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Singapore's election date may be set

Singapore Prime Minister Lee Hsien Loong (L) shaking hands with a PAP supporter during a May election rally.
SIMIN WANG | AFP | Getty Images
Singapore Prime Minister Lee Hsien Loong (L) shaking hands with a PAP supporter during a May election rally.

Four months after the passing of Singapore's founding father Lee Kuan Yew, speculation is mounting that city-state's general election may be set for September.

"The feel-good effect of golden jubilee celebrations and a National Day Rally in August for PM Lee to give a last rallying call," is a key factor, Kit Wei Zheng, a Citi economist, said in a note on Thursday. Singapore celebrates 50 years of independence on August 9.

Local newspaper The Straits Times reported on Wednesday that September 12 was the most likely date, pointing to comments by the organizing secretary of Singapore's ruling political party—the People's Action Party (PAP)—that hinted the party may officially announce new candidates in August. Singapore Press Holdings, which owns the Straits Times, has close ties with the government.

"The Straits Times report is consistent with our view that September is the most likely election window," Zheng agreed.

September 12 is also the last Saturday of school holidays, which matters because schools are typically used as polling stations.

If that date is accurate, it would cap months of conjecturing after the government introduced a slew of populist measures that tea-leaf readers took as harbingers of the election, such as reducing the cost of car-ownership and lowering maid levies.

What to expect

"Purely from a textbook point of view, the PAP should do well," said PN Balji, a veteran Singaporean journalist and strategist at media consultancy RHT Digital & Media, during a phone interview.

The PAP has ruled the wealthy Southeast Asian city state since independence in 1965 and its ability to shift the economy away from export manufacturing to a high-value services and investment-driven growth model has been crucial to Singapore's success at transforming itself into one of the region's few first-world nations.

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The country's one-party system may be unusual to other developed economies, but it is one that benefits all residents, said Prime Minister Lee Hsien Loong and son of Lee Kuan Yew, at a conference earlier this month.

After the PAP's share of the vote slid to its lowest-ever at 60.1 percent and the opposition parties won a record-breaking six seats in parliament during the 2011 election, Balji said the party took strong measures to identify and address the public's concerns, notably tackling the infrastructure crunch in transportation and housing as well as supporting the elderly.

Plans are underway for a massive expansion of Singapore's transit system, while a medical benefit package for citizens aged 65 and above was introduced last year.

However, public tensions remain and as a result, Balji doesn't anticipate the PAP will retake the Group Representation Constituencies (GRC) that were lost in the last election.

As for the opposition, the Workers Party—deemed the most serious out of the bunch—has reportedly expressed their intention to contest 28 seats out of the parliament's total 87.

"They aren't ready to take over the government, so the best scenario for them is to merely retain their previous strong showing," Balji said. In 2011, the party contested 23 seats.

The issues at stake

Going into the election, concerns are rising that the economy faces a technical recession after second quarter gross domestic product grew at its weakest rate since 2012.

Meanwhile, annual core inflation—a measure that excludes accommodation and private road transport—rose to 0.2 percent in June from a five-year low of 0.1 percent in May.

"I don't think the Monetary Authority of Singapore (MAS) is worried at this juncture. The lynchpin for them is still the labor market," said Selena Ling, head of Treasury research and strategy, at OCBC Bank.

Data on Thursday showed the economy added 15,700 jobs in the second quarter, an improvement from a contraction of 6,100 jobs in the previous period.

If the PAP retains its dominance in a September election, analysts don't expect major policy changes.

"Favorable election results for the PAP may facilitate tweaks (but not outright U-turns) to policies in a more growth-friendly direction, including pace and composition of tightening of foreign worker policies, property cooling measures, and possibly even monetary policies," Citi said.