http://groups.yahoo.com/group/Sg_Review/message/1743
Mellanie Hewlitt
Singapore Review
22 Jan 2005
Why & How The PAP Financially Handcuffs Singaporeans.
You know about the COE and HDB scams. But have you ever wondered
what the 2
biggest financial handcuffs of the avarege Singaporean are?
Answer: a) The House and b) The Car.
These are essentially fixed illiquid assets which cannot be easily
taken
off-shore. And these are also the two biggest items on the average
Singaporeans
list of expenses. They provide a stable income/revenue stream for
the bloated
coffers of the government bureucracy and also physically shackles
citizens to
this island.
The following commentary by Robert Schwartz, chief economist for a
strategic
research unit in Australia, was written as part of a Singapore
Studies project.
For more information on the project and other articles, please
visit JGNews at
www.jamesgomeznews.com
Read on and discover how and why the PAP Government financially
handcuffs the
average Singaporean.
---------------------------------------------------------
Singaporean spending not central to Singapore economy
by Robert Schwartz, 20 Jan 2005
Writing about Singapore's economic outlook is boring.
It's not that there is nothing to say, it's that there
is nothing to say about Singapore itself. A pertinent
discussion of Singapore's near term prospects for the
first half of 2005 has to start with the effects of
the tsunami. This then would segue over to the actions
of America's Federal Reserve Bank, which in turn would
be followed by a pithy, yet substantive, look at the
global electronics cycle.
Where do the people of Singapore fit into this
analysis? Hopefully as readers of this piece, but
that's about as far as it goes.
In 2001, the Ministry of Trade and Industry published
a paper that looked at the four primary, long term
drivers of Singapore's economy. The number one
influence was growth in the United States. Number
two? Growth in the economies of Indonesia and
Malaysia. Third was global semiconductor sales. And
rounding out the top four was domestic construction.
But wait, you might say, what about Singaporeans' love
of shopping? Certainly that has to count for
something? You're right it does. The problem is that
Singaporeans love of shopping is usually done
someplace other than Singapore. The fastest growing
component of private consumption over the past decade
or so has been Resident Expenditure Abroad.
Of the spending done in Singapore, the fastest growing
type of retailer (by far) has been motor vehicle
dealers. From 1997 to the third quarter of 2004,
dealership sales had increased by a total of nearly
260%, not including the effects of inflation. The
next fastest growing category was supermarkets, which
grew by a total of nearly 32%. Overall, non-motor
vehicle retail turnover grew, excluding inflation, by
a total of 7.1% from 1997 through September 2004.
The key to Singapore's retail sector is not the
average Singaporean. The key to retail in Singapore
is the overseas visitor. If you want to get a handle
on how well the sector is doing, look at the growth in
visitor numbers. These have traditionally led the
retail numbers.
So again, where does this leave the people of
Singapore? In their government housing units voting
for the PAP every so often and that's about it. As
far as making the economy move forward, the average
Singaporean is a non-event. And as such has little
say in the political environment. No economic clout =
no political constituency = no audible political
voice.
The consumer's share of Singapore's economy is around
42%. This compares to about 55% in Japan, a country
notorious for saving, and close to 70% in the United
States. It is not coincidental that the average
American, who is such a vital part of the US economy,
has such a central role in the political sphere.
In fact, the average consumer in the United States has
more power over the direction of the Singapore economy
than does the average Singaporean. It is the
continually increased spending on ever more
gadget-filled electronics equipment or on a new
lifestyle drug done by a typical American that drives
the sales which drive Singapore's production.
To be fair to the government, it knows that any money
spent on boosting the consumption of average
Singaporeans is money that will very quickly find its
way to foreign shores. As such, the PAP has decided
that it would prefer not to spend its hard-earned tax
revenues boosting the local economies of Batam, Johore
or Bangkok.
This is also why the government's interest in the
domestic consumer economy is limited to construction.
This is a section of the economy that can't be taken
out of the country. The problem here is that by the
mid-1990s the residential property was way ahead of
the average Singaporean in terms of price,
affordability and location. As a result, the property
sector took a serious dive. Furthermore, neither the
public nor private housing markets have come close to
hitting the highs reached in 1996/1997.
The problem with this emphasis on property is that it
has handcuffed many Singaporeans. A typical private
residence bought between the beginning of 1994 and the
beginning of 1998 has, at best, not appreciated. At
worst, this homeowner could have held onto this asset
for over a decade and have it being worth less today
than when it was purchased. This means that a
Singaporean family could been paying off a mortgage
that was higher than the value of the property itself.
This negative equity is extremely depressing, both
economically and psychologically.
Alright, so where does this leave us? Talking about
things far from Singapore's borders. And, quite
frankly, it's a bit boring, not to mention impolite,
to talk about other people's lives instead of your
own. But when your lives don't count for much,
economically, there just isn't much point to a conversation.
