Singaporeans' high debt levels reflect the failure of PAP's leadership
I was shocked to learn about the high levels of debt that Singaporeans face, or at least the very reasons for it: 49% of people got into debt because of overspending while 46% got into debt because of pay cuts and retrenchments. While the exact reasons cannot be pinpointed from these statistics, we can look at it from the perspective of the average man.
Take your average polytechnic graduate couple who start their careers at the age of 22 (NS) and 20 respectively. When they get married at 27, the would have a combined income of about $5,000 a month, $85,000 in their CPF OA and $15,000 in cash savings. This is inadequate, relative to the estimated $70,000 cash required for their wedding.
Notwithstanding that they are heavy in debt at 27, their incomes are unlikely to increase beyond that point. Because of the way the PAP government has structured its employment passes, the fact remains that it would be hard for the couple to progress further in terms of salary as the typical E-pass holder can be employed for the same amount, but offers better education and experience.
Furthermore, the E-pass holder is not subject to a cap.
Why would I go as far as to label this a flaw of the PAP government? Before the floodgates have been opened by the PAP government in 2005, the pay earned for average poly graduates did not differ too much while an average 4-room resale flat costing $230,000. The doubling of property prices and mass immigration have had wide ranging impacts on economy and wages.
Businesses who faced increasing rents increase their prices of goods, which in turn increase costs of living.
Talk about repayments then. At the age of 35, the same poly graduate would have an income of about $3,000 (assuming a 4% a year increase from $1,800). At 2 credit cards, he would have an unsecured credit limit of $24,000. Even at half utilisation, he would have a $12,000 debt incurring a monthly interest of $240. This is effectively 10% of his take home pay.
Given the increasing costs of living, is this a negligible sum? Certainly not! To make matters worse, my analysis centres around the middle middle-class. I have yet to touch on the lower middle-class and the poor, all of whom are likely to incur more debt when the latter has been known to spend 120% to 150% of their income.
Conversely, by adapting SDP's proposed model where foreigners are restricted, HDB flats can be purchased directly (and resold to the HDB) at a fixed rate, and a more generous rate on CPF by making it an independent fund, we can eradicate the root cause of this problem: the PAP's failed economic policies.
Clearly, we have yet another indicator that the PAP has failed us.
Joseph Kheng-Liang Tan
*The author is a 21 year-old polytechnic graduate who is currently pursuing his law degree in Australia. Widely quoted for his views, he has contributed extensively in his personal capacity to top socio-political portals such as TRS, TRE and TAV. He is also supremely homophobic and would rather vote for the PAP should the opposition send in a homosexual representative.