PM Speech – The economic front
By Lau Kee Wee
1. General tone: putting on a brave front
Patting each other on the back would seem to be the gist of his economic front. After all, Singapore did emerged stronger from SARS; terrorism; recessions; bird-flu into this current boom. Expect PM to remind us that much of the credit is due to our government’s foresight of structural changes, diversification of economy and the opening up of our economy.
2. STI Index
With the global credit market in a flunk, and with the STI losing about 10% over the past 2 weeks, I personally feel that there won’t be too much tough talk. It’s also a good bet that there will be some soothing words regarding the credit markets and how Singapore will sail over this patch.
3. Red-hot property markets.
I believe that there might be some gentle cooling measures on PM’s NDP rally. While the government has stated that they will not have any big changes come 1st of September, residential property markets are still too big an issue for the government to ignore. However, with the credit crunch gyrations in the American sub-prime caused issue, I don’t think there will be any big concrete clampdowns. Just some tough talk on how concerned the government is regarding spiraling housing prices.
With houses comprising the bulk of the average Singaporean’s wealth, any ham-fisted measures will hurt the market big, and the resulting confidence in the government (read: PAP).
Commercial rentals will be a different issue though. Firstly, it does not really affect the prime heartland votes block directly (while one may argue from the perspective of job-creation and GDP growth, I don’t think it will be a very pertaining issue to the blue collared.) Hence, the government will have free rein to lower raising rental costs, be it by releasing more office blocks or by more tough talks on raising cost of business.
4. Increasing Wealth Inequality
While white collared professionals are seeing an average of 4%-6% real wage raises consistently over the past few years, with spectacular raises in certain industries such as finances and chemical, the low income group are being squeezed with frozen (at best) wages.
The government has opened the crack of that forbidden door towards a welfare state with workfare bonus, which works as a negative income tax.
Hence, it would seem likely that PM will focus part of his speech on social equality and might even hint at more goodies for the poor.
5. Ageing population
If there’s anything keeping PM up at night, you can bet it’s demographics.
Much of the top leadership’s speeches have centered on how we have to help the elderly and prepare Singapore for a graying nation.
PM is likely to tackle this topic on two fronts: suggesting incentives for companies to re-employ older workers, and emphasizing the need to increase the minimum draw out sum for CPF. The recent government musings about making annuities mandatory (albeit through an opt-in scheme) could also get a mention.
The writer is a final year banking finance undergrad at NTU. This is his first foray into the world of online commentary.
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