Are we progressing or sinking?

last SG · 2005-09-05T12:45:03+00:00

The more i think on this topic, the more i am of the view that life for the general singaporean is indeed getting more difficult. As reported the incomes of...

ObviousMan SG

Interesting exchange not widely known to Singaporeans.

Economy
Global ranking drops
Its population increase and powerful euro help push Singapore way down the ladder. By Seah Chiang Nee
Jul 11, 2005

In a changed landscape, Singapore's developed status has eroded, its global economic ranking overtaken by countries that had lagged behind it.

At its peak in 1997, the republic ranked among the world's top eight in per capita GDP, but after several years of economic weakness, it has now dropped to 22nd.

The recently released IMF World Economic Outlook 2005 showed Singapore at US$26,481, behind even the poorer European countries like Italy (US$31,874) and Spain (US$27,074) that it had little problem beating previously.

Other nations that were behind but have surged ahead of Singapore include Australia (US$33,629), Britain (US$30,09 Cool and Germany (US$35,075).

Its traditional rival Hong Kong, which was slightly behind, has shot up to a dozen places above the republic at US$32,292, helped by its link to the strong US dollar.

Between 1999 and 2003, Singapore's per capita GDP at purchasing power parity fell from US$27,800 to US$23,700. At the peak, only three countries ranked higher on PPP terms; today it's 22nd.

(PPP takes into account price differences between countries for a more accurate measure of national wealth.)

To put things into perspective, Singapore's global slide was not caused solely by its trade weakness, but also by currency movements.

The GDP per capita, the value of a nation's goods and services divided by the population, is measured in US dollars.

The dozen or so nations that overtook Singapore were Europeans whose rankings were boosted by the powerful euro, especially over the Sing dollar.

Another major cause was Singapore's population jump due to immigration. It went from three million in 1996 to 4.18 million in 2003, the period of the ranking decline.

The island plans to push it to seven million by 2030 by immigration, which will make it hard to reclaim its former high per capita position.

The revelation couldn't have come at a less opportune time for the ruling People's Action Party, which is preparing the ground for general elections.

The slide explains why Prime Minister Lee Hsien Loong is leaving the bulk of Singapore's foreign affairs to his senior Cabinet colleagues to concentrate on the hard-hit economy.

However, there are bright spots.

Firstly, it appears to be on the mend. In 1996, the per capita GDP stood at US$25,105 but it fell to US$20,775 in 2001. Last year, it recovered to US$26,481.

Singapore is in transition. Its economy is being restructured, which probably means that the future could be more hopeful than the present.
The state has signed a series of bilateral free trade agreements with major trading partners and invested billions to expand its life sciences, tourism, and hub activities in health, education and the performing arts.

The republic has also decided to build two mega casino resorts by 2009 after saying "no" to casinos for 40 years. When mature, all these new activities will move the economy.

But the most cheerful news has come from investments abroad.

While the domestic scene didn't measure up in recent years, its external pair of economic wings has done better.

In fact, Singapore has become quite a global investor. Between 1998 and 2003, as its GDP per capita weakened, smallish Singapore invested an incredible S$147bil abroad, doubling its total global investments to nearly S$300bil, the Department of Statistics announced last week.

More than half were in direct investments, mostly in Asia, topped by China with 37.2%, followed by Malaysia and Indonesia.

At the same time, the government's investment arm Temasek Holdings announced it had agreed to buy US$1bil of stock in China Construction Bank's initial public offering.

A number of Singaporeans have greeted Singapore's drop to 22nd position with pessimism.

One questioned if it could still be classified as a First World nation, saying it's best described as a League player dropping from Division One to Division Two.

"Forget the Swiss standard of living; Singapore doesn't even have the Spanish standard of living!" declared another writer, throwing cold water on one of Goh Chok Tong's pledges when he was prime minister.

Some blame the woes on the open-door immigration policy, pursued for more than 10 years.

"Instead of a stronger economy as promised, it has become weaker," declared one.

Singaporeans take the ranking game seriously. They drool when told that theirs is the most globalised country or the second best airport in the world, but when the grades fall, the public pessimism could also be exaggerated.

This happened last month when Singapore Airlines, which was frequently named the best airline, managed only a fourth place.

Some attribute it to rising expectation among youths who are used to the good life and anything that falls short of it represents a mini crisis.

Some simply find it hard to accept that in this competitive world, others are improving all the time.

The world has changed and so will global ranking. They will likely change more regularly with new names popping up and old ones disappearing.

Speaking about the fortune of nations, one writer said Argentina was one of the world's richest nations at the turn of the century because of its natural resources and cattle.

"Today they are nowhere near the top," he said.

Being practical, the majority of Singaporeans are less bothered by world ranking than the living reality at home.

Many multinational corporations have pulled out and the government is frantically raising skills and reducing costs (including wages), cutting into Singaporeans' living standards.

The poor are hit the hardest and the rich-poor gap has widened. The Department of Statistics said the wages for the bottom one-fifth of Singaporeans had fallen by 3.2% between 1998 and 2003.

At the same time, another survey by Housing Development Board (HDB) confirmed that the household income for those living in smaller one-room and two-room flats had declined by 17% to 14.5%.

Singaporeans who have gone through worse times see the recent past as a passing cloud.

Lee Kuan Yew has told youths not to despair because their future will be brighter. Singapore 2030 will be a flourishing global city of six to seven million people, he adds.

Singaporeans who admire his vision are hopeful that in 25 years, their city may achieve the current living standards of Switzerland (per capita GDP US$52,879).

(This article was written for, and published in, The Sunday Star on Jul 10, 2005) http://www.littlespeck.com/content/economy/CTrendsEconomy-050711.htm

ObviousMan SG

Reply from Singapore.

Ranking remains
relatively stable
World Bank over-estimated earlier rankings, theres no drop in global ranking, says Statistics Department letter.
Aug 1, 2003

The following letter (published in Sunday Star on July 31) refers to the article Economy: Global ranking drops in our website http://www.littlespeck.com/content/economy/CTrendsEconomy-050711.htm
(full text):

Seah commented that several years of economic weakness had resulted in Singapores economic ranking in terms of per capital GDP declining from its peak as the worlds top eight in 1997 to todays 22nd position.

He also made a similar observation on Singapores ranking in per capita GDP at purchasing power parity, adding that between 1999 and 2003, Singapores per capital GDP at purchasing power parity (has declined) from US$27,800 to US$23,700.

We wish to clarify that Singapores per capita GDP was in the past over-estimated by the World Bank, which compiles and publishes the World Development Indicators.

It had used Singapores resident population (comprising Singapore citizens and permanent residents) instead of Singapores total population as the denominator in its computation.

Seahs observation of Singapores population jump from three million in 1996 to 4.18 million in 2003 is also incorrect as the former refers to Singapores resident population while the latter refers to Singapores total population.

Since 2001, the World Bank had re-computed and published Singapores per capita GDP using total population as the denominator.

However, if comparisons were made using the earlier series for earlier years but more recent series for recent years, users can conclude wrongly that there has been a significant fall in Singapores per capita GDP when none had, in fact, occurred.

The data on per capita GDP drawn from the latest IMF database, which in turn draws from the World Development Indicators, shows that Singapores per capita GDP at purchasing power parity has in fact increased from US$22,185 in 1999 to US$24,495 in 2003, and further to US$28,228 in 2005.

Singapores ranking in these years has remained relatively stable at around 22.
DR SOON TECK WONG
Director (Economic Accounts)/ for Chief Statistician, Singapore

ObviousMan SG

Seah Chiang Nee comments:

I thank Dr. Soon for clarifying that World Bank per capita GDP figures in 1999 had over-estimated and had revised them. On this he knows best, and I defer to his set of statistics. He runs a credible, transparent operation.

But it is a fact that then and now, there have been conflicting reports mainly with the CIA Fact Book. In fact its latest estimated (2004) of our per capita GDP at US$27,800 ranking it globally at 29th, rather than 22nd as we had it. (http://www.odci.gov/cia/publications/factbook/rankorder/2004rank.html)

Way back in 1999, it ranked us 5th at US$26,300.
(http://www.photius.com/wfb1999/rankings/gdp_per_capita_0.html)

And a year later, in 2000, it was US$26,500, dropping to 7th rank. (http://www.geohive.com/charts/ec_gdp2.php In a report, it said)

In 2001, the CIA Fact Book commented: Economy - overview: Singapore is blessed with a highly developed and successful free-market economy, a remarkably open and corruption-free business environment, stable prices, and the fifth highest per capita GDP in the world.
(http://workmall.com/wfb2001/singapore/singapore_economy.html)

Today, at US$27,800 it stands 29th according to the same source, which had ranked us 5th in 1999. (http://www.odci.gov/cia/publications/factbook/rankorder/2004rank.html)

I was indeed wrong in reporting a population hike from 3m in 1996 to 4.18m in 2003, without mentioning the latter includes permanent residents, many of whom had arrived during this seven-year period. Sorry about that.

At any rate, there must be a reason for the significant differences with the CIA Fact Book, past and present. It may be due to a different definition of population. Thats just my guess.

As a Singapore website, wed like to centralise our reports around figures given out by our own Statistics Department, but must point out the latter, too.

Unlike our insignificant size, The CIA Fact Book is a major global reference website, which many institutions depend on, including American corporations.
The Editor,
Seah Chiang Nee
Littlespeck.com

ObviousMan SG

What's your stand on this issue?
Who captures the picture more accurately?

pikamaster SG

hard to say really...

we need to see the stats first

LazerLordz SG

I would trust a global figure over a local sourced figure.Lord knows what they might have done to it. Laughing

Love Story SG

If 25 years to recover? Then the current generation will have to suffer.

Gedanken SG

Well, I don't ever recall the government protesting the overestimated GDP until this point, do you? Back then they were bragging it up and telling people what a great job they were doing - are they now admitting they puffed it up too much, or were the figures right and have things gone down the gurgler? Either way, they've scammed people at one point or another.

Hey, maybe Singapore can keep dropping, get its NIC status back and have a rerun of the 70's. Laughing

le cruz SG

Dunno wtf "youth" lky is referring to... the youths of current generation will be in their 40s and 50s by 2030.

Cindyfeh SG

"Lee Kuan Yew has told youths not to despair because their future will be brighter. Singapore 2030 will be a flourishing global city of six to seven million people, he adds.

Singaporeans who admire his vision are hopeful that in 25 years, their city may achieve the current living standards of Switzerland (per capita GDP US$52,879). "

With ever increasing working hours and lower and lower disposable income, Singaporeans' birthrates aren't going to go beyond 2 per female (to generate a natural increase in population). So I think by 2030, Singapore will make up of half foreign talents - 3 milllin Singaporeans and 3 million FT! 3 million FT instead of the current 1 million to steal your jobs and education slots from you! I say dispair now!

Hopefully by 2030, NUS will start to offer world-class education in Maid and Office Boy PhD programs for Singaporeans to enroll in in order to become maids and office boys for the 3 million foreign talents.

I know of a quicker way to get the current living standards of Switzerland.

Migrate there!

Love Story SG

It would have been better off as a fishing village. Becos “somebody” had a vision and that vision is biting back now. And now there is no turning back.

Love Story SG

2030? The youth now will be suffering. By then the current youth will be the future homeless tramps u see currently

Profounder SG

Singaporeans are paying the price for a deliberate and self-aggrandizing policy by the PAP to entrench itself and stay in power as long as it can, regardless of the long-term costs of doing so.

This policy is aimed at coopting or suppressing the independence and vibrancy of the thought sphere of Singaporeans so they would not challenge the ruling party. The PAP government have employed vast resources to clear the landscape of any political, social and economic alternatives and imposed upon it a political narrative called "benevolent authoritarianism", falsely justified by appeal to Asian culture and values such as Confucianism.

As a result, Singaporeans have taken either of 3 options:
(1) migrate;
(2) join the ruling party;
(3) shut themselves out of the political process and become an automaton imbued with the material objectives.

The 1st option has led to massive brain drain compelling the PAP to formulate their "foreign talent" policy.

The 2nd option has led to a barren political landscape, marked by LEE HSIEN LOONG's OB Markers.

The 3rd option has contributed to Singapore's anaemic socio-economic environment.

Now, if we look at the developed countries in the world, we will notice that majority, if not all, have a vibrant socio-political landscape and a self-sustaining economy with majority homegrown players continually inventing and patenting new products that the world relies on. Many of these products are upstream products which in turn become essential components for the countries' products. E.g. semiconductors. Such upstream products, to a great extent, shield the countries from externalities, or at least they mitigate effects of such externalities.

Singapore in turn, do not have any such companies or economic culture. As a result, year after year, we are exposed to the vagrancies of economic downturns in other countries esp in the US. This is the result of PAP's social and education policy that aims to train Singaporeans into unthinking cogs of the wheel who only follow the official line. We see the manifestation of this most markedly in the typical Singaporean response to any problems they encounter: write to the authorities.

Today, we are at the crossroads and a decade too late. The PAP will not change because too much is at stake. In the globalised economy today, this self-aggrandizing policy may come at a heavy price. For you and me, no less.

timothytsgsg SG

Agreed.

shade343 SG

If you cannot trust your own countryman, who can you trust? Laughing

LazerLordz SG

Can you?To what percentage?I trust my neighbours and the man in the street.I do not trust inhabitants of ivory towers to dictate what the rest of the masses must do.

shade343 SG

If you do that, wouldnt you be treated as second class citizens there?

LazerLordz SG

This is why one party should never be given full rein of the Executive, and why a strong Judiciary must be in place to ensure that the nation's real interests are placed before the short-term interest of any group.

Granted, many of them might not see the fallout of their actions.But this is why humans are infalliable and sometimes success in the past inures you to challenges.

shade343 SG

But the inhabitants of The Ivory towers came form the same birthplace as you. Laughing

LazerLordz SG

Rolling Eyes Right.So what?Do they have the luxury of being in the know of both worlds?