Mo’ Money, Mo’ Problems: The Economic Plight of Singapore

Making your first million by the age of 20, running in the same social circles as David Beckham, and owning a designer shoe collection envied by Rihanna – welcome to the lives of Singapore’s elite. It’s no wonder the global perception of Singapore is skewed towards immeasurable wealth, luxury branded goods, and multi-storey high rises. Without further prodding, one would assume that Singapore and its citizens are at the forefront of money, power, and glory.

What bubbles beneath the Burberry is a different story altogether.

Singapore: Then and Now.

Now home to the third largest concentration of millionaires, the humble beginnings of this little island are almost a distant memory. A “started from the bottom” success story, Singapore began its quest for rapid economic development from scratch when it declared independence in the 60s. Over the ensuing decades, the country has secured a position as one of the most efficient economies and affluent states. How did Singapore transform from an underdeveloped nation to a booming republic in less than 40 years? Various bodies of research have attributed this economic success story to three main reasons.

1.Location, Location, Location  The Singapore government took advantage of the nation’s strategic location among major shipping routes in Southeast Asia and transformed the island into a major port for foreign trade and commerce.

2.Government – To the best of their ability, the government of Singapore encouraged economic development and growth. Institutions were drafted that would ease the process of foreign investment, tax incentive schemes were continuously reviewed, and high levels of spending was dedicated to developing infrastructure and innovating technology.

3.Human Capital – Investment in education, as well as emphasis on its importance, created a culture where knowledge is power. The establishment of a world-class education system spawned highly skilled workers who went on with the necessary skills to make meaningful economic contributions.

The Khoo Family. Net worth: $6.3 billion.

However, the remarkable economic growth favoured some more than others. Those whom were #blessed became a class known as ‘new money’ – families who are first generation wealthy and aren’t exactly shy about showcasing their spoils. They are infamously depicted in Kevin Kwan’s 2013 bestseller Crazy Rich Asians, in which Kwan portrays crass materialism run amok – Cirque de Soleil as wedding entertainment, climate-controlled shoe closets, and weekend international shopping trips via private jet. The novel may be fictional, but there is an element of truth to the extravagance. Kwan himself quips,

“The novel is satire, but much of what I write about I’ve witnessed on my visits home [to Singapore]”.

A survey into the spending habits of Singapore’s high-net-worth individuals – anyone with over US$1 million in assets – found that close to 30 per cent of participants chose to fly overseas solely for the purpose of shopping. A little bit of digging and I stumble upon the Rich Kids of Singapore Instagram page. The offspring and relatives of business moguls, real estate tycoons and CEOs; trust me when I say, these silver spooners make Gossip Girl’s Upper East Siders spending habits look like amateur hour. One of my favourites is socialite Jamie Chua who reportedly spends US$17,000 a day, owns a museum devoted to Hermes bags, and has two maids by her side at all times to take photos for her Instagram.

Jamie Chua and her collection of Hermes bags which range in price from $12,000 to $200,000.

While the upper-crust of Singapore live large on a lifestyle of sports cars, designer labels, and private dining clubs, those on the opposite end of the wealth spectrum are struggling to make ends meet. The stark polarisation between the lives of Singapore’s upper echelons and its lower class reveal a level of imbalance reminiscent of fictional dystopias.

Even though academics have been raising alarm bells for years, the plight of Singapore’s underprivileged has been relatively hidden from the lime light. Global statistics indicate that Singapore is amongst the top 10 prosperous nations in the world but has the second widest income gap between the top 20 per cent and bottom 20 per cent. A research study at the National University of Singapore found that the richest 10 per cent have 32.8 per cent of the nation’s wealth and the poorest 10 per cent own only 1.9 per cent.

Adding cause to concern, whilst the incomes of Singapore’s highest earners have risen sharply; the bulk of the workforce has been plagued by stagnating wages despite the cost of living skyrocketing. Studies indicate that income inequality has dire economic and social consequences if ignored. It has the potential to create price distortions which push lower income families into poverty whilst the increased sense of vulnerability drives up mortality rates and crime.

Low income tax across the board and minimal government assistance is all fun and good – if you’re one of the lucky ones with millions lining your Hugo Boss suit pocket. The uneven distribution of income amongst Singapore’s citizens, alongside social policies that emphasise independence, means a large proportion of the population are struggling to afford housing, healthcare, and retirement.

Though the price tag of a Singapore socialite’s Hermes Birkin may feed o̶n̶e̶ several middle class families for a year, the long term solution for the disparity lays in the hands of its maker – the government. Policy needs to be introduced that narrows  inequities, for example tax and transfer systems, as well as increasing government support for the financially disadvantaged.

The question remains:

Will the government of a nation infamous for its growth, consumption, and self-reliance be willing to sacrifice efficiency for equity?

If not, then perhaps a dystopian reality isn’t too far off.

It’s the year 2037, and consumerism reigns supreme. People without a country club membership, minimum number of designer goods, and US$10 million in liquid funds are voted off the island one by one, Survivor style.

Touch wood, this Prada-ridden future remains a fantasy.

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