Home > Economics, Problems caused by PAP's policy > Wise words from a former Civil servant

Wise words from a former Civil servant

This post is on facebook, and it really brought out the main issues with PAP’s policies. My comments are in red :

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On Social Fabric and Economic growth:

“When Mr Lim Siong Guan was Permanent Secretary for Defense, he came to see me one day to discuss the concept of total defense. We both agreed that total defense would be to embrace economic defense, social defense, psychological defense, and from MINDEF’s point of view, the bedrock of military defense. Having spent most of my career in the economic ministries, I thought that a strong economy is the bedrock of everything else, including miltary defense. We agreed to disagree.

I would just end by paraphrasing Lord Keynes, who said that even the wisest statesmen is often the slave of some defunct philosopher. In plain English, the politician is often misled by the economist. So, for those of us who profess to be professional economists, heavy is our responsibility. In the spirit, I urge my fellow economists in government to accept that sometimes we can grievously wrong.”

In all, it’s simply what I had mentioned in my previous post. Managing a nation does not solely means growing the economy.

On Public Housing:

“MR Howe Yoon Chong, the first CEO of HDB, once said to ministerial colleagues by proposing we close down the HDB as it had then housed some 80 per cent of the people. He thought that we should leave it to the private sector to build for the other 20 per cent.

But old habits, particularly success, die hard, and the HDB was not shut down.

So from providing a first home for a family, we went on to give them a second bite of the cherry by giving a second loan to upgrade from a 3- to a 4- or 5-room flat.

As property prices were rising in the 1980s, there was a good cheer all round. The HDB thought that had an endless queue for new flats and went into overdrive. But the party had to end.

The Asian financial crisis in the mid-1990s led to a sharp and sudden fall in demand, particularly those who were hoping to make money by upgrading. The queue disappeared, and the HDB was left with unsold flats, some 17,000 units. HDB would have gone bankrupt years ago if it had been a private company. But as a statutory board, it was kept afloat by MOF, which paid up the tab.”

MOF helped HDB survived using taxpayers’ money. A senior civil servant also agreed with me that our public housing policy had lost it’s initial mission and became overly complicated. After the Asian Financial Crisis, we noted that Mah Bow Tan stopped building too many flats for fear of oversupply. Then the floodgate for foreigners opened and the suddenly the million dollar paid and self-praised-highly-capable government surprised itself by the spike in housing demand pushing up house prices. To be on the safe side, Mah Bow Tan introduced the BTO system where only committed buyers can justify a building of a new flat. But because the highly intelligent Mah Bow Tan did not understand that there are so many foreigners flooding into the country and he does not understand the simple logic that build-to-order building system takes 4-5 years to build, supply and demand is always off by 4-5 years, creating constant pressure on high prices.  

On Land prices:

“Relying on the concept of opportunity cost, the Chief Valuer, at the behest of either the Ministry of National Development or Ministry of Trade and Industry (I am not sure which), has valued land in Singapore using Raffles Place land as the benchmark. The assumption was that every square meter of land in any part of Singapore has the potential of Raffles Place.

I was in the Ministry of Finance and had no inkling of what was happening when the Ministry of Community Development and Sports (MCDS) came running to us to give them a supplementary budget to help voluntary bodies and charity bodies to pay their substantially increased rentals on premises going to the Land Office. Similarly, EDB asked for more funds to help cope the higher cost of MNCs setting up water fabrication plants in Singapore. We kidded ourselves into thinking that we are the only intelligent people in the world and ignored the fact that other countries would offer their land to such companies.

As a result, PSA priced itself out of the market for transhipment. Unwittingly, we gave its Malaysian rival, Tanjong Pelepas, the window of opportunity.

One of the main causes of Singapore’s loss of competitiveness in recent years is our perverse land pricing policy. What did it achieve to send prices of land valuations so high? It was no more than a muddle headed book keeping practice. MOF paid out subsidies to MCDS and EDB, which were returned to MOF as land revenue. In one mistaken manoeuvre, overall land prices shot up and Singapore lost part of its competitiveness.”

Again, this statement agrees with my previous statement that land prices for public good should not be allowed to priced itself upwards due to market forces. And again, this proves that this land pricing policy had contribute to our high rising HDB flat prices.

On GST and handouts:

“We should concentrate on helping the poorest 5 to 10 per cent of the population, instead of handing out a general largesse. Forget about asset enhancement, Singapore shares and utility rebates. You’re dancing to the tune of the gorrilla.

I don’t understand the urgency of raising the GST which increases the tax on the lower income people. Why tax the lowly paid then return to them in an aid package? It demeans him and creates a growing supplicant class who habitually hold out palms. This is not the way to treat people. Despite the fact that we are not a welfare state, we act like one of the most welfarish in the world. You should instead appeal to their sense of pride on reliance.

I think political courage is needed here. And my instinct is the Singaporeans will respect you for that. Even if the PAP’s percentage win dropped from 75 per cent to 55 per cent, it is still worth it for the sake of Singaporeans.”

Let’s face it. The introduction of GST is to create additional tax revenue so that the government can be allowed to keep income and corporate tax low so as to attract foreign investments and ‘foreign talents’. Hong Kong, the closest comparison to Singapore offers a lower tax system and has no GST (as a true democracy, the citizens refusal to endorse HK’s GST plan is heard). Yet, we don’t see the HK administration suffering from fiscal deficit. Where does all that tax revenue goes to anyway? Who really profits from this GST? It’s the government, the rich and (mostly foreign) MNC.

On different voices and education:

“Singapore is like Sparta, where the top students are taken away from their parents as children and educated. Then, from each cohort, they each select their own leadership, ultimately electing their Philosopher King. When I first read Plato’s Republic, I was totally dazzled by the great logic of this organizational model where the best selects the best.

But when I reached the end of the book, it dawned on me that while the starting point was meritocracy, the end result was dictatorship and elitism. Once selected, only God can remove the Philosopher King. If he is a good dictator, then all is fine and good. But if he’s bad, the whole state collapsed. In the end, Sparta, a martial state known for being disciplined and elitism, crumbled.

On the other hand, there was Athens, a city of philosophers known for diversity and different school of thoughts. Most people consider philosophers bloody useless fellows but at least they dare to argue and think. At the end of the day, Athens survived. Sparta is long forgotten. What does this tell us about OB markers?

So SM Lee has to think very hard what legacy he wants to leave for Singapore and the type of society he wants to leave behind. It is to be a Sparta, a martial, well-organized, efficient society but in the end, very brittle; or an Athens, untidy, chaotic and argumentative, but which survived because of its diversity of thinking?

Personally, I believe that Singaporeans are not so “kuai” (Hokkien for docile) to become a Sparta: This is our saving grace. As a young senior citizen, I very much hope that Singapore will survive for a long time, but as an Athens. It is more interesting and worth living and dying for.”

Highlights how dangerous it is for us to have only one ruling party with group think and refusal to listen to the people as elitism crept in. Singaporeans reading this blog, are you sure you want your future descendants to suffer due to narrow-mindedness and conservative thinking? 

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Excerpts from the book Mandarin And The Making Of Public Policy, A: Reflections By Ngiam Tong Dow

by Tay, S. C. Simon

About This Book

Ngiam Tong Dow served in the elite Singapore Administrative Service for more than 40 years. His vision, foresight and leadership in economics and finance have helped transform Singapore into a text-book case in development economics. As a senior civil servant and “mandarin”, he has worked closely with the founding political leaders of Singapore including Goh Keng Swee, the late Hon Sui Sen, and served under two Prime Ministers, Lee Kuan Yew and Goh Chok Tong. In this book, he reflects on his experiences and shares personal anecdotes and perceptive insights of the early decades of Singapore. He also boldly questions some of the policies of government and emerging trends in the country to suggest how Singapore must change to survive and thrive in the future.

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My takeaway from this book:

If a book on a senior civil servant SEVEN YEARS ago still resonates and remains relevant today, has Singapore made any real progress (other than economic and population growth)?

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I urge you readers to read up this book, be it buy it or borrow from the local library. 

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