PM and PAP MPs adopt SDP’s economic ideas

February 5, 2009 by · 1 Comment
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By the Singapore Democrats
05 Feb 2009

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Even as it rubbishes the economic proposals put forth by the Singapore Democrats as unworkable, the PAP pilfers them and then claims them as its own.

The most glaring is the Singaporeans First Policy. The SDP had campaigned on this proposal in the 2001 general election where we said that when it came to the economic interests of the people, Singaporeans should take top priority over non-citizens (see here).

This matter was even reported in the International Herald Tribune (see here). Mr Lee Kuan Yew and Mr Lim Hng Kiang had then slammed the policy saying that it would hurt Singapore’s prospects for growth.

Five years later on 3 Dec 06, Prime Minister Lee Hsien Loong unveiled the “Singaporeans-first policy” (see here) in which he called for healthcare subsidies for non-citizens to be reduced.

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NSP Budget Response 2009 — Extensive But Not Comprehensive

February 5, 2009 by · 3 Comments
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Press Release by the National Solidarity Party (NSP)
04 Feb 2009

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The “Resilience Package” of $20.5 billion unveiled in Parliament by Finance Minister Tharman Shanmugaratnam, is generally seen to be extensive, addressing the main problems of job loss, business cash flow and credit crunch.

However, while the direction and footing of the Budget are generally correct, its actual impact will be quite below public expectations, because its somewhat mediocre quantum may be inadequate in facing the tsunami-sized ground crisis. Indeed, the Government has itself admitted that the Package “will not be enough to haul the Country out of recession….”

Firstly, the deficit of $4.9 billion to be drawn from the Nation’s Official Reserves, is very much less than the tens of billions in paper loss which the Government had incurred in trying to prop-up foreign banks, over the past six months. According to prominent economist Song Seng Wun (from CIMB-GK), it was estimated that the Government had accumulated some $60 billion (perhaps, including land sale income) over the past two years, since May 2006. This amount would be more than sufficient to “offset any fiscal stimulus package”.

Secondly, the Package did little to help the unemployed in particular, other than allowing them to pay their income tax instalments over two years. The increment of $30pm in Public Assistance is considered to be so miserly, that the poor recipient will have difficulties wondering whether to use it for salt or sugar!

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A consolidation of my views on Budget 2009

February 5, 2009 by · 5 Comments
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Written by Ng E-Jay
05 Feb 2009

This is a consolidation of my views on Budget 2009. Most of the material in this article can also be found in the following posts which are written by me:

Singapore’s economy: Has the Government been caught with its pants down? (01 Feb 2009)

Will our business-centric budget benefit GLCs and big businesses more than consumers and working class citizens? (26 Jan 2009)

Will the use of past reserves set a precedent for future drawdowns? (23 Jan 2009)

My take on the key highlights of Budget 2009 (23 Jan 2009)

1. The main thrust of Budget 2009: Saving jobs by aiding businesses

Budget 2009, touted by the mainstream press to be “generous”, “decisive”, “bold”, and “scoring on superlatives”, is designed to benefit businesses first and foremost, in the hope that by helping companies cut staff costs and gain easier access to credit, jobs can be saved.

But will jobs really be saved by such measures? The current sharp downturn in the global economy has been accompanied by a collapse in global demand. Given that our economy is still very much export oriented, helping businesses cut costs and gain access to credit would not necessarily translate into job gains because companies have no reason to expand but every reason to scale down to survive. If no one out there is buying your goods and services, the cheapest labour in the world or the easiest source of credit is not going to help your company stay afloat.

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Mr Siew Kum Hong’s speech in Parliament on the Budget

February 5, 2009 by · Leave a Comment
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EDITOR’S NOTE: Mr Siew Kum Hong’s speech in Parliament on the Budget is reproduced here with permission. Mr Siew blogs at http://siewkumhong.blogspot.com/

1. Mr Speaker Sir, thank you for allowing me to join the debate on the Budget Statement. I will touch on three aspects of this Budget: the use of the reserves, the Jobs Credit scheme, and the amount of help for the retrenched and unemployed.

Using the reserves

2. First, the unprecedented use of our reserves, to fund the Jobs Credit scheme and the Special Risk-sharing Initiative. I applaud the Government for taking this step.

3. Our reserves have always almost bordered on the mythical: Singaporeans speak of them proudly and reverently, but we know so little about these fabled reserves. Using them now sends the right signal about just how dire the situation is. It assures Singaporeans that the reserves are not sacrosanct, that they are not being accumulated for the sake of accumulating them, and that they will be used when it is necessary to do so. If the worst economic crisis the world has seen in six decades does not merit the use of the reserves, then nothing ever will.

4. But I have some concerns about the process in which the use of the reserves is being approved. We have always been told that the reserves are a hard-earned strategic asset of Singapore, and that the Elected Presidency is necessary to safeguard them. And yet, there has been precious little information about the deliberations of the President or of the Council of Presidential Advisers, in giving in-principle approval to use the reserves.

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Budget spending not transparent, SDP proposes alternative 5-point plan

February 2, 2009 by · 8 Comments
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By the Singapore Democrats
01 Feb 2009

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As budgets go, this one is faultless. As far as hype is concerned, that is. Named the Resilience Package by its architects and hailed as “unprecedented”, “bold” and “decisive” by its cheerleaders, Budget 2009 suffers from the same old problem: there is a complete lack of transparency and accountability.

While we expend our energy trying to analyse the wisdom or folly of the proposed expenditure, how do we know when the funds are going to be spent, who they are actually going to go to, and whether or not they are achieving the intended results?

We need to remember that the Budget is just a plan – and we all know what plans in Singapore become after a few months (think the Growth Triangle, Sentosa Theme Park, Suzhou Industrial Park etc plans).

With a government as notorious as this one when it comes to transparency and accountability, whether we have a Budget and a debate or not makes little difference.

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Singapore’s economy: Has the Government been caught with its pants down?

February 1, 2009 by · 8 Comments
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Written by Ng E-Jay
01 Feb 2009

Has the Government been caught with its pants down with regards to the sharp downturn in Singapore’s economy?

As recent as August 2008, just a couple of months before the US credit markets totally froze up, the Ministry of Trade and Industry was projecting an economic growth target of between 4% and 5% for the year — a projection that now seems far too optimistic.

To the Government’s credit, their budget statement for 2008 acknowledged the presence of “major downside risks” to the economy, with the possibility of a sharper than expected decline in US growth adding to the turmoil in the financial markets, and deepening the credit crunch.

However, the Government has spent most of 2008 fighting inflation rather than preparing for deflation, which is what the global economy, and in particular Singapore, is likely to experience in the months ahead.

In April 2008, MAS announced that it would shift the Singapore dollar nominal effective exchange rate (S$NEER) policy band upwards without changing its slope or width, in an attempt to combat inflation by allowing a faster appreciation of the Singapore dollar. Subsequently, the Singapore dollar rose to as high as 1.35 USD/SGD.

Such a policy measure seemed appropriate at that time, but later proved too strict when the collapse of oil prices and other commodity prices such as those of base metals in the second half of the year erased inflation expectations from their artificially and temporarily elevated levels.

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ST letter: Cash grants should benefit citizens more than others

January 30, 2009 by · 2 Comments
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ST Online letter by Mr Edmund Lin
29 Jan 2009

ST link

I REFER to last Friday’s report, ‘Cash grants to subsidise wage bills’.

In this economic downturn, I would like to see this cash grant benefit Singaporeans rather than permanent residents (PRs). A clearer distinction between companies that hire more Singaporeans and those that do not is needed.

In the figures released by the Ministry of Home Affairs, more than 50,000 foreigners became PRs in 2005 and 2006. But in the past 10 years, an average of just 8,500 a year became citizens.

In addition, many expatriate couples, with husband and wife equally qualified, have one spouse taking up Singapore citizenship to enjoy subsidies, while the other retains home country citizenship.

Many foreigners come here because they see Singapore as a land of opportunity which is clean, safe and good for families. But going by the number who become citizens, not many think of Singapore as their only home.

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Will the use of past reserves set a precedent for future drawdowns?

January 23, 2009 by · 7 Comments
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Written by Ng E-Jay
23 Jan 2009

The PAP Government has always been very adamant about using past reserves only as a last resort. In fact, as recent as February 2008, SM Goh Chok Tong told reporters at a charity Lunar New Year lunch: “The reserves are like a golden goose which lays golden eggs. And if you try and dig into the reserves, you’re actually in a sense not feeding the reserves and the goose gets smaller …. …. Produce the wealth first and the surpluses before we talk about sharing and never, never dig into the reserves. That’s like killing the golden goose to get the meat.” (Channel News Asia, “SM Goh says growing the economy is important for the future“, 17 Feb 2008)

SM Goh then did an about-face on 18 Jan 2009 when he revealed that the Government might draw on past reserves to help fund this year’s budget. He also told reporters at a Lunar New Year event at Marine Parade constituency: “The weather is so bad, and we’ve always said the reserves are for a rainy day. If this is not a rainy day, I don’t know what is a rainy day.” (Straits Time Online, “Govt may tap reserves “, 19 Jan 2009)

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My take on the key highlights of Budget 2009

January 23, 2009 by · 3 Comments
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Written by Ng E-Jay
23 Jan 2009

Finance Minister Tharman Shanmugaratnam delivered the 2009 Budget Speech at 3.30pm in Parliament on Thursday, 22 January 2009. He told Parliament that this year’s budget, aimed at helping Singapore through the worst recession since independence, is a significantly expansionary budget that will put us in deficit to the tune of 6% of GDP for fiscal year 2009 (before accounting for Net Investment Returns and transfers to endowments and trust funds).

Mr Tharman said that Budget 2009 will deliver a Resilience Package totalling $20.5 billion this year. One of the most important objectives of this package is to help Singaporeans keep their jobs and retain their ability to support their families. To achieve this, the package will focus on helping businesses retain workers by helping them meet their costs and strengthen their cash-flow, and by enhancing their competitiveness.

To encourage employers to retain workers, the Government will introduce a Jobs Credit Scheme in which every employer is provided with a cash grant amounting to 12% of the first $2,500 of the monthly wages of each employee who is on the CPF payroll. The Jobs Credit, which will be equivalent to a 9 percentage point CPF cut, is not intended to be a permanent scheme to subsidize employment. It is a temporary scheme to help companies through an exceptional downturn.

Will the Jobs Credit Scheme be effective in encouraging employers retain workers? My take is that it could be, provided the downturn does not become significantly worse than it already is. Thus far, we have seen some major companies, such as DBS Bank, retrench middle management and higher paid staff, only to re-employ cheaper, junior staff to replace them, in order to save on staff costs. The Jobs Credit Scheme could be of some help in dissuading companies from carrying out such practices. Also, some companies might be looking to make a deal with employees to reduce their salaries in return for continued employment. The Jobs Credit Scheme could take the place of such negotiations by providing a cash grant that amounts to an effective employee wage cut from the point of view of the employer. The benefit of this arrangement is that the employee gets to keep his original wage.

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