Tuesday, August 10, 2010

Does PAP Government Work for Singaporeans or Foreigners?

I decided to delve into an analysis of some of Singapore's Economic statistics today. I did a bit of sleuthing around and some analysis of our GDP data, and what follows below is the results of my analysis. All the data below is publicly available from Singstat. (all charts clickable for full version)

The chart above shows the nominal GDP breakdown from 1999-2009. From the chart we can see that GDP has been steadily on the rise, apart from the recent dip following the financial crisis. The chart also breaks down the GDP into the Foreign Resident share and the indigenous share of GDP.

This chart performs a statistical analysis on the first chart above. As can be seen, the % share of GDP that went to Foreign Residents increased consistently from 37.85% in 1999 to 42.58% in 2009. In other words, a progressively larger proportion of our economy belongs to foreigners. Correspondingly, the indigenous share of GDP has declined from 62.15% to 57.42% from 1999-2009.

The average rate of increase in Foreign Resident share of GDP over the last 10 years was 0.473% per year. If this rate of change continues into the future, the Foreign Resident share of the Singapore economy will cross the 50% mark within 16 years.

If that extrapolation is disturbing, then the analysis of GDP growth must be even more so.

This chart shows the difference in compound GDP growth between Foreigners and Singaporeans. The growth in Foreign Resident GDP at 7.56% is distinctly 2 full percentage points higher than the growth in Indigenous GDP at 5.46%, over the last 10 years.

This chart is perhaps the most telling of all. It shows the breakdown in the share of GDP growth between Foreign Residents and Indigenous. Since 1999, a whopping 48.19% of Total GDP growth has gone to Foreign Residents. In particular, in 2006, the year just before the financial crisis began, 73.87% of GDP growth went to Foreign Residents. This was only corrected during the economic downturn when there was a contraction in 2008 in Foreign Resident GDP.

Think about the implications of this. Half of the efforts of the Singaporean Government since 1999 to grow GDP have gone to Foreigners. Half of Singaporean Men's national service efforts have contributed to Foreign Resident GDP growth since 1999 (obviously, foreigners will never have to serve a single day of national service, and they are subject the same tax rates as Singaporeans). And at current rates of growth, more than half the economy will belong to foreigners by the year 2026. At current rates of growth, Singaporeans will, in 2026, effectively be foreigners in their own country.

The statistics speak for themselves. For the last 10 years, has the PAP Government looking out for the interests of Singaporeans first, or foreigners?

Look at the numbers and decide for yourselves.


Anonymous said...

Hi - do you have any more information available on the methodology used to produce these graphs?

Just interested on how you worked out the foreign/local propotions of GDP as I couldn't find relevant information from SingStat - ie is this based on salaries paid to foreigners/locals, or based on output value of foreign/local owned companies etc?


InSpir3d said...

you can find the data in table 5.1 of this document


GDP growth used to compute the 3rd and 4th charts is simply the increase in GDP over previous year's number

Anonymous said...

Ok - thanks!

It's interesting that - assuming I've read the stats correctly - both compensation to foreign employees as well as profits made by foreign companies in Singapore are included in the same "foreign GDP" figure.

So even if a foreign company only employs Singaporeans, it's profits would still contribute to the foreign GDP figure. Not sure how much of a share that would be though...

Anonymous said...

So am I right to suggest that based on a quarter of people sitting in Singapore being foreigners, and contributing close to 50% of our GDP, I am intepreting that these guys are more well off than native Singaporeans by 4 times!

Anonymous said...

Awesome analysis, don't really understand the calculation for the last chart though. What numbers did you use to derive the share of GDP growth? ie. the 73.87% figure in 2006.

Many thanks!

Wang said...

"Misleading" graph quotes opined as this is GDP breakdown inclusive of profits/revenues foreign companies based in Singapore who provide jobs to locals.

InSpir3d said...

Foreign resident share of GDP growth = foreign resident GDP growth / Total gdp growth = (101382-85319)/(230509-208764)=0.74

@ Wang - why does it matter if it is a foreign worker or a foreign company that takes the share of gdp? in any case, the indigenous gdp also includes profits of local companies which provide jobs to foreigners. so i don't see why this is misleading

Anonymous said...

Good post there. Yet I wonder if this is a long standing trend, or one which recently started at the turn of the decade. Examining the composition of GDP in the 1990s would help.

Wang said...

I opined misleading because you left out the companies portion and hence natural assumption is that it is pie only to locals/foreigners residents.

Further, you left out the fact that Foreign Direct Investment into Singapore was the strategy used which created the high income status in the 1st place.

To me the issue is how to provide the best opportunities and grow a bigger pie, whilst you seem to aim for best outcomes (just a different type of social engineering).

Regarding overbearing govt/salaries/etc, fine, get the whips/cattails out since such want to be paid private sector perform like private sector and also same hire and fire.

InSpir3d said...

where on earth did i leave out the companies' portion? wtf are you talking about???

company's gdp is incorporated into both foreign resident and indigenous share of gdp numbers. there are both foreign resident companies and indigenous companies' share in the numbers. go and read the statistical yearbook yourself and see.

and in any case, foreign resident companies belongs to foreigners. what is the problem with that?

Wang said...

My reference was to graphs and legends used.
Further, just because they are foreign registered companies does not mean foreign owned as you as investor would be fully aware of especially for Large and Middle sized entities either for tax or other purposes.
Have a good weekend and interesting how different worldviews would interpret the same data as half full/half empty