Addressing Singapore’s cost of living crisis: A call to revisit past policies

by Lee Choong Onn

As a loving critic of Singapore, I’d like to shed light on Singapore’s cost of living crisis.

Our city-state’s unique characteristics as a small economy and island country with limited land necessitate a tailored economic approach.

Singapore’s historical success can be partly attributed to its closed capital account for the Singapore dollar and the restrictive market policies of the Housing and Development Board (HDB) and Housing and Urban Development Company (HUDC) implemented before 1990.

This approach allowed the government to maintain control over the currency, the Singapore dollar, and the housing market, primarily through the Government Housing Program (HDB and BTO).

The closed market principle ensured that essential services like housing and currency management were insulated from external market forces, thereby maintaining affordability and stability for citizens. This approach was a key driver of Singapore’s transformation from a third-world to a first-world country.

However, the introduction of the 1990 asset enhancement policy by Goh Chok Tong marked a significant shift in our economic approach. This policy change dismantled the closed market principles, leading to increased costs, particularly in housing and living expenses.

I’d argue that over 50% of our current cost of living issues stem from this policy misstep. The opening up of the market exposed Singapore’s economy to external forces, driving up costs and eroding the purchasing power of citizens.

To mitigate these issues, it’s essential to re-examine our economic approach and consider implementing policies that prioritize affordability and sustainability. This might involve revisiting the concept of a closed capital account and closed market for essential services like housing and currency management.

By acknowledging the role of government policies in driving up costs, we can work towards creating a more balanced and equitable economy that benefits all Singaporeans.