be too strong to rebuke.