Wealth inequality must be considered when celebrating Singapore’s ‘success’

By: Ong Liang Wei

If one were to look at how Singapore’s wealth is divided, then it should come as no surprise that the rich own the bulk of financial assets relative to the size of our economy.

When the negative and low interest rates are start to appear, the poor in Singapore will be in for a bigger shock of their lives.

Why? The natural behaviour is for people to look for higher yields and they start to purchases assets such as REITs. With a higher share price, these REITs are under greater pressure to maximise shareholder yields.

For them to do so, they are likely to engage in asset enhancement schemes which ‘benefit’ the economy through massive construction projects. In turn, rental rises and businesses and retailers pass their costs onto consumers.

The lower income group will then see their purchasing power as a percentage of national income shrink.

Unlike Western countries where there are minimum wage schemes and financial assistance schemes to help the poor, Singapore has one of the World’s worst income inequalities.

Will a mere $500 under Comcare help chronically unemployed Singaporeans when we are the costliest city in the world?

It doesn’t matter if the lowest rung of society have their salaries grows by 5 to 6 percent in real terms. Simply put, if their expenditure keeps on going up then their utility gets worse instead.

Despite the government effort to redistribute wealth, income inequality remains a sticking point in Singaporean scene.

This clearly cannot be ignored when looking at Singapore’s ‘success’.