Singapore is rightly proud of its economic gains as one of the original Asian ‘little tigers’. Now it turns to the social problem of the minority of its people left behind through decades of successful growth
The growing wealth of Singapore has produced social inequalities that are worrying the Government. Inflation also is threatening to compound the political challenge. Political stability, even with its one-party dominance has become a concern.
Mariko Oi in Asia Business Report for BBC World News explored the story [Feb 2011] using a few well-chosen statistics
Singapore’s economic success and role as a regional financial centre have amplified the problem. Wealth has been created so quickly that it is easy for people to get left behind. The economy almost doubled in size in the 10 years to the end of 2008, Department of Statistics figures show. The average monthly income increased by 40% over the same period. However, the average monthly income for the bottom 20% of Singaporean households fell by 2.7% over the same decade.
Singapore’s inflation rate hit a two-year high of 4.6% in December , and the central bank has warned that prices may rise at a faster pace in coming months
The government has been looking at ways of narrowing the country’s income gap and in 2007 introduced the Workfare Income Supplement (WIS) scheme. As a result, some 400,000 Singaporeans now receive financial support from the government. Top government adviser and former Prime Minister Goh Chok Tong said last month that economic growth must benefit all members of Singapore’s community. “Otherwise,” he warned, “our community may be divided by differences in income levels within it.”
Prime Minister Lee Hsien Loong is scheduled to call a general election within a year. His People’s Action Party has ruled the city-state since independence in 1965 and it is widely expected to win most of the seats. But with many of Singapore’s poorer citizens facing tougher times, the government will be watching to see if they bring any of their worries to the ballot box.
Locally-based analyst Chris Howells believes that the Government is taking a prudent approach to the issue and that the budget will not overheat.
While dishing out more than S$13 billion to households and businesses, this year’s Budget is unlikely to lead to an overheating of the economy. That is because the Government is adopting a cautious fiscal stance, forecasting a slight overall Budget surplus of S$100 million for this year, after a much smaller-than-expected Budget deficit of S$300 million last year, compared with an originally anticipated S$3 billion shortfall.
Singapore’s economic growth is expected to be between 4 and 6 per cent this year, slower than last year’s record expansion but above the country’s estimated trend growth of 3 to 5 per cent for the next 10 years [reporting Finance Minister Tharman Shanmugaratnam in his Budget speech].
So for this year, the Budget has been positioned to avoid stoking the flames of inflation. “I would say that this indicates a very cautious Budget in the sense that there are no bold and drastic measures being introduced by the minister and the focus is very much on improving productivity over the next 10 years,” said Mr Tay Hong Beng, head of tax at KPMG in Singapore.
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