PAP’s Tharman Shanmugaratnam and the basic realities of the world today

May 06, 11 PAP’s Tharman Shanmugaratnam and the basic realities of the world today

Okay this is going to be my last election rally review before polling day.

After doing 1 on Nicole Seah of NSP, and Tan Jee Say from SDP, I have to do 1 from PAP. This time it’s Tharman Shanmugaratnam from PAP.

Tharman is definitely one of the more respected Ministers from the PAP. As the Minister of Finance, definitely he is more into the numbers of things.

His speech is actually re-hashed by the newspapers already, but I would like to add my point of views.


He starts of by saying that any serious debate on Singapore economic policies have to start with the basic realities of the world we live in. Things like how to create jobs, how to help low income workers, how to make sure we upgrade jobs, etc… basically requires money first. That is the only prudent thing to do. We have to spend what we have and not overspend. He then goes on to say that “It is a world that is very different from where we were 5 years ago. And it will be very different 10 years from now. ”

Later on, he described that he was in the IMFC meeting 2 weeks ago, and the mood was downbeat. He goes on to say that these people are not congenital pessimist, but the mood was downbeat and it was more downbeat today than 1 year ago. It’s because there is a very real risk for a setback in global economies in US, Europe and even Asia. “The world is 1 shock away from another major crisis.” according to the World Bank President. The problems that led to the crisis is not over. Excessive household debt, Governments that overborrowed, Banks that are in a fragile state. And these problem will be with us for many years to come. He then goes on to talk about government credit rating in risk and banks have to raise or refinance up to $3.2 trillion in the next 2 years. These will be shocks that will be propagated quickly and widely across the global economy.


I’m personally in the finance industry, and the things you seen hidden from the public view is scary. In the US budget, interest payment on debt is the 2nd highest item on the list! The 1st item is military spending. And I repeat, it’s interest payment on debt, not even debt payment. Scary. If a person has interest payment as the 2nd highest item, I would have condemned the person to bankruptcy. Euro crisis has been downplayed so much. Things are horrible there. Can  you imagine a developed country with 20% unemployment? That’s Spain for you. For those interested in learning more about Economic news from the real people, consider Mish’s Global Economic Trend Analysis and Sudden Debt. Very very very good read with a lot of relevant information!


Tharman goes on to talk about another set of problems post crisis. That is the rise of global inflation. Commodity prices are moving up sharply. Oil prices are moving up and because of uncertainty in the middle east, nobody can rule out the steep rise of oil. This together with global crisis can create a big problem. Lots of economic disjoints, lots of cracks on the floor, and policies will overly benefit some, while overly disadvantaging some.


Another issue he mentioned is that China had reshaped low end manufacturing in the last 10 years, and they are now reshaping manufacturing in the mid/high end manufacturing and services and this will affect everybody in the next 10 years to come. That Chinese in China are getting more educated, highly skilled, hardworking and willing to accept lower wages. This will be a new set of challenges, because it is not only the blue collar worker that are at risk, but also the white collar worker.

Absorb that sentence a bit, and then ponder on the scariness of it. White collar workers will be affected globally. My job is at risk. So is yours. What’s stopping MNCs from uprooting from Singapore and moving to China? Probably the only thing is that we still have enough skilled workers here. Perhaps the day will come, where they will uproot, and then maybe bring 20 key middle management staff from Singapore to work in China, while hiring the rest from China. What’s going to happen to the rest of the Singaporeans? Probably the foreign talent would fly back to China to take a pay cut.


He goes on to talk about wage stagnation in the last decade for US and Europe, and because of this crisis, it might stagnate for another decade. That we must think of ways and help Singaporeans to find ways to earn more in the job that they do, and find ways to help everyone move up in Singapore in terms of the median income.

He propose things in Singapore has not been stagnant. There has been significant change for the low income worker. In US, Europe and Japan, the average worker has seen no increase after discounting for inflation in the last 10 years, and that the average worker in Singapore has seen a significant increase after inflation. The average worker or median worker has seen income grow by 25% in nominal terms in the last 5 years, (2005-2010) and even minus-sing inflation, it is about 10%. In the next 10 years, they want a 30% improvement in real living standards.

In the last 10 years, we did better. Not just US, Europe. But we even did better than those of our peers, Hong Kong, Korea and Taiwan. For Hong Kong, the median income grew 4%, Korea 2%, Taiwan -3%. They all faced the same challenge as us, but we managed to get more of our boats to lift here.

Even the low income workers have benefited, not all, but most. The average HDB 3rm family saw an increase of 28% over the last 5 years or 14% after inflation adjusted. There are some that saw a wage stagnation and even some that saw a reduction in wages. We must find ways to help them.

To be honest, just looking at those numbers it looks quite impressive. Somehow, in the average Singaporean culture, we are quite sheltered from the world. I recently had a thought. When people see things progressing around them, but they themselves have stagnated or are progressing slowly, is that the reason for their distress? If Singapore as a whole progressed slower, maybe people will feel less distressed. We like to compare ourselves with the surrounding. Just because we seem to be doing the same as the last 5 years, means we didn’t progress. But if you were to look at the bigger picture in the world, perhaps lack of progress is better than decline.

Tharman comes back to reiterate his point that we need to start any debate by first not ignoring the basic facts. The average Singaporean and the average low income Singaporeans have seen an increase in income and livelihoods. And there are those that have not seen an increase, and we need to do it in a way, in the face of the global competition that we will face in the next few years. Everyone must get a massive upgrade in skills in the next 10 years. Government must be fair to redistribute their income to help the low/middle income class more. That is what they have been doing and they will do more of it. Workfare, busaries, subsidised training, etc.

Unemployment rate of 2% or less, which is much lesser than developed economies of 8%, and unlike parts of Europe which is almost 20%. We have a Government that can afford continuing help and subsidies because we have a solid budget, we have a revenue base, we avoided debts, and we kept our reserves growing in the long term. And that is how we need to center our policies on. Raising living standards for all, avoiding spending without the resources, avoiding spending that would lead to higher taxes.


For those who would like to hear more from Tharman, here’s a speech he did in 2009 at the St. Gallen Symposium in Switzerland.


I personally believe some of the policies he mentioned are very good. Things like workfare, is probably better than tiered GST or minimum wages. Subsidised training is good, because I believe the market only pays you for the value provide. That is but the way things will be. So the more value you provide, the higher the market pays you for it. Of course, we can talk about things like the lower income folks that cannot even work. That is a different situation from the one I am describing, and is a story for another time.

There has been unrest all over the world, because people suddenly feel that the government could have done more. Places like Egypt, Libya, and even Saudi Arabia has seen riots and protests. China, Hong Kong, USA, Greece, Ireland have seen citizens voting against the government in different ways. Even in Singapore we can see people feeling frustrated at the government and the world in general. Is it worth it?

I generally agree that the lower income workers deserve more help, especially those below the poverty line where they are not able to help themselves without external parties. But why is it only the government’s responsibility? Maybe a mindset change has to happen among individuals. The opposition has been overplaying this in my opinion.

My 2 biggest gripes about the complaints is 1) Personal fiscal responsibility and 2) Individual’s reponsibility in helping people more disadvantaged then themselves. Perhaps I would write more about this 2 in time to come.

I do agree there are bad eggs in the PAP, and those have to be removed. Most people feel that they are suddenly aware about politics now, but if they do study the history of PAP, lousy politicians do get removed from time to time. PAP as a whole should not be faulted for their policies.


Lastly,  I would like to end by saying, vote wisely. Vote your hearts and your minds.

PS: I would encourage undecided voters to void their vote. Mark an X for both candidates. This sends a signal to the candidates from both camps.

PPS: Just to add, in the GE2006, I voided my vote. The PAP didn’t deserve my vote then and the opposition was crap. This year, I would likely vote the PAP. Things have improved relatively to the past.

1 Comment

  1. Fergus /

    Moh Hon Meng on wrote a pretty detailed note on PAP too. Please read at

    Amazing how social media has changed the world.

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