Lu Keehong Singapore: Daily Lessons from Life 25 February 2013

Today is the FY2013 Singapore Budget day. Many initiatives were introduced to achieve the theme of the budget: ' A Better Singapore: Quality Growth, An Inclusive Society'.

I extracted a few key points which I like to comment on:

A.1. While part of this slowdown is due to global cyclical factors which affected sectors such as Manufacturing, it is also to be expected as our economy matures and our labour force grows more slowly. In fact, our economy has been at full capacity since our strong recovery from the global financial crisis. This is why we have virtually full employment. It is also why wage costs and many other costs like rentals have been going up.

- interesting to note that we have virtually FULL EMPLOYMENT while many older Singaporean PMETs complained about their 'structural unemployment' as they worked self-employed due to influx of FAKE FTs.

- with CHEAPER FWs and Fake FTs, how is that our wage costs still go up?

- does this budget address the 'rentals have gone up?' How BIG is the rental costs in those 'low-productivity' industries?

A.6. Household incomes have risen, in 2012 and over the last five years. Adjusted for inflation, the median Singaporean household saw income per member grow by 14% over the last five years, cumulatively. Lower-income households at the 20th percentile also saw real income per member grow by 10% in the last five years. Excluding imputed rentals on owner-occupied homes, which do not involve actual spending by households, both the median and 20th percentile households have in fact experienced growth of 19% in real incomes over the five years.[1] This reflects both higher individual wages and greater employment opportunities, part-time and full-time.

- Great to note that Median Household incomes have risen, including the 20th percentile of lower-income households. The Question then is: Has it kept pace with the INCREASE in 'normal' expenditure?

A.7. However, many Singaporeans who work in jobs at the lower rungs of the income ladder, especially cleaners, waiters, and security guards, have not fared as well. They have been able to get jobs easily, but have seen little or no rise in their real incomes over the last five years. These jobs should be paid better, and our schemes will help ensure that they are. For cleaners, the Government is working with NTUC and the business community to equip them better and to uplift their pay through the recently introduced Progressive Wage Model. We will be doing likewise for security guards. This Budget will also introduce further measures to support our workers, including those with the lowest wages.

- great to KNOW the SPECIFIC jobs and industries that pay BADLY due to poor Productivity and reliance on CHEAP FWs and Fake FTs. We can REALLY begin to change for the better.

C.26. Businesses have to respond in new ways to the tight labour market – adopting shared services to save manpower, redesigning jobs, and giving workers broader responsibilities and rewarding them fairly. Indeed, in every sector, there are already examples of SMEs that stand out as having adopted these practices and are growing. Consumers too have to adjust. For instance, by getting used to self-serve or semi-serve models and returning trays, all of which are common in the F&B industry in many developed countries.

- ASME will surely criticise the Budget as UNHELPFUL and unresponsive to its cry for 'don't cut FWs and Fake FTs or we will die'. It is unfortunate that the 'push towards productivity' since FY2012 Budget DID NOT get a lot of takers. Maybe the SMEs were too addicted to the CHEAP FWs and Fake FTs 'drug' that it CANNOT pulls itself away to focus on 'Productivity Improvement'? There is NO CHOICE now for ASME members but to take up the Productivity Enhancement Incentives being provided!

C.59. Besides higher manpower costs, businesses also face other cost pressures such as higher rentals. To help companies cope during this period of transition, I will provide a special Corporate Income Tax rebate from YA 2013 to YA 2015. I will give a rebate of 30% of tax payable up to $30,000 per Year of Assessment. This is expected to cost $1.3 billion over three years.

- Rental costs are MENTIONED AGAIN. YET, in this Budget, there is NO specific attempt to see HOW it can be brought down. Any chance the government can look into this? How many 'low productivity' firms or industries are facing 'high rental costs'?

C.65. This will include Collaborative Industry Projects (Estimated $100 million over 3 years), where consortia of firms will develop solutions to industry-specific productivity challenges. This approach will be adopted in seven new priority industries.[1]

[1] These include food manufacturing, retail, F&B, printing and packaging, textile and apparel, furniture manufacturing, and social services. This is in addition to sectors that have already adopted this model – healthcare, ICT and construction.

- it is good to have SPECIFIC industries in mind so that it is REAL and MEASURABLE. While the forecast into the future is never accurate, it does provides us with some basis to work from.

D.2. We have two key concerns. First, income inequality and the risk that it poses to social cohesion. We have to take further steps to ameliorate inequality and give every Singaporean a real chance to do well and have a fulfilling life.

and

D.12. Third, we need to redistribute to benefit our lower- and middle-income groups. We must maintain a progressive system of taxes and benefits and preserve a sense of fairness, even as we ensure that our economy remains competitive

- I particular like the adoption of a 'progressive taxing of properties' and 'wealth tax'. Especially the one on non-owners occupied and also 'vacant' properties'. Some Foreign Investors apply their home country logic in buying properties in Singapore by leaving them 'vacant' as their aim is to make 'capital appreciation profit' when properties prices shoot up!

Hopefully the WEALTHIER Singaporeans and foreign investors will NOT mind too much about forking out more properties taxes as they are in a SAFE and STABLE society that allows them to continue to make money in their other means besides property investments.

I will stop here as there are many other points being made in the FY2013 Budget Speech.

Overall, a good holistic budget in my opinion though the High Rental Cost issue was not addressed. I will await more details from the various Ministries which will be elaborated in the COS debates subsequently.

Oh, I WONDER if the DPM and Finance Minister will agree to REPORT to the PEOPLE on a Quarterly Basis on the Actual vs. Budget. Much like what a company will do - a Monthly Management Report!