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Singapore By-Election Loss Shows Lee Challenges: Southeast Asia

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Photographer: Roslan Rahman/AFP/Getty Images

Supporters of the Workers' Party hold posters of their party's candidate Lee Li Lian at the nomination center in Singapore on Jan. 16, 2013.

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Photographer: Roslan Rahman/AFP/Getty Images

Supporters of the Workers' Party hold posters of their party's candidate Lee Li Lian at the nomination center in Singapore on Jan. 16, 2013. Close

Supporters of the Workers' Party hold posters of their party's candidate Lee Li Lian at the nomination center in... Read More

Photographer: Sam Kang Li/Bloomberg

This month, Lee Hsien Loong's administration said it will give priority housing to families with children and provide greater childcare subsidies. Close

This month, Lee Hsien Loong's administration said it will give priority housing to families with children and provide... Read More

Photographer: Roslan Rahman/AFP/Getty Images

A Workers' Party supporter holding a banner of candidate Lee Li Lian celebrates after the results for the Punggol east by-election was announced in Singapore on Jan. 26, 2013. Close

A Workers' Party supporter holding a banner of candidate Lee Li Lian celebrates after the results for the Punggol... Read More

Photographer: Munshi Ahmed/Bloomberg

The overseas labor clampdown on an island smaller than New York City has driven the jobless rate to a six-quarter low of 1.9 percent, pushing up manpower costs and constraining the central bank’s scope to combat an economic slowdown with monetary easing. Close

The overseas labor clampdown on an island smaller than New York City has driven the jobless rate to a six-quarter low... Read More

Singapore’s ruling People’s Action Party lost a by-election with the widest margin in almost three decades, signaling Prime Minister Lee Hsien Loong may struggle to claw back support as the cost of living climbs.

The Workers’ Party’s Lee Li Lian, a 34-year-old sales trainer, won 54.5 percent of votes in the four-way race in the northeastern Punggol East district over the weekend, a 10.8 percentage point lead over the ruling party’s candidate. That’s the most for a district held by the PAP since the 1984 general elections, according to data from the Elections Department.

Record-high housing and transport costs, public discontent over an influx of foreigners and infrastructure strains are weakening approval for the only party that has ruled Singapore since independence in 1965. Its policies, which have helped forge Southeast Asia’s only advanced economy, are now being questioned by voters, many of whom are looking for a government that is less authoritative and more consultative.

“The scope of the loss indicates that it is national and there is something fundamentally wrong with the way the PAP is operating,” said Bridget Welsh, a political science professor at the Singapore Management University. “The voters are saying they really want a rethink of some of the government’s policies.”

The results extended the loss in the 2011 general elections, when a record six opposition members, all from the Workers’ Party, were elected into the 87-seat Parliament.

More Time

The prime minister said in a statement after the Jan. 26 poll that by-elections tend to be tougher for the ruling party, and he will continue to focus on policies for the longer term that may take more time to yield results.

Last year, his administration cut ministerial pay, sped up construction of homes and made permanent a program to provide cash and medical funds for the elderly and low-income households. This month, it said it will give priority housing to families with children and provide greater childcare subsidies.

“I asked myself if my life and my standard of living have improved in the last few years, and the answer is no,” said Perry Koh, an insurance agent who’s a Punggol East resident. “Looking at the results, it looks like I’m not the only one who feels that way.”

The island’s population has jumped by more than 1.1 million to 5.3 million since mid-2004, driving up property prices and stoking social tension as the government used immigration to make up for a low birth rate. Strains on the housing market and public services appeared “quite suddenly” rather than progressively or gradually, Lee told a conference today.

“The population grew faster than we expected,” Lee said. “The infrastructure didn’t keep up.”

Work Harder

The prime minister, who has led the country since 2004, has also raised foreign-worker levies and salary thresholds to slow the inflow of non-Singaporeans.

The overseas labor clampdown on an island smaller than New York City has driven the jobless rate to a six-quarter low of 1.9 percent, pushing up manpower costs and constraining the central bank’s scope to combat an economic slowdown with monetary easing. Singapore’s inflation rate of 4.3 percent in December is among the highest in the developed world.

“People still feel the pressure of the high cost of living and many other things as well, so I expect the government will work harder on that,” Low Thia Khiang, secretary-general of the Workers’ Party, said in a televised briefing after the polls.

The candidate from the Workers’ Party won the same percentage of votes as the former PAP representative Michael Palmer in 2011. Palmer, who later became the speaker of Parliament, resigned in December after admitting to an extramarital affair. The PAP’s Koh Poh Koon, a surgeon, garnered 43.7 percent of ballots in the by-election.

Very Impatient

“The government is trying its best but I feel that Singaporeans are very impatient and they expect things to be perfect,” said Ng Kim Yin, whose parents live in Punggol East and regard themselves as long-time PAP supporters. “They don’t see that we are still better off than many other countries. My parents were very upset that the PAP lost, my dad especially.”

Last year, the prime minister announced changes at three ministries to boost the social safety net and communication of government policies.

The benchmark Straits Times Index (FSSTI) closed at the highest in more than two years today.

The PAP returned to power in May 2011 with the lowest share of the popular vote since independence, at 60.1 percent. The Workers’ Party said it remains small after the latest victory as the PAP still holds 92 percent of the seats in Parliament.

Singaporeans “are not voting for an alternative government but for a stronger opposition,” Welsh said.

Victory Margin

The margin at the by-election was the widest for a seat held by the ruling party since Chiam See Tong, then Singapore Democratic Party candidate, won the seat for Potong Pasir district in 1984. Chiam had 60.3 percent of the votes, more than 20 percentage points higher than his PAP opponent. He held the seat until the 2011 general elections.

A widening wealth gap has contributed to angst among voters. Income inequality in Singapore has risen since 2000. The average monthly wage for the poorest 10 percent of households increased by S$250 to S$1,581 in the decade to 2011, compared with a S$10,400 jump to S$27,867 for the top 10 percent.

Singapore’s Gini coefficient, an income inequality measure, rose to 0.482 in 2011 from 0.48 the year before, and has climbed from 0.444 in 2000, according to the statistics department. A reading of zero means income equality, while a reading of one means complete inequality.

“We have issues that we have to tackle at hand, like a sense of belonging, a place where we are treasured and not seen or made to feel as mere items of economic tools for greater gross domestic product, greater revenue, greater profit,” said Lincoln Lim, a medical student who attended one of the opposition rallies in Punggol East. “The government needs to show and tell the citizens that we matter.”

To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net.

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net.

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