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Chua Beng Huat
The main event of the month was clearly the first budget of Lee Hsien Loong as Prime Minister announced on 18 February. It deviates from previous budgets in one significant way; greater emphasis has been placed on 'social welfare'. The foreign maid employment levy has been reduced substantially, especially for maids who are employed to look after children and the elderly. This is in line with policy to encourage higher fertility and community elderly care. In contrast, the levy for employment of foreign labour in the other sectors of the economy has been increased. This reflects the government-trade union effort to encourage 'redesigning' of jobs, particularly low skill ones, in order to increase wages in such jobs. Without the increased wages, Singaporeans are unable to take up such employment in the face of the high cost of living. Additional expenditure is being provided for skills retraining for older and lower-educated workers. Finally, philanthropy will be encouraged with more non-profit, voluntary welfare organizations to be licensed to have tax-exempt status. These specific measures reflect an increasing demand for social welfare measures in a matured capitalist economy with structural unemployment and an aging workforce. The strident 'anti-welfare' rhetoric of the days of double digit economic growth has disappeared, while concern for the old and unemployed is persistently reported in local media.
The debate on whether to build a casino continues. The split within the population, between moralizing middle class and a desiring working class, is long known. However, explicit public admission of a split in the cabinet is a first in Singapore politics under the PAP. The split is between those who are morally against it and those who are 'economic pragmatists' who see revenue gains. Two of the heavy weight members have publicly stated their opposition: namely, Lee Kuan Yew and Tony Tan. This leaves one to speculate as to who is countering their combined objections in cabinet. Pundits have started to doubt that the casino will be built. If the government were to build it, it would alienate a very substantial segment of the middle class, who have been very vocal against it. If it decided against it, Lee Hsien Loong will gain political kudos for having 'listened' to the people. Ergo: it will not be built.
Meanwhile, the potential bankrupting of opposition politician Dr Chee Soon Juan, who has been ordered by the courts to pay S$500,000 to Lee Kuan Yew and Goh Chok Tong, received a mere mention in the local press on the last possible date of his legal appeal against the judgement. (Lee Kuan Yew and Goh Chok Tong had sued Chee for libel. He had allegedly, during the last general election in early 2002, accused the latter two of 'lying' to the parliament and, therefore, the people of Singapore, regarding the nature of a massive loan to the Indonesian government during the 1997 Asian regional financial crisis. The court ruled in Lee and Goh's favour.)
WATCHPOINT: The business community's reaction to absence of 'goodies' in the budget and any decision regarding the casino.
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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