Category Archives: Science and Technology

Budget 2012 Speech (Part 7): Budget position

For FY2012, a small basic surplus of $1.3 billion is expected, which is close to a balanced budget at 0.4% of GDP. -AsiaOne

Fri, Feb 17, 2012
AsiaOne

Budget position

Mr Speaker Sir, this is therefore a Budget for the future. We are building an inclusive society, founded on higher skills, better jobs for every vocation, and a fair social compact. FY2012 Estimated Budget Position

We are starting off from a position of fiscal strength. For FY2012, we expect a small basic surplus of $1.3 billion, which is close to a balanced budget at 0.4% of GDP. This reflects our operating revenues, but does not take into account the Net Investment Returns Contribution (NIRC) from past reserves. It also reflects the expenditures we will make in FY2012, but not the monies we are setting aside in endowment and trust funds for future spending.

Our NIRC is estimated at $7.3 billion. Taking this into account and the contributions to endowment and trust funds – all of which that I have mentioned earlier – the Overall Budget Balance for FY2012 is projected to be $1.3 billion (0.4% of GDP).

Conclusion

Mr Speaker Sir, at the Opening of Parliament in October, PM spoke of building an inclusive society, and sketched the Government’s vision for a stronger Singapore and better home.

Budget 2012 sets out our directions and takes significant steps towards achieving this vision. We are restructuring and upgrading our economy, so that workers can enjoy higher incomes and every Singaporean family can aspire to move up. We are also introducing new initiatives, and deploying more resources to uplift and support lower- and middle-income Singaporeans.

But we all know that building an inclusive society is not just about government redistributing resources to help the poor. It is about building a society where at its heart, people retain a deep sense of responsibility for their families and seek every opportunity to improve themselves and do better. Where employers treat workers with respect, value their contributions and reward them fairly.

Where the more successful step forward to help others in the community, because they feel for their fellow citizens. And where Singaporeans actively participate in causes that will make this a better society. An inclusive society will only blossom if we grow this spirit of responsibility and community

It has to be about how we go about our lives as Singaporeans, like the people in this video.

[Tan Ai Li, 11. Sani Rosmani, 45. Mumtaz Begum, 40. John Forbes, 92. Mrs Goh Kah Tian, 55.]

Opportunity, improving ourselves, compassion. They define the character of the society we are building, and must be our common purpose as Singaporeans.

Budget 2012 Speech (Part 6): Better Healthcare, from Hospital to Home

Yearly healthcare expenditure will be doubled from $4 billion to about $8 billion over the next five years. -AsiaOne
Fri, Feb 17, 2012
AsiaOne

Better Healthcare, from Hospital to Home

I will now move on to the significant measures we are taking in healthcare.

We will double our yearly healthcare expenditure from $4 billion to about $8 billion over the next five years. It is about more and better infrastructure, from hospitals to home-based care. It is about engaging many more healthcare professionals, such as doctors, nurses and Allied Health Professionals, and paying them more competitively. And it is about making it more affordable, including for the middle class.

We will expand bed capacity in our acute hospitals, as well as our ability to provide longer-term care for the elderly both in institutional settings, and at home. But we must also shift from the current concentration on acute hospital care and move towards providing affordable, long term care. Most importantly, we must make it easier and more affordable for the elderly to stay at home, with access to quality care services when needed.

Expand Healthcare Capacity

First, we will expand public hospital capacity. We will increase the number of beds in acute hospitals by about 30%, or 1,900 beds by 2020. This is more than the capacity of the Singapore General Hospital (SGH) today.

Second, we will add another 1,800 Community Hospital beds by 2020, more than a 100% increase from today. Besides the new Community Hospitals that will be co-located with Khoo Teck Puat Hospital and the new Ng Teng Fong General Hospital, we will add two more Community Hospitals in Outram and Sengkang by 2020.

Third, we will more than double the capacity in long term care services by 2020. This includes nursing homes, home-based health and social care services, day care and rehabilitation facilities, and Senior Activity Centres. We will also improve access to polyclinics and introduce new models of care, such as Medical Centres that provide specialist outpatient services in the community.

The Minister for Health will elaborate on this major expansion and broadening of our healthcare landscape in the COS.

Enhance Affordability

Next, we will enhance affordability of long term care.

We will increase subsidies in our Community Hospitals such that all patients can receive help with their bills. Lower-income patients will receive a 75% government subsidy. Those above the median income, who previously did not receive any subsidy, will now receive a 20% to 50% subsidy. The Community Hospitals that previously had to use charity dollars to offset bills for middle-income patients can now use these resources in other ways – such as providing further help to those in need, or improving the quality of care.

We will also raise subsidies for nursing homes, day care and rehabilitation facilities and home-based care packages so that more in the middle-income group can benefit. Two-thirds of Singaporean households will now qualify for subsidies. As the elderly often do not themselves have income, what this effectively means is that about 80% of elderly will qualify.

Let me illustrate the impact. For a middle-income family with an elderly parent at a private nursing home, the new subsidies will bring down their costs from about $2,800 to $1,700 per month. However, if they opt for a home-based care package, our subsidies will bring the cost down from about $1,400 to $700 per month. Both will be significantly cheaper than before, and home-based care will be about 40% of the cost of nursing home care. This shift should hopefully allow about one out of two frail seniors to enjoy home-based care instead of moving to a nursing home.

Instead of getting external help, some families may prefer to hire a foreign domestic helper, especially when constant attention is required. This may also allow family members to continue working. We will give a $120 grant per month to families hiring a foreign domestic helper to help care for elderly family members who have severe dementia, or are immobile and unable to care for themselves[8]. This is on top of the $95 concession in the Foreign Domestic Worker Levy that all households with elderly persons will continue to enjoy.

[8]: Those unable to perform three or more Activities of Daily Living.

Families with elderly members also find it very helpful to have safety features in their flats. We will subsidise home modifications such as grab bars and anti-slip treatment for bathroom tiles through a new programme, the “EASE” (Enhancement for Active Seniors) Programme. Each citizen household with an elderly member can get home modifications worth around $2,000. They would pay no more than $250 themselves.

We expect this programme to benefit 130,000 households and cost around $260 million over the next 10 years. The Minister for National Development will elaborate on EASE in the COS.

Absorb GST for Long Term Care

GST is currently fully absorbed for Class B2 and C patients in our acute hospitals. I will extend the same benefit to subsidised patients in the long term care sector, extending from Community Hospitals to nursing homes and the range of home-care services. I spoke about this earlier, so that they do not have to pay GST. About 40,000 Singaporeans receiving long term care will benefit.

Medifund Top-up

The enhanced subsidies that we have introduced in this Budget will help many more Singaporeans with the cost of healthcare. However, there will be some who need extra assistance, including not only those with low incomes but also some middle-income Singaporeans faced with high medical expenses. Medifund will help them cope.

I will provide a $600 million top-up to Medifund this year. This will increase the payouts from Medifund by over 20%.

Enhance MediShield

The final plank in our plans to provide better healthcare support for older Singaporeans is to enhance MediShield, which covers them for their major hospital bills. For example, a basic MediShield plan can cover up to 70% of a large Class C hospital bill for a knee replacement. This would reduce the patient’s payment from $6,200 to $1,800, which can be paid for using Medisave.

We will extend MediShield coverage from age 85 to 90, as many more Singaporeans are now living till 90 and beyond. MOH also intends to engage the public on other changes to MediShield, including extending coverage to people who suffer from congenital conditions.

These are worthwhile shifts, and in particular will mean that most Singaporeans will be covered by MediShield for their whole life. But it will also require an increase in premiums across the board

I will therefore provide a one-off Medisave top-up to all Singaporeans currently on MediShield, to help them adjust to the premium increase. As older Singaporeans pay the highest premiums, they will receive a larger Medisave top-up (see Table 2).

[9]: Age at next birthday

The Minister for Health will elaborate on MediShield in the COS.

How Older Singaporeans will Benefit

As all this amounts to a significant package of support for the elderly, let me briefly summarise. Taken together, our strategy of helping the elderly by enabling them to stay at work, helping them unlock the savings in their homes and providing better and more affordable healthcare support will give them peace of mind and a greater sense of security.

a. Older workers will enjoy higher CPF contributions, and reduced income tax bills through a higher Earned Income Relief. Their employers will also receive a Special Employment Credit as an incentive to retain them and reward them adequately.

b. Elderly households who take up the Silver Housing Bonus or the Enhanced Lease Buyback Scheme can gain $20,000.

c. Lower-, and especially middle-income elderly will benefit from enhanced subsidies in Community Hospitals, nursing homes, day care and rehabilitation facilities and home-based care packages. They can gain $480 to $610[10] per month through subsidies for a range of home-based care services, and a further $1,800[11] to add safety features to their homes.

[10]: Based on a home-based care package for an elderly person in a median income household with moderate to severe disability.

[11]: For a household living in a 4- or 5-room flat

d. Older Singaporeans who use long term care services can benefit from GST absorption.

e. Those under MediShield will receive Medisave top-ups to help them pay for MediShield premiums as coverage extends to age 90.

This is therefore a package that will benefit virtually all Singaporean families, including the children who are or will in time be supporting their parents.

Supporting Singaporeans with Disabilities

Let me now move on to talk about what we will do for Singaporeans with disabilities. They are not a very large group in our society – about 3% of Singaporeans, or 100,000 in total. But their lives can be challenging. Parents of children with special needs try their best to cope and bring up their children with the care and love they need. They could do with extra support.

We will provide a stronger helping hand for Singaporeans with disabilities, at each stage of their lives.

Strengthening Early Intervention and Education

Let me start with their pre-school years. We will increase places in centres for children who need intensive early intervention. In addition, in mainstream pre-school classrooms, we will introduce a new programme to provide learning support and therapy interventions to children with mild speech, language and learning delays. Some 2,000 children will benefit from this new “Development Support Programme” when it is fully rolled out.

MCYS will elaborate on this in the COS. We will also make enhancements to our Special Education (SPED) schools, which MOE will speak about in the COS.

Supporting Employment

With better education and a supportive community, more young Singaporeans with disabilities will be able to enter the workforce and remain independent in their adult years.

Chen Min Li is an energetic 23-year-old who graduated from Towner Gardens School, one of our SPED schools. She then went on to complete four years of vocational skills training. She now works in the service crew at Carl’s Junior. Min Li is happy to be able to add to her family’s finances, and according to her supervisors, is one of the most enthusiastic workers at Carl’s Junior.

There are many others like Min Li who want the opportunity to do meaningful work. I will therefore extend the Special Employment Credit to employers who hire SPED graduates, regardless of age. They will get a credit of 16% of the employee’s wages, which is twice as large as the SEC that I spelt out earlier for older workers[12]. With these enhancements, the employer of a SPED graduate who earns $1,000 a month will receive $160 per month in the form of a Special Employment Credit.

[12]: For Singaporean SPED graduates earning up to $1,500 per month, the SEC will be 16% of wages. For monthly wages between $1,500 and $3,000, the SEC is $240 per worker. A lower SEC will also be provided for those with a monthly wage of between $3,000 and $4,000

To help the workers earn more income, I will also extend the Workfare Income Supplement scheme to all SPED graduates who work, even if they are below 35, and double the Handicapped Earned Income Relief for all persons with disabilities (refer to Annex A-4).

Our measures to support their employment will complement what we plan to do under the Enabling Masterplan, such as enhancing vocational training, job placement, and support for continuous improvement in their working years.

Better Adult Care

However, Singaporeans with more severe disabilities will need care throughout their adult lives. This is especially because more and more of them outlive their parents.

They will be eligible for the same enhanced care subsidies that older Singaporeans will receive. Additionally, we will expand places in Day Activity Centres by 25%[13], to allow their caregivers to work or have free time during the day. With our enhancements in adult care this year, a middle-income household can receive up to $5,700 in subsidies to offset 50% of the annual cost of attending a Day Activity Centre. Low-income households will get more.

[13]: 250 additional places

We will also embark on other measures including expanding places in residential homes and providing transport options. The Acting Minister for MCYS will elaborate on these and the other government responses to the Enabling Masterplan Committee’s recommendations in the COS.

Uplifting Lower-Income Families

We know that lower-income Singaporeans have real worries about their day-to-day expenses. And they are concerned about whether their children will do well in school and get a good job.

Our most important solution to help lower-income families is to give their children a high-quality education, and help them keep upgrading their skills as adults so they can take on better jobs. This is a major work-in-progress. We have also taken significant steps in recent years to support their incomes through Workfare, help them own their homes and build up their savings.

More Support for Children from Lower-Income Families

In this Budget, we will provide further financial support for children from less well-off families.

Pre-school Subsidies

We have enhanced our pre-school subsidies significantly in recent years. To provide further support for larger families, we will also introduce a new, per capita household income criterion (PCI) for subsidies.

Take for example a family of five (with three children), earning $2,500 in household income. They will now pay only $20 for each child in child care[14], compared to $110 previously. This is similar to what lower-income families with fewer children would pay.

[14]: Assuming they attend a HDB Childcare Centre costing $620 per month.

MOE Financial Assistance Scheme

We will help more students benefit from the MOE Financial Assistance Scheme by raising the household income ceiling from $1,500 to $2,500 per month. It will mean that 40,000 more students, or twice the original number, will be fully subsidised for their school fees, uniforms and textbooks, and receive a 75% subsidy on their exam fees.

Top-ups to Schools for Discretionary Financial Assistance

We will provide a further top-up to School Advisory and Management Committees of up to $15,000 per year for the next three years. This will give the committees greater certainty of government support and help them introduce new schemes in the school – such as transport assistance for students.

The two enhancements I have just mentioned will also be provided to our SPED schools.

Student Care Fee Assistance (SCFA) Scheme

We will enhance the Student Care Fee Assistance (SCFA) scheme to benefit more families. As student care costs much more than fees and expenses for regular school, we will extend subsidies to a larger group of families than those who qualify for the MOE Financial Assistance Scheme. Subsidies for student care will be extended to families with up to $3,500 in monthly household income. A family earning say $2,500 per month would typically see the amount they pay for student care reduced from $200 to $80 per month.

Top-ups for Education and Social Support

To support the Government’s and community’s efforts, I will also make several top-ups this year.

I will provide a $200 million top-up to the Edusave Endowment Fund to help all children enjoy meaningful enrichment programmes.

I will make a $200 million top-up to the ComCare Endowment Fund to support families in need.

As the community plays a crucial role in helping low-income families, I will also give a total of $10 million to our Self-Help Groups and the CCC ComCare Fund.

Broadening Opportunities for Every Child

The real story, however, is not just about helping families cover their fees and costs in school. What we are providing is a breadth of exposure to every child regardless of family background in a way that few school systems overseas do. We have been building this up across the school landscape, so as to allow every child to discover what they like, and what they are good at.

Muhammad Fairoz is now in Secondary 4 at Yusof Ishak Secondary School. His family has modest means – his father is a factory cleaner and his mother is a housewife. He is doing very well. He has obtained Edusave Merit Bursaries and Scholarships over the last few years, besides the MOE Financial Assistance Scheme. In fact, he has had near perfect scores of 6 academic distinctions every year. He also went to Xi’an on a 10-day cultural exchange programme that was fully funded by the Trips for International Experience Fund that every school gets, plus his Edusave Account.

Fairoz does a lot more in school. He is a tenor in the school choir, which is where his talent was also spotted for the school’s Performing Arts Programme. Last year, he played the role of Professor Higgins in the school’s production of “My Fair Lady”. Now, he wants to go on to do theatre studies so that he can become a stage actor. So that’s how we do it. Give every student the chance to go through varied experiences so that along the way they can discover something they like and that they are good at.

A Fair Tax System

Let me move on now to a broader theme, which involves how the GST affects the poor, and its role as part of a fair system of taxes and benefits.

Our fiscal system is a progressive one, which means that the poor get far more benefits compared to the taxes they pay, and the better-off pay more taxes.

The top 20% of households pay 80% of income taxes collected. We shifted to progressive property taxes last year, and they should become more so over time. Then, there is the GST, which is a flat tax and is therefore on its own, regressive, taking up more of the pay of those with low incomes.

But taken as a whole, our fiscal system has in fact become more progressive over the last decade despite our raising the GST from 5% to 7%. This is because we introduced programmes like Workfare and enhanced our subsidies to help lower-income families. These enhanced benefits are much larger than the increase in GST that they now pay.[15]

[15]: If we add it all up, the average lower-income (2nd decile) household has received $2.40 back in additional permanent transfers for every dollar of additional GST paid over the past five years

These permanent transfer schemes are how lower-income Singaporeans benefit from our fiscal system. Our GST, most of which comes from residents in the upper half of the population by incomes and foreigners, is an important source of revenue that enables us to fund this system of transfers.

In addition, we provided a substantial package of temporary offsets for individuals and households when we raised the GST in 2007. These temporary offsets lasted until last year.

To carry on with these offsets, I will now introduce a permanent GST Voucher to help lower-income Singaporeans. The GST Voucher will provide continuing assurance that our GST does not hurt the poor.

This Voucher will fully offset the 7% GST that the lower half of retiree households pay on their expenses. Many retirees in the upper half will also have their GST offset by a significant amount.

The GST Voucher for other lower-income families (who do not have elderly members) will also offset about half their total GST bills. Further, taking into account the other permanent benefits that they receive through Workfare, housing, education and healthcare, they will get back much more than the GST they pay.

There will be three components to the GST Voucher – cash, Medisave top-ups and U-Save. The amount each Singaporean will get will be based on both their income and the Annual Value (AV) of their homes. This is by no means a perfect system, but it is fair to have both criteria. For example, retirees and homemakers who have no incomes but live in higher-end homes, are generally better off than most lower-income Singaporeans.

GST Voucher – Cash

The cash component will be given to Singaporeans whose incomes fall within the bottom 40%, and who live in HDB flats or the bottom 15% of private properties (those with an Annual Value of up to $20,000).

Those who live in HDB flats will receive $250 in cash each year. Those living in lower-end private properties will receive $100, as long as their incomes are also low (below $24,000)[16]. $100 may not be a large sum, but taken together with the Medisave component of the GST Voucher, it will provide some help for our retirees who live in lower-end private properties. (See Table 3 for full schedule).

[16]: 40th percentile of annual incomes.

GST Voucher – Medisave

The second component of the Voucher will comprise an annual top-up to the Medisave Accounts of older Singaporeans. Those above 65 and living in HDB flats or lower-end private properties will receive this top-up (see Table 4). This would benefit 85% of all elderly Singaporeans.

A 75 year old Singaporean, for example, will receive $350 if he lives in an HDB flat, or $250 if he lives in a lower-end private property.

GST Voucher – U-Save

Finally, the GST Voucher will help lower- and middle-income households through permanent U-Save rebates, to offset part of their utilities bills.

Households living in smaller flats will benefit more. 1- and 2-room HDB households will receive $260 per year, which is equivalent to about three to four months of their utilities bills on average (see Table 5).[17]

[17]: Overall, the U-Save rebates will benefit about 800,000 households (or 75% of all households).

Let me illustrate how the GST Voucher adds up. A retiree couple living in a 3-room flat will receive enough to offset fully the GST they pay each year. They typically pay about $840[18] in GST a year, but will receive $1,240 worth in their GST Voucher. (This is without counting the one-off Medisave top-up they will receive this year, which is not part of the GST Voucher).

[18]: See Annex B-2.

Younger lower-income households (without elderly persons) in 3-room or 4-room flats will also receive a significant GST offset. It should cover about half of the total GST they pay each year.

In total, the GST Voucher will cost about $680 million this year. As I have explained, this will be a long-term feature of our fiscal system and not a scheme of temporary offsets. To ensure that we can provide this GST Voucher irrespective of economic circumstances over the next few years, I will set aside $3.6 billion this year to finance the scheme for the first five years. To do this I will set up a GST Voucher Fund from which payouts will be made in the coming years.

Budget 2012 Speech (Part 5): A fair and inclusive society

Equally, we are stepping up social policy: to provide greater economic security for the elderly and Singaporeans with disabilities. -AsiaOne
Fri, Feb 17, 2012
AsiaOne

A fair and inclusive society

Mr Speaker Sir, we are making important moves to build a fair and inclusive society. We are growing our economy in a way that can lift incomes for all Singaporeans. Equally, we are stepping up social policy: to provide greater economic security for the elderly and Singaporeans with disabilities; and to help lower-income families develop resilience, strive hard, and move up.

We have two key challenges. First, to help the growing number of older Singaporeans live comfortably, even as they are living longer.

Our seniors want active and fulfilling lives. At the same time, many have worries, including those in the middle-income group. They worry about whether they will be able to afford treatments when they fall ill, whether they will be a burden on their children, and whether they can grow old in the company of family and friends.

We will do more to help them. We are particularly concerned about the current generation of older Singaporeans, many of whom have very limited cash savings. Their CPF balances are low because wages were much lower 20 or 30 years ago, and the Minimum Sum they were required to set aside was also much smaller.

However, these older Singaporeans do have substantial savings in the value of their homes.

We will help them use this wealth to boost their retirement income. At the same time, we will give them greater assurance of being able to afford their healthcare.

Our second challenge is inequality. The economic pressures that have led to widening income gaps nearly everywhere in the world will not go away soon. Furthermore, because Singapore is a city, our income inequality will inevitably be wider than in larger countries, like in many other global cities.

But we cannot leave our social compact vulnerable to market forces. We have to do all we can to contain inequality, and to sustain social mobility in each new generation.

We are therefore making a determined, multi-year effort to raise the prospects of success for lower-income families. We must also give our middle-income families every opportunity to achieve their aspirations in an evolving and often unpredictable economic environment.

We still see evidence of considerable social mobility, as students from all backgrounds flow through our education system. Take our PSLE cohorts. Each year the top students come from schools all around the island, including many neighbourhood schools. And a significant proportion of students from the lower end on the socio-economic scale make it to the top one-third in PSLE performance.

But it will get more difficult to keep up this mobility in the years to come – precisely because we achieved a very high degree of mobility in the past. We must therefore work harder at this. We must find every effective way to help those who start off lower down to catch up and do well; every way to prevent disadvantage from repeating itself across generations.

Education and jobs are the springboards to success in Singapore. We will do more to help children from disadvantaged homes, starting earlier in their lives – better quality pre-schooling, specialised intervention to help those with specific learning difficulties, and more after-school student care in the primary school years. We are also broadening education so that every student can develop their strengths, in and out of the classroom.

We are expanding our pathways to a university education, to match the aspirations of our students and give them skills that will find them good jobs. PM spoke about this at last year’s National Day Rally. We are also investing heavily to give every adult worker the opportunity to keep up-skilling, or even return to a tertiary institution mid-career to enrich his knowledge.

But we must also groom a larger pool of social workers and other professionals, to help lower-income families overcome the deeper and more complex problems that many of them face. The solution to low incomes does not only lie in supporting incomes through government transfers, as many societies have found. We need many more people with passion for the job, from speech therapists and learning support specialists to work with children in their early years, to counsellors who can help families work towards better times, or gain the trust of drug offenders and help them turn their lives around. This is an important priority. We will do more to attract Singaporeans into the social sector, reward them better, and enable them to have fulfilling careers.

Helping our Seniors Live Long, Live Well

Mr Speaker Sir, let me move on now to the main steps we are taking in this year’s Budget, as part of the broader shifts that we will be making in our social policies over the next five years.

First and foremost, we want to help Singaporeans age with dignity and grace. Our seniors aspire not just to live long, but to have fulfilling, active golden years. But they have worries as well, centering on whether they will be able to afford the cost of medical care when they fall ill, and avoid being too big a burden on their children.

The key change is that fortunately people are healthier and are living longer, but unfortunately working careers have not lengthened to the same extent. So the savings they have at the time they retire have to be stretched out in smaller amounts over a longer period. To help our older Singaporeans, we will provide strong support for those who desire to stay at work. We will also help them unlock the savings in their homes, so as to boost retirement income. And we will significantly expand hospital and long term care capacity and make services more affordable – including for the middle-class elderly.

Rewarding Work

First, helping older Singaporeans at work.

Increase CPF Contribution Rates

Earlier, I announced a strong incentive we will provide for employers to engage older Singaporeans. The Special Employment Credit (SEC) will especially help older Singaporeans who are in the bottom half of the income ladder.

On top of this, we will help all our older workers, including those with incomes in the upper half, by raising CPF contribution rates.

We lowered contribution rates for older workers in the late 1980s and again in the last decade, because their employment rates were lower compared to younger workers. Seniority-based wages discouraged employers from hiring older workers. The lower CPF contribution rates hence helped to offset the higher cost of older workers, and kept them in demand in the employment market. However, we have made good progress in recent years in flattening wage scales, and in increasing the employment of older Singaporeans.

We can expect this positive trend to continue. The labour market is tight. Our workers in their 50s and 60s will increasingly have better educational and skills profiles. Our re-employment legislation is now in place. And the SEC will provide further support.

It is therefore a good time for us to raise CPF contribution rates for three groups of Singaporeans – those aged 50 to 55, 55 to 60 and 60 to 65.

First for those aged between 50 and 55. We have had good consultations with our tripartite partners, and reached a consensus that we should give this group the same CPF contributions as younger workers, rather than reduce CPF contribution rates after age 50.

We therefore need to raise CPF contribution rates for this group by 6 percentage points – 4 percentage points from the employer and 2 percentage points from the employee – to reach the full CPF contribution rate of 36%. However, we cannot make this major move in one step, and particularly with an economic slowdown at hand.

For the first step this year, we will raise CPF contribution rates for those aged between 50 and 55 by 2.5 percentage points – 2 percentage points from the employer and 0.5 percentage points from the employee. This will bring their total CPF contributions up from 30% to 32.5%.

For the second group comprising Singaporeans aged between 55 and 60, we will raise contribution rates by 2 percentage points – 1.5 percentage points coming from the employer and 0.5 percentage points from the employee.

For the third group, those aged between 60 and 65, their employer contribution rate will increase by 0.5 percentage points. There will be no increase in their employee contribution rate. (See Table 1 for full schedule.)

We will have to watch how the employment market develops before making any further moves. The SEC will hopefully encourage employers to attract and retain more of these older workers.

These changes in CPF contribution rates will take effect from September 2012, in line with the first disbursement of the enhanced SEC.

We will also raise contribution rates of self-employed persons into their Medisave Accounts, to be in line with those of employees. The Medisave contribution rates for those aged 50 and above will be raised from 9% to 9.5%. This change will take effect from January 2013.

More details are in Annex B-1, and a press release that the Ministry of Manpower will issue later today.

Enhanced Earned Income Relief

I will also raise the income tax relief for older taxpayers so that they can retain more of their income from work. They deserve this. I will double the Earned Income Relief for those aged 55 and above. Those aged 55 to 59 will now enjoy $6,000 in Earned Income Relief per annum, while those aged 60 and above will enjoy $8,000.

119,000 older Singaporeans will benefit. The increased relief will cost the Government $30 million per annum, and will be effective from Year of Assessment 2013.

Helping Seniors Unlock Savings

As I mentioned earlier, many of our current generation of elderly have significant wealth in their homes. We will provide them an attractive option to free up money for their retirement years by moving to smaller homes.

Silver Housing Bonus

First, we will introduce a Silver Housing Bonus of $20,000.

This Bonus will be given to older Singaporeans who wish to sell their existing flats and purchase 3-room or smaller HDB flats. Many of our senior citizens are in fact keen to do so – the great popularity of our Studio Apartments speaks for itself. It is not just a desire to unlock their savings, but that the apartments are practically designed for them. And they have nearby amenities that cater to the elderly, such as Senior Activity Centres. We will be building more Studio Apartments in the next few years.

The Silver Housing Bonus works like this. The Government will provide $15,000 in cash and $5,000 to the CPF accounts. To benefit from the scheme, the homeowners will use the proceeds from the sale of their previous home to top up their CPF savings up to the prevailing Minimum Sum. All amounts above the Minimum Sum can be withdrawn in cash, and we expect many to be able to do so.

Providing the best care for our seniors

Transforming Long-Term Care

Singaporeans are living longer. A larger proportion of our people are going to be elderly – by 2030, one in five residents will be aged 65 and above. We want to provide our seniors with the best possible care and help them stay healthy and active in their retirement years.

We are continuing to make significant investments with new acute care hospitals – Khoo Teck Puat Hospital has opened last year in the north, and Jurong General Hospital will open in 2014.

Our next big priority is to build up our long-term care sector. We will develop a high quality and comprehensive system, to provide the best possible care for the elderly and the disabled, not just in our hospitals but also in the community and in their own homes. We will provide enhanced government support so that we can develop the VWO sector for long-term care – good people and institutions that bring passion, expertise, and resources to help the elderly and disabled.

Today, we already have several good long-term care providers amongst our VWOs. For example, St Luke’s ElderCare provides day care services; Metta Welfare Association helps the disabled to stay active; the Home Nursing Foundation does good work to help the elderly in the community. We need more of them, and must raise the quality across the whole spectrum of providers – including community hospitals; day rehabilitation centres and home-based care so that the elderly can be close to family and friends; and institutionalised care in nursing homes and hospices.

The Minister for National Development will elaborate on these measures in the COS.

Budget 2012 Speech (Part 4): Enhancing our transport system

The Government will provide funding for 550 buses while the public bus operators will add another 250 buses. -AsiaOne
Fri, Feb 17, 2012
AsiaOne

I will now go on to a significant initiative in this year’s Budget – to enhance our public transport system.

Reliable and convenient public transport is critical to the quality of daily life for the majority of Singaporeans. When the planned Downtown Line, Tuas West Extension, Thomson Line and Eastern Regional Line are completed in a decade’s time, our rail coverage will be comparable to that of cities with the most developed rail networks today such as New York. We will also have 400,000 housing units within 400 metres of MRT stations, double the number today.

Boosting Bus Capacity

It will take time for these rail capacity improvements to be completed. In the meantime, we will significantly ramp up bus capacity so as to relieve daily congestion in public transport. 60% of all passenger trips are in fact made on buses.

The Government has decided to make a major commitment to improve bus service levels. We will partner the public transport operators (PTOs) to add about 800 buses over the next five years, or a 20% increase. This is a significant increase. It took the PTOs close to 20 years to grow the public bus fleet by 800 buses in the past.

The Government will provide funding for 550 buses while the public bus operators will add another 250 buses. This significant increase in bus capacity will reduce crowding and waiting times. For example, it will enable almost all feeder buses to run every 10 minutes or less – for two hours during morning and evening peak periods, instead of a one-hour peak currently.

This is an important new commitment that will stretch beyond this term of Government. To ensure that the Government can fulfil this commitment for both the purchase of buses and the running costs for 10 years, I will set aside $1.1 billion in this Budget for a Bus Services Enhancement Fund.

Beyond this one-time Government commitment to fund 550 buses, the viability of bus operations will have to rest on improvements in efficiency and a sustainable system of fare revenues.

Revisions to the Vehicle Tax Regime

I shall now move on to private transport measures.

The Green Vehicle Rebate Scheme (GVR) was introduced in 2001. Electric and hybrid cars, as well as those running on compressed natural gas (CNG), are given a 40% rebate of their Open Market Value, which is offset against the vehicle’s Additional Registration Fee or ARF.

Ten years on, the take-up of green vehicles remains modest. One drawback of the GVR is that it is based on the technology platform, rather than the actual impact on the environment. Some hybrid vehicles with large engine capacity are in fact not very environmentally friendly, while some petrol cars with smaller engine capacity emit less carbon. We have thus decided to replace the GVR with a new Carbon Emissions-based Vehicle Scheme, or CEVS in short, when the GVR scheme expires at the end of 2012.

CEVS is based on carbon efficiency and will be applicable to all new passenger cars. Car models with low carbon emissions will enjoy generous rebates on their ARF of up to $20,000, while those with high carbon emissions will have to pay a registration surcharge of up to $20,000.

With CEVS, some car buyers will pay less and others pay more, but the Government will collect less revenue overall. CEVS is expected to cost Government $34 million per year, more than double the total annual incentives given under GVR.

For commercial vehicles and motorcycles, we will be extending the GVR by another two years till end-2014. The Ministry of Transport will be announcing more details on CEVS in the COS.

Special Diesel Tax for Euro V Vehicles

Last year, the Government announced the adoption of Euro V emission standards for new diesel vehicles by 2014.

To encourage the adoption of new and cleaner diesel technologies, the Special Tax for Euro V compliant cars will be lowered from $1.25 per cc to $0.40 per cc from January 2013, a reduction of 70%. For a 1,600cc Euro V diesel car, this means that the Special Tax payable is comparable to the annual fuel tax paid by an equivalent petrol car.

Removal of Additional Transfer Fee

The Additional Transfer Fee, or ATF, is levied on used-vehicle transactions at 2% of the vehicle value at the point of transfer. Arising from feedback from the public and the motor industry, the Government has reviewed and decided that the ATF is no longer necessary. I will therefore abolish the ATF, starting tomorrow. This is estimated to cost the Government $70 million per annum in revenue forgone.

Can Technology End Poverty?

The international development community has high hopes that the spread of information and communication innovations can lift millions of people out of poverty. But technology – no matter how well designed – is only a magnifier of human capacity, not a substitute, says Kentaro Toyama.
A ten-year-old boy named Dhyaneshwar looked up for approval after carefully typing the word “Alaska” into a PC.

23rd November 2010 – Published by the Boston Review

“Bahut acchaa!” I cheered—“very good.”

It was April, 2004, and I was visiting a “telecenter” in the tiny village of Retawadi, three hours from Mumbai. The small, dirt-floored room, lit only by an open aluminum doorway, was bare except for a desk, a chair, a PC, an inverter, and a large tractor battery, which powered the PC when grid electricity was unavailable. Outside, a humped cow chewed on dry stalks, and a goat bleated feebly.

As I encouraged the boy, I wondered about the tradeoff his parents had made in order to pay for a typing tutor. Their son was learning to write words he’d never use, in a language he didn’t speak. According to the telecenter’s owner, Dhyaneshwar’s parents paid a hundred rupees—about $2.20—a month for a couple hours of lessons each week. That may not sound like much, but in Retawadi, it’s twice as much as full-time tuition in a private school.

Such was my introduction to the young field of ICT4D, or Information and Communication Technologies for Development. The goal of ICT4D is to apply the power of recent technologies—particularly the personal computer, the mobile phone, and the Internet—to alleviate the problems of global poverty. ICT4D sprouted from two intersecting trends: the emergence of an international-development community eager for novel solutions to nearly intractable socioeconomic challenges; and the expansion of a brashly successful technology industry into emerging markets and philanthropy.

The latter prompted my own move to India. I was working as a computer scientist for Microsoft Research in the United States during a time when India’s rise as an information-technology superpower drew to that country increasing investments from multinational firms. In 2004 I was asked to help start a lab in Bangalore, and I jumped at the opportunity. While the lab’s broader mission was to engage India’s science and engineering talent in computer-science research, I would have the chance to start an ICT4D research group, where I hoped to devote my expertise to something of wider societal value.

At the time, telecenters were the poster children of ICT4D. Telecenters are like Internet cafés, except they are placed in impoverished communities with the intention of accelerating socioeconomic growth. The telecenters are often sponsored wholly or in part by outside agencies—governments, NGOs, academia, industry—harboring a variety of secondary aims, from profits and publicity to increased interaction with a voting constituency.

In Retawadi the telecenter was created jointly by a for-profit start-up company and a local nonprofit. The partners believed that the telecenter would provide social services to the community and income for a local entrepreneur, and, in fact, it did a bit of both. When I visited, the telecenter had two students. Occasionally, a college-aged youth would come in to use the Internet for the equivalent of $0.25 per hour. And the owner boasted that he earned additional income by using the PC himself to provide a local hospital with data-entry services.

Some telecenters have been successful. One operator in South India reported saving a farmer’s okra crop by enabling a timely video teleconference between him and a university agriculture expert. Another boasted a threefold increase in income after opening a computer-training center. The press headlines have been unabashedly flattering: “India’s Soybean Farmers Join the Global Village” (The New York Times); Village Kiosks Bridge India’s Digital Divide” (The Washington Post); “Kenyan Farmer Lauds Internet as Saviour of Potato Crop” (BBC).

These stories have sparked high hopes for telecenters: distance education will make every child a scholar; telemedicine can cure dysfunctional rural health-care systems; citizens will offer each other services locally and directly, bypassing corrupt government officials. Ashok Jhunjhunwala, a member of the Indian Prime Minister’s Science Advisory Council, suggested that telecenters could double incomes in rural villages. M.S. Swaminathan, widely credited with India’s “Green Revolution” in agriculture, called for a telecenter in each of the country’s 640,000 villages. Other countries have followed suit, proclaiming their own national telecenter programs.

The excitement around telecenters has spread to the rest of ICT4D. Prominent people in both the technology and development sectors eagerly fan the flames, and proponents of ICT4D increasingly wrap it in the language of needs and rights. Nicholas Negroponte—founder of One Laptop Per Child (OLPC), a project devoted to getting inexpensive laptops into the hands of every poor child—claims, “Kids in the developing world need the newest technology, especially really rugged hardware and innovative software.” Kofi Annan has publicly backed the project. Edward Friedman, director of the Center for Technology Management for Global Development, epitomized engineers involved in ICT4D when he wrote, “There is a pressing need to employ information technology for rural healthcare in sub-Saharan Africa.” One recent worldwide survey commissioned by the BBC found that 79 percent of the nearly 28,000 adults polled—mainly from richer countries and those with Internet access—strongly agreed or somewhat agreed with the statement, “Access to the Internet should be a fundamental right of all people.”

Yet the successes of ICT4D are few, fleeting, and very far between. In Retawadi the telecenter owner made approximately twenty dollars per month, but monthly costs of hardware, electricity, connectivity, and maintenance were a hundred dollars. The telecenter closed shortly after my visit.

Over a span of five years I traveled to nearly 50 telecenters across South Asia and Africa. The vast majority looked a lot like the one in Retawadi. Locals rarely saw much value in the Internet, and telecenter operators couldn’t market even the paltry services available. Most suffered the same fate as the Retawadi telecenter, shutting down soon after they opened. Research on telecenters, though limited in rigor and scale, confirms my observations about consistent underperformance.

As I soon discovered, these mostly failed ventures reflect a larger pattern in technology and development, in which new technologies generate optimism and exuberance eventually dashed by disappointing realities.

Academic observers have deconstructed telecenters and other ICT4D projects, enumerating the many reasons why the initiatives fail: ICT4D enthusiasts don’t design context-appropriate technology, adhere to socio-cultural norms, account for poor electrical supply, build relationships with local governments, invite the participation of the community, provide services that meet local needs, consider bad transportation infrastructure, think through a viable financial model, provide incentives for all stakeholders, and so on. These criticisms are each valid as far as they go, and ICT4D interventionists sometimes focus narrowly on addressing them. But this laundry list of foibles ultimately provides no insight into the deeper reasons why ICT4D projects rarely fulfill their promise, even as their cousins in the developed world thrive in the form of netbooks, BlackBerrys, and Facebook.

Nothing would have pleased my group more than finding a way for technology to advance the cause of poverty alleviation. But as we conducted research projects in multiple domains (education, microfinance, agriculture, health care) and with various technologies (PCs, mobile phones, custom-designed electronics), a pattern, having little to do with the technologies themselves, emerged. In every one of our projects, a technology’s effects were wholly dependent on the intention and capacity of the people handling it. The success of PC projects in schools hinged on supportive administrators and dedicated teachers. Microcredit processes with mobile phones worked because of effective microfinance organizations. Teaching farming practices through video required capable agriculture-extension officers and devoted nonprofit staff. In our most successful ICT4D projects, the partner organizations did the hard work of real development, and our role was simply to assist, and strengthen, their efforts with technology.

If I were to summarize everything I learned through research in ICT4D, it would be this: technology—no matter how well designed—is only a magnifier of human intent and capacity. It is not a substitute. If you have a foundation of competent, well-intentioned people, then the appropriate technology can amplify their capacity and lead to amazing achievements. But, in circumstances with negative human intent, as in the case of corrupt government bureaucrats, or minimal capacity, as in the case of people who have been denied a basic education, no amount of technology will turn things around.

Technology is a magnifier in that its impact is multiplicative, not additive, with regard to social change. In the developed world, there is a tendency to see the Internet and other technologies as necessarily additive, inherent contributors of positive value. But their beneficial contributions are contingent on an absorptive capacity among users that is often missing in the developing world. Technology has positive effects only to the extent that people are willing and able to use it positively. The challenge of international development is that, whatever the potential of poor communities, well-intentioned capability is in scarce supply and technology cannot make up for its deficiency.

This point may sound reasonable enough when stated in the abstract, but it has an important consequence for anyone expecting to save the world with technology: you can’t . . . at least, not unless the technology is applied where human intent and capacity are already present, or unless you are willing also to invest heavily in developing human capability and institutions.

The converse belief—accepted as faith by technocrats and techno-utopians—is that the large-scale dissemination of appropriately designed technology, per se, can provide solutions to poverty and other social problems. Believers jump to address the scale of global problems before confirming the value of the solution. They equate technology penetration with progress. For example OLPC seeks to enable “self-empowered learning.” Teachers can be altogether absent; OLPC has consistently sold its technology with little discussion of the realities of pedagogy—training teachers, redesigning curricula, strengthening weak school systems. As for technical maintenance, the students are supposed to provide it themselves. OLPC’s very name implies that its goal is, primarily, widely disseminated technology. Yet, few of us would choose PC-based education for our own children.

This myth of scale is the religion of telecenter proponents, who believe that bringing the Internet into villages is enough to transform them. Most recently, there is the cult of the mobile phone: one New York Times Magazine headline ran, “Can the Cellphone Help End Global Poverty?” The article went on to assert, “the possibilities afforded by a proliferation of cellphones are potentially revolutionary.”

“Revolutionary.” The myth of scale is seductive because it is easier to spread technology than to effect extensive change in social attitudes and human capacity. In other words, it is much less painful to purchase a hundred thousand PCs than to provide a real education for a hundred thousand children; it is easier to run a text-messaging health hotline than to convince people to boil water before ingesting it; it is easier to write an app that helps people find out where they can buy medicine than it is to persuade them that medicine is good for their health. It seems obvious that the promise of scale is a red herring, but ICT4D proponents rely—consciously or otherwise—on it in order to promote their solutions.

Estimates of annual, worldwide ICT4D expenditure are hard to come by, but they range from hundreds of millions to tens of billions of U.S. dollars, depending on what is counted. Given the extent of the investment, the opportunity costs become significant. OLPC’s target cost of a hundred dollars or less per laptop (in practice, the machines have been more expensive), sounds affordable, but that’s about half of India’s per-student education budget, most of which is currently devoted to teachers’ salaries. Does a hundred dollars for a computer make sense when $0.50 per year, per child for de-worming pills could reduce the incidence of illness-causing parasites and increase school attendance by 25 percent?

Despite critical needs in all areas of development, ICT4D proponents tend not only to ignore the opportunity costs of technology, but also to press for funding from budgets allocated to non-technology purposes. Presumably, this was one of the reasons behind OLPC’s brazen doublespeak in claiming to be “an education project, not a laptop project,” while expecting governments to spend $100 million for a million laptops, the original minimum order. In a fine example of the skewed priorities of ICT4D boosters, Hamadoun Touré, secretary-general of the International Telecommunications Union, suggests, “[governments should] regard the Internet as basic infrastructure—just like roads, waste and water.” Of course, in conditions of extreme poverty, investments to provide broad access to the Web will necessarily compete with spending on proper sanitation and the rudiments of transportation.

Disseminating a technology would work if, somehow, the technology did more for the poor, undereducated, and powerless than it did for the rich, well-educated, and mighty. But the theory of technology-as-magnifier leads to the opposite conclusion: the greater one’s capacity, the more technology delivers; the lesser one’s capacity, the less value technology has. In effect, technology helps the rich get richer while doing little for the incomes of the poor, thus widening the gaps between haves and have-nots.

Technology widens the gap through three mechanisms. First, differential access. Technology is consistently more accessible to the rich and the powerful. Technology costs money not only to acquire, but also to operate, maintain, and upgrade. And this “digital divide” persists even when the technology is fully sponsored. For instance, most public libraries in the United States provide free access to the Internet, but poorer residents have less leisure time in which to visit them and a harder time reaching them because of transportation costs. There may be social barriers, too: many of the rural telecenters I’ve visited in the developing world were not accessible to the least privileged people in their villages due to social injunctions against comingling of caste, tribe, or gender.

Technology producers also reinforce the digital divide. As for-profit companies, by and large, they naturally cater their products toward larger groups of richer customers, who are more likely to buy. Technology amplifies shareholder interest in profit, and, globally, this means hardware tends to be designed for people working in climate-controlled offices with stable AC power; software tends to be developed in languages understood by the world’s largest, wealthiest populations; and content tends to be written for audiences with the greatest disposable income. Even when products appear to be free, as with TV or Google, they are frequently supported by advertisers who seek consumers with more disposable income. The result is, again, that the disadvantaged are further disadvantaged. India has more than twenty nationally recognized languages, yet almost all of the software in use there is in English, making it difficult for those literate only in their local languages to use computers. And this inclination reinforces itself: if a technology is not designed for someone, she won’t buy it; and if she doesn’t buy it, the producers won’t design for her.

It is possible to fight against this differential access. Telecenter projects, in fact, typify such efforts, as the centers are always targeted at poorer clients. But progressive practices with respect to technology are not particularly effective on their own because of other differentials that technology doesn’t undo. A level playing field doesn’t address the underlying issues, which are the inequalities among the players themselves.

This brings us to the second mechanism: even if differential access to technology could be countered through universally distributed technology, differential capacity—in terms of education, social skills, or social connections—remains. Consider the following thought experiment. You and a poor farmer from a remote village are each given 24 hours to raise as much money as you can for the charity of your choice. You are both provided unfettered access to an Internet-connected PC, and nothing else, with which to fulfill the task. Who would be able to raise more money? You would, because of your education, social ties, self-confidence, and organizational capacities. The technology is exactly the same in both cases, so the difference is due to qualities associated with the person. It could be argued that telecenter projects are not far off from a real-life version of this experiment. Clients of telecenters are limited in literacy, education, social ties, political influence, etc., and are therefore constrained in the value they can extract from the Internet. With limited capacity, technology’s value is minimal.

Along with differential access and capacity, a third mechanism—differential motivation—contributes to the widening divergence between the privileged and the marginalized. What do people want to do with the technology they have access to? Those of us who have worked in interventionist ICT4D have often been surprised to find that poor people don’t rush to gain more education, learn about health practices, or upgrade vocational skills. Instead, they seem to use technology primarily for entertainment. Telecenter surveys find that when a village has ready access to a PC—connected to the Internet or otherwise—the dominant use is by young men playing games, watching movies, or consuming adult content. Many become proficient at the software incantations required to download YouTube videos from a PC onto a mobile phone. But these same users typically forsake software-based accounting and language lessons. What interventionists perceive to be “productive” use of technology is trumped by the “frivolous” desires of users. Even users in the developed world rarely take advantage of their technologies for purposes of self-improvement—the most popular iPhone apps are games and other entertainments, nothing that would improve productivity or health—but this tendency is exacerbated among those who have grown up with lessons of learned helplessness and low self-confidence.

I’m not blaming the victim. None of the three mechanisms necessarily speak to failures on the part of those who are poor or poorly educated. Blame, if it must be attributed, falls readily on historical circumstances, social structures, and the rich world’s unwillingness to invest in high-quality, universal education. In fact, one reason for valuing education is that it generates the appetite for and capacity to use modern tools—all the more reason to focus on nurturing human capability, rather than trying to compensate for limited capacity with technology.

* * *

The problem is that ICT4D assumes the very results it seeks to achieve. The human intent and competence ICT4D aims to generate must already be in place for the technology to work. But if developing economies had the capacity, there would be no need for an external technology push: capable people attract, or develop, their own technology.

North America, Western Europe, Japan, and several other economically blessed regions are cases in point. They attained their status as economic powerhouses well before digital technologies had a measurable impact of any kind. Their advanced production and consumption of information technology can be interpreted more as a result of economic advances than as a primary cause.

There is also evidence that previous applications of information and communications technology in developing countries have not led directly to socioeconomic progress. Consider television. In 1964 Wilbur Schramm, the father of communications studies and a cofounder of Stanford University’s Department of Communication, wrote a book eerily prescient of ICT4D discourse, though its focus was on the technologies of its day—print, radio, and television. In one section of Mass Media and National Development, Schramm highlights the potential of television:

“What if the full power and vividness of television teaching were to be used to help the schools develop a country’s new educational pattern? What if the full persuasive and instructional power of television were to be used in support of community development and the modernization of farming?”

Since then television has had some positive impact. Economists Robert Jensen and Emily Oster have found that exposure to cable television empowers rural women in India. Anthropological evidence suggests that television shows depicting urban values can shift social attitudes in rural areas. One nonprofit organization, the Population Media Center, explicitly applies this principle in order to influence birth rates and health-care practices in developing countries by running soap operas with positive social messaging. These are encouraging points.

Yet the sum total of television’s development impact comes nowhere near even Schramm’s measured expectations. Half a century later, we find that television has not been consistently beneficial to national education or agriculture, either in the developed or the developing world. A visit to a poor household with a television suggests how appropriate the “boob tube” nickname really is. TV is not an effective guard against illiteracy, poverty, or poor health, as India, where about half of households own TVs, demonstrates. Whatever television’s potential, society—both as producer and consumer of technology—has failed to apply it consistently toward development on a large scale.

My point is not that technology is useless. To the extent that we are willing and able to put technology to positive ends, it has a positive effect. For example, Digital Green (DG), one of the most successful ICT4D projects I oversaw while at Microsoft Research, promotes the use of locally recorded how-to videos to teach smallholder farmers more productive practices. When it comes to persuading farmers to adopt good practices, DG is ten times more cost-effective than classical agriculture extension without technology.

But the value of a technology remains contingent on the motivations and abilities of organizations applying it—villagers must be organized, content must be produced, and instructors must be trained. The limiting factor in spreading DG’s impact is not how many camcorders its organizers can purchase or how many videos they can shoot, but how many groups are performing good agriculture extension in the first place. Where such organizations are few, building institutional capacity is the more difficult, but necessary, condition for DG’s technology to have value. In other words, disseminating technology is easy; nurturing human capacity and human institutions that put it to good use is the crux.

The claim that technology is only a magnifier extends beyond international development and beyond information and communication technology. Nobody expects to turn around a loss-making company with the injection of newer computers, but well-run corporations can benefit from, say, computerized supply chains. A gun in the right hands protects citizens and maintains peace; in the wrong hands, it kills and oppresses. (Alas, the gun lobby is right—“guns don’t kill people; people kill people.”) Modern industrial technology magnifies our ability to produce, but it also magnifies our desire to consume. On a planet with finite resources, the latter could be our ruin. And history suggests that even the political “technology” of democracy is all-too easily subverted in the absence of an educated, self-confident citizenry, willing and able to implement checks and balances against the abuse of power. Computers, guns, factories, and democracy are powerful tools, but the forces that determine how they’re used ultimately are human.

This point seems obvious but is forgotten in the rush to scale. Currently the international-development community is having a love affair with the mobile phone. Rigorously executed research by Jensen and by fellow economist Jenny C. Aker demonstrates that cell phones can eliminate certain kinds of information inefficiencies in developing-world markets. Encouraged by such findings and by the sheer depth of mobile-phone penetration, foundations and multilateral agencies have formed task forces and entire departments devoted to mobile phones for international development. In these circles, it is not possible to discuss microfinance without “mobile money,” or health care without “mHealth” (short for “mobile health”).

The magnification thesis, however, suggests that this is a one-sided view of mobile phones. Certainly talking is something that all human beings, as social animals, not only want to do, but are well equipped for. Phones multiply that intent and capacity, and some of the resulting value is positive—no point in being an indiscriminate Luddite.

But, it’s not just productive intentions that are magnified by technology. When a dollar-a-day rickshaw puller pays a large corporation for the privilege of changing his ring tone, does he generate a net benefit to himself or society? Companies pump out such questionable, “value-added” services, and millions of impoverished consumers readily pay for them. Kathleen Diga of the University of KwaZulu Natal observed that some households in Uganda prioritize talk time over family nutrition and clean water. Sociologist Jenna Burrell found that destructive patterns of gender politics are exacerbated by mobile phones, as men wield phones as tools of sexual exchange. Meanwhile, in the developed world, there is mounting evidence that mobile phones contribute to distracted driving, fractured attention, and reduced cognitive ability.

We are in the midst of the largest ICT4D experiment ever. In 2009 there were over 4.5 billion active mobile phone accounts, more than the entire population of the world older than twenty years of age. The cell phone is overtaking both television and radio as the most popular consumer electronic device in history. Some 80 percent of the global population is within range of a cell tower, and mobile phones are increasingly seen in the poorest, remotest communities.

These numbers prompt suggestions that there is no longer a “digital divide” for real-time communication. Yet any demographic account of mobile have-nots will show them to be predominantly poor, remote, female, and politically mute. Whatever the case, if the spread of mobile phones is sufficient to help end global poverty, we will know soon enough. But, if it doesn’t, should we then pin our hopes on the next new shiny gadget?


Focus : Kodak : Another casualty of digital revolution

Kodak, once a leading giant in the Photography & Film industry has been reduced to a shadow of its former glory. As long as you are born before the 2000’s, you should know about Film photography. If you don’t, well here’s some background information. A film roll had to be inserted into a camera in order for a picture to be taken. The picture would be “saved” onto the film and you had to go to your local Kodak shop to have the photos developed. The photo quality is nowhere near what we have today and the camera that came with it was usually bulky.

In those days, film was the best you could ever get. This little innovation made Kodak a multi-million dollar business. Kodak eventually become a household name and film cameras were used all around the world. That is until the digital revolution came.

Digital Cameras took over the world. We got our hands on clearer pictures (the more mega pixels your camera had, the better),were able to store pictures in digital formats (no need for film) and the cameras became much more compact. The world lapped up these devices. Kodak unfortunately, bit the dust. And people always wondered how such a giant become obsolete.

Well the reason was simple. Complacency had set in. Kodak refused to move out of its comfort zone.

Kodak cannot deny that they did not see this coming. They were the invented the first digital camera. They knew that the film was going to be a thing of the past. But did they do anything about it? No. They continued to place firm belief in the film. When all their rivals jumped on the bandwagon for Digital cameras, Kodak stood their ground. They felt that with the long history of film, they would never need to change. A mixture of stubbornness and complacency contributed to the downfall of the film giant. The younger generation of today know not of film photography and Kodak but of digital photos and DSLR’s.

So what we can learn from this episode is that we have to learn to step out of our comfort zone. The first steps could be harsh and difficult but if we refuse to budge, we may just end up like Kodak, Broken and Down.

C.S.

Kodak: Another Casualty of Digital Revolution

Kodak’s decision to file for bankruptcy protection is a sad, though not unexpected, milestone for an American corporate icon that pioneered consumer photography and dominated the film market for decades, but ultimately failed to adapt to the digital revolution.

Unlike fellow corporate titans IBM, Xerox, and Corning Glass, Kodak was unsuccessful in its quest to reinvent itself in the face of a rapidly changing economy. Rather, Kodak’s demise mirrored that of Blockbuster and Borders, two other giants that saw new, innovative digital upstarts crowd them out of the marketplace.

On Thursday, Kodak filed for Chapter 11 protection in U.S. Bankruptcy Court for the Southern District of New York. The company said it has received a $950 million line of credit from Citigroup while it reorganizes its business with a view toward emerging from bankruptcy in 2013.

Although many commentators attribute Kodak’s downfall to “complacency,” that explanation is “the easy answer,” one that doesn’t acknowledge the lengths to which the company went to reinvent itself, according to Rebecca Henderson, a professor at Harvard Business School who co-authored an influential case study about the company. Decades ago, Kodak anticipated that digital photography would overtake film — and in fact, Kodak invented the first digital camera in 1975 — but in a fateful decision, the company chose put its new discovery on the backburner to focus on its legacy film business.

It wasn’t that Kodak was oblivious to the future, Henderson said, but rather that it failed to execute on a strategy to confront it. By the time the company realized its mistake, it was too late.

“Kodak is an example of a firm that was very much aware that they had to adapt, and spent a lot of money trying to do so, but ultimately failed,” Henderson says. “Large companies have a difficult time transitioning into new markets because there is a temptation to put existing assets into the new businesses.”

(MoreGetting Kodak To Focus)

Henderson contrasts Kodak’s experience with that of two other American corporate icons, IBM and Corning Glass, both of which recreated themselves to adapt to new market conditions. IBM’s decision to jettison its personal computer business and invest heavily in consulting and services laid the foundation for Big Blue’s recent renaissance. Corning, meanwhile, has become one of the largest manufacturers of glass for flat-screen televisions and cell-phones. It’s a far cry from that company’s start as a producer of railroad signals, Henderson points out.

Although Kodak anticipated the inevitable rise of digital photography, its corporate culture was too rooted in the successes of the past for it to make the clean break necessary to fully embrace the future, Robert Burley, an associate professor at Toronto’s Ryerson University, told Bloomberg. “They were a company stuck in time,” Burley said. “Their history was so important to them, this rich century-old history when they made a lot of amazing things and a lot of money along the way. Now their history has become a liability.”

Founded in 1880 by George Eastman, Kodak became closely identified with the city of Rochester, New York, where it was based. At its peak in the 1980s, Kodak employed 62,000 people there, according to a recent must-read New York Times story about the evolution of Rochester’s economy. Today, that figure has fallen to less than 7,000. Between 2004 and 2007 alone, Kodak closed 13 film plants and 130 photo labs, and slashed its workforce by 50,000, according to Reuters.

(MoreKodak’s Photo Op)

Kodak’s demise over the last several decades was dramatic. In 1976, the company commanded 90% of the market for photographic film and 85% of the market for cameras, according to the case study Henderson co-authored. But the 1980s brought new competition from Japanese film company Fuji Photo, which undercut Kodak by offering lower prices for film and photo supplies. Kodak’s decision not to pursue the role of official film for the 1984 Los Angeles Olympics was a major miscalculation, according to Los Angeles Times business columnist Michael Hiltzik. “The bid went instead to Fuji, which exploited its sponsorship to win a permanent foothold in the marketplace,” Hiltzik wrote in an excellent piece detailing Kodak’s struggles.

In 1991, Kodak introduced the photo CD, which allowed consumers to view digital photographs on their computers, but that launch was a modest, incremental step for a company that needed to move much more decisively. The company introduced several pocket-sized digital cameras in the late-1990s, culminating with the launch of its EasyShare device in 2001. But by then, the digital camera market had become highly competitive, with rival device manufacturers battling each other for increasingly slim profit margins.

And of course, over the last several years, the rise of the smartphone has further transformed the market, as consumers increasingly eschew low-cost digital cameras, preferring to use feature-rich iPhones and Google Android devices to take photos and videos. Kodak, once a blue-chip American company, had been left in the dust.

Time Sam Gustin