Developing Asia is in middle of economic crisis and Singapore and Brunei are the least affected of the ASEAN countries. The Singapore government offered about US$1 billion (can’t really remember the total amount) to Indonesia as trade finance guarantee that is supposed to be disbursed under conditions imposed by IMF.
That offer however became a hot topic in Singapore and was debated in Parliament. Some people fear that the money will be wasted (knowing how corrupt the Suharto government is!) or not returned. Some thinks that Singapore itself may need the money as the crisis is also affecting itself. Of course, the complaints are all valid but so are the government’s reasons (officially stated or not). A huge part of Singapore’s trade & therefore income is tied to Indonesia. A downturn in Indonesia means the same for Singapore. In addition, the Indonesian government must have been approaching the Singapore government quietly for help (they know that Singapore has huge reserves too you know!). Politically, Singapore has to be seen to react to the request for help by a ‘close neighbor’ but is also well aware of the risks involved (if there’s any government with real brains it is in the Singapore Government of the last half-century). They therefore linked it to the IMF. In fact, the Indonesians later complained that Singapore is not a ‘true friend’ as the conditions for use of the funds pledged were too stringent. Malaysia also pledged some money at the same time but was never given as Malaysia itself went the same way. The Indonesians were understanding and did not complain.
So, that was the topic and background of a casual discussion among the office staff. One of them, a lady with about 3-4 years working experience (about 25 years old), was quite vocally complaining about her government risking the money and that US$30,000 of what the government holds belongs to her. Although I knew what she was trying to say I nevertheless was curious about how she came to that conclusion. She explained that Singapore’s total foreign reserve is about US$100 billion – so, if you divide that by Singapore’s population size of 3 million you will get US$30,000 per head. I then explained to her that she does not really own what much – a bit may be but not US$30,000. If it belongs to anyone, it is her parents, grandparents and the 2 generations of Singaporeans before her who has worked their whole life (as opposed to her 3-4 years!) building up the country and its current reserves. It was obviously very enlightening to her – I can see that ‘oh, I’ve not thought of it that way’ look. That ended her complain and the discussion very quickly.
I also noticed that there was another staff who is more junior (1 year working experience) who was quietly listening to the whole thing but showed clear signs of agreement with what I’ve said. The fact that she was quiet while this other girl was vocally making her point about her ‘asset’ makes me wonder about the difference caused by their up-bringing. One comes from a more Chinese background while the other from a more English educated background (I know because they both work for me!). For years, I’ve always noted and wondered about the difference upbringing makes and this is one of those instances that captured my attention.
This incident also reminds me of some note worthy social programs of the Singapore government esp. the current one of PM Goh Chok Tong – upgrading of older housing estates, special rates for elder citizens etc. To me those programs are the government way of giving the money back to the people who really owns them. The older generation who when they were younger were working at very competitively low salaries which could only afford them nothing more than a small HDB flat, and whose savings could not catch up with the high inflation in cost of living the last 10 years or so.
I was especially impressed when the Singapore government announced that they will not let their currency devalue too much as a way out of the economic crisis, and that they will not change their CPF rules to let Malaysians take their S$ savings back to Malaysia. Other than not necessarily the best way to increase Singapore’s competitiveness (as Singapore’s import is also very high), I’m quite sure they also do not want to devalue the S$ too much because that will cause their citizen’s and the older generation’s life long savings to ‘go down the drain’. The older generation, especially, can only rely on their savings from times past when their earnings were no where near the salaries now. Devaluing the currency will only shrink their one-way reducing-only account balances.
That is starkedly unlike what the other governments in the region which have either intentionally devalued their currency or has caused the same as a result of their own mismanagement. The Malaysian government was pushing very hard for Singapore to release the CPF holdings of Malaysians ostensibly because they belong to Malaysians and Singapore has no right to ‘hold on’ to the money. It was front page news in Singapore for a while. Things were a lot clearer later. The Malaysian government was soon to implement capital controls (after the Ringgit has slided 25% against the S$), and were using Malaysians’ EPF savings to buy shares to prop up the stock market (or bail out failing businesses depending on how you choose see it). God knows what they would have done if they have gotten the CPF money!
I remember the days when 1 Ringgit was 1 Singapore dollar until early 80’s and still wonders how much my father’s small Malaysian EPF savings would be like if he had been in Singapore. But then things are more expensive here now too.
