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Thursday, 18 December 2008

The storm ahead

Han Ming Wen
Guest Writer

There is a financial tsunami coming. It is slowly picking up speed and power. It will be devastating.

Of utter concern to us are the effects of the international crisis on Singapore. What is in store for us in the next 3 to 5 years (this is probably how long the U-shape recession will last)?


The Government may not be able to stimulate the economy on infrastructure projects anymore. Firstly, there are already too many white elephants around like the airport (especially T3), esplanade, "country" clubs (Safra, police, and grass roots ones) just to name a few.

Secondly, as a little red dot, there is only so much space that we can build things on before inefficiency sets in.

Singapore will have to be realistic or in our local army lingo: "We have to wake up our ideas!" To see Singapore through the next 5 years, we too need reforms like the rest of the world.

On the economic front

We have to wake up to the fact that we are a small geographic entity. We should not try to be a big world player when we are not. No matter how we try to present the figures our economy is at most a $220-billion one, peanuts by world standards. But small as we are we can still be a success without going down the road of financial dubiousness. How do we do this?

First, reduce cost of doing business even before we try to pick winners in the various industries. This is of great significance because whatever industries we target, business costs in Singapore is way out of proportion which makes doing business here rather difficult especially for the little players. We need to reduce costs and here are some of ways we can do it:

Reduce the myriad of taxes. Just check your utilities and vehicle taxes and you will see one layer of tax piled on top of another. In the utilities bill there is the water borne fee, sanitary appliance fee (have you ever wondered why we are paying $3 a month just to use your own toilet bowl?), water conservation tax, and the GST. For motorists you have the road tax, registration tax, ad valorem, radio licence fee and, of course, the ERP.

Is it any wonder that we have the highest public debt (as a percentage of the GDP) in the world?

Price in real cost, not inflated cost. For instance, if we are generating electricity from natural gas, then the cost base should be that of natural gas, not crude oil. Another example: Price in real cost for HDB flats, not inflate costs such as factoring in opportunity costs and buying land at "market rate". Why can't the Government base HDB prices on acquired prices which is the real cost paid.

Slash ministers' salaries and benefits. As a guide, the prime minister's salary should not be 6 times more than that of the US President's. Rather it should be 1/6 given the size and performance of our economy.

Second, the Government should withdraw from basic captive, domestic business. In many developed and semi-developed countries, retail businesses are in the hands of the people. Foreigners are not allowed to be in retail business unless they are multi-million dollar investments, with the size of these investments varying from country to country. In Singapore the NTUC seems to be in on every business -- even, some say, the coffin business. Small- and medium-sized private retail enterprises can only increase efficiency and spread the economic pie across a broader section of the local population.

Every country protects its private retail business except Singapore. Old arguments of international competition clobbering local entrepreneurs because of globalisation does not hold anymore. If Malaysia, Indonesia, the Philippines and even China can successfully keep their retail sector for their citizens, why can't Singapore?

Yet, with this grossly unfair advantage NTUC Fairprice is no more efficient than Cold Storage or Sheng Shiong. After so many years, it still operates only in Singapore. Is there an NTUC Fairprice Malaysia or NTUC Fairprice China? There may have been some justification in the past to have an NTUC Fairprice. Not anymore, especially in the current economic context. Return the sector of the retail trade to the people. We must reform.

On the political front

Political reforms are urgently needed. We need a more open society. Singaporeans have the Internet these days making media control irrelevant. The Government should come clean about what lies ahead in these disastrous times. Abraham Lincoln once said, "You can fool all of the people some of the time, and you can fool some of the all of the time but you cannot fool all the people all of the time."

In the past, people used to believe the PAP. Then, Mr Goh Keng Swee told it like it was when the British pulled out and Singaporeans responded, rallied around the Government and worked hard to overcome the difficulties.

Nowadays, because of its spin and unaccountability, people have become wary. As much as the government tries to paint a Utopian Singapore, only it believes its own propaganda.
If the Government believes that it has been doing right and that Singaporeans have not been short changed, then there is nothing to fear. In fact more will be gained by having an open society.

On the social front

For Singapore, the real asset is the populace. We need to stimulate creativity and encourage individualism. With an open society, Singaporeans will take care of Singapore. There won't be a need to buy transient sportsmen, there won't be a need to buy transient talent (whose talent is debatable in the first place), and there won't be a need to label foreign entrepreneurs as Singaporeans.

Perhaps the Government has not heard of Finland -- a country of 3 million, home of Nokia, Nobel laureates, Olympic champions, and a caring social service that few in the world can match.

Perhaps, too, the Government doesn't know about local folk heroes like Tan Howe Liang, our only Olympic silver medalist, and business tycoons like the Haw Par brothers, Tan Kah Kee, Lee Kong Chian, Tan Lark Sye, Sim Wong Hoo. These people helped build up Singapore and put Singapore on the map without the PAP's authoritarian help.

Going back to Singapore's history the British had left us a working and efficient civil service, including several institutions that we have today like the present-day Kepple Corp and Sembawang Corp. The British also gave us the English language that has helped us through the years. Last but not least, we have the all-important geographical location and a deep harbour.

These were the foundations of Singapore's economic pillars. PAP has taken away the credit of hardworking Singaporeans and claimed all the glory for itself. It has stifled the creative pioneering spirit and motivation that Singaporeans always had.

Remember that even before the PAP came into power, Singapore had always been ahead and more developed than our neighbours, be it Kuala Lumpur, Bangkok, or Jakarta. It is time to tap the potential of Singaporeans again. It doesn't make sense to oppress locals and stifle their creativity, and then turn to foreigners to build up our country.

Silencing voices of Singaporeans only feeds the denial syndrome of the powers that be. The authoritarian system has achieved little, and at a great cost to the future development of the country.

The present situation is like playing musical chairs. While the music is playing everything seems fine and there is much fun and laughter. But when the music stops, like the present time, some will be left standing with nothing to fall back. When the music starts playing again, we've got to make sure that it's not same tune.

Mr Han Ming Wen is a financial analyst and trader. He contributed the article to this website.

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