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Why Hongkongers won’t settle for a Singapore-style boom
“Singaporeans live in far more spacious homes than we do… Their average salary is also catching up with ours, if not already higher.”
These are among the usual moans and groans in Hong Kong when it comes to comparisons with our main rival in Asia — Singapore.
Hongkongers indeed constantly hear the roar of the Lion City amid a longstanding battle of one-upmanship between the two regional financial and trading hubs.
The concerns have only grown of late, given the uncertain political climate in Hong Kong, but anyone looking at Singapore as a better place should ask himself this question: what does it take to live in Singapore, and is the price worth paying?
How would you feel if you were required to save more than a fourth of your monthly salary? What if the government borrows your savings to subsidize certain industries and sectors? And, what if the authorities want to import a million of non-local workers within the next decade?
It won’t be difficult to surmise that if such policies were to be implemented in Hong Kong, many locals will take to the streets to protest. But that’s exactly what Singapore has been doing and will continue to do so with its nanny-state policies.
Well-known economist Francis Lui Ting-ming, professor at the Hong Kong University of Science and Technology, pointed out to the Hong Kong Economic Journal that Singapore’s combined private consumption expenditure amounted to 39.4 percent of the city-state’s gross domestic product in 2011 while the corresponding figure for Hong Kong was 65.15 percent.
On per capita basis, Hongkongers spent HK$174,000 (US$22,440) that year, more than 15 percent higher than Singaporeans (HK$152,000), according to Lui’s calculations.
Quite a big chunk of Singaporeans’ money goes to the Central Provident Fund, a compulsory comprehensive savings plan primarily to fund retirement, healthcare and housing needs.
In the 1980s an employer had to contribute one fourth of a worker’s monthly gross salary to the provident fund, with the employee contributing an equal amount.
Although the combined contribution rate has been lowered since then, Singapore’s gross national saving rate in 2011 still stood at 45.3 percent with an annual increment in national savings of around SG$145 billion (US$116 billion).
Lui notes that the authorities then leverage the huge capital pool though government bonds issued at extra low rates to cover costs of public housing projects as well as to subsidize selected industries such as the manufacturing sector.
The concentration of a large amount of capital in the tiny domestic market drags down investment return. But rather than leave the wealth in the hands of the people to boost consumer spending, the Singapore government injects money into wholly-owned investment firms like Temasek Holdings.
The state-owned firms then invest the money overseas – SG$71.7 billion in 2011, equivalent to more than a fifth of the city’s gross national income – in a bid to generate higher profits. In this sense, Singapore’s economic boom is built on continued government-led saving and investment.
While population and immigration policies are becoming a new source of grievance in Hong Kong, Singapore’s total population has swelled from less than 3.8 million in 1997 to 5.47 million in 2013.
According to official data, almost 30 percent, or 1.3 million people, are temporary, low-paid workers brought in mainly from India and Southeast Asian nations. The large army of cheap imported workers – who are not allowed to bring families and so make no demands for educational, welfare and social services – have greatly shored up investment return and quenched labor shortage in Singapore’s construction sector, where Hong Kong is facing a big problem right now.
But consciously or not, what we may tend to overlook is the fact that not everyone in Singapore is happy about their government’s policies.
A large protest attended by over 1,000 locals in February 2013 – unseen in decades in a country where political demonstrations are heavily suppressed – following Prime Minister Lee Hsien Loong’s plan to boost the total population to 6.9 million by 2030 showed that people were resenting the additional inflow of immigrants.
And, in a place renowned for its safety and social order, a rare violent riot occurred in the Little India enclave that December involving over 300 Indian and Bangladeshi workers. The riot, which left dozens injured, was a telling indicator of how foreign workers – the backbone of Singapore’s economy – feel about their working and living conditions in the city-state.
Apart from the contrast in people’s political freedom and liberal rights, there is a divergence in governance between Hong Kong and Singapore.
Hong Kong is a shining paragon of a free market with faith in limited government interference while Singapore’s cornerstone is a paternalistic regime stressing government authority in national economic planning as well as people’s personal finances.
So, now we come to the following question:
Will Hongkongers, who had in the past amply demonstrated their view that the government must keep its nose out of personal affairs and private business, be ready to trade their autonomy and right of choice for the Singaporean-style prosperity?
The answer, most would agree, is not difficult to guess!
http://www.ejinsight.com/20150211-why-HK-people-wont-settle-for-a-Singapore-style-boom/
Why Hongkongers won’t settle for a Singapore-style boom
“Singaporeans live in far more spacious homes than we do… Their average salary is also catching up with ours, if not already higher.”
These are among the usual moans and groans in Hong Kong when it comes to comparisons with our main rival in Asia — Singapore.
Hongkongers indeed constantly hear the roar of the Lion City amid a longstanding battle of one-upmanship between the two regional financial and trading hubs.
The concerns have only grown of late, given the uncertain political climate in Hong Kong, but anyone looking at Singapore as a better place should ask himself this question: what does it take to live in Singapore, and is the price worth paying?
How would you feel if you were required to save more than a fourth of your monthly salary? What if the government borrows your savings to subsidize certain industries and sectors? And, what if the authorities want to import a million of non-local workers within the next decade?
It won’t be difficult to surmise that if such policies were to be implemented in Hong Kong, many locals will take to the streets to protest. But that’s exactly what Singapore has been doing and will continue to do so with its nanny-state policies.
Well-known economist Francis Lui Ting-ming, professor at the Hong Kong University of Science and Technology, pointed out to the Hong Kong Economic Journal that Singapore’s combined private consumption expenditure amounted to 39.4 percent of the city-state’s gross domestic product in 2011 while the corresponding figure for Hong Kong was 65.15 percent.
On per capita basis, Hongkongers spent HK$174,000 (US$22,440) that year, more than 15 percent higher than Singaporeans (HK$152,000), according to Lui’s calculations.
Quite a big chunk of Singaporeans’ money goes to the Central Provident Fund, a compulsory comprehensive savings plan primarily to fund retirement, healthcare and housing needs.
In the 1980s an employer had to contribute one fourth of a worker’s monthly gross salary to the provident fund, with the employee contributing an equal amount.
Although the combined contribution rate has been lowered since then, Singapore’s gross national saving rate in 2011 still stood at 45.3 percent with an annual increment in national savings of around SG$145 billion (US$116 billion).
Lui notes that the authorities then leverage the huge capital pool though government bonds issued at extra low rates to cover costs of public housing projects as well as to subsidize selected industries such as the manufacturing sector.
The concentration of a large amount of capital in the tiny domestic market drags down investment return. But rather than leave the wealth in the hands of the people to boost consumer spending, the Singapore government injects money into wholly-owned investment firms like Temasek Holdings.
The state-owned firms then invest the money overseas – SG$71.7 billion in 2011, equivalent to more than a fifth of the city’s gross national income – in a bid to generate higher profits. In this sense, Singapore’s economic boom is built on continued government-led saving and investment.
While population and immigration policies are becoming a new source of grievance in Hong Kong, Singapore’s total population has swelled from less than 3.8 million in 1997 to 5.47 million in 2013.
According to official data, almost 30 percent, or 1.3 million people, are temporary, low-paid workers brought in mainly from India and Southeast Asian nations. The large army of cheap imported workers – who are not allowed to bring families and so make no demands for educational, welfare and social services – have greatly shored up investment return and quenched labor shortage in Singapore’s construction sector, where Hong Kong is facing a big problem right now.
But consciously or not, what we may tend to overlook is the fact that not everyone in Singapore is happy about their government’s policies.
A large protest attended by over 1,000 locals in February 2013 – unseen in decades in a country where political demonstrations are heavily suppressed – following Prime Minister Lee Hsien Loong’s plan to boost the total population to 6.9 million by 2030 showed that people were resenting the additional inflow of immigrants.
And, in a place renowned for its safety and social order, a rare violent riot occurred in the Little India enclave that December involving over 300 Indian and Bangladeshi workers. The riot, which left dozens injured, was a telling indicator of how foreign workers – the backbone of Singapore’s economy – feel about their working and living conditions in the city-state.
Apart from the contrast in people’s political freedom and liberal rights, there is a divergence in governance between Hong Kong and Singapore.
Hong Kong is a shining paragon of a free market with faith in limited government interference while Singapore’s cornerstone is a paternalistic regime stressing government authority in national economic planning as well as people’s personal finances.
So, now we come to the following question:
Will Hongkongers, who had in the past amply demonstrated their view that the government must keep its nose out of personal affairs and private business, be ready to trade their autonomy and right of choice for the Singaporean-style prosperity?
The answer, most would agree, is not difficult to guess!
http://www.ejinsight.com/20150211-why-HK-people-wont-settle-for-a-Singapore-style-boom/
