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WP GE 2020 candidates discuss possible solutions to S’pore’s low productivity growth, overreliance on low-wage migrant labour

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Singapore’s low productivity growth and overreliance on low-wage migrant labour were some of the key issues discussed by The Workers’ Party (WP) candidates in their second episode of “The Hammer Show” on Thursday night (2 July).

Entrepreneur Yee Jenn Jong highlighted that Singapore’s “founding fathers had repeatedly warned against having too many migrant workers” even in the early years following the nation’s independence.

“At the leadership hand over to the second generation 30 years ago, there were around 300,000 foreign workers. This has jumped to over 1.42 million today — most of them low-wage workers,” said Mr Yee, who is also a former NCMP and a candidate for Marine Parade GRC this year.

He explained that GDP growth is a sum of capital growth, growth in labour force, and productivity growth.

“Singapore’s productivity has been low for most of the recent years, mostly short of the two to three per cent target set by Mr Tharman in the past,” said Mr Yee.

The country has instead resorted to growing its economy by “throwing in more capital and labour”.

Mr Yee cited Singapore’s “economic architect” the late Goh Keng Swee — who used to serve as Deputy Prime Minister — in the 1970s, who warned that relying on low-wage migrant workers to grow the economy is bad and will cause growth to one day come to a grinding halt.

Even the late Lee Kuan Yew said that he was not keen on the PAP’s plan to have a 6.5 million population at the time, saying that it would not work for Singapore as a society, Mr Yee noted.

“Yet, in 2013, the PAP pushed for an even higher 6.9 million population cap by 2030,” he highlighted.

PAP’s unrelenting “growth at all costs” approach, Mr Yee warned, will “lead to unsustainable population growth, depressed wages for the bottom income earners, and vast social problems”.

Many Singaporeans, he said, were “promised the Swiss standard of living” — but many have only received “the Swiss cost of living” instead, said Mr Yee.

More needs to be done to make construction sector more attractive to locals: Entrepreneur and Marine Parade GRC candidate Yee Jenn Jong

Replying to a question from moderator Leon Perera — Youth Wing president and Aljunied GRC candidate — on how Singapore could “localise” sectors presently known to be overrepresented by migrant labour, Mr Yee said that in other developed economies such as Japan, Australia and New Zealand, construction costs are similar of that in Singapore despite their workers being paid higher wages across the board.

“In economies like Japan, they have to built to withstand major earthquakes and other withstand typhoons. Yet the overall final course is about the same as Singapore,” he said.

“Concerted change” on a national scale — involving a multi-ministry effort and across multiple industries — must be put in place to boost productivity growth, said Mr Yee.

“When we look at the workers that they bring in — can we bring in workers who are already more skilled?”

Citing other industries such as nursing or childcare, Mr Yee pointed out how around a decade ago, such fields were not seen by locals as a “viable, long-term industry”.

“Now, after years of effort at the national level, with scholarships with good career opportunities and the image change, the locals have started to go into these industries. So we really need to do that for the construction industry as well,” he said.

 

Govt should provide loans for expensive equipment to construction companies: WP treasurer and Aljunied GRC candidate Gerald Giam

Treasurer Gerald Giam, who is also a former NCMP and one of WP’s candidates for Aljunied GRC this year, said that Singapore has been focusing too much on upping migrant labour input and neglecting “productivity growth”.

Even across sectors, he said, productivity growth appears to be uneven.

“For example, the construction industry is much less productive than, let’s say, of finance and insurance industries.

“If you compare the construction industry in Singapore with that of other countries, we are only half the as productive as in the US and one third as productive as in Japan,” said Mr Giam.

A huge contributor to low productivity growth, he said, is “the large number of unskilled labour” being brought into Singapore.

Productivity, however, is “not just about putting in more work into the into your workplace, but really about automating”, according to Mr Giam.

Many companies struggle to acquire productivity-enhancing equipment due to high costs, he noted.

Mr Giam proposed that the government provide “loans of these expensive equipment” to construction companies “so that they don’t have to purchase the equipment themselves”.

Companies may still be unable to afford such equipment too expensive even with the available grants, he added.

Policymakers should also make it “more attractive” for more local workers to join the construction sector.

“The jobs become better, the pay becomes better, and people can work more productively with each other because they’re familiar with each other and they are able to cooperate more with each other,” he said.

Deputy Organising Secretary and East Coast GRC candidate Terence Tan said that WP intends to “engage the government” on its promises to help Singapore “emerge stronger” from the economic impact of the COVID-19 pandemic and to create better jobs for Singaporeans.

“Long gone are the days where Singapore experienced double digit growth. In 2019, our economy grew a meagre 0.7 per cent,” he said, adding that “a Swiss standard of living remains but a fable for many Singaporeans”.

“Household debt stands at about 64 per cent to GDP. An OCBC survey indicates that seven out of 10 Singaporeans, if they lose their income, can only manage their living expenses for six months,” Mr Tan noted.

Mr Tan cited a visit by the then-Minister for National Development to Australia in 2013, who “praised construction workers in Melbourne who had taken advantage of advanced construction techniques so as to erect a building in about half the usual time”.

“I thought that The Honorable Minister might come back galvanized and look to see how he might encourage and support our entrepreneurs and SMEs by way of tax incentives and grants. To research and develop similarly operative solutions so that all our Industries might be more productive and efficient, and also how our technical schools might be suitably reformed and apprenticeship schemes fully developed so that we might eventually reduce our reliance of foreign labour,” he said.

“We need to look at ways and means of improving productivity for the long-term benefit of our economy. We need to look at how we create job opportunities and put more money in the pockets of our hard-working fellow countrymen,” said Mr Tan.

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Economics

Thailand’s household debt reaches record high amid slow economic growth

Thailand’s household debt has surged to a record 606,378 baht per household, driven by slow economic growth and high living costs. A UTCC survey found 71.6% of households struggle to meet repayments. The government is working on measures to alleviate the burden.

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Thailand’s household debt has soared to a record high, with many citizens struggling to manage loan repayments due to weak economic growth, declining incomes, and rising living costs, according to a recent survey.

The study, conducted by the University of the Thai Chamber of Commerce (UTCC) in early September, revealed an average household debt of 606,378 baht (S$23,600), marking an 8.4% increase from the previous year. This is the highest level of household debt recorded since the survey began in 2009.

The survey highlighted that 69.9% of this debt is attributed to formal lending, a decrease from 80.2% last year, while informal lending has risen to 30%. This shift is largely due to many individuals reaching their borrowing limits from formal financial institutions, forcing them to seek credit from informal sources such as loan sharks.

The study also noted that a significant number of households are facing difficulties meeting their financial obligations, with monthly debt payments averaging 18,787 baht, up from 16,742 baht the previous year. The delinquency rate stands at 71.6%.

The growing household debt is placing pressure on Thailand’s economy, the second largest in Southeast Asia, which is already grappling with high borrowing costs and sluggish exports amid a slow recovery in China, its main trading partner.

Both the government and the Bank of Thailand have raised concerns over the country’s total household debt, which reached 16.4 trillion baht, or 90.8% of gross domestic product (GDP), at the end of March 2024—one of the highest levels in Asia. The central bank has introduced measures aimed at reducing this ratio to 89% by next year.

For comparison, International Monetary Fund (IMF) data from 2022 shows household debt as a percentage of GDP at 67% in Malaysia and 48.6% in Singapore.

The UTCC survey, which polled 1,300 respondents from 1-7 September, found that the majority had experienced challenges repaying debt over the past year and expected to continue facing difficulties in the coming year.

UTCC President Thanavath Phonvichai expressed concern over the long-standing debt problem, stating that household debt is primarily incurred for daily expenses, housing, vehicles, and business operations, and does not necessarily undermine the overall economy. He added that the situation would improve once the domestic economy returns to strong growth.

In response to the debt crisis, the Federation of Thai Industries has reduced its 2024 target for domestic vehicle sales by 200,000 units to 550,000, citing high household debt and stricter lending conditions as key factors reducing demand.

Finance Minister Pichai Chunhavajira emphasized the urgency of addressing household debt and urged the Bank of Thailand to provide more support to retail borrowers. He also mentioned plans to engage with banks to explore further assistance measures for debtors.

Thailand’s newly appointed Prime Minister, Paetongtarn Shinawatra, has pledged to stimulate the economy immediately.

On Monday, the government announced plans to distribute 145 billion baht to state welfare cardholders starting next week.

This is part of a broader “digital wallet” program aimed at providing financial relief to up to 50 million people, although it now appears much of the support will be disbursed in cash.

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AFP

Top rice supplier India bans some exports

India, the world’s largest rice exporter, bans non-basmati white rice exports to ensure domestic availability and tackle rising prices amid global food crises, potentially impacting rice-dependent nations.

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MUMBAI, INDIA —  The world’s biggest rice exporter India has banned some overseas sales of the grain “with immediate effect”, the government said, in a move that could drive international prices even higher.

Rice is a major world food staple and prices on international markets have soared to decade highs as the world grappled with the Covid pandemic, the war in Ukraine and the impact of the El Nino weather phenomenon on production levels.

India would ban exports of non-basmati white rice — which accounts for around a quarter of its total — the consumer affairs and food ministry said.

The move would “ensure adequate availability” and “allay the rise in prices in the domestic market”, it said in a statement late Thursday.

India accounts for more than 40 percent of all global rice shipments, so the decision could “risk exacerbating food insecurity in countries highly dependent on rice imports”, data analytics firm Gro Intelligence said in a note.

Countries expected to be hit by the ban include African nations, Turkey, Syria, and Pakistan — all of them already struggling with high food-price inflation — the firm added.

Global demand saw Indian exports of non-basmati white rice jump 35 percent year-on-year in the second quarter, the ministry said.

The increase came even after the government banned broken rice shipments and imposed a 20 percent export tax on white rice in September.

India exported 10.3 million tonnes of non-basmati white rice last year and Rabobank senior analyst Oscar Tjakra said alternative suppliers did not have spare capacity to fill the gap.

“Typically the major exporters are Thailand, Vietnam, and to some extent Pakistan and the US,” he told AFP. “They won’t have enough supply of rice to replace these.”

Moscow’s cancellation of the Black Sea grain deal that protected Ukrainian exports has already led to wheat prices creeping up, he pointed out.

“Obviously this will add to inflation around the world because rice can be used as a substitute for wheat.”

Rice prices in India rose 14-15 per cent in the year to March and the government “clearly viewed these as red lines from a domestic food security and inflation point of view”, rating agency Crisil’s research director Pushan Sharma said in a note.

India had already curbed exports of wheat and sugar last year to rein in prices.

— AFP

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