GST hike did not ‘turbocharge’ inflation, says PM Lawrence Wong as he acknowledges cost-of-living concerns

Budget 2025 Debate Round Up Speech

This Government will always uphold fiscal responsibility, says PM Lawrence Wong

By Wong Pei Ting, The Straits Times, 1 Mar 2025

The PAP Government will never take risks with Singaporeans’ lives and their future – this means ensuring that it keeps public finances healthy year after year and spending within its means, said Prime Minister Lawrence Wong.

PM Wong also cautioned against attempts to portray a healthy surplus as somehow detrimental to Singaporeans as he addressed criticism from opposition MPs about poor budget marksmanship.

“Let’s try not to put a wedge between the Government and the people... A strong fiscal position for Singapore is not at the expense of Singaporeans,” he said. “In fact, it benefits Singaporeans in so many ways, because we are able to invest more in Singaporeans.”

In an hour-long speech wrapping up the Budget debate on Feb 28, he also responded to the opposition’s suggestion that the Government had raised the goods and services tax earlier than it needed to, given an expected surplus of $6.4 billion for financial year 2024, compared with the $778 million that had earlier been projected.

Singapore is in a strong fiscal position today precisely because it took the necessary steps early in this term of government to raise revenues ahead of expected structural spending needs as the population ages, said PM Wong.

While the Republic was fighting the Covid-19 pandemic, it could already foresee spending needs going up on the horizon.

“This was 2020, 2021 – we had no way of knowing when the pandemic would end, how the virus would mutate, how many more new waves of infection would we face, how many more restrictions we have to impose, and how much deeper a fiscal hole we would end up with,” PM Wong said.

The authorities made the decision to proceed with the GST increase in Budget 2022, accompanied by enhancements to a package to delay the increase for most Singaporean households, when there were signs that the economy had stabilised.

“We must ask ourselves, do we want short-term populism or long-term stability?” PM Wong asked. “Do we want to kick the can down the road or take the hard but necessary decisions?”

With the GST increase in place, the Government has the additional revenues – mostly from those who are better off, foreigners and tourists – that it needs to improve healthcare infrastructure and take better care of seniors, he said.

Were it not for the GST hike, and unexpected upsides in corporate income tax collections, FY2024 would have ended in deficit, as would projections for FY2025, he added.

“That would have meant less funding for essential services, less support for our seniors and fewer resources to invest in our future,” he said.

“Basically, Singapore and Singaporeans would have ended up in a much weaker position.”

PM Wong refuted Leader of the Opposition and Workers’ Party (WP) chief Pritam Singh’s proposition that the GST hike had “turbocharged” inflation.

As Singapore is a small and open economy, inflation was driven primarily by global factors, such as war and supply chain disruptions, said the Prime Minister.

In the two years when GST was raised, price increases actually moderated, from 6.1 per cent in 2022 to 4.8 per cent in 2023 and 2.4 per cent in 2024, he pointed out.

He noted that in most countries, poor budget marksmanship refers to when governments severely overestimate revenue collections and underestimate expenditures.

This results in unfunded promises that a country cannot keep, because there is not enough money. Alternatively, it borrows to meet these commitments, thereby leaving a growing burden for the next generation.

This is not the case in Singapore, as the Republic practises responsible and prudent budgeting, PM Wong said.

Earlier in the debate, Mr Singh had called the Government’s fiscal projections “so unpredictable, but somehow always so healthy when elections have to be called”.

This point was echoed by Progress Singapore Party (PSP) Non-Constituency MP Leong Mun Wai, who said that “so much pain” had been inflicted on Singaporeans by the decision to raise GST in 2023 and 2024.

PM Wong said that, ultimately, it was not a matter of marksmanship, but a question of right or wrong fiscal principles.

“The WP and the PSP may think that we are being overly cautious in our projections, but this Government will never take risks with Singaporeans’ lives and future,” he said.

This includes raising revenues should new spending needs arise, he added.

On the charge by opposition MPs that the Government had been relying on temporary measures such as vouchers to deal with cost pressures instead of making structural reforms, PM Wong said that cost-of-living support and the SG60 package accounted for just 5 per cent of the Budget.

A far larger part of government spending is in structural programmes such as SkillsFuture to empower Singaporeans through skills and job training, he said.

“This will ensure Singaporeans do not just receive help, but are able to stand on their own feet and seize better opportunities for themselves and thrive in a rapidly changing world,” he said.

Objectively speaking, this has helped Singaporean households across different income levels achieve higher real income growth in the past decade than countries like the United States and Japan, he added.

For instance, the bottom 20 per cent of households here saw their wages rise 3.6 per cent per annum between 2013 and 2023, compared with 2.1 per cent in the US and minus 1.6 per cent in Japan.

Singapore’s fiscal approach has also stood it in good stead – while many countries use their tax revenues to service interest payments, the Republic instead receives an annual boost from its investment returns.

“Countries that have this luxury of investment returns are the ones that are endowed with oil and gas or some other natural resources – they have been blessed by the heavens with these endowments,” PM Wong said.

‘We have nothing, and yet we are in this position. It is truly unique, and it is a Singapore miracle.”

Singapore’s fiscal strength is a vital source of competitive advantage in these turbulent times, which look likely to get worse, said PM Wong.

He flagged the ongoing wars in Europe and the Middle East, and the possibility of conflict in Asia.

Today’s environment means global responses to these threats will sadly not be as well coordinated or effective as before, he added.

“But in Singapore, we know that if such shocks were to arise, we have the ability to respond swiftly to them, like we did during Covid-19,” he said.

“Our reserves and our fiscal strength will enable us to protect Singaporeans when it matters, and to turn adversity into opportunity.”

In a Facebook post in the evening, Senior Minister Lee Hsien Loong said Singapore must continue to spend prudently, so that it can tackle and recover from future challenges swiftly, as it did with Covid-19.

Reflecting on SG60 – the country’s 60th year of independence – SM Lee said the country’s strong fiscal footing has been built through the careful stewardship of the earlier generations. He said: “It gives us confidence to move forward sustainably, so that future generations can enjoy the fruits of Singapore’s progress.”

PM Wong said the Government’s approach has also achieved outcomes that reflect Singapore’s values as a society – one that is fair, prudent and progressive, where the better off contribute more to lift up those with less.

For instance, the bottom quintile of households receives $4 in benefits for every dollar of tax paid, while the top quintile of income earners receives 30 cents.

“There is no fiscal system in the world that can deliver perfect precision and equity. But I think we have found an approach in Singapore that works for us,” he said. “It’s not perfect, but we continue to make it better.”

At the end of the day, PM Wong said, Singaporeans will decide whether they prefer a government that underestimates needs and spends more from the reserves, leaving the country weaker, or one that steadfastly upholds fiscal responsibility and discipline so that current and future generations have the resources to handle unexpected challenges.

“We will continue to do our best to convince Singaporeans that ours is the right approach. It has served us well these last 60 years, and it will continue to keep Singapore on the right track in the years ahead,” he said.

Singapore spending billions to help seniors stay active, socially connected

Loneliness and social isolation: A public health threat for societies

By Judith Tan, Correspondent, The Straits Times, 29 Jul 2024

A 20-something Gen Zer who laughs with colleagues, meets friends for drinks and sees family for dinner every weekend may seem to have a rich network of interpersonal connections.

In reality, he may be lonelier than his widowed grandmother alone at home with only a domestic helper except when relatives visit on some Sundays.

Though they are similar, loneliness and social isolation are not always related. Loneliness is a subject sense of distress that occurs when a person perceives that their need for meaningful connections is unmet, even if they are surrounded by people.

While social isolation – and loneliness – has been building up for decades as family and community structures change, governments are increasingly recognising it now as a crisis.

In November 2023, the World Health Organisation (WHO) declared loneliness as a pressing global health threat.

The same year, United States surgeon-general Vivek Murthy issued an 82-page public health advisory titled Our Epidemic Of Loneliness And Isolation.

The surgeon-general said that far more than a bad feeling, loneliness and social isolation are detrimental to individual and societal health. They increase the risk of premature death by 26 per cent and 29 per cent respectively, he said.

Dr Murthy warned: “The mortality impact of being socially disconnected is similar to that caused by smoking up to 15 cigarettes a day, and even greater than that associated with obesity and physical inactivity.”

Singapore, too, is concerned about the health impact of social isolation, particularly among elderly people.

It has earmarked $800 million for improving active ageing centres supporting seniors in their communities. At the launch of Age Well SG in November 2023, Health Minister Ong Ye Kung said: “For many seniors, their biggest enemy is social isolation and loneliness. That’s when your health really deteriorates. We want them to be socially connected.”

Researchers in Singapore say that seniors who live with their children and grandchildren can feel as lonely as someone living alone, if they are ignored by their loved ones going about their own busy lives.

Data collected from the Singapore Chinese Health Study, which recruited participants between April 1993 and December 1998, found almost four in five elderly people who are socially isolated lived with their families, compared with the three in 20 living on their own.

Young people feel lonely even with social media connections

While the stereotype is that an older person with dwindling social connections is at the greatest risk of loneliness, multiple studies show that it is in fact younger people who are more likely to feel socially isolated.

According to a Gallup poll of more than 140,000 people in 2023, 27 per cent of young adults aged 19 to 29 reported feeling very or fairly lonely, compared with 17 per cent of older adults aged 65 and older.

The 2023 Gallup poll of 142 countries also found that nearly one in four people in the world feels fairly or very lonely, and that rates are about even between men and women.

A 2020 report by insurance giant Cigna based on a questionnaire answered by more than 10,400 people found that 79 per cent of Gen Zers (born between the late 1990s and early 2010s) and 71 per cent of millennials (born between 1981 and 1996) considered themselves lonely, compared with 50 per cent of baby boomers, who are now aged 60 to their late 70s.

In Singapore, a 2023 survey by the Institute of Policy Studies (IPS) had similar findings.

The straw poll, carried out between November and December 2023, surveyed 2,356 Singaporeans and permanent residents aged 21 to 64. It found that people between the ages of 21 and 34 had the highest mean score for loneliness.

In contrast, people between 51 and 64 had the lowest mean score for loneliness.

It is not surprising that young people should experience feelings of abandonment and lack of support, said psychologists. Young adults are at a transitional stage of their lives, navigating uncertainties in finding partners, establishing their careers and carving out an existence for themselves apart from their parents.

Social media too often provides connections that are only fleeting and superficial.

Prime Minister Lee Hsien Loong to hand over leadership to Lawrence Wong on 15 May 2024

It marks Singapore's long-planned leadership transition to 4G political team

PM Lee to stay on as Senior Minister; any major Cabinet changes will come after General Election: Lawrence Wong

By Tham Yuen-C, Senior Political Correspondent, The Straits Times, 16 Apr 2024

Singapore will have a new prime minister on May 15, with Deputy Prime Minister Lawrence Wong set to take over from Prime Minister Lee Hsien Loong on that day.

The date for the handover was announced in a statement from the Prime Minister’s Office (PMO) on April 15, a key detail in Singapore’s long-planned leadership transition from the third-generation to the fourth-generation (4G) political team.

When he is sworn in at 8pm on May 15 at the Istana, DPM Wong, who entered politics 13 years ago, will be Singapore’s fourth prime minister.

In a video message put up shortly after the announcement, DPM Wong said he had never expected to be asked to serve as prime minister one day when he first agreed to enter politics in 2011.

“I accept this responsibility with humility and a deep sense of duty. I pledge to give my all in this undertaking,” he said.

“Every ounce of my energy shall be devoted to the service of our country and our people. Your dreams will inspire my actions, your concerns will guide my decisions.”

PM Lee said on his social media pages that leadership transition is a significant moment for any country.

“Lawrence and the 4G team have worked hard to gain the people’s trust, notably during the pandemic,” he said. “Through the Forward Singapore exercise, they have worked with many Singaporeans to refresh our social compact and develop the national agenda for a new generation.”

PM Lee said the 4G team is committed to keeping Singapore working well and moving ahead, and asked that Singaporeans give DPM Wong and his team their full support to jointly create a brighter future.

DPM Wong, who is 51, had been the presumptive next prime minister since April 2022, when he was picked by his peers as the leader of the People’s Action Party’s (PAP) 4G team.

Before DPM Wong, who is also Finance Minister, emerged as leader, former minister Khaw Boon Wan had spoken individually to the 4G leaders and other members of the Cabinet to move along the process of finding a successor for PM Lee. Mr Khaw revealed that 15 out of the 19 he had spoken to had put DPM Wong as their top choice.

It capped a period of uncertainty in Singapore’s leadership succession.

A year before, in April 2021, Deputy Prime Minister Heng Swee Keat – originally earmarked for the job by his 4G peers in November 2018 – had stepped aside to pave the way for a younger person to lead the country. He was going to turn 60, and the Covid-19 pandemic, which began in 2020, had shortened his runway as the next prime minister, he had explained.

The pandemic, meanwhile, was also what helped DPM Wong come into prominence, pundits had said.

As co-chair of the multi-ministry task force on Covid-19, DPM Wong had been front and centre in Singapore’s fight against the pandemic, along with Health Minister Ong Ye Kung and Trade and Industry Minister Gan Kim Yong.

His assured manner during the task force’s many media conferences and ability to break down issues simply had gained him admirers.

The usually business-like minister also showed a gentler side, choking back tears as he thanked healthcare and other front-line workers during a speech in Parliament at the height of the crisis.

PM Lee, 72, later said that his younger colleague and the 4G team had “earned their spurs” during the pandemic. The baptism of fire they went through put paid to worries that the team would have only a short time to forge bonds and learn to work together before having to take over.

Since then, DPM Wong and his team had gone on to take on more responsibilities, chief among them spearheading the Forward Singapore exercise to forge a new social compact with Singaporeans.

The team’s report, put out in October 2023, set the public agenda for the years ahead. It called on Singaporeans to partner the Government in developing a fair, caring and inclusive society with people progressing together.

While the Forward Singapore report has been described as a continuation of the work of the Government, there are signs that the new team will go further than their predecessors, as signalled by policy shifts such as the forthcoming introduction of unemployment assistance.

The coming into power of the 4G team also happens at a more troubled time for the world, with wars raging in Europe and the Middle East, and uncertainty in the global economy.

Amid this, Singapore is restructuring its economy for the future.

While there have been positive signs that Singapore’s economy will do better in 2024 than it did last year, more layoffs are expected due to rising costs and greater automation. Overall growth for 2024 is projected to be between 1 per cent and 3 per cent.

In many developed countries, rising inequality and slowing mobility have also divided people, and a key plank of the 4G team’s agenda has to do with strengthening bonds between people through sports, the arts and philanthropy in order to build national resilience.

With DPM Wong taking over before August, he will have the National Day Rally to lay out his plans for the year ahead. He also has his work cut out as he prepares his party for the next general election (GE).

At the biennial PAP convention held at the Singapore Expo in November 2023, PM Lee, who has been prime minister for 20 years, made his intention clear that he wanted to hand over to DPM Wong before the next general election, due by November 2025.

DPM Wong, on his part, signalled his readiness for the task. Speaking to a hall full of his party’s members, he said: “I am ready for my next assignment.”

The handover announcement sparked an outpouring of tributes from both political office-holders and backbencher MPs on PM Lee’s two decades as head of government. Many, like DPM Heng, reflected on PM Lee’s role in building a Singapore that is cohesive and future-oriented.

PM Lee will relinquish his role on May 15, and is required under the Constitution to inform President Tharman Shanmugaratnam of his decision to step aside.

He will also formally advise the President to appoint DPM Wong as his successor, said the PMO.

At the PAP convention in November 2023, PM Lee had said he will be at the new prime minister’s disposal after he steps down.

Giving an indication of his possible next steps, he had said: “I will go wherever he thinks I can be useful. I will do my best to help him and his team to fight and win the next GE. I want to help him to fulfil his responsibilities leading the country so that Singapore can continue to succeed beyond me and my 3G colleagues, for many years to come.”

PM Lee Hsien Loong addresses Singapore's public finances and reserves in Parliament on 7 February 2024

Singaporeans are both beneficiaries and stewards of the reserves: Prime Minister Lee Hsien Loong at the Debate on the Motion on Public Finances

By Tham Yuen-C, Senior Political Correspondent, The Straits Times, 8 Feb 2024

Sacrifice and careful husbandry by earlier generations was how the Republic built up its nest egg of past reserves, and the current generation should see themselves as not just beneficiaries but also trustees who protect this inheritance for future Singaporeans, said Prime Minister Lee Hsien Loong.

The past savings were built up at a unique time in Singapore’s history when it could set aside budget surpluses, and if they are gone, it will not be possible to build them up again, he stressed.

This is why it is important to have the “right instincts”: to save where possible, to resist pressures to use the reserves, and to unlock them only when really necessary, he said.

PM Lee was speaking in Parliament on Feb 7, amid calls by opposition MPs for the Government to use more of the reserves.

“We must not erode the patrimony, this family treasure, which we have inherited from our forefathers, nor should we burden future generations with debt nor mortgage their future,” he added.

This compact of protecting the reserves has been forged across generations of Singaporeans, and had also been upheld across both sides of the House, he said.

He reiterated the Government’s long-held stance on the reserves in response to a call by Progress Singapore Party (PSP) Non-Constituency MPs Leong Mun Wai and Hazel Poa for the Government to review its current budget and reserves accumulation policies.

The two NCMPs had proposed that more of the reserves be used to “help present-day Singaporeans reduce their financial burdens and improve their quality of life”.

They were joined in this by Leader of the Opposition Pritam Singh and Workers’ Party (WP) MPs, who repeated their party’s position that using more investment returns would not jeopardise growth of the reserves.

Mr Leong said that in the face of the goods and services tax (GST) hike and rising cost of living, accumulating reserves at the current rate “hurts the welfare of present-day Singaporeans”.

PSP’s view is that current reserves are enough, especially if the Government is raising taxes “for the sake of maintaining the current rate of reserves accumulation”.

How much is enough?

But it is a misconception that a specific number can be deemed enough when it comes to the reserves, said PM Lee.

He recounted how Singapore first tapped $4 billion of the reserves in 2008 when the global financial crisis hit, to help employers pay Central Provident Fund contributions and protect jobs.

When the Covid-19 pandemic hit, some $40 billion was drawn from the reserves to fund assurance packages and pay for vaccines to save lives and livelihoods.

That is far from the worst thing that can befall Singapore, PM Lee added. He noted that the war in Ukraine costs the Eastern European country more than US$100 million (S$134 million) a day.

These examples are why there is no sensible answer to the question of how big a nest egg is enough.

“Looking ahead 50 years, can anyone promise that Singapore will enjoy another half century of peace and tranquillity? Or guarantee that someone will come to our rescue if we ever find ourselves in the same situation as Ukraine?” he said.

“We can never say for sure how much is enough, because we do not know what kind of crises we will face in the future, or how our investments will fare.”

But that does not mean Singapore should mindlessly save for a rainy day without regard for present needs, said PM Lee.

That is why the Government had enshrined in the Constitution the “50-50” rule, which allows up to half of returns from investing the reserves to be used for current spending.

This also happens to be about the right ratio to keep the reserves in proportion with the gross domestic product, PM Lee added.

With long-term expected real returns of the reserves currently at about 4 per cent, the Government can spend about 2 per cent and save the other 2 per cent. Singapore’s economy is expected to grow at about 2 per cent a year if things go well.

Keeping this balance means the Government can count on the reserves to provide one-fifth of its annual revenue – or around 3.5 per cent of GDP – without having to double the GST, said PM Lee.

Reserves spent on current generations

Among the points Mr Leong made was that too much money from the reserves was locked up in trust and endowment funds to pay for longer-term spending, at the expense of current generations.

Ms Poa, meanwhile, suggested that it was excessive to plough the proceeds of land sales back into the reserves, since land is sold on leases and is thus more akin to a renewable resource.

The Government’s policies therefore prioritised future generations at the expense of current Singaporeans.

Rebutting these arguments, Minister in the Prime Minister’s Office Indranee Rajah said that money in these funds was “not just for the far unknown future”, but was set aside to meet specific funding commitments for the benefit of today’s Singaporeans.

These include the over $2 billion disbursed each year from the GST Voucher Fund to help lower- and middle-income households defray their GST expenses, and money in the Pioneer Generation Fund and Merdeka Generation Fund that is drawn down regularly to support Singaporeans in those cohorts.

As for funds set up to pay for large infrastructure projects, these help to smoothen the lumpy spending on such projects and ensure that future generations will not have to scramble to find money to pay for them, Ms Indranee said.

“This is prudent, thoughtful and responsible fiscal policy – not evidence of excess fiscal resources,” she added.

As for treating land sales as revenue, Ms Indranee said selling land did not generate wealth. Instead, it merely converted a physical asset into a financial asset.

The cash proceeds accrue to the reserves and are then invested to generate returns, which contribute to government spending. In this way, the proceeds of land sales are used indirectly in each year’s budget, she said.

Past savings are also a strategic asset during crises and emergencies. Thus, it would be imprudent to disclose the size of the reserves, she said in response to calls for greater transparency from PSP and WP MPs.

Take it to the ballot box

PM Lee noted that the growing political pressure to use more of the reserves was not new, and that it would always be tough to raise taxes.

Early in Singapore’s history, founding prime minister Lee Kuan Yew and his team had anticipated this, and that is why they had formulated a two-key system that required the president’s approval to unlock the country’s savings, he said.

When Singapore instituted the 50 per cent spending rule in 2001, the former prime minister intervened in the debate to remind the House that at the end of the day, the Government’s deepest obligation is to the future.

“Not just to the present; certainly not to the past,” said PM Lee.

He said that is why in taking care of today’s citizens, the People’s Action Party (PAP) Government is conscious to also safeguard the interests of young people not yet of voting age, future citizens not yet born, and the long-term interests of Singapore.

This ethos was in fact shared across the aisle in the past, he added, noting that former WP leader Low Thia Khiang had commended the Government for being prudent when it returned $4 billion to past reserves in 2009.

“Now I hear the opposition arguing that we should change the rules and draw more from reserves, and that of course they have no intention to raid the reserves, far from wanting to bankrupt Singapore,” said PM Lee.

“They say we can easily afford what they are proposing, I conclude their tune has changed.”

Mr Singh’s rejoinder was that different times call for different measures, which was why the PAP Government has said it is unlikely to return to the reserves the $40 billion it took out to deal with Covid-19.

Mr Singh, who is WP chief, also said the Prime Minister was cherry-picking what Mr Low had said.

PM Lee said the PAP is convinced that it has the right approach to stewarding the reserves.

Opposition parties who want to spend more should therefore put the issue upfront and campaign on it at the next general election, he said.

“Say you want to touch, you want to spend, you want to shift the rules,” he said. “Don’t pretend that you’re just as prudent, only more kind-hearted.”

The PAP will join the issue and convince Singaporeans that its way – taking a long-term view of the reserves, and striking the right balance between present and future needs – is the right one for Singapore, said PM Lee.

“We are confident that we will win the argument, and we’ll be able to get Singaporeans to do the right thing.”

PM Lee said he had spent 40 years of his life stewarding and safeguarding the reserves, and was now preparing to hand over to his successor a Singapore in good order, one that is more prosperous and more secure.

“I ask everyone to help them maintain the prudent policies that have served us well to keep Singapore on the right track, so that we can all continue to benefit from the nation’s success for many years to come,” he said.

Halimah Yacob: A President For Everyone

Singapore’s eighth President Halimah Yacob reflects on the defining moments of her six years in office, from unlocking past reserves, to advocating for causes close to her heart.

Farewell, Madam Halimah: Singapore’s first female president’s last day in office

By Jean Iau and Natasha Ann Zachariah, The Straits Times, 14 Sep 2023

Six years after making history as Singapore’s first woman head of state, President Halimah Yacob left the highest office in the land with accolades of being a powerful symbol of unity for all Singaporeans.

At her farewell reception held at the Istana on Wednesday evening, Prime Minister Lee Hsien Loong said Madam Halimah’s efforts to expand opportunities for all made for a more united and inclusive Singapore, where everyone belongs and has a part to play.

Recalling that when she was elected in 2017, Madam Halimah said she was a president for everyone, PM Lee said: “Through your leadership and heart for the people, you have certainly fulfilled your promise.”

He said that throughout her tenure, Madam Halimah showed the way with “grounded leadership, and a warm heart for the people”.

“Your ability to empathise and resonate with Singaporeans from all walks of life has brought our nation closer together, and reminded us that we all have a role to play to make Singapore a better home,” he added.

In her speech following PM Lee’s, Madam Halimah said the president plays “an important role in uniting and rallying people together”.

“In this capacity, I focused on creating a more caring, compassionate and just society,” she added.

Madam Halimah, 69, said she reached out to different communities and underprivileged people, and highlighted various programmes that she launched while in office.

She championed issues such as providing more support for caregivers, skills upgrading for lower-income families, and building interracial and interreligious harmony and social cohesion.

Diplomacy was also a key part of her work, and she saw it as a chance to raise Singapore’s international image, strengthen the nation’s bilateral ties, and open new economic opportunities for companies here.

As the first female president, Madam Halimah knew that she had the “distinct opportunity” to inspire other women and girls.

She shared that someone had told her she had “allowed people to imagine the president as a woman” and that “images and ideas give birth to reality”.

“I wish Mr Tharman Shanmugaratnam all the best in discharging his duties,” Madam Halimah said, addressing the President-elect, who was standing near the front of the audience with his wife, Ms Jane Ittogi.

Mr Tharman, 66, will be sworn in on 14 September, after securing 70.41 per cent of the vote at the presidential election on Sept 1.

As she left the podium, Madam Halimah received rousing applause from an audience of more than 200, including foreign diplomats, MPs and leaders from the social service sector.

With her husband, Mr Mohamed Abdullah Alhabshee, by her side, she received well wishes and took wefies with guests, including MPs from both sides of the House.

She had earlier in her speech called her family’s love, encouragement and sacrifices “the bedrock of (her) strength” and said she was forever grateful for their support.

Chua Chu Kang GRC MP Zhulkarnain Abdul Rahim, who was among the crowd, said Madam Halimah has been a unifying figure not just for Singapore but a symbol of aspiration for minority women everywhere.

“She will be remembered not only as a decisive president who supported the Government in steering our country out of the pandemic safely, but also as a president who is generous in lending her voice to speak up on behalf of various segments in our society such as youth, women and workers,” he said.

Before departing the Istana, Madam Halimah posed for pictures on the staircase by the main entrance with her family. She had said her farewells to members of the Istana staff earlier on Wednesday morning, shaking their hands and sharing laughs before taking a group photo.

Her aide-de-camp, Major Toh Su Sin, said it had been an honour to serve Singapore’s first female president. “As challenging as it was to plan and manage the range of events in Madam President’s packed diary, it was even more rewarding to be able to witness the difference she makes in the lives of others,” she said.

She added that Madam Halimah’s warmth and genuine care for everyone she meets will be missed.

Senior butler Zaidi Hashim recalled feeling awestruck on Madam Halimah’s first day in office. He said: “Madam President treated everyone with equal respect, dignity, and compassion – whether they were foreign dignitaries or her staff.

“It was bittersweet bidding farewell to her on her last day in office.”

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.”