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One country, two systems

Is the capitalist free market system best for a country? By Tan Kin Lian.

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Note: Look out for TOC’s first media release at 3pm today, Wednesday, August 27.

Tan Kin Lian / Columnist

The concept of “One Country, Two Systems” was created by Deng Xiaoping to accommodate the absorption of capitalist Hong Kong into communist China on the return of the territory to China in 1997.

This concept worked quite well, judging by the social and economic progress of Hong Kong over the past decade. The social and economic life of the territory progressed and offered a high quality of life to its people.

China has also boomed during the past decide. The concept of a capitalist and free-market economy was applied in many urban areas. China fitted well into the global economy and benefited from the inflow of foreign capital and investments.

A large segment of the population of China continues to enjoy the relative security and low cost of living under socialism. Although prices of the basic essentials have to be adjusted to reflect global prices, there is some measure of protection against the worst effects.

Can this concept work in other countries?

I believe that the concept of two systems, i.e. capitalism and socialism, in co-existence can apply to other countries too. Actually, this is already in existence in the form of a public and a private sector in many countries. It also fits into the needs of the population, as I shall explain below.

In any country, there are two groups of people. The first group prefers the excitement and rewards of the free-market capitalist system. The second group prefers a more stable and secure life, and to be protected from the uncertainties of the market economy.

The second group, which comprises the lower and middle segments, forms the majority of the population. They prefer to work in the public sector and in large companies. They are willing to work hard in return for a fair wage that is sufficient to sustain a reasonable standard of living and have some savings for the future. They do not like the uncertainty of the free market and do not wish to make many difficult decisions in their lives, for example, on how to invest their money or manage their wealth, issues on which they are not equipped to handle.

A mixed economic system offers more choices that meets the needs of both groups of people.

Competition

The free-market capitalist system, which is now favored in many countries, has several serious drawbacks which are not well understood. This system requires all businesses to compete fiercely for their share of the market to survive. It is the law of the jungle. It seems to be all right to kill off a competitor, even if undesirable methods are used, so long as it is not against the law.

Some businesses resort to cheating their customers, in order to survive. This goes beyond the need for survival. Some cheat their customers in order to make more profits. The end, namely pursuit of shareholder value, seems to justify the means and is more important than ethical behavior.

People have to compete for jobs. They work long hours to keep their jobs. They are afraid to lose their jobs and face the uncertainty of unemployment. This leads to a poor balance of their family and work life.

Economic theory says that competition will lead to greater efficiency and lower cost, but this is not the only outcome. In practice, it leads to duplication and wastefulness, with too many varieties of the same product and too much excessive capacity in producing products that are not really needed.

If there is less wasteful production, less time is needed to produce these goods. People will have more time for other important aspects of their lives, such as their family and friends. The products that they buy can be made to last a longer time, and not be thrown away too early.

Planning with flexibility

We need an economic system that has better planning. Planning helps to determine the types of products and services that are needed by the people and to allocate the resources to meet these needs. The setting of these national priorities and organising the resources is the role of the elected Government.

There is a similar role in the corporate sector. Companies adopt corporate planning to determine their strategy and use of resources to do their business and serve their customers. They do not let these matters be decided in a haphazard manner.

In recent years, there is a belief that decisions can be best left to the free market and national planning is unnecessary. I disagree with this view.

Advocates of the free-market system quote examples of the negative aspects of the rigid central-planning system adopted by communist regimes in past years.

This does not mean that all planning will lead to this negative outcome. It is possible to find a better and more effective way to plan our economy, to make the best use of the resources to achieve the desired outcomes. It should focus on the strategic issues and provide guidelines and flexibility on how to deal with operational issues.

We need planning to make the best use of human and other resources, such as the number of people needed for the various sectors of the economy. This allows people to plan their careers and their future with greater certainty.

Business ethics

We need a stronger sense of business ethics and purpose to govern our economic activities.

People at all levels should be paid fairly for their services. Professionals and business entrepreneurs can earn more than ordinary workers, but the difference in earnings should be kept at a reasonable ratio. They should not be allowed to earn excessive remuneration at the expense of workers by depressing their wages.

Businesses should offer products at a fair price to consumers. A fair price should be determined by a product’s actual cost plus a fair margin of profits. The business should be encouraged to reduce its cost by operating efficiently, and not by exploiting workers. They cannot make excessive profits by misleading or exploiting the customers. They should be prevented from making wealth through corruption and cheating.

Conclusion

The world has accepted that the capitalist, free-market system is the best way for the past two decades. It is time to reconsider and see if there is a better mixed system that can provide a happier and better life for citizens.

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Chee Soon Juan questions Shanmugam’s $88 million property sale amid silence from Mainstream Media

Dr Chee Soon Juan of the SDP raised concerns about the S$88 million sale of Mr K Shanmugam’s Good Class Bungalow at Astrid Hill, questioning transparency and the lack of mainstream media coverage. He called for clarity on the buyer, valuation, and potential conflicts of interest.

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On Sunday (22 Sep), Dr Chee Soon Juan, Secretary General of the Singapore Democratic Party (SDP), issued a public statement on Facebook, expressing concerns regarding the sale of Minister for Home Affairs and Law, Mr K Shanmugam’s Good Class Bungalow (GCB) at Astrid Hill.

Dr Chee questioned the transparency of the S$88 million transaction and the absence of mainstream media coverage despite widespread discussion online.

According to multiple reports cited by Dr Chee, Mr Shanmugam’s property was transferred in August 2023 to UBS Trustees (Singapore) Pte Ltd, which holds the property in trust under the Jasmine Villa Settlement.

Dr Chee’s statement focused on two primary concerns: the lack of response from Mr Shanmugam regarding the transaction and the silence of major media outlets, including Singapore Press Holdings and Mediacorp.

He argued that, given the ongoing public discourse and the relevance of property prices in Singapore, the sale of a high-value asset by a public official warranted further scrutiny.

In his Facebook post, Dr Chee posed several questions directed at Mr Shanmugam and the government:

  1. Who purchased the property, and is the buyer a Singaporean citizen?
  2. Who owns Jasmine Villa Settlement?
  3. Were former Prime Minister Lee Hsien Loong and current Prime Minister Lawrence Wong informed of the transaction, and what were their responses?
  4. How was it ensured that the funds were not linked to money laundering?
  5. How was the property’s valuation determined, and by whom?

The Astrid Hill property, originally purchased by Mr Shanmugam in 2003 for S$7.95 million, saw a significant increase in value, aligning with the high-end status of District 10, where it is located. The 3,170.7 square-meter property was sold for S$88 million in August 2023.

Dr Chee highlighted that, despite Mr Shanmugam’s detailed responses regarding the Ridout Road property, no such transparency had been offered in relation to the Astrid Hill sale.

He argued that the lack of mainstream media coverage was particularly concerning, as public interest in the sale is high. Dr Chee emphasized that property prices and housing affordability are critical issues in Singapore, and transparency from public officials is essential to maintain trust.

Dr Chee emphasized that the Ministerial Code of Conduct unambiguously states: “A Minister must scrupulously avoid any actual or apparent conflict of interest between his office and his private financial interests.”

He concluded his statement by reiterating the need for Mr Shanmugam to address the questions raised, as the matter involves not only the Minister himself but also the integrity of the government and its responsibility to the public.

The supposed sale of Mr Shamugam’s Astrid Hill property took place just a month after Mr Shanmugam spoke in Parliament over his rental of a state-owned bungalow at Ridout Road via a ministerial statement addressing potential conflicts of interest.

At that time, Mr Shanmugam explained that his decision to sell his home was due to concerns about over-investment in a single asset, noting that his financial planning prompted him to sell the property and move into rental accommodation.

The Ridout Road saga last year centred on concerns about Mr Shanmugam’s rental of a sprawling black-and-white colonial bungalow, occupying a massive plot of land, managed by the Singapore Land Authority (SLA), which he oversees in his capacity as Minister for Law. Minister for Foreign Affairs, Dr Vivian Balakrishnan, also rented a similarly expansive property nearby.

Mr Shanmugam is said to have recused himself from the decision-making process, and a subsequent investigation by the Corrupt Practices Investigation Bureau (CPIB) found no wrongdoing while Senior Minister Teo Chee Hean confirmed in Parliament that Mr Shanmugam had removed himself from any decisions involving the property.

As of now, Mr Shanmugam has not commented publicly on the sale of his Astrid Hill property.

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Redditors question support for PAP over perceived arrogance and authoritarian attitude

Despite Senior Minister Lee Hsien Loong’s warning that slimmer electoral margins would limit the government’s political space “to do the right things”, many Redditors questioned their support for the ruling PAP, criticising its perceived arrogance. They argued that SM Lee’s remarks show the party has ‘lost its ways’ and acts as if it alone can determine what is right. Others noted that the PAP’s supermajority allows for the passage of unfavourable policies without adequate scrutiny.

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In a recent speech, Senior Minister Lee Hsien Loong warned that “if electoral margins get slimmer, the government will have less political space to do the right things.”

Mr Lee, who served as Prime Minister for 20 years, highlighted the risks associated with increasingly competitive politics.

“It will become harder to disregard short-term considerations in decision-making. The political dynamics will become very different,” he stated during his speech at the Annual Public Service Leadership Ceremony 2024 on 17 September.

“Singaporeans must understand the dangers this creates, and so must the public service,” SM Lee stressed.

SM Lee pointed out that Singapore faces formidable internal and external challenges in the years ahead, with rising expectations and demands from citizens.

As growth becomes harder to achieve and politics becomes more fiercely contested, he warned, “Things can go wrong for Singapore too.”

He urged vigilance in preparing for an uncertain future, noting, “As the world changes, and as the generations change, we must do our best to renew our system – to ensure that it continues to work well for us, even as things change.”

Critique of PAP’s Arrogance and Disconnect from Singaporeans

The People’s Action Party (PAP) experienced a notable decline in its vote share during the 2020 General Election, securing 61.24% of the votes and winning 83 out of 93 seats, a drop from 69.9% in 2015.

A significant loss was in Sengkang GRC, where the PAP team, led by former Minister Ng Chee Meng, was defeated by the Workers’ Party (WP).

In discussions on Reddit, some users questioned why they should support the ruling PAP, criticising the party’s perceived arrogance.

They pointed out that SM Lee’s recent remarks illustrate that the party has strayed from effectively serving Singaporeans and seems to believe it has the sole authority to decide what is right.

Others highlighted that the PAP’s super-majority in Parliament enables the passage of unfavourable policies without sufficient scrutiny.

One comment acknowledged that while many older Singaporeans remain loyal to the PAP due to its past achievements, younger generations feel the party has failed to deliver similar results.

There is significant frustration that essentials like housing and the cost of living have become less affordable compared to previous generations.

The comment emphasised the importance of the 2011 election results, which they believe compelled the PAP to reassess its policies, especially concerning foreign labor and job security.

He suggested that to retain voter support, the PAP must continue to ensure a good material standard of living.

“Then, I ask you, vote PAP for what? They deserve to lose a supermajority. Or else why would they continue to deliver the same promises they delivered to our parents? What else would get a bunch of clueless bureaucrats to recognise their problems?”

Emphasising Government Accountability to the Public

Another Redditor argued that it is the government’s responsibility to be accountable to the people.

He further challenged SM Lee’s assertion about having less political space to do the right things, questioning his authority to define what is “right” for Singapore.

The comment criticised initiatives like the Founder’s Memorial and the NS Square, suggesting they may serve to boost the egos of a few rather than benefit the broader population. The Redditor also questioned the justification for GST hikes amid rising living costs.

“Policies should always be enacted to the benefit of the people, and it should always be the people who decide what is the best course of action for our country. No one should decide that other than us.”

The comment called for an end to narratives that present the PAP as the only party capable of rescuing Singapore from crises, stating that the country has moved past the existential challenges of its founding era and that innovative ideas can come from beyond a single political party.

Another comment echoed this sentiment, noting that by stating this, SM Lee seemingly expects Singaporeans to accept the PAP’s assumption that they—and by extension, the government and public service—will generally do the “right things.”

“What is conveniently overlooked is that the point of having elections is to have us examine for ourselves if we accept that very premise, and vote accordingly.”

A comment further argued that simply losing a supermajority does not equate to a lack of political space for the government to make the right decisions.

The Redditor express frustration with SM Lee’s rhetoric, suggesting that he is manipulating public perception to justify arbitrary changes to the constitution.

Concerns Over PAP’s Supermajority in Parliament

Another comment pointed out that the PAP’s supermajority in Parliament enables the passage of questionable and controversial policies, bypassing robust debate and discussion.

The comment highlighted the contentious constitutional amendments made in late 2016, which reserved the elected presidency for candidates from a specific racial group if no president from that group had served in the previous five terms.

A comment highlighted the contrast: in the past, the PAP enjoyed a wide electoral margin because citizens believed they governed effectively. Now, the PAP claims that without a substantial electoral margin, they cannot govern well.

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