Tuesday, March 13, 2012

The Staggering Gap between Singapore's Rich and Poor

Official statistics by the World Bank indicate that Singapore has the highest Gini coefficient in the developed world. The Gini coefficient is an abstract mathematical economic indicator that measures the extent of income inequality in a country. Yet one doesn't have to be an economics guru to understand the extent of inequality in Singapore. Simply by browsing the newspapers, Singaporeans have been exposed to a much more visceral and concrete demonstration of Singapore's staggering gap between the rich and the poor.

On Monday, the following article was published in my paper:
You can have this bungalow for $68m

This five-bedroom good-class bungalow in Ridout Road comes with its own pool and tennis court.

Reico Wong | Mon, Mar 12, 2012 | my paper

The record $39-million sale of a Sentosa Cove seafront bungalow to a buyer from India, which made headlines earlier this month, may have raised many eyebrows.

But it is far from being the most expensive prestige landed home on the Singapore property market - in terms of absolute price - at the moment.

Sources told my paper that one of the priciest residential landed properties up for grabs is a five- bedroom good-class bungalow (GCB) in Ridout Road, off Holland Road.

Its owner is asking for $68 million, or about $1,670 psf, for the property, which occupies about 40,000 sq ft of land. The large plot of land, on which two GCBs can be built, is sited on a slope and comes with its own swimming pool and tennis court.

The article goes on to quote Savills' (a property agency) director of prestige homes, Mr Samuel Eyo. Eyo described GCBs, as being "in a class by themselves", being "something which tells immediately of the owners' status, and most buyers purchase such properties for their own use." Mr Eyo also added that individuals keen on buying such a high-end GCB would probably need to have a net worth of at least $500 million.

Meanwhile, as Singapore's ultra-high net worth individuals do the sums on their uber-exclusive bungalows, the PAP Government has been frantically trying to explain the mathematics of how a family earning $1,000 a month is able to afford a 2-room BTO flat in Singapore. In stark contrast to GCBs which sit on land ranging between 15,000 - 40,000 sq ft in size and which cost between $25 - $70 million, 2-room flats in Singapore are a mere 485 sq ft in size and cost only S$40,000 a pop, after Government subsidies.

Mr Eyo's estimate of the net worth of GCB buyers is at least $500 million. Let's be conservative and allow for a net worth of $50 million, since a buyer can probably take out a significant mortgage loan on the bungalow without having to pay the entire price in cash. In stark contrast, allow me to optimistically estimate that the net worth of the household earning $1,000 a month is $10,000, including their possessions, some savings and the equity in their 2-room flat.

The conclusion of this estimate is that the richest in Singapore are approximately 5000 times wealthier than the poorest. But this is surely a gross underestimation, since Mr Eyo's estimate of $500 million is 100,000 times more than a much more realistic (and still optimistic) estimate of $5,000 net worth for the 2-room flat buyer.

Tan Chuan Jin estimated that out of the $1,000 of income, the household would have about $783 dollars to spare after CPF contributions. How a household gets by on $783 a month, I do not know. But surely the difference in lifestyle between such a household and the one with $500 million in assets must be mind-boggling for anyone who cares to imagine.

While Singapore's poor struggle to get by on puny incomes, the wealthy flaunt their wealth with mega bungalows, supercars and other opulent accoutrements. The middle-class is obsessed with their rat race to accumulate more and more material wealth in their quest to win the never ending status competition. Neoliberal ideology continues to hold sway over the Government and its agents.

Tharman in the budget debate said that he "did not like the idea of first world welfare." K Shanmugam was quoted yesterday defending low income taxes for high income earners. GST, which hurts the poor the most, continues to be doggedly defended by the PAP as the preferred solution over raising income taxes. Minimum wages are shot down as having a distortionary effect on the labour market and thus bad for the economy.

Yet the body of research and evidence demonstrating the correlation between social ills and income inequality is growing. Epidemiologists, sociologists, psychiatrists, criminologists and economists are testifying in increasing numbers to the association between inequality and problems such as disease, crime, suicides, depression and violence. While the causative effects of inequality are debatable, there is little dispute that rising inequality is a reliable sign of declining social capital in a country.

Are we, as Singaporeans, just going to sit around and do nothing while our society slowly disintegrates? Are we just going to run mindlessly on our hamster wheels meaninglessly chasing material wealth and status symbols while our souls rot into nothingness?

The staggering gap between the rich and the poor portends serious problems on the horizon. And if we don't start doing something about it today, the consequences will be deep and devastating.


Amused said...

The Singapore situation is similar to that of a boiling frog. A frog will jump out if it is dropped into boiling water. But it will not feel the danger if the water is gradually heated, and will eventually be boiled to death.

This situation will persist until there is a change in public policy, which is unlikely under the PAP government.

Anonymous said...


Why drive away the rich, who are the more productive members of our society, with higher taxes than the others? Singaporeans want to be rich but that can only be achieved if they have the talent and to have the talent, they have to inherit the right genes! Singapore is very small and everyone here should count (and contribute) and those who cannot make it are welcomed to emigrate, freeing up the space for the talents to be imported that can really improve our gene pool.


Anonymous said...

Tharman is trying very cleverly and subliminally to credit 'first world social welfare" to the WPs.
All WP is asking for is really just '3rd world help for 3rd world wage-earner'.
Singapore is FAR from being a social welfare.
Just because they have been bombarding the MSM with all these 'inclusive' and '50% low tax" bullshit doesn't mean they are doing enough. Just look at what the Autistic group are asking - and you will understand why we are still in 3rd world stage when it comes to aid for our own people.
Spare your heart PAPies. Otherwise, more of you will be getting a $8 heart by-pass if you don't watch what karma seeds you are sowing.

ser guan said...

The word "Singapore" in your essay can be substituted by countries such as USA, United kingdom, India, China, Malaysia,Japan etc.

Of course, u may need to substitute "bungalow" with country estate or "HDB 2 rm flat' with "hut without running water".

Anonymous said...

dear me, are u actually doubting that globalisation isn't behind all of this inequality? that's heresy, you know.

are you trying to say that contradictory statements by the govt don't make sense? that's unpatriotic, you know.

are you trying to galvanise people into thought and acting under their own bat? that could be seditious, you know.

we have been running on out of date ideas for the last 25 years. there is no reason for the govt to stop doing so now. from the way things are going on, it is rather obvious the govt does not have a clue on how to proceed, much less is even aware its policies are mouldy and no longer applicable.

some believe things will change when harry leaves. i reckon there'll be a terrible clamp down, out of sheer fear by the PAP. look at the fear now in the party despite its upper hand, putting down anything and anyone that doesn't fall in with its thinking.

round about 2020, things should really start jumping when there'll be all these pple living in their affordable homes with no money in the bank and no jobs, and no recourse for help, as a result of the wonderful forward-planning tt's been going on (the same sort tt didn't forsee a shortage of hospital beds, among other things when it brought in 2 million pple. makes you wonder what they talk about at cabinet meetings).

all stand up and cheer plse for the god of money and higher GDP. let us celebrate fear and obedience and stupidity, the oils that make the wheels of this great city state turn.

btw, terrific post.

Anonymous said...

Is it possible for the govt to change its spots?

There would be one opportunity. That is when nature takes its natural course right at the apex of current govt leadership.

Another would be when there is an internal leadership change, including an internal revolt by more progressive and nationalist forces with the party.

A third would be a voters' revolution at the ballot box. Either we get an outright change of party or a second party (WP?) with enough representation to meaningfully check govt excesses.

A fourth, least desirable, but nevertheless cannot be definitely rule out, is a 'hot' change by 'newbie' citizens after they have tasted what it is really like to become 'real' citizens -given the same short end of the stick treatment as meted out to the true blue Singaporeans. The new citizens are very likely to be of completely different mindsets AND don't forget these new citizens have got a lot of close links and ties with their former motherlands. The PAP govt is really truly naive and myopic not to have taken this into consideration with its open floodgates immigration policies. I foresee civil unrest and strive to be expected in the years and decades ahead in response to govt policies and actions that are unpopular. The 'newbies' are going to react like their own kind from their former motherlands. Even now, we are already witnessing on occasions the way the 'visitors' are behaving and reacting to things not to their liking. The govt may just have to inflate the police force by doubling its size and perhaps start to recruit another Gurkha battalion to meet the needs in the coming years!

This is real. It is all in the history books.

Anonymous said...

Can these rich & wealthy able to jaga their riches,wealth,bungalow & what not, without the poorer & poor forming & performing the bulk of the involuntary service to the nation? (& at below true cost?)