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  • Dec 25, 2014
  • Updated: 2:59am
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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Parasitic economies?? Only in a derailed mind of an economist who has forgotten that economy is peoples desire to improve their lives through voluntary cooperation amidst state oppression. To be consequent the author should label all countries accepting refugees from other territories parasitic too. Because every individual is property of the masters in the country they were born.
can you me some examples of how it is definitely muddier in Singapore?
Search on extradition treaties. How many returned after fleeing economic crimes back home. Giving honorary degrees to ministers and head of foreign countries. Just about anything even taxis are gov owned. That says a lot about its clout and means to achieve it.
Isn't Median Household Income a better way to proxy personal well-being?
S$7,570/month ($5,929.95) vs. HKD$22,000/month ($2,833.23)
median is the midpoint, doesn't say anything about the spread. median household income in Hong Kong is unbelievably low given its per cap GDP because the spread is very wide.
Well that's sort of the point, isn't it? Despite both being fairly unequal societies Singapore's middle class is arguably much better off
John Adams
Put the gambling money into the numbers and then also run the numbers again with Macau included !
Really? I think you and Jake really need to make some effort to understand the Singapore economy. Maybe it is too sophisticated for those who do not understand the excesses of the free markets
Have you applied before? If not, don't talk nonsense! Any married SG couple can go online and apply, paying SG$10. For suburban area built to order flat average waiting time 3+ years. If you want to choose from leftover flats, you can get within a year. Buy a resale flat near your parents, you can get as much as SG$40K rebate from gov and move in immediately.
HK is quintessential capitalist and SG is socialist? I am afraid your understanding of both economies as well as capitalism and socialism is so warped I don't know where to begin. HK rely on its own wits? haha. Why don't you try looking at the special privileges that the city has been receiving from the mainland for the last decade.




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