Written by Ng E-Jay
24 Feb 2010

Singapore’s opposition parties and alternative media have responded to Budget 2010, pointing out its deficiencies despite it being touted as generous and progressive by the mainstream media.

In its article “Budget 2010 exposed” published on its website on Tuesday, the Singapore Democratic Party (SDP) said that throwing money at the problem of low productivity and making the same proposals that have been tried and found wanting will not make the problem go away.

The SDP was referring to the Finance Minister’s Budget proposal of putting $5.5 billion to work over the next 5 years on sustained initiatives at raising productivity through investment in continuing education and helping businesses upgrade their operational expertise.

The SDP pointed out the similar strategies were devised by the Economic Review Committee led by Mr Lee Hsien Loong in 2003, but that those measures have failed.

The SDP also explained that Singapore’s productivity problem has been in existence for the past couple of decades, caused by over-dependence on MNCs, the channelling of resources to GLCs which are uncompetitive, and the continued autocratic system run by the PAP that pushes talented and skilled Singaporeans to leave the country.

The solution proposed by the Singapore Democrats include:

  1. reigning in our addiction to MNCs and allowing wages to find their natural levels in a genuinely free market system,
  2. dismantling GLCs and allowing local SMEs to develop and grow to be world beaters,
  3. empowering our workers by allowing them to organise their own unions, and
  4. democratising the economy so as to retain Singaporeans and to prevent its hollowing out.

The National Solidarity Party (NSP) also posted a response to Budget 2010 on its website on Tuesday.

Signed off by Goh Meng Seng, the recently appointed Secretary-General of NSP, the statement questioned whether the proposed measures to improve productivity would benefit the majority of small and medium enterprises (SMEs).

The NSP explained that most SMEs do not have the financial means to embark on sizeable investments in human resource and technology to improve their productivity, rendering tax breaks for such investments useless for them.

The NSP felt that special emphasis should be given to local SMEs to help upgrade themselves from mere contract manufacturers and spare parts suppliers to that of MNCs, and from Original Equipment Manufacturers (OEMs) to that of Original Design Manufacturers (ODM), Private Label Manufacturers (PLM), or Main Brands Owners (MBO).

Countries such as Taiwan and Korea, for instance, were successful in grooming their own local SMEs to become higher value-added industrial players, eventually overtaking their Singapore counterparts in the 1990s.

The NSP was also concerned that Budget 2010 ignored the need to enhance existing social infrastructure and amenities to cope with the increased population of 5 million and growing. Strains on the public transport system, for example, were not being adequately addressed.

The NSP was also of the view that increased foreign worker levies without an effective quota policy could translate into even lower wages, which are not currently being protected by any minimum wage policy.

In an interview with the Straits Times, Workers’ Party organising secretary Yaw Shin Leong shared the same views with NSP, in expressing worry that smaller firms may not know how to boost productivity even if they wanted to. [1]

Mr Yaw told The Straits Times that the official stand of the Workers’ Party will be made known by Low Thia Khiang and Sylvia Lim when Parliament sits next week to debate the Budget.

However, Mr Desmond Lim, secretary-general of the Singapore Democratic Alliance (SDA), took a slightly different stand on the productivity issue, essentially agreeing with what the government had proposed with regards to raising productivity.

Mr Lim was of the view that multinationals and government-linked companies are the main pillars of the economy and thus should be given more assistance.

Alternative media also weighed in on Budget 2010.

In a video interview with The Online Citizen, TOC columnist Leong Sze Hian said it was good that the budget recognized the need to raise the real incomes of workers, particularly those from the lower income segment.

However, Mr Leong pointed out that Budget 2010 did very little to address the woes faced by average Singaporean citizens in finding employment or competing with PRs and foreigners.

Mr Leong also criticized the proposal to raise foreign worker levies, arguing that in the past when similar moves were made, companies merely passed on the additional cost to workers by either cutting their pay or lowering their benefits. This also eventually depressed the salaries of Singapore workers at the lower end of the wage spectrum.

Mr Leong pointed out that previous measures at raising productivity did not lead to improved wages for lower income Singaporeans. He took specific aim at Workface, the main bulk of which is disbursed into the employee’s CPF account rather than given in cash which can be used for daily necessities.

Mr Leong was also of the view that more money needs to be spent on healthcare to help the ageing population cope with increased medical needs and escalating costs of treatment.

In conclusion, it would be interesting to see how the government reacts to the criticisms of Budget 2010, especially in light of the fact that it is clearly not an election budget, but merely an interim measure aimed at placating voter concerns over the deluge of low skilled foreigners and government policies that have suppressed wages and inhibited productivity growth thus far.

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References:

[1] Straits Times, “SMEs may miss out on govt help, says opposition“, 24 Feb 2010.


What is missing in the productivity debate Just how progressive is Budget 2010?