Friday, March 14, 2008

Top-down vs Bottom-up

A compulsory annuity come 2013. The last time the compulsory annuity proposal was foisted on Singaporeans, it was very unpopular, and frankly, half-baked (there's that word again). People primarily objected to the possibility that they may be funding/subsidizing somebody else's longevity, somebody whom they are not related to at the expense of their loved ones who may also outlive them. Why should my hard earned money, money earned and accumulated over a lifetime, be left to somebody else other than my family? Call it selfishness if you want, but that's very human, very natural, to take care of my own first before somebody else.

Unfortunately, the highly paid scholar-administrators in the Civil Service couldn't see this simple point. They handed Mr Lee Hsien Loong such a raw idea for him to pronounced in a very public National Day Rally speech last year. Well, the government can pride itself on making unpopular policies accepted, but it can't ride roughshod (again) over people's money, as it soon found out. To its credit, it didn't press the matter, but instead sent the matter back to a committee to have a re-look. Well, the proposals are out now, and it all seem to be much fairer this time around. The question is not how fair it is now. Rather the question is why this wasn't thought of first before the PM went on National TV to announce it?

You wonder now how well ANY public policy is thought through? So far, it seems that we have been making the right decisions most of the time, if a booming economy and mega-projects in the pipeline are any indication of measures that would have been taken in a slowing economy. Add to this the billions of dollars committed to the expansion of expressways and subway lines on the island and you have the classic recipe of governmental pumb-priming in a slowing economy over the next few years. That's the hidden writing on the wall.

Beyond the short term moneys, is the IR good for us in the long term? Is this push for the tourism industry lasting? I am old enough to know that tourism was an important part of the economy back in the 1970s. It slowed in the latter part of the 1980s into the 1990s until it was re-discovered just recently. The fact is that the island is so small that sustaining visitor numbers is not viable perpetually. We are now just profiting from the global terrorism phenomena that has made neighbouring destinations such as Indonesia, Malaysia and even the Philippines less than desirable. There are also the positives. The China Chinese, the Vietnamese, the Continental Indians, etc. are traveling like never before for leisure and entertainment. The next time you are out and about, try to listen in on what others are saying. No, I don't mean be a busybody. Listen to what they are saying, or rather, the language they are using. Increasingly, the language you hear spoken won't just be English or Singapore-accented Mandarin, but China-accented ones and tongues that sound Indian and Chinese - Indochinese. Yes, you've just met our guests from China and Vietnam.

I recall the last major boom in visitor arrivals, and that was in the 1970s when the Japanese swarmed in to buy up whatever Singapore had to offer because of the comparative cheapness of the goods. Many Singapore companies grew rich from this. I personally know of a company which grew from a cottage industry to a branded chain today because of this influx of tourists from Japan. It is happening again now, this time with another group of travelers.

Of course, we will not know for sure now, but my sense is that it cannot last - I mean the tourism thing. We don't have to discuss resorts because we don't really have any to start off with. And the island is so small, you'd need at most 2 days to look at everything that is worth looking at. But this is a subject for another time...

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