TR EMERITUS

Hong Kong has also rolled out its version of the Job Support Scheme in view of Covid-19. It is called Employment Support Scheme and pays 50% of each employee’s salary up to a maximum subsidy of HK$9,000 (S$1,620) for six months. All employers who contribute Mandatory Provident Fund (similar to our CPF) for their employees qualifies. Our JSS pays between 25% to 75% of each employee’s salary up to the first $4,600, for ten months. All employers who contribute CPF for their employees qualifies. More significantly, however, is how the two schemes are administered. To receive the funds, companies in HK have to apply for it, while in Singapore all companies automatically receive the funds. In HK, names of all companies which apply and receive the funds will be revealed. Over here, such a requirement does not arise as all companies will receive the fund. In HK, 100% of the funds received will have to be disbursed to employees, while here, the government is vague. Finally, employers in HK must formally agree not to retrench any employee during the subsidy period or they will be penalized. Over here, employers are strongly advised to keep their employees. As a result of the conditions imposed in HK, companies there have to consider carefully before applying for the funds. They have to consider how receiving a government bailout will affect their reputation. They also have to consider their business plan, their cash flow requirements, manpower needs and whether their business is viable post Covid-19. As such, only companies that really need the money will apply. Those that can get by, will refrain. Those that are not viable will not apply. Not surprisingly, almost all the big companies and foreign MNCs did not apply as they can probably manage the fallout themselves and due to reputational risk. Instead, most are local companies with 98% of them being micro, small or medium-sized enterprises with less than 50 employees. In Singapore, more than 130 companies have returned or donated their JSS payout amounting to $97m including Citi, Bank of America, Swiss MNC Syngenta and Dutch MNC, DSM Nutritional Products. Rather than reflect their generosity, it reflects our government’s absurd decision to give money to each and every company regardless of need. It also reflects their blatant disregard for taxpayers, past and present, who have toiled for our reserves. The government has a fiduciary duty to taxpayers and the way they administered the JSS borders on criminality. Our government has always been very stingy in giving out money to citizens. Why is it in such a hurry to rain money on businesses without proper safeguards, like Hong Kong? The people deserves an unequivocal answer.   Foong Swee Fong      Read More →

On 16 June Leon Perera, a Workers Party NCMP, asked a question in Parliament. I reproduce a screenshot of his post below: Unfortunately there seems to be some befuddlement among both those who left comments on the post, Ravi Philemon’s daughter Jewel who is a journalist at the Independent Singapore and also in the mind of Leon Perera himself who should really know better as his Wikipedia entry says he studied Politics Philosophy and Economics PPE) at Oxford. Many of those leaving comments on his FB page asked where the $22 billion loan capital is coming from that Heng mentions in his answer and the terms on which it is lent including how the loan will be repaid. Perera has said these are “pertinent questions” and that “we may need to wait till after the GE to shed some light on these questions.” There is also misunderstanding of what Heng means when he says “Loan capital, which we expect to be repaid in the future and is hence fiscally neutral” Loan capital actually comprises loans made by the Government to other sectors (in this case the corporate sector). The reason it is fiscally neutral is that the loans are repayable and not actual spending. The actual spending will only be the amount of losses in the even that the loans are not repaid. In fact the loans are made by the banks and guaranteed by the Government. If the borrowers fail to repay the loans the banks will be required to try to recover the loans from the borrowers through the courts first by seizing the assets of the companies. Only in the event that the banks fail to recover the loans in full will the Government be on the hook and then only for the amounts that the banks lose. The problem with this method is that the banks may still be reluctant to make loans to marginal borrowers because of the time-consuming process that they will have to go through in order to recover the loans. Despite what Leon Perera and many others might think the Government is not borrowing money. It should have no need to since I have shown that even under conservative assumptions it should have net assets of $1.5 trillion. Heng’s answer illustrates perfectly my point that Heng should have issued a POFMA to himself and Ms Tin Pei Ling for his deliberately misleading statement to Parliament on the amount of support given to Singaporeans. PAP MPs like Ms Tin bandy around fake figures like $92.9 billion. However if we subtract the $22 billion we get to $71 billion. The difference between this and Heng’s figure for the overall budget deficit of $74.3 billion is presumably the provision for loan losses ($1.9 billion set aside in the Solidarity Budget). But Heng’s deficit figure of $74.3 billion is itself bogus, typical of the PAP’s chicanery by which it seeks to pull the wool over Singaporeans’ eyes as to the real level of spending. This is what I said when I wrote to the Finance Minister demanding that he issue a Correction Notice to Ms Tin Pei Ling: Another way of measuring the Government’s support is to look at the projected budget deficit in the Fortitude Budget Statement of $74.3 billion and subtract both the Top-Ups to Endowments and Trust Funds of 17.3 billion and the allocation of $13 billion to the Contingencies Fund. This gives a figure of $44 billion. You have already allocated $20 billion to the Jobs Support Scheme to help fund up to 75% of the wages of Singapore citizens and PRs. However given that probably more than half of the economy should be classified as being in the public sector and that a large proportion of the Jobs Support Scheme will go to Government-linked companies (GLCs) we should probably deduct half of the $20 billion as just a transfer payment from central Government to other entities in the public sector. We should also deduct $1.9 billion provided from past reserves under the Temporary Bridging Loan Programme and the Enterprise Financing Scheme shown in the Solidarity Budget since the Government is acting as a guarantor only. The final cost will depend on the loss that is left after the banks have exhausted the recovery process. The current cost of these guarantees is zero and they do not constitute actual spending. Unfortunately your Government’s guiding principle of obfuscation and hiding the true surplus from the people means that I am forced to make assumptions. As a minimum you should publish the General Government surplus, which should include all entities in the public sector including GLCs and take account of changes in the value of all assets including land as well as the true figure for the reserves. Thus I have no idea of how much the real deficit is and am forced to guess. I calculated the real support for Singaporeans (not companies the majority of which are Government owned and many of the remainder foreign owned) at $2.5 billion,or a per capita figure of around $600, not the fake $23,225 claimed by Ms Tin. Perera’s confusion on this point amply illustrates why Singaporeans need real economists not fake ones in Parliament if the Opposition is ever to do a proper job of holding the Government to account. You also need MPs who will be tenacious and dogged in pursuit of the truth and will have done their homework properly. My hope is that in the impending election Singaporeans will vote nicely and not just as though they are picking a football team by the colour of their strip and how close to the PAP they claim to be. There is another important point to be made. If the Government has provided loan guarantees of $22 billion then it needs approval from the President under the Constitution. I took the Government to court over its loan commitment to the IMF. Despite my showing that a loan commitment was substantially similar to a guarantee the AG’s equivocations on this subject were accepted by the judges who furthermore ruled that Singaporeans had no right to use the courts to hold the Government to account for wrongdoing unless they were affected personally. However the circumstances provide much less room for the Government to weasel out. If Heng has breached Article 144 of the Constitution and not obtained the President’s approval for the loan guarantees of $22 billion then this a serious matter and he is unfit to be Finance Minister or the future Prime Minister. Unfortunately Singaporeans’ rights to sue the Government have been removed courtesy of our judiciary who are appointed by the Prime Minister.   Kenneth Jeyaretnam * The author blogs at https://kenjeyaretnam.com/ .  Read More →

Thanks to Covid-19, I’ve been discovering a host of programs that I might otherwise not have watched. One of them is “The Crown,” which tells the story of England’s current Queen Elizabeth II. The Queen is currently the longest serving Head of State and the longest ever reigning British Monarch. One of the most poignant moments in the series was the story of her coronation, which was the first one ever to be televised. It showed her Uncle (who did not attend), explaining the beauty of the coronation and his classic line was “Who wants transparency when you can have magic?” This line of the series underlines the key reason why the British Monarchy has endured for so long. Despite having no political power, the monarchy has survived and, in some cases, thrived because it has been a symbol or a fantasy for the average man. She and her family are perhaps the British nation’s PR spokespeople, responsible for selling a certain image to the world. Royal Weddings are an example of this, when the world’s cameras are tuned onto the United Kingdom (the converse being Royal divorces) The key to the Queen’s success is that she’s stayed out of politics and never gives any hint of her personal opinions on the matters of the day. She is, however, by many reports sharp and knows what’s going on and whenever she has to do something, she does it. As was portrayed on Netflix, she did dress down Winston Churchill for having a stroke and keeping it from her. The classic line being “My job is not to govern but to ensure there’s governance.” By staying out of anything remotely political, the Queen stays out of anything grubby and as they say, ensures the magic that keeps the monarchy going. As a constitutional monarch, the last thing the Queen needs is to be transparent about the nitty gritty of the institution that she represents. However, while constitutional monarchs may exist on the concept of magic, the same should never be true for elected politicians and civil servants, who are in the grubby business of running the country. Unfortunately, there have been cases of elected politicians and bureaucrats who have forgotten that they are in the business of running things and that actually requires transparency. The most famous example is the current occupant of 1600 Pennsylvania Avenue who has famously refused to release his tax returns (something which all his predecessors have done) and appointed relatives the politically influential positions (something which real Princes have avoided doing). This is, unfortunately, not limited to the USA. In Singapore, we’ve had the example of the Ho Ching, the Chief Executive of Temasek Holdings, an investment firm that invest on behalf of the Singapore government. One of the largest issues in Singapore is the fact that nobody knows what Madam Ho’s salary is. If you look at it from a legal perspective, there’s no need for Madam Ho to reveal what she earns. Temasek Holdings is a private company and as such has no obligation to publish any accounts or any details about the salaries paid to its directors. Her salary, as they say, should be no one’s business except hers and her employer, which in this case is the Ministry of Finance. However, when you look at what Temasek Holdings is, you have to ask why there’s so much secrecy about its financial performance and the salaries of the top directors. Temasek Holdings, as is known to everyone is mandated by the Ministry of Finance to invest and grow the nation’s wealth. My pension money (CPF) funds are utilized by Temasek Holdings and while I may not have a direct share of Temasek Holdings, they are using my money to do what they do. So, the point is – surely their business is also my business and what Ho Ching as CEO is paid is my business. The consistent argument for keeping all of this secret is that it’s part of national security. However, this argument does not wash. Madam Ho’s husband is the Prime Minister and his salary is public knowledge. Are we to say that the CEO of Temasek Holdings has a higher national security priority than the Prime Minister? When it comes to Constitutional Monarchs, magic can override transparency. However, when it comes to the case of the people involved in running the country and with their hands on the public purse, the answer is no – we cannot accept that they live in the world of magic. Transparency is required in their case. Let us never forget that politicians and civil servants are employed by the tax payer and what they get up to is our business.   Tang Li *Although I’ve been based mainly in Singapore for nearly two decades, I’ve had the privilege of being able meet people who have crossed borders and cultures. I’ve befriended ministers and ambassadors and worked on projects involving a former head of state. Yet, at the same time, I’ve had the privilege of befriending migrant labourers and former convicts. All of them have a story to tell. All of them add to the fabric of life. I hope to express the stories that inspire us to create life as it should be.      Read More →