SINGAPORE – In a nation reputed for its staid politics, the delivery of the annual budget statement is one of Singapore’s keynote political events. Amid the unveiling of the latest spending plan has been a back-of-mind concern that Singaporeans have not previously been accustomed to: a stalled prime ministerial leadership transition.
When Finance Minister Lawrence Wong announced the budget earlier this month, it was his first time doing so since a cabinet reshuffle last April put him in charge of the influential ministry, a portfolio held previously by deputy premier Heng Swee Keat, who had earlier that month stepped aside as prime minister-designate in a surprise announcement.
The appointment put 49-year-old Wong, already one of the most visible government leaders in his role as co-chairman of a multi-ministry task force in charge of Singapore’s Covid-19 response, among the frontrunners in a contest for which there is still no clear successor a decade since aging Prime Minister Lee Hsien Loong first broached his plans to retire.
Apart from Wong, who on February 18 unveiled a spending plan designed to drum up revenue with a slew of tax hikes on higher income groups after two years of pandemic-era big-spending, local media and commentators see Education Minister Chan Chun Sing, 52, and Health Minister Ong Ye Kung, 52, as the top contenders to succeed Lee.
Having already held Singapore’s top job for 18 years, Lee said in a 2012 interview with local broadsheet the Strait Times that he hoped not to stay in office beyond the age of 70. But the premier, who turned 70 years old on February 10, pledged in 2020 to remain in power to see Singapore through the uncertainty of the Covid-19 pandemic.
Heng, 61, had already emerged as Lee’s designated successor in 2018, the result of a consensus decision among a cadre of younger cabinet ministers from the ruling People’s Action Party (PAP) referred to as its fourth-generation, or “4G”, leadership, which spent four years winnowing the field of six candidates down to one.
With his suitability for the job already in question after a weak electoral showing at July 2020 polls, Heng dropped out of contention to make way for a younger candidate citing age and ill-health, bringing the leadership transition back to square one and leaving the 4G team the task of once again determining who among themselves should take the reins.
Lee, the eldest son of Singapore’s modern founder Lee Kuan Yew, last addressed the leadership vacuum at the ruling party’s annual conference in November, where he said the 4G team would “need a little longer to make a decision” and that his successor would be named “in good time” before the next general election due in 2025.
Singapore has seen only two transfers of power since independence, in 1990 and 2004. In comparison to those past generational changes in leadership, the transition from the PAP’s third to fourth-generation teams has been discordant, a fact that has unsettled a public used to smooth and predictable handovers telegraphed years in advance.
“The fumbled transition has already raised problems for the PAP’s self-styled image as a party distinguished for its precision in political leadership and transitions thereof,” said Garry Rodan, an honorary professor at the University of Queensland’s School of Political Science and International Studies.
“The idea that the party has exceptional talent due to its meritocratic recruitment and candidate selection processes is incongruent with the protracted difficulty it is having in finding a suitable new leader,” Rodan added. “This feeds into growing skepticism about the PAP’s elitist rationales for its continued political hegemony.”
Singapore’s next prime minister will take over one of the world’s fastest aging countries at a time when voters’ desire for political pluralism is rising after 63 years of uninterrupted one-party rule coincident with anxieties over the city-state’s openness to foreign professionals, widening wealth inequality and rising costs of living.
Wong, who exceeded many people’s expectations in his role as the public face of a task force that has succeeded in bringing the country’s Covid-19 situation largely under control, sought to address the raft of economic and social pressures facing the government with the country’s latest S$102.4 billion (US$75.6 billion) spending plan.
The budget, more expansionary than analysts had expected, included proposals for the most aggressive tax increases in years. Plans to raise the personal income, property and luxury vehicle taxes have been aimed at higher income earners, while a long-planned goods and services tax (GST) hike is set to take effect next year.
Proposals for raising GST were announced in 2018, but put off until now due to economic uncertainty amid the Covid-19 pandemic. The current 7% rate will increase to 8% in January 2023, and then 9% in January 2024, at which point the hike will bring in about S$3.5 billion ($2.5 billion), or around 0.7% of gross domestic product (GDP), in revenue annually.
Wong said the revenue from GST and other planned tax hikes would go towards supporting a health care system faced with the growing burden of an aging population – people aged 65 or older accounted for 16% of the total population last year – while other areas of spending on education, defense and support for businesses rise as well.
Plans for the GST hike come at a time when inflation has hit its highest level in more than nine years, with core inflation in January rising to 2.4% on a year-on-year basis driven by higher prices for food, electricity and gas. Some analysts warn the tax will add to current price pressures and dampen growth-boosting spending on consumption.
“The phased GST rate hike reflects the authorities’ cautious attitude as its impact on price inflation and consumer sentiment could slow Singapore’s economic recovery. We believe this delay also reflects that the government is conscious that the hike is unpopular among the electorates,” said Yu Liuqing, an analyst at the Economist Intelligence Unit (EIU).
Wong has said the government is closely monitoring the risk of rising inflation, but that the city-state would “not have enough to cover the additional spending needs” without the GST hike. “These tax adjustments will help to raise additional revenue and also contribute to a fairer revenue structure,” said the finance minister in his budget statement.
The government has set aside a S$6.6 billion ($4.4 billion) package to help cushion the impact of the GST hike, which is opposed by Singapore’s opposition parties. Yu told Asia Times that the support scheme “should be able to offset a good proportion of the additional costs for low- and middle-income Singaporean households.”
Among other measures announced was a further tightening of foreign labor policies, the third adjustment since the pandemic began, by raising the minimum salary threshold required for work visas to be issued to incentivize the hiring of local over foreign talent, particularly in the professional, managerial, executive and technical (PMET) job categories.
A recent survey by independent pollster Blackbox, which polled more than 750 Singaporeans, found only 28% said they felt like “winners” after the budget announcement and that only 40% of Singaporeans expressed a favorable view of the proposed GST increase, with middle-income households finding it least favorable.
The pollster concluded that reactions to the GST hike indicate a “tough sell” ahead for the government and the proposed tax adjustments “will likely take more time for the Singapore public to get behind.” According to the survey, 80% of respondents were still confident that Singapore is on the right track in its post-pandemic recovery.
Nydia Ngiow, the Singapore director of the BowerGroupAsia consultancy, told Asia Times that Wong, who was previously a civil servant prior to entering politics in 2011, “had managed to put together a budget that had included the introduction of several unpopular tax measures in a way that remained palatable to the Singapore population at large.”
With Wong’s “constant presence” at the forefront of Singapore’s Covid-19 fight, Ngiow said she felt that “the winds are currently in his favor” to be chosen as Lee’s successor, but added that it would not be surprising if there are shifts in popularity for any of the frontrunners with several months to go before a final decision is reached.
Ngiow said the PAP’s annual party convention scheduled for November 2022 would shed more light on the power transition. “There should be a clearer picture of who will be Lee’s successor by that point, and once that occurs, it would be important for the PAP to coalesce around his successor to dismiss any speculation of capabilities,” she added.
Observers say Ong, the health minister, and Chan, the education minister and the second-most senior 4G leader, are both still strong contenders, with the latter even rumored to be Lee’s preferred successor. But others see Wong as a dark horse that, through his high visibility, has garnered a degree of resonance with the electorate.
“Wong has been given an opportunity to enhance his prospects, which already suggests a significant level of confidence in him from within the upper echelons of the PAP,” said academic Rodan. “However, the PAP keeps its cards too close to its chest to be sure whether support for him is now decisively firming among party colleagues.”
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