• Tue
  • Jul 22, 2014
  • Updated: 10:34pm
Jake's View
PUBLISHED : Tuesday, 04 February, 2014, 5:57am
UPDATED : Tuesday, 04 February, 2014, 3:00pm

Singaporeans not as wealthy as GDP figures suggest

HK performs better than the Lion City on the basis of personal consumption expenditure

... the average growth of Singapore's gross domestic product and GDP per capita has outperformed Hong Kong's over the last 45 years. Its GDP was only half that of Hong Kong more than 20 years ago. Today the Lion City's GDP is slightly ahead and GDP per capita is 25 per cent higher than in Hong Kong.

Letters to the editor,
SCMP, February 2

 

OK, let's play games with GDP numbers as these are what Singapore bureaucrats love to play and as the numbers are not quite what they seem.

We shall start by conceding the headline figures. Yes, as of the latest statistical releases, GDP at prevailing rates of exchange runs at an annual rate of about US$52,000 per person of the total population in Singapore and US$37,000 in Hong Kong, which puts Singapore about 40 per cent ahead, not just 25 per cent.

The point about GDP, however, is that it is meant to be a measure of wealth. It does not mean much to you unless it represents wealth that finds its way into your hands, that is, unless it takes the form of a component of GDP called personal consumption expenditure.

I now refer you to the first chart. In Singapore, personal consumption expenditure has steadily fallen over the years as a percentage of GDP and, at 35 per cent, is now barely half of what it is in Hong Kong. This is an oddity characteristic of a startup economy, not of a wealthy town like Singapore.

But it means that, on the basis of our money-in-your-hands measure, Hong Kong at US$24,000 per capita still outranks Singapore at US$21,000.

The second chart gives you a clue as to why the two economies are so different on this measure. Industrial investment in Singapore, always predominantly foreign, has become even more so in recent years, accounting for an average of about 80 per cent of total investment over the past 10 years. I do not have the equivalent figures for Hong Kong but, at a rough guess, the foreign-local ratio would be the reverse.

This foreign investment in Singapore has in turn produced a huge trade surplus in both goods and services. Over recent years, it has run at about 30 per cent of GDP. And most of this money goes right back out again to pay foreigners for all the confidence they have shown in Singapore by investing in it so heavily.

In short, Singapore's high GDP numbers are mostly an anomaly created by very generous industrial concessions to foreigners. They do not really reflect domestic wealth.

In another way, however, these GDP measures of Hong Kong and Singapore do not mean much as a yardstick of the comparative efficiency of either system. The fact is both are parasite economies feeding off much larger neighbours, the mainland in Hong Kong's case and Indonesia and Malaysia in Singapore's. They are both wealthy because they perform services that their neighbours cannot or, for reasons of policy, will not perform.

All that their relative state of wealth really tells you is one has fewer scruples than the other about how low it is willing to go. On this measure, I definitely rate Singapore as the more successful.

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This article is now closed to comments

wailunscmp
applying for a HSB flat is not as simple. there's a long wait and applicants must fulfil certain criteria. then there are those caught in between the criteria. in successive elections the ruling PAP has lost parlimentary seats due to major disaafection from her heartland. now that's not a sign of happiness. GDP numbers are meaningless to a citizen. what's important is the purchasing power of one's disposable income - both HK and SG have serious problems in this regard
the two economies are totally different - HK is the quintessential capitalist while SG is socialist. there are merits and demerits with both, neither are perfect or better. also, SG has relied on massive immigration intake and gambling industry in the past 10 years to bolster its economy while HK has not opted for these quick fixes. SG's population increased by more than 25% so imagine if HK has 9 million people !
the strength of any economy is its human capital and not government intervention, the latter actually revealing an inherent uncompetitiveness and lack of innovation. the human capital in SG relies on government sponsorship while HK relies on her own wits. monopolies and oligopolies in both economies are their greatest enemies to future prosperity. it produces uncompetitiveness and lack of initiative
wailunscmp
Jake has nailed it again !
Alice Ng
Jake,
Nice article!
There have been recent eruptions in Singapore, indicating a simmering hatred towards FT (referred to by Singaporeans as "Foreign Trash").
The Singapore government has introduced new measures to curb the influx of FT's, making it more difficult for Singapore-based companies to find required resources.
Within my personal circle (engineering background), a seemingly large number of companies are relocating HQ's to Thailand (e.g. Siemens, Foster Wheeler) and Philippines (e.g. Emerson). The Singapore office remains but expansion will take place elsewhere. None of this is reflected in the Singapore Press. The Government controlled press does not mention, and the Singaporean Online community of "Netizens" (TR Emeritus, TOC, The Real Singaporean) are on the war path, shooting down any target that resembles FT's.
How do you reckon, this will affect the Singapore economical landscape?
Big Sheep
As much as I appreciate the sarcastic twist at the end, I doubt others will. Amusing nonetheless!
sydmel
Suggest looking into how the gambling industry helped boosting Singapore GDP and its real impact on local well-being to get a better picture.
auyeungy
Jake, great article. I wonder if the per cap GDP of China, low as it is, also overstates the wealth of the people. Their personal consumption % of GDP is also very low.
Will.I.Am
Fair enough Jake, but irregardless, Singapore has done very well in recent years and HK, while doing pretty well could have done much much better if not for all these bickering.
And one thing for sure every young and even older HKers would give both arms and legs for, a nice 800+square foot nett area apartment (costs: around HK$2 mil) that Singaporeans pay for their public housing. We can only dream of it here....Dream...Dream...
journey
well said. both parasitic except for those who know water is definitely muddier over there.
 
 
 
 
 

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