Storm ahead..
.. or the best years ever?
All data point to a serious downturn, but Lee Kuan Yew thinks Singapore is approaching its best ever years. By Seah Chiang Nee
Jul 13, 2008

Under a dark economic sky almost everywhere in the world, the Minister Mentor, Mr. Lee Kuan Yew thinks the next five to 10 years will be the most promising in Singapore’s history.

“We are moving to a new plateau, a new platform. You can see it visibly before your eyes,” he said at the annual dinner of the Economic Society of Singapore last week.

“If there are no big recessions worldwide, easily 4 to 6 per cent, maybe 7 to 8 per cent (a year). We should be all right,” he added.

At a time when virtually all statistics show deterioration, Mr. Lee’s extraordinary optimism has taken most people by surprise. He offered no details for his exuberance beyond saying, “The point is that we have got enormous options.”

For Singaporeans

In the past few weeks, the following are some of the bad news that has hit the country and its people: -

* Oil crisis. Oil price hit a record $147 a barrel. Brace for further fuel price increases, the government has warned.

* The economy. Singapore's economy grew at the slowest pace in five years in the second quarter to annual rate of 1.9%..

* Worsening inflation. Instead of a predicted moderation in the second half of 2008, inflation may have another round of increases, says Minister Tharman Shanmugaratnam. His forecast for the year: Between 5-6%, a 26-year-high.

- Tourism. Growth in visitor arrivals eased to 0.8 percent in April and May, the slowest expansion in a year, according to a “very concerned” Tourism Promotion Board. This has put the 5% target growth of 10.8m tourists for 2008 at risk.

- Property. Prices and demand are weakening; market researchers forecast a fall of 35-40% fall over the next two years.

- Taxis woes. A 30-cent fuel levy for taxi rides comes into effect from Thursday (Jul 17),

- Public transport. The government has warned that another round of increase in train and bus fares is likely this year.

- Road use (or ERP). The rates for Electronic Road Pricing (ERP) - and the places it covers - have gone up for the third time this year. New gantries, which electronically charge motorists driving under them, have opened, pushing the total up to 80.

Public unease

All these developments, coming at the same time, are causing a great deal of public unease and suffering. Inflation is the Number One problem.

“There seems to be no end in sight to our problem” is a general concern. “I don’t see any solution coming from the government,” said an exasperated housewife.

“I don’t know how Mr. Lee can talk about 'best years' when we are struggling with paying bills for rising prices? Our expenses are going up fast and our salaries can’t cover them,” she added.

On Sunday, I approached two groups of people to pose to them the question: “Do you see a better life in the next 5-10 years or so?”

One group, mostly retirees, was forceful in their replies, rejecting the possibility of this happening.

“Golden years? Hogwash! Our worry is how we can even cope with our lives!” replied a private tutor teacher.

Another, a retired civil servant, said, “Many us are spending our life savings. This means money going out, no money coming in. It is a slow financial death”.

Not one a single person agreed with Mr. Lee. A businessman, however, said that he could not tell if the economy would get better or not in 10 years' time because "we he may know things that we don't know..

"But even if it does, it will benefit the state - the GDP and the reserves - not the people."

On the business front, too, few people seem to share Mr. Lee's exuberance.

A commentator in Sgforums, Singapore Tyrannosaur, says that some government officials are privately expressing concern that global - and Singapore - consumer spending power would decline beyond the immediate next two years.

“The problem will span into the distant horizons,” he said.

On its economic prospects, he said that some of its strategic industries, like biotech and high-value IT are already facing increasing competition from China, New Zealand and others.

“In short a Singapore economy that weathered the last Asian financial crisis with some aplomb ... has been brought down to earth as the global economy began to fracture," he said.

With unemployment increasing, the social security net in Singapore that is provided by the Family (among Chinese, Malays and Indians) is beginning to show stress.

“The cash liquidity in families, which has allowed them to support temporarily unemployed family members and at high levels to ensure the clan does not lose face, is gradually drying up as well,” Singapore Tyrannosaur added.

Instead of talking of a coming Golden Age, one forummer asked instead; “Will Singapore plunge into a recession sooner than America? It is getting ominously close to the danger point.

This start of a downturn in Singapore was a rude awakening, said abhijit. “The ground reality (is turning) out to be worse than the economists feared.”
By Seah Chiang Nee