New Singapore Shares scheme is announced

The New Singapore Shares scheme was introduced by then Prime Minister Goh Chok Tong in his National Day Rally speech on 19 August 2001 as a cost-relief measure to help less well-off Singaporeans during the economic downturn.^[1] The scheme, which cost S$2.7 billion, was funded by the government’s budget surpluses. It was a means for the government to redistribute wealth and to forge a social compact among citizens.^[2] By giving “shares” of the country to citizens, the government wanted to convey the message that all citizens  had a stake in the nation’s future and prosperity.^[3]

Through the scheme, eligible Singaporeans received sums of S$200 to S$1700 in New Singapore Shares worth S$1 each.^[4] The allotment of shares was based on social indicators such as age, national service status, employment status, income level and housing type.^[5]

Conceived to work like savings bonds,^[6] the shares earned annual tax-free dividends in the form of bonus shares over a five-year period from 1 March 2002 to 1 March 2007. The bonus shares were pegged at a minimum rate of 3 percent per annum with an extra dividend equal to the real GDP growth rate of the preceding calendar year. The shares could not be transferred or traded but Singaporeans could exchange their shares early for cash to offset living expenses though the government strongly encouraged citizens to hold on to their shares until maturity in 2007 to enjoy the full returns. All outstanding shares in 1 March 2007 were automatically converted to cash at S$1 each.^[7]

The shares, which were issued on 1 November 2001, 1 December 2001 and 15 January 2002, were administered by the Central Provident Fund (CPF).^[8] To avoid allocating shares to dormant CPF accounts, eligible citizens had to contribute at least S$50 to their CPF accounts in the previous year in order to qualify for the scheme.^[9] The payouts were given to recipients either through their bank accounts or by cheque.^[10] In all, a total of 2.08 million Singaporeans were eligible for the scheme.^[11]

References
1. Ministry of Information and the Arts. (2001, August 19). Transcript of Prime Minister Goh Chok Tong ‘s National Day Rally 2001 Speech at the University Cultural Centre, National University of Singapore on Sunday, 19 August 2001 at 8.00 pm. Retrieved December 12, 2013, from National Archives of Singapore website: http://archivesonline.nas.sg/
2. Singapore. Parliament. Parliamentary Debates: Official Report. (2001, October 12). Tackling the economic downturn. (Vol. 73, cols. 2288–2289, 2291, 2295). Call no.: RSING 328.5957 SIN; Ministry of Information and the Arts, 19 Aug 2001, Transcript of Prime Minister Goh Chok Tong ‘s National Day Rally 2001 speech at the University Cultural Centre, National University of Singapore on Sunday, 19 August 2001 at 8.00 pm.
3. Parliamentary Debates: Official Report, 12 Oct 2001, Tackling the economic downturn, Vol. 73, col. 2288.
4. Government of Singapore. (2008). New Singapore Shares. Retrieved December 12, 2013, from the Ministry of Finance website: http://www.mof.gov.sg/ers/nss_ovw.htm
5. Central Provident Fund. (2001, October 16). Introducing New Singapore Shares. Retrieved December 12, 2013, from the Central Provident Fund website: http://www.cpf.gov.sg/cpf_info/Publication/NSS.pdf; Parliamentary Debates: Official Report, 12 Oct 2001, Tackling the economic downturn, Vol. 73, col. 2288.
6. Qui, P., & Tan L. S. (2012). Discretionary transfers: Providing fiscal support in a behaviourally compatible way (p. 109). In Low, D. (Ed.) Behavourial economics and policy design: Examples from Singapore. Singapore: Hackensack, NJ: World Scientific. Call no.:  RSING 330.019 BEH.
7. Central Provident Fund, 16 Oct 2001.
8. Central Provident Fund, 16 Oct 2001.
9. Parliamentary Debates: Official Report, 12 Oct 2001, Tackling the economic downturn, Vol. 73, col. 2288.
10. Central Provident Fund, 16 Oct 2001.
11. New S’pore Shares credited. (2002, February 2). The Business Times, p. 3. Retrieved from NewspaperSG.