The politics of Singapore’s new media in 2006

This is an article I contributed to The Online Citizen.

The year 2006 was a landmark year for the new media and citizen journalism in Singapore. The government’s “light touch” approach to regulating the Internet was probably one of the factors that emboldened many Singaporeans to step up and push the political boundaries through their blogs, podcasts (online sound clips) and vodcasts (online video clips). There were too many developments in the new media in Singapore in the past year to capture in one article. Nevertheless, this piece will highlight just a few of the more significant happenings in Singapore fuelled by this phenomenon.

Election podcasting and vodcasting

In the weeks leading up to the General Election in May, Senior Minister of State for Information, Communications and the Arts Balaji Sadasivan announced a ban on “explicitly political” podcasting and vodcasting during the hustings. This move was ostensibly in response to the Singapore Democratic Party (SDP)’s plans to circumvent the government-controlled mainstream media by reaching out to the electorate using sound and video clips on its website. After the Ministry of Information, Communications and the Arts (MICA) informed political parties of this regulation, the parties had no choice but to comply. The SDP reluctantly removed the podcasts from their website, but not without protest.

However, this did not stop some Netizens from publishing videos of numerous election rallies on their blogs. Almost all of the videos, which people had recorded using their mobile phone camcorders and submitted to the blogs, were of Opposition rallies, notably that of the Workers’ Party (WP). The blog owners did make several attempts to ask for People’s Action Party (PAP) videos but there were few takers.

Some wondered why the government did not crack down on these websites. The likely reason was that the government felt assured that due to the lack of knowledge about these websites among the general populace, they would have been unlikely to swing the votes by much. This assurance was probably strengthened when a post-election survey by the Institute of Policy Studies (IPS) revealed that only 33 per cent of Singaporeans — mostly young adults — said that the Internet was important to shaping their voting decisions.

The rise of mrbrown

Singapore’s most well-known blogger, mrbrown, shot to fame during the elections with his riotously funny “bak chor mee” podcast. This was part of a series of “persistently non-political” podcasts (a play on the government’s phase “explicitly political”). This podcast recorded an argument between a bak chor mee man (a food vendor) and his customer over a botched order. It implicitly poked fun at the PAP’s demonising of WP candidate James Gomez for his blunder of not submitting his election forms properly and initially blaming it on an Elections Department official.

mrbrown’s next podcast about the impact of grades and exams in Singapore was equally funny. In this clip, two schoolchildren who were comparing exam grades and debating whether one student’s score of 66.6 per cent was “a very good score”, as their teacher had told her. The mainstream media had trumpeted the PAP’s 66.6 per cent win as a resounding mandate. The clip went on to lampoon other politicians both from the PAP and the Opposition.

During his National Day Rally speech, PM Lee misquoted the character in mrbrown’s “bak chor mee” podcast as saying “mee siam mai hum”. Many Singaporeans caught the error immediately, as the popular Malay dish mee siam never contains hum (cockles). PM Lee’s press secretary later clarified that he had meant to say, “laksa mai hum”. This didn’t stop mrbrown from recording another funny podcast titled, “A harmless podcast”, which contained a catchy jingle of PM Lee’s gaffe. The jingle was widely downloaded and circulated, with some people even converting it into a mobile phone ring tone. In keeping with their “light touch” commitment to the new media, there was no response from the government, even though some officials were said to have taken offence at that irreverent mockery.

Unfortunately, despite (or perhaps, because of) mrbrown’s popularity, he found himself targeted for crossing the proverbial “out-of-bounds” (OB) markers. In a column he wrote for TODAY newspaper on 30 June, mrbrown criticised the government, albeit in a light-hearted manner, for its price increases following the Elections. The article, “S’poreans fed up with progress”, drew a scathing response from MICA, which it said “distort(ed) the truth”. To the dismay of many Singaporeans, MICA accused mrbrown of being a “partisan player” in politics and declared that “it is not the role of journalists or newspapers in Singapore to champion issues, or campaign for or against the Government”. The government’s sore point appeared to be that his opinions were circulated in a mainstream newspaper rather than on his blog, which has a much narrower and more limited audience.

TODAY promptly sacked mrbrown, despite howls of protests from Netizens, some of whom turned up at City Hall mrt station wearing brown tee shirts in a show of support for mrbrown and protest at his dismissal from TODAY.”Thankfully, no further action was taken against mrbrown and his podcasts continued to draw more and more listeners every week.

Talking Cock in Parliament

The event Talking Cock in Parliament was publicised almost entirely through “viral marketing” on the Internet. It was a stand-up comedy held at the Old Parliament House on 24 August. Most of the performances were captured and made available on YouTube and other websites. The most memorable performances were probably that of Ruby Pan and Hossan Leong. Ruby Pan had her audience rolling in laughter as she demonstrated the different English accents used in Singapore to illustrate the different strains of Singlish — acrolectal Singlish (i.e., the “high class” Singlish) and basilectal Singlish (the colloquial, ungrammatical type frowned on by the government).

Hossan Leong also had his audience in fits of laughter when he sang his localised version of Billy Joel’s “We Didn’t Start the Fire”. His song, “We live in Singapura”, chronicled the history of Singapore from Sang Nila Utama to the present day.

This refreshing, citizen-driven event not only showcased the amazing artistic talents of Singaporeans, but more importantly demonstrated that Singapore does have a unique and vibrant culture despite our short history. The event succeeded in making Singaporeans laugh at themselves and in the process celebrate their “Singaporean-ness”, regardless of political differences.

The Wee Shu Min affair

Teenager Wee “Elite Face” Shu Min put Singapore on the map in October when her arrogant online rant against what she saw as a “whining” middle-aged Singaporean, and the subsequent vitriol against her resulted in her name topping Technorati’s most popular search words in the world for a few days. T
he storm went mainstream when journalist Ken Kwek reported the online war of words in The Straits Times (ST). The incident was later mentioned numerous times in subsequent newspaper articles and commentaries, and even in Parliament. Member of Parliament Wee Siew Kim, had to apologise twice on behalf of his daughter — the second apology was for his own insensitive remarks in his first “non-apology”.

There is no doubt that the intensity in which Singaporeans reacted to these dismissive comments by an “elite” father and daughter pair served as a warning bell of the fate that awaits any politician who is blind to the growing class divide in Singapore.

Self-regulation by bloggers

A TODAY article in December by blogger Dharmendra Yadav sparked off another debate in Blogosphere about self-regulation by bloggers and developing a bloggers’ code of ethics. Many articles were written in response, arguing both for and against the proposal. It was evident that despite the rationale put forward by its proponents, most Netizens were against the idea of any sort of regulation or code of ethics on a platform which some saw as the “last bastion of truly free expression” in Singapore.

Use of the Internet by political parties

In the past year, Opposition parties in Singapore made tentative steps to use the Internet to propagate their messages. Of the three major Opposition parties in Singapore, the SDP appears to be the most Web savvy. The party regularly publishes articles and press statements on its positions on various issues. On the other hand the WP, while maintaining a respectable Web presence, has yet to use the Web extensively to maximise its reach to the electorate. In fact, two WP central executive committee members resigned following online comments of theirs which did not square with the party leadership’s preferred method of engaging Singaporeans.

Foreign Minister George Yeo was the first Cabinet minister to start blogging regularly, with some surprisingly frank and insightful articles based on his interactions with foreign leaders. P65 MPs (the term coined for new MPs born after Independence) drew some chuckles when they first started blogging about grassroots activities which did not interest the majority of Netizens. However, by immediately posting their maiden speeches in Parliament and the PAP Conference on their blogs, they proved to be a step ahead of the main opposition Workers’ Party, which was markedly slower in using the Net for their party propaganda.

Government awakens to the new media

In his annual National Day Rally speech in August, Prime Minister Lee Hsien Loong devoted over 25 minutes to expounding on how digital media is changing Singapore. He acknowledged that the new media will “change the texture of society” and that the traditional media was “under siege” to hold its audiences. While highlighting several citizen-driven new media initiatives, he surprised many when he mentioned political satire site TalkingCock, even remarking that “some of the jokes are not bad”. The site, which was founded by cartoonist and filmmaker Colin Goh, responded in feigned horror with a headline, “Seow Leow! TalkingCock Suffers Shrinkage, Street Cred Loss, After Rally Mention”. This was obviously not true, as TalkingCock enjoyed a huge surge in visits after the speech.

PM Lee also revealed the government’s distrust for the free-wheeling world of cyberspace. He told Singaporeans that “if you read something on the Straits Times or CNA (Channel NewsAsia) you know it is real”, unlike what is on TalkingCock. He warned Singaporeans to be “sceptical” and not believe everything they read, as “there will be half truths and untruths which will circulate, and you won’t know which is which”.

Many Netizens would have seen this as an unfair comparison, as they know that TalkingCock is just a humour site which has never claimed to be a source of proper news reports, while the ST and CNA too have their share of biases towards the government line.

PM Lee also made no mention of the many local blogs that debate political issues both objectively and independently. However, he signalled that the government would be prepared to change laws like the ones governing podcasts during elections and political videos to keep pace with developments in this digital age.

In response to these trends, the government set up a new unit in MICA’s public communications division named the New Media Unit, presumably to advise the government on Internet public communications strategies and to monitor Internet chatter. Changes to the Penal Code were also proposed to make explicit mention of electronic media as a platform for potentially defamatory comments.

STOMP and citizen journalism

In June, media giant SPH launched a new web portal, STOMP (Straits Times Online Mobile Print). It was billed by ST editor Han Fook Kwang as a platform “to provide readers with new avenues to express themselves, to enable them to interact with [the newspaper], and among themselves”.

While the paper trumpeted it as “citizen journalism”, academic and former Straits Times journalist Cherian George poured cold water on the idea. He said on his blog, “I don’t consider STOMP to be citizen journalism, because it puts the public on tap, not on top. It merely introduces greater interactivity to traditional journalism. Citizen journalism in the proper sense does its own agenda-setting. Citizen journalists decide what questions need to be asked and what topics to pursue. They don’t just answer questions decided by mainstream editors.”

Expected trends in 2007

Positive developments in the new media are expected to continue in 2007, barring any major government crackdown. As more Singaporeans from all backgrounds take to reading, writing and commenting on blogs, online forums, podcasts and vodcasts, the diversity of views on the Internet will also increase. Although most Internet chatter currently takes on a disproportionately anti-Establishment tone, there might be a slight shift in views to the right (i.e. the conservative) in 2007, as more people linked to the government machinery step in to counter their views.

We can expect more Singaporeans to warm up further to Blogosphere and see it as an increasingly credible alternative to the traditional media.

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Also check out Charissa’s excellent review: Rise of the New Media in Singapore Politics

Saddam’s execution a warning to would be tyrants

The execution of former Iraqi dictator Saddam Hussein has drawn mixed reactions from all corners of the world, including in his own country of Iraq. That’s really an understatement, of course, as the death penalty imposed by the Shi’ite-led Iraqi government against a Sunni ex-president threatens to even further deepen wounds in a country already bursting at its seams with sectarian strife.
 
However, beyond all the criticisms of the trial, I believe that Saddam’s execution sends a strong signal to future genocidal tyrants around the world that their crimes will not go unpunished. At the same time, it closes a sad chapter in the lives of the families of Saddam’s many victims, who will be assured that the tyrant will never again threaten them or their loved ones.
 
Saddam is probably the first head of state responsible for crimes against humanity in modern times to face the ultimate punishment following an open judicial process. From the middle of the last century until Saddam’s conviction in November 2006, it was almost unheard of for a murderous national leader to face the hangman for his crimes.
 
The list of mass murderers who have escaped the gallows is staggering: Adolf Hitler took his own life before he was captured; Imperial Japan’s Emperor Hirohito did not even face trial; the Soviet Union’s Joseph Stalin died while in office; Cambodia’s Khmer Rouge leader Pol Pot died of heart failure before he could be turned over to an international war crimes tribunal; Serbia’s Slobodan Milošević died days before the conclusion of his trial; Uganda’s Idi Amin died of natural causes while in exile in Saudi Arabia; and Liberia’s Charles Taylor is now awaiting trial in The Hague, which does not impose the death penalty.
 
So while lawbreakers in retentionist countries like Singapore were being sentenced to death for far less serious crimes like drug trafficking and kidnapping, these all these dictators managed to get away with murder. In fact most of them did not even serve jail time for their crimes. Where is the justice in all that?
 
Many have argued that Saddam’s execution will not improve the dire security situation facing Iraq now, but that is really a separate issue. Justice has been served through Saddam’s conviction and execution. He received the due process of an open trial conducted by his own countrymen, not by the US occupiers. In fact, most of the judges that presided over the trial were senior judges appointed by Saddam himself years back. If the US was presiding over the trial, I doubt it would have reached such a speedy conclusion, as the lengthy appeals process would have probably continued until Saddam died waiting in jail.
 
Iraq faces a long, difficult journey ahead towards national reconciliation and peace. Saddam’s execution may not produce an immediate remedy to the sectarian violence, but it is a necessary first step that will hopefully lead to a healing process and eventually a lasting peace for that nation.

Feedback on the Casino Exclusion Measures

The following is the feedback I submitted to REACH (the Government Feedback Unit) on the National Council On Problem Gambling’s Public Consultation on the Casino Exclusion Measures.

The consultation paper can be found here. REACH is accepting feedback until 31 January 2007, for those interested in giving their inputs.

————

What are your views on the draft procedures of the Voluntary Self-Exclusion? Are there any other ways to make the voluntary self-exclusion procedure simpler and more effective? How can we encourage problem gamblers to apply for self-exclusion?

It is good that NCPG will allow applications by mail or online. However, the procedures for self-exclusion should be made even simpler.

If someone makes a self-exclusion application online using his SingPass, there is no reason to have to verify it a second time by way of a phone call. If people can apply to set up a business or collect their Progress Package using their SingPass without any additional verifications, I don’t see why a simple voluntary self-exclusion from a casino needs it.

Mail-in applications accompanied by the applicant’s NRIC should also not require any phone verification. One can apply for a credit card using a photocopy of one’s NRIC, so why not a casino self-exclusion?

Informing applications that they will receive a phone call could deter some people from applying as they may not wish to have any personal contact with a “live” person about this application. The applicant may also fear — however unfounded — that the caller will be a social worker trying to help him treat his gambling problem.

Some individuals may also want to exclude themselves even if they do not have a gambling problem — perhaps for symbolic reasons. Trade & Industry Minister Lim Hng Kiang and his wife have both pledged to exclude themselves from the casino. In a Parliamentary statement on 21 Apr 05, the Minister said, “Well, in my family, my wife is dead set against gambling. So we have decided that when the time comes, both of us can send in our exclusion forms.” (The speech can be found on the Hansard at http://www.parliament.gov.sg/reports/public/hansard/section/20050421/20050421_S0004.html.)

Is NCPG really going to call up Minister Lim to personally confirm his application?

Your paper has indicated that, “These steps are taken to guard against impersonations”.

NCPG’s fears are largely unfounded. There might be rare cases of fraudulent applications, but this will by far be the exception rather than the rule, given Singapore’s strict law enforcement and punishment for impersonations. NCPG’s concerns stem from a kiasu Singapore habit of assuming the worse in people, and shaping the rules to fit the lowest common denominator. If someone had his NRIC or Singpass stolen to make a fraudulent application, he will have far worse things to worry about than being excluded from a casino.

What are your views on the draft procedures of the Family Exclusion? Under what circumstances, if any, could it be better for families/social workers to persuade the problem gambler to opt for self-exclusion instead of proceeding with family exclusion? How can we better support families going through family exclusion orders?

This option should (1) be made less onerous and (2) allow for extended family to make this application and (3) allow anonymous applications.

My reasons as follows:

(1) This option should be made less onerous

If a family (say a wife) has decided to make an exclusion application, chances are that she has assessed that her gambler husband will be unwilling to make a self-exclusion application, or has failed to convince him to do so. Therefore to go back to the gambler and persuade him to apply for a self-exclusion will be counter productive. In fact, it may heighten tensions within the family, rather than lessen it.

The gambler’s family — not NCPG or any social worker — is in the best position to assess if the gambler needs to be excluded. Their assessment of the situation which affects their own family should be taken at face value. To put in place additional roadblocks to approving the application will only deter families from applying for the exclusion.

While the idea of tying in a social worker interview and referrals to help agencies is well-intentioned, it should be noted that the objective of this procedure is to exclude problem gamblers from the casinos, not to treat gambling addictions. The latter can be dealt with through other means. To force an applicant or his family to go through “counselling” before application approval will only serve to deter genuine applications.

(2) Allow extended family to make this application

Very often, a problem gambler’s family may not be in a position to make the application, for fear of the consequences. A wife who has a problem gambler husband who comes home and beats her up in frustration after suffering gambling losses will not dare to make this application out of fear for her personal safety. Therefore the respondent’s extended family (e.g. his siblings, parents, in-laws) should be allowed to make an application as well.

(3) Allow anonymous applications

By anonymous, I do not mean that someone can make an application without providing their own name. But just like tips offs to the Corrupt Practices Investigation Bureau (CPIB) the applicants’ names do not need to be revealed to the respondent. This will be more effective if suggestion (2)
above is adopted.

In all the above three circumstances, if the person objects, he can always appeal and receive a COA hearing to confirm or dismiss the application (the same way as for the Third Party Exclusion Procedure).

What are your views on the draft procedures of the Third Party Exclusion? How can the NCPG implement the Third Party Exclusion in an effective and sensitive way?

I have no comments on this Third party Exclusion procedure, except to point out that the government appears to have reserved the right to exclude persons from the casino, while not giving that same right to members of a problem gambler’s extended family. (See point 2 above.)

What are your views on the draft procedures of the Panel of Assessors? What criteria should be used to select persons to sit on the Panel? Who should not sit on the Panel of Assessors? (Please note that we are not asking for names of persons.)

The government should be very objective in selecting appropriate persons for this panel. Since the duty of these assessors is to assess if persons merit being excluded from the casino, assessors should be those who understand the trauma that is faced by the families of problem gamblers and interact on a regular basis with dysfunctional families. For this reason, social workers, psychiatrists and religious leaders who counsel and assist broken families are the most appropriate candidates.

Professionals like corporate lawyers and company executives who have little or no interaction with dysfunctional families should not be included on the Panel just to make up the need for “diversity”.

Persons who have a vested interest in the success of the casino should not be included, as this could lead to conflicts of interest. These include people who work in the casinos or officials from the economic ministries and agencies who pushed for the establishment of the casinos.

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In support of a bloggers’ Code of Ethics – Part 2

Dharmendra Yadav’s TODAY article calling on bloggers to self-regulate continues to draw mixed reactions from local blogosphere. Aaron, Yuhui and I generally support the suggestion. BL agrees that blogs should self-regulate, but doubts the feasibility of implementing the idea. Other bloggers, including Dr Huang, Cowboy Caleb and Elia Diodati feel that it is unnecessary and impossible.

I don’t think Dharmendra and Aaron were calling for a formal blogger’s association which will censor or censure its members who do not toe the line. That is not only undesirable but also impractical—bloggers simply won’t join the association. There is also no intention to muzzle the “last bastion of truly free expression”, as Dr Huang colourfully describes blogosphere. “Censorship” is as much a bad word to bloggers, as “welfare” is to the Singapore government.

Rather than any type of association, whether formal or informal, I would prefer a Code of Ethics that the majority of law-abiding bloggers would willingly agree to. This Code should be concise, localised to the Singapore context, simple to understand, easy to adhere to, and non-binding. Its function would be symbolic rather than regulatory. It would be somewhat like the our National Pledge. The Pledge, penned by our first foreign minister S Rajaratnam, is a short and straightforward, yet deeply meaningful statement. Almost all Singaporeans from all walks of life and political persuasions agree with it. The Pledge itself has no legally binding requirements, but those who choose not to adhere to the statements set forth in the Pledge are likely to find themselves contravening some laws of our land.

Once a bloggers’ Code is agreed upon, it could be hosted on its own website. Bloggers who agree to adhere to the Code can then place a logo (like CaseTrust) on their own blog with a link to the Code.

My rationale behind advocating a Code of Ethics is two-fold.

Firstly, it would help illuminate the “out-of-bound (OB) markers” that exist in Singapore so that bloggers don’t inadvertently cross them and end up in hot soup.

The fact that the vast majority of bloggers use pseudonyms rather than their real names on their blogs belies a mistaken belief that pseudonyms provide a high level of identity protection for bloggers. This is a false security. One’s identity is easily traced through the IP address that ISPs (either Singnet, Starhub or Pacnet for all residential users in Singapore) issue to customers each time they log in to the Internet. You can easily find out your own IP address. All website logs also keep track of the IP addresses of their visitors. In addition, the surfing habits of visitors can also be determined through the logs. For example, my logs tell me that 24 per cent of my visitors are Singnet customers, 87 per cent use Windows XP operating system, and 80 per cent of them are from Singapore. I even know what pages they were on just before they visited my blog (i.e. the referral pages).

In countries like the US, the authorities require a subpoena to get the ISP to reveal the name behind the IP address. Not here Singapore. In the absence of privacy laws, the police can easily compel your ISP to reveal that information even without a court order. In fact, even without asking the ISP, the police are exempt from seeking permission before gaining access to computer servers to conduct their investigations (under the Computer Misuse Act, Section 14). Readers would recall the uproar in 1999 when Singnet was caught using a Trojan horse to scan its customers’ computers. Incredibly, Singnet had asked the Ministry of Home Affairs’ (MHA) IT security unit to scan the computers of its more than 200,000 subscribers. (MHA is the parent ministry to the Singapore Police Force and the Internal Security Department. It is not the agency in charge of info-comm regulation.)

Most bloggers are not fully aware of the wide array of laws that can be used against them should they cross that red line. These include the Computer Misuse Act, the Maintenance of Religious Harmony Act, the Penal Code and the Sedition Act. The latter was used several times in the past year against bloggers whose writings the authorities deemed to be inflammatory and racist.

Recently the MHA released its proposed amendments to the Penal Code. Section 298 of the Penal Code is to be expanded to allow the authorities to prosecute individuals who utter words with the intent of wounding not just the religious, but also the racial feelings of any person. Under the revised defamation laws (Section 499), explicit mention will include imputation “made or published in written, electronic or other media”. What this means is that (1) the authorities will soon have the option to prosecute racist bloggers under either the Sedition Act or the Penal Code, and (2) it would be easier to charge bloggers for defamation.

The Code of Ethics should therefore state, in simple terms, that its bloggers agree not contravene the laws of Singapore.

Secondly, a Code of Ethics could help raise the credibility to the blogging community. It has been repeated time and again by ruling party politicians and the government-controlled media that blogs are not credible sources of information, unlike the mainstream media. In a speech in October to foreign journalists, PM Lee Hsien Loong declared that while the traditional or mainstream media is “reliable, verified and insightful”, the new media is “full of clever propaganda, inflammatory opinions, half-truths and untruths” which are “not always easily countered by rational refutation or factual explanation”.

The truth is that while there is a fair share of inflammatory opinions out in blogosphere—terrorist websites usually feature most prominently—the vast majority of blogs are just personal diaries, which cater to only a small network of the authors’ friends. Others are authored by writers who are earnestly trying to present balanced, truthful and responsible opinions.

A Code of Ethics, which could incorporate journalism ethics and standards of truthfulness, accuracy, objectivity, impartiality, fairness and public accountability, would go some way in convincing not just ruling party politicians, but also the mainstream media-reading population that blogs are not as full of nonsense as they have been conditioned to believe.

Conclusion

While a bloggers’ association is an idea that could be KIV’ed for the future, an informal Singaporean bloggers’ Code of Ethics may not be as far fetched and draconian a measure as some of my fellow bloggers think. There are strong benefits in coming up with such a Code, but it will only be realisable with the strong support of the majority of blogosphere.

In support of a Bloggers’ Code of Ethics

Dharmendra Yadav wrote an article for TODAY calling for bloggers to “self-regulate” by way of a code of ethics. I support this idea as articulated by Yadav and Aaron Ng. My reasons are found in my comments here and here.

Aaron has taken the initiative to draft out a code of ethics for consultation here. I hope all of Singapore blogosphere (bloggers and readers alike) would take some time to look through this draft code and give your comments and suggestions.

Hong Kong drops plans to introduce GST

Just as the GST debate in Singapore seems to be petering out, Hong Kong — the very economy that Singapore is often trying to emulate — yesterday shelved its plans to introduce a 5 per cent GST in the face of strong public opposition. It is notable that this decision was reached after a long 9 month public consultation. In Singapore’s case, there was no public consultation at all. Just an announcement in Parliament which Singaporeans are expected to meekly accept. Perhaps it is not just the government that is to be faulted, but us citizens as well for too easily accepting whatever will be, will be.

Hong Kong shelves controversial sales tax plan

HONG KONG (AFP) – Hong Kong is to drop plans to introduce a goods and services tax (GST) after it failed to win enough public support for a change in the city’s famously low tax environment.

Financial Secretary Henry Tang said the decision was reached after an ongoing public consultation showed that the controversial plan lacked public support.

“It is clear from the views collected that we have not been able to convince the majority to accept GST as the main option to address the tax base problem,” he said.

“So we accepted that at this time we do not have the public support nor the conditions for introducing a GST. For the remainder part of the consultation we will not be advocating GST as the only option,” he told reporters.

Tang did not take questions nor clarify whether the government will re-consider the policy in the future.

He said the government will stop promoting the plan over the remainder of the nine-month consultation period and urged citizens to continue to provide their views on the other possible ways to widen the tax base.

Hong Kong leader Donald Tsang said the decision has complete support from him and the Executive Council, or cabinet.

“We believe that the decision (Tang) has made respects fully the wishes of Hong Kong people that we should seriously consider widening our tax base,” he said.

“At the same time he has paid full regard to the strong opposition of the people to the introduction of GST at this time,” he said.

Tsang Yok-sing, Executive Councillor and the founding chairman of the pro-Beijing Democratic Alliance for the Betterment of Hong Kong (DAB), also welcomed the move.

“We opposed the GST but also believe that we should find other ways to widen the tax base … we welcome that the government has listened to the public views,” he said.

The proposal has met public hostility with protests denouncing the plan throughout the consultation period. All major political parties opposed the measure.

Activists had accused Tang of robbing the poor to pay the rich, with protesters saying a sales tax would decimate the booming tourism industry by making shopping in Hong Kong — one of its biggest draws — less attractive.

Is a GST hike the only solution?


The Singapore government seems to have concluded that only way to decrease income and corporate taxes while increasing funding for social assistance to help the poor is through a GST hike. Although I have no doubt that the Ministry of Finance and the Cabinet went through much deliberation before arriving at this conclusion, it seems to be a less-than-ideal solution to helping the poor, for the reasons I explained in Part I and Part II of this series.

But if the GST isn’t increased, how are we going to find the money to “tilt the balance in favour of the poor”? I explore a few possible alternatives, and I invite readers to comment on them and add their suggestions.

1. Use the capital gains from Net Investment Income (NII)

Currently, the Constitution defines Net Investment Income (NII) as the dividends and interest earned from investing past reserves. Just before announcing the GST hike, PM Lee announced that the government will amend the Constitution and seek the President’s approval to re-define NII to include capital gains.

The NII for this year is projected to be almost $2.4 billion. Citigroup economist Chua Hak Bin told TODAY (15 November) that he “won’t be surprised if the NII doubles once you incorporate capital gains”.

This could mean an additional $2.4 billion into the government coffers — almost 60 per cent more than the extra $1.5 billion that the GST hike is expected to reap. It is almost 3 times the entire operating expenditure of the Ministry of Community Development, Youth and Sports in 2005. Is $2.4 not enough to help the needy?

2. Further increase vice taxes

Although smokers know that each budget speech usually brings bad news for them, they may not be aware that Singapore actually has a lower cigarette tax burden than many other developed countries. In Denmark, Ireland, the UK and Portugal, the cigarette tax is upwards of 80 per cent, while in Singapore it is just over 50 per cent. [Note: These were 1999 figures. The cigarette tax has probably gone up across the board since then.]

Cigarette taxation has been proven to be one of the most effective ways of preventing young people from picking up the habit and helping smokers kick the habit by making cigarettes less affordable.

There is also scope to increase liquor duties further, especially for hard liquor. The Singapore Armed Forces (SAF) should also abandon its provision of duty free beer to servicemen.

In the same vein, betting taxes on 4-D, Toto, Singapore Sweep, soccer betting, private lotteries and fruit machines in private clubs should also be increased to discourage people from gambling away their family money.

The annual revenue gain from the 2005 increase in tobacco duties was about $158 million. Similarly, the increase in liquor duties in 2003 resulted in an annual revenue gain of $9.4 million.

Given the benefits of vice taxation to Singaporeans’ health, the savings on healthcare and social service expenditure, the reduction in drink driving and the increase in government revenue, there is no reason why Singapore should not aim to top the world with its taxation on vices.

3. Collect more taxes from tourists

Currently, just 1 per cent cess tax is levied on cessable items sold by tourist hotels, tourist food establishments and tourist public houses. Cessable items include hotel rooms charges, food and beverage, corkage charges and cigarettes sold at hotels.

Cess could be increased to at least 3 per cent or more. In addition the number of cessable items could also be increased to include telephone and Internet charges, the hire of vehicles, tour guide charges and services of dance hostesses (yes, the last item is currently non-cessable!).

The government collected $30.46 million in cess last year. A threefold increase in cess could therefore net an additional $60 million, even without factoring in the increase in tourist arrivals envisaged in the coming years.

Currently, tourists may claim a refund of the GST paid on their purchases under the Tourist Tax Refund Scheme. The government should also eliminate this scheme. Although GST refund schemes are practiced by several other countries, there is no pragmatic reason for Singapore to follow suit. Canada recently announced that it will end its GST refund programme next April.

Some may argue that these moves could discourage tourists from coming to Singapore. But isn’t the main benefit of tourists the money they bring? If some el cheapo tourists were to really shun Singapore because of excessive cess or no GST refunds, then I don’t think they are the kind of tourists we should be courting.

4. Impose a luxury tax

A luxury tax is any tax on the sale of items not considered to be essential to a reasonable standard of living. Items such as high-end cars, fine dining and expensive entertainment could be subject to this tax. Compared to income tax, this would be a fairer way of taxing the rich, yet not penalising those who work hard but are prudent in their spending on luxuries.

5. Stop giving election handouts in cash

On the eve of the last two elections, the government saw it fit to disburse a total of $7.8 billion in cash to Singaporeans through New Singapore Shares (NSS), the Progress Package and Economic Restructuring Shares (ERS). Although less well-off Singaporeans were given larger packages, high income earners still received at least $200 to $400.

Several ruling party MPs had questioned the fiscal prudence of this generous give-away. For the rich, a few hundred dollars did not make much of an impact on either their bank books or their voting patterns. A friend of mine who is a successful investor in the financial services sector even asked me last month, “What is the Progress Package?”

These handouts were given in the form of cash deposits in one’s bank account or CPF account. Although they were meant to cushion the impact of economic restructuring, many less frugal Singaporeans saw it as ang pow money to be spent immediately on luxuries. The longer-than-usual queues at ATMs all over town and the extra long store hours in Orchard Road on the day the Progress Package was disbursed were suggestive of where many “struggling” Singaporeans had spent this money.

The government should have been more prudent in this respect. The money should not have been wasted on giving to the rich, who have no need for cash assistance from the government. It would have been better if it spread out and given in the form of vouchers for essential items rather than in one lump sum cash payment. This would have ensured that the money was not frivolously spent.

6. Reduce government administration expenditure

The government wants to reduce the tax burden for the rich (including MNCs) so they won’t pack up and leave. However it will be impossible to increase revenue without taxing the rich more, either directly or indirectly. This is because most of the tax burden in Singapore already falls on them. If the government wants more money to spend but does not want to make life more expensive for the rich, the best solution would be to reduce on government administration expenditure.

This is not a new
proposal, and indeed the government has already set up a Cut Waste Panel to look into this matter. The Panel has received almost 3,700 suggestions from the public but has agreed to implement just 91 of them – a 2 per cent take-up rate. For the remaining suggestions, government ministries have claimed that they are either already being done or “have been addressed in current policy/practice”.

Assuming that most Singaporeans who wrote in to the Cut Waste Panel had genuine observations and concerns, it is surprising that only 91 suggestions were deemed implementable.

One of the most politically contentious issues is salaries. Manpower costs make up the largest component of government administration expenditure.

Even if one were to completely accept the government’s anti-corruption and talent retention arguments for paying our ministers and top civil servants the highest public sector salaries in the world, is it really necessary to pay them so much more than their counterparts in the richest countries? (The Singapore President earns 3.7 times more than the US President, and the Singapore Prime Minister earns 6.4 times more than the British PM.)

Recently Minister in charge of the civil service Teo Chee Hean said that civil service salaries would rise next year in order to retain talent. Senior Minister Goh Chok Tong also hinted at a rise in ministerial salaries. KTM has pointed out that increasing the Staff Grade salary benchmark will mean that the salaries of the hundreds of Superscale officers will increase. This would cost taxpayers millions of dollars, on top of the already sky high salaries that the ministers and top civil servants earn.

Is this really the most effective way to retain talent and prevent corruption? Human resource practitioners know that salary is not the most important reason why talented employees stay on the job. In fact, a high salary often succeeds in retaining non-performers while having a marginal influence on retaining talent. Having previously worked in the civil service, I know that there are many other reasons besides salaries that result in such a high turnover rate. The government cannot keep throwing money at a problem without solving the root cause.

And if exceedingly high pay can prevent corruption, why is it that so many African dictators continue accepting bribes even when they already have billions stashed away in Swiss bank accounts? Greed knows no boundaries. The Singapore Civil Service has managed to stay relatively corruption-free not because of its very high salaries, but because of the very heavy penalties imposed on offenders.

You see! The GST spin is working!

If you need proof that the government’s spin is working, look no further than the Straits Times Forum page!

Nov 21, 2006
‘No’ to minimum wage, ‘ Yes’ to GST hike

I REFER to the proposed GST increase from 5 to 7 per cent, to provide for those who are poor. There is indeed a pressing need to help lower-income Singaporeans caught in the globalisation tide.

Being a small-business owner, I can attest to this. I have many employees who earn less than $1,000 in basic salary and are the sole breadwinners (One such staff member hails from a family of 11). It is heart-rending hearing them bemoan the cost of living, utility bills, household expenses, etc. Much as I would like to pay them more, it is not possible to do so without affecting cost and the business’ survival.

The minimum-wage argument is not tenable. Should employers be forced to pay a minimum wage, many like myself would choose either not to hire because we cannot afford it, or not to set up shop in Singapore. This will result in lesser employment.

I am glad the Government has heeded the call to take care of the lower-income. Workfare is unique to Singapore and is a far better principle than welfare. Under workfare, hardworking Singaporeans are given a chance to level up whereas welfare destroys all incentive to work.

It will take some time for Singaporeans to accept the GST increase. I urge everyone to take a measured and rational approach and to support it as it is designed primarily to help poorer fellow citizens. In order to make the reason for the GST hike more persuasive, I suggest the Prime Minister gives a full account of the two-point increase by Budget 2007 – what is the exact dollar value and how much of each dollar will go into workfare.

Theodore Yeo Guan Huat

The GST spin and the whole truth

Part 2 of the series on the GST hike

Continuing from my previous post, this post will highlight some of the spin that the government and the mainstream media has been putting out to soften the blow of the GST hike announcement. It will also explore some other possible reasons for the government’s decision, not all of which have been publicised.

In most other developed countries, a two per cent increase in consumption tax – which will impact every single resident in the country – would be cause for a huge public outcry. In Hong Kong, the government’s mere proposal to introduce a 5 per cent GST sparked huge protests in August by 3,000 to 10,000 Hong Kongers, including local businesses operators, traders and retailers.

Unsurprisingly in Singapore, where street protests are banned, the shock announcement has been met with meek acceptance by MPs and the mainstream media, and a sense of resignation by the general population.

The spin

The government and the mainstream media are fond of comparing figures with other countries to show how much better off Singaporeans are. TODAY’s report (15 November) dutifully did a “consumption tax comparison” between Singapore and other countries. It cited how Australia, Europe, the UK and New Zealand have GSTs of between 10 and 17.5 per cent.

The sales tax in the US was listed as being “up to 9.4 per cent”, but the report conveniently omitted the fact that some states like Oregon, Delaware and Montana don’t even have sales tax. In New York city, although the sales tax is 8.325 per cent, essential items like groceries and clothing under US$110 are exempt.

The report also failed to mention that these countries are all welfare states (to varying degrees) which spend a higher proportion of government revenue on public assistance and health care than Singapore. Australia, for example, spent A$17.1 billion or 2.3 per cent of its GDP on just welfare services in FY2002-03. In contrast, the Singapore government’s total expenditure on health and community development, youth and sports in 2005 took up only 1.28 per cent of that year’s GDP (assuming that all of it goes to public assistance, which it certainly doesn’t.)

On the other hand, Japan, a developed economy just like Singapore, has continued to maintain its 5 per cent consumption tax. Hong Kong, which has a corporate tax rate that is 4 per cent lower than Singapore’s, has yet to even implement their proposed 5 per cent GST.

Local blogosphere hasn’t been so acquiescent in its reaction to the GST hike announcement. It is one of the hottest topics on local blogs, with article after article (some say too many) slamming the GST as a regressive tax which will hurt the poor.

The mantra that the government is singing to Singaporeans is that the GST hike is about “tilting the playing field in favour of the poor”. Coming hot on the heels of the tragic suicide by a Singaporean in financial crisis and the Wee Shu Min affair, the government has probably calculated that the best way to sugar coat this bitter pill is to emphasise that most of the additional revenue collected will go to help the poor.

The whole truth (well, at least some of it)

The actual reasons for the increase are not as clear cut as the sound bites portray. Firstly, the government is trying hard to balance the budget, which is currently in deficit. Between FY2002 and FY2006, the government accumulated a net overall budget deficit of $4.23 billion. (Note: This figure does not factor in additional inflows like capital receipts from statutory boards – more of this in my next post.) In certain circumstances, a large and prolonged budget deficit could lead to higher inflation and interest rates (although not necessarily so).

Secondly, the GST hike will give room for the government to further lower corporate and top bracket personal income tax rates to increase economic competitiveness. As globalisation and Singapore’s high operating costs are resulting in more and more multinational companies (MNCs) relocating to lower cost countries like China, the government is desperately trying to boost the incentives for these entities to remain in Singapore. Slashing direct taxes for high income earners and MNCs is seen as key to achieving this.

Thirdly, with the elections over (but not too recently) and the PAP receiving its “strong mandate”, there is no better time than now to feed Singaporeans the bitter medicine so they will have more time to forget its unpleasant aftertaste before the next elections in 2011.

Lastly (and this is what the government is emphasising), with an ageing population, growing income inequality and more populist pressure to increase social spending, the government is embarking on a policy shift to provide a little more financial assistance to the needy. Someone will have to pay for this “Workfare” assistance.

However, it is unlikely that the entire $1.5 billion expected windfall from the GST increase will be used to fund social assistance programmes. Institute of Southeast Asian Studies researcher Terence Chong told TODAY (15 November) that he “doubt(s) the full amount will be used purely for assistance programmes. Some of it may go into research and development costs, some may be used to fund education.”

Conclusion

Despite the concerted efforts by the government and the media to paint a rosy picture behind the GST hike, it is clear that the announcement is not going down well with most Singaporeans, except the fiscal conservatives who dominate the Establishment. Keeping in mind that it is still three months before Budget 2007 is officially announced, I would not exclude the possibility that the government might back down slightly under pressure on the GST hike. Singaporeans might either see a very gradual increase in the GST rate or generous offset packages to help them cope with the hike.

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Coming up next….Some suggestions on how the government could balance the budget without hiking the GST.

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Is GST really a fairer tax for the poor and SMEs?

This is a first in a three-part series of commentaries about the impending GST hike. In this first part, I will examine the impact of GST on the lower income earners and small businesses. Part 2 will analyse the government’s and media’s “spin” accompanying the announcement of the hike. In Part 3, I will explore some of the alternative sources of revenue that can be used to increase social assistance to the poor yet balance the budget, as well as ways to cushion the impact of the GST hike for the poor.

On Monday, Prime Minister Lee Hsien Loong announced that Singapore’s Goods and Services Tax (GST) will be increased to 7 per cent in 2007, from the current 5 per cent.

The decision to increase in the GST requires much greater scrutiny by the public, consumer groups, small businesses and the Opposition. The government needs to stop its political spin and be fully transparent with Singaporeans on this issue. It needs to explain clearly why the GST hike is necessary, whether any alternative solutions have been explored, and outline exactly what it intends to do with the increased revenue from this tax increase.

So far Singaporeans have been told by the government and the media that the extra revenue will be used to fund increased social assistance programmes that will benefit the lower income groups.

While it is laudable that the government intends to increase public spending to help needy Singaporeans, it is disingenuous to put out a message that this tax increase will benefit the poor.

The GST, unlike income tax, is widely recognised as a regressive tax. This is because it taxes both rich and poor for all items, including essential goods and services such as clothing, food, utilities and transport. Since the poor have less disposable income, the GST effectively takes a higher percentage of income from the poor than the rich.

Impact on businesses and the economy

The GST hike will also negatively impact the bottom line of small businesses. Currently, businesses with less than $1 million in revenue a year cannot pass the GST costs of their goods purchases (their “input GST”) to their customers if they are not GST-registered (which most aren’t). So a mama shop owner (a small sundries retailer) will be paying 7 per cent tax for all the goods he purchases from wholesalers, but will not be able to collect any of it back from his customers.

An increase in consumption tax will also reduce consumer spending. While this may be good for individual savings, will be bad for many businesses and could impact the overall economy of the country.

The Singapore Chinese Chamber of Commerce & Industry (SCCCI) issued a statement yesterday expressing “great concern and disappointment” at the impending GST hike. SCCCI added that “the proposed hike is likely to have an immediate and detrimental effect on local spending, and add to the cost burden for many local companies. Our long-term competitiveness will also suffer.”

The GST has been pitched in the past as “a fairer tax”. But fairer to whom? If the government is really keen on improving the lot of the poor and small businesses, a GST hike is certainly not the best way to go.

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Coming up next…Putting the “spin” on the GST hike.

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