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Insight: down south by seah chiang nee
Reports abound about Singapore being one of the world’s richest cities. But with its growing wealth, poverty is also increasing.
Some time ago, a friend of mine complained to me after I quoted Western reports in a column describing Singapore as one of the world’s richest cities.
It was less than reflective of the truth, he said. The mythical headlines, as he called them, included the following:
> “Singapore is world’s third richest country, Forbes (per capita GDP PPP US$56,700)” – March 30, 2012;
> “One in six Singapore householders are millionaires: Boston Consulting.” – June 1, 2012; and
> “Yet another wealth report has put tiny Singapore as the wealthiest nation in the world by GDP per capita, beating out Norway, USA, Hong Kong and Switzerland: Wall Street Journal.” – Aug 15, 2012.
Firstly, he pointed, some 37% of residents here, including the ultra-rich, are foreigners.
Many of the millionaires and billionaires mentioned were not Singapore citizens. Some of the imported wealth would probably leave as swiftly as it had come.
“I feel like screaming whenever I hear someone telling such tales about us,” said my friend, who is a person of average standing, which means earning barely enough to pay off housing and raising a family.
The extreme wealth, he said, was only half the truth since it left out the high level of household debts, especially for housing, children’s university education, parental healthcare costs among others.
This, I suppose is common of any advanced country, however rich. There will always be the wealthy, the middle-class and the poor.
But I must agree with my friend, a middle-aged professional, when he said that such emphasis on “wealth” was not useful in relating the financial truth of a country and its people.
Nevertheless, the riches referred to are real enough, albeit, somewhat misleading. It is only half the story; the other half is mortgages and debt.
There are plenty of both in our high-cost, materialistic Singapore, as it enters a new era of ever-changing expensive high-tech gadgets that the young “die-die” must have.
Affluence, yes! But Singapore is also one of the world’s most expensive cities.
Its household debt – at 75% of the GDP last year (up from 38% in 2000) – was worse than Hong Kong’s 61%.
The biggest cause is the craze for property, the values of which spiralled over the past five years.
“This amount of leverage could very possibly see banks succumbing as well, should a majority of their loans default,” said a commentator.
Debt per adult in Singapore is nearly US$40,000 (RM127,000) according to the latest Credit Suisse Global Wealth Report.
However it is doubtful if it includes people’s large housing loans.
One thing is certain, as individuals prosper, so does people’s debts with the help of low interests, particularly among the well-educated young.
Official figures show that there were 65,804 loan sharking cases in the last four and a half years – or about
1,200 cases a month.
The government is getting worried about the rising level of personal loans – judging from the following measures to curb borrowings.
On July 1, the central bank introduced rules to cap a property (of all types) buyer’s monthly payments at 60% of his income.
This was to reduce the chances of buyers being caught out by a rise in interest rates.
In February, it imposed limits on bank loans for motor vehicle purchases, capping certain loans at 50-60% of purchase price.
Seven months ago, the central bank proposed rules to encourage responsible use of credit card and unsecured credit rules aimed at discouraging people to get into greater debt.
Amidst our growing wealth, why are so many Singaporeans falling into debt?
The accumulation generally starts young from university graduates whose starting salary is about S$2,710 (RM6,811). Not all is attributed to a lavish lifestyle.
A money website recently painted a picture of a newly-wedded couple, working graduates, with a combined salary of S$8,000 (RM20,106), who are lucky enough to buy a new Housing Development Board (HDB) three-room flat for S$350,000 (RM879,500).
This is a normal start to two or three decades of debt repayment, not to mention a list of smaller items like the wedding costs, a ring and most likely a medium-size car costing around S$120,000 (RM301,606).
There are social implications for this costly start-up. One is a growing reluctance to marry young or to have children.
One of the changes in Singapore is the widening inequality between the rich and poor, even without considering foreigners in our midst.
Decades of prosperity and rising property values have helped many of the middle-class to upgrade, their riches rising substantially.
Others have dropped into the poverty class. The city’s dilemma is the widening gap between the rich and poor, technically computed as Gini coefficient.
On OECD measurement, Singapore’s Gini coefficient of 0.478 last year was the widest in the world.
This makes it confusing to judge articles about extreme wealth and increasing poverty, since both are true.
To put things into perspective, there are signs of prosperity among the upper class in certain areas.
In central places often used by the upper middle class, restaurants are packed and branded goods fly off the shelves.
“Throw a stone into the crowd in the shopping centres or the two resorts, or in Raffles Place or Shenton Way, one in two is likely hit a millionaire (in net worth),” observed a prominent columnist.
State TV still runs frequent advertisements about Singapore being a happy place with dancing crowds of all ages and races prancing around.
Not everyone agrees.
An English-language newspaper wrote: “Singaporeans are among the world’s wealthiest, but they are not necessarily a happy lot.”
Reports abound about Singapore being one of the world’s richest cities. But with its growing wealth, poverty is also increasing.
Some time ago, a friend of mine complained to me after I quoted Western reports in a column describing Singapore as one of the world’s richest cities.
It was less than reflective of the truth, he said. The mythical headlines, as he called them, included the following:
> “Singapore is world’s third richest country, Forbes (per capita GDP PPP US$56,700)” – March 30, 2012;
> “One in six Singapore householders are millionaires: Boston Consulting.” – June 1, 2012; and
> “Yet another wealth report has put tiny Singapore as the wealthiest nation in the world by GDP per capita, beating out Norway, USA, Hong Kong and Switzerland: Wall Street Journal.” – Aug 15, 2012.
Firstly, he pointed, some 37% of residents here, including the ultra-rich, are foreigners.
Many of the millionaires and billionaires mentioned were not Singapore citizens. Some of the imported wealth would probably leave as swiftly as it had come.
“I feel like screaming whenever I hear someone telling such tales about us,” said my friend, who is a person of average standing, which means earning barely enough to pay off housing and raising a family.
The extreme wealth, he said, was only half the truth since it left out the high level of household debts, especially for housing, children’s university education, parental healthcare costs among others.
This, I suppose is common of any advanced country, however rich. There will always be the wealthy, the middle-class and the poor.
But I must agree with my friend, a middle-aged professional, when he said that such emphasis on “wealth” was not useful in relating the financial truth of a country and its people.
Nevertheless, the riches referred to are real enough, albeit, somewhat misleading. It is only half the story; the other half is mortgages and debt.
There are plenty of both in our high-cost, materialistic Singapore, as it enters a new era of ever-changing expensive high-tech gadgets that the young “die-die” must have.
Affluence, yes! But Singapore is also one of the world’s most expensive cities.
Its household debt – at 75% of the GDP last year (up from 38% in 2000) – was worse than Hong Kong’s 61%.
The biggest cause is the craze for property, the values of which spiralled over the past five years.
“This amount of leverage could very possibly see banks succumbing as well, should a majority of their loans default,” said a commentator.
Debt per adult in Singapore is nearly US$40,000 (RM127,000) according to the latest Credit Suisse Global Wealth Report.
However it is doubtful if it includes people’s large housing loans.
One thing is certain, as individuals prosper, so does people’s debts with the help of low interests, particularly among the well-educated young.
Official figures show that there were 65,804 loan sharking cases in the last four and a half years – or about
1,200 cases a month.
The government is getting worried about the rising level of personal loans – judging from the following measures to curb borrowings.
On July 1, the central bank introduced rules to cap a property (of all types) buyer’s monthly payments at 60% of his income.
This was to reduce the chances of buyers being caught out by a rise in interest rates.
In February, it imposed limits on bank loans for motor vehicle purchases, capping certain loans at 50-60% of purchase price.
Seven months ago, the central bank proposed rules to encourage responsible use of credit card and unsecured credit rules aimed at discouraging people to get into greater debt.
Amidst our growing wealth, why are so many Singaporeans falling into debt?
The accumulation generally starts young from university graduates whose starting salary is about S$2,710 (RM6,811). Not all is attributed to a lavish lifestyle.
A money website recently painted a picture of a newly-wedded couple, working graduates, with a combined salary of S$8,000 (RM20,106), who are lucky enough to buy a new Housing Development Board (HDB) three-room flat for S$350,000 (RM879,500).
This is a normal start to two or three decades of debt repayment, not to mention a list of smaller items like the wedding costs, a ring and most likely a medium-size car costing around S$120,000 (RM301,606).
There are social implications for this costly start-up. One is a growing reluctance to marry young or to have children.
One of the changes in Singapore is the widening inequality between the rich and poor, even without considering foreigners in our midst.
Decades of prosperity and rising property values have helped many of the middle-class to upgrade, their riches rising substantially.
Others have dropped into the poverty class. The city’s dilemma is the widening gap between the rich and poor, technically computed as Gini coefficient.
On OECD measurement, Singapore’s Gini coefficient of 0.478 last year was the widest in the world.
This makes it confusing to judge articles about extreme wealth and increasing poverty, since both are true.
To put things into perspective, there are signs of prosperity among the upper class in certain areas.
In central places often used by the upper middle class, restaurants are packed and branded goods fly off the shelves.
“Throw a stone into the crowd in the shopping centres or the two resorts, or in Raffles Place or Shenton Way, one in two is likely hit a millionaire (in net worth),” observed a prominent columnist.
State TV still runs frequent advertisements about Singapore being a happy place with dancing crowds of all ages and races prancing around.
Not everyone agrees.
An English-language newspaper wrote: “Singaporeans are among the world’s wealthiest, but they are not necessarily a happy lot.”
