Friday, March 1, 2013

Cost of living is big concern

Mar 01, 2013
THE recent debate over the Population White Paper has missed the point.

[And, I picked this letter because the writer has missed the whole picture. Not just a point.]

The issue is not about the number of Singaporeans versus non-Singaporeans, nor is it about having a population density higher or lower than that of Hong Kong.

The real issue is how we can control the cost of living - and, by implication, the labour component for businesses - and the rise of commercial rents, as well as ways to improve productivity.

I used to be amazed that a plate of fried rice in the United States could cost US$15 (S$19), and worry that this could happen in Singapore if inflation is not controlled.

[And with the resistance to the proposals in the White Paper, it may well happen sooner rather than later! You don't see it? Yes, it is obvious you don't.]

I also worry when large companies throw in the towel and leave Singapore.

[Why? What has that to do with your plate of fried rice? Or your costs of living?]

The Government needs to rein in inflation and rentals.

[Sure. The Govt also needs to make sure I have affordable housing, a good job that pays well but doesn't exploit me, and I can get to work with relative ease and comfort and reliably, not stuck in traffic for hours after uncertain hours, and preferably allow me time to date and find a spouse, have kids, with affordable and accessible childcare so my spouse and I can have a decent life similar to the one we had before kids, and not have to worry about finding the kids a good school, and passing their exams without too much stress, and without too complicated process of finding a secondary school and a JC with reasonable admission criteria, and can we ensure that National Service won't kill my son before he gets into University so he can find a job, and my daughter can find a decent man to marry her, preferably without her being molested on crowded bus and trains? Or you only interested in inflation and rental? So... ok if you wife, mother, daughter, sister gets molested on public transit?

OK, I need to explain sarcasm here because this is the internet and people who read this MAY BE DENSE! If you find yourself chuckling as you read the above, you are fine. If you felt a frown furrowing your brows, lighten up!

My point is a general statement like "The govt should... (fill in the blanks with almost universally accepted "truths" or values)" is remarkable in its unremarkability. Unless you are going to say something controversial like, "the govt should allow Singaporeans to own handguns!" Now THAT would be something remarkable.]

We need to protect businesses so that there are jobs for everyone who wants one.

[See above.]

But as long as rentals rise, the cost of doing business and the cost of living will also go up.

To balance costs, salaries have been kept low in certain jobs - but no one will fill these positions. Yet labour costs will rise simply because the cost of living is higher. So, bringing in foreign workers is, at best, a partial solution.

We need to talk about the new norm and how we can adjust to it. We should ask ourselves:

- Are we willing to put up with a slower pace of growth and development?
[Stupid question. What do you mean by slower? Train runs every 15 minutes instead of every 2 minutes during peak hour? Then no. Banks only open from 9 am to 3 pm Mon to Fri only like in many developed countries? No. Shops open 9 am to 6 pm Mon to Fri, and 10 am to 2 pm on Sat and closed on Sun? No. Slower development? HDB flats waiting period to stretch to 6 years? NO! Or what did you mean by slower pace? Wait 30 minutes to get served in a restaurant? Walk to the McDonald's 2 km away because you can get there in 30 minutes, and the feeder bus only comes every hour?]

- Do we need new hawker centres that come with hefty rents and associated rising food prices?
[There are so many problems with this question, I don't even know where to start. This is an example of a compound question. Let me just get to the basic question: Do we need new hawker centres? First, what do you mean "NEED"? You can argue that everyone can start packing sandwiches to work, or buy an electric kettle (if you workplace does not have hot water) and bring cup noodles. Then you don't NEED hawker centres. Wives can start COOKING at home (you lazy useless wives you! you know who you are!) And husbands too! This is the new age! Start doing your part! Stop eating out so much!

So do we NEED new hawker centres? Of course not! ]

- Do we need new shopping centres? Are we willing to pay more at these new shops?
[ANOTHER STUPID QUESTION! Wow! Where does he come up with these? But to answer your question, YES! we need MORE shopping centres, so we can create JOBS for those people that will be knocking on YOUR doors, FORCING you to GO to the NEW shopping centres and SPEND your hard-earned money on OVER-PRICED goods that you don't NEED, or they will SHOOT you.

And if you're asking, "there's such a job meh?" You're still not getting Sarcasm. Or irony. Or satire. Or spoof. One of those things. OH God! I've been on the internet too long! I'm getting stupid!]

- Do we have too many real estate investment trusts? How can we keep commercial rents from trending ever higher?
[Yes. I think I'm getting stupid, because this question actually makes some sense... I too, have wondered about the value (or disservice) that REITs provide. So this sounds like a valid question to me. Am I getting stupid too?!?!?

But the second question still sounds stupid to me. So maybe all hope is NOT lost.

How to prevent rents from rising. Rent-control. Centrally managed economy. Socialism/ communism.
Or if you wanna stick to solutions via Capitalism, increase the supply of commercial space to exceed demand. Oh. But that means SPEEDING up development rather than slowing down. Wait, there is another way. Instead of increasing supply, we REDUCE demand! COE for commercial space! Oh but that would still raise costs even if rent stays low or is controlled.
Stop people from starting businesses! Prevent foreign companies from setting up in Singapore. Encourage companies to close down or leave Singapore! Oh but he worries about companies leaving. So contradictory!]

- How can we get more accountability from Singapore's largest landlords, especially the Government and government-linked companies?
[This is a "WTF" question. I read it, and I go, "WTF?" No context to the question. Just comes out of left field. OK, MAYBE it is not the writers fault. Maybe the ST forum page editor edited out the context. Whatever. So I'll just let it go with just my quizzical "WTF?".]

We need new trains and hospitals but, ultimately, what are Singaporeans willing to pay in return?
[Okay. I am a Singaporean. I want new trains. And new Hospitals. And I am willing to pay... NOTHING! Why should I pay? Tax the Rich lah! Draw from our Reserves, lah! Another thoughtless, meaningless, contextless question!]

Kang Wey-Ming

[To be fair to the letter writer and the ST forum page editor who picked this letter, this letter is actually worthy of publication. Not for the intellectual depth and incisive analysis (Yes, I'm still calling this a dumb letter but now with bigger words), but for it's re-presentation of the vox populi.

This letter is actually representative of what people are thinking, and the confusion and contradiction in what they want.

They want a slower pace of growth and development, but they do not quite understand what that means. Or rather they SAY they want a slower pace, when what they actually want is contradictory or even illogical. What is clear is that what they want is clearly selfish and self-centred or at least centred around their self-interest and convenience.

So I want to have cheap hawker fare at convenient locations whenever I want, and I want to be served by a true-blue, born in Singapore Singaporean. I don't care that young Singaporeans don't wanna work as Hawkers! Why are they so spoilt? If Hawkering was good enough for their parents, it should be good enough for them! So atas for what? Social mobility your head ah!

We want flats faster and cheaper, but don't house those foreign construction workers in my neighbourhood where they can scare my wife and daughter, and don't let them take the trains where they can molest our women.

When I go to a nice restaurant, I want to be able to get a seat easily, not have to wait for those smelly foreign talents to finish before I can get a table. I want service to be fast and good (and I must say those Filipino wait staff are pretty good, but after they take my order and serve my food, they better go back to Philippines and not try to become citizens or worse, try to marry our sons and daughters! Oh, but they should come back to my table to top up my water every now and then. I HATE having to call a waiter to refill my glass. They should be MORE attentive!)

Singaporeans don't see or don't want to see the links.

If you don't want foreign workers, you will have to entice Singaporeans to do the job. To entice Singaporeans to do the job, you need to pay them enough to make a living. To pay them enough to make a living, you need to raise prices (say of your restaurant meals).

So first point: If you don't want foreign workers, you must be prepared to pay higher prices.

And the fact is there are NOT enough Singaporeans to fill the vacancies. So more restaurants, food stalls will have to close, even as service standards fall.

So the second point: the increase in prices, will be accompanied by a fall in service and quality.

At this point, the average Singaporean loses interest and says, "I don't care lah! I just want my food cheap and the service prompt. And I don't want foreign workers touching my food. Make it happen and spare me the details!"

End of discussion.

About Rent, Hawkers, and the cost of doing business:

Yes. Rent is one aspect of costs. But thinking that controlling rent will reduce costs is simplistic at best and assumes hawkers are idiots.

Look at any rent-controlled hawker stalls where the hawkers either bought their stall about 25 years ago (and so pay no rent, and so have sole control over their rent costs) or are "legacy" hawkers who were given 30-year rent-controlled leases that are a fraction of the open market value of their stalls.

Yes, their prices ARE lower.

But what are their operating hours? Because their rent is low, they only need to cover their variable costs. After they have earned enough, they close for the day and take it easy. Do I blame them? Of course not! Hawkering is a tiring and trying job, and most of them have been at it for years. They deserve to take it easy in their silver years.

And they deserve to take it so easy, some of them have leased out their stalls (these are the ones that bought their stalls almost 30 years ago). And the rental? Market rate of course.

Why? Why are these hawkers so greedy? You may ask.

What would you do? You put up your stall for rent. Someone offers you $1000. Great! practically free money, you think. But before you can accept, someone else offers you $1,500. Then another $2,000. Then another offer of $2,500. And finally $3,000.

So which idiotic hawker will turn down $3000 monthly rent for a $1000 monthly rent?

So now HDB or NEA (or whichever govt agency is in charge of hawker rental) sees this. How should they charge rent?

Yes, market rental is NOT the way forward IF we want cheap hawker food. But understand than cheap rent will mean hawkers will do the minimum necessary to cover their costs, to earn a decent living and then close for the day, because they want to take it easy too.

The solution that has been implemented (as I understand) is to set up hawker centres as social enterprise or some such thing. I am sceptical of such an approach, but I am going to watch and see if it works. Because while I can see the problems and the issues, I can't see a solution. ]

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