Singapore's next PM to contend with rising prices, aging population
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Singapore's next PM to contend with rising prices, aging population

Singapore Prime Minister Lee Hsien Loong shakes hands with Finance Minister Lawrence Wong during a news conference at the Istana in Singapore on April 16, 2022. (Photo: SPH Media/The Straits Times via Reuters)
Singapore Prime Minister Lee Hsien Loong shakes hands with Finance Minister Lawrence Wong during a news conference at the Istana in Singapore on April 16, 2022. (Photo: SPH Media/The Straits Times via Reuters)

SINGAPORE: Skyrocketing prices and an aging population are among the challenges facing Singapore's Deputy Prime Minister and Finance Minister Lawrence Wong, who will become the country's new premier on Wednesday.

The affluent city-state is seeing its first leadership change in nearly 20 years, with outgoing Prime Minister Lee Hsien Loong having designated Wong to succeed him as chief of the ruling People's Action Party in 2022.

The PAP has led Singapore uninterrupted since Lee's father, Lee Kuan Yew, became its first prime minister in 1959, following the attainment of self-government from British colonial rule. The senior Lee continued to lead the country after its full independence in 1965 until he stepped down in 1990.

The junior Lee has served five terms as premier since 2004, during which time Singapore has become the world's third most competitive financial centre after New York and London, successfully attracting foreign businesses.

Wong, the son of a salesman and a schoolteacher, was a bureaucrat and the junior Lee's principal private secretary before he was first elected to parliament in 2011. He served in such posts as education minister and national development minister.

The 51-year-old was catapulted into the spotlight when he was appointed in 2020 as the co-chair for the multi-ministry task force to handle the Covid-19 pandemic.

Following the government's announcement last month about the leadership change slated for May 15, Wong said Lee will assume the role of senior minister in the next cabinet even after stepping down from the premiership, just as the senior Lee did from 1990-2004.

Observers say Wong will continue most of the policies of the outgoing administration, particularly in regard to economic and foreign affairs.

"This is a handover within the ruling People's Action Party, so it's not significant in terms of democratic or political change. But it is significant in terms of the passing of an era," said Donald Low, a lecturer at the Hong Kong University of Science and Technology.

Singapore's gross domestic product per capita, which was US$27,610 in 2004, grew to $82,450 in 2024, which is over 2.6 times that of Japan and 1.6 times Hong Kong's, according to International Monetary Fund data.

"Economically, Singapore is now at the frontier, so there are no more role models that Singapore needs to catch up with. It means that Singapore will now have to chart its own path," Low said.

However, the economic success has come at a cost.

According to an Economist Intelligence Unit report in 2023, Singapore maintained its pole position as the world's most expensive city for the ninth time in the last 11 years.

The price or the rent of an apartment more than doubled in nearly two decades, according to housing authorities. About 80% of Singaporeans live in public housing and many use money from their compulsory government-run retirement savings fund to buy property, even while this may deplete their retirement funds.

Many young couples are finding it difficult to secure housing.

The high cost of living makes lives difficult especially for senior citizens. Many of them continue to work because savings from the retirement savings fund are not enough to make ends meet.

Wong has indicated his government will tackle concerns around jobs and the cost of living, while providing greater assurance to families, seniors and vulnerable groups.

Ryoichi Hisasue, deputy chief researcher at the Japan External Trade Organisation's Institute of Developing Economies, said although Singapore is growing to a mature nation, it is aging and there is an increasing pressure from the public for redistribution of wealth.

"Economic growth also has the side effects of widening inequality and rising prices. The new prime minister has to strike a balance between maintaining economic vitality, openness and the people's will."

Since the 2010s under the Lee Hsien Loong administration, Singapore's authoritarianism has shifted to a stance that emphasises dialogue with the people, Hisasue said, while noting there are still restrictions on freedom of expression and opposition parties.

Lee admitted last year that his party had "taken a hit" after the series of scandals.

The PAP saw a decline in support in the 2020 general election, with its share of votes falling from nearly 70% in the previous poll in 2015 to 61%.

Low said Lee Hsien Loong did not bring about much political reform, noting many Singaporeans want more voices to be heard and more accountability and diverse representation in politics.

"The style of leadership, the style of governance is still paternalistic, top-down, somewhat condescending," Low said. "I think the style has to change."

Another issue Wong as the new premier must address is the country's fertility rate that has declined in recent decades, reaching a historic low of 0.97 in 2023.

The proportion of citizens aged 65 and above has increased from 11.7% in 2013 to 19.1 percent in 2023.

In an address to parliament in February, Indranee Rajah, a minister in the Prime Minister's Office, warned that the decline in the country's labour force due to the low fertility rate will make it difficult to maintain economic vitality and attract global companies.

Some experts say the heavy financial burden of education expenses caused by soaring prices is behind the falling fertility rate. Although the government has been expanding support measures, such as subsidies for child-rearing, effects have been negligible.

Regarding foreign policy, Wong must navigate Singapore's delicate balancing act between maintaining strong economic ties with China and its security partnership with the United States, a task similar to what Lee has handled.

Mustafa Izzuddin, senior analyst at Solaris Strategies Singapore Pte Ltd, said, "I think he will continue the position that Singapore has taken vis-a-vis the great powers," adding Singaporeans commonly do not want to choose sides.

"They want economics to take precedence over politics," Izzuddin said.

Inderjit Singh, an entrepreneur and a former PAP lawmaker, said he expects Lee, as senior minister in Wong's Cabinet, to play a "global ambassador role" on his behalf of him as Lee has built personal relationships with leaders of both China and the US.

In the meantime, he said, "Wong's challenge is to build his own relationships (with the two major powers) as soon as possible."

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