Despite Singapore’s per capita GDP higher than that of Hong Kong, its personal consumption expenditure is far worse than that of Hong Kong’s by the day. This was revealed in an South China Morning Post (SCMP) article on 26 June.
Singapore has a much bigger foreign proportion in its population
“It’s the foreigners who have taken the winnings, taken them back home, leaving the Singapore cow to stay in constant surplus and be milked of yet more income tomorrow from their Singapore investments,” SCMP said.
“And if one component of GDP is skewed way out of line one way then another must be skewed way out of line another way. In Singapore’s case it is personal consumption expenditure, the money that ordinary Singaporeans have in their wallets and bank accounts to spend on themselves.”
According to the article writer, 40 years ago (before Singapore sold so much of itself to foreigners(, personal consumption expenditure was about the same in both Hong Kong and Singapore as a percentage of GDP at around 60%.
Since then, the figure has edged up for Hong Kong to 66% of GDP while in Singapore it has collapsed to only 36% of GDP (close to half).
So, at present, Hong Kongers on average have US$29,000 each a year to spend on themselves while Singaporeans only have US$19,000, and the margin is growing rapidly in Hong Kong’s favour, the writer claims.
And to those people especially Singaporean politicians who go around touting the high per capita GDP Singapore “enjoyed”, the SCMP writer has this to say:
“No, they may not have typhoons in Singapore, but they certainly whirl up a lot of hot air about themselves.”
Chris Kuan, a retired banker and socio-economic commentator, writing on the SCMP article suggested that Singapore does not take the full benefit of an expanded population base.
“The shortfall in personal consumption relative to Hong Kong is obviously due to the close to 50% foreign participation in the labour force. Given that most of the foreign workers work to save for the day they return home, then personal consumption largely rest on Singapore citizens who comprised only half the work force.
Hence the chronically weak personal consumption in Singapore. This is close to fully reflected in the difference in personal consumption to GDP of both cities. That the gap has widened is simply a correlation to the increase in foreign workers.
In other words, it would take a truly heroic effort from Singaporeans to consume, probably far exceeding American per capita consumption, to reach the level consistent with a wealthy country (around Hong Kong’s level).
However, here’s the rub – high cost of living, overloaded infrastructure, etc, are the costs we face while reaping the advantage of low cost foreign labour. But as long as foreign workers predominantly repatriated their earnings, then Singapore do not actually take the full benefit of an expanded population base.”