Monday 21 August 2023

National Day Rally 2023: A Better Home, A Brighter Future

From housing to retirement, PM Lee Hsien Loong provides reassurances amid anxieties and storms
By Danson Cheong, The Straits Times, 21 Aug 2023

Prime Minister Lee Hsien Loong sought to reassure Singaporeans on Sunday that his government would continue to take care of their needs, as the country faces mounting global challenges and growing anxiety over jobs, housing and costs of living.

His tone of reassurance ran across all three of his speeches during the National Day Rally at the Institute of Technical Education College Central.

PM Lee lauded Singapore’s efforts in pulling through the Covid-19 pandemic, which he called “the most challenging ordeal for our nation since independence”, and said it is a testament to the country’s indomitable spirit.

But challenges from US-China tensions, the war in Ukraine and global warming have affected the global economic order, disrupted supply chains and food production, and will especially hurt small trading nations such as Singapore, he noted.

These will contribute to anxieties over bread-and-butter concerns. PM Lee warned that Singaporeans should expect higher food prices and more job disruptions in the future. Inflation is at last coming down but “will probably stay higher than what we were used to”.

He promised that the Government will weather this storm together with Singaporeans.

During the rally, which lays out the Government’s priorities and is seen as the most important political speech of the year, PM Lee also unveiled measures to support Singaporeans.

These include a $7 billion Majulah Package that will benefit about 1.4 million older Singaporeans, especially those in their 50s and early 60s.

This is a group PM Lee called “young seniors”, who are in a particularly sandwiched phase of life where they might have to care for both the young and the old in their families.

He said to them: “Beyond the daily cost-of-living pressures, you know that retirement is creeping up on you, and you wonder, ‘Will I have enough to get by? Can I cope?’ But don’t worry, the Government will help you. You will not be left behind.”

The new Majulah Package, to help those born in 1973 or earlier meet their retirement needs, will consist of three components:

– An Earn and Save bonus, where the Government will credit up to $1,000 a year into the Central Provident Fund (CPF) accounts of lower- and middle-income workers.

– A one-time CPF bonus of up to $1,500 for Singaporeans who have not reached the Basic Retirement Sum in their CPF balances.

– A one-time MediSave top-up of $1,000.

More details will be released in 2024, PM Lee said. He added that the Government will also enhance existing retirement and income supplement schemes.

“Taken together, these improvements will help seniors to meet basic retirement needs, especially for lower- and middle-income Singaporeans, so you can have greater peace of mind in your golden years,” he added.

There will also be more support for those who lose their jobs, said PM Lee, adding that a scheme is being developed that will offer temporary financial support to retrenched workers while they upgrade their skills.

This is part of the Forward Singapore exercise driven by the fourth generation of leaders who will share further details soon, he added. Turning to housing, PM Lee assured Singaporeans that the Government will keep Housing Board (HDB) flats affordable, while maintaining a good social mix in every town and ensuring the system is fair for everyone.

Record-high HDB flat prices have fuelled anxieties among Singaporeans in recent months over the cost of home ownership.

In order to ensure HDB flats remain affordable, new Build-To-Order (BTO) projects will be classified as Standard, Plus or Prime – depending on their location.

This will replace HDB’s current classification of projects as mature or non-mature, and kick in from the second half of 2024.

A Prime flat, in the “choicest and most central locations”, will have the most subsidies and tightest restrictions. These subsidies and restrictions scale progressively downwards with Plus and Standard flats.

The idea is to moderate the higher prices of flats in choice locations while imposing stricter sale conditions on these units.

PM Lee gave the example of how Plus flats will receive more subsidies over Standard flats, but also will face more restrictive sale conditions. He cited a 10-year minimum occupation period before any sale, a subsidy-recovery clause to claw back extra discounts upon such a sale, and an income ceiling on resale buyers.

Another change: Singles will be able to buy BTO two-room flexi flats across all three of the new categories – they are currently restricted to BTO units in non-mature estates.

“We will build a good mix of projects within and across regions, to cater to different needs and budgets. And that is how we can fulfil our commitment to keep high-quality HDB flats accessible and affordable to you and to your children for a very long time to come,” PM Lee said.

On the issue of ageing, PM Lee added that the Government will take steps to prepare for what he called a “super-aged society”.

These will include efforts such as investing more resources so seniors can install fittings, including foldable shower seats and wider toilet entrances at home; revamping housing estates so they are more senior-friendly, and building more flats that have senior care and community facilities integrated.

PM Lee, who was delivering his 19th National Day Rally speech, also said his succession plans are back on track after they were disrupted by the pandemic.

He also sought to allay concerns over recent political scandals involving People’s Action Party politicians. Transport Minister S. Iswaran is under investigation for corruption, and Speaker Tan Chuan-Jin and backbench MP Cheng Li Hui resigned in July after their affair was made public.

“Let me assure you: These incidents will not delay my timetable for renewal. We are on track,” PM Lee added.

Future generations of PAP leaders must continue to keep the political system clean and incorruptible, he said, adding that he has every confidence in Deputy Prime Minister Lawrence Wong and his team.

Thanking Singaporeans for their support, he urged them to give DPM Wong and his team their “fullest support, now and after they take over”.

“The Singapore story has been an unlikely one from the start. Our nation is still young, and will always be tiny. We will forever be an unlikely nation, created out of the sheer collective will of our people. Nobody expected us to survive, much less to flourish, but, each time, we beat the odds; each time, we showed the world what Singapore can be,” said PM Lee.

“It has been an exceptional story but I believe the best parts are still to be written.”

Saturday 19 August 2023

Singapore Reserves Revealed

Singapore’s reserves cannot be built up again once gone: Prime Minister Lee Hsien Loong
Think of Singapore’s reserves as ‘rainy day’ money
By Goh Yan Han, Political Correspondent, The Straits Times, 16 Aug 2023

Singapore’s reserves cannot be built up again once they are gone, Prime Minister Lee Hsien Loong said in an interview published on Wednesday.

The country is no longer in a situation like it was in the 1970s and early 80s. This was when it had strong growth and budget surpluses yearly, and there was the possibility of putting aside some of the prosperity for a future rainy day, he said.

Today, Singapore is not as poor as it was before, with higher incomes and a higher standard of living. But expectations and needs have also grown, noted PM Lee.

“So, to say today you put aside systematically 2 per cent, 3 per cent of GDP (gross domestic product) and build up a sovereign fund from scratch, I think it is very hard. The economy will not be able to take it,” he said.

PM Lee said he was proud that Singapore had built up the reserves, and is anxious that the country keeps it like this for as long as it can.

“Because it is one of those things – once it is gone, it will never come back again. It is finished,” he said.

“I think we need to be very, very conscious that this is a Garden of Eden state. You are here, it is marvellous. You may not always feel great, but please be aware this is the Garden of Eden because if you come out from it, you cannot go back in again by the sweat of your brow.”

PM Lee was responding to questions on Singapore’s reserves, including its functions and its history, in an interview with national broadcaster CNA that was aired on Wednesday in a documentary titled Singapore Reserves Revealed. The interview was conducted on June 8.

When asked what the reserves mean to him, PM Lee said they are a great source of comfort and reassurance that if Singapore runs into a jam, it will not be destitute and will have “one extra card to play”.

It gives the Government confidence, but is also a reminder of the forefathers’ contributions and a responsibility to generations to come, he added.

Singapore’s reserves are managed by the Monetary Authority of Singapore (MAS), the Republic’s investment company Temasek and sovereign wealth fund GIC.

The reserves also include those of key statutory boards like the Housing Board, Central Provident Fund and JTC Corporation, which together with MAS, GIC and Temasek are listed in the Constitution as Fifth Schedule entities.

Are the reserves enough?

PM Lee said that the biggest misconception among Singaporeans on the reserves was that “there is such (a) thing as enough”.

“And how much is enough? If I have more than that, I can spend it. If I have less than that, well, maybe I hope to get there. I do not know how much is enough. There is no such idea of how much is enough,” he said.

The future is unpredictable and many things can go wrong, he added.

“From the long-term point of view, will I have enough if the world is steady and peaceful? I hope so. Will I have enough under all circumstances? That is what I do not know, and that is what the Government has to worry about on behalf of Singaporeans.”

He noted that when the global financial crisis of 2008 hit, the Government needed to draw $4 billion to $5 billion from the reserves. For the Covid-19 crisis, it needed over $40 billion.

“So, you have no idea how much you will need because Covid-19 is far from the worst thing that can happen to us,” he said.

He suggested that Singaporeans look at the reserves as “rainy-day money”.

“If it is not raining, I do not touch it. If it is a sunny day and I can afford to, I put a little bit more into it.

“However much there is, I keep on having this attitude that I would like to build it up a little bit more when I can, so that the next generation will be in a more secure position than I am today,” he said.

PM Lee added that while the Government managed to put back the money it drew for the global financial crisis, he did not think it was possible for the Covid-19 draws to be put back.

When asked if there was any anxiety over Singapore’s response to the Covid-19 crisis, PM Lee said he had no doubt that the Government was doing the right thing, and it was doing what it needed to do.

“I was relieved that we were not held back because of the lack of resources to do, at least not lack of dollars, to do what we needed to do.

“It could have been overdone, but in such situations, it is not worth trying to fine-tune,” he said, adding that the eventual spending was less than expected, though still substantial.

When asked how large the reserves are, PM Lee said he could not answer the question, but said they are “enough for most circumstances” and enough to provide a substantial support in the Budget every year, by contributing to a fifth of the Government’s revenues.

“But it may or may not be enough if you have a catastrophe – who knows what the world will bring? So, I do not ask whether it is enough; I ask, can we husband it and if possible, gradually grow it bit by bit year by year,” he said.

He noted the importance of the contributions from the reserves to Singapore’s Budget, without which the Government might have to make up the revenue from other sources, such as doubling corporate income tax or personal income tax, or increasing the goods and services tax rate further.

“When people say, why don’t we use the reserves in order to benefit the current generation? The answer – we are, to a very big degree. But you may not realise because we have gotten used to it,” he said.

When asked if the structure of having MAS, Temasek and GIC overseeing the reserves is correct and useful in today’s context, PM Lee said that from time to time, the Government has asked itself if it should have two GICs.

“Because you have a certain amount of funds now, it is not small. Conceivably, you could have two and they could compete with one another, then you would know who is doing well and who is not doing so well,” he said.

“Every few years we argue about this, but finally we will conclude that building one team is hard enough, let us concentrate on making that one team succeed. And I think we keep it like that.”

The elected president

On the singular pivotal moment in the history of Singapore’s reserves, PM Lee pointed to the time when the Government decided to recognise the reserves as being a lot of money, and needing to have a second key.

The idea was first floated by former prime minister Lee Kuan Yew in his 1984 National Day Rally speech, before the scheme was worked out and implemented over the next few years.

“I think that was the key turning point because it crystallised people’s focus. They knew that there is such a thing called the reserves, that it is quite a lot of money and that it needs to be protected,” said PM Lee.

When drafting the system, it was important to protect the reserves but not paralyse the government of the day, noted PM Lee.

He noted a phrase used by the late Mr Lee on the topic.

“The phrase which he used was that one day, if you have a rogue government, everything is finished.

“That was the way we explained and marketed it, that one day, if you have a freak election, you have the wrong team in charge, you have a rogue government who wants to raid the reserves, in one term, all your life savings of generations of Singaporeans will be gone. And therefore, we must prevent that,” said PM Lee.

He also noted that when the system of the elected presidency was first devised, there was no clear distinction in the original legislation between income from the reserves and investment returns.

In those days, the portfolio was not invested as systematically and comprehensively as it is today. The premise then was that the principal sum would be locked up, and all of the income from the reserves could be spent.

PM Lee said that when former president Ong Teng Cheong took on the role, Mr Ong asked why all the income was being spent, and asked the Government to set some aside for the future.

Mr Ong then suggested that half be split for now, and the other half for the future.

The Government accepted the suggestion and amended the Constitution.

There was an arbitrariness to the decision of the 50-50 split, said PM Lee.

“But when you do deals, 50 per cent is not an arbitrary number. Fifty per cent has a certain psychological resonance to it,” he said.

At the same time, barring accidents and if everything goes well, the reserves should be able to grow by about 2 per cent yearly.

This will ensure the contribution to the Budget every year can be maintained, said PM Lee.

The Net Investment Returns Contribution (NIRC), which comes from the reserves, is the largest contributor to the Government’s revenue yearly.

When asked about potential scenarios where the 50-50 rule could be changed, PM Lee replied: “If the world completely changed, and I would say several successors from me, from now.”

He added: “Where we are does not give me any reason to need to reconsider this 50-50 NIRC rule.”

Wednesday 16 August 2023

DPM Lawrence Wong at the Ministerial Dialogue on Reinventing Destiny

Important to strike a balance with greater contestation of ideas: Deputy Prime Minister Lawrence Wong
By Goh Yan Han, Political Correspondent, The Straits Times, 14 Aug 2023

It is increasingly difficult to have policies that everyone agrees on, and trade-offs have to be made and balances struck, Deputy Prime Minister Lawrence Wong said on Monday.

In the Singapore environment today, there is a greater contestation of ideas for every new policy and decision that is made, he said.

As leader of the fourth-generation team of the People’s Action Party (PAP), Mr Wong said he has to think about what makes sense, what is right for Singapore in the long term when developing policy, and “explain, persuade, convince people that this is the right thing to do”.

Mr Wong was speaking at a dialogue at the Reinventing Destiny conference, held at the Sands Expo and Convention Centre to mark the 100th birth anniversary of the late Mr Lee Kuan Yew.

It was organised by the Singapore University of Technology and Design’s Lee Kuan Yew Centre for Innovative Cities, the National University of Singapore’s Lee Kuan Yew School of Public Policy, and Institute of Policy Studies.

The dialogue was moderated by Dr Fareed Zakaria, the host of CNN’s weekly show Fareed Zakaria GPS and columnist for The Washington Post.

Mr Wong was answering a question posed by Dr Fareed about whether he is worried about Singapore having to engage in populist policies, like other countries have done.

Mr Wong, who is also Finance Minister, said that the pressure to do so is always there, given that information is widely available in today’s world.

Dr Fareed noted that the PAP had recently faced some scandals, including one involving possible corruption.

“Do you think that you will be able to clean up the image of the PAP enough that you will, in the next election, see a return to the kind of near-total dominance?” he asked.

Mr Wong replied that PAP does not have near-total dominance.

“Political contestation is increasing. That is to be expected,” he said.

“At the end of the day, for me, looking at what we must do, particularly after the recent incidents and the setbacks we have suffered, it is really for us to reflect, learn, emerge and grow stronger from that experience and do everything we can to win the confidence and trust of Singaporeans.”

He added that there is currently a high base of trust between the people and their elected Government.

His immediate priority is then to see how he can strengthen the reservoir of social capital and trust, and ensure that the party can continue to earn the confidence and mandate when Singapore next goes to the polls.

Mr Wong added that beyond the recent incidents, taking into account the broader experience he has had with government, he has learnt to have a “certain sense of equanimity”.

“In government, when things go right, when things go well for us, when people praise us, and say, ‘We are No. 1, we are gold standard’ – don’t let that go into our heads,” he said.

But at the same time, when there are challenges, setbacks and mistakes, which are bound to happen, the Government will then learn from it.

“It is in the mistakes and the failures where we find greater motivation to learn and to be better. And that is the attitude I take,” he said.

Responding to questions from the audience on building and sustaining trust domestically and internationally, Mr Wong said that people know the way Singapore operates – consistent, principled and credible in its actions.

Within the country, trust is built when the Government can ensure that every citizen, regardless of background, benefits from the nation’s success, and people feel they are part of shaping Singapore’s future, he said.

He added that the Government is now also reviewing its policies to strengthen these assurances for Singaporeans, as part of the nationwide engagement exercise Forward Singapore. The exercise culminates in a report later this year.

Responding to a question from the audience on whether there should be adjustments made to improve the lives of migrant workers here, Mr Wong said the Government is continually improving their living conditions.

Monday 14 August 2023

The asset-rich, cash-poor have a housing dilemma

The elderly might not downsize and monetise their homes for retirement income. Their concerns centre on preserving the value of their flat and ageing in place.
By Sing Tien Foo, Published The Straits Times, 12 Aug 2023

Are homes nest eggs for retirement? It turns out the answer is not straightforward.

Delivering his National Day message this week, Prime Minister Lee Hsien Loong highlighted the Government’s desire to refresh its approach to public housing, with a special effort on adapting Housing Board estates and flats to serve a rapidly ageing population.

Although he had referred to physical infrastructure, community spaces and active ageing centres, he also highlighted the importance of retirement adequacy. More details will be announced at the upcoming National Day Rally, he said.

Ageing population, ageing homes

PM Lee’s remarks are timely. By 2030, one in four Singaporean residents will hit 65. Today, only one in three in this age group is employed. We should technically see more monetising their homes to fund their retirement.

In Singapore, the HDB has two schemes by which elderly home owners can unlock the value of their homes – the Silver Housing Bonus (SHB) and Lease Buyback Scheme (LBS).

SHB incentivises eligible households to right-size their homes. If they downsize to a three-room or smaller HDB flat, use the proceeds of the sale of their home to top up their Central Provident Fund (CPF) Retirement Account (RA) and join the CPF Life lifelong annuity scheme, they can receive a cash bonus of up to $30,000.

Similar to a reverse mortgage, the LBS allows seniors aged 65 and older to sell the tail-end of the lease to HDB while continuing to live in their homes. The proceeds will go to their CPF RA and CPF Life, with the home owner receiving a monthly income for life.

Recognising that the LBS holds the key to helping more Singaporeans unlock the value of their homes in their old age, the scheme, which was introduced in 2009 for those living in three-room and smaller flats, was subsequently expanded to include residents in all HDB flat types.

But is this thinking one-sided? Based on the 2022 population statistics of the 547,598 HDB dwellers aged 65 and older, and assuming that each household comprises two such dwellers, about 274,000 households are eligible for LBS. However, as at December 2022, only about 9,700 households – or 3.5 per cent of the estimated eligible households – have taken up the scheme.

The low response rate for the LBS betrays the popular sentiment among elderly Singaporeans that may become a problem for retirement adequacy: People seem unwilling to trade their homes for retirement income.

They are asset-rich but cash-poor

Instead, many middle-aged and retired home owners, usually referred to as the asset-rich, cash-poor segment, are more concerned if their homes will preserve their value, even as they stew over whether they can meet their financial needs in old age.

This is a problem because policymakers have long assumed that most Singaporeans purchase homes for capital appreciation, with the wealth accumulated to be freed up in old age.

In this housing life-cycle model, which has a hump-shaped curve, one accumulates wealth with age as the value of a house appreciates and the mortgage is paid off. But as homes age and begin to decline in value, the home owners must at some point sell off the property or find some way to monetise the asset, so that they can live reasonably comfortably in their golden years.

Depending on the amount drawn down, home owners can still bequeath the remaining lease to a loved one. Else, the value of the home is exhausted when its lease runs down to zero.

Persistent accumulation of housing wealth

Why aren’t Singaporeans monetising their homes? The uncertainties associated with life expectancy, bequest motives and medical expenses in old age may encourage many to keep a housing asset intact.

Thursday 10 August 2023

NDP 2023: Onward As One

A celebration to remember
This year's NDP marks first full-scale parade at Padang since 2019, and President Halimah's last as head of state
By Kok Yufeng, The Straits Times, 10 Aug 2023

It was a National Day Parade (NDP) of firsts and lasts as the Padang came alive on Wednesday with light, sound and colour to mark Singapore’s 58th year of independence.

There was a concert-like atmosphere at the annual birthday bash as a 27,000-strong crowd sang along to old and new local tunes.

Their LED-equipped drumsticks lit up the stands as they thumped to the beat with drum kits that came with each NDP funpack.

Many arrived at the Padang well before the festivities kicked off at 5.35pm.

Undeterred by the sweltering heat and enhanced security measures, which included checks on individuals and vehicles, thousands more gathered at nearby Marina Bay.

Some arrived as early as 3pm – about three hours before the party started.

They were well prepared with phones and cameras to capture the experience, including the 10-minute fireworks display at the end of the two-hour parade.

With “Onward As One” as this year’s theme, it was the first time that full-scale NDP celebrations were held at the Padang since 2019, after the Marina Bay floating platform had its swansong parade in 2022.

The floating platform has hosted 11 NDPs since 2007. It will be replaced by NS Square, a permanent structure expected to be completed by end-2026, whereupon it will be the primary venue for future parades.

Wednesday was also the first time since 2019 that the parade and ceremony segment of the NDP featured full-scale physical marching contingents, comprising 1,700 participants from the military, civil defence, youth uniformed groups, and various social and economic groups.

Making its inaugural NDP appearance was the Digital and Intelligence Service, the fourth arm of the Singapore Armed Forces (SAF), which formed one of five guard of honour contingents.

It was also the last NDP for President Halimah Yacob as head of state – her six-year term as president ends on Sept 13.

She received a rousing welcome when she arrived, shortly after Prime Minister Lee Hsien Loong, and later inspected the marching contingents commanded by Lieutenant-Colonel Ragumaran Davindran – the first army supply officer to be given the role.

A 21-gun presidential salute was fired from 25-pounder artillery guns stationed on military rafts near Merlion Park, and a video montage of Madam Halimah’s past NDP involvements as president was later shown as the crowd waved their national flags in tribute.

Before her arrival, NDP attendees were entertained by hosts Joakim Gomez, Hazelle Teo, Eswari Gunasagar and Fauzie Laily, who kept spirits high with games and several rounds of the Padang Wave before the parade went live at 6pm.

Deyi Secondary School’s marching band, decked out in bright pink uniforms, had the crowd at the edge of their seats as 16-year-old drum major Caspar Ho executed a flawless series of mace throws.

Moments later, spectators watched in awe as eight Red Lion parachutists made freefalls from a height of about 3km – all landing safely to resounding cheers.

Then came the marching-in of the 34 parade contingents, the state flag fly-past and a bomb burst manoeuvre performed by a group of F-16D+ fighter jets in a soaring salute to the nation.

There was still more aerial action to come as the Republic of Singapore Air Force put on a thrilling display to commemorate its 55th anniversary. A highlight was a new cross turn and vertical climb stunt to signify progress and prosperity for the nation.

Another addition to 2023’s NDP was the Total Defence Parade, which involved 650 participants.

With six large, colourful floats modelled after everyday objects such as an umbrella and a barbell – each representing a pillar of Total Defence – the new segment gave a fresh, whimsical spin to the national defence concept.

This was accompanied by a drive-past of military and civil defence assets from the SAF, Singapore Police Force and Singapore Civil Defence Force.

As night fell and the show segment of the parade got under way, another unique – if unseen – aspect of 2023’s parade filled the air.

During the show’s second act, titled Our Strength, a subtle floral fragrance with a woody undertone emanated through the stands at the Padang, evoking the scent of a flowering Tembusu tree.

The smell was specially created to accompany a blossoming flower dance by the Soka Gakkai Singapore Women’s Division and local dance troupe Dance Inspiration.

Those watching at home were given an augmented viewing experience, with each of the NDP show’s four acts featuring themed floor projections and 3D effects.

At the show’s climax, fireworks erupted over the Padang as screens showed an animated golden lion leaping skywards, symbolising Singapore’s youth leading the future of the country.

An energetic rendition of this year’s theme song Shine Your Light and a medley of past NDP songs followed, before everyone recited the national pledge and sang the National Anthem.

Ms Mira Lee, 28, who works in the events industry, said it was nice to see fellow Singaporeans out in full force despite the hot weather.

“Plenty of work has clearly gone into this to showcase some of Singapore’s best, and I am grateful for the show they put on,” she added.

Ms Joey Lim, 31, who last attended an NDP two decades ago, said she especially enjoyed the show segment because it was vibrant and colourful.

“The parade was just as great as last time, and I hope I can attend it every year,” said the administrative worker, who came with her family. “It has been a memorable day for me.”