Several Singaporeans have questioned why the Government does not appear to be making use of Singapore’s reserves and has resorted to hiking the Goods and Services Tax (GST) to manage rising expenditure needs.
Finance Minister, Heng Swee Keat, responded post Budget 2018 that while the Government uses 50 per cent of the returns of investing the reserves, relying any more on the reserves “will hurt our ability to respond to changing circumstances in the future”.
The Minister’s statement – which comes after the International Monetary Fund’s (IMF) assessment that Singapore is excessively prudent – is in line with the government’s economic strategy of saving ahead for the future.
Heng has said that abstaining from overly relying on the reserves marks our commitment to the future: “We must have the humility to recognise that we can never predict what will happen in our lifetime, much less our children’s lifetimes. So we must do our best to give them the best chance of a better life, whichever way the winds of change blow. What we have inherited from the past, we also owe to the future. That is our moral obligation.”
Singaporeans have questioned the legitimacy of such a strategy, even after the Minister’s explanation. One such voice belongs to writer Ryan Ong, who asserted on social media that hoarding all the money is the “strategy of a chipmunk, not a visionary” in a thorough post on why pumping money back into the economy instead of just saving is a more forward-thinking fiscal plan.
Read his post in full here:
I hear a lot of people say keeping our reserves is a good idea, because we may need it in hard times. Well you know what…
“I hear a lot of people say keeping our reserves is a good idea, because we may need it in hard times. Well you know what helps a country to survive hard times?
“Take a look at countries that, instead of hoarding their reserves, pump the money back into the economy. The money goes toward opening new companies, or expanding existing ones. The money goes into adult education subsidies, interest-free business loans, technology and university grants, and government funded, public access research. The money makes it toward private sector entrepreneurship , with the potential to build large MNCs that in future, will contribute millions in tax dollars.
“This in turn results in better employment – not more employment, mind you (we already have a lot of employment opportunities, the problem is that our graduates are becoming Uber drivers. We have an underemployment problem, not an unemployment problem).
“Expanding companies have more demand for accountants, coders, digital content creators, engineers, illustrators – some may even find a need for middle managers.
“Pumping more money into the economy also means people spend more. It means businesses manage to move their inventory, which means more revenue, which again means expansion and better jobs.
“People with higher wages, who are incentivized to develop skills because there are positions waiting for them, and people willing and able to innovate and take risks – countries that have these qualities don’t just survive hard times. They have the ability to seize opportunities in hard times, and countries like these thrive rather than merely survive.
“If your only solution to hard times is “hoard all the money”, then you’re frankly not qualified to lead. That’s the strategy of a chipmunk, not a visionary.”