Sunday, August 26, 2012

#1 GDP but no buying power?

I'm talking about Singapore, the country that has an excuse for everything.

Singapore imported trees and placed them in air-conditioned domes.

Singapore will have any excuse for killing wildboars which has their natural habitats threatened. "NParks steps up efforts to manage wild boar nuisance" And yes, and Mr Wong, Director of Conservation at NParks said: "In the past, if you come to Lower Peirce, you may spot a mousedeer six or seven times out of 10 times. But now, it's very rare to spot a mousedeer. And we believe this is due to the presence of wild boars affecting the habitat and scaring away the mousedeer."

The recent news that Singapore is #1 again, and is now the richest nation in the world seemed to not really thrill the citizens. In fact, it seemed to have done the opposite.

Locals unhappy with ‘World’s Richest’ tag

Uber-wealthy class of people

According to the Wealth Report, Singapore will see a 67 percent increase in centa-millionaires over the next four years – an uber-wealthy class of people with over 100 million dollars in disposable income. The Boston Consulting Group’s 2012 global wealth report, released in June, said that Singapore had the highest percentage of millionaire households in the world.

It is very clear that the average Singapore, (The majority of them) do not earn anywhere close to the average in Norway, US or most Western European countries, however, bring #1 GDP, the uber wealthy is clearly skewing the numbers.

There are many people with structural unemployment or underemployment. I have a lot of friends who have college degrees, and do not have a proper job, even enough for them to pay taxes. (under S$20,000) a year.

I've spoken to several old people collecting newspapers and cardboards, cans and other recyclables. They are above the age of 70, and have to work because the state does not give handouts, and the local businesses do not really give any opportunities.

The number of US$56k per capita, which for a family of 4, may mean that an average family makes US$224k a year, is incredibly skewed. Just look and ask an average Singaporean you see, does his family earn US$224k a year?

In the past 10 years, gross domestic product (GDP) grew by 83.3 per cent, whereas median household income grew only 21.9 per cent in real terms. The bulk of growth went to corporate profits and the income of high earners. About 42 per cent of Singapore's GDP goes to wages here, which is one of the lowest such shares in the world. The rest goes to corporate profits, interest and dividends.

With the large influx of foreigners, mainly the low paying kind, (to be "competitive") salaries remain depressed, not only for retail, F&B and many other jobs which businesses claimed, "Singaporeans" are not interested to take up the job, you can find foreigners as programmers, managers, and many other jobs you can think of, including lawyers, doctors and bankers.

High GDP, Low Buying Power.

Domestic purchasing power: ... To add insult to the injury, Malaysians living in Kuala Lumpur have higher domestic purchasing power than Singaporeans in both years though our diplomats had decried them as being governed by ‘incompetent’ politicians!

Cost of living: ... In 2006, Singapore is ranked the 32th most expensive city in the world after Hong Kong, Seoul and Tokyo in Asia. Its ranking shot up to 11th in 2010 and Singapore is now the second most expensive city in Asia after Tokyo...

Selling "Organic" and Green products in Singapore, you get to feel that most Singaporeans do not have buying power. People look out for sales, offers and deals more than anything else, but if its for something they cannot brag about, they would spend less.

Like my friend complains, people will spend $3 on lunch and buy $5 for a cup of Starbucks.

Another thing that is disturbing is the data from Temasek Holdings. People have the right to know and there is a lack of transparency, even though most of the funds are sovereign funds which belong to the people.

This article is a good read. Temasek and Singapore Puzzle – Is it another Madoff crisis in making?

So where do you think the country is heading, and just food for thought,

Q) If you fund a company which owns all the properties in your neighbourhood, they have enough funds to create monopoly and set their own rents causing everything to be more expensive while earning record profits, will that benefit you at all if you do not get any parts of the profits or dividends from the company you fund?

-- Iron Bowl

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