WAS THIS EVER REPORTED IN THE STRAITS TIMES?
SOMEONE JUST SENT IT TO ME AND I THOUGHT SOME MAY ENJOY THE READ.

Kenneth Jeyaretnam’s Speech at the FCA Lunch on 2 July 2009

Good afternoon ladies and gentlemen. Thank you for inviting me to this luncheon today. The Foreign Correspondents Association has been here in Singapore even longer than I have and like my father has played a significant and historic role in the story of our region’s history. It is surely no less an historic moment for Singapore’s newest political party, The Reform Party to be given this exciting platform.



I am very proud to join the ranks of such prominent figures as our Prime Minister Lee Hsien Loong and his father Minister Mentor Lee Kuan Yew and from the opposition Jaswant Singh of India, Malaysia’s Anwar Ibrahim and so many other statesman, politicians and even Nobel Prize winners. Not least of these is my dear late father JBJ. I really do feel unworthy but then again, maybe July is a quiet month for the press.


You have asked me to discuss my hopes and visions for The Reform Party and how I see the current political situation in Singapore. However as an economist I shall insist on boring you with my views on the current economic situation and the economic future for Singapore.


I hope you won’t mind if I start by adding a bit of background to my emergence on the political scene. It seems to me that the ladies and gentleman of the press are in dire need of a bit more information about me. I say this because despite being Singaporean, I am always referred to in the press as ‘British-trained economist’, Kenneth Jeyaretnam.



Hmm..I wonder why I have never read in the Singapore press, British-trained mathematician prime minister LHL or British trained-lawyer, Minister Mentor Lee Kuan Yew. Naturally I suspect that the MSM want to light up a subliminal marker in the people’s minds that a)I’m a foreigner and b) that my economics is suspiciously left-wing because it’s from a country associated with economic failure and the welfare state.


In actual fact I’m much less British than, my father, who spent many more years than I as a British subject. So I went to University in England but I was born here, I went to school here, excepting 2 years, and I completed National Service. And I always say that if I’m fit to die for my country then I’m fit to stand for it. I’m not ashamed of being a patriot. On the second point I have always believed by and large in free markets, though governments may need to intervene to prevent undesirable or suboptimal outcomes. Indeed at Cambridge, I often used to have economics discussions with our current Finance Minister, Mr Tharman, who was there doing a masters, and at that time he was far, far to the left of me on most economic policy issues.


In addition to British- trained the other appendage to my name is usually “Son Of.”.. JBJ. That one is of course entirely true. I’m just grateful my father’s name wasn’t Sam!!!
There’s no arguing that the Reform Party and indeed the very notion of an active opposition, was my father’s legacy to Singapore. He always strove, at great personal cost, to get the people to realise they had the power to change things just by exercising their democratic rights -Hence his call at the inauguration dinner to the people to arise from their slumber.. Unfortunately many here wear ear plugs when they slumber but luckily for me there’s nothing like a recession for waking people up.


My father named his new party The Reform Party for a reason. He believed that the way forward, for freeing the people of Singapore was through political Reform.


It’s a legacy which I’m proud to continue but also to extend and adapt to the current needs of Singapore. We have always been told that the current authoritarian framework has benefited us economically - I feel we’re victims of the approved version of history. In fact Singapore’s growth record is good but not spectacular. It hardly compares with nations such as Taiwan and South Korea - Nations that started considerably poorer and are now at comparable levels of per-capita real incomes. Nations which moved away from authoritarianism and are now much freer than Singapore-so that authoritarian framework is clearly no longer beneficial.


The task I have set myself for the Reform Party is to get across the message that the Faustian bargain the electorate thought they had struck in surrendering liberty for economic prosperity didn’t have to be so.



In some of my economic articles for the Party I have talked about an outmoded economic model which doesn’t really improve the welfare of the bulk of Singaporeans. While the GDP growth rate over the last few years looked impressive, fuelled globally by an unsustainable growth in US imports, the productivity of the workforce first stagnated and then fell sharply. Growth was built upon the addition of seemingly inexhaustible inputs of cheap labour from abroad with concomitant dire consequences for the real wages of those at the median and below. Domestic consumption has been driven down to a level that is on a par with China and countries at a much earlier stage of development. The savings rate rose to 47% in 2008 which given what little we hear about the decline in value of our external investments is manifestly excessive. Yet all we hear from the government is that we need to have more of the same policies of cutting business costs and just wait for the inevitable return of the US consumption binge.



So whilst the need for Reform in the field of democracy and civil rights is an integral part of the Party’s platform I believe that there are equally fundamental reforms that need to be made in the economic sphere.
In essence The Reform Party has become the double Reform Party.



These are indeed exciting times for Democracy and the Opposition in Singapore. Given its record over the last few years it will be difficult for the government to continue its claim that it alone has a monopoly on good economic management. Or at least we hope to make it difficult for the government to go on claiming that monopoly.


Unfortunately it is also a very challenging time for the Opposition. After many years of conditioning, Singaporeans think very differently to those who have been brought up in a liberal western democracy. There’s little point, I’ve found, in talking about the European Convention on Human Rights to people who think that expressing an opinion will lead to mob rule and rioting.. Or, as we were told often in the past, that foreign investment and MNCs would flee Singapore if there were significant numbers of Opposition MPs in Parliament.


The latest parliamentary changes proposed by the government don’t help promote democracy - amounting to no more than smoke and mirrors. It’s a cheap parlour trick that will have no impact at all on The Reform Party’s strategy - but clearly gives the government a legitimate excuse for changing constituency boundaries yet again. The silent and peaceful protesters in Iran summed up our feelings best when they held up notices saying simply, “election not selection”


Throughout all, I maintain my belief in the people of Singapore. We are its greatest resource. We are a uniquely talented and situated nation and we deserve prosperity and emancipation. In time we will come to the realisation that these are not mutually exclusive but actually are dependent one upon the other. I believe that The Reform Party is the party to bring that to the people of Singapore and my modest hope is that this will be achieved if not in the next five years than in my lifetime.

I have few concerns -
Scenario 1 - example if one who owns a few property for long term investment but are force to sell 2
properties with 4 years due to en-bloc which they may not wish to sell, however due to the majority votes
he/she are comply to sell.
Firstly maybe he/she got to prove he/she vote against en-bloc ???
Then must he/she then apply to strata board against the en-bloc sale as proof ????
In this instant will it be fair to penalize he/she on the capital gain on the 2nd en-bloc sale of the property ???
a) The above can be that he/she sell the 1st property on own and the second is en-bloc ???
b) The above can be that he/she forced to sell both on en-bloc ???

Scenario 2 - example someone die and have personal properties within 5 million (non taxable)
Family have to sell the properties to split - will they be tax on the 2nd and subsequent properties ???

Hence there are more to debate about which on this subject in details before amend the Bill.

I would like to point out that the recent articles on proposed protperty tax, Thursday's front page article followed retraction and clarifications on Friday and today does not do the demonstrate a well thought through and researched publication.
That said I would like to point out that the proposed tax change whereby the IRAS holds the right to potentially label/brand an active investor as a 'trader' is not something new. This right to brand/label has always existed once S'pore became a 'Zero Capital Gains Tax" jurisdiction.
Here the application of 'Capital Gains' becoming taxable income could be applied to such gains derived from any 'trading' activity such as equity markts, other financial market instruments such as foreign exchange , commodity and bond futures contracts etc AND also real estate investment.
Hence the 'proposed' changes in Property Tax is simply a subset of the current tax regime as it stands.

Let's also not forget to mention that introducing such a 'taxable' classifcation is a double edged sword for both the IRAS and the taxable " trader".
For the 'trader' , being classified as a 'professional' deriving taxable income from 'trading activities" means the following
a) S'pore law allows you to challenge the classification
Real estate and equity investments are the 2 most popular asset classes for the general investment public globally, attempting to carve out a 'trading' classification for one and not the other will not be a simple task .
b) DEDUCTIBLES!
You can can deduct 'trading losses" , cost to ply your 'trade' such as any efforts / resources commited to generating your 'trading income' ( research, entertainment spent on intelligence gathering, transport , time and a whole host of other related cost to ply your 'trade")....I am sure a tax consultant will have a longer list.

For the IRAS, they will have to be able to defend any 'classification" and they will have to commit resources to follow up and process each tax submission as these will not be 'cookie-cutter' apllications.
Wil there be other 'classifications' down the road for the regular IR visitors ??

For the image and reputation of S'pore , I think one needs to consider how S'pore wishes to position itself.

If we wish to position our country as a destination of choice to attract
1) inflows of Private Wealth Management clients
2) inflows of Asset and Fund Management companies
3) inflows of MNC regional hubs
4) inflows of the best brains to our tertiary institutes

...then I think we need to to also consider and balance the over all package that S'pore has to offer versus the other countries that we have to compete extremely hard with.

This is nothing but to give individual property owners incentive to sell since the net gain is now non-taxable. This buffers any losses they may in their recent investments, in fact, this may even be a profit for many.

Now, there are two sources of supply in real estate - new developments, and 2nd hand property.

Real estate developers have for so long benefitted from the reluctance of individual property owners to sell since this keeps property prices at where they are right now - HIGH.

But by having the tax incentive, individual property owners are now willing to sell at current or slightly below market prices....since the real profit will now come from the non-deductable tax.

This will compete with supply from new developments, and that could only mean lower prices, and rentals.

This correction has long been overdue.