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
Background
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
Description
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
Author
Joycelyn Hwang
References
1. Serena Ng, “S$2.7b Worth of New S’pore Shares to Be Given Out on Nov 1,” Business Times, 13 October 2001, 2 (From NewspaperSG); Ministry of Information, Communications and the Arts, “Opening Remarks By the Minister For Finance, Dr Richard Hu, at the New Singapore Shares Media Briefing at the Treasury,” press release, 16 October 2001. (From National Archives of Singapore document no. 2001101601)
2. Parliament of Singapore, Tackling the Economic Downturn, vol. 73 of Parliamentary Debates: Official Report, 12 October 2001, cols. 2288–9, 2291, 2295. (Call no. RSING 328.5957 SIN)
3. Irene Ng, “Poor Get More Help in PM’s New Deal,” Straits Times, 21 August 2001, 2. (From NewspaperSG)
4. Chuang Peck Ming, “New S’pore Shares: Low-Income to Get 7 Times More Than Top Earners,” Business Times, 17 October 2001, 1. (From NewspaperSG)
5. Chuang, “New S’pore Shares.”
6. “Shares Encashed,” New Paper, 2 November 2002, 6. (From NewspaperSG)
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