The Breaking of Singapore's Economy

(email from Singaporean Mom, M)

Hi Nix,

Not sure if you have read this article. Read it, have a laugh... tell me what you think.


Hi M,

I've read the article that you send me. Thank you for sharing.

I've written about the dangers of an artificial demand many times in my blog. Most people probably think I am a naysayer, doomsayer or a nut case. I'm not an economist but this is bloody common sense. Let me explain my analysis again.

The price of everything in Singapore is artificially inflated. When you have a situation where the population is increasing in an unnatural way i.e the importing of foreigners, the increase numbers will mean an increase demand in every good and service in the country. The most significant one would be the HDB flats, that's what most Singaporeans scream about. In reality, what they do not realise is that the artificial demand affects every single thing, not just our HDB flats.

We know very well when demand outweighs the supply, price goes up. We don't need to be an economist to know that. So there is no argument on what causes our inflation - artificial demand. Why do I keep saying the word artificial? Because this demand is not sustainable. One day, Singapore will reach its peak capacity. How many people can we squeeze in the country? 10 million people? 15 million? We know our physical limits is nearing soon in a matter of 1-2 decades at most.

What happens next? The problem with artificial demand is that this demand is not within our control. Foreigners can leave the country in doves in the next financial crisis, for better job opportunities elsewhere or go home when circumstances in their own country improves or leave when there are general push factors. They do not have a sense of belonging, obligation or loyalty to Singapore. Our increasingly xenophobic locals are not helping. The signs are aligning for a perfect storm, waiting for a single spark to start it all.

Why can't we keep importing foreigners even if a big number of current ones decided to go? Let's just look at the construction industry for a good indicator what is going on in the ground. 2 decades ago, we have Thais, Malaysians, Sri Lankans and Pakistanis as our construction workforce. Today, you do not see Malaysian construction workers. You see them as supervisors or project managers. There are very few Thai workers in the construction industry as compared to the past because Singapore companies have found them expensive and decided to go for others.

Fast foward to today, others will mean the current batch of Bangladeshis, PRCs and Indians. Already, I have heard from so many of my workers during my stint in Singapore from these countries that the wages that Singapore offers that are not fantastic and is fast becoming unworthy of their effort to slog it out in Singapore. Especially so for the PRCs. In the near future, what happens when Singapore companies find these workers too expensive? Do we hire Somalians? The government's one and only plan to bring Singapore ahead by being Cheaper, Better, Faster is clearly a fallacy itself. It is clear for all to see yet they chose to ignore the wisdom from the crowd and regard them as noise.

Worse, we have a Prime Minister that told the world that if Singapore takes in fewer foreign workers, it will spark inflation. [link] The PM clearly thinks that higher labour costs will see companies passing the cost to the consumers. In reality, the factors as mentioned in the article you shared with me far outweighs labour cost and are mostly, if not all, caused by over-demand. I'm truly worried for Singapore. Either our Prime Minister is a complete nut in economics, extremely ill-advised or isn't doing very well up there. Whichever it is, it doesn't bode well for Singapore.



  1. since you live in perth/oz now, anything which happens in S'pore doesn't really affect you anymore.

  2. Anon above, you can't say that! I'm a Singaporean in Sydney now but whatever happens in Singapore does still affect us because our friends and family are still back there. And we all worry about them.

    Singapore is soon going to be a basket case. LHL is screwing up way more than his dad.

    1. I agree with you. Likewise, I have been living in Oz for umpteen years but my heart and mind are still with Singapore. Leaving Sg doesn't mean we gloat in its demise.

  3. you blokes admit that you have been living and working in downunder for years and of course have been paying taxes to the oz govt for years and therefore have no tangible contributions to the well being of Singapore's economy in anyway except making all kinds of "interesting" statements in various websites.

    1. U think they want to leave huh? If SINKaPOOR has been well-managed like a REAL first-world country, would sinkies leave the country in doves?

    2. Contributions to Singapore do not have to be in monetary form. Sharing thoughts and opening the eyes of misled relatives and friends who are still living in Sg, is another form. During the GE2011, we called our Singaporean friends to make sure they vote for oppositions. Encouraging fellow Singaporeans not to be dismayed is a contribution. If you want to be pedantic about monetary contribution, let's say our annual visit to Singapore - spending $$$ in hotels, food, shopping, transportation costs, flying by SQ... All these boost the SG economy.

    3. What make you think that you are more Singaporean than me . You may live in Jurong or Tampines, I happen to live in Sydney.

    4. you sinkaporeans admit that you have been living and working in sinkapore for years and of course have been paying taxes to the sg govt for years and therefore have tangible contributions to the well being of Singapore's economy in everyway except at the ballot boxes.

      Regardless of nationality, hear hear, ye subsets (i.e. Singaporeans who have left SG): progress on personal achievements and behold Nix's priorities: while they are stuck there in SG and there's little that one can do, build personal lifeboat first before extending it for those you care about. Trolls rock: they feed the justification of your efforts and highlight their ineptness of ... well.... how do you describe "everything" without using the word itself?

      Onward. Burn the trolls as your motivational fuel forward, with lavish delight.

    5. I have friends and relatives who have taken up citizenship in other countries (many in Australia). Curiously, they've all gone through a period of 'adjustment' during which the remorse of leaving their country is relieved by complaints and comparisons; it usually takes them a long time (years) to come to terms with the fact that they'd taken that decisive step to leave, for better or worse, before they can truly embrace their new home. It's pitiful, really. Their children, if they're born overseas, don't have this emotional baggage - that's not to say that their children have no relatives or friends in Singapore that they care about; it's just that they don't have the angst of their parents. So they're free to face the future, secure in their sense of belonging, directing their energies towards building a life in their country of birth, and not spending it looking backwards, justifying to themselves and others, why they left. In the meantime, Singapore welcomes new immigrants, new citizens from foreign lands, who see new opportunities for themselves and their children, and see much more that is positive. They are living the life that emigrants have abandoned and they are not complaining. They have moved on.

    6. @ Anonymous - 6 May 2012 21:44

      You may have hit the nail on the head with this observation.

      Emotional baggage.

      Those leaving Singapore for land overseas always have push/pull factors involved in their decision to migrate. It is not always easy to leave the baggage behind.

      The kids are in a better position, especially if they are younger - little or no emotional baggage to speak of. Thus, for them it is an exciting new adventure... it does not matter if it's Australia or Antarctica... it's all good! Oh, for the innocence of childhood!

  4. Actually, I think the problem is also artificial supply. Who controls the supply of land? In times of recession, they can withhold and when land auction prices are below their expected price, they can withdraw it. The cost of land feeds into alot of things as input prices.

  5. guys, do not feed the troll.

  6. "We know our physical limits is nearing soon in a matter of 1-2 decades at most."

    1 to 2 decades is too optimistic a view, I think we are very near to breaking point. Beyond 5-6 million, and you will see the country bursting at its seams...

  7. I still have relatives, my sis included, who believe the myth perpetuated by PAP, that the price of HDB will always go up and never come down. That is precisely the reason why PAP is bringing in foreigners in truckloads. They wanna make tonnes of obscene profit from HDB, COE and ERP, but they have to keep the population artificially inflated so that the prices of HDB remain artificially high. If not, there will be social unrest and people will take to the streets to protest, (and if they don't, they would have to sleep on the streets) if one day the housing prices were to collapse in SG.

    Just look at Spain for example. The housing market has been in doldrums since the property bubble burst in 2008. Since PM lee is comparing SG to Germany to substantiate his point about bringing in more foreign labour, why doesn't he look at the lessons learnt from another EU country Spain?

    I have been to Spain many times and I can tell you it is very sad to see thousands of newly-built houses left unoccupied as homeowners could not afford to pay the sky-high prices jacked up by unhelmed speculation or artificial demand. Spanish banks offered 40 year or 50 year loans and attracted unsuspecting home buyers who stretched their credit beyond their means and what happened next was what is gonna happen to Singapore if the PAP government doesn't do anything to control the spiralling prices in the property market.

  8. "The PM clearly thinks that higher labour costs will see companies passing the cost to the consumers.

    PM Lee can cut his craps and stop hoodwinking the nation. If PM Lee can reason that higher labour is passed to the consumers, but yet he can't see that high rental, vehicle and property cost inflated by the govt will be passed to the consumers ?

    PM lee should not stop his nonsense and crap. And stop acting Blur fart. We aren't stupid and daft as the old freak want him to believe.

  9. E on steroids9 May 2012 at 11:15

    The real reason for the influx cannot be said openly. CPF. The gahmen has already disclosed the following:

    1. Singapore's population is aging. (It also means that the average age of the working population, currently at about 2.1 million, will also raise. Don't forget that in this group, almost half are foreigners. Also disclosed by Shamemugan that half of SIngapore's taxes are paid by foreigners also. So this estimate seems reasonable.)

    2. that without immigrants to Singapore, the population will start to decline.

    Think about it, working population is declining and their average age going up. (even with the immigrants on steroids policy, although at a slower rate)

    CPF is NOT a bank or an investment fund. The set-up is basically a pool of money $$ that pays it's members when certain criteria is met. That means, the contributions into the fund MUST always be greater than the withdrawals. Or else it will go bankrupt. (Most recent amount of all CPF members' balance is about $207.55 billion)

    Data for the Oct to Dec 2011 period is:

    Contributions: about $5.75 billion
    Withdrawals: about $2.76 billion

    Explore the CPF website and notice the upward creep of the total withdrawals and the downward trend of the total contributions in the data.

    In 2008, Morgan Stanley estimated the GIC to have about US$300 billion and Temasek Holdings to have about US$142 billion.

    According the CIA world factbook, Singapore gahmen's total debt is about $371 billion. (118.2% of GDP, 2011 estimates)

    Sing gahmen has always said that the funds in GIC are accumulated from gahmen surpluses over the years. If we accept their explanation, it means the GIC funds will be ringfenced and will NOT be used to bail out the CPF.

    Now, gahmen has not said anything about Temasek Holdings. Even if we draftees dreamily assume that somehow TH funds can be tapped in an emergency for the CPF, there isn't enough to guarantee the entire CPF funds of members.

    The only way the gahmen knows is to continue with this immigrants on steroids policy to ensure the contributions into the CPF will always exceed the withdrawals. (While at the same time, place various obstacles to delay your withdrawal of your CPF.)

    But rest assured that the gahmen will slow the immigrant intake for a few years. Not because they have heard your voices or learnt their lesson in 2011. But as LHL said, they are running up against physical limits and constraints. Meaning, they finally found out that Singapore is too small.

    But no bother, now 'research' has been done that concludes that Singapore can increase the building density, change mindset about the population density. (Meaning accept the higher population density. It's not going to go lower.) Smaller HDB flats are desirable. (When that fails, claim that HDB flats have not shrunk. It's all in your minds.)

    Now, tell me, how is it possible for Singapore to wean itself from the immigrants on steroids policy?

    If your conclusion is the same as mine, then, welcome to Australia. Where the population density is about 2.5 persons per km square.