SINGAPORE (Aug 27): As Prime Minister Lee Hsien Loong began delivering his annual National Day Rally (NDR) speech on the evening of Aug 19, the movie Crazy Rich Asians was well on its way to making box office history in the US. While PM Lee’s speech laid out a host of welfare initiatives for ordinary Singaporeans, the highly anticipated movie celebrated the supposedly glitzy, luxe life of the city state’s ultra-rich elite.
Crazy Rich Asians is based on a book of the same name by Kevin Kwan, who grew up in Singapore. It offers a caricatured glimpse into the world of the outrageously wealthy living large, throwing lavish parties and jet-setting to exotic holiday locations. Set in Singapore and Malaysia, the book includes scenes such as an aquarobics class in the infinity pool atop Marina Bay Sands.
As a safe and modern city in one of the fast-growing regions in the world, Singapore really is home to more than a few billionaires and their families. It also counts among its residents some 1,400 so-called ultra-high-net-worth individuals, defined as people with net assets worth more than US$50 million ($68.6 million). This number is expected to hit 1,550 in four years. And, there are literally tens of thousands of millionaires here. By some estimates, one in 30 Singaporeans will be a millionaire by 2020.
Singapore now makes a business of serving wealthy people around the globe. With its transparent rule by law and low taxes, it has become one of the largest asset management centres in the world. According to figures published by the Monetary Authority of Singapore last September, the city state had total assets under management of $2.74 trillion, of which nearly 80% came from outside the country.
Yet, Singapore is also home to millions of people who do not happen to be crazy-rich. Not far from the multimillion-dollar bungalows in Sentosa Cove are one-room rental flats in Bukit Merah that cater to families who earn less than $1,500 a month, or have no income at all. Hawker centres in the city, such as that seen in Crazy Rich Asians, are typically staffed by aged cleaners with bent backs and arthritic hands.
Singapore grew fast during its early years, and improved the lot of most of its citizens with inclusive education, healthcare and housing policies. Nevertheless, many still evidently need help, especially older Singaporeans who, in the words of PM Lee, “spent most of their lives in Third World Singapore, only to retire in First World Singapore”. Issues surrounding socio-economic status, inequality and social mobility have also received quite an airing in public discourse in recent months.
Meanwhile, some of Singapore’s most vaunted policies are being questioned. Notably, even as private residential property prices have risen strongly, prompting more cooling measures, the value of Singapore’s stock of ageing HDB flats has sagged. That has some asking whether HDB flats are a sustainable means of building wealth, and wondering whether Singaporeans have too many of their proverbial eggs in that single basket.
Judging from the tone and content of Lee’s NDR speech, the government is preparing to systematically address these issues. Among the initiatives he unveiled during the speech is an upcoming “Merdeka Generation Package” for Singaporeans born in the 1950s, most of whom are in their 60s today and are likely to need help in meeting medical expenses. This would be similar to the “Pioneer Generation Package” unveiled four years earlier, for those born in 1949 or earlier. Lee also announced a widening of heavily subsidised schemes to upgrade ageing HDB flats, and a plan to buy HDB flats back from their owners when the properties hit about 70 years old.
Based on the method of calculation by the Organisation for Economic Co-operation and Development, Singapore’s Gini coefficient before taxes and transfers was 0.417 last year; after taxes and transfers, it was 0.356. According to the government, that compares well against many other major developed economies. The Gini coefficient measures income inequality from zero to one, with zero being complete equality and one being complete inequality.
Singapore should not use other developed economies as a benchmark, though. As Lee himself warned earlier this year, mitigating income inequality and ensuring social mobility and integration are critical to the country’s future. “If we fail, if widening income inequalities result in a rigid and stratified social system, with each class ignoring the others or pursuing its interests at the expense of others, our politics will turn vicious, our society will fracture and our nation will wither.”
