Monday, December 10, 2007

Facts on the ground more eloquent than statistics: Ngiam

Facts on the ground more eloquent than statistics: Ngiam

Loh Chee Kong

MORE than four decades ago, former top civil servant Ngiam Tong Dow — then a young public officer in the Finance Ministry — was tagging along with former Deputy Prime Minister Dr Goh Keng Swee at a high-level United Nations meeting in Thailand.

After dinner one day during the discussion at the Economic Commission for Asia and the Far East, the minister insisted that a bemused Mr Ngiam follow him on an evening walk through the streets of Bangkok.

"After sweating up and down the hot and dusty pavements of the street in front of our hotel, I plucked up enough courage to ask Dr Goh what was the purpose of the exercise," said Mr Ngiam last Saturday at the National University of Singapore's Economics Alumni inaugural annual dinner. The event was attended by about 100 alumni from various years.

As it turned out, Dr Goh — widely regarded as Singapore's economic wizard — wanted to see "whether the shops were well stocked" in order to satisfy himself with the economic statistics put forth by the Bank of Thailand.

Mr Ngiam, now 70, also recalled how Dr Albert Winsemius, Singapore's first economics adviser, got his grandson to plot the changes in the number of job advertisements in the newspaper.

The chart his grandson produced "told him far more about the state of the Singapore economy than all the economic statistics I dutifully sent him each month", said Mr Ngiam.

Mr Ngiam was underlining the pitfalls of over-reliance on economic statistics without reality checks, especially in today's age of super-computers.

Another potential trap is how Singapore's "robust brand" of economics could turn out to be myopic, said Mr Ngiam.

Questioning the Monetary Authority of Singapore's use of the exchange rate as the key monetary policy instrument — while eschewing the interest rate as a tool — Mr Ngiam said that long-term growth could only be sustained by increases in productivity.

While wages here have skyrocketed in the last few months, economists have expressed concern over the sluggish growth in productivity.

Describing the Republic's productivity performance as "mediocre", Mr Ngiam pointed out how Singapore's Gross Domestic Product has expanded "largely on infusions of foreign labour".

Said Mr Ngiam: "MAS' catchphrase in its half-yearly review is that it will allow a modest appreciation of the Singapore dollar over time. Such a policy stance is realistic only if there is steady increase in our productivity growth."

And such shortsightedness has come back to haunt Singapore in some instances, Mr Ngiam added.

For example, the ongoing retrofitting of lifts to stop on every floor in HDB blocks is costing the Government "much more" than the intended "marginal" savings when it decided in the early years that the lifts should stop on alternate floors.

And even the top brains can sometimes be wrong — as evidenced by the "great MRT debate" of the mid-1970s, said Mr Ngiam.

Back then, a "powerful" team of Harvard economists assembled by the Finance Ministry had argued for an all-bus transport network instead of a bus-rail mass rapid transit system.

Dr Goh also argued that an all-bus system would be less risky than the $5 billion MRT system as the bus fleets "can expand incrementally bus by bus".

"It was a disruptive piece of reasoning," said Mr Ngiam, who had argued for a rail-based network on the basis that it would provide access to the whole island and push up property prices.

"The increase in the collection of property taxes would probably pay for the total cost of $5 billion to build the initial system," said Mr Ngiam, who added that the Government's final decision to build the MRT has been vindicated.

Reiterating that population issues are the most pressing concerns, cutting across the social, economic and political spheres, Mr Ngiam said he feared that "the tipping point of procreation has been reached" and falling birth rates "cannot be easily reversed".

While he confessed that he was "not clued up enough" to have a complete understanding of the current population policy, Mr Ngiam repeated his concern — which he first made in a People's Action Party newsletter last month — that Singapore should not be obsessed with bumping up the population for economic purposes, given the advances in technology and education standards.

Said Mr Ngiam: "The civil service is more adept at achieving quantitative than qualitative targets. Topping up our population en masse with immigrants may well create a population base larger than what our economy can sustain."


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