SINGAPORE – The Republic has a range of policy levers besides taxation to tackle inequality, such as giving Singaporeans a wealth injection through public housing and the occasional Central Provident Fund (CPF) top-up, said Prime Minister Lawrence Wong.
That is the reason why even the bottom 20 per cent of households here has significant net assets – because of Singapore’s home ownership policy, he said in a conversation at the Bloomberg New Economy Forum’s gala dinner on Nov 19.
“That’s one way we can continue to fine-tune our policies to provide more support and uplift for lower-income groups,” he said at the event at Clifford Pier. The annual forum is taking place from Nov 19 to 21.
“We also have CPF… which is the individual’s own retirement nest egg, which we do top-ups from time to time.”
PM Wong was responding to a question from Bloomberg editor-in-chief John Micklethwait, who asked him whether the influx of wealthy foreigners to Singapore meant people were more aware of inequality, despite the Gini coefficient here having come down.
Singapore’s Gini coefficient, a measure of income inequality, peaked in 2007 and has declined in recent years, partly due to government transfers and policies such as the Progressive Wage Model.
The Prime Minister said there are two separate issues: tackling wealth inequality among its people, and managing the funds of people who are not Singaporeans.
As a financial centre, the city-state welcomes family offices and for foreigners to manage funds out of Singapore, as these create jobs for Singaporeans, he said.
“Sometimes it creates frictions, especially when they are ostentatious shows of wealth,” he acknowledged. “We have just to remind them, ‘Singapore is a different society, we are egalitarian, our norms are different, please understand.’ And for the most part, they do.”
Mr Micklethwait also asked about illicit money coming in from abroad as part of these flows, such as the $3 billion money laundering case in 2023.
PM Wong said illicit flows are something that all financial centres have to deal with, and are not a problem unique to Singapore.
“The key is, what do you do? And we are very stringent, and we take swift action,” he said. “We are determined to protect our reputation because that’s what keeps Singapore going – a trusted business and financial centre.”
Asked about Singapore’s energy future and whether nuclear energy is going to become a big part of the Republic’s energy mix, PM Wong said the city-state is studying the option seriously, though there won’t be “an easy silver bullet” to meet its energy needs.
He noted that some new technologies like small modular reactors (SMRs) are safer, but there are currently very few commercial-scale SMRs that meet Singapore’s needs.
Other options include hydrogen, which is still expensive, and working with neighbouring countries to bring about an Asean power grid, which he said is “taking time, complex, but it’s happening”.
Mr Micklethwait also asked about the US-China rivalry, and if the US was losing South-east Asia due to its policies, such as trade tariffs.
PM Wong said that in his regular visits to China, he observed that the US’ actions had only strengthened the Chinese side’s resolve to work even harder and move faster on technology and self-sufficiency.
While everyone is focused on what one country does to the other, the fates of the two great powers will, at the end of the day, be determined by their own people, he said.
“Americans decide America’s future, Chinese people decide China’s future – that’s what it comes down to,” he said. “And it’s their actions, their agency, that determines domestic reforms, that determines the direction that these countries will take.”
On South-east Asia, PM Wong said the region was once an arena for proxy wars, and does not want that to happen again.
“Asean will continue to be fiercely independent – not so much non-aligned, but multiple-aligned, engaged with all the key players” and taking positions on issues based on their own national interest, he added.
Amid the unravelling of the stable multilateral framework, with countries today more concerned about security and resilience, Singapore wants to see a new framework that finds ways such that countries can protect their national interest but with restraint and shared rules, he said.
Singapore is working with like-minded countries to get there, he added, citing partnerships such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Future of Investment and Trade Partnership (FIT-P).
“They are about setting new norms, new rules of the road… in a way, we are laying the foundations for a new multilateral framework that may come later on,” said PM Wong.
Mr Micklethwait noted that FIT-P countries include Brunei, Costa Rica, Chile, Liechtenstein, Morocco, New Zealand, Panama, Rwanda, Singapore, the United Arab Emirates and Uruguay, which “is a fantastic kind of World Cup group to be in (but) doesn’t feel like the beginnings of a big trade bloc”.
In response, PM Wong recounted that long before the CPTPP became one of the largest regional free trade agreements, it had begun as a partnership of four countries – Brunei, Chile, New Zealand and Singapore.
“Great things can start from small places, including Singapore,” PM Wong said to applause from the audience.
Mr Micklethwait closed the conversation noting that PM Wong was Singapore’s first prime minister born after the country’s independence, and asked what made him different from the three Singaporean prime ministers before him.
PM Wong said that while being from a different generation than his predecessors is part of it, in ethos, mindset and values, he represents the PAP.
“We are here to build a better Singapore because history has never been kind to small states,” he said. “And we know, despite our success these last 60 years, the world is a dangerous place. It’s become even more dangerous.
“Our mission, my mission, is to keep Singapore going – not just in my term, but to leave behind a better Singapore for my successor and for future generations.”