Singapore will be celebrating 50 years of independence next year. Her economic success seems to be risk free and has become a development model in the world#0. However, does the country have sustainability issues?
Low transparency
High Accountability
For Singaporeans, risk is a possible loss if there is low transparency.
Opportunity is a possible gain if there are more accountability, checks and balances.
World Development Report 2014 highlights several risks that Singapore is facing. The central bank (Monetary Authority of Singapore) is not an independent body. The government has full control of monetary policy which emphasizes growth and cares less about social safety net. The ruling People’s Action Party has been in power for more than 50 years and all economic, social and political policies are based on the principle of utilitarianism and pragmatic approach of trade-off and costs and benefits.
The World Bank report also calls for an independent fiscal council to be set up. Very unlikely, Singapore government will buy this idea. In fact, very few persons know about the actual value of the reserve - even the President#1 who holds the second key for reserve did not have the full picture.
From monetary and fiscal policies to reserve, sovereign funds#2 and Central Provident Fund (pension funds) #3, Singapore’s future is challenged by haze with little transparency, checks and balances. The risk is further worsened by the information and media control. Being one of the richest countries in the world, Singapore’s press freedom ranks amongst the lowest#4.
To improve the risk management in Singapore, the government will have to be open and transparent. It can no longer implement policies like before. Greater accountability, checks and balances are needed to manage the risks and opportunities. Singapore in the past has stressed too much on one party’s opportunities and ignore the risks faced by Singaporeans. The Report stresses risk management can save life, prevent crisis and unleash opportunities.
Based on the World Bank Report, Singapore is like a developing country. The Report says there is an absence of important safety net and insurance, including medical insurance and basic financial assistance, in poor and lower income countries. |
The lower income group noted in the World Bank Report is the most vulnerable one and suffers the most under shocks, either household or systemic risk. Singapore’s pragmatic approach has offered little helps to the lower income people as their wages have been frozen for more than 10 years#5.
Risk Management
The past success model of Singapore development needs further examination under the World Development Report 2014’s risk management framework:
Knowledge: Under a control environment and lack of transparency, it will be difficult to assess the uncertainties, risk and opportunity that Singapore faces. Since the establishment of Central Provident Fund in 1955, Singaporeans until now still find it hard to understand the operations of the fund#6.
Protection: Protection framework is designed by one party without accountability, checks and balances. The probability of losses and gains is solely decided by the government even the President may not have a full picture of the reserve.
Insurance: Transfer and fair distribution of resources is based on pragmatic approach of no free lunch, trade-off and costs and benefits. Until recently, under political pressure, the government starts to roll out universal medical insurance and cash coupons. However, rich-poor gap remains one of the highest in the world#7.
Coping: The preparation to equip Singaporeans with knowledge, protection and insurance has failed. It is only provided and driven by one party with limited public participation. Coping, in this circumstance, can only follow the preparation with little flexibility and adjustment.
The risks and opportunities in Singapore are unique and different from both developed and developing countries. The government wants to continue her pragmatic approach with limited transparency and accountability. They believe they are doing the best for Singaporeans. The question is ‘is it the best for the party or for the people’? The debate continues …...
Singapore has good institutions and expertise to engage in risk management. The only shortfall is how to improve transparency and accountability. More hazier days are expected if the situation remains unchanged. |
Notes:
#0
http://www.channelnewsasia.com/news/singapore/singapore-s-healthcare/127...
#1
http://app.mof.gov.sg/reserves_sectiontwo.aspx
Q18 on valuation of physical assets
#2
http://dr.ntu.edu.sg/handle/10220/4542
http://www.swfinstitute.org/swfs/government-of-singapore-investment-corporation/
http://www.swfinstitute.org/swfs/temasek-holdings/
#3
http://mycpf.cpf.gov.sg/Members/home.htm
#4
http://en.rsf.org/singapore-government-subjects-news-websites-30-05-2013...
#5
https://sg.news.yahoo.com/-1-000-minimum-wage-scheme-as-%E2%80%98last-re...
#6
http://www.todayonline.com/singapore/why-its-so-hard-sporeans-understand-cpf
http://news.asiaone.com/news/singapore/many-unsure-about-cpf-cpf-life-details
#7
http://www.straitstimes.com/breaking-news/singapore/story/rich-poor-gap-not-caused-recent-growth-strategies-dpm-tharman-20130824
http://globalvoicesonline.org/2013/10/26/singapore-rejects-proposal-to-define-poverty-line/
Piji Tailai
*The writer blogs at http://pijitailai.blogspot.com/