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Is a Realistic Measure of the Size of Singapore’s Economy Only About Half What the PAP Government Says It Is?

I remember discussing Singapore’s development strategy with my Economics Director of Studies at Cambridge University, Professor Ajit Singh, in 1983. He said Singapore had pursued a similar strategy to Ireland, though he thought rather less successfully. I have made the same comparison many times in my blog. Both countries have sought to attract multinational investment and the relocation of corporate HQs to their countries through a low corporate tax rate and sweetheart deals with new investors.

Economists, have pointed out for some time that because of its pivotal role in the tax avoidance strategies of many, particularly US, MNCs, Ireland’s GDP is not an accurate reflection of the real size of the Irish economy. Neither are its growth rates. Ireland’s GDP shot up by 24.5% in 2015, which led Paul Krugman to famously call it “leprechaun economics.” It shot up a further 15% in 2021 when the growth rate in the Eurozone of which Ireland is a member was only 5.9%.

A recent Economist article discussed the current thinking about what amendments might need to be made to better reflect the true size of Ireland’s economy. In the past looking at Gross National Income (GNI), which excludes income due to foreigners but includes income from abroad, might have been sufficient. But this no longer works because now so many US MNCs have moved their legal headquarters to Ireland. They say a crude solution might be just to exclude sectors of the economy that are dominated by large multinationals. But this would be too radical as these sectors do contribute something to output and employment. They suggest two alternatives.

The first is domestic demand-consumer and government spending as well as investment, but excluding exports and imports. This is called Modified Domestic Demand and is already reported. But this has drawbacks, not least the exclusion of international trade.

A second and better measure according to The Economist would be a modified version of GNI called GNI*. This excludes the retained earnings of firms that have moved their HQ to Ireland but includes international trade. Using GNI* as a measure the Irish economy’s size is only £249 billion while in terms of GDP it is worth £475 billion.

The PAP Government follows much the same strategy as Ireland to use low corporate taxes and sweetheart deals with individual MNCs to attract investment and persuade companies to put regional HQs in Singapore. Economic growth, like Ireland’s has also been very rapid in certain years, like 2010 and 2011 when the economy grew by 10% and 6% respectively. The Statistics Department already calculates GNI and publishes the statistic on a per capita basis. It’s about 84% of the GDP level. However it would be interesting if the Statistics Department were to calculate GNI* for Singapore. The real size of the Irish economy on this measure is only slightly over half of that measured by GDP. It’s entirely possible that a calculation of Singapore’s GNI* would yield similar results.

This would destroy the PAP’s triumphalist narrative which has always touted the size of Singapore’s GDP as a counter to any criticisms of its repressive rule. However, while they might feel pride in hearing that Singapore’s GDP has significantly surpassed Malaysia’s, a country with 6 times the population, most Singaporeans know that they are not six times as rich. In fact a UBS survey of global cities back in 2011 placed the purchasing power of Singaporean median wages as on a par with those in KL and it would not surprise me if they were still fairly similar today. Rather than looking at misleading measures of GDP per capita on a purchasing-power-parity basis which place Singapore first or second in the world, Singaporeans should look at the reality of wages per hour worked which for many are well below minimum wages in other countries which rank much lower in the table and median wages which range between a half to a quarter of those in cities in North America and northern Europe. At election time it would be better if they remembered the latter fact rather than being bamboozled by PAP disinformation.

 

Kenneth Jeyaretnam

 

About the author: I’m a Singaporean economist who became an opposition activist. I blog to provide an alternative to the porkies that the Pinkies tell. It just so happens that my alternative is the truth. That’s why I’ve never been sued in any civil or criminal court no matter how hard hitting my criticism. I’m quoted and interviewed and asked to speak across the world but largely censored in Singapore in an effort to silence my political opinions. The left hate me because they think I split their vote and because I eschew their outmoded economic models. Models that don’t work. The Right and the Conservatives hate me because I’m a liberal. I’m not sure what the middle think of me. I don’t think there are more than a handful of people in the middle, here in Singapore. I’m a Singaporean born and bred, dual heritage, my parents Singaporean established here before the State of Singapore was created. I’m not Eurasian. I read economics at Cambridge and could be broadly described as from the Keynesian school but I believe in interventions. I was formerly a successful hedge fund manager. After economics and politics my greatest interests are history, film and Makan. I run but I run so I can eat like a Singaporean.

 

 

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READER COMMENTS BELOW

14 Responses to “Is a Realistic Measure of the Size of Singapore’s Economy Only About Half What the PAP Government Says It Is?”

  • Inequality gap:

    Whatever the number, the top get most of it while the bottom struggle on $5 an hour.

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  • rice:

    All said,GDP PER CAPITA is a meaningless stat especially for $in City where INCOME DIVIDE is so glaring with one of the world’s highest COL and HIGH GNI.

    The “Lich”(rich /LEEch) gets richer.
    The poor effectively becomes poorer.

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  • Sinchiapor the Incorporated:

    Pappy CEO-politician vs citizen Sheeples: Crony Capitalist Elitism vs Republic Democracy

    https://youtu.be/sqSA-SY5Hro?si=5JgmuDeLbOrocxAm

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  • opposition dude:

    Well, the good old Big Mac index might be a suitable gauge for those hourly rated workers. How long does one have to work before being able to buy just one Big Mac? It’s used in countries with varying results.

    But whether the economy is tanking or red hot also like that lah. When you don’t have individual organisations to audit the rubbish PAP churns out regularly it’s a simple thing to print whatever numbers you want to print to make the statistics look really nice and give false impressions that all is well.

    We all know PAP keeps breaking promises and lies. What we don’t know is when they won’t have the luxury of having the majority in parliament anymore.

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  • Not so rich:

    The reality is Singapore is a rich nation and full of rich people but many Citizens are not rich…many barely surviving.So How ?

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  • SINGAROAR:

    80% in Public Housing with no assets to be passed down to next generation. The wealth is in the hands of the PAP, taken away by some scheme or other. The GDP does not measure the wealth of the people. It is incorrect to use it.

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  • Money Launderers:

    For the past 7 years or so, how much of these economic figures were distorted by money launderers.
    Tax avoidance is legit.
    Tax evasion is not and hard to catch.
    Sinkieland are in all the three games.
    Papigs have no other cards to play.
    The rich and the money launderers love sinkieland.
    Inflation is thru the roof.
    COE at $155,000.
    BTO at $ 877,000.
    Next gen sinkies should all migrate—no longer HDB slaves, nor NS slaves.
    They end up holding the babies, unable to purchase a decent home nor car.
    Toa Payoh flats were $10,000 now hitting $1,000,000.
    How far more can this madness continue.
    Younger gen, please wake up.

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  • 2Daft2Live:

    Inequality gap:
    Whatever the number, the top get most of it while the bottom struggle on $5 an hour.

    This is the type of soda pop economic development that the country had been saddled with. Like soft drinks, it is void of nutrients and rich in empty calories.

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  • Dr. Chan:

    @Money Launderers
    This madness can only be stopped if the voters want it (very extremely) badly to stop. There is no other way around this.

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  • Light The Way:

    Temasek-backed Vertex invests in cryptocurrency exchange Binance

    https://www.reuters.com/article/us-singapore-cryptocurrency-binance-idUSKCN1MX0B2/

    Binance’s Zhao pleads guilty, steps down to settle US illicit finance probe

    https://www.reuters.com/markets/us/us-authorities-set-unveil-settlement-with-binance-source-2023-11-21/

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  • Bluff People MIWs:

    Part of GDP growth here in recent years is from profligate spending on:
    – Sports Hub
    – Jewel
    – Changi T5 and renewed budget terminal
    – repaving of HDB open car parks
    – repainting and replacement of sheltered walkways
    – MRT lines and extensions
    – bicycle lanes
    – replacement of bus stops
    – annual revamps of ministry/stat board websites
    – etc

    All at our expense, of course

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  • Spoiling the LAND:

    ”PROPERTY developer CapitaLand says it has no plans to build so-called shoebox flats – those occupying less than 500 sq ft.

    Group president and chief executive Liew Mun Leong said at a briefing last Friday that building such small apartments would be akin to ‘spoiling the land’.

    These micro homes – derisively called Mickey Mouse or shoebox flats – usually have a high per sq ft (psf) value.”
    Papigs destroyed this country by making it into one giant construction site.
    Built and built and bring in no-NS new citizens from 3rd world countries to fill it up.
    Like Liew said–spoiling the land; spoiling the country.
    Mickey mouse country!

    Dr. Chan:
    @Money Launderers
    This madness can only be stopped if the voters want it (very extremely) badly to stop. There is no other way around this.

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  • Lost in the Past:

    Why you quote outdated stuff from 12 years (2011) ago? Two years later (2013), Capitaland built apt SMALLER than 500 sqft.

    “The giant developer is now building homes that are smaller than 500 sq ft – shoebox size, in other words – to lure buyers seeking lower total price quantums.

    Gone, too, are brand-name foreign designers for its residential projects.

    This departure is most clearly seen in its Sky Vue development in Bishan, which will be the true test of its new strategy when the project goes on sale this weekend.

    The 694-unit project includes units as small as 484 sq ft and is designed by a local firm, DCA Architects.”

    Spoiling the LAND:
    ”PROPERTY developer CapitaLand says it has no plans to build so-called shoebox flats – those occupying less than 500 sq ft.

    Group president and chief executive Liew Mun Leong said at a briefing last Friday that building such small apartments would be akin to ‘spoiling the land’.

    These micro homes – derisively called Mickey Mouse or shoebox flats – usually have a high per sq ft (psf) value.”
    Papigs destroyed this country by making it into one giant construction site.
    Built and built and bring in no-NS new citizens from 3rd world countries to fill it up.
    Like Liew said–spoiling the land; spoiling the country.
    Mickey mouse country!

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  • Smart Poles, Not so smart Sg:

    A border blockade by Polish truckers. The truckers began their protest on November 6, denouncing the EU’s decision to exempt their Ukrainian counterparts from having to seek permits to cross the frontier. The law was initially relaxed after the conflict between Moscow and Kiev broke out in February 2022, but the protesters argue that the measures have led to unfair competition and have driven down prices.

    Not so smart Sinkies welcome Malaysians to come in everyday. Then they complain no jobs.

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