27 November 2011

Steering Singapore Out of the Last Recession

At the People's Action Party's convention on 27 November 2011, chairman Khaw Boon Wan presented some insights on the general election six months ago.

One of the several issues that affected the outcome was that, despite steering the economy out of the deepest recession since independence, the PAP was less effective in getting political mileage out of it.

Singapore is a small open economy.  It has one of the highest ratios of trade to GDP in the world.  Its growth and economic prosperity depend greatly on international markets, and are consequently volatile.

22 November 2011

Private Property Investment as a Route to Permanent Residence

An entrepreneur who invested in a business in Singapore could include an investment in an owner-occupied property as part of his application for permanent residence for himself and his family prior to 1 January 2011.

Investing in property was removed from the eligibility criteria with effect from 1 January 2011 and is no longer a consideration in the evaluation of applicants for permanent residence.

Economic Development Board ("EDB") said this in a letter to The Business Times on 22 November 2011 to correct a statement by Mr Ngiam Tong Dow in his article "Climbing the Global Economic Ladder".

Mr Ngiam is a former chairman of EDB.

It is puzzling why EDB allowed an investment in an owner-occupied property to satisfy, even partially, the criteria for permanent residence, and stopped the practice only this year.

It might arguably have been quite reasonable several decades ago when Singapore was in dire need of capital, although it would certainly have been much better had the permanent resident entrepreneurs invested in manufacturing or services, instead of real estate.  After all, they were entrepreneurs.  And they wanted to be granted permanent residence.

Furthermore, many of the new permanent residents would probably have needed to purchase a property for themselves and their families to live in anyway.

Especially in the past 20 years or more, not only did Singapore not need foreign capital to be invested in private property, but also it is incomprehensible why such non-productive property investment should be allowed to partially satisfy permanent residence criteria.

EDB finally stopped this practice on 1 January 2011.

21 November 2011

Government Subsidies for Foreigner A&E Patients

Foreigners accounted for 18 per cent of the approximately 780,000 accident and emergency ("A&E") patients treated at publicly funded hospitals each year, Minister for Health Gan Kim Yong told Parliament.

The government subsidy given to foreigner A&E patients is $14 million a year.

This is less than 1 per cent of the annual $2.2 billion government subsidy given to publicly funded hospitals.

Mr Gan was justifying the government's practice of providing the same subsidy for all A&E patients, regardless of their nationality.  It kept the administrative procedures simple given that A&E departments serve patients with critical, life-threatening medical conditions or who require emergency attention.

Mr Gan appears terribly confused.

13 November 2011

Businesses, Politics and Economics

Business people expressed their admiration and concerns for Singapore in three separate articles recently.

'S'pore Has Done What the West Failed to Do' The Business Times (19 Oct 2011)
Businessman and economist Charles Ormiston, Bain and Company's Southeast Asia chairman, is impressed with how the Singapore government has addressed the country's economic issues.  The government, according to him:

Has twice in the past year instituted measures to slow the rate of growth of property prices to reduce the size of the bubble.

Runs budget surpluses when other countries are in deficit.

A government may need to run a budget deficit if the economy requires fiscal stimulus to help to get it grow out of a recession or to serve as a catalyst in the face of anaemic economic conditions.  For such contingency, it is better to draw on reserves accumulated from budget surpluses to fund an occasional budget deficit than to rely on borrowings.  Nevertheless, oversized accumulated reserves resulting from persistent large budget surpluses may imply that the government has been collecting too much tax and other revenue, or not spending enough on its operating or development expenditure, or both.