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WhySingaporeisapoorrolemodelforHongKong

WhySingaporeisapoorrolemodelforHongKong
PUBLISHED:Sunday,29June,2014,5:30am
UPDATED:Monday,30June,2014,2:43pm
Comment Insight&Opinion
Philip Bowring

PhilipBowringsaysHongKongshouldcarelittleforasocialeconomypropped
upbydominantstateenterprisesandforeigncompanies,andanunderclassof
lowskilledmigrants
SomuchoftennonsenseiswrittenabouthowHongKongshouldfollowSingaporein
assortedwayseconomic,political,socialandsoon.Itistimetosettherecordstraight.
First,thegoodthingsaboutSingapore.Themostprominentandleastcontroversialareits
effortstobeinthevanofenvironmentalimprovement,whetherreducingairpollution,limiting
privatecarownershipandtaxingitsuse,orrecyclingwater.
ThereasonSingaporehasdonethesethingsisnotbecauseithasanauthoritariangovernment
butbecauseithasstrongpoliticalandbureaucraticleadership,whichisrelativelyimperviousto
narrowbusinessinterests,ofthesortwithwhichHongKongisalltoofamiliar.Italsoknowsthat
mostofthesepoliciesmeetwithpublicapproval.ThathelpssustainthePeople'sActionParty
inpower.
ThedownsideofSingapore'sauthoritariansystemisplaintoanyonewiththeremotestinterest
infreespeechandassembly,andkeepingthenosesofthegovernmentoutofpersonalaffairs
andprivatebusiness.ThatdifferenceindeedremainsthecornerstoneofHongKong.However,
ithasyettofindawayofmarryingthesefreedomswithagovernmentthatisbotheffectiveand
reflectstheinterestsofthemajority.
InSingapore,therulingpartyusedstatepowertobuildaneconomyinwhichstateenterprises
andforeigncompanieswerepreeminent,andoftenprovidedwithtaxbreaks,effectively
curtailingtheinfluenceofbigprivatebusinessesanddisadvantagingsmallbusinesses.
ThereshouldberealconcerninHongKongnotonlyaboutthepoliticalpowerofafew,mostly
propertyrelatedbusiness,butalsotheuseofgovernmentregulationstofavourselectmainland
stateenterprisesinkeyareassuchastelecomsandpower.ThepushforHongKongto
become"morelikeSingapore"isalltooevident.
OnebizarreaspectofthiswasarecentclaimbyanacademicthatSingapore'seconomyisnow
growingfasterthanHongKong's,partlybecauseHongKongisslowedbyanincreaseinpublic
housing.Infact,publichousingconstructionwasatitsheightwhenHongKongwasgrowing
fastestthe1970sand1980s.
TheseopponentsofpublichousinginHongKongprefertoforgetthat80percentof
Singapore'shousingiscontrolledbythegovernment'sHousingDevelopmentBoard.Though
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WhySingaporeisapoorrolemodelforHongKong

ownerscansell,theboardhasmanyrestrictionswhichmakeanonsenseofrealprivate
ownership.
Likewise,thecompulsorysavingssystem,theCentralProvidentFund,notonlyenforcesahigh
levelofsavingsbutensuresthatmuchisdirectedintolowyieldinginvestments,andHDB
housing,sothatretireesfaceatleastasproblematicafutureastheircounterpartsinHong
Kong.TheonlyadvantageSingaporeansenjoyisthatlowerinflationhasmeantthatsavings
depositshavenotbeenerodedsorapidlyasinHongKong,wherenegativerealinterestrates
havecontributedtoincomeinequality.
NotthatSingaporehasbeendoingbetteronthatscore.Inequalityoverthepastdecadehas
beenincreasingjustasfast.
Singapore'sperformancewouldprobablybeevenworseifcomparativestatisticsreflectedits
hugerelianceontemporary,lowpaidworkers.Ithasover200,000foreigndomesticservants
morethanHongKongdoesrelativetopopulationsize.Inapopulationof5.4million,only3.3
millionarecitizens.
Thenumberofforeignersonvarioustypesofemploymentpassnowstandsat1.3million.
Some336,000oftheseareskilledpeoplewhohavehelpedraiseproductivity.But985,000,or
nearly30percentoftheworkforce,arelowskillemployeeswithworkpermits.
Inotherwords,Singapore'seconomicgrowthhasrecentlyoutstrippedHongKong'slargely
becauseofthischeap,disposablelabour.IsthisthesortofsocietyHongKongwantstobe?
Onewhichdoesnotjustwelcomeskilledpeoplefromaroundtheworldbutreliesonanarmyof
serfswhosubsidisetherestofthepopulationbyprovidingcheaplabourbutarenotallowedto
bringfamiliesandsomakenodemandsoneducationalandsocialservices?
Bothcitiesfacedangerouslylowfertilityrates,theresultofmoneyconcernsoverwhelmingthe
socalled"Asianfamilyvalues",ofwhichSingaporeusedtoboast.
Bizarrely,thesamecommentatorswhosayHongKongisslippingintermsoffactorproductivity
growthalsodemandentryofmoreunskilledlabour.SurelytheyshouldseeSingaporeasan
exampleofwhatnottodo.Forsure,HongKongneedssomeimmigrationtooffsetanageing
population.Butletitbeofskilledpeoplewithambitionfromanywhere,notthosedecidedby
someopaquemainlandsystem.Lowproductivityinsectorsrangingfromconstructiontopetrol
stationsisaresultoflowwagesdeterringinvestment.
ButHongKongdoesnotshareSingapore'srelianceonforeigncapitalandlabour.Despiteits
hugeforeignexchangereserves,Singapore'sgrossnationalincomeislessthanitsgross
domesticproduct.HongKongistheopposite.
ThebottomlineisthatwehavelittletolearnfromSingapore.HongKongeventhecurrent
governmentalreadyknowsitsownfailings.Butdoesithavethemeansofcorrectingthem?
PhilipBowringisaHongKongbasedjournalistandcommentator

SourceURL:http://www.scmp.com/comment/insightopinion/article/1541760/singaporepoor
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