Singapore calls election as economic expansion provides edge

Singapore Prime Minister Lee Hsien Loong called for elections next month, taking advantage of record economic growth to keep his party’s grip on the city- state it has ruled since before independence in 1965.

Elections will be held on May 7 after President S.R. Nathan dissolved parliament on the advice of the prime minister, according to e-mailed statements from the government yesterday.

The economy grew at an unprecedented pace last year, spurring inflation and boosting property prices, leaving some Singaporeans behind as the wealth gap widens. The island’s growth has been partly fueled by an influx of foreign workers, sparking calls for limiting immigration. The government said in February it will give cash to all adult citizens as a “dividend” from the record expansion.

 

“The incumbents may get fewer votes as it gets more expensive for Singaporeans to put food on the table or maintain a roof over their heads,” said Song Seng-Wun, an economist at CIMB Research in Singapore.

 

The island of 5.1 million people, of which more than a third are foreigners, has been run by Lee’s People’s Action Party, known as PAP, since 1959 when the island was still part of the British empire. Singapore joined the Federation of Malaysia in September 1963 before it was expelled and became independent in August 1965.

NEW CANDIDATES

The last polls, held on May 6, 2006, returned the PAP to power with about 67% of the votes cast, down from 75% in the 2001 elections. The party has named 24 new candidates who will compete in the coming elections to replace parliamentarians who retired or stepped down.

 

“Singapore’s economic performance has been pretty strong in the past year and against that backdrop, I think the government should be confident of being re-elected,” said David Cohen, a Singapore-based economist at Action Economics LLC.

 

Singapore’s parliament is currently made up of 82 PAP lawmakers, two elected opposition politicians, one non-elected opposition member and nine non-elected independents. A law passed last year allowed as many as nine opposition politicians to sit in the legislative body even if the candidates lose. There will be 87 seats contested in these elections.

 

In these elections, a new law designated the eve of voting as a cooling-off day, when campaigning is prohibited.

 

“This 24-hour campaign silence period is to give voters some time to reflect rationally on issues raised during the election before going to the polls,” the Elections Department said on its website.

 

CASINOS, TAXES

Since he took office in August 2004, Lee has lifted a ban on casinos, cut corporate taxes and boosted the financial and legal services industries to reduce the nation’s reliance on exports. Lee is the son of Minister Mentor Lee Kuan Yew, who was prime minister from 1959 to 1990.

 

Gross domestic product increased at an annual rate of 23.5% last quarter from the previous three months and the government predicts an expansion of as much as 6% this year. The economy added about 116,000 jobs last year when the economy grew a record 14.5%, while wages increased an average 5.6% in that period.

 

Singapore’s consumer prices are forecast by the central bank to be at the upper end of the 3% to 4% range in 2011, prompting the central bank to tighten monetary policy for the third time in a year this month. Policy makers in January introduced more measures to curb property speculation after private home prices and transactions reached records. Attempts to rein in prices had started in 2009.

 

GROWING WEALTH GAP

The gap between Singapore’s most affluent and poorest people widened last year as higher wage earners received bigger increases in income.

 

Singapore’s Gini coefficient, a measure of income inequality, climbed to 0.48 last year from 0.478 in 2009, according to the statistics department. A reading of zero means income equality, while a reading of one means complete income inequality.

 

Immigration had been a key component of Singapore’s population and economic strategy, given the failure of other incentives offered since 1987 to arrest a birth-rate decline -- such as tax breaks, subsidies and cash bonuses.

 

In August, Lee said the influx of foreign workers is a “trade-off” that Singapore cannot avoid.

“Higher growth that will benefit our workers also means accepting more foreign workers to come and work in Singapore,” he said. “If you choke off the foreign workers, the economy is stifled, growth is not there, our workers will suffer.”

 

SWELLING POPULATION

Hundreds of thousands of people were granted citizenship and permanent residence in the past five years, while companies brought in thousands more to work at hotels, shipyards and restaurants. The population has increased by about 810,000 people since the end of 2005, government figures show.

 

Disgruntled Singaporeans say the immigration policy means crowded public transportation, more competition with newcomers for jobs, public housing and places in choice schools for their children.

 

Lee has said the government will slow the pace of immigration because the country can’t increase its population by more than 100,000 a year indefinitely.

 

“It’s more challenging for incumbents against the backdrop of strong economic growth compared to putting the fear into voters during a recession, but they will still have a tight grip on power,” CIMB’s Song said. “Singaporeans know the government has delivered and they will be voted into power again.”