Mellanie Hewlitt
12 June 2005
Singapore Review
Lifting The Veil On Singapore Politics

Today, we attempt to lift the thick veil which covers much of
Singapore's inner-political circles to catch a glimpse of reality

Attached below are two articles;
a) Industrial Policy, a Tale of Two Cities, By Robert J. Barro, Wall
Street Journal, 2 April 1992
b) Fiscal Predator, By Dan Fineman, Far Eastern Economic Review, 6
May 2004

Both touch on similiar subject matters and reach the same basic
conclusions; that Singapore's facist policy of micro management and
enforced savings has handicapped the private sector amd impoverished
the citizens.

Robert Barro in his 1992 article concluded that:
"Singapore's forced saving and industrial targeting have been
mistakes. These policies have led unnecessarily to reduced
productivity and welfare."

A similiar conclusion was reached by Dan Fineman a decade on:
"Deprived of disposable income by numerous [hidden] taxes,
Singaporeans consistently consume a share of GDP 10-20 percentage
points below Hong Kong levels, while Hong Kong maintains a higher per-
capita income. Their high-revenue, low-expenditure government leaves
Singaporeans a smaller slice of a more modest pie."

"Austere fiscal policies hurt Singapore more than possibly any
country on the planet. Although Singapore markets itself as a low-tax
country with world-class social programmes, in reality the government
taxes heavily and spends little. The resulting huge surpluses --
largely hidden and off-budget -- strengthen the ruling party but
weaken the economy. Unless the government drastically loosens fiscal
policy, businesses will lose competitiveness and long-term growth
will slow."

There is nothing new in the above comparisons between Singapore and
Hong Kong.

What is a revelation is the date of the articles. Robert Barro's
article was written in in 1992 while Dan Fineman's article was more
than 12 years on in 2004. More than a decade separates these two
articles and little has changed during this period. The singapore
government has steadfastly persisted with its socialist policies
against conventional wisdom.

How could anyone be so blind and for so long? Or is this a case of
will-full blindness? Is the PAP Government really seriously intent on
change?

After so many decades, political and economic analyst now question
the sincerity of the Singapore Government. It is no secret that
Government Linked Companies make up at least 50% of the total market
capitalisation of ther Singapore Stock Exchange. And these GLCs are
either directly or indirectly controlled by Singapore's First Familee.

The First Famuilee has a strangle hold over all aspects of Singapore
political and economic environment. And unlike other despotic corrupt
governments in Africa, South America or Eastern Europe, they have
been able to successfully hide this through a corporate veil and also
via a process of legtimised corruption.

This regime has sucessfully resisted recommendations by the IMF,
World Bank and the FTA as well as other free speech pro-democracy
advocacy NGOs to maintain transparent and accountable world standards
in state administration of public funds.

Similiar calls by Opposition political parties (and the international
press) have been met by defamation law suites with Singapore's very
unique brand of justice administered swiftly by a ready and compliant
judiciary which submits to the back and call of the Ruling Elite.

To complement this elaborate charade, Singapore GLCs and state
administration are buried behind a corporate veil of secrecy and
shrouded in mystery. It was a grand illusion ochestrated in perfect
harmony by a state runned local press which would put the likes of
great magicians and artists like David Copperfield to shame. (Who
ever said Singapore lacks creativity?)

Even the size of the country's foreign exchange reserves are
designated as a "State Secret" for reasons of "National
Security" to bring it wiithin the ambit of the Internal Security
Act. Previous conservative estimates of the size of Singapore's
reserves were in the region of USD110-140 Billion, a sizeable figure
for a small nation with a population of only 4 million citizens.

This is money which was accumulated out of the blood and sweat
of the working citizens. It is also money they will never see or
touch, courtesy of Singapore's state constitution which prohibits any
repartriation of profits earned by the government (or the GLCs) back
to the citizenry.

So the USD150billion dollar question is, where does the money go?
Previous queries on such senstive politically incorrect issues were
posed by previous President Ong Teng Cheong who experienced a short-
lived term in office due to "ill health".

He was replaced by a more compliant President Nathan who has adopted
a more co-operative mentality towards internal politics and
management of public funds. Political Analysts expect this compliant
President to stay another term in office. (surprise surprise?)

But lets get back on track to whether the PAP Government really is
intent on change. Why would a Familee who is enjoying the fruits of
ill-gotten gains (all USD150 billion of it) ever want to put an end
to the good-life? Afterall, it would be in the best material interest
of Singapore's Ruling Elite to carry on this game of deception for as
long as possible.

Is all this mere conjecture or fact? Read on and decide for
yourselves. Do open the attached file on Singapore Nepotism to peer
behind the scenes and see the incestous close-knit ties of the
innercircle which constitute Singapore's Ruling Elite.

-----------------------------------------------------------------------

http://forums.delphiforums.com/sammyboymod/messages/?msg=74351.22
Industrial Policy, a Tale of Two Cities
By Robert J. Barro
1,217 words
2 April 1992
The Wall Street Journal Europe
(Copyright (c) 1992, Dow Jones ...

The city-states of Hong Kong and Singapore are two of the heroes of economic
development. Gross domestic product per capita grew in both countries at a
remarkable 6% a year from 1960 to 1990, and the levels of production per person
advanced in each country from one-quarter of the U.S. level in 1960 to about
three-quarters in 1990.

These economic success stories motivate us to look at the histories of the two
countries to find clues about the policies that enhance growth. The
investigation is especially revealing because the governmental actions pursued
by Hong Kong and Singapore have, in major ways, been polar opposites. Hong Kong
has been largely laissez faire, whereas Singapore has pursued an aggressive form
of industrial policy. (One would therefore identify Singapore's policies with
Paul Tsongas's and Hong Kong's with Ronald Reagan's. Bill Clinton's policies fit
better with those of the formerly socialist economies of eastern Europe. I have
no idea which countries' economic policies to identify with George Bush's or
Jerry Brown's.)

One should begin with some of the many similarities of the two countries: small
city-states that began under British colonialism as trading centers with
immigrant populations from China. Neither country has significant agriculture or
natural resources, except for harbors. Both economies are highly open to
international trade and have remarkably high ratios of exports and imports to
GDP. Neither government imposes much direct regulation on business, and neither
has high ratios of government consumption purchases or transfer payments to GDP.

Each has been politically stable for some time, although Singapore had
difficulties in the 1960s and Hong Kong's prospects for 1997 are uncertain. They
are nearly identical in age-adjusted fertility and mortality rates, although
Hong Kong had somewhat higher population growth due to greater in-migration.
Both countries are strong on education, although Hong Kong had an educational
advantage in 1960 and continues to enjoy that advantage today.

I could start the list of differences by noting Singapore's constraints on civil
liberties, illustrated by its limitations on the circulation of The Asian Wall
Street Journal (a constraint that no doubt limited the Singaporeans' access to
the latest innovations in economics). More important contrasts from an economic
standpoint involve the government's role in three areas: the volume of saving
and investment, the role of foreign investment and the amount of spending on
public infrastructure. Singapore has been far more activist in these areas,
especially in using the tax and pension systems to compel private saving and in
subsidizing foreign investment and entrepreneurship in targeted industries. Its
direct public investment has also been much greater than Hong Kong's.

Hong Kong has, in general, been far less interventionist. The major exception is
its monopoly position in landholding. The government's land policies have
allowed vast, potentially valuable holdings to lie fallow and be brought into
productive use only at a remarkably slow pace.

The differences in government policies have led to dramatically different
behavior of investment and the balance of international payments. In this story,
I am using the purchasing-power adjusted national-accounts data reported by
Robert Summers and Alan Heston in the May 1991 Quarterly Journal of Economics.
(I used data from the International Monetary Fund and the World Bank to update
to 1990.) The Summers-Heston data show that Hong Kong's gross investment has
been reasonably stable since 1960 at around 20% of GDP, and its current account
has typically been near balance.

Singapore's gross investment was 13% of GDP in the early 1960s, reached 21%
between 1965 and 1969, and then soared to an average of nearly 40% since 1970.
This staggering amount of investment has been financed partly by the highest
saving rate in the world (thanks to governmental coercion, rather than an
especially thrifty disposition of the populace) and partly by massive borrowing
from abroad (until the mid-1980s). Another way to put this is that Singapore's
prosperity in terms of production has not been translated nearly as much as Hong
Kong's into high levels of consumption. In 1989-90, when Singapore's per-capita
GDP was 104% of Hong Kong's, its per-capita private consumption was only 71% of
Hong Kong's.

Prof. Alwyn Young of MIT's Sloan School discussed many of these facts in a
recent study ("A Tale of Two Cities: Factor Accumulation and Technical Change in
Hong Kong and Singapore," forthcoming in the National Bureau of Economic
Research's 1992 Macroeconomic Annual). His stress was on the effects of the
different governmental polices on productivity and growth. The main findings
follow from the facts already presented: Although Singapore has plowed twice as
much of its GDP into investment, the growth rates of GDP have been about the
same.

Singapore has, in other words, gotten much less out of each unit of investment.
This low return involves two effects: First, there has been so much investment
that the real rate of return on capital has fallen to near zero, and second, the
growth of productivity (output per unit of quality-adjusted labor and capital)
in Singapore has been much slower than in Hong Kong.

Prof. Young attributes Singapore's low productivity growth to its industrial
policy of picking winners to target for investment. The problem has not been so
much the choice of the wrong winners, but rather the tendency to select new
winners too often. Since the late 1960s, Singapore has shifted from a
trading-post economy that had a large role for the British military and
non-export-oriented manufacturing to an emphasis on export-oriented textiles and
clothing, petroleum refining, various electronic products, computers and
financial services.

Allegedly, Singapore is now targeting biotechnology and striving to become the
Asian center for corporate headquarters. All of this in 20 years in a country of
less than three million. One can admire the initiative in tackling one
technology after another, but productivity would likely have been better if they
had stayed in an area long enough to gain the production efficiencies that
result from learning and experience.

I should recall that this discussion concerns two of the great success stories
among the world's economies. Hong Kong and Singapore are co-champions in growth
rates of per-capita GDP since 1960, and these performances reflect many
favorable elements, such as friendly economic climates and political stability.
Singapore's shortcomings have to be interpreted relative to Hong Kong's
strengths, not relative to the many economic disaster areas of the developing
world.

A fair conclusion, however, is that Singapore's forced saving and industrial
targeting have been mistakes. These policies have led unnecessarily to reduced
productivity and welfare. This lesson is important for developing and developed
countries, but the implications for the 1992 presidential election in the U.S.
are unfortunately unclear. None of the prospective candidates offers the
free-market policies of Hong Kong, and Ronald Reagan and the leaders of Hong
Kong are ineligible for the office.

----------------------------------------------------------------------

By Dan Fineman
6 May 2004
Far Eastern Economic Review
(c) 2004 Dow Jones & Company, Inc.

Austere fiscal policies hurt Singapore more than possibly any country on the
planet. Although Singapore markets itself as a low-tax country with world-class
social programmes, in reality the government taxes heavily and spends little.
The resulting huge surpluses -- largely hidden and off-budget -- strengthen the
ruling party but weaken the economy. Unless the government drastically loosens
fiscal policy, businesses will lose competitiveness and long-term growth will
slow.

Singapore's political system and fiscal strategy are inextricably intertwined.
Only a government dominated by a single party could consistently post such large
surpluses and only an extraordinarily well-financed state could exert such
extensive control over political and economic life.

Big structural surpluses most benefit the ruling party, to the detriment of the
private sector. Unconstrained by tight finances, the government pays cabinet
members and civil servants some of the world's highest public-sector packages.
Although generous salaries discourage corruption, they also lure the best talent
to the government and ruling party. Private enterprises -- and rival political
parties -- suffer brain drains. When campaigning, the ruling party argues that
the opposition lacks capable leaders. Because high pay has attracted the
island's brightest to the government camp, the claim rings true.

A variety of analytical shields obscures the embarrassing size of government
surpluses. Accounting principles differ from global standards. A bewildering
array of statutory boards, government-linked companies, investment corporations
and holding companies transact among themselves at undisclosed prices. Key data
such as the government's share of national savings and the profits of holding
companies and investment corporations are kept secret. One analyst calls the
national accounts a "masterpiece of obfuscation."

Actual surpluses greatly exceed the already impressive stated numbers. From 1991
to 2001, the government reported surpluses averaging 3.6% of GDP, but Mukul
Asher of National University of Singapore calculates an adjusted average of
9.7%, nearly triple the announced figures. Official budgets exclude land-lease
revenues, investment income and profits from off-budget state bodies. Because
Asher includes only publicly disclosed revenues, his adjustments understate real
surpluses.

The high-surplus strategy lowers Singapore's standard of living. Deprived of
disposable income by numerous taxes, Singaporeans consistently consume a share
of GDP 10-20 percentage points below Hong Kong levels, while Hong Kong maintains
a higher per-capita income. Their high-revenue, low-expenditure government
leaves Singaporeans a smaller slice of a more modest pie.

Overly stringent fiscal policies sap Singapore's competitiveness. Excess
surpluses depress the cost of capital and encourage firms -- many state-owned --
to overinvest. According to JPMorgan, listed Singapore companies provided a
return on equity below the non-China developing Asian average in four of the
last five years and half the United States benchmark since 1996.

An excessively pro-fiscal design is contributing to a looming crisis in
Singapore's national pension plan, the Central Provident Fund, or CPF. Rather
than invest balances on beneficiaries' behalf, CPF pays contributors a low,
artificially determined interest rate. The state pockets as a hidden tax the
potentially huge difference between the actual investment yield and what
beneficiaries receive. In contrast to most countries' schemes, Singapore allows
working contributors to pay medical bills with plan balances. The resulting
outflow depletes retirement funds but relieves the government of potential
health-care liabilities.

Arguably, provisions allowing home buyers to tap CPF balances work to similar
effect. State entities own an estimated 85% of the island's land. If, as some
analysts believe, CPF financing has contributed to high land prices, the
government gains from home purchases, while pension balances dwindle. Largely as
a result of its fiscally friendly features, CPF will prove grossly inadequate
for meeting individual retirement needs.

Slower economic growth has eliminated reported surpluses this decade, but the
lack of change in broader fiscal policies indicates that actual balances remain
high. Until the dominant-party political system that thrives on outsized
surpluses undergoes fundamental reform, Singapore will struggle with an
underfunded pension plan, inefficient businesses and sickly consumption.

----------------------------------------------------------------------

This message was forwarded to you from Straits Times Interactive
(http://straitstimes.asia1.com.sg) by MellanieHewlitt@...

Comments By Mellanie Hewlitt
Singapore Review
1 Oct 2004

With an obscene amout of surplus in Medisave Reserves, huge hidden fiscal
surpluses enrich the Singapore government and state enterprises but impoverish
the private sector and tax payers.

Lack of Transparency is a common issue with the CPF Board and State Owned
Enterprises. The ST article (in 1 Oct 2004 issue) below is vaguely
reminiscient of similiar revelations of the huge hidden reserves which the
National Kidney Foundation had stashed away, even as it sort more charitable
funding from the general public. Indeed the common theme in both CPF and NKF
exercises is that they have the central objective of siphoning even more funds
from tax-payers into the already fat coffers of many state owned vehicles. All
this is cleverly done under the guise of schemes and policies which are
supposedly designed to look after the welfare of Singapore Citizens.

But the abuse is quite glaring since money only flows one way:- into the
pockets of the state administrators. There is no outflow from the state to the
public. What happens to the billions of dollars in reserves is also a total
mystery.

The high-surplus strategy lowers Singapore's standard of living. Deprived of
disposable income by numerous taxes, Singaporeans consistently consume a share
of GDP 10-20 percentage points below Hong Kong levels, while Hong Kong
maintains a higher per-capita income. It was only recently that the CPF Board
has also stepped up measures to sue "Medisave Laggards" who fail to top-up on
their own Medisave accounts.

These Big structural surpluses most benefit the ruling party, to the detriment
of the private sector. Unconstrained by tight finances, the government pays
cabinet members and civil servants some of the world's highest public-sector
packages. See:
http://groups.yahoo.com/group/Sg_Review/message/1182
http://groups.yahoo.com/group/Sg_Review/message/3
http://groups.yahoo.com/group/Sg_Review/message/1321

A variety of analytical shields obscures the embarrassing size of government
surpluses. Accounting principles differ from global standards. A bewildering
array of statutory boards, government-linked companies, investment corporations
and holding companies transact among themselves at undisclosed prices. Key data
such as the government's share of national savings and the profits of holding
companies and investment corporations are kept secret. One analyst calls the
national accounts a "masterpiece of obfuscation." See:
http://groups.yahoo.com/group/Sg_Review/message/87
http://groups.yahoo.com/group/Sg_Review/message/1270
http://groups.yahoo.com/group/Sg_Review/message/1170

The other troubling issue which is tactfully avoided by the government is the
fact that CPF investments (and returns/profitability of State Owned Companies
as wells as GLCs and TLCs) are under performers and laggards well behind
private sector standards. Is this is an intended result of figures manupulated
to obscure huge returns, or are State Owned Entities really so appalingly bad
at earning decent returns on investments? No one will ever know the answers.

It is indeed cruel irony that State Organisations and Government Linked
Companies are ripping-off the very individuals which they are established to
protect. So blatant is the abuse of public funds that such occurences have now
been institutionalised and formalised, with the Constitution re-written to
allow the state and State Owned Enterprises direct access to state/public
reserves. All this has happened with the blessing of the Auditors General
office and Finance Ministry. See:
http://www.singaporedemocrat.org/media_releases_display.php?id=119
http://www.parliament.gov.sg/Legislation/Htdocs/Bills/0400012.pdf
http://groups.yahoo.com/group/Sg_Review/message/1175

Legitimisation of Corruption and Nepotism has been tansformed into a art-form
by Singapore's Ruling Bureucracy, all at the expense of the man on the street.