SINGAPORE may have reached the end point of its involvement in the global manufacturing market with the impending departure of Seagate’s plant. While this is not unexpected, it spells a deepening crisis that most Singaporeans may not yet fathom, thinking that the PAP government has the ready solution.
With 10,000 people under its payroll, Seagate is one of the biggest employers in Singapore’s corporate history. With its immense market share, its presence here has generated a whole segment of supporting industries which created many more tens of thousands of jobs for both locals and foreigners.
It is difficult to imagine the impact of Seagate’s loss on our economy.
The great migration of low-end, low-skilled jobs to China began in the 1990s, which is one reason why Singapore decided to move up the value chain in the manufacturing industry. Theoretically, the move was logical and necessary. There were ample opportunities to scale up and higher-end jobs were largely retained here in line with the higher educational achievements of the average Singaporean.Fast forward 20 years now and most Singaporeans are facing a looming job crisis on the back of ever higher cost of living, no doubt a result of PAP’s unbalanced growth policies. The departure of factories not only badly affected the workers but the managers as well. The number of unemployed PMETs represent the gravity of the current situation.
The growing property bubble
The main culprit is the very wide pyramid that supports the top which is largely the result of high property prices. How did Singapore arrive at this crossroad? A relook at PAP’s policies provides us with the undisputable answer.
In the early days of S’pore, HDB flats cost below $10,000 and rose over the years. Even factoring inflation, the growth in HDB flat prices is unnatural and unsustainable for the future generations. The government’s claim that HDB flats are much subsidised compared to the market prices is a distorted view. Selling HDB flats at reduced profit compared to market prices does not do anything to reduce cost for potential buyers, and cannot be called a subsidy.
In short, each new generation will have to pay much higher prices for HDB properties to support the artificial price rise, creating a false sense of wealth and of property value in Singapore.
This form of property price engineering is sustainable only if we can continue to attract or produce enough MNCs to set up businessess and factories which in terms, generates jobs for the various segments of society. The consequences of a failing Singapore is dire compared to other countries due to a lack of natural resources and land for self subsistence. With a large percentage of the population serving mortgages on their properties, it is conceivable that the whole economy could collapse quickly, if large numbers of Singaporeans are no longer able to do so.
The sub-prime crisis in the United States serves as a vivid warning to the government of the perilous path that its policies have created. Ultimately, it is the vast majority of heartlanders who will bear the consequences of this devastating ‘bubble tsunami’ when it strikes.
What can we do?
What can be done to prevent this crisis from erupting? It’s not possible to prevent the crisis but it’s possible to create a soft landing. HDB must revert to its primary role of providing genuinely affordable housing to Singaporeans as in the past. A home is the single most important and most basic asset required for developing a sense of rootedness. The “Swiss way of living standard” is nice to have if not a mere rhetoric. However, the vast majority would consider that a luxury well beyond their reach.
With affordable housing, lower wages can be mitigated which in turn reduces business cost and makes Singapore a more competitive economy again. With less money going towards servicing mortgages, the average Singaporean can put more money into savings and more disposable income will help to drive the local economy. Mortgages are unproductive components of the economy benefiting few among which are the banks.
Higher consumption not only helps to drive the local economy but also helps to distribute income which leads to a more equitable society. As Singapore moves towards the services industries, namely finance, legal, entertainment, retail, and so on, Singaporeans will be extremely hard-pressed to compete with foreign labour for lower pays and jobs.
The government has opened the floodgates for foreigners to come in without much consideration for the average Singaporeans. With depressed wages leading to less financial freedom, the average Singaporean will have to continue to slog to pay for inflated housing mortgages and living costs. The rich, however, will continue to benefit disproportionately, giving rise to a widening social chasm.
There is much to be learnt from any crisis. If we do not, we are priming ourselves for an even more tumultuous calamity. If that happens, we have only ourselves to blame for playing into the hands of the economics of greed.
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The true problem with the HDB model is that is a price bubble that’s developed over the long term – fuelled by ever increasing tenures of leverage. To maintain prices over the long term, HDB has to increasingly act like like a monopolist (tighten supply). Either that or encourage foreign ownership (prop up demand). I think they’ll be increasingly tempted to choose one or the other (likely both).
If it chooses neither – we might see a whole generation of Singaporeans with negative equity if the economy stops growing, and HDB with a lot of bad debt on its books. Where do you think years after years of profit came from?
Selling the future for the present of course…. its a done deed. We just have to sit back and wait for the great unwinding. Seems like choices between rocks and a lot other hard places. Ouch.
#47,
I agree with you on TC report.
If we do not know how much is spent on what , how can we know if its value for money , as one guy interviewed on the news yesterday said?
lack of transparency in this area is not wise.
all this creates suspicion and doubts in the minds of the people, 85% of whom are hdb leaseholders.
Other aspects i like to raise concern about:
1. If a town has a lot of MOSQUITOES and DENGUE victims or deaths due to dengue, should this be part of the assessment of how a town is MANAGED?
2. All the noise pollution caused by BIRDS . Is this or shouldn’t this be part of the assessment?
HDB role is to ensure every citizens has a decent housing over their head. Now it turn out to be a REVNUE generating operations. Build more and earn more is the motto. To sustain the Billions dollars returns and the Minister million dollars salary.
Key HDB flats should not allow great price variation or appreciation over years. Make it as a zero appreciation over time with subsidies coming in when the materials and labour costs are up. Is will be much sustainable for the local citizens.
Lastly , SACK THE WHOLE TEAM AND VOTE THEM OUT. WE need to see a new team that can ensure prices are sutainable for the citizens. Chiam See Tong can do it …..let him do it and justify to the people the real cost. Land cost should not be computed in all HDB development.
Affordable is a very subjective terms. In China, village folks save 30 years to buy a TV, radio. This is term as luxury or affordable. Are we implying the same for Sinkapore.
Todate HDB and URA are moving citizens out of their home ( henderson 3 room, Zion road 3 rooms, Teban Garden 3Rm etc) . They are driving the leasee of this flat out and retrofitting it for FT. Mostly are in good location near to MRT.
Local get out , indirect way of forcing them to owes flat or buy a flat. Those cannot afford are indirectly make to purchase a 2 room flat cost 60-90K. Single without a family nucleus are told they are not entitled to removal fee of $2000. Is this a double standard policy .
Getting smaller flat and and giving way to the FT to stay in a bigger and better location flat. Key is collecting revenue this is from rental.
Are they caring for your needs ??????? Highly questionable.
Excellent article. Kudos to Harrison.
To the question: what can we do? We can vote the Papies out in the next general elections. That’s what we should all do and that’s as essentail step for the future of Singaporeans.
There is only 1 WAY OUT as we only have 1 option out of 1.
sincerely,
the UNPLUGGED
52) George on September 25th, 2009 12.24 am ,
i have always suspect the mosqitoes breeding tend to be under covered drain of surrounding flats in all town councils.
the question – how thorough have they check and investigate? so lawfully, they are should be liable for such creation of fatal health issue.
i have seen immigrants esp from china buying mainly 3 room flat (resale) back then though it costs about over 100K. recently, i came to know they prefered 4 rooms instead of 3. that’s probably explained the rise of of cost for hdb flats.
mind u, they are mostly PRs and their intention is – making profits of 100 – 200k or more when time comes for sale and make their way back home for retirement.
THAT’S THE FACT AND REAL AT THE MOMENT IN SINGAPORE! WAKE UP SIINGAPOREAN!
…and the singaporeans buying from the PR and foreigners will be at the losing end…
haiz if only singapore citizens can see…
because the policy makers in HDB who allow this to happen remains blind….
unless some of these HDB folks and their “buddies” outside HDB are also trying to make money out for themselves directly/indirectly…hope not but how to explain what is happening now to HDB prices…it is over the top…
haiz.
Dear all. My neighbour works in the construction industry, building condo and previously his companies tendered for HBD flats.
The cost of each flat from the 4 rooms to 5 rooms even at today’s raw material prices is only between 60 to 90K, not counting the land cost which is from the Land Authority. If a construction company tenders for a HDB project for 1000 flats at 300 to 400 million, you do the sums, its not difficult. This is only the cost to the HDB which also includes the carpark, walkways, a “small” playground. We pay 15 to 19 K for a lift upgrading and extra room, the cost is not more than 2 to 3K! The government is making more than the private developers of the condos. He laughs at us but what to do. Well if we are smart enough ,we all should know what to do, so he says!!!
Lets look at the economics in regards to the Government’s perspective.
More foreigners = more levy
More housing sales = more stamp duty
More new citizens = more compliant voters
So who gives a shit to you the average Singaporeans…except during election time.