New Singapore Shares
The New Singapore Shares is a scheme introduced in 2001 by then Prime Minister Goh Chok Tong as a means of sharing Singapore’s wealth with the people and to help less well-off Singaporeans tide over the economic downturn during that period.1 The S$2.7-billion scheme was funded by the government’s budget surpluses, and part of a new social compact the government was trying to forge among Singaporeans.2
Goh called for a new social compact during the 2001 National Day Rally, highlighting three key principles. The social compact referred to a set of principles for various segments of society, as well as the government, to work together for the common good of the country. The three key principles were: (1) provision of heavy subsidy for housing, education and healthcare; (2) distribution of some of the budget surpluses back to the people during good performing years through asset-enhancement schemes and rebates; and (3) focus of specific attention on the needs of the lower-income group. In principle, the social compact emphasised self-reliance and healthy family ties, in which one was advised to work and go for retraining before the government would provide support if he/she earned too little to support the family.3
Each New Singapore Share was worth S$1, and qualifying Singaporeans received a basic package of 200 to 1,400 shares from 1 November 2001. Allotment of shares was based on the individual’s monthly income for the working group, while allotment for the self-employed group was determined first by the housing type, and then monthly income. Housewives, retirees and the unemployed were allotted shares based on their housing type.4
These shares earned annual tax-free dividends in the form of bonus shares, at a guaranteed minimum of 3 percent per annum for five years, from 1 March 2002 onwards. Bonus dividends were declared annually in the form of bonus shares equal to the real growth rate of the preceding year’s gross domestic product, provided it was a positive growth. These shares were neither transferable nor tradable. Singaporeans were allowed to cash in up to half their shares in the first 12 months. Thereafter, they could cash in their shares any time, without limits.5 By 1 November 2002, over 750,000 Singaporeans had applied to encash them.6
1. Ng, S. (2001, October 13). S$2.7b worth of new S’pore shares to be given out on Nov 1. The Business Times, p. 2. Retrieved from NewspaperSG; Ministry of Information, Communication and the Arts. (2001, October 16). Opening remarks by the minister for finance, Dr Richard Hu, at the New Singapore Shares media briefing at the Treasury, at 9am, Tuesday 16 October 2001 [Press release]. Retrieved from National Archives of Singapore website: http://www.nas.gov.sg/archivesonline
2. Singapore. Parliament. Parliamentary debates: Official report. (2001, October 12). Tackling the economic downturn (Vol. 73). Singapore: [s.n.], cols. 2288–2289, 2291, 2295. (Call no.: RSING 328.5957 SIN)
3. Ng, I. (2001, August 21). Poor get more help in PM’s new deal. The Straits Times, p. 2. Retrieved from NewspaperSG.
4. Chuang, P. M. (2001, October 17). New S’pore Shares: Low-income to get 7 times more than top earners. The Business Times, p. 1. Retrieved from NewspaperSG.
5. Chuang, P. M. (2001, October 17). New S’pore Shares: Low-income to get 7 times more than top earners. The Business Times, p. 2. Retrieved from NewspaperSG.
6. Shares encashed. (2002, November 2). The New Paper, p. 6. Retrieved from NewspaperSG.
The information in this article is valid as at 2016 and correct as far as we can ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.