Bersih rally deepens Malaysia's social divide

Jul 12, 2011
commentary

All eyes now on how PM Najib will soothe inter-racial tensions and woo voters back
 
By Leslie Lopez

PRIME Minister Najib Abdul Razak successfully deflected one of the biggest challenges to his government's authority at the weekend, when security forces put down street protests demanding greater electoral reform.

But analysts say Datuk Seri Najib and his ruling Umno party have emerged badly bruised, largely because of the use of excessive force to block the rally, organised by a loose coalition of opposition parties and non-governmental organisations called Bersih.

What is more, they add, the defiance displayed by the thousands who braved a security lockdown of Kuala Lumpur was a clear demonstration of how much Malaysian society has been polarised by the country's divisive politics.

What began as a call for electoral reform by Bersih has grown to mean something more, particularly in the face of furious attacks against it by Utusan Melayu, the Umno-owned Malay language paper, and Perkasa, the Malay supremacist group that had earlier warned of race riots and issued threats of a counter-demonstration.

In effect, the Bersih rally has come to be a proxy for those in Malaysia - whether from the Malay community or otherwise - who want a break from the old system of race-based politics; in their view, electoral reform and other problems need serious attention, but not through the usual prism of race and religion, with its tendency to descend into an 'us versus the rest' contentiousness.

Analysts like Mr Ibrahim Suffian, a director of the Merdeka Centre, one of Malaysia's premier opinion research outfits, believe that the government's heavy-handed response to the rally may have provoked some among Malaysia's growing middle class who were previously fence-sitters to take a more partisan role in opposition politics.

'The incredulity of the government's response with fear, the banning of yellow T-shirts and linking the movement to communism has further distanced the government from voters, particularly the younger electorate,' he says.

Dr Bridget Welsh, associate professor of political science at the Singapore Management University, adds: 'There is no question that the government lost a large chunk of support from the multi-ethnic middle ground and chattering classes.'

Mr Najib's multi-racial ruling Barisan Nasional (BN) government also staged a march on the same day. But the group, numbering in the hundreds, comprised only members of Umno's youth wing. Conspicuously missing were representatives from the ruling coalition's Chinese and Indian component parties.

Although the turnout for the Bersih rally was not as big as its organisers had hoped, the tens of thousands of people who turned up still amounted to a setback for Mr Najib, who has worked hard to regain public trust in his BN coalition.

The BN leadership will also surely not forget that the coalition took a severe hit in the March 2008 election after the first Bersih rally was held months earlier. Then, too, the rally drew thousands of protesters.

The challenge now for Mr Najib's government is how to claw back the support of disenchanted voters. His next moves will be watched keenly.

Economists, for instance, will be keeping a watchful eye on whether Malaysia's political woes will distract the government from efforts to deal with critical issues such as inflationary pressures.

Then, there is the impact on the delicate racial balance that has kept Malaysia together since independence in 1957.

Whether it is ultra-Malay Perkasa or the opposition Democratic Action Party standing up for the minority races, all parties have become more vocal and more assertive in standing their ground.

How Mr Najib manages inter-racial tensions while trying to woo back voters from across the ethnic divide will be a big challenge in the months ahead, particularly if he plans to call for a snap election.

There is yet another big worry for the Umno-led government: The deepening split within the politically dominant Malay Muslim community.

Of the thousands who took part in last Saturday's rally, most were Malays. They form more than 60 per cent of Malaysia's population, and are the source upon which Umno's power rests.

But Umno's position as the Malays' favoured party has been steadily undercut since the 1998 falling out between then Prime Minister Mahathir Mohamad and his deputy Anwar Ibrahim, the current leader of the opposition.

The opposition under Datuk Seri Anwar has focused on issues such as corruption and good governance. The high rally turnout among Malays suggests that this is having an effect on the community's support for Bersih's demands on matters such as electoral reform and overhauling the security and justice institutions.

This is significant because stability and bread-and-butter issues have long been Umno's way of getting Malay voters, especially rural ones, on its side.

Clearly, the old ways are not working as well as they used to: Malaysia's voters have become more assertive and fragmented along new lines.

Mr Ibrahim says: 'The Malaysian government needs to be more imaginative to deal with the changing political environment. Brute force is not a long-term solution; engagement is.'

ljlopez@sph.com.sg

Australia's untapped renewable energy

Jul 12, 2011
 
By Benjamin K. Sovacool

AUSTRALIA continues to promote renewable sources of electricity the wrong way, with implications for Singapore and other Asian exporters of technology.

Consider a few striking statistics. Australia has more solar energy potential than every country outside of those in northern Africa, yet uses solar photovoltaic panels to produce less than one-tenth of 1 per cent of its electricity needs.

Indeed, if distributed equally to every home in Australia, the country's roughly 200,000 small household systems would not even provide enough juice to cool a single beer in everyone's refrigerators.

Australia needs to do five concerted things to get back on the path to promoting renewable energy so that this potential can be tapped, improving energy security, reducing greenhouse gas emissions, and creating thousands of regional high-paying and highly skilled jobs.

First, the country needs consistency. I have evaluated the energy policies of more than 50 countries around the world, and never before have I encountered the ad hoc, slipshod, inconsistent, constantly changing policies found here.

New South Wales, for example, recently made drastic changes to their feed-in tariff scheme with less than 12 hours notice for businesses and manufacturers to adjust. The Solar Homes & Community Plan, which gave A$8,000 (S$10,500) in rebates for 1kilowatt solar photovoltaic systems, was closed with less than 24 hours notice.

The Renewable Remote Power Generation Programme, which covered up to 50 per cent of the cost of renewable energy systems that displaced imported diesel fuel use in off-grid parts of Australia, was cancelled with no notice whatsoever.

The photovoltaic industry now employs almost half as many people in Australia as the coal industry. Would the coal industry be given that little, or no, notice?

These sudden and unexpected changes make it difficult for investors to make prudent decisions to locate factories and renewable energy facilities in Australia.

Second, Australia needs better standardisation of renewable energy installations, especially solar ones, as well as more rigorous inspection and enforcement. Investments in testing, standards and safety require government facilitation as market forces can sometimes prioritise short-term profits over long-term quality.

Third, and quite likely the elephant in the room: ongoing energy subsidies. These include rebates and concessions to all energy fuels that cost taxpayers and households.

A transparent accounting system has to be set up so taxpayers know what types of energy subsidies exist, and where their money goes. The mountains of subsidies for fossil fuels - and they exist in Australia, in many forms - distort energy markets leading to sub- optimal investments. They need to be accurately identified: from accelerated depreciation of power plants and tax relief for coal miners to reduced rates for coal transport and government guarantees for purchasing fossil-fuelled electricity. The Australian Bureau of Agricultural and Resource Economics (Abare) could improve its annual Energy in Australia report by tracking trends in government interventions and tax advantages.

Fourth, electricity prices must move towards more accurately matching costs. Most obviously, greenhouse emission permits need to be properly valued in the market. Furthermore, many of the other social costs of energy production need to be included. Renewable energy technologies should be given credit for, among other things, displacing pollutants like mercury that cause neural damage in humans; for relieving electricity grid congestion when strategically deployed; for avoiding the deleterious impacts of water consumption and water contamination; and for reducing wholesale electricity prices. Everyone benefits from these positive aspects of renewable energy, not just those lucky enough to own their own solar or wind system.

Fifth and lastly, a true, national, gross feed-in tariff - a scheme that pays local, residential forms of renewable energy - needs to be implemented. This feed-in tariff would require electric utilities to purchase the power produced from renewable resources at a fixed, premium regional rate. It would pay tariffs irrespective of the owner's actual power consumption. Network and transmission operators would provide those wishing to take advantage of the tariffs access to the grid.

Until these five elements - consistency, standardisation, accounting for subsidies, accurate electricity prices, and properly designed feed-in tariffs - are combined into a synergistic package, Australia's renewable energy potential will likely remain just that.

The writer is an Assistant Professor at the National University of Singapore.

Enjoy what's here, not just mourn what's gone

Jul 9, 2011
 
commentary
Preserving only physical monuments cannot replace a lost heritage
 
By Grace Chua

ALL of Singapore wants a piece of the Keretapi Tanah Melayu (KTM) railway action, it seems.

For weeks, crowds turned up at the now-defunct Tanjong Pagar train station, sweating and jostling. Some nights, there were more trainspotters, shutterbugs and gawkers than passengers, and more joyriders than actual travellers.

Young people want to be part of an organic movement, rather than experience history spoon-fed to them in school. So those who have never taken the train as a traveller, hopped on board for excursions to Johor Baru or Kuala Lumpur, for personal memories.

But amid the outpouring of feeling and flurry of activity, we might ask ourselves: Did we care about the station when trains still ran out of it?

And should the railway land, station and their accoutrements be preserved, for how long will we come back?

The Tanjong Pagar railway station, built in 1932, has been gazetted as a national monument, and the one at Bukit Timah, a conserved building.

But not all the physical components will be preserved. For one thing, the tracks and platform may not be part of the national monument, explained architectural conservator Yeo Kang Shua in a previous interview. He questioned the value of keeping the station without the trappings, arguing they should be taken as a whole. At least keep some vestige of the Tanjong Pagar tracks, he said.

At a photo and video exhibition at the station one night in its last week, after the food stalls had gone, I bumped into architectural historian Lai Chee Kien, of the National University of Singapore. He thought the terminal should be turned into a transport museum.

Will people visit, I asked.

'The physical infrastructure is there, but the software and information are not there yet,' he said, meaning that there should be information panels that go beyond the superficial, and that there must be a public hungry to find out more.

'Oh, and...'

He paused.

'The teh tarik was legendary.'

Mr Lai has a point.

National monuments - buildings or public places - are just a shell. Heritage involves more than preserving the physical; there is an organic living component to heritage, which is why we preserve oral histories, rituals and cultural knowledge.

A number of national monuments, for example, are churches, temples and mosques. Those who visit St Andrew's Cathedral or the Sri Srinivasa Perumal Temple to join in worship, are not mere tourists, but are participants in the civic life of the place. So long as congregations do not dwindle, those national monuments will go on living.

It may be easy enough to preserve the train station. But intangibles like Mr Hasan's drink stall and the legendary teh tarik are harder to preserve. You can set up another teh tarik stand with the same recipe, but the food is given personality and flavour by the man's personality, by the ambience of a mouldering train station.

Every day for years, people worked at the station and along the railway line; some lived there; others transited there.

But how many of us had an interest in, let alone took a part in, the daily life of the station at Tanjong Pagar before it was about to be made scarce? Singaporeans are notoriously kiasu - imminent scarcity immediately increases value.

Later on, how many will come back?How many will linger long enough at this new monument and once train station to engage with it and converse with its history?

Conservation can coexist with urban renewal. It has worked, for instance, at the Red Dot Traffic building in Maxwell Road, which in colonial times housed the traffic police headquarters and today is home to design firms, offices, restaurants and a design museum.

It has worked at the Old Hill Street Police Station, now the brightly painted headquarters of the Ministry of Information, Communications and the Arts.

For the Tanjong Pagar train station, perhaps that option remains.

Right now, there is another quiet civic campaign, conducted on Facebook and in letters to the newspapers, to save the sprawling Bukit Brown cemetery off Lornie Road. I would love to see that cemetery kept another hundred years: my great-grandparents are buried there.

At the same time, cities must evolve as needs and land uses change. Some areas with a vivid past that have been redeveloped are now important sites in their own right.

For example, the Five Points slum neighbourhood of Manhattan, immortalised in the film Gangs Of New York, is now the island's civic centre and part of its Chinatown.

Even as we fret over what we might lose tomorrow, we should consider the wonders of today.

All life, in Singapore and elsewhere, is tenuous, yet enduring - as tenuous as that railway station whose life is ebbing away, as tenuous as the old kampungs that made way for soaring Housing Board flats. And yet those same places live on. The old railway station may yet become a hub of new activity; the old kampungs are now teeming HDB estates.

If they remain as mere monuments to memory, spaces and buildings will always be inadequate - only a shell. They come to life only when people colonise the spaces, jostling, sweating, and breathing life into them.

We can be more than tourists or spectators. We can be participants or worshippers. We can inhabit those places that are not yet burdened by the stamp of official heritage and not yet about to disappear.

And to the train tracks, to the teh tarik, to neighbourhood hairdressers and provision shops - to ordinary life as it is lived - we can bear witness and remember.

caiwj@sph.com.sg

[Sentiments. Memories. Ideals. Lacking the essential life.]

Zero GST for basic goods? Bad idea

Jul 8, 2011

ASK: NUS ECONOMISTS
By Mukul Asher

What would be the effect of implementing a zero per cent Goods and Services Tax (GST) rate for basic commodities? Would it help to lower the cost of living for lower-income families in Singapore? What other measures should be implemented to help Singaporeans cope with high inflation?

Singaporeans are experiencing inflation higher than what they are used to. In April, the Consumer Price Index ) was 4.5 per cent, higher than a year ago, and inflationary pressures are expected to continue in the coming months.

Many people assume that doing away with the Goods and Services Tax on basic commodities such as rice and bread will help low-income households to cope with inflation.

But the case for excluding these commodities from the tax is weak. If this were done, there would be three major consequences:

First, GST revenue would drop. To make up for the shortfall, the current GST rate of 7 per cent would need to be increased. The Government might also cut the GST-related packages designed to help households.

Second, households will switch from the commodities subject to GST to the items that are not taxed. This shift in demand could push up the prices of basic commodities, partially defeating the purpose of exempting them from the tax.

Third, the change would further complicate GST administration and auditing. This is because GST is levied only on the value added (sales minus purchases) at manufacturing, wholesale and retail levels.

Making basic commodities GST-free would not only increase the cost of administering the tax but also make it more expensive for businesses to comply with GST regulations.

The average rate of GST/VAT (value-added tax) in member countries of the Organisation for Economic Cooperation and Development last year was 18 per cent.

Singapore's GST rate of 7 per cent is low by international standards. It is only when the standard rate of GST exceeds 10 per cent that a lower - or zero - rate for basic commodities may be worth considering.

What else can be done to help households deal with inflation? Here are a few suggestions.

Public-sector agencies, many of which operate in markets with limited price competition, affect the prices of many goods and services significantly. There is merit in reviewing in a more rigorous and integrated manner the pricing decisions that these agencies make.

The Competition Commission of Singapore, set up to enforce provisions of the 2004 Competition Act, including promoting and sustaining competitive pricing, could play a major role in such a review.

The second measure concerns the range of choices for consumers. There should be greater efforts to preserve cheaper options. For example, is there a need to redevelop hawker centres, wet markets or older parts of the city if this increases business costs and, therefore, prices?

Finally, households should not wait for the authorities to introduce measures to cushion the effects of inflation. By paying attention to what they buy, consumers can get better value for their money.

The writer is professor of public policy at the Lee Kuan Yew School of Public Policy.

Sino-US relations in a time of transition

Jul 6, 2011

By Frank Lavin

I HAVE had the privilege of spending much of my professional life dealing with China and China-related matters. Maybe that is what makes me, in a broad sense, an optimist about China and US-China relations. But the size of China, as well as the size and complexity of the United States, means that this relationship may become the most complicated diplomatic relationship in the world.

China is now, by virtue of economic success and other elements of state policy, more consequential than it has ever been. This presents a challenge to China and the US in terms of foreign policy.

The core of foreign policy management for China is external equilibrium: How do you achieve your goals in a peaceful setting? But the policy decisions are driven by internal equilibrium. In other words, a primary determinant of China's foreign policy decisions is domestic political and bureaucratic requirements.

Let me touch on five things that constrain China's policy formulation: internal cohesion, personalities, silos, amplification and the Internet.

The No. 1 criterion in the Chinese government is internal cohesion. One could argue that there is essentially one question during a job interview with the Chinese government, and it is a very simple one: Are you one of us? A capable Chinese government official essentially spends his entire life demonstrating that his answer to this question is 'yes'. Life is a job interview.

The raucous nature of the US political process might strike the Chinese as perplexing. In China, you must be able to demonstrate that you will be a responsible member of the team. The first question is not how capable you are or how creative you are or what your ideas are. The first question is: Are you one of us?

This does not always get you the best outcome, and it militates against people who want to try a slightly different direction. Thus, China does not have much in the way of bottom-up experimentation. And people have a need to demonstrate to a broader audience that they are part of the team.

A related phenomenon is the end of the personality-led system and the emergence of a bureaucratic state in China. In some respects, this could be reassuring because of the excesses of historic personality-led systems, but it can also augur a foreign policy drift because it can require a strong personality at the top to help shape outcomes that are in China's best interests.

Think for a second what classic international relations theory teaches about ascendant powers: that if you are a country on the rise, it is best for you to defer challenges and problems for as long as possible. There is no strong argument for prematurely forcing an issue if your capabilities are on the upswing.

Yet when we look at the issues that have bubbled up over the last year or two, it looks as if there is almost a deliberate pattern of surfacing issues that did not need to be surfaced: harassment of US ships in the South China Sea, the overly hostile reaction to US arms sales to Taiwan, some of the un-neighbourly remarks by Chinese officials to Asean foreign ministers, the ramming of a Japanese Coast Guard vessel by a Chinese fishing boat. Any one of these actions from the Chinese side could have been stopped by a dominant personality but, unfortunately, I think, for China, what transpired over the past few years was a series of arguably minor steps that cumulatively created a perception of a country taking an aggressive posture in the region.

There are different theories as to why China abandoned its charm offensive which, to my mind, helped it a great deal in South-east Asia. I believe there has been a combination of factors, some of which I have articulated above, along with the role of silos and the amplification effect.

By silos, I am referring to the fact that the Chinese government is more compartmentalised than other large governments, with ministries responsible for relatively narrow areas and without many inter-agency mechanisms for coordination.

It is not always easy in the Chinese system to think through and argue the costs and benefits of various government initiatives. There is a particular challenge if there are short-term or nominal benefits for one ministry and perhaps long-term costs borne by another ministry. For example, if a People's Liberation Army (PLA) naval vessel harasses a foreign ship in the South China Sea, that might help the naval command demonstrate that it is committed, that it is part of the team. However, this action could work very much to the long-term detriment of China's foreign policy. Still, the Foreign Ministry cannot countermand a PLA navy decision.

There is also an amplification effect, by which I mean that people tend not just to echo established policy but also to amplify it in order to signal their allegiance to that policy. Thus, bad policy gets amplified through the system, not toned down as one would hope.

Take what transpired in China after activist Liu Xiaobo was awarded the Nobel Peace Prize. From the Chinese point of view, the award was a severe public insult, and their starting point was they wanted to respond in kind, by criticising Mr Liu and the Nobel Committee.

But how did that help or hurt them? What other steps did they take and what were the eventual consequences of this for China's foreign policy? After the public criticism, the Chinese authorities conjured up their own international prize, the Confucian Peace Prize, and awarded it to a Taiwanese dignitary who had not even been informed that he had won. It was a somewhat embarrassing moment, I believe, for the people who orchestrated that event and even worse for Beijing - it just kept the issue alive. The amplification effect made matters worse.

The emergence of the Internet in China provides more latitude for discussion than we have ever seen there. But it may also serve as a constraint on policy because Internet chatter in China tends to be a bit unbalanced. On some issues, open criticism of government policy is prohibited so the audience receives only one point of view.

Beyond that, the Internet itself tends to be a medium which promotes comments that tend to be emotional and maybe even a bit nationalistic. So, instead of thoughtful examination of an issue, you can get this cheerleading effect.

Some of this emotional response is to be expected because it is the Internet, not a graduate school seminar. But I do think that, cumulatively, this kind of emotionalism does not help China move to more productive outcomes in foreign policy.

My conclusion is that China and the US face twin challenges when it comes to foreign policy management. As China emerges into this new major power role, it is going to enhance its own prospects for a successful foreign policy, showing the subtlety and restraint that all great powers have to show, and I think this is difficult given China's domestic political environment. For its part, the US needs to display flexibility and goodwill in trying to work with China.

I think the biggest mistake China could make in foreign policy would be to simply assert its goals without regard to other parties. An assertion of a point of view is not the same as the adoption of policies that will help you reach your objectives. Sometimes, the two concepts are blurred in China. We can understand that, domestically, they may be somewhat the same. You have a top-down system and, if you assert a domestic policy goal, that is an important step to achieving it. But it does not work that way in foreign policy as there are other parties involved.

The United States has responsibilities as well. I think the biggest mistake it could make in dealing with China would be to view China through a deterministic lens, that China's economic rise inevitably means hostility. Given the size and complexities of the two countries and the many differences between the two governments, it is no surprise that there are different points of view and even occasional points of friction, but I also see significant progress in the relationship. If there is as much positive movement over the next 40 years as in the past 40, the leaders in both countries should be congratulated for their statesmanship.

The writer is chairman of public affairs for Edelman Asia Pacific. He was US ambassador to Singapore from 2001 to 2005 and was undersecretary for international trade at the US Department of Commerce, where he was lead negotiator for China. This article is edited from a speech he delivered at US think-tank, The Heritage Foundation, on April 20.

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Winning back public trust after GE

Jul 2, 2011
 
By Ngiam Tong Dow

THE General Election on May 7 this year yielded the best possible outcome for Singapore. The People's Action Party (PAP) Government was returned to power with an 81-6 majority although its vote share dipped to 60.1 per cent, reflecting a secular decline. The Workers' Party (WP) won Aljunied, a Group Representation Constituency.

The greatest value of the WP win in Aljunied is that it breached a psychological barrier, giving a boost to the opposition and its supporters. Politics is about winning the hearts and minds of the people. Trust is the cornerstone. This election shows some chipping away of the trust that past generations of Singaporeans had in the PAP. This was shown, for example, in the way Aljunied voters did not heed the statements from senior PAP leaders warning them against choosing the opposition. The challenge for Prime Minister Lee Hsien Loong and his colleagues is to win back their trust.

The PAP began as a multiracial grassroots party. Its largely English-educated leadership was supported by the ordinary man in the street, clerks, postmen, technicians, small businessmen, carpenters and barbers. Mr Lee Kuan Yew and his Cabinet colleagues were seen by the electorate as selfless men, sacrificing promising careers for an uncertain future in politics. PAP cadres rode bicycles to hang up election posters on lamp-posts. The party could not even pay for a soft drink. Former MP Chan Chee Seng told me that they paid out of their own pockets.

[Imagine that Singapore Inc was a small struggling business back then. The partners were dedicated, though rather impoverished. They put in their blood, sweat, and tears for very little in terms of remuneration. But they were driven by passion and vision. And after many years of struggle and success, they have build up a good viable business. And they now seek to a new management at the top. And they tell the CEO candidates that they must suffer as they had suffered and take pittance in pay to show their dedication and passion.

Sure. That would work.]

The founding generation lived frugal lives. My permanent secretary drew a monthly salary of $1,950, just three times more than mine, a young rookie, at $680.

When the gap between the highest and the lowest paid is excessive, the rank and file become disgruntled. Insolence sets in. Morale goes down. The organisation, whether Government, business, or professional practice, begins its slow decline.

[This is an interesting issue. The widening income gap. Economic inequality. The hollowing out of the middle class (is that happening here?) The flight of jobs (again is that happening here?) Globalisation. Job re-design. Is there even a solution to this? Can we abandon captialism? Because that is what some Singaporeans seem to be commenting on online when they ask for govt intervention to hold down prices of flats, and other deemed essentials. If not communism, then socialism.]

The Government has done most things right. Over the five decades since independence in 1965, Singapore's per capita income has increased from $500 to $50,000. Unemployment rates have fallen from over 10 per cent to 3 per cent. The Housing Board has resettled and rehoused 85 per cent of the population. Average education levels have been raised from primary to tertiary levels in one generation.

Yet the Government's popular vote has dropped to 60.1 per cent, close to the psychological tipping point of 60 per cent. I feel that this decline is due in part to the Government's own policies. Some Singaporeans believe less and less that the Government acts in their best interest. In the earlier years, Mr Lee Kuan Yew's rallying cry was that no one owes Singapore a living. Despite its hard edge, the older generation believed that then PM Lee Kuan Yew and his Government put Singaporeans first.

Not having gone through the hard times of the earlier years, the young generation today is not willing to give the Government the benefit of the doubt. They judge the Government by its actions, not just promises.

Changes in two aspects of PAP policies can help build more trust: ministerial salary, and being more open about national reserves.

The formula used for benchmarking ministerial salaries to top earners in the private sector is perceived as a case of heads you win, tails we lose. Worse, it is regarded as self-serving.

A better benchmark would be the median income at the 50th percentile. If we can agree that the core role of government is to raise the livelihoods of the people, then the median income is a good measure of the Government's performance. As a minister's job is more complex than that of the average wage earner, his compensation can be 10, 15, 20 or 25 times the average. Ministerial salaries can range from $40,000 to $100,000 a month or somewhere in between. This would be about $480,000 to $1.2 million annually.

The Government should adopt a clean wage system and not use incentive schemes modelled on the private sector. Profit may be the measure of performance in a company, but not in a public administration. Using gross domestic product (GDP) as a proxy for performance of the Government and using this as one indicator to determine bonuses for ministers is deeply flawed. For instance, the GDP of Singapore can expand simply by importing more low-cost foreign workers - but this would be detrimental to citizens' interests. It is good that a committee has been set up to review salaries of ministers and political office-holders.

[Interesting point about incentives. Could be a valid observation, However, I think his proposed Ministerial salary a little on the low side. Or rather the low end is too low. The high end is about there, but could be higher.]

To my mind, even more crucial than revising ministerial salaries is the need for transparency in the management of Singapore's national savings.

These are accumulated from Central Provident Fund contributions, budget surpluses, revenue from land sales and dividends from government-linked companies such as DBS, Singapore Airlines (SIA), SingTel, ST Engineering, Keppel and Sembcorp. These enterprises were established with equity from the Ministry of Finance or the Ministry of Defence.

Temasek Holdings and the Government of Singapore Investment Corporation (GIC) are the wealth managers for the Singapore Government. Temasek Holdings was established by the Ministry of Finance to manage the equity investments of the Government, such as SIA, Neptune Orient Lines, DBS and other government-linked companies. Though Temasek was expected to play an entrepreneurial role like its predecessor, the Economic Development Board, it has become more and more of an equity investment manager no different from private hedge funds. In fact, it has sold off some knowledge-based government-linked companies.

[Really? You compare them to hedge funds? But being in the dark I have no way of knowing if the comparison is in fact valid.]

Temasek and GIC are profiled in the financial press as Singapore's sovereign funds. They are not. They are just wealth managers for the Ministry of Finance. The ministry is the custodian of Singapore's national wealth. The President exercises custodial powers only over drawdown of past reserves.

[Needs to explain what he means and what is the difference (at least in his eyes) of a SWF and "wealth managers" for MOF. I don't see the distinction. By his own words, MOF is the custodian of Sg's wealth and if these wealth managers work for MOF, then are they not managing Sg's national wealth, which is what SWF do.]

There is considerable misunderstanding over the governance of Singapore's reserves. Few people understand just what the reserves are composed of and which agency is responsible for which portion of the funds. To be sure, Temasek Holdings and GIC do publish annual statements on their funds, even disclosing returns. But these are neither comprehensive nor specific.

The Singapore Government can seek to build more trust with citizens by being more open about the size and composition of the national reserves.

While there is no outcry on the secrecy now, a more open, transparent approach can reduce confusion and dispel any doubts on the issue. I would urge the Minister of Finance to consider publishing an annual audited statement on the size and composition of our reserves. It can be presented as a White Paper to the new Parliament, which is due to begin its term.

[I am suspicious of people who wants to know our wealth, and how it is invested. There is leverage to be gain from such knowledge and it puts us at a disadvantage. George Soros and other robber barons can use such knowledge to their own advantage and to the disadvantage of others. But perhaps there is also the need for transparency to rebuild trust and so there is a need to balance transparency and disclosure with some discretion and protection.]

The writer is a former permanent secretary for finance in Singapore. This article is based on a lecture delivered on Tuesday at the Nanyang Centre for Public Administration at Nanyang Technological University.

Has the Third Party's Moment Arrived?

At the Aspen Ideas Festival, columnist Tom Friedman said he would vote for a third-party candidate. John Avlon on how technology and gridlock could spell an end to the curse of Ross Perot.

July 1, 2011

Independence Day came a few days early this year, as columnist and author Tom Friedman declared his support for a third party at the Aspen Ideas Festival.

“We need a third party. I am for a third party,” Friedman said to applause. “We are trapped in a corrupt duopoly.”

Expressing disappointment with President Obama, dismay with what passes for Republican policy debates, and frustration with the culture of hyperpartisanship in Washington, Friedman sees a reckoning coming, pushed by new technology. “One thing about the Internet and the hyperconnected world—it has flattened every hierarchy in the world from The New York Times to the banking industry. It’s flattened every hierarchy in the world except the two-party system, and that will not remain. That is a prediction that I will make.”

He’s right. Professional partisans are still playing politics by analog rules—they have not woken up to information-age reality. Politics is the last place where people are expected to be satisfied with a choice between Brand A and Brand B.

Friedman launched into this criticism while talking with Aspen Institute President Walter Isaacson about his upcoming book on U.S. domestic politics, co-written with Michael Mandelbaum, That Used to Be Us: How America Fell Behind in the World It Invented and How We Can Come Back.

Friedman is just the latest and most prominent addition to the chorus of voices concluding that hyperpartisanship is hurting our country because it is stopping us from solving the serious problems we face.

In May, the Gallup poll found that a majority of Americans support the creation of a third party, including 68 percent of independent voters.

In 2003, when Gallup started asking the question, a majority of Americans thought a third party was not necessary. But the polarization of the Bush years has metastasized in Washington despite candidate Obama’s core campaign promise to bridge these divides. The two parties are more polarized that at any time in our modern history—more ideologically and geographically stratified. Demonizing people who disagree with you has become standard-operating procedure, as RINO and DINO hunting proliferate in closed partisan primaries. Policy debates have been hijacked by special interests. All or nothing has become the negotiation position of choice.

The current issue crystallizing the problem is the cataclysmic game of chicken that D.C. is playing with the debt ceiling. Bipartisan proposals to deal with the deficit and the debt, like the plan put forward by Alan Simpson and Erskine Bowles late last year, are dismissed by ideologues on either side—especially House members appointed to the commission. And the hottest place in that particular hell goes to the folks who are content to demagogue the deficit and the debt and then refuse to embrace any realistic plan to deal with it.

“If Alan Simpson and Erskine Bowles want to run as president and vice president, I will vote for them,” Friedman said. “If Michael Bloomberg wants to run, I’m very happy to vote for him. We need a shock to the system.”

The point of encouraging a third party, in Friedman’s view, would be to influence the national debate and dislodge the dysfunction through shock therapy.


“Now, I don’t think a third party can win for a lot of reasons…[but] if it’s led by a Bloomberg, it’ll have more impact on the next president than the person who does win. Because let’s remember that Ross Perot won almost 20 percent of the vote. At one point he had 40 percent of the polls, and he was nuts.” For all Perot’s not-ready-for-prime-time-ness, he did succeed in shifting the national debate around the deficit, which put Clinton and Gingrich on a political course to create a surplus by the end of that decade. We need that same reset today.

I spoke to former senator Alan Simpson after Friedman’s endorsement, and the quotable senior statesman declined that particular honor. “I don't see a third party, unless the frustration level is that both parties are stupid. And if the recognition level goes up that the Republicans are stupid and the Democrats are stupid, then there's an easy chance for a third party.” But, Simpson said, he would remain a Republican. “I'm an ornery-enough bastard, if I get into a thing or an organization I'll get in there and fight for my position. That's the way I've always lived all my life. So I'm a Republican. But I always say to them, ‘I thought Republicans believed in government out of our lives, the precious right of privacy, and the right to be left alone. Well, then what they hell are we doing in abortion, and gay/lesbian issues, and mental health…I have a cousin who was gay who was a war hero, World War II. We're all human beings,” he said. “I am rather lyrically profane, because the only way to cut through the shit is to get profane and say, ‘You, sir, are speaking bullshit, and the American people know what bullshit is.’”

Speaking of lyrical profanity, a major contributing factor to the current hyperpartisanship is the rise of partisan media, which is causing us to self-segregate into separate political realities. Friedman had dreams of how to dislodge that as well, imaging an on-air centrist truth-teller who launched into the talking points parroted by partisans, saying: “'Those two people are talking complete nonsense. This one actually thinks that we can get out of this hole without raising taxes, and this one thinks we can get out of this hole without cutting entitlements. What nonsense…That’d be pay-per-view for me. I would love that. And that’s what’s totally missing.”

Given the fact that 41 percent of Americans are now self-described independents, there is a rare opportunity for political and media innovation—an emerging market that is already a near majority.

The two parties are deeply polarized, but the American people are not. That’s why we’re witnessing a market breakdown in our politics. A rising tide of voters might describe themselves as fiscally conservative but socially liberal, but because of the disproportionate influence of special interests like the religious right and public-sector unions, the two parties cannot meet this market demand. They are polarized and paralyzed—incapable of reasoning together to solve long-term problems, absent a crisis.

As we paddle closer toward a cliff, frustration is growing. The status quo is not working.

Impractical extreme voices dominate the debate. And unless they show a new capacity to self-correct, it just might take a third party to remind Republicans and Democrats that they are Americans first—and that hyperpartisanship is the opposite of patriotism.