French picnic firm sparks Singapore food fight
AFP News – Thu, Aug 30, 2012.
An upmarket French picnic organiser which said popular Singapore delicacies were not welcome at its debut event in the city-state was forced to eat humble pie Wednesday.
Diner en Blanc, where participants are required to dress entirely in white and bring their own food, provoked outrage after it told food blogger Daniel Ang to take down a post recommending Singaporean dishes for the occasion.
They told him that "local delicacies were not in line with the image of the picnic", he wrote.
Ang's suggestions included typical hawker centre fare such as Hainanese chicken rice, chwee kueh -- steamed rice cakes topped with diced preserved radish -- and tau huay, a soya bean pudding slathered with syrup.
With calls mounting for a boycott of Thursday's event -- the firm's first in Asia -- despite an initial apology, Diner en Blanc issued another 500-word confession on its website Wednesday, addressed to "Dear Singapore".
"The most serious error involved a comment -- posted on Facebook -- that said local food wasn't welcome. This was wrong and was withdrawn, corrected and apologies tendered," it said.
"However, the damage lingers. This is the cause of much regret and disappointment."
Singaporean dishes would not be turned away, it added.
"All food is welcome -- of whatever background or taste. Ultimately this is a personal choice -- your choice -- and we embrace that."
The Straits Times newspaper reported that at least 10 people who had signed up for the picnic were now boycotting it, while objectors had retaliated by organising four rival dining events, three of them on Thursday.
"If you are going to hold a party at my house, I welcome you with open arms, I respect your rules but please respect your hosts as well," Ang said on his blog.
"My Singapore local delicacies are the classiest food ever in our hearts. You can disrespect me as a blogger, and disrespect my blog post, but you do not disrespect my culture."
Thursday, August 30, 2012
Sunday, August 26, 2012
Behind Singapore Inc
http://sg.news.yahoo.com/behind-singapore-inc---part-i---the-growing-class-of--working-poor-.html
In a wide-ranging interview with former GIC chief economist Yeoh Lam Keong, Yahoo! Singapore’s JEANETTE TAN finds out what he thinks are the key challenges Singapore faces in its quest for continued economic development. This is the first of a three-part series that dives into some of the country’s key policies and governance.
Could Singapore’s immigration policies over the past 15 years have created a separate, growing class of poor citizens?
Former chief economist to the Government of Singapore Investment Corporation (GIC) Yeoh Lam Keong believes that may be the case.
Using a term he calls “the working poor” — a term he uses to refer to the bottom 10 per cent of working household breadwinners, who hold full-time jobs, but yet find themselves entrenched in the poverty cycle – he said, “In other words, even if you’re fully employed, you may barely earn enough money to bring up a family decently or to improve your children’s economic opportunities.”
“It’s a poverty in work, as opposed to poverty because you don’t have a job,” the 54-year-old said during a recent one-hour interview with Yahoo! Singapore.
A seasoned economist, Yeoh understands more than most the interconnected nature of so many of Singapore’s policies, with the multitude of factors involved in dealing with employment and wages alone.
A former schoolmate of Deputy Prime Minister Tharman Shanmugaratnam’s at the Anglo-Chinese School, and later the London School of Economics, Yeoh spent almost all his adult life working on government economic policies.
Involved in starting up the Economics and Strategy Department at GIC, Yeoh rose through the ranks to become chief economist, enjoying his work there so much that he stayed there for 26 years before leaving in June last year to spend more time with his family and his first love -- nature and the outdoors.
Zooming in on the hot-button point of the country’s immigration policy, Yeoh went on to explain that mass immigration of foreign unskilled workers has depressed the wages of working-class Singaporeans.
Industry-level salaries for these workers have stagnated against rapid inflation over the years as local firms hire more foreign workers who are willing to accept lower pay, and locals are then forced to accept little or no increases in their salaries to keep their jobs.
“Therefore this policy needs to be reversed. What we need to do is be much more stringent on admitting such unskilled labour,” he said. “We’ve really got no excuse to be so relaxed about this kind of immigration.”
Doing so, says Yeoh, will compel companies here to up their productivity levels through mechanisation, automation and re-organisation. This, in turn, will result in them relying more heavily on skilled labour, hence improving cost, productivity and more importantly real wage structures.
Helping the ‘working poor’ get by
Naturally, a process like this requires time — years of it, in fact — and Yeoh says some things can be done to help the working poor in the meantime.
For one, he advocates an immediate hike in Workfare payouts to allow all low-wage workers to take home at least $1,500 a month.
Currently, Workfare supplements are offered in proportions to the amount of income earned and the age range of the worker, ranging from between $360 and $600 annually for people earning $200 a month or less, to between $1,050 and $1,500 a year for those earning $1,000 per month.
The figure decreases as income increases, up to a threshold of $1,600 per month.
“What you can do is raise your Workfare payouts so that everyone takes home at least $1,500 and above (per month), and then gradually you can phase these out as productivity and real wages catch up in the longer run,” he suggests. “So you solve the poverty problem first by the government paying for it, and over time you let employers pay for it when they upgrade productivity and can afford to.”
This, he says, might be a more palatable option which achieves the same objectives set out by former National Wages Council (NWC) chairman Lim Chong Yah, who earlier this year proposed a “wage shock therapy” plan to increase the monthly salaries of low-income workers by 50 per cent over three years (a period that Yeoh feels is a bit too fast) while at the same time freezing wages of those who earn over S$15,000 a month.
Lim’s proposal drew the wage debate sharply into focus, with the government countering that his proposal contained serious hidden risks for the economy such as structural unemployment and higher cost of living due to higher business costs.
Yeoh said the additional cost from increasing the Workfare Income Supplement (WIS) should fall well within the government’s affordability range — a figure he estimates to be below 0.5 per cent of GDP per year.
“In this case, at least there is burden sharing,” he says. “The first instance, between labour and the government, and the second, between labour and company.”
Revisiting the minimum wage debate
This, though, is where Yeoh feels that minimum wage legislation may have to be introduced, to ensure that employers don’t cut back on pay in the wake of the government increasing workfare payouts.
The government has long opposed the imposition of a minimum wage, arguing that it would cause unemployment, although earlier in May, it accepted the NWC's proposal for workers earning less than S$1,000 be given a pay increase of $50. The council had also recommended firms to give a built-in pay rise to all workers this year to help them cope with inflation.
Yeoh, however, said a minimum wage does not necessarily create job loss “if it’s not an aggressive rise”.
“Most countries have a minimum wage, and it has not created unemployment significantly unless you make (the rise) too aggressive,” he said. “But what you’re doing here is not making it aggressive, you’re just making sure the increase in WIS (workfare income supplement) is not taken back by employers cutting wages. So that’s a different angle.”
He acknowledges the immediate challenges this will pose to local small and medium-sized businesses (SMEs) here, however.
“The problem is when you restrict foreign labour, the firms better able to deal with this will tend to be the larger firms — which tend to be foreign ones, and the smaller, local SMEs will tend to lose — so the economy will be hollowed out of SMEs and grow at their expense,” he said.
How to tackle this? Through “intelligent intervention” on the part of the government, Yeoh says.
“It needs to give them tax breaks, capital allowances; it needs to give them technology consultancy in terms of extension services, and setting up different industry centres to disseminate the technologies to them… because large companies have these facilities in-house already.
“This is a major adjustment process, so the government needs to facilitate this,” he says, referring, for instance, to the fact that workers lack unemployment insurance protection when they are transferred out of industries and companies.
“They’re not giving enough workfare so people can get up to that standard before the companies have a chance to adjust (to changing labour immigration policies)… They’re not supporting the workers, (or) the companies (sufficiently) either,” he said.
“So all they’re saying is, ‘Okay, turn off the labour taps!’ and they think that’s it, but that’s not it. There’s a lot more.”
Behind Singapore Inc. (Part I): The growing class of 'working poor'
Why peg public services to market prices?
In a recent hour-long interview with Yahoo! Singapore, former chief economist at the Government of Investment Corporation Yeoh Lam Keong asked this question.
A former schoolmate of Deputy Prime Minister Tharman Shanmugaratnam’s at the Anglo-Chinese School, and later the London School of Economics, Yeoh spent almost all his adult life working on government economic policy, and in that time experienced a social awakening to what he feels are inherent problems in the system.
“(The current model is) essentially relying on individual and family savings to fund these public services,” said the 54-year-old economist, who left GIC last June after 26 years to spend more time with his family.
“At the same time, it pegs the price of these public services to market prices when they don’t have to.”
Acknowledging that the majority of Singaporeans do have access to these three areas through the HDB scheme, subsidised and compulsory primary school education, as well as subsidised hospitalisation wards, he said nonetheless that the current model used in the delivery of these three services in particular needs to be rethought.
‘Lower cost of housing’
Yeoh gave an example of how Build-to-Order (BTO) flats are linked to general market prices by being pegged to the cost of resale housing.
“Once you do that, BTO prices will rise as general property prices rise, and resale prices are already often five to six times that of low to median (annual) incomes, making housing very unaffordable by most conventional housing industry measures,” he says.
Property market prices tend to be pulled up by the cost of upscale, private and landed property, he explains. These are subject to speculative forces and can be bought by people all over the world, so it tends to move toward price levels in other major cities such as Hong Kong and Beijing, where property prices are notoriously sky-high.
“That will then price out everybody else who falls below the top 20 to 30 per cent of households,” he adds.
In light of this, Yeoh, who himself stays with his wife and two children in a five-room flat in Marine Terrace, says BTO flats should be priced at a range of between two and three times of low to median annual incomes instead of between five and six times, where BTO prices currently stand.
This artificially lower subsidised price would be available only to Singapore citizens. In this situation, however, he notes further measures will be needed to prevent excessive speculation, recommending for example that Singaporean buyers should only be permitted to purchase flats at these lower prices once — for their housing needs — and suitably long “no resale” periods should be imposed.
What about the cost of land, an argument frequently used in favour of market pricing? Yeoh notes in response that Singapore’s government owns over 80 per cent of the country’s land area, and had acquired a large portion of it historically at low prices.
“So they have a big land bank at very low values, and they can use this land (more wisely)... for housing,” he adds.
He also said more cooperation and communication between ministries could help free up land space for public housing, however. Using the space taken up by an airbase for a BTO project, for example, would require the Ministry of Defence to work closely with the Ministry of National Development, which he said does not appear to happen very often.
“Although land is indeed a scarce resource for us especially in the long term, if you’re serious enough (to fix the land scarcity problem for housing) you can probably do it,” he says. “They’ve probably got enough land to do it.”
The real cost of education
Turning to Singapore’s education system which is heavily subsidised, Yeoh said the cost of private tuition is skewing matters out of whack.
Currently, a Singaporean child going through government-aided mainstream schools pays roughly $11 per month at primary school level, about $21 at secondary school, and about $27 per month at junior college or at a centralised institute.
Even at university level, Singaporean and permanent resident (PR) students attending local university courses benefit greatly from substantive grants provided by the Ministry of Education.
But these benign fee structures mask the real cost of schooling in Singapore when one takes in the cost of private tuition, says Yeoh.
“If you have a kid who has tuition in two or three subjects, that easily costs close to $1,000 (per month) or often even much more,” he says. “A lot of people also feel that at primary 6, they need to send their kids for tuition in three to four core subjects, so that adds up to more than $1,500 per month, perhaps even $2,000.”
But is private tuition really necessary?
Yeoh argues it is because of two key reasons — first, because of insufficient teaching resources for what is becoming an unnecessarily difficult curriculum and second, because class sizes are too large.
Making matters worse is the various possible paths in primary and secondary education alone — from the gifted programme to the through-train, and a wide range of elective programmes offered at secondary and junior college level.
It is no wonder parents become “kiasu” to ensure their children get the best opportunities and the most choices, said Yeoh.
His solution? Cut down class sizes and do away with unnecessary streaming.
“This would require higher education expenditure, but it will be less stressful for both students and teachers, and (the former) can actually be taught in school instead of at home (through tuition),” he adds, pointing out that the average OECD country spends about 6 per cent of its GDP on education, as compared to Singapore, which spends roughly 3.8 per cent.
‘Make healthcare universally affordable’
Much more can be done when it comes to healthcare, too, says Yeoh.
According to statistics from the World Health Organisation, private expenditure on healthcare in 2010 came up to a hefty 63.7 per cent of Singapore’s total healthcare costs, while the government covered the remaining 37.3 per cent.
This comes up to almost double the industry’s existing recommendations of roughly a third — the threshold for it to be considered “universally affordable”, he adds, especially when citizens of most other South Asian countries including Taiwan and Korea pay between 25 and 35 per cent of healthcare costs.
“But we have chosen to say, ‘No, the government should not pay for such a high share of healthcare costs; instead people should pay closer to the real costs of it themselves.’” he says.
“In doing this, we have made it very difficult to make healthcare universally affordable.”
Yeoh believes that Singapore’s current situation with respect to healthcare puts people at significantly higher risk of being bankrupted by their own illnesses — in particular where they suffer from chronic diseases that are not covered by insurance.
“I think the people shouldn’t have to pay (so much) for healthcare because it’s too much risk to pay for illnesses that could bankrupt them,” he says. “That’s the reason why the government should pay (for it), which is the fundamental rationale for universal healthcare affordability.”
How can this be done? Yeoh says the government should take a leaf from other Asian countries like Taiwan, Korea and Hong Kong and increase its expenditure on healthcare so as to bring down the private out-of-pocket share.
Pointing out that government healthcare expenditure in Singapore has stood at about 1.5 per cent of GDP for roughly the past decade while Taiwan’s government spent 4 per cent of its GDP on healthcare a decade ago, he said, “Why not spend more to make healthcare more affordable universally? We can afford it better than Hong Kong and Taiwan and Korea, so why aren’t we doing it?”
Where will the money come from?
So with his wide-ranging proposals, where will all the money needed to improve Singapore’s provision of housing, healthcare and education come from?
Yeoh says it can be a combination of surpluses and slightly higher taxation.
Noting that the International Monetary Fund estimates our structural budget surplus from the past two years to be about seven per cent of GDP (which amounts to nearly $15 billion), as compared to the figure given by our government: less than 0.1 per cent, Yeoh acknowledges that the government does mean well by its “over-conservative” accounting approach.
“But let’s face it, the IMF is hardly a tax standard,” he says. “We probably have at least four to five per cent of GDP we can use sustainably from the structural budget balance, let alone the full, long-term potential of investment income from reserves.”
He also thinks fiscal resources from Singapore’s reserves are similarly used too conservatively, but understands where the government comes from in its prudence.
“For one, they’re genuinely worried about a big disruption, a crisis or a deep depression, that they may need the money for a rainy day, and also for the needs of future generations,” he says. “But I think you can provision reasonably for that and still have enough to further supplement the needs of current citizens,” he points out.
“After all, these are the people who built modern Singapore with their sweat and tears — without their welfare, support and cohesion, a good society for future generations will not be possible,” he adds.
Another way to compensate tapping on the country’s surplus would be to raise Singapore’s low tax rates, he said.
“Even if you move taxes to 25 or 30 per cent, it is still very low, and you’ll still be able to save for a rainy day,” he says.
But won’t that deter top talent from working in Singapore?
Yeoh disagreed, saying that taxes for annual earned incomes exceeding $320,000 continue to stand at 20 per cent in Singapore, one of the lowest in the developed world.
“If you look at the literature on labour economics, it doesn’t seem to work that way. Talented people from other countries as a whole don’t seem to be unduly put off. But it’s a fear, and a belief they hold strongly perhaps without having looked at the evidence very hard,” he said.
Having said that, even with the additional revenue through taxes and budget surplus, improving these public services requires strategic vision and long-term planning, says Yeoh.
“You have to think five, 10 years out, not just two or three,” said Yeoh.
“To move from 1.5 per cent GDP in healthcare spending to 4 per cent over 10 years, for example, you get there by increasing spending by 0.35 per cent per year. You get there steadily, without inflation, at a rate that helps us absorb without going crazy, but it needs to be planned.”
Former top financial sector economist Yeoh Lam Keong says the government should be more pragmatic in its approach and return to its roots to meet and serve the needs of the ordinary citizen.
The 54-year-old, who was the chief economist at the Government of Singapore Investment Corporation for a decade, said the ruling People’s Action Party succeeded and even exceeded expectations in doing this, from Singapore’s early years right up to the mid-1990s.
“One of its founding values, which is still found in large measure in government today, is pragmatism — ‘I will do what works to get what I need done, done successfully, regardless of ideology, convention or dogma’ — that’s a great strength of our government,” said Yeoh, who left GIC last year to spend more time with his family.
However, during a recent one-hour interview with Yahoo! Singapore, the economist said this innovative pragmatism has been replaced by a rigid mindset of conventional policy and what he terms an over-reliance on market forces as the best basis for social policy design. He singled out the area of social welfare, where the government believes spending should be avoided or minimised.
“It is unrealistic (for example) to expect individuals and families to be able to look after their healthcare needs successfully without hardship in our current system,” he says. “Right now, it needs more systemic government support and active management given actual wage, economic and demographic trends.”
“That kind of systemic policy reform and re-engineering is something they (the government) are very capable of, so they need to go back to being realistic and pragmatic, as opposed to defensive and ideological — assuming things will work out, that the market will adequately provide.”
The need for a change in mindset is pressing, says Yeoh, who warns of a potential backlash from voters in future elections that could hamstring policy should the party fail to tackles current issues head-on.
“They need to be more realistic and return to creating policies for true citizen well-being. If they don’t, they will likely continue to erode public trust in policymaking and government credibility,” said Yeoh, who lives in a five-room HDB flat in Marine Terrace and who still takes public transport.
Beyond that, Yeoh says this could lead to policy paralysis, or worse still, populist policy that sacrifices the long-term good for short-term political success.
“We can’t afford that in Singapore. You need strong public trust in government policy capability, and you need the government to be able to mobilise the public to do what is needed together, even if it is difficult.”
'Start making changes'
How to show a change in mindset? Yeoh says the party simply needs to start making changes — in housing, healthcare, education, social security, unemployment protection and really tackling poverty.
“They need to wake up and smell the coffee, (and) make the serious, far-reaching policy adjustments — they are fully capable of it,” he says. “If they can go back and address those areas, and it’s well within their capability, they will win back a lot of policy credibility; they’ll win back a lot of their original brand.”
Yeoh said he felt encouraged by Prime Minister Lee Hsien Loong’s promise in his recent National Day Rally that his government will engage all Singaporeans in a National Conversation to re-look current government policies.
"I thought that the PM's focus on heart issues and social policy was refreshing and authentic," he said, sensing the government’s serious interest in re-engaging with the public.
He also called the PM's National Conversation "a much needed move" toward genuine dialogue and collaboration on policy issues that matter to citizen well-being, but added his hope that it will not simply be a cosmetic one.
"My dearest hope is that it... will actually be matched by the substance of real policy solutions. Rather than just 're-affirm, recalibrate and refresh', are we also willing to really re-think, reform and co-create a truly national social vision, with a supporting core of social policies that bring citizen well-being to a new, materially higher level?"
It is at this point that Yeoh raises his caveat: these changes need to be made realistically, in a manner suited to current times. They must also be sensitive to circumstances rising from globalisation, wage stagnation, ageing and rising structural unemployment exacerbated by wage restructuring.
“They (the government) just need to get into gear and deal seriously with it,” he adds. “They’re perfectly capable of managing overall policy reform, but they also have to realise that they need to be a lot more consultative and collaborative about it as the issues are a lot more complex than they used to be in the 60s, 70s or even the 80s.”
Yeoh also notes that given the new normal in Singapore, these sweeping reforms need to be designed and implemented in a politically participative and contentious public environment.
And indeed, consultation is key — something the PAP has been gradually doing more of in recent months, and even more so now with Education Minister Heng Swee Keat’s pledge to engage all in a National Conversation.
“They need to get real about facilitation of crowding in and aggregating expertise in co-creating policy,” he says. “Lots of big companies and regional governments are doing it; a lot of governments have done it — why can’t they? I’m sure they can. You need to realise it’s difficult but very, very necessary, and only then can you do it.”
Not counting them out yet
Despite the blunt manner in which Yeoh speaks out about policies and governance, he ultimately does still have faith in the capability of Singapore’s government as an institution.
“I haven’t counted the government out yet — I hope they may yet deliver on a lot of these things (housing, healthcare and education, in particular), and that they may actually move significantly in these areas,” he says.
Despite the wave of anti-government sentiment in Singapore’s online space, Yeoh says he genuinely feels that most Singaporeans want to give the government the benefit of the doubt.
“Most Singaporeans would love to see them deal decisively and pragmatically with these issues as they did long ago, and are rooting for them, but they’re just not giving Singaporeans who are hoping for something to cling to. And as a result their hope is sort of slipping away,” he says.
He adds, “That’s the real pity — the loss of the chance of real policy reform that can really bring the well-being of citizens to a new high that we can afford, and the loss of the leadership opportunity to craft a new social compact for Singapore’s future, by reclaiming our key founding values
In a wide-ranging interview with former GIC chief economist Yeoh Lam Keong, Yahoo! Singapore’s JEANETTE TAN finds out what he thinks are the key challenges Singapore faces in its quest for continued economic development. This is the first of a three-part series that dives into some of the country’s key policies and governance.
Could Singapore’s immigration policies over the past 15 years have created a separate, growing class of poor citizens?
Former chief economist to the Government of Singapore Investment Corporation (GIC) Yeoh Lam Keong believes that may be the case.
Using a term he calls “the working poor” — a term he uses to refer to the bottom 10 per cent of working household breadwinners, who hold full-time jobs, but yet find themselves entrenched in the poverty cycle – he said, “In other words, even if you’re fully employed, you may barely earn enough money to bring up a family decently or to improve your children’s economic opportunities.”
“It’s a poverty in work, as opposed to poverty because you don’t have a job,” the 54-year-old said during a recent one-hour interview with Yahoo! Singapore.
A seasoned economist, Yeoh understands more than most the interconnected nature of so many of Singapore’s policies, with the multitude of factors involved in dealing with employment and wages alone.
A former schoolmate of Deputy Prime Minister Tharman Shanmugaratnam’s at the Anglo-Chinese School, and later the London School of Economics, Yeoh spent almost all his adult life working on government economic policies.
Involved in starting up the Economics and Strategy Department at GIC, Yeoh rose through the ranks to become chief economist, enjoying his work there so much that he stayed there for 26 years before leaving in June last year to spend more time with his family and his first love -- nature and the outdoors.
Zooming in on the hot-button point of the country’s immigration policy, Yeoh went on to explain that mass immigration of foreign unskilled workers has depressed the wages of working-class Singaporeans.
Industry-level salaries for these workers have stagnated against rapid inflation over the years as local firms hire more foreign workers who are willing to accept lower pay, and locals are then forced to accept little or no increases in their salaries to keep their jobs.
“Therefore this policy needs to be reversed. What we need to do is be much more stringent on admitting such unskilled labour,” he said. “We’ve really got no excuse to be so relaxed about this kind of immigration.”
Doing so, says Yeoh, will compel companies here to up their productivity levels through mechanisation, automation and re-organisation. This, in turn, will result in them relying more heavily on skilled labour, hence improving cost, productivity and more importantly real wage structures.
Helping the ‘working poor’ get by
Naturally, a process like this requires time — years of it, in fact — and Yeoh says some things can be done to help the working poor in the meantime.
For one, he advocates an immediate hike in Workfare payouts to allow all low-wage workers to take home at least $1,500 a month.
Currently, Workfare supplements are offered in proportions to the amount of income earned and the age range of the worker, ranging from between $360 and $600 annually for people earning $200 a month or less, to between $1,050 and $1,500 a year for those earning $1,000 per month.
The figure decreases as income increases, up to a threshold of $1,600 per month.
“What you can do is raise your Workfare payouts so that everyone takes home at least $1,500 and above (per month), and then gradually you can phase these out as productivity and real wages catch up in the longer run,” he suggests. “So you solve the poverty problem first by the government paying for it, and over time you let employers pay for it when they upgrade productivity and can afford to.”
This, he says, might be a more palatable option which achieves the same objectives set out by former National Wages Council (NWC) chairman Lim Chong Yah, who earlier this year proposed a “wage shock therapy” plan to increase the monthly salaries of low-income workers by 50 per cent over three years (a period that Yeoh feels is a bit too fast) while at the same time freezing wages of those who earn over S$15,000 a month.
Lim’s proposal drew the wage debate sharply into focus, with the government countering that his proposal contained serious hidden risks for the economy such as structural unemployment and higher cost of living due to higher business costs.
Yeoh said the additional cost from increasing the Workfare Income Supplement (WIS) should fall well within the government’s affordability range — a figure he estimates to be below 0.5 per cent of GDP per year.
“In this case, at least there is burden sharing,” he says. “The first instance, between labour and the government, and the second, between labour and company.”
Revisiting the minimum wage debate
This, though, is where Yeoh feels that minimum wage legislation may have to be introduced, to ensure that employers don’t cut back on pay in the wake of the government increasing workfare payouts.
The government has long opposed the imposition of a minimum wage, arguing that it would cause unemployment, although earlier in May, it accepted the NWC's proposal for workers earning less than S$1,000 be given a pay increase of $50. The council had also recommended firms to give a built-in pay rise to all workers this year to help them cope with inflation.
Yeoh, however, said a minimum wage does not necessarily create job loss “if it’s not an aggressive rise”.
“Most countries have a minimum wage, and it has not created unemployment significantly unless you make (the rise) too aggressive,” he said. “But what you’re doing here is not making it aggressive, you’re just making sure the increase in WIS (workfare income supplement) is not taken back by employers cutting wages. So that’s a different angle.”
He acknowledges the immediate challenges this will pose to local small and medium-sized businesses (SMEs) here, however.
“The problem is when you restrict foreign labour, the firms better able to deal with this will tend to be the larger firms — which tend to be foreign ones, and the smaller, local SMEs will tend to lose — so the economy will be hollowed out of SMEs and grow at their expense,” he said.
How to tackle this? Through “intelligent intervention” on the part of the government, Yeoh says.
“It needs to give them tax breaks, capital allowances; it needs to give them technology consultancy in terms of extension services, and setting up different industry centres to disseminate the technologies to them… because large companies have these facilities in-house already.
“This is a major adjustment process, so the government needs to facilitate this,” he says, referring, for instance, to the fact that workers lack unemployment insurance protection when they are transferred out of industries and companies.
“They’re not giving enough workfare so people can get up to that standard before the companies have a chance to adjust (to changing labour immigration policies)… They’re not supporting the workers, (or) the companies (sufficiently) either,” he said.
“So all they’re saying is, ‘Okay, turn off the labour taps!’ and they think that’s it, but that’s not it. There’s a lot more.”
Behind Singapore Inc. (Part I): The growing class of 'working poor'
Why peg public services to market prices?
In a recent hour-long interview with Yahoo! Singapore, former chief economist at the Government of Investment Corporation Yeoh Lam Keong asked this question.
A former schoolmate of Deputy Prime Minister Tharman Shanmugaratnam’s at the Anglo-Chinese School, and later the London School of Economics, Yeoh spent almost all his adult life working on government economic policy, and in that time experienced a social awakening to what he feels are inherent problems in the system.
“(The current model is) essentially relying on individual and family savings to fund these public services,” said the 54-year-old economist, who left GIC last June after 26 years to spend more time with his family.
“At the same time, it pegs the price of these public services to market prices when they don’t have to.”
Acknowledging that the majority of Singaporeans do have access to these three areas through the HDB scheme, subsidised and compulsory primary school education, as well as subsidised hospitalisation wards, he said nonetheless that the current model used in the delivery of these three services in particular needs to be rethought.
‘Lower cost of housing’
Yeoh gave an example of how Build-to-Order (BTO) flats are linked to general market prices by being pegged to the cost of resale housing.
“Once you do that, BTO prices will rise as general property prices rise, and resale prices are already often five to six times that of low to median (annual) incomes, making housing very unaffordable by most conventional housing industry measures,” he says.
Property market prices tend to be pulled up by the cost of upscale, private and landed property, he explains. These are subject to speculative forces and can be bought by people all over the world, so it tends to move toward price levels in other major cities such as Hong Kong and Beijing, where property prices are notoriously sky-high.
“That will then price out everybody else who falls below the top 20 to 30 per cent of households,” he adds.
In light of this, Yeoh, who himself stays with his wife and two children in a five-room flat in Marine Terrace, says BTO flats should be priced at a range of between two and three times of low to median annual incomes instead of between five and six times, where BTO prices currently stand.
This artificially lower subsidised price would be available only to Singapore citizens. In this situation, however, he notes further measures will be needed to prevent excessive speculation, recommending for example that Singaporean buyers should only be permitted to purchase flats at these lower prices once — for their housing needs — and suitably long “no resale” periods should be imposed.
What about the cost of land, an argument frequently used in favour of market pricing? Yeoh notes in response that Singapore’s government owns over 80 per cent of the country’s land area, and had acquired a large portion of it historically at low prices.
“So they have a big land bank at very low values, and they can use this land (more wisely)... for housing,” he adds.
He also said more cooperation and communication between ministries could help free up land space for public housing, however. Using the space taken up by an airbase for a BTO project, for example, would require the Ministry of Defence to work closely with the Ministry of National Development, which he said does not appear to happen very often.
“Although land is indeed a scarce resource for us especially in the long term, if you’re serious enough (to fix the land scarcity problem for housing) you can probably do it,” he says. “They’ve probably got enough land to do it.”
The real cost of education
Turning to Singapore’s education system which is heavily subsidised, Yeoh said the cost of private tuition is skewing matters out of whack.
Currently, a Singaporean child going through government-aided mainstream schools pays roughly $11 per month at primary school level, about $21 at secondary school, and about $27 per month at junior college or at a centralised institute.
Even at university level, Singaporean and permanent resident (PR) students attending local university courses benefit greatly from substantive grants provided by the Ministry of Education.
But these benign fee structures mask the real cost of schooling in Singapore when one takes in the cost of private tuition, says Yeoh.
“If you have a kid who has tuition in two or three subjects, that easily costs close to $1,000 (per month) or often even much more,” he says. “A lot of people also feel that at primary 6, they need to send their kids for tuition in three to four core subjects, so that adds up to more than $1,500 per month, perhaps even $2,000.”
But is private tuition really necessary?
Yeoh argues it is because of two key reasons — first, because of insufficient teaching resources for what is becoming an unnecessarily difficult curriculum and second, because class sizes are too large.
Making matters worse is the various possible paths in primary and secondary education alone — from the gifted programme to the through-train, and a wide range of elective programmes offered at secondary and junior college level.
It is no wonder parents become “kiasu” to ensure their children get the best opportunities and the most choices, said Yeoh.
His solution? Cut down class sizes and do away with unnecessary streaming.
“This would require higher education expenditure, but it will be less stressful for both students and teachers, and (the former) can actually be taught in school instead of at home (through tuition),” he adds, pointing out that the average OECD country spends about 6 per cent of its GDP on education, as compared to Singapore, which spends roughly 3.8 per cent.
‘Make healthcare universally affordable’
Much more can be done when it comes to healthcare, too, says Yeoh.
According to statistics from the World Health Organisation, private expenditure on healthcare in 2010 came up to a hefty 63.7 per cent of Singapore’s total healthcare costs, while the government covered the remaining 37.3 per cent.
This comes up to almost double the industry’s existing recommendations of roughly a third — the threshold for it to be considered “universally affordable”, he adds, especially when citizens of most other South Asian countries including Taiwan and Korea pay between 25 and 35 per cent of healthcare costs.
“But we have chosen to say, ‘No, the government should not pay for such a high share of healthcare costs; instead people should pay closer to the real costs of it themselves.’” he says.
“In doing this, we have made it very difficult to make healthcare universally affordable.”
Yeoh believes that Singapore’s current situation with respect to healthcare puts people at significantly higher risk of being bankrupted by their own illnesses — in particular where they suffer from chronic diseases that are not covered by insurance.
“I think the people shouldn’t have to pay (so much) for healthcare because it’s too much risk to pay for illnesses that could bankrupt them,” he says. “That’s the reason why the government should pay (for it), which is the fundamental rationale for universal healthcare affordability.”
How can this be done? Yeoh says the government should take a leaf from other Asian countries like Taiwan, Korea and Hong Kong and increase its expenditure on healthcare so as to bring down the private out-of-pocket share.
Pointing out that government healthcare expenditure in Singapore has stood at about 1.5 per cent of GDP for roughly the past decade while Taiwan’s government spent 4 per cent of its GDP on healthcare a decade ago, he said, “Why not spend more to make healthcare more affordable universally? We can afford it better than Hong Kong and Taiwan and Korea, so why aren’t we doing it?”
Where will the money come from?
So with his wide-ranging proposals, where will all the money needed to improve Singapore’s provision of housing, healthcare and education come from?
Yeoh says it can be a combination of surpluses and slightly higher taxation.
Noting that the International Monetary Fund estimates our structural budget surplus from the past two years to be about seven per cent of GDP (which amounts to nearly $15 billion), as compared to the figure given by our government: less than 0.1 per cent, Yeoh acknowledges that the government does mean well by its “over-conservative” accounting approach.
“But let’s face it, the IMF is hardly a tax standard,” he says. “We probably have at least four to five per cent of GDP we can use sustainably from the structural budget balance, let alone the full, long-term potential of investment income from reserves.”
He also thinks fiscal resources from Singapore’s reserves are similarly used too conservatively, but understands where the government comes from in its prudence.
“For one, they’re genuinely worried about a big disruption, a crisis or a deep depression, that they may need the money for a rainy day, and also for the needs of future generations,” he says. “But I think you can provision reasonably for that and still have enough to further supplement the needs of current citizens,” he points out.
“After all, these are the people who built modern Singapore with their sweat and tears — without their welfare, support and cohesion, a good society for future generations will not be possible,” he adds.
Another way to compensate tapping on the country’s surplus would be to raise Singapore’s low tax rates, he said.
“Even if you move taxes to 25 or 30 per cent, it is still very low, and you’ll still be able to save for a rainy day,” he says.
But won’t that deter top talent from working in Singapore?
Yeoh disagreed, saying that taxes for annual earned incomes exceeding $320,000 continue to stand at 20 per cent in Singapore, one of the lowest in the developed world.
“If you look at the literature on labour economics, it doesn’t seem to work that way. Talented people from other countries as a whole don’t seem to be unduly put off. But it’s a fear, and a belief they hold strongly perhaps without having looked at the evidence very hard,” he said.
Having said that, even with the additional revenue through taxes and budget surplus, improving these public services requires strategic vision and long-term planning, says Yeoh.
“You have to think five, 10 years out, not just two or three,” said Yeoh.
“To move from 1.5 per cent GDP in healthcare spending to 4 per cent over 10 years, for example, you get there by increasing spending by 0.35 per cent per year. You get there steadily, without inflation, at a rate that helps us absorb without going crazy, but it needs to be planned.”
Former top financial sector economist Yeoh Lam Keong says the government should be more pragmatic in its approach and return to its roots to meet and serve the needs of the ordinary citizen.
The 54-year-old, who was the chief economist at the Government of Singapore Investment Corporation for a decade, said the ruling People’s Action Party succeeded and even exceeded expectations in doing this, from Singapore’s early years right up to the mid-1990s.
“One of its founding values, which is still found in large measure in government today, is pragmatism — ‘I will do what works to get what I need done, done successfully, regardless of ideology, convention or dogma’ — that’s a great strength of our government,” said Yeoh, who left GIC last year to spend more time with his family.
However, during a recent one-hour interview with Yahoo! Singapore, the economist said this innovative pragmatism has been replaced by a rigid mindset of conventional policy and what he terms an over-reliance on market forces as the best basis for social policy design. He singled out the area of social welfare, where the government believes spending should be avoided or minimised.
“It is unrealistic (for example) to expect individuals and families to be able to look after their healthcare needs successfully without hardship in our current system,” he says. “Right now, it needs more systemic government support and active management given actual wage, economic and demographic trends.”
“That kind of systemic policy reform and re-engineering is something they (the government) are very capable of, so they need to go back to being realistic and pragmatic, as opposed to defensive and ideological — assuming things will work out, that the market will adequately provide.”
The need for a change in mindset is pressing, says Yeoh, who warns of a potential backlash from voters in future elections that could hamstring policy should the party fail to tackles current issues head-on.
“They need to be more realistic and return to creating policies for true citizen well-being. If they don’t, they will likely continue to erode public trust in policymaking and government credibility,” said Yeoh, who lives in a five-room HDB flat in Marine Terrace and who still takes public transport.
Beyond that, Yeoh says this could lead to policy paralysis, or worse still, populist policy that sacrifices the long-term good for short-term political success.
“We can’t afford that in Singapore. You need strong public trust in government policy capability, and you need the government to be able to mobilise the public to do what is needed together, even if it is difficult.”
'Start making changes'
How to show a change in mindset? Yeoh says the party simply needs to start making changes — in housing, healthcare, education, social security, unemployment protection and really tackling poverty.
“They need to wake up and smell the coffee, (and) make the serious, far-reaching policy adjustments — they are fully capable of it,” he says. “If they can go back and address those areas, and it’s well within their capability, they will win back a lot of policy credibility; they’ll win back a lot of their original brand.”
Yeoh said he felt encouraged by Prime Minister Lee Hsien Loong’s promise in his recent National Day Rally that his government will engage all Singaporeans in a National Conversation to re-look current government policies.
"I thought that the PM's focus on heart issues and social policy was refreshing and authentic," he said, sensing the government’s serious interest in re-engaging with the public.
He also called the PM's National Conversation "a much needed move" toward genuine dialogue and collaboration on policy issues that matter to citizen well-being, but added his hope that it will not simply be a cosmetic one.
"My dearest hope is that it... will actually be matched by the substance of real policy solutions. Rather than just 're-affirm, recalibrate and refresh', are we also willing to really re-think, reform and co-create a truly national social vision, with a supporting core of social policies that bring citizen well-being to a new, materially higher level?"
It is at this point that Yeoh raises his caveat: these changes need to be made realistically, in a manner suited to current times. They must also be sensitive to circumstances rising from globalisation, wage stagnation, ageing and rising structural unemployment exacerbated by wage restructuring.
“They (the government) just need to get into gear and deal seriously with it,” he adds. “They’re perfectly capable of managing overall policy reform, but they also have to realise that they need to be a lot more consultative and collaborative about it as the issues are a lot more complex than they used to be in the 60s, 70s or even the 80s.”
Yeoh also notes that given the new normal in Singapore, these sweeping reforms need to be designed and implemented in a politically participative and contentious public environment.
And indeed, consultation is key — something the PAP has been gradually doing more of in recent months, and even more so now with Education Minister Heng Swee Keat’s pledge to engage all in a National Conversation.
“They need to get real about facilitation of crowding in and aggregating expertise in co-creating policy,” he says. “Lots of big companies and regional governments are doing it; a lot of governments have done it — why can’t they? I’m sure they can. You need to realise it’s difficult but very, very necessary, and only then can you do it.”
Not counting them out yet
Despite the blunt manner in which Yeoh speaks out about policies and governance, he ultimately does still have faith in the capability of Singapore’s government as an institution.
“I haven’t counted the government out yet — I hope they may yet deliver on a lot of these things (housing, healthcare and education, in particular), and that they may actually move significantly in these areas,” he says.
Despite the wave of anti-government sentiment in Singapore’s online space, Yeoh says he genuinely feels that most Singaporeans want to give the government the benefit of the doubt.
“Most Singaporeans would love to see them deal decisively and pragmatically with these issues as they did long ago, and are rooting for them, but they’re just not giving Singaporeans who are hoping for something to cling to. And as a result their hope is sort of slipping away,” he says.
He adds, “That’s the real pity — the loss of the chance of real policy reform that can really bring the well-being of citizens to a new high that we can afford, and the loss of the leadership opportunity to craft a new social compact for Singapore’s future, by reclaiming our key founding values
Tuesday, August 14, 2012
S
Singapore topped the list for GDP per capita in 2010, and is expected to continue leading in 2050, according to the Wealth Report 2012 published by Knight Frank and Citi Private Bank. (Screengrab of Wealth Report 2012)
Singapore topped the charts for highest GDP per capita in 2010 at close to SGD $70,000 (USD $56,532), according to a study.
In the Wealth Report 2012 published by Knight Frank and Citi Private Bank, Singapore is also expected to continue to be the global leader in 2050.
GDP per capita refers to the total output of a country divided by the population.
Trailing closely behind Singapore is Norway at about SGD $63,000 (USD $51,226), then the U.S. at about SGD $56,200 (USD $45,511), followed by Hong Kong at almost SGD $56,000 (USD $45,301).
The report also forecasts that Singapore’s GDP per capita will more than double to about SGD $170,000 (USD $137,710).
Hong Kong is expected to take over Norway’s position as number two in 2050, followed by Taiwan and South Korea – two countries that failed to make the list in 2010.
The U.S. is expected to drop from third place in 2010 to the fifth in 2050.
Gráinne Gilmore, head of UK residential research at Knight Frank LLP who is also the author of the economic and wealth trends article said, "Other countries may have bigger GDP growth 2010 – 2050, but in most cases, they are starting from a much lower base on economic terms. Singapore is a developed economy, and is expected to achieve a rate of growth which enables it to remain one of the wealthiest countries in the world."
"Some of the factors contributing to Singapore’s forecast performance are its ‘human capital’ – a skilled and educated labour force (which is likely to lead to better long-term prospects for a country’s economic growth), the dynamic business environment (with legislation to match), openness to trade, capital mobility and foreign direct investment. Also, it is worth noting that there is a global eastwards shift in economic activity – Singapore is perfectly positioned to take advantage of this," Gilmore added.
Singapore topped the charts for highest GDP per capita in 2010 at close to SGD $70,000 (USD $56,532), according to a study.
In the Wealth Report 2012 published by Knight Frank and Citi Private Bank, Singapore is also expected to continue to be the global leader in 2050.
GDP per capita refers to the total output of a country divided by the population.
Trailing closely behind Singapore is Norway at about SGD $63,000 (USD $51,226), then the U.S. at about SGD $56,200 (USD $45,511), followed by Hong Kong at almost SGD $56,000 (USD $45,301).
The report also forecasts that Singapore’s GDP per capita will more than double to about SGD $170,000 (USD $137,710).
Hong Kong is expected to take over Norway’s position as number two in 2050, followed by Taiwan and South Korea – two countries that failed to make the list in 2010.
The U.S. is expected to drop from third place in 2010 to the fifth in 2050.
Gráinne Gilmore, head of UK residential research at Knight Frank LLP who is also the author of the economic and wealth trends article said, "Other countries may have bigger GDP growth 2010 – 2050, but in most cases, they are starting from a much lower base on economic terms. Singapore is a developed economy, and is expected to achieve a rate of growth which enables it to remain one of the wealthiest countries in the world."
"Some of the factors contributing to Singapore’s forecast performance are its ‘human capital’ – a skilled and educated labour force (which is likely to lead to better long-term prospects for a country’s economic growth), the dynamic business environment (with legislation to match), openness to trade, capital mobility and foreign direct investment. Also, it is worth noting that there is a global eastwards shift in economic activity – Singapore is perfectly positioned to take advantage of this," Gilmore added.
21 govt bodies cited for fund management lapses
21 govt bodies cited for fund management lapses
Yahoo! NewsroomBy Jeanette Tan | Yahoo! Newsroom – Tue, Aug 14, 2012
10 ministries and 11 statutory boards were revealed to have lapses in their management of public funds and resources in an annual report by the Auditor-General’s Office (AGO).
In a more than 100-page report for the financial year ending 31 March 2012 released on Monday, the AGO said these lapses were found in its investigations into 11 complaints lodged during the latest financial year, as well as in its audits on financial statements from all government ministries and state organs.
At the forefront of the lapses were those related to procurement, contract management and financial administration, said Auditor-General Lim Soo Ping.
One of the biggest amounts cited in the report was the $69.42 million total of nine tenders by the National Parks Board (NParks) for park development projects that had been approved by the wrong authority.
The ministries or their divisions cited in the report include those of Defence, Education, Finance, Foreign Affairs, Health, Home Affairs, Manpower, National Development, Trade and Industry and the Prime Minister’s Office.
Statutory boards that were identified in the report for lapses include the Singapore Sports Council, the Accounting and Corporate Regulatory Authority, the Inland Revenue Authority of Singapore, the Workforce Development Agency, NParks, the National Environment Agency, the Public Utilities Board and the Singapore Tourism Board.
Approval of tenders
Lim noted that there were many instances when approval for contracts was only sought after a decision was made and commitment was given, or when approving authorities were given incomplete or incorrect information.
He said the role of an approving authority “is not a perfunctory role and must not be treated as such” by procurement officers.
In one instance cited in the report, the Ministry of Manpower awarded a tender for office chairs to the highest bidder at the value of S$258,750, almost six times higher than the lowest bid submitted, but the cost-effectiveness was not explained.
In another instance, the Ministry of Trade and Industry failed to state explicitly to the Cabinet that its appointed operator, Singapore Power, would be working in a joint venture on a district cooling system in Marina Bay. The ministry had sought the Cabinet’s approval to appoint Singapore Power as the operator with the knowledge that the company had planned to undertake the project through a joint venture.
Abuse of term contracts and overcharging
Lim also said he observed a lack of detailed and accurate documentation in the procurement process and he also highlighted the abuse of term contracts — those that are agreed-upon for an extended period — which resulted in several government departments being “grossly overcharged” for projects. He said the overcharging came mostly from items that were not covered in the agreed-upon term contracts.
Under the Ministry of Finance (MOF), for example, 12 cases of duplicate payments were found between April and December last year, including one that came up to more than S$18 million disbursed by the ministry’s payment processing arm Vital. The AGO noted, though, that the 12 payments represented a small percentage out of more than S$26 billion that was processed through some 286,000 payment vouchers during that period.
Also, according to the AGO report, the Ministry of Health had overpaid a contractor by an estimated S$830,000 for foundation work and basement construction at Khoo Teck Puat Hospital, out of a total payment of almost S$5 million.
The Immigration and Checkpoints Authority, which falls under the Ministry of Home Affairs, was said to have inappropriately used term contracts in 12 projects (valued at S$1.21 million altogether) where open tenders should have been called instead. This allowed the term contractor to earn profits over the invoiced prices when calling for quotations on subcontracted work under the term contract.
Similar incidents occurred with the Singapore Police Force and the Singapore Prison Service, resulting in them being overcharged by estimated amounts of S$73,000 and S$1.36 million respectively.
As similar cases of overcharging may exist in other agencies that may not have come under review by the AGO, Lim made recommendations to the MOF to introduce procurement rules pertaining to the appropriate use of term contracts, as well as to ensure that agencies are charged at fair market prices for items that do not come under these contracts.
Breach of laws in accounting for revenue and expenditure
The AGO also discovered irregularities in accounting and procurement practices at the Ministry of National Development (MND).
MND had reported its expenditure on a land reclamation project as an amount net of revenue collected, and so was found to have understated the revenue in its consolidated fund and expenditure in its development fund by some S$141.03 million. This violated the country’s financial regulations, which require that gross revenue and expenditure be recorded in the government’s accounts.
In understating its revenue and expenditure, the S$141 million was used to fund part of the ministry’s expenditure on the reclamation project, which contravened Singapore’s constitution, requiring that all revenue must be paid into the consolidated fund, and not be used to fund expenditure, according to the report.
Poor management of contracts
The National Environment Agency was also found to have high rates of non-compliance with specifications laid out in deals it signed with contractors.
The AGO discovered that out of 225 locations where street cleaning was supposed to be taking place, workers failed to turn up at 190 of them. Even after extending its checks to two hours beyond the stipulated time agreed upon in the contract at 68 locations, the workers still did not appear at 67 of them.
Further, the AGO observed substandard work carried out at 15 out of another 39 locations it checked, where for instance a road kerb area remained littered even after it was “swept”.
Further lapses found by the AGO in its review included waiving competition on weak grounds in the awarding of tenders, failure to evaluate bids in accordance with specified criteria and splitting purchases in order to avoid the need to call for tenders and quotations.
In response to the AGO’s findings, the majority of the identified ministries and stat boards agreed to seek repayment, where overcharging occurred, to review terms and contracts where applicable and to send their staff for training on better procurement practices, among other reformative practices.
Noting that agreement to send staff for procurement training was a common response given by agencies committing these lapses, Lim said, “While training is important, I should mention that many of the lapses found were not due to a lack of knowledge of procedures but more to administrative expediency or preference for certain suppliers taking precedence over financial prudence.”
He stressed the importance of incorporating values expected of public officers as custodians and stewards of public monies.
“This should be reinforced by the senior management of public sector agencies setting the right tone at the top on governance and financial control matters,” he added.
Yahoo! NewsroomBy Jeanette Tan | Yahoo! Newsroom – Tue, Aug 14, 2012
10 ministries and 11 statutory boards were revealed to have lapses in their management of public funds and resources in an annual report by the Auditor-General’s Office (AGO).
In a more than 100-page report for the financial year ending 31 March 2012 released on Monday, the AGO said these lapses were found in its investigations into 11 complaints lodged during the latest financial year, as well as in its audits on financial statements from all government ministries and state organs.
At the forefront of the lapses were those related to procurement, contract management and financial administration, said Auditor-General Lim Soo Ping.
One of the biggest amounts cited in the report was the $69.42 million total of nine tenders by the National Parks Board (NParks) for park development projects that had been approved by the wrong authority.
The ministries or their divisions cited in the report include those of Defence, Education, Finance, Foreign Affairs, Health, Home Affairs, Manpower, National Development, Trade and Industry and the Prime Minister’s Office.
Statutory boards that were identified in the report for lapses include the Singapore Sports Council, the Accounting and Corporate Regulatory Authority, the Inland Revenue Authority of Singapore, the Workforce Development Agency, NParks, the National Environment Agency, the Public Utilities Board and the Singapore Tourism Board.
Approval of tenders
Lim noted that there were many instances when approval for contracts was only sought after a decision was made and commitment was given, or when approving authorities were given incomplete or incorrect information.
He said the role of an approving authority “is not a perfunctory role and must not be treated as such” by procurement officers.
In one instance cited in the report, the Ministry of Manpower awarded a tender for office chairs to the highest bidder at the value of S$258,750, almost six times higher than the lowest bid submitted, but the cost-effectiveness was not explained.
In another instance, the Ministry of Trade and Industry failed to state explicitly to the Cabinet that its appointed operator, Singapore Power, would be working in a joint venture on a district cooling system in Marina Bay. The ministry had sought the Cabinet’s approval to appoint Singapore Power as the operator with the knowledge that the company had planned to undertake the project through a joint venture.
Abuse of term contracts and overcharging
Lim also said he observed a lack of detailed and accurate documentation in the procurement process and he also highlighted the abuse of term contracts — those that are agreed-upon for an extended period — which resulted in several government departments being “grossly overcharged” for projects. He said the overcharging came mostly from items that were not covered in the agreed-upon term contracts.
Under the Ministry of Finance (MOF), for example, 12 cases of duplicate payments were found between April and December last year, including one that came up to more than S$18 million disbursed by the ministry’s payment processing arm Vital. The AGO noted, though, that the 12 payments represented a small percentage out of more than S$26 billion that was processed through some 286,000 payment vouchers during that period.
Also, according to the AGO report, the Ministry of Health had overpaid a contractor by an estimated S$830,000 for foundation work and basement construction at Khoo Teck Puat Hospital, out of a total payment of almost S$5 million.
The Immigration and Checkpoints Authority, which falls under the Ministry of Home Affairs, was said to have inappropriately used term contracts in 12 projects (valued at S$1.21 million altogether) where open tenders should have been called instead. This allowed the term contractor to earn profits over the invoiced prices when calling for quotations on subcontracted work under the term contract.
Similar incidents occurred with the Singapore Police Force and the Singapore Prison Service, resulting in them being overcharged by estimated amounts of S$73,000 and S$1.36 million respectively.
As similar cases of overcharging may exist in other agencies that may not have come under review by the AGO, Lim made recommendations to the MOF to introduce procurement rules pertaining to the appropriate use of term contracts, as well as to ensure that agencies are charged at fair market prices for items that do not come under these contracts.
Breach of laws in accounting for revenue and expenditure
The AGO also discovered irregularities in accounting and procurement practices at the Ministry of National Development (MND).
MND had reported its expenditure on a land reclamation project as an amount net of revenue collected, and so was found to have understated the revenue in its consolidated fund and expenditure in its development fund by some S$141.03 million. This violated the country’s financial regulations, which require that gross revenue and expenditure be recorded in the government’s accounts.
In understating its revenue and expenditure, the S$141 million was used to fund part of the ministry’s expenditure on the reclamation project, which contravened Singapore’s constitution, requiring that all revenue must be paid into the consolidated fund, and not be used to fund expenditure, according to the report.
Poor management of contracts
The National Environment Agency was also found to have high rates of non-compliance with specifications laid out in deals it signed with contractors.
The AGO discovered that out of 225 locations where street cleaning was supposed to be taking place, workers failed to turn up at 190 of them. Even after extending its checks to two hours beyond the stipulated time agreed upon in the contract at 68 locations, the workers still did not appear at 67 of them.
Further, the AGO observed substandard work carried out at 15 out of another 39 locations it checked, where for instance a road kerb area remained littered even after it was “swept”.
Further lapses found by the AGO in its review included waiving competition on weak grounds in the awarding of tenders, failure to evaluate bids in accordance with specified criteria and splitting purchases in order to avoid the need to call for tenders and quotations.
In response to the AGO’s findings, the majority of the identified ministries and stat boards agreed to seek repayment, where overcharging occurred, to review terms and contracts where applicable and to send their staff for training on better procurement practices, among other reformative practices.
Noting that agreement to send staff for procurement training was a common response given by agencies committing these lapses, Lim said, “While training is important, I should mention that many of the lapses found were not due to a lack of knowledge of procedures but more to administrative expediency or preference for certain suppliers taking precedence over financial prudence.”
He stressed the importance of incorporating values expected of public officers as custodians and stewards of public monies.
“This should be reinforced by the senior management of public sector agencies setting the right tone at the top on governance and financial control matters,” he added.
Thursday, August 2, 2012
Chinese colonialism? 19 July 2012 BBC
Is China becoming Africa's new colonial master? Is Beijing sucking away resources to drive its own economic growth, while offering little in return?
Or is such talk the product of fear and envy? Is it a sign of Western anxieties, that China is fast becoming the new power in Africa, building more equal relationships, and undermining Western influence on the continent?
China is certainly a real force in Africa. Just look at the clutch of presidents and the officials from many more parts of Africa who have made the long trek to Beijing this week for the China-Africa Co-operation Forum.
The visitors certainly have incentives to be here. They are being showered with attention, feted at banquets and tantalised with the prospect of preferential loan deals.
Neo-colonialist charge
But China is extremely sensitive to the charge it's a neo-colonialist power and is trying hard to refute it.
Ahead of the forum the People's Daily newspaper, the Communist Party's main mouthpiece, warned that "a trickle of critics... have struck a chord of dissonance, warning of the 'new colonialism' looming on the continent in a veiled swipe at Beijing's efforts to forge closer ties with Africa".
The opinion piece, from the official Xinhua news agency which echoes official opinion, said the charge was "biased and ill-grounded", the relationship is based on "equality and mutual benefit... fact is more convincing than rhetoric".
"Africa's exports of crude oil, minerals, steel and agricultural products have played an active role in lifting the Chinese people's livelihood. Meanwhile, the continent also serves as an indispensable market with great potential for Chinese products," it explained.
"China also provides Africa with much-needed products and technologies, and a vast market for its commodities," said Xinhua. "What's more, Beijing focused on helping build the continent's productive capacity by improving its infrastructure and boosting the manufacturing sector, rather than involving the so-called "resource-grabbing practice".
President Hu Jintao picked up the theme at the forum, repeatedly calling this "a new type of China-Africa strategic partnership".
He said "the Chinese and African peoples have always treated each other as equals... we will... forever be a good friend, good partner and good brother of the African people".
He, too, had a barrage of facts to show China is bringing benefits to Africa. "China has built over 100 schools, 30 hospitals, 30 anti-malaria centres and 20 agricultural technology demonstration centres in Africa. It has met the pledge of providing $15bn [£9.58bn] of lending of a preferential nature to Africa....China has trained close to 40,000 African personnel...and provided over 20,000 government scholarships" said China's president.
Media barrage
China's commerce minister even got poetic, penning an article in the China Daily highlighting the way China is investing in Africa, not just stripping resources from it.
"In Malawi, a landlocked African country, rows of cotton cultivated by local farmers with instruction from Chinese experts are budding; in Ethiopia, a shoe factory built with investment from the China-Africa Development Fund is teeming with local workers; in the Democratic Republic of Congo, a hydropower station financed by credit from China has just been inaugurated," wrote Chen Deming.
He went on: "In Yiwu, a city in East China, Chinese customers are selecting South African wine at the Exhibition Centre for African Products; at the New Port of Tianjin, a cargo ship loaded with fruit and textile products from Benin is preparing for tariff exemption procedures to enter the Chinese market. These are the encouraging scenes unfolding before us."
At the forum itself, China has promised $20bn of new loans, reduced tariffs on African imports and help for Africa's development. All of this is designed to show that China is different from colonial powers.
The English-language mouthpiece, the China Daily, gave space to Sehlare Makgetlaneng from the Africa Institute in Pretoria, South Africa, who wrote: "The West's claim that China's relationship with Africa is neo-colonialism... results from the fear its strategic interests will be harmed as a result of structural changes in African countries and China's growing presence on the continent.
Despite this media barrage, though, there are still concerns in many parts of Africa that this is not an equal exchange, concerns that the investment deals are opaque and open to corruption, that Chinese infrastructure projects often import Chinese labour rather than developing local skills, that Chinese firms may exploit local workers, that cheap Chinese products undermine Africa's ability to build it's own industries, that for all the new roads, railways and ports, this is not a mutually beneficial relationship.
Winning over doubters?
Kenya's Prime Minister Raila Odinga is at the forum. He will be signing deals for new power plants and roads. But before he left Kenya, the PM Press Service said he wanted to talk to China's leaders about areas where trade has "not worked well."
"We import a lot of manufactured equipment like tractors, ploughs and harvesters. I feel that we should by now be having a tractor manufacturing plant here in Kenya. There is no reason why we should be importing tractors from China year in year out. These are some of the things we want to engage the Chinese on," Mr Odinga was quoted as saying.
"We should have a fertilizer manufacturing plant here instead of importing the product from China which causes delays and poor harvests," he added.
And that may be the key for China, if it can invest more in African factories and businesses, not just infrastructure and buildings, if it can create more jobs in Africa rather than export more Chinese-made products to the continent, if Kenya gets a tractor factory and a fertilizer plant, China may win over many of the doubters.
Or is such talk the product of fear and envy? Is it a sign of Western anxieties, that China is fast becoming the new power in Africa, building more equal relationships, and undermining Western influence on the continent?
China is certainly a real force in Africa. Just look at the clutch of presidents and the officials from many more parts of Africa who have made the long trek to Beijing this week for the China-Africa Co-operation Forum.
The visitors certainly have incentives to be here. They are being showered with attention, feted at banquets and tantalised with the prospect of preferential loan deals.
Neo-colonialist charge
But China is extremely sensitive to the charge it's a neo-colonialist power and is trying hard to refute it.
Ahead of the forum the People's Daily newspaper, the Communist Party's main mouthpiece, warned that "a trickle of critics... have struck a chord of dissonance, warning of the 'new colonialism' looming on the continent in a veiled swipe at Beijing's efforts to forge closer ties with Africa".
The opinion piece, from the official Xinhua news agency which echoes official opinion, said the charge was "biased and ill-grounded", the relationship is based on "equality and mutual benefit... fact is more convincing than rhetoric".
"Africa's exports of crude oil, minerals, steel and agricultural products have played an active role in lifting the Chinese people's livelihood. Meanwhile, the continent also serves as an indispensable market with great potential for Chinese products," it explained.
"China also provides Africa with much-needed products and technologies, and a vast market for its commodities," said Xinhua. "What's more, Beijing focused on helping build the continent's productive capacity by improving its infrastructure and boosting the manufacturing sector, rather than involving the so-called "resource-grabbing practice".
President Hu Jintao picked up the theme at the forum, repeatedly calling this "a new type of China-Africa strategic partnership".
He said "the Chinese and African peoples have always treated each other as equals... we will... forever be a good friend, good partner and good brother of the African people".
He, too, had a barrage of facts to show China is bringing benefits to Africa. "China has built over 100 schools, 30 hospitals, 30 anti-malaria centres and 20 agricultural technology demonstration centres in Africa. It has met the pledge of providing $15bn [£9.58bn] of lending of a preferential nature to Africa....China has trained close to 40,000 African personnel...and provided over 20,000 government scholarships" said China's president.
Media barrage
China's commerce minister even got poetic, penning an article in the China Daily highlighting the way China is investing in Africa, not just stripping resources from it.
"In Malawi, a landlocked African country, rows of cotton cultivated by local farmers with instruction from Chinese experts are budding; in Ethiopia, a shoe factory built with investment from the China-Africa Development Fund is teeming with local workers; in the Democratic Republic of Congo, a hydropower station financed by credit from China has just been inaugurated," wrote Chen Deming.
He went on: "In Yiwu, a city in East China, Chinese customers are selecting South African wine at the Exhibition Centre for African Products; at the New Port of Tianjin, a cargo ship loaded with fruit and textile products from Benin is preparing for tariff exemption procedures to enter the Chinese market. These are the encouraging scenes unfolding before us."
At the forum itself, China has promised $20bn of new loans, reduced tariffs on African imports and help for Africa's development. All of this is designed to show that China is different from colonial powers.
The English-language mouthpiece, the China Daily, gave space to Sehlare Makgetlaneng from the Africa Institute in Pretoria, South Africa, who wrote: "The West's claim that China's relationship with Africa is neo-colonialism... results from the fear its strategic interests will be harmed as a result of structural changes in African countries and China's growing presence on the continent.
Despite this media barrage, though, there are still concerns in many parts of Africa that this is not an equal exchange, concerns that the investment deals are opaque and open to corruption, that Chinese infrastructure projects often import Chinese labour rather than developing local skills, that Chinese firms may exploit local workers, that cheap Chinese products undermine Africa's ability to build it's own industries, that for all the new roads, railways and ports, this is not a mutually beneficial relationship.
Winning over doubters?
Kenya's Prime Minister Raila Odinga is at the forum. He will be signing deals for new power plants and roads. But before he left Kenya, the PM Press Service said he wanted to talk to China's leaders about areas where trade has "not worked well."
"We import a lot of manufactured equipment like tractors, ploughs and harvesters. I feel that we should by now be having a tractor manufacturing plant here in Kenya. There is no reason why we should be importing tractors from China year in year out. These are some of the things we want to engage the Chinese on," Mr Odinga was quoted as saying.
"We should have a fertilizer manufacturing plant here instead of importing the product from China which causes delays and poor harvests," he added.
And that may be the key for China, if it can invest more in African factories and businesses, not just infrastructure and buildings, if it can create more jobs in Africa rather than export more Chinese-made products to the continent, if Kenya gets a tractor factory and a fertilizer plant, China may win over many of the doubters.
War of billions: How has Afghanistan changed?
War of billions: How has Afghanistan changed?
Afghanistan has undergone momentous change in the decade which followed the US-led operation to remove the Taliban from power in October 2001.
Billions of dollars in foreign assistance have poured into the country, most of it spent on military operations. While some aspects of life have improved for some people, the death toll from a decade of violence is high.
Secret of the Taliban's success
By M Ilyas Khan BBC News, Islamabad
5 October 2011 Last updated at 02:28 GMT
Ten years ago, Taliban fighters in their thousands abandoned power, fled their military posts and melted away into the countryside, allowing Western-led forces to capture Afghanistan without a fight.
Today, that rag-tag militia has evolved into a sophisticated guerrilla force which has recently hit several high-value targets and all but derailed American plans for a smooth and successful drawdown of troops.
Significantly, they have achieved this despite the absence of a charismatic leader, a unified chain of command and a politico-economic vision.
So how did they do it?
Until three years after their government was ousted by coalition forces in October 2001, there was little Taliban activity in Afghanistan.
"Taliban were initially welcomed by the Afghan people for bringing a four-year long civil war to an end, but when they started to implement their strict Islamic code, the people got fed up," says Brig (retired) Mehmood Shah, a former head of security for Pakistan's north-western tribal areas.
"People welcomed the Americans [because] they saw them as their liberators. There was no room for the Taliban to stage a comeback immediately."
By 2006, however, the Taliban had infiltrated large parts of the south - especially the provinces of Zabul, Kandahar and Helmand.
By 2008, they were spreading out north towards Kabul.
Brig Shah says the Americans made two mistakes which squandered their advantage.
"They focused on military objectives instead of stabilisation and development. And they soon went to fight a war of choice in Iraq, abandoning the war of necessity that had brought them to Afghanistan."
The lack of reconstruction, and rampant corruption among government officials at a time when millions of refugees were returning from Iran and Pakistan, led to widespread disenchantment and fuelled insurgency, he says.
Sanctuary in Pakistan
But many analysts also point to the role of Pakistan, from where the Taliban had emerged in 1994, and where most of them fled in 2001.
Many feel the current Afghan insurgency was born in the Pakistani tribal region of Waziristan.
While the rest of Afghanistan was quiet, they say, Waziristan was alive with Taliban activity that then made banner headlines around the world.
In 2002, and again in 2004, there were skirmishes between the Taliban and Pakistani troops, which were followed by a series of peace deals with the army that left the Taliban virtually in control of most of Pakistan's tribal areas along the border with Afghanistan.
Most analysts agree - whether publicly or in private - that Pakistan's security establishment allowed the Taliban to turn Waziristan into a militant sanctuary despite having the capacity to eliminate them.
"I think the military was divided on the issue. It tolerated them, and also helped them," says Dr Hasan Askari Rizvi, a defence analyst.
Coalition troops suffered their earliest casualties in south-eastern Afghanistan, just across the border from Waziristan.
Pakistan-Afghan border map
It was the fighting in the south-east, and later in the north-east - in Afghanistan's Kunar province, which is adjacent to the Pakistani tribal districts of Bajaur and Mohmand - which took up most of their attention during 2002-06.
These developments eclipsed the concentration of Taliban fighters in Pakistan's south-western province of Balochistan, who started to quietly infiltrate Zabul, Kandahar and Helmand provinces from Toba Kakar, Chaman, Quetta and Chaghai areas.
This development remained unattended both by the coalition troops in Afghanistan, who were too few in numbers to handle it, and the Pakistani military, to whom the Americans outsourced the fighting when they went to fight in Iraq.
The results were predictable enough.
Western officials admit that until 2008-09, coalition forces in the south were unable to hold areas which were important for the Taliban - such as large parts of central Kandahar and southern Helmand where the Taliban set up bomb-making factories, arms caches and defensive positions - and at the same time protect their own lines of communication.
'Punjabi Taliban'
Since the "troop surge" announced by President Obama in 2010, coalition forces have been able to dislodge the Taliban from their entrenched positions in Kandahar and Helmand.
But the insurgency has now spread wider, to areas around the capital, Kabul, and even to the formerly peaceful provinces of northern Afghanistan.
The Taliban now seem to be relying more on suicide bombings, and spectacular gun-and-bomb attacks to hit targets of great psychological value.
And there is an unending supply of new - and better trained - fighters entering Afghanistan from Pakistani areas, notably Waziristan.
Credible sources tell the BBC that these fighters are mainly Pakistanis, locally called the Punjabi Taliban, who specialise in gun-and-bomb attacks and constitute a major part of the Waziristan-based Haqqani network.
According to these sources, since 2009 these fighters have been travelling up to the border in Pakistani military vehicles, presumably to avoid missile strikes by CIA-operated drones.
A Pakistani military source in the region admits collaboration with these fighters.
The army spokesman, Maj-Gen Athar Abbas, rejects this as "malicious and fabricated".
"Nothing can be farther from the truth," he wrote back in a recent text message to me.
But since the recent accusations by US officials that some attacks in Kabul may have been ordered by Pakistan's ISI intelligence service, questions over the military's actual role in the Afghan insurgency are now being raised in various quarters within Pakistan.
Many in the West have long held that the key to peace in Afghanistan lies with the Pakistani military.
The coming months will show if that is really the case, and whether Pakistan agrees to comply with the demands of the international community.
Afghanistan has undergone momentous change in the decade which followed the US-led operation to remove the Taliban from power in October 2001.
Billions of dollars in foreign assistance have poured into the country, most of it spent on military operations. While some aspects of life have improved for some people, the death toll from a decade of violence is high.
Secret of the Taliban's success
By M Ilyas Khan BBC News, Islamabad
5 October 2011 Last updated at 02:28 GMT
Ten years ago, Taliban fighters in their thousands abandoned power, fled their military posts and melted away into the countryside, allowing Western-led forces to capture Afghanistan without a fight.
Today, that rag-tag militia has evolved into a sophisticated guerrilla force which has recently hit several high-value targets and all but derailed American plans for a smooth and successful drawdown of troops.
Significantly, they have achieved this despite the absence of a charismatic leader, a unified chain of command and a politico-economic vision.
So how did they do it?
Until three years after their government was ousted by coalition forces in October 2001, there was little Taliban activity in Afghanistan.
"Taliban were initially welcomed by the Afghan people for bringing a four-year long civil war to an end, but when they started to implement their strict Islamic code, the people got fed up," says Brig (retired) Mehmood Shah, a former head of security for Pakistan's north-western tribal areas.
"People welcomed the Americans [because] they saw them as their liberators. There was no room for the Taliban to stage a comeback immediately."
By 2006, however, the Taliban had infiltrated large parts of the south - especially the provinces of Zabul, Kandahar and Helmand.
By 2008, they were spreading out north towards Kabul.
Brig Shah says the Americans made two mistakes which squandered their advantage.
"They focused on military objectives instead of stabilisation and development. And they soon went to fight a war of choice in Iraq, abandoning the war of necessity that had brought them to Afghanistan."
The lack of reconstruction, and rampant corruption among government officials at a time when millions of refugees were returning from Iran and Pakistan, led to widespread disenchantment and fuelled insurgency, he says.
Sanctuary in Pakistan
But many analysts also point to the role of Pakistan, from where the Taliban had emerged in 1994, and where most of them fled in 2001.
Many feel the current Afghan insurgency was born in the Pakistani tribal region of Waziristan.
While the rest of Afghanistan was quiet, they say, Waziristan was alive with Taliban activity that then made banner headlines around the world.
In 2002, and again in 2004, there were skirmishes between the Taliban and Pakistani troops, which were followed by a series of peace deals with the army that left the Taliban virtually in control of most of Pakistan's tribal areas along the border with Afghanistan.
Most analysts agree - whether publicly or in private - that Pakistan's security establishment allowed the Taliban to turn Waziristan into a militant sanctuary despite having the capacity to eliminate them.
"I think the military was divided on the issue. It tolerated them, and also helped them," says Dr Hasan Askari Rizvi, a defence analyst.
Coalition troops suffered their earliest casualties in south-eastern Afghanistan, just across the border from Waziristan.
Pakistan-Afghan border map
It was the fighting in the south-east, and later in the north-east - in Afghanistan's Kunar province, which is adjacent to the Pakistani tribal districts of Bajaur and Mohmand - which took up most of their attention during 2002-06.
These developments eclipsed the concentration of Taliban fighters in Pakistan's south-western province of Balochistan, who started to quietly infiltrate Zabul, Kandahar and Helmand provinces from Toba Kakar, Chaman, Quetta and Chaghai areas.
This development remained unattended both by the coalition troops in Afghanistan, who were too few in numbers to handle it, and the Pakistani military, to whom the Americans outsourced the fighting when they went to fight in Iraq.
The results were predictable enough.
Western officials admit that until 2008-09, coalition forces in the south were unable to hold areas which were important for the Taliban - such as large parts of central Kandahar and southern Helmand where the Taliban set up bomb-making factories, arms caches and defensive positions - and at the same time protect their own lines of communication.
'Punjabi Taliban'
Since the "troop surge" announced by President Obama in 2010, coalition forces have been able to dislodge the Taliban from their entrenched positions in Kandahar and Helmand.
But the insurgency has now spread wider, to areas around the capital, Kabul, and even to the formerly peaceful provinces of northern Afghanistan.
The Taliban now seem to be relying more on suicide bombings, and spectacular gun-and-bomb attacks to hit targets of great psychological value.
And there is an unending supply of new - and better trained - fighters entering Afghanistan from Pakistani areas, notably Waziristan.
Credible sources tell the BBC that these fighters are mainly Pakistanis, locally called the Punjabi Taliban, who specialise in gun-and-bomb attacks and constitute a major part of the Waziristan-based Haqqani network.
According to these sources, since 2009 these fighters have been travelling up to the border in Pakistani military vehicles, presumably to avoid missile strikes by CIA-operated drones.
A Pakistani military source in the region admits collaboration with these fighters.
The army spokesman, Maj-Gen Athar Abbas, rejects this as "malicious and fabricated".
"Nothing can be farther from the truth," he wrote back in a recent text message to me.
But since the recent accusations by US officials that some attacks in Kabul may have been ordered by Pakistan's ISI intelligence service, questions over the military's actual role in the Afghan insurgency are now being raised in various quarters within Pakistan.
Many in the West have long held that the key to peace in Afghanistan lies with the Pakistani military.
The coming months will show if that is really the case, and whether Pakistan agrees to comply with the demands of the international community.
Subscribe to:
Posts (Atom)