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High cost of living – what the government can do

Posted by theonlinecitizen on April 30, 2008

TOC is happy to welcome Mr Tan Kin Lian on board as the latest addition to our writing team. He is the former chief executive of NTUC Income, an insurance cooperative in Singapore.

Lessons from the general election in Malaysia

Tan Kin Lian

The Malaysian general election held in March 2008 produced results that surprised not only the politicians but ordinary voters as well. A Malaysian friend told me that the ordinary people wanted to send a message to the ruling Barisan National, which had governed the country for over 50 years, about their unhappiness with the current situation. They did not expect to see a change in five state governments to the Pakatan Rakyat.

One key issue that contributed to this unexpected election results appears to be the high cost of living. It is not sufficient for the Government to explain that the higher prices are due to external factors. The people expect the Government to find effective ways to deal with this problem. This is what they elected the Government to do.

This election result has lessons for Singapore. What can the Government do about the high cost of living in Singapore?

Contributors

Here are two key factors that make it difficult for many people to cope with the cost of living in Singapore:

Financial Products.

Many people earn a low rate of interest on bank deposits. The bank interest rate, which has been less than 2% for several years and now less than 1%, is insufficient to cover the rate of inflation, which has now increased to more than 5%. If they invest in other financial products, they have to pay high charges and get a poor yield.

Many people invested several billions of dollars in structured financial products in the hope of getting a better yield than bank deposits. They were taken to the cleaners. Many housewives and retirees told me about their investments in the capital guaranteed products that were heavily advertised and sold by our trusted banks. After locking up their principal for five years, they get a total return of less than 1% per year, worse than bank deposits. They missed the chance of earning more than 10% per annum on the booming stockmarket.

For most people who invested in unit trusts and investment funds offered by life insurance companies, the outcome was not much better. They have to suffer an upfront charge of 3% to 7% on their investment and an annual charge of 1% to 3%. After deducting these high charges, the net yield on their investment is mediocre and is not commensurate with the risk. The fund managers and other financial intermediaries have taken away most of the gains.

The worst cases are the hundreds of thousands of people who invested their regular savings in an investment-linked product sold by the life insurance companies. In addition to the high charges mentioned above, they have to suffer “allocation rates” that takes away two years of their savings to pay commissions to the insurance agents. Many were not aware of the financial impact of these predatory “allocation rates”.

Transport

Many people have to pay high cost for their daily commute to and from work.

If they live in a place that is not conveniently served by public transport, they would have to use a private car. The cost of driving has gone through the roof due to high petrol prices, a wider network of gantry points and higher ERP charges implemented over more hours in the day and night.

Those who use taxis for their transport have seen the cost increased by 30 percent.

A friend of mine once decided to take a taxi from Pasir Ris for a meeting in town, instead of driving. She was shocked that it cost $27. This was the highest taxi fare that she has paid in her life in Singapore. It will be the last time that she takes a taxi. Not all the $27 goes to the taxi driver. ERP charges takes up a few dollars.

If you have to take public transport, it could mean a bus to the MRT station, a ride in a train, and another bus ride to the destination. The total cost of three legs of the journey is not cheap. And the rides are not comfortable, due to crowded buses and trains and long unreliable waiting times.

Apart from the high cost, the commuters have to bear with long travelling time of more than one hour at times.

The regular increase in bus and train fares, needed to keep pace with higher petrol and other operating costs, is never welcomed. The commuters read that the large publicly listed transport operators continue to make hefty and increasing profits for their shareholders.

In a recent survey carried out in my blog, www.tankinlian.com, I was surprised that the cost of transport was rated to be the highest concern among my readers.

Suggestions

Here are my suggestions on how to help people to cope with the cost of living in Singapore.

Financial Products

We have to give people a fair return on their investments.

The regulator should disallow financial and insurance products that have excessive charges and offer unfair terms to consumers. The product issuers should not be allowed to design complex products that skim off the consumers. The financial institutions can compete to provide products to consumers on the basis of their efficiency and quality of service.

We need a stronger consumer association to play this role of educating the public and taking care of the public interest. The consumer association needs to be adequately funded by the Government and to be provided with adequate resources to play this role, which is normally expected of the Government.

In many countries, the media and independent minded journalists help to educate the public and prevent the abuses of businesses in taking advantage of consumers. In Singapore, we have the unfortunate situation that many questionable products are advertised in full pages in the newspapers. They are an important source of revenue to the newspapers which, in turn, reward the advertisers with friendly coverage.

Transport

The Government can take a pro-active approach to reduce the cost of public transport. It is a necessity for daily living, just like fresh air. People do not consume public transport for enjoyment.

The cost of public transport cost can be reduced by waiving ERP charges, road tax and other levies. It can be brought down to the marginal operating cost to cover energy, wages and depreciation.

We have to find ways to reduce the need for commuting. People should be encouraged to find work near their homes or to move their homes closer to their place of work. Students should be encouraged to study in a school near their home.

We should reduce the transaction cost for a person to sell a house and buy a new house that is close to the place of work. Stamp duty should be waived. Lawyers and broker fees can be reduced by simplifying the work and creating a more efficient system.

Apart from reducing the transport cost, this will save travelling time and improve the quality of life.

Conclusion

The Government has already announced several measures to address these two issues. A new transport blueprint has been published. The Monetary Authority of Singapore has invited public views on a consultation paper dealing with the conduct of financial institutions.

I hope that the Government will consider the additional measures that are suggested in this article.

—————–

About the author:

Mr Tan Kin Lian started his insurance career in 1966 in a local life insurance company. He qualified as a Fellow of the Institute of Actuaries in 1975.

He joined NTUC Income in 1977 as the chief executive officer. From a base of $28 million, the total assets increased to over $18 billion when he retired in April 2007. NTUC Income is a leading life and general insurance co-operative in Singapore.

From 1992 to 1997, he was Chairman of the International Co-operative and Mutual Insurance Federation (ICMIF), an international organisation representing 123 insurance groups in 65 countries.

He now works as a consultant to insurance companies and maintains a website here: www.tankinlian.com

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105 Responses to “High cost of living – what the government can do”

  1. family man said

    Thank you Mr Tan, for being so forthright on these financial products. I look to your inputs on TOC in future.

  2. sevenleleven said

    How true, the bank charge you $2 per month for account having less than $500 at any one time. Assuming if you have $500 in the accoun for a year at the return of 2%. This willing bring a return of about $10 only. but if the account is less than %500 per month at any one time, you will have to pay the $12 just to keep the money with them for a year.

    It’s like having the cake and eating them as well. Did the govt or MAS did anything to stop this. No, the let the market force decides. What was worse was the trust the people had on POSB Bank and the govt. But it was sold to DBS. This is one instance of the betrayal of the people trust.

  3. I spy with my eyes said

    I always enjoy reading some of your life experiences articles.

    On my way to work on Monday morning, I was approached by a young man (jobless) and his mother (most likely a retiree. His mother was sick and needed to go to a clinic but had not enough money so asked me for $10.00. Could I not give? No! I felt sad that these are the people the government really missed out.

    Further on saw this old man picking up empty aluminium cans. What a pathetic sight!

    At times I wonder whether all these happenings at ground zero are been monitored realistically up at the top.

  4. Gary Teoh said

    I bought the DBS swing fund,using my special acc from CPF.For 5 years, I lost heavily,the agent told me before I sent for it,she said I will get back the profit of 4% follow the SA acc rate if I don’t earn anything. But after 5 yr, I lost the up front fee and could not recover my loss.The agent is not honest.

  5. The SS said

    Banks : Agree that they are creaming off lots of customers who have no training to understand the intricacies of structured products. The claim of Principal Guaranteed is a misnomer. MAS can do more there.
    Consumer Association: I find conflict of interest if it is funded by NTUC that runs a supermarket amongst other things! We need an independant Association that genuinely looks after the interest of the Consumer and allowed to organize boycotts and petitions etc against unscrupulous actions like oligopolies etc. CASE is not effective and does nothing for the Consumer except lame show of ‘demonstrating against children eating JUNK food?’.. what a laugh.
    Transport: TPC should be reconstituted not to include people in Transport Companies to start with. Transport Companies should be made public and not be a pte company that serves the shareholders!! Only then can we have a Cost Plus Transport. In other 1st world countries, senior citizens travel FOC vs the pittance discounts here at off peak hours. We should not call it PUBLIC Transport here.. since its all owned PRIVATELY!!
    ERP: is a ridiculous scheme that doesnt solve traffic woes but actually diverts the load to other arteriel roads. For e.g. CTE – they should build a double deck in the middle from Jln Bahagia through to Yio Chu Kang and make it dual-directional. Southbound in mornings and Northbound for evenings like the old Nicoll Highway. If the no. of people is growing (as intended) there is no choice but to BUILD infrastructure to cater for it and DONT BLAME US !

  6. Gary Teoh said

    To : I spy with my eyes,
    I thought the government gave out $3 billion to 2.4 milliom of our citizens,newspaper reported, and they also sent flyers to us,advertise so clear, and MM lee said there are no beggers in spore?

  7. Gary Teoh said

    Mr Tan’s suggestions are good but is it workable ? Most of the time, the gavernment said, they let market forces to decide, they can’t control the price, I think it is not they can’t, they are reluctant.

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  9. Amused said

    In USA, there are fund houses offering Index Funds with very low fees that performs close to their benchmark indexes most of the time. (E.g.: Vanguard European Index has an expense ratio of 0.22%, with average annual return of 10.53% for the past 30 odd years) If someone’s CPF had been in this fund, each $1 could have grown to $16!

    Why can’t there be a similar fund for the Singapore market? (The Vanguard European fund is available through feeder fund [Lion Capital] in Singapore, but they have annual expense ration of 1.11%, which is like 5 times the fee charged by Vanguard.)

    I feel that financial houses in Singapore charge too much fee for less performance.

  10. finditsiongbyeachday said

    Thought anyway to help cutting transport cost is for the government to cut taxes on petrol to cushion the sky high petrol prices.

  11. RAM said

    Hi Mr Tan ,

    Appriciate ur article on the high cost, not sure am i rite to address this ,

    About the people (newly married couples and young genenration) who wanted to get the HDB flat to sattle down , as current HDB valuvation price is very high price , with a little income how do they able to get place to sattle down , if the able to affort then they need to work longer years just to clear the housind debt, does this also need to address first as part of the high living cost . i can forsee the basic necessity for our young singaporean unable to get.

  12. Tan Kin Lian said

    Here is my reply to RAM, who made an observation about the high cost of HDB flats for young couples.

    Many, many years ago, it was quite common for young couples to stay with their parents for a few years, so that they can save enough money for the down-payment to buy their own house or HDB flat.

    As HDB flats are now quite expensive, it may be necessary for young couples to consider this option, i.e to stay with the parents. Besides reducing the living expenses, this arrangement has the following advantages:

    a) the grandparents can help to look after the grandchildren
    b) better bonding between the three generations
    c) the young couple learn to accept living with in-laws.

    I hope that this “old arrangement” can still work in today’s context.

  13. Dear Mr Tan,

    Allow me to share my thoughts on your piece.

    With regard to investing, I think it will be a lesson learnt for all investors, that is, invest only in products one understand and that there is no free lunch – risk and return – there is always a trade off.

    The fact that the SGD interest rate is so low is a result of MAS strong SGD policy, which is our only tool against imported inflation. To allow a gradual appreciation of the SGD, MAS will have to purchase more ‘SGD’ using foreign reserves. This essentially means that our SIBOR will remain low due to the huge pool of SGD available. So, to have a lower inflation rate, one will have to live with a lower rate of interest.
    Anyways, the low rate of interest has other implications – this has effectively supported the housing market – the ability for people to finance their mortage at a low rate of interest acts effectively to stabilise the housing market.

    Singapore is a victim of its success in attracting foreign talents from abroad. Unemployment is at an all time low and the Singapore population is increasing rapidly. As a consequence, the economy is operating at almost full capacity. Transportation, Housing, Cost of living will and continue to increase. An economic downturn or slowdown will ease transportation woes and I believe we should be seeing the effects very soon.

    Regards,
    Eaststopper

  14. Tan Kin Lian said

    I agre with the views submitted by Amused (11.30 am) and Eaststopper (4.36 am).

    I hope to get a new life insurance company to offer low cost investment funds within the next 6 to 12 months. Read my blog, http://www.tankinlian.blogspot.com

  15. I spy with my eyes said

    To : Gary

    <<<>>>>>>>>

    Strange i keep seeing this old lady standing along overhead bridge of MRT station “selling tissues”. Sometimes i gave her couple of dollars only. I think I am breaking the tenet “there is NO free lunch”.

    $3 billion spread over 2.4 million citizens over 6 months work out to about $200 plus a month. Plenty meh??????

  16. Snova said

    Thank you very much Mr Tan; the suggested low cost investment fund will help many of us in the difficult years ahead . More importantly it will provide an alternative and can be the benchmark of conscience.
    Your generousity of advice and planned follow up action is indeed rare top talent dishing out gratis in acts similar to that of the Servant King.

  17. Tang said

    The Government often cites market forces, or leaving it to the market, as the reason why it does not intervene. As the elected Government, it must consider whether the players in the market are taking advantage of the consumers, particularly when they have little choices or alternatives. And if the market players, be they banks, telcos, transport bodies are not doing the right thing = but only concern about profits and more profits – then it is the duty of the Government to intervene. If the Government does not, then we might as well not have all the various regulatory bodies around. What are they for?

  18. Fever Guy said

    Thank you Mr Tan for this article, but the tone used is too soft for my liking. We got to ask hard questions even if it is face dropping ones. This is a blog and i think Mr Tan has wealth of experience to showcase how bad this gahmen has been in recent years.

    Why we call buses and mrt as public transport when it is privately owned by companies with shareholder interests? Shouldn’t Public transport as a basic need be kept under control by the gahmen? When they privatize it the costs would keep rising and the costs push to consumer who has no way to say no. Have services improved greatly? NO! People are condemning the transport services at all areas giving it a BIG thumbs down. Pay so much more every year and the level of service never moves a level up. My goodness, privatization leads to lower costs and higher productivity and in uniquely singapore is the BIG reverse.

    What exactly is the gahmen ‘s role? Why they collect all forms of taxes and GST but are seen to be shedding away so much responsibility as people elected gahmen. What are their business? Money or Citizens? TELL the people the truth. We should call gahmen as Singapore Business Corporation?

    HDB also privatize without any consultation with the people and the promise of affordable housing evaporated into thin air and worse of all Expensive BTO flats, privately built flats and overpriced HDB flats that currently in short supply. People are waiting in a forever long queue. They have to pay $10 to get a queue number and is not refundable. Gosh, what agency can earn so much money printing queue number and the great honour goes to HDB! Thanks MR MAH…you are the man, one hell of a sucker.

    Medical care(Means testing relaible in the long run?), Education(unfair to singaporeans?) and Manpower(What exactly are our Singaporean’s worker rights?) policies..with so much complexity and even MP and journalist cant understand it … how do we peasant able to understand? So much more we can discuss on the many failures implemented by million dollars minister which have not help but cause more pain to the people. Stop STOP STOP! STOP robbing us! We are BROKE!

    FG

  19. Fever Guy said

    You invest when you first have spare money. In Singapore context, many of us have money stuck in housing, education and daily expenses.

    For those barely surviving, do you think they are in the mood to invest? Helping setup a investment fund for the people is not useful even if you can use CPF to do it but can you withdraw cpf monies to spend?

    Not unless you are dead or emigrating or very very old. Come to think of it, only by increasing our wages and set a minimum wage is the way to go.

  20. Fever Guy said

    Eaststopper,

    Why did the Federal Reserve do to stop inflation? They did many things to spur the US economy from brink of a big recession and they are still keeping it up for now. At least they put in great effort to do it. They are quick to stop US falling into a recession sooner or may have evade one. They never procrastinate. I think our gahmen has to do something more than strengthening our dollar. It cant be artificially kept strong for long before our real economy gets hurt too much. What are their great solutions?

    Why more actions are called for? More drastic actions to tackle inflation are needed before it gets ugly. We cant wait for recession to come or hope for one before actions are carry out especially when high inflation hasn’t dwindled away. We all will be double hit by a deep recession and a existing high inflation and to recall what GIC Mr Tony says is the worst case scenario for Singapore if world wide recession is deeply entrenched. One that no one hope for. Didn’t Tony already foretelling all of us of a impending doom? If it is a world recession, show us how million dollar minister can keep singapore afloat?

    To make matter worse. Why is our MM telling whole world they are going to spend more on banks on cheap lelong buys that are face with deeper shit of their own? Saying UBS is a rare bank that cannot be replicate ever and investing in it is a right choice for next 30 years. In the first place, if UBS is good it wont be the world worst losing bank on sub prime related assets totalled US$30 billion. Where were their risk controls and management? Where are their foresight? Investment banks without top talent are nothing more than a branded shell. Talk about rare GEM, i am afraid GIC and Temasek are losing their mind and putting more of people’s hard earned savings into banks we do not need at all. Are the gahmen going to replicate de javu to us again? Please account the billion of dollars of losses before thinking of spending a dime from the reserve. I have the sinking feeling again in my heart, like when you lost thousands of your hard earned money in a stock you bought that is going down fast and you cant cut your losses by selling?

    Our brilliant High Ministers should be seen doing much more and planning robust policy to tackle inflation rather than keeping SGD stronger by a few cents. Such a no brainer job dont need to pay millions of dollar.

    FG

  21. Tan Kin Lian said

    I agree with the views expressed by Tan (8.30 pm).

    I also agree with several of the views expressed by Fever Guy, although I do not wish to adopt his style of presenting these views.

  22. chet said

    Thank you for your article Mr Tan.

  23. […] Fever Guy sure knows how to captivate the audience. A recent post was published on Comment on High cost of living â […]

  24. Commoner said

    Hi Fever Guy,

    I agree with what you said, but I think we will still have to sit tight and wait for the recession to come. Then, all we have to do is to stay united to pull through it. It is the main reason for Singapore’s “success” and the PAP’s success over the years. Aren’t you used to it yet?

    Regarding our national reserves, it’s in their hands so we can’t do much. Anyway, it won’t stay dwindle away with more plans for GST hikes (up to 13%) and other “must pay” charges, which are surely coming.

    Inflation, recession or poverty is peanuts to them, just like the NKF issue. They are paid way too high to experience the plight of the people. I wonder how much do they donate out of their own pockets every month. I certainly don’t mind if they advertise such things about themselves, so that at least I know that they are doing something for us.

    I still miss the old government that brought the real success to Singapore. Sadly, most passed on. I would prefer to pay them what the present govt is getting. Real value for money!

  25. Commoner said

    ‘What to do? It’s happened.’

    Personally, I think it is their job to ensure that it didn’t happen in the first place. How could someone so dangerous escape from the closely guarded prison with no one actually noticing it? Could it be an insider job? Any corruption involved?

  26. tiredman said

    Are Singaporean ready to prevent their backsides from catching fire? As I observed, few years back, the financial sector (perhaps govt) starts to pass on risks to all the savers by reducing bank interest and “forceing” people to invest. In another word we common people had to take risk.

    One question: Are the people ready for the changes at that time? Is the information as efficient? Do we have a workforce to facilitate this change? I asked my mom does she know what is unit trust when she bought it. Apparently, it was only hearsay that it is good when I knew that she had made losses. One example is the CPF case, which happened years ago, when many Singaporeans used their hard earn saving to invest and end up everything gone down into the drain.

    There is another case. Like a sudden surge in population which result the insufficient infrastructure (bus, housing, schools) to support this increase. I see both cases (the govt) as “too impatience to see an economic success”.

    Talking about bus service, I believe that PTC is a useless council. I see them as friends of SBS and SMRT. It is astounding to see what PTC had said 5 mins per bus arrival had turned out to be a joke. Most of the time when I miss a bus, I have to wait 15 mins. Base on my experience, this would not shock me given that having three bus service providers is as good as one. Each service provider would monopolize a zone of their own and once one of them screamed for an increase in fare do the other two. Isn’t this another win-win-win situation for the providers? What are friends for right? Sometimes, I do wonder is our ministers as godly as being claimed?

    Another point. It is good that everybody work and contribute to the economy. However, I am rather sad when I (ever read before) our PM praised a grandma for continuing to work at her age. This is showing a very bad sign, work till you drop. A good life example, my mother is unfit to work because of her health condition and was unable to claim the emm… I think it is called the workfare bonus (unsure about the actual term used). She used to collect such bonus half yearly. I see that as a help to my family. However, once she was unfit to work, she got none. I see that as a penalty for not working. So, is the bonus given out of economic reasons? Are there any moral values in it?

    I want to send a strong signal that I do not believe in the current policy. I believe it is a duty of the government (of course not the annuities as I see economic component it.) to look after her elderly as they had contributed to the society for the past few decades. I do not wish my mom to pick up aluminum cans for living. Am I watching a movie of my future? It is such a disgrace for a PM to encourage his “mothers” and “fathers” to work at their age. To become a graceful society, the government must be equiped with graceful brain and policies. Do you agree with me?

    PS. Due to time constraint (exam ahead) , the comment is a bit messy.

  27. Fever Guy said

    I too felt sad that elderly are commonly seen picking up cans and paperbacks for a living. SWISS standard of living for our elderly? Only PM can define it better than us?

  28. Commoner said

    Hi Tiredman,

    I think the ‘workfare bonus’ is to encourage Singaporeans to stay employed so that unemployment rate will be curbed and it will look good for G at the end of the day. There are also other benefits. If employment rate goes up, CPF contributions and spending will go up, there will be cash flow for the “nation” and G.

    By the way, does anyone knows where the money of our reserves comes from? It can’t be the 22 billion (can’t really remember the figure) that was saved by MM when he was PM, since some already spent as aids to neighbouring countries during SM as PM period, right? SM certainly introduced a lot of costly stuff to us (GST, ERP, salary adjustment for top G, foreign talents, esp from China, “pension” ministers) then.

    Regarding “pension” minister, I don’t mind paying for the first guy, but I am quite worried how many more we have to pay for.

    Regarding investment, one thing is for sure, if the present G said that it is good, then, be wary that it is not good afterall. Some of the many good examples are the anticipated sky-rocketing share prices of SingTel which never happen and the very “safe” Unit Trusts or Bonds (didn’t pay attn to it, so not too sure) that they advice us to invest with our CPF money. Perhaps it is a way to keep our Economy floating. As you can see, they are not really good investors, so if you have any money, just avoid everything that they mention and your money will be safe. I think for money matters, you can only trust the late Dr Goh Keng Swee or the late Mr Hon Sui Sen (the honest “hold-on man”).

    Good luck for your exams!

  29. Tang Li said

    I like this piece because it points to a problem that many Singaporeans face – a competitive business environment for the small guy and an unrealistic “competition-free” environment for the big guys. It’s like when they tried to have media competition and then rushed back to the duopoly that we have because SPH and MediaCorp’s bigger shareholders (Now, now – don’t be cynical) could not face “Destructive Competition.” It’s like you want to laugh when Earnest Wong, former group CEO of MediaCorp becomes a hero for saving the company from a destructive phase – what exactly did he do – he went crawling to the government to take away competition. Nobody seemed to be bothered by what the Singapore media consumer wanted.

    Likewise in the financial industry. You have banks placing on $2 monthly charges because it cost them money to keep your account if you have less than $500 in there. Erm, something is very wrong with the business model. As Mr Tan has pointed out, a bank pays you less than 1% – something pathetic like 0.25% a year (for savings accounts – they don’t pay interest on current accounts), yet the bank lends money out at least 8% per year. They borrow from you at virtually no cost and then lend it out at a whopping huge margin and they are losing money, which is the logic for charging you. Something is very wrong with that. But of course….who cares about your business model when you have somebody as your major shareholder.

  30. Kay said

    I do hope that people will avoid buying financial products that they do not understand. They are so prevalent these days with banks taking out full page advertisements on the ST. With regards to index fund, you can find the STI ETF on the SGX which is an index fund that tracks the STI and this is a good way to grow your investment for the general public. It has a very low annual expense of around 0.3% and pays dividend with a yield of around 2-3% annually. Moreover, the recent correction in the stock amrket makes it an attractive time to enter now. Don’t forget that the stock market average a return of 10% annually in the long run.

  31. To cope up with the problem, petrol taxes should be minimised first.

  32. Mr Tan,

    You said, “the regulator should disallow financial and insurance products that have excessive charges and offer unfair terms to consumers. The product issuers should not be allowed to design complex products that skim off the consumers”.

    The KTM disagrees. The assumption you seem to be making is that the regulator is necessarily smart enough know what is excessive and unfair. Since you are retired, ever considered joining MAS to see if you can do better? Also, disallowing financial institutions to design “complex” products kills innovation. How would we even begin to define “complex”?

    You said, “we need a stronger consumer association to play this role of educating the public and taking care of the public interest”. So you are accusing CASE of sleeping lah? 😛 Not disagreeing with you. Just wondering……

    In many countries, the media and independent minded journalists help to educate the public and prevent the abuses of businesses in taking advantage of consumers. In Singapore, we have the unfortunate situation that many questionable products are advertised in full pages in the newspapers. .

    The KTM disagrees again because you are working on the assumption that someone is in a position to decide what is “questionable” and what is not. Perhaps indulge us and cite a “questionable” product that you spotted in the media recently and explain to us why it’s “questionable”? The KTM is really keen to understand what you mean by “questionable”.

    Finally, are you suggesting that MAS now employ some “expert” to squat at SPH vetting ads? Surely, the press cannot be expected to be an expert and/or authority on what it means for a product to be “questionable” right?

    To conclude, the KTM agrees with you that the cost of public transport is a big issue, but he disagrees that the Government is doing enough to contain the cost. ERP is pretty irrelevant in the discussion on public transport. Those who earn enough to take taxis can take care of themselves. The KTM firmly believes that nothing’s going to change without nationalization.

    Your views and comments would be much appreciated. 🙂

    tiredman,

    I believe it is a duty of the government to look after her elderly as they had contributed to the society for the past few decades.

    Help me understand this thinking. While your mother was working, was she not paid a salary? Perhaps we can try to quantify this “contribution to society” thing you are suggesting.

    Let’s do a simple thought experiment: suppose your mother didn’t work in Singapore but somewhere else, say Malaysia, how much worse off are we (the society, the other 2,999,999 citizens of Singapore)? If you can quantify this (let’s call this x), this is the amount of money that the Government should pay to your mother.

    Another thought experiment: suppose your mother didn’t exist, what would have happened to you? How much worse off would you be? Let’s call this amount y. This is the amount that YOU should pay your mother for her bringing you up.

    The KTM would hazard a guess that y >> x.

    It is such a disgrace for a PM to encourage his “mothers” and “fathers” to work at their age. To become a graceful society, the government must be equiped with graceful brain and policies. Do you agree with me?

    No.

    1. Why is a disgrace to work at their age?

    2. Shouldn’t YOU be taking care of your mother rather than the Government?

    3. Do you have any idea who would be footing the bill? Do you pay taxes? Instead of having the Government tax you to pay for your mother, why don’t you just pay her directly?

  33. Tan Kin Lian said

    Here is my reply to Kway Teow Man.

    If the regulator does not know what is a bad financial product, they should not be the regulator. Many complex financial products are designed to rip off the consumer. The ordinary consumer may not be aware, but it is obvious to a financially savvy person. If the regulator does not know, they can engage the services of independent financial experts.

    People who read my blog will understand this point. I am able to point out many financial products that give poor value to consumers. They are covered in my blog and website:

    http://www.tankinlian.blogspot.com
    http://www.tankinlian.com

    I encourage people to read my views. They are given free. If you do not agree with them, you are free to ignore my views and invest in the heavily advertised financial products. At least, you have an independent expert view.

    In the medical field, the Health Science Authority have the responsibility of checking that drugs are safe for consumption by the public. They cannot take the stand that the public should judge for themselves on the safety of the product.

    I hope that the MAS will take a similar approach towards financial products that are “unfair to consumers”.

  34. Tan Kin Lian said

    Fever Guy said that the tone of my article is too soft for his liking. I do not have the luxury of making strong statements and using strong language under the cloak of anonymity. I have to be careful with my words to avoid being sued in sue-happy Singapore.

    It is a better approach to be positive in making our statements.

  35. family man said

    Kway Teow Man,

    Please advise me. When I was a kid, I understand we need to store a big reserve to help Singaporeans in times of emergency. As it is now, inflation and the price of rice has increased tremendously.
    However, our govt has indicated the subsidy of rice is the start of a slippery road. So our govt decides to buy more citibank and UBS shares, leaving our singaporeans without a cent of subsidy.

    What is your take on this?

    Should our govt spend some billions to subsidise the price of rice? When do you think the reserves will EVER be used to help Singaporeans? Or should only be kept in GIC to grow and grow and grow (hopefully)

    When a meteor hits us?
    When an earthquake hit us?
    When the sea overflow the banks?

  36. leong said

    Tang of 0830.
    Do you not realise most of these companies are more monopolistic and wholly or partly owned by the govt. If they could help, the would have! But, the govt smokescreens these are private instuitions and they have no say in them

  37. Logicalman said

    Fever guy,

    I agree with your comments and analysis. On the point of combating inflation, you said “only by increasing our wages and set a minimum wage is the way to go”. I think there are better solutions to that. Like many of us have said, the Govt can afford not to collect GST on basic goods and services, and also to keep it at 5% instead of 7% for all other items. What about ERP when the public is faced with an equally costly “public” transport alternative?

    On the point of privatization leading to lower costs and higher productivity, you are spot-on, and that I think in this respect, the private “public” transport and other services have fallen grossly short, yet no corrective measures were taken by the so-called regulatory bodies who do not seem to ask themselves what’s the basic objective of providing those services. As for banks charging $2 for balances below $500, as well as monthly account fee, and contrast that with the paltry interest paid, and the high interest they charge on loans, yes, we all see a huge problem. It’s highly exploitative, yet condoned. These are the days when it makes more sense to keep money in a tin can or under the pillow, instead of being bled in a savings account unless you have no choice because your employer credits your pay directly into one. Banks operate under strict regulations in any country, yet, it’s appalling that the regulatory body sees nothing wrong with such predatory practices. Perhaps this is why our banks stay afloat while those in US sink under the sub-prime losses in a highly competitive environment. To think that we are bailing them out. In a highly competitive environment, the fittest survive and the consumer benefits the most, but we are seeing the reverse here, to the extent that the Govt needs to compile a list of $2 meal outlets, telling us where to get better value for our money. Even if a price-wage spiral hasn’t started, a price-tax spiral already has.

    Commoner,

    You said “I still miss the old government that brought the real success to Singapore. Sadly, most passed on”. My sentiments exactly. The old guards were more grounded in their expectations and tackled the issues of those days diligently, directly and fruitfully. Today, various aspects of society have broken down.

    Look at our education system. How many cousellors are appointed to look after students in schools today, and how many cases do they see? I know several counsellors personally and the cases they handled are really heart-wrenching. Students barely able to cope being pushed all the way to P6 and then being told to accept that they need to choose a different path henceforth. 12 years of age and a child has to decide what to do next. Sure, we have been churning out more record number of As, but how many are left struggling at the lower rungs until they are eliminated and their self-worth dented in the process, and how much of this is reported? Similarly, teachers are barely able to cope with teaching and non-teaching responsibilities. Many roster out their sick leave entitlement, and students have become accustomed to expect their teachers falling sick at intervals. Is raising pay for teachers a good solution, or should the KPIs be honestly reviewed and revised? The prison service has done well to recognise that their role is not just to reform but to transform inmates. It’s about time that MOE realise that their role is to educate, not to segregate.

    Families aren’t doing too well either. Divorce rates have gone up. Many choose not to have children, or to get married at all. Is this a healthy trend? Will bringing in more foreigners to meet our target population number solve the underlying problems, or will it just meet the numbers and nothing else? We hear leaders exhorting work-life balance, but how many can afford that, in the light of the escalating costs of living on all fronts and increasing competition for regular jobs?

    I can go on, but many have already voiced similar opinions about the real issues facing this nation, and suggested counter-measures. It will do the Govt well to take heed, listen, and act on these where merited.

  38. accountable said

    It is clear our govt of the day has decided not to take accountability for their role in our cost of living – rising inflation – starting with the much revolted GST increase from 5% to 7%. (compared to HK experience).

    In the meantime, our MM LKY has indicated they will get their top dollar pay pegged to private sector pay, but regarding the GIC, they will dumb down to 5 year reporting regime regarding the GIC performances. You see, giving regular reports of GIC performances will make things difficult for the ministers to manage her citizens, so less transparency is better. So in the end, WHO DARES TO AUDIT GIC AND ACCOUNT FOR THEIR ACTIONS.

    (PM Lee has indicated they will not be accountable to their losses – it was a throw of dice and one came up instead of six – sends shivers down my spine)

    old hero of Singapore. LKY.

    Modern hero of Singapore – Ong Teng Cheong and his valiant effort in accountability of Reserves role to ALL SINGAPOREANS.

    PS – in GIC buying Citibank shares – was there a conflict of interest where a citibank paid advisor is also heading GIC?

  39. Dingo said

    So is the writer trying to suggest ways in which the ruling party can stay in power??

    I’m in favour of helping the people but not in helping authoritarians maintain their stronghold.

  40. Singaporean said

    “Tan Kin Lian Says:

    May 1, 2008 at 8:10 am
    Fever Guy said that the tone of my article is too soft for his liking. I do not have the luxury of making strong statements and using strong language under the cloak of anonymity. I have to be careful with my words to avoid being sued in sue-happy Singapore.”

    Dear Mr. Tan,

    I am of the view that Singaopore should not have this “sue-happy Singapore” culture as far as different or less than desirable tone of opinions are concerned. Having different opinions is not a crime. It is the onus (though not an obligation) on the party which possesses more accurate information to do the counter-argument – this can go on and on until the one with a stronger counter-argument prevails. If in the end, no clear outcome still exists, then a mutual respectable agreement to disagree should be on the table among all parties. That is how cross-learning and cross-education comes about.

    Receiving parties have to decide on the quality of information from different sources and it is still not wrong to place reliance on a less-than-accurate information in their own decision making process as everyone has their own prioritised interests to take care.
    People will learn fast as the real world will usually not be too kind to anyone for wrong decisions made unless there is a system deliberately calibrated to tweak this natural flow of result.

    The danger lies in not having different viewpoints / opinions but the protection of viewpoints of some privileged groups. The former will benefit a society at large while the latter will benefit only those protected few.

  41. Dear Fever Guy @ 8.33pm

    I appreciate your comments to my post. Allow me to share my thoughts.
    The US Federal Reserve is aggressively cutting interest rates to jump-start a slowing US economy as well as to lower the cost of borrowing for the US investment banks. As a consequence, the US dollar has weakened further. These series of actions have accelerated the rising cost of raw materials quoted in US dollars (e.g petroleum). If you really look at it closely, it is not hard to see that this is exactly what is happening in Singapore – our interest rates are keep low so we do not stifle domestic demand and in addition, allow our local business to continue running at a lower cost of debt. Our currency is kept strong because we are importing raw materials from our neighbouring countries, example rice, chicken, vegetables, steel for our IRs, etc. The currencies of our neighouring countries are strengthening as well. So if our currency do not appreciate against these currencies, the rate of inflation would have been much higher.
    I agree with you that the GST, on hindsight, should have been delayed. But then, there is never a good time for this tax for the consumer. I do understand that the government sends out rebates for the GST so in a way, this is identical to the US as well (the Bush administration recently sends out billions of US dollars worth of tax rebates)
    With regard to GIC’s investment in foreign banks: yes, I agree that the banks have messed up big time and they are paying a huge price for it. GIC’s investment strategy has always been for the long term and not reactive to the volatility of the share movement. We should look at the other strategic issues here at play rather than simply the stock price. And to add on to it, GIC’s investment in UBS is in the form of a convertible bond, maturing in 2 years (2009). In the meantime, GIC is collecting a cool 9% return on its outlay. We shall see if UBS share price is still languishing at its current level in 2009.

    Cheers,
    Eaststopper

  42. Seeking Salvation said

    In this present world class government that do not do much to look after the people who have at a time contribute significantly also to nation building

    1) see old people pick up cardboards and tins cans to erk a living as graceful retirement is beyond their means

    2) seing people who consult the polyclinic but have not money to pay for their prescription and asking only for a few days medicine

    3) seing down and out friends who lost their jobs because they are considered more expensive in the cost structure of the company expenditure when the company prefers hiring cheaper foreign talent to replace them

    4) seeing middle aged people who were gainfully employed who lost their jobs in property management because of the government’s enbloc property ruling which prop the property market to new highs Developers prefer to hire new young management staff who are cheaper

    5) there are many other factors which would take days to list

    Are we then considered as a decimal point which can be chuck aside when we outlive our usefulness. This is a government that has lost its soul and would not take care of its citizens. We are not asking for handouts but their present form of taxation or GST has caused considerable hardship to down and out and the low income. Even Australia has not taxation or gst on food.
    The elite would still support this structure as they have lost touch with the ground. The day of judgement would arrive remember the enslavement of the people during the egyptian empire and what happen afterwards.

  43. Mr Tan,

    Thank you for your response. The KTM agrees with you that “if the regulator does not know what is a bad financial product, they should not be the regulator”. 🙂

    However, the KTM might not have articulated his question very well and so perhaps he can try again. Imagine. Just imagine that the Government agrees with you that we should regulate more and you are appointed the Director at MAS in charge of the regulation. In addition, you have a small army of analysts at your disposal to help you with your work. My question: what is your directive to your army of analysts w.r.t. what should be considered “questionable” products?

    Obviously there are many factors, e.g. liquidity, maturity, etc. etc., but at the end of the day, it’s all about the tradeoff between rate of return versus risk. So what are you going to do? Are you going to say that only products with a minimal “effective” (nett of fees) rate of returns of say 5% can be sold? How would you even begin to quantify the risks and are you going to make decisions on behalf of the people w.r.t. their risk appetites?

    Since you were from the insurance line, so perhaps we can do a simple case study for insurance products that typically have two components – guaranteed and non-guaranteed. What sorts of conditions would you impose on them? People surely haven’t forgotten the recent episode where AIA zeroed the bonuses (because investments didn’t do so well)? When insurance companies sell their products they always have this dunno what projected returns. If they cannot meet how? Should MAS keep track and fine them?? If MAS passes such a law, the KTM is sure you know the reaction of the insurance companies.

    And one last point – and the KTM would like to highlight that this last point is not made as a personal attack in any way, but raised as a matter of public interest.

    As we know, NTUC Income is a major player in the financial sector in Singapore and since NTUC is a co-operative, which means that it is supposedly owned “by the people for the people”, how is it possible that NTUC will come up with “questionable” products, which seems to be what you are insinuating as you sweep the financial landscape with your broad strokes?

    Now suppose the KTM has misunderstood, and NTUC Income is flush with lots and lots of “good products”, then isn’t the solution simple? Government can just tell the people, “Let’s buy NTUC. NTUC will take care of all your retirement needs!”. In any case, if NTUC Income is “doing the right thing”, wouldn’t it already be exerting competitive pressures on the other financial institutions to fall in line?

    family man,

    Truly excellent questions. So excellent in fact that the KTM has written a whole blog entry in response: http://kwayteowman.blogspot.com/2008/05/questions-about-reserves.html. 🙂

    The KTM’s answers are unlikely to be satisfactory by a long shot, but that’s the best this Internet kay poh can do. Someone should really raise your questions in Parliament so that we can all have some clarity on this issue of reserves. Good day. 😛

  44. Fever Guy said

    Eaststopper,

    I believe the GIC investments in UBS and citibank are bad and comes at a terrible time. We have to see how both CITI and UBS start to raise capital and dilute the investment GIC have made. Is not millions they are raising but billions of dollars and not once but more often and definitely enough to par down the value of GIC investment significantly. The share price of the 2 companies are trading at record lows and GIC bought them at a price so much higher. If Buffet stays away why is GIC stupidly buying them at high price? Who has the logic? Talk about 9% return for 2 years is not even enough to cover the already battered stock price with paper losses in billions. Anyway UBS is negotiating a new deal with GIC that might just evaporate our investment further and bye bye to the 9%. UBS shareholders are not happy with the 9% thingy to GIC. More drama coming? GIC pumping more money to save the mess it got into?

    FG

  45. Fever Guy said

    Dear Mr Tan Kin Lian,

    I do admire Mr Tan for coming out with a nice article that raised some pointers about present day living costs. I thank him for his courage and wisdom. As for myself, i am a peasant and my role is to be a peasant. We need warrior like Mr Tan to fight using his pen so that peasant like me can hope for a better life. In TOC, there are many warriors and heroes to whom i have great respect for. Their writings are really spot on and most of the time leave no stones unturned. I believe that Mr Tan will soon get a hang of how current TOC writers wrote and how our peasant voices are better reflected on a blog through them. Thank you once again, Mr Tan. Hope to see more cutting edge articles.

    Fever Guy the anonymous

  46. Tan Kin Lian said

    Dear Kway Teow Man,

    If I were the MAS director of regulation, I will require the product issuers to answer a few key questions:

    a) what are the charges levied on the consumer
    b) what benefits is being provided by the product issuer
    c) what is the best estimate cost of the benefits

    This will prevent products being designed to skim off consumers.

    Here is an example. A structured product is being introduced to give a capital guarantee at the end of 5 years. If the yield on government bonds is 4% per annum, the product can earn 20% from this investment. If the charges taken away for the marketing, issue expenses and the profit to the issuer is 15%, the product is likely to return 5% for 5 years or 1% per year. To hide this miserable yield, the issuer invest the remaining 5% in an option. Many of these options expire without value. The investor is likely to get back the original principal – nothing more.

    It is not likely for a financially naive investor to see through this type of structure. We need stronger regulation to ensure that the interests of ordinary consumers are protected.

    It is all right for investors to decide on taking higher risks to get higher returns. But it is not right that the major portion of the return is taken away by the product issuers and intermediaries.

  47. Mr Tan,

    I will require the product issuers to answer a few key questions:

    a) what are the charges levied on the consumer
    b) what benefits is being provided by the product issuer
    c) what is the best estimate cost of the benefits

    Item (a) is quite clear. The KTM however doesn’t completely understand what you mean by items (b) and (c). He would be most grateful if you can elaborate on “benefits” and “estimate cost of benefits”. Benefits = ROI? What’s estimate cost? Please pardon the KTM for his ignorance.

    Your cited example is interesting – but it is still not clear that regulation (in the sense of banning such products) is necessarily the only way. You seem to have described a problem of misrepresentation. My question on your 5%-gamble-on-option product is the following: how does/can a financial institution get away with it?

    Even a naive investor will ask the question: how much can he expect to get after 5 years, above and beyond the capital guarantee? Surely the bank rep must cough up a number and the expected returns must be more than you regular bank savings rates for him to invest in the structured product. Are you suggesting that there a problem in that number? In your example, the bank rep should have said 1% p.a. right? If not, then shouldn’t MAS simply take action against misrepresentation?

    Frankly, the KTM has no issues with MAS requiring financial institutions to make full (or what’s deemed “sufficient”) disclosure of financial products (but he thought this has already been done what no?). Where the KTM disagrees quite strongly with you is the statement that “(MAS should) disallow financial and insurance products that have excessive charges and offer unfair terms to consumers”, because the terms “excessive” and “unfair” are highly contentious (and he was basically seeking to understand where in your opinion is that threshold separating “reasonable” from “excessive” and separating “fair” and “unfair”).

    If there’s is no misrepresentation and it’s a case of willing buyer/willing seller, why should we stop people from buying/selling? You seem to be implying that your invest-5%-on-option instrument is bad. Perhaps you are right, but there is this organization called Singapore Pools and they sell this thing called 4-D. Is buying 4-D necessarily better or worse than investing 5% on options? 🙂

    To conclude (and the KTM doesn’t want to sound too pushy), but you have not addressed the question of what NTUC Income is doing in our financial landscape as a subsidiary of the national cooperative (which is now supposedly all about U (us?)). Rumours are (and the KTM must admit that it’s all hearsay since he’s not a client of Income) that there’s also been some cutting of bonuses. Your comments?

    Thanks for your patience and kind indulgence. 🙂

  48. tiredman said

    The Kway Teow Man,

    First thing, please do not put those words in my mouth. You are trying to say that I refused to take up the responsibility of a son and it is not true.

    Tell the people in TOC that the gahman had no obligation to take care of her people! Mr KTM. Tell the people in TOC that the gahman had paid the people salaries and will have no obligation to take care of the people when they are old, Mr KTM. Please, I respect, Health Minister Khaw Boon Wan alot. He is not YOU!

    I as a citizen would assume that my children will experience the same problem and hence I will be as selfish as you were and plan for myself and my children. I will be an opportunist. When I see a better place, I will leave with my family. However, I hardly want to do that, I want to see changes.

    Think again, why most of the Singaporeans choose to leave if they have a chance? This is the same when we talk about Singaporean’s welfare. When most of the people react the same way, you are not being very rational. You have to think hard Mr Kway Teow. People who are not rational are people who think highly about themselves and would very likely not to spare a thought for others.

    Perhaps you can ask your elderly mother to work till she drops. Tell your friends, “Look my mother is still working (shame on you) and she does not need me!” Next time when you have problem to pay your parent’s bill, please do not complain. Continue with this please. In future when you become an old man and having trouble in footing any medical bill, please come and find me.

    I have notice your presence since few years and I already know that we do not share the same views in many areas and I see that you are worse than our gahman.

    Writers like Mr Tan Kin Lian and Mr Leong Sze Hian are gaining my fullest respect as they write with a hope to help and educate many Singaporeans like me.

    With people like you around, life would be very hard.

  49. Tan Kin Lian said

    Dear Dingo (11.56 am)

    The writer (i.e. me) is suggesting ways for the ordinary people to get a better yield on their savings, and to reduce the cost of transport.

    At present, it seems that the current government has the power to make this happen. I hope that they will do so.

    I am not suggesting ways for them to remain in power. They know how to take care of themselves. This is a separate matter for the people to decide in 2011.

  50. Tan Kin Lian said

    Dear Kway Teow Man,

    I do not wish to engage in a lengthy discussion on how to regulate the financial services industry in TOC. If the MAS is interested, they can contact me directly on this matter. If you tell me about the nature of your interest (e.g. if you are representing the political powers), you can also contact me. We can discuss it separately.

    If you wish to know about the rumoured cut in bonus by NTUC Income, you can read more details in my blog, http://www.tankinlian.blogspot.com.

    I do not wish to comment in TOC about the practices of NTUC Income at present or in the future. It can create misunderstanding.

    During my time as CEO of NTUC Income, I made sure that all the products sold by NTUC Income are fair and give good value to consumers. These are the products that I would buy for myself and my family on the same terms as customers. I consider that this is ethics and integrity.

  51. Tan Kin Lian said

    Gary Teoh (10:40 am) said:

    Mr Tan’s suggestions are good but is it workable ? Most of the time, the government said, they let market forces to decide, they can’t control the price, I think it is not they can’t, they are reluctant.

    Dear Gary,

    I agree with you. The government can let market forces work, but they can play the following roles:

    > ensure that the market players do not skim off the consumers
    > do not add to the cost through ERP, taxes, levies
    > promote an efficient, competitive market

    In many countries, a pro-market government recognises that they have to play an active role in these areas. Look at USA. They have to regulate the market, when the market fails (e.g. subprime mortgages). They have anti-trust laws. They are considering a waiver of petrol tax to reduce the cost.

  52. Tan Ah Kow said

    I came across some very pertinent questions asked by family man May 1, 2008 at 8:43 am. In a nutshell the gist of question posed was this: What is the reserved for? Is it a play thing for GIC?

    The question was posed to KTM and, as ever, one can expect the “nut case” to dissect the question to the point of being deviod of context and meaningless analysis. But that’s KTM take.

    As for my take, it is quite clear from the various PAP pronouncement of that even people in the inner circle is unclear of what the role of the reserve is for?

    Take the latest pronouncement by LKY about investing in international banks:

    “We are buying something that we intend to keep for the next two to three decades and grow with them.”

    So from the horse’s mouth it seemed the role of GIC is to use the state asset held under it’s charge to “grow” — i.e. code word for building a company, a foreign one — company. To the old man it seemed to be that the goal is not really to maximise returns on investment.

    If you refer to the GIC mission statement:

    To achieve good long-term returns on state assets placed under our charge by investing internationally, with due regard to risk and the nature of associated liabilities.

    Now here the mission statement is missing some key details. How long is long-term? five years? ten years? one hundred years?

    Well at least according to the Old Man, it seemed long-term means twenty or thirty years.

    Quite clearly, it seemed that the so-called reserved is NOT meant as family man puts it “to help Singaporeans in times of emergency”.

    If it was meant to be:

    (a) An emergency fund, no one in the right mind would have plan for returns over such a long period, going by the OLD man thinking, thirty-years. Who can predict an big emergency wouldn’t happen within the thirty-years? Five-years is already long enough. Imagine if suddenly in the tomorrow a terrorist exploded a bomb a Singapore and tomorrow there is a run on Singapore banks by foreign investor and MAS needs to draw down to reserve to protect Singapore dollar, and hey presto, we have to sell UBS to raise money. The the paper loss is no paper loss no more. Oh I forgot LKY is the next best thing to a God so I suppose he can. I am sure LKY suck up kind like KTM probably believe LKY is GOD!

    (b) Ok it could be argued that GIC investment is to help out the Government in handling the bumps presented by, say demographic changes and the liability of high CPF draw down by larger than expected pool of retirees, well then the question for GIC is should it be in the business of “growing” a faltering business by GIC? Should GIC investment cycle not be more in synch with say the demographic trend in the case it was indeed used to protect CPF investment? After all there is opportunity cost for helping faltering business. What if the CPF draw down come on stream whilst the business cycle of the company GIC invested is still on the downward trend? So money that could have been used to ride out the bump in CPF draw down becomes unavailable. Oh I guess no need to worry here because under LKY mode of thinking, this is not a problem:

    (i) LKY can easily disclaim that it is not a GIC problem and the finance ministry one, which I am sure KTM will say. Logic is a bit strange considering that GIC is 100% owned by Finance Ministry. Alternatively Finance Ministry wants to be hands off, hey why should the Ministry then buy products from GIC? Hey, when I am investing my money, I don’t just go to one provider, I go to several and find a product to fit my needs. I don’t go buy a product to feed the needs of the provider right?

    (ii) The PAP can easily withhold payment and say to the depositor, tough. It’s for your “long term” good.

    (c) Ok the government could say that investing in entities are for the “strategic” good of Singapore. Because by investing in these entities, say investment bank, we can control these entities and get them to help develop our own finance services sector. Oops a problem here. If this was an open intention, it is definitely going to cause other Governments to suspect that GIC has a strategic rather than simply financial motives. I am guessing that “strategic” thinking is probably behind such investment. Here is what LKY said of investment in UBS:

    “The franchise of the banks, the expertise that they have, under proper leadership, they will be able to recover and rise again … Will there be another Swiss bank like UBS for wealth management? I doubt it, we doubt it, that is why we invested in it.”

    As for Citigroup, his comment was:

    “an enormous spread worldwide as a retail bank”

    Now he wasn’t saying that the banks’ shares or our investment value are likely to be so-and-so many points higher, when they recover, given the good leadership and extensive. He was point-blank in pin-pointing the functional value of the company — i.e. wealth management, retail bank spread. Is that really thinking in terms of financial gain? If not wouldn’t other countries suspect GIC investment intention. Oh to LKY it’s no problem: don’t use the word “strategic” just used word like “long-term” and all will be ok.

    So all-in-all, if you hear the government say the investment is for the “long term” — whatever that means — good, it basically means it is a play thing for GIC. Emergency fund, forget it!

  53. Daniel said

    Tan Ah Kow,
    thank for your analysis, you really say it all.
    Your comment is a must read.

  54. Mr Tan,

    I do not wish to engage in a lengthy discussion on how to regulate the financial services industry in TOC.

    Fair enough. This topic will probably bore many TOC readers to tears. 😛

    If you tell me about the nature of your interest (e.g. if you are representing the political powers), you can also contact me. We can discuss it separately.

    If indeed the KTM was a representative of the political powers, he would have asked his secretary to invite you for tea instead of engaging you here at TOC. 😛 Sorry to disappoint you, but the KTM is just a big internet kay poh who is interested in the topic at hand and has been looking for an expert with whom to exchange views. You just happened to be a convenient choice. Hope you don’t mind. 🙂

    In any case, this is the blogosphere and the keyword is transparency. Would it be possible for the KTM to invite you to his KT stall to continue our discussion? The topic at hand is a matter of public interest and is unlikely to be defamatory or seditious and so it’s perhaps unnecessary for us to resort to private communication.

    I do not wish to comment in TOC about the practices of NTUC Income at present or in the future. It can create misunderstanding.

    The KTM understands and respects your decision. It is certainly quite inconvenient that you should happen to be the former NTUC Income CEO.

    During my time as CEO of NTUC Income, I made sure that all the products sold by NTUC Income are fair and give good value to consumers. These are the products that I would buy for myself and my family on the same terms as customers.

    Great. The KTM is delighted to hear this.

    For some closure, permit the KTM to summarize our discussion and for the KTM to share his views.

    You had said in your article that “(MAS presumably) should disallow financial and insurance products that have excessive charges and offer unfair terms to consumers”.

    The KTM disagreed with this statement because he is of opinion that if the Govt tried to regulate, it’s probably going to screw it up – because MAS won’t be able to do it right. However, the KTM could most certainly be wrong if there’s indeed some way of regulating the industry, which is why your views on “how” the regulation should be done was sought.

    Now the question about NTUC Income was not random (and neither was it a personal attack). The point very simply is the following: NTUC Income is a subsidiary of the NTUC, a national co-operative under the control of the Government. And hor, co-operatives aren’t usually supposed to be making tons of money since they are supposedly “by the people for the people”.

    The answer to “questionable” financial products thus seems pretty obvious (or perhaps not): if NTUC Income is doing its job and coming up with quality products, it should be hard for other financial institutions to sell their “questionable” products. All NTUC Income has to do is to take up ad’s side-by-side with these “questionable” products with accurate information and let these products sell themselves. Of course, this might not eliminate “questionable” products completely, but it should make these products relatively unpopular if the uptake isn’t high enough. So ends the KTM’s logic. 🙂

    This argument could however be flawed since the KTM is not sufficiently familiar with the financial landscape to see where the underlying assumptions might fail. Your comments would be much appreciated.

    tiredman,

    Clarification: the KTM never sought to put words in your mouth. If you will read carefully, the KTM merely provided you with two thought experiments and three questions – and said he didn’t agree with you. How could that possibly constitute “putting words in your mouth”?

    In any case, it is nice to know that you are running a charity. If you will leave your contact number, the KTM will most certainly come and look for you when he becomes an old man and has trouble footing his medical bills. You are too kind. 🙂

    Perhaps we can talk again when you’ve figured out what’s x and y. 😛

  55. ronin said

    Mr Tan,

    The govt put up ERP so that the rich will not be stuck in traffic jams….because their time is too precious. With ERP charges so high, our roads will soon be just for Ferraris!!!

  56. Tan Ah Kow,

    Seems like you cannot understand the concept of separation of functions between Finance Ministry and GIC. Perhaps the KTM can give you a simpler analogy: suppose you own a guard dog (to guard your house lah, what else?), are you going to leave the dog to guard your house when you sleep, or are you going to stay up with the dog watching the gates so that you can tell the dog to bark when the thieves break in? 😛

    Interesting theories on the function of the reserves – but perhaps permit the “nut case” to explain why you are not making any sense:

    (a) An emergency fund, no one in the right mind would have plan for returns over such a long period, going by the OLD man thinking, thirty-years. Who can predict an big emergency wouldn’t happen within the thirty-years? Five-years is already long enough.

    Finance 101 for you. GIC holds hundreds of billions worth of assets. What this means is that GIC is definitely doing some big time portfolio optimization crap and it will be holding a whole range of assets from long-term instruments to liquid assets. If the folks at GIC are earning their pay, they will be doing all kinds of stuff to hedge against the risk inherent in the assets they are holding. What makes you say that five years is enough? Do you know there are instruments known as 30-year Treasury bonds? Also, long-term doesn’t mean cannot sell early if the price is good.

    Suppose you have some fixed deposits, but suay suay your house burn down, you sell or not? Or do you kiasu put all your money in the savings account ‘cos scully your house burn down tomorrow? 🙂 If the probability of shit happening is relatively low, it is possibly optimal to hold higher-return, longer-maturity assets, or is this principle lost on you?

    Next, when it comes to an emergency fund, how much of spare cash you think we’d need at one go? If the emergency is so big that GIC has to liquidate ALL its assets, we’re COMPLETELY screwed I tell you, emergency fund or no. 😛

    (b) Ok it could be argued that GIC investment is to help out the Government in handling the bumps presented by, say demographic changes and the liability of high CPF draw down by larger than expected pool of retirees, well then the question for GIC is should it be in the business of “growing” a faltering business by GIC?

    You think people grow old overnight huh? 🙂 Let me tell you this: the Govt can compute its liabilities arising from expected CPF draw down EXACTLY – isn’t this obvious actually? An emergency fund will not be needed for this purpose if someone is doing his/her job and planning for it. If there’s some “complacency” somewhere then anything is possible lah.

    (c) Ok the government could say that investing in entities are for the “strategic” good of Singapore. Because by investing in these entities, say investment bank, we can control these entities and get them to help develop our own finance services sector.

    ******* Who in his right mind will sell us a controlling stake in their bank? 😛 On the point about “controlling”, do you know what Temasek is currently going through in Indonesia? Big stakes will expose GIC to unnecessary political risks.

    ********* ******* ****** *******

    TOC Moderator’s note: KTM, your comments have been edited – denoted in the bold asterisks. Please refrain from making personal, disparaging remarks. There is no need to do so. Thanks.

  57. Daniel said

    KTM, do enlighten me.

    “Seems like you cannot understand the concept of separation of functions between Finance Ministry and GIC. Perhaps the KTM can give you a simpler analogy: suppose you own a guard dog (to guard your house lah, what else?), are you going to leave the dog to guard your house when you sleep, or are you going to stay up with the dog watching the gates so that you can tell the dog to bark when the thieves break in?”

    Not that we do not understand but we no longer trust the government to think that they invest wisely. What is the connection between Finance ministry and GIC then ? Anyone bother to tell us ? Still, you probably ask how wise is wise ?

    If I have a guard dog that I could not trust, I will replace it. Why do I even bother to stay together with the dog to enjoy the moon ? How about Temasek and GIC ? Could we replace the coffers if they create blunders and coverup ? How much is enough is enough ?

    “What makes you say that five years is enough? Do you know there are instruments known as 30-year Treasury bonds? Also, long-term doesn’t mean cannot sell early if the price is good.”

    Now the most important question to ask if who is THE ONE RESPONSIBLE ? The government, Hojin or some pathetic trader ? Putting the matter of 30 years old investment or whatever. Who is responsible ? That is what we want to know. Not some Tom, Dick and Harry who physically execute the transaction and thus be responsible, but who are the one passing down the order. Selamat’s saga has certainly been a lesson of complacency, not of government but of own nation. So will bad investment been the case of complacency again ? Now, did LKY anticipate that Thaksin get overthrow when the latter sell the telecom company ? Think nothing serious going to happen for investment in next 30 years ? Indeed base solely on commerical interest and benefit, the government is right to invest, but it never thought that Thaksin get overthrow, isn’t it ? Of course, we should continue to invest but we should have somebody to be responsible. Even in army, we have official responsible. The strange thing in government office is that no one is responsible. Don’t you find strange or do you find it normal ?

    ” If the emergency is so big that GIC has to liquidate ALL its assets, we’re COMPLETELY screwed I tell you, emergency fund or no.”

    Taking the worse case again, the question is what is the probability of GIC liquidate ALL its assets for the emergency ? Is there any past history to indicate that GIC and government will sacrifice everything ? Given characteristic of our government, will anyone confident that government will sacrifice it all ? Nobody ask GIC to liquidate ALL its assets, how about some of the assets ?

    “On the point about “controlling”, do you know what Temasek is currently going through in Indonesia? Big stakes will expose GIC to unnecessary political risks.”

    So does that deviate the government any responsbility and accountability to the citizen because lack of disclosure is necessary to migitate political risks ? Can you suggest how then we can ensure that Temasek is accountable to the nation given the past blunders ? Yes, you will ask again what blunder and ask me how to do it ?

    Do you yourself trust the Temasek and GIC for their investment aside from your pragmatic view and response ?

    …. cheers, thank

  58. Just To Say said

    This is what I got to say..
    After reading so many comments on this article, the bottom line is that the goverment keep on stressing on the achieved STANDARDS in Singapore. But have those ministers up there saw the ground situation?? Before they got to see the other pathetic side of Singaporeans, their sniff dogs already keep the ugly scene out of their sight. Have they really gone through the situations now Singaporeans were facing now??
    1)Jobs Security.
    2)Cost Of Living.
    3)Daily Expenses.
    4)Transportations.
    5)Foreign Talents.
    For the above mention and maybe more are the woes of average Singaporeans were facing now.
    Will anyone think that the miserable 3 billions payout in installments given have improve or lessen the problems?? That was really peanuts to a better solution?
    Have people earning big bucks up there really mind on the decisions they made affected lives of others. Did they really gone through REAL LIFE SITUATION then relying on paper reports or surveys.
    ##Conclusion##
    Every single things has gone up in $$$, but pay package still the same or worst retrench on present job and got a lower pay package. Will these contribute to the zero morale of an individual in Singapore? As for myself, I do not know and don’t even think can live up to 82 years old working on two jobs just to par up end meet feeding a family of 4.
    ##Proposed Solution##
    Pay out percentage of our CPF.
    ##My point of view##
    I don’t really believe to live up to the retirement age. Why can’t handle the CPF $$ if oneself is mature enough to plan on their financal needs. That’s why Singaporens are asset rich but pocket empty. If one can’t slove the situation facing now, why think of retirement? Why goverment need to control on CPF which was monies doesn’t belong to them?? Why can’t be transparent and what is the purpose behind holding CPF? To prevent poor Singaporens having nothing to spend in old age whereby is a dream far far later. I must agree that the Goverment has done good on certain part and grateful when CPF really helps on buying HDB asset. But can also introduce CONTROL SYSTEMS for those who have brought their asset, withdraw certain percentage of CPF for situation like now. This will be applause by every single Singaporean and goverment still hold certain percentage for retirement planning. WIN WIN Situation.
    Everybody then can pay off their monthly due.
    ONLY A PERSON WITHOUT DEBT CAN REALLY PROVIDE BETTER OUTPUTS.
    SAID WITHOUT ACTION OR THROWING SWEETS AROUND SERVE NO RESULTS.

  59. Singaporean said

    I have this question.

    About the “better-than-average” past performance of GIC, Temasek , our reserves. Has “the better-than-average” performance been due to overall net positive performance on portfolio done within Singapore as against those outside Singapore ? I definitely can sleep better if their foreign portfolio has performanced “better-than-average” on a net-basis since the day they ventured overseas and again how much better.

    To me, I am of the opinion that GIC, Temasek, our reserves are all of the same thing (e.g it belongs to the nation) as I do not really know the mechanics of funds transfer among the entities if the need arises.

    Could someone enlighten me a little bit.

  60. Logicalman said

    Just to say,
    I think having more flexibility with CPF monies does not solve the problems at hand. Our current situation of high cost of living is due in large part to prices escalated by taxes and external factors that may be regional or global in nature, and reduced Govt spending. If the Govt were to do more in terms of spending on public goods and services, such as transport, utilities, education, healthcare, public housing, etc, and taxing less (no GST on basic goods and services, 5% on others, more equitable ERP, for example), leaving the monies in CPF will serve us well, as it did for the generation before us. CPF itself is a good system to have, but I must say I have yet to be convinced of the fairness and benefits of the CPF Life annuity scheme, the upping of minimum sum, and the delaying of CPF withdrawal age, based on the justification that people appear to be living longer.

    Coming back, as more public good and services are privatised, yet do not translate into lower costs for the public, our purchasing power drops. At the same time, because many public goods and services have been privatised, the Govt no longer spends as much on them; on the contrary, she now collects taxes levied on these goods and services, on top of the “market” rates that we are paying, as well as the from the businesses that provide such former public goods and services.

    The lower interest rates everywhere also do not help our savings unless we have enough to invest in higher-return instruments. Many people, by leaving their money in savings accounts, have actually been bleeding. Whatever little interest earned is wiped out, along with part of our savings, by bank charges every month. Interestingly, though interest rates have fallen, long-term borrowing costs for housing did not. At the same time, the value of our public houses have seen several upward revisions, resulting in higher property taxes, while we benefit nothing from it, unless we are in the business of buying and selling properties, or apartment rental.

    If we own a car, we are stuck with high COE prices, high petrol prices as well as higher ERP charges levied at more places. If we choose alternative transport modes (there’s no public transport to speak of in Singapore), we are faced with increased MRT and bus fares, higher school bus fees, as well as higher taxi charges, most of which have gone up by 20% or more last year.

    If our household comprises of 2 working parents, a couple of kids, and an aged parent, we incur higher charges from before/after school care, as well as domestic helper (foreign worker levy has dropped slightly for the domestic helper, but salaries have increased overall).

    As you rightly pointed out, wages have not risen as fast or as much as the cost of living. In many cases, workplace restructuring has led to people, mainly older workers, moving onto lower-paying jobs. I do not think that the fact that we have more curry-puff and tissue paper sellers, as well as beggars at bus interchanges, is a pure coincidence. As you have also pointed out, many Singaporeans are asset-rich but pocket-empty. May I add that asset, for most, is a HDB flat unit that won’t generate any financial benefits to the owner, unless it’s rented out or downgraded. If the flat is a home, most people won’t think of renting out, much less selling it for profit.

  61. Expected Analysis said

    Most of the points have been well covered in relation to GIC and Temasek’s investments.

    Without a good estimate of the amount of S’pore’s reserves, how are we going to quantify and qualify their returns? Base on $100/200/300 billion? 1% of either of these sums is a monstrous difference.

    Is there transparency in the remuneration of the executives and management at Temasek and GIC? Do we need to wait till a sub-prime type of management crisis there to realise the magnitute of their losses?

    As far as I’m concerned, there are only two distinct reasons for being evasive about GIC, Temasek and the reserves. One, we have so much more than perceived. Two, we use to have so much but depleted significantly over the last 2 years, especially since 2007 with the onset of the crisis.

    There is also a possibility that GIC has invested heavily in UBS prior to the crisis and finds it necessary to give it a lifeline.

    Whatever the reason, any further injection of funds into UBS will only serve to cover their write-offs for the foreseeable future.

    To protect himself, LKY hints that this investment may take up to 30 years to bear fruits. Unfortunately, it is unlikely Singaporeans can hold him or PAP accountable.

    Any expectation of Singaporeans to continue to have blind faith in LKY or PAP is plain foolish and naive, not only complacent.

    Singapore is here today only through the collective efforts of its citizens’ sacrifices, not PAP’s policies alone. Therefore, it’s time to stand up for our citizens’ rights to put things back on the right path.

    Good political leaders had passed on or retired. What we are having now are as good as corporate raiders, where profits is the end objective.

  62. Daniel et al.,

    Those who wish to engage the KTM are welcome to come to the KTM’s KT stall to continue this conversation.

    The KTM is extremely displeased with the double standards w.r.t. to censorship that the TOC moderator has adopted. The KTM expects his earlier comments to be posted in full and an apology before he will continue with further conversations on this thread.

    The KTM nevers uses obscenities, profanities or seditious and racist remarks in his postings and sees no reason TOC has to resort to censorship. What transparency are we talking about? Pathetic.

  63. KTM says:

    You said, “we need a stronger consumer association to play this role of educating the public and taking care of the public interest”. So you are accusing CASE of sleeping lah?

    He must be sleeping that he did not know the level of CASE’s incompetence. Did he not know that it took a MP and a lot of disgruntled customers a long time and get CASE to finally sanction that the TimeShare scheme is a sham with how the salesman tries to force the customers to get the products?

    Muahahhahahaha, my friends in TOC, even you have to moderate KTM, a blogger belonging to a group that is supposed to champion rational and fair discourse. I really want to know what he says that constitutes personal and disparaging remarks. Finally it took that long to have this chap being moderated.

  64. Tan Ah Kow said

    I suppose one need not be surprised by KTM responses. Here he goes again spinning with his “nit-picking analysis” what was actually said to the point of being out-of-context.

    Let’s start with:

    KTM says:

    Seems like you cannot understand the concept of separation of functions between Finance Ministry and GIC. Perhaps the KTM can give you a simpler analogy: suppose you own a guard dog (to guard your house lah, what else?), are you going to leave the dog to guard your house when you sleep, or are you going to stay up with the dog watching the gates so that you can tell the dog to bark when the thieves break in?

    Daniel says May 3, 2008 at 3:09 am hit the nail on the head. Let me try to analyse KTM’s “superior” logic by extending his guard dog analogy:

    What happens if my guard dog keeps letting thieves in?

    Of course since I cannot understand the concept of separation of function, so I must go by KTM’s “superior” logic and keep the guard dog despite it not being a good one in the interest of “separation of function”.

    Coming back to my original point: I didn’t say that the Ministry of Finance, to use KTM’s word, must keep watch over GIC’s day-to-day operations. My point is that the ministry has two options:

    (a) Since it has 100% ownership of GIC, it could clearly influence the “guard dog” mission. Making make the “guard dog” a “pet instead” — i.e. making GIC technical advisers rather than executor!

    (b) If GIC was not delivering as expected of it, than go find another “guard dog”, UBS perhaps?

    KTM says:

    Finance 101 for you. GIC holds hundreds of billions worth of assets. What this means is that GIC is definitely doing some big time portfolio optimization crap and it will be holding a whole range of assets from long-term instruments to liquid assets. If the folks at GIC are earning their pay, they will be doing all kinds of stuff to hedge against the risk inherent in the assets they are holding. What makes you say that five years is enough? Do you know there are instruments known as 30-year Treasury bonds? Also, long-term doesn’t mean cannot sell early if the price is good.

    As usual KTM loves to put words in people’s mouth.

    The point I was making was that on the one hand GIC’s stated goal was to “maximise return over the long term” and LKY, the chairman of GIC, than say that they bought into UBS and the likes because and I quote:

    “We are buying something that we intend to keep for the next two to three decades and grow with them.”

    Now how do you reconcile the two intentions? If what LKY is saying of how GIC invest, then one wonders if the people in GIC are really doing optimization at all.

    That’s what LKY says, so is KTM wanting to put words in LKY’s mouth?

    On the point about the five year, whether it is long enough? My point is that to all about ability to predict so far. Not about choice or availability of investment instruments. Now again my point is that IF, and I stress again IF, the reserved was indeed intended to be an emergency fund, putting that kind of fund into something that long range, especially, stocks-based instruments is somewhat difficult to reconcile. As it is now, GIC is sitting on a paper loss because of investment in Banks, can anyone say that we won’t need to liquidate that investment with five years let alone thirty? As KTM clearly point out there are 30-year bond, so if it was an emergency fund won’t anyone with their right mind put it into that than stocks?

    Well maybe KTM with superior logic can make thirty year prediction.

    Oh here is Finance 101 when you sell stocks at a loss, you not just lose the difference between what you paid and what you finally get. Your loss is compounded because of opportunity cost — i.e. the money that you have lost if placed on a saving account would also be earning interest so you not only lose the paper lost but also you opportunity interest gain!

    KTM:

    Who in his right mind will sell us a controlling stake in their bank? 😛 On the point about “controlling”, do you know what Temasek is currently going through in Indonesia? Big stakes will expose GIC to unnecessary political risks.

    Here is another one those KTM classic put words in my mouth thing.

    My point is that based on what LKY is saying, it seemed that all these investment seemed to reflect strategic considerations rather than purely financial. So the question in my mind is this a wise?

    Oh to answer KTM’s question, note that Barclays and UBS offered board membership. Keppel gain full control of a power generation company in the UK. So yes, there are companies willing to offer controlling stake. Whether their host Government is happy about such arrangement is another matter altogether.

  65. Daniel said

    For all I read, KTM means well. I just find hard to understand him like most of people here. To me, it is not business decision and business acumen that I questioning but the leadership and morality of the ‘secretive’ groups that run Temasek and GIC. If they learn from mistake, I say fine and move on but instead those mistakes are downplayed as honest mistakes and coverup, and repeat again which eventally give doubt about their competency and their integrity.

    If by all means that there is real check and balance from independent group that the citizen could trust, by all means, says that Daniel is too paranoid and oversuspicious. However, now there anything to go by, Selamat is a wake-up call to many that no one is responsible and accountable for major blunder. Business as usual. WKS , PM still get their increasing millon dollars job, still sing song together while millions of taxmoney goes into capturing Selamat, bad reputation abound. Importantly, citizen end up paying more taxes because PM say that there is no free lunch so money will need to be recouped from somewhere. From who, do I need to say more ?

    Business rationality and strategy do made concrete sense but do take into consideration the importance of ‘good’ characters and traits of the leaders that run those business, especially with total lack of transparency and accountability. Leader with greed and lack of moral authority, and running with nepotism, doing as they please and like like nobody business using someone else money like his own, so isn’t that frightening to see that happening in our Uniquely Singapore?

    Worldcom, Enron, etc shows examples of leaders with lack of transpency, using Creative accounting, justifying their million dollars salary. Yes, these people can be brought down and stand trial because evidence can be found against them.

    Question is could our coffers withstand scrutiny or just simply acquitted and move on because of the repercussion should that happen ? Isn’t there a law to protect ministers/high officials from investigation ?

    We are not going anywhere if we simply focus upon business decision or policy, the focus lies in the leaders and their integrity who run the show. Needless to say, majority of educated Singaporeans no longer trust the government. (Will KTM ask again who are the majority just like LKY ?)

    Hope that KTM understand what are we really concern about.

  66. Daniel said

    KTM,
    I will like to visit your ‘stall’ and eat more of your ‘Kway Teow’. However, after ‘tasting’ some of your ‘Kway Teow’ here, I better stick to MeeSiamMaiHUM.

    cheers…. my friend …

  67. I love Kway Teow Man’s persistence in saying if the current party is no good we should vote them out in the next election.

    Bro, with the crazy gerrymandeering and suka suka change electoral boundaries, so easy meh? Oh, I’m sure inflation will affect election deposit in 2011 too!

    Is Kway Teow Man working for the Hen man?

    To Mr Tan Kin Lian, may I ask this: Was it ethical for CPF to transfer public Medisave policies/accounts to NTUC Income and Great Eastern Life (or was it AIA?) many years ago without the consent of the policy holders. Through the transfer, the 2 insurers had access to the personal particulars of hundreds of thousands which I think was worth much as it would lead to new business. No, I do not blame the insurance companies involved. I’m just sad that the CPF Board can just walk all over us without any respect for our privacy!

    Meanwhile, I feel that the reserve in GIC & Temasek is just a mirage where the general population is concerned! They may be real to the Lee family and selected Eleetists. Surprisingly, some MPs don’t even know squat about it! Then again, if our late President, Mr Ong Teng Cheong, had to go through the cesspool and still not find what he needed to know, who are we to know?

    Pardon my cynicism, but I feel very strongly that our reserve is similar to Mas Selamat Kasturi.

    What is our reserve? (Who is Mas Selamat?)
    Where is our reserve? (Where is Mas Selamat?)
    How big is our reserve? (How do we describe Mas Selamat?)

    It’s for them to know and for us to find out?

    Who are we to know? Does it matter if we know?

    We just want them to ‘stay together and move ahead’ with us with our reserve! Not tell us that “u cant touch this” until 5, 20 or 30 years later!

    Meanwhile, they touch, they play!

    We wonder.

    Who’s money is it anyway?

    feedmetothefish

  68. Oops, I mean Medishield, not Medisave.

    Sorry.

    feedmetothefish

  69. patriot said

    I love the substances in the many posts here, especially Posts 65 to 67 by Daniel and Feedmeto the fish.

    And I just like to add that MM Lee Kuan Yew can say anything he wants now because thirty years(or maybe tommorrow) down the road, even gods will not be able to make him answerable to anything he has ever said. I am 101 percent sure!

    patriot.

  70. Tan Kin Lian said

    Keow Teow Man said:

    Mr. Tan said:
    I will require the product issuers to answer a few key questions:
    a) what are the charges levied on the consumer
    b) what benefits is being provided by the product issuer
    c) what is the best estimate cost of the benefits

    Item (a) is quite clear. The KTM however doesn’t completely understand what you mean by items (b) and (c). He would be most grateful if you can elaborate on “benefits” and “estimate cost of benefits”. Benefits = ROI? What’s estimate cost? Please pardon the KTM for his ignorance.

    Dear Keow Teow Man,
    The product issuer tells the financially naive investors that their money is invested in certain combination of shares or bonds that will give certain yield under certain circumstances in the future.

    The ordinary folks have no way of calculating the probability of the “happy events” occuring. As a financial expert, I will not be able to calculate this probability as well, but I guess that the chance is very, very small.

    What happened? Most of these “happy events” did not occur. The investor is likely to get his principal back. In some cases, they lose part of their principal – as they were not aware about the risks.

    I understand that some of the structured products are invested in CDOs. They have not matured yet. Let us see if the investors can get back their principal.

    As the so-called MAS director of regulation (if I ever get appointed), I will never allow this type of “rip-off” to happen. It will not be possible for the product issuer to answer my (b) and (c) questions, so the product will never get approved by me.

    Why did the government regulate gambling? It is to ensure that the consumers are not “rip off”. They should be given a fair game of chance, and may pay some loading to cover expenses.

    Sadly, this kind of protection does not occur, when financial products are concerned and reputable, trusted banks are involved.

  71. Tan Kin Lian said

    To Mr Tan Kin Lian, may I ask this: Was it ethical for CPF to transfer public Medisave policies/accounts to NTUC Income and Great Eastern Life (or was it AIA?) many years ago without the consent of the policy holders. Through the transfer, the 2 insurers had access to the personal particulars of hundreds of thousands which I think was worth much as it would lead to new business. No, I do not blame the insurance companies involved. I’m just sad that the CPF Board can just walk all over us without any respect for our privacy!

    Dear Feedmetothefish

    I prefer these schemes to be managed by the CPF, rather than passed to the private sector. There is no advantage in having the private sector to manage these schemes. They are not able to improve efficiency, reduct cost, or give better service compared to CPF.

    Sadly, there is a mistaken belief that the private sector is efficient. This is not the case.

    You have raised a privacy issue as well. I think that the insurance companies are required to sign an agreement to respect the privacy and are not allowed to use the data for their own marketing. I think that this should be all right, and that it is not being abused.

    I prefer national schemes to be managed nationally. Do not give it to the private sector, which are profit drivern.

  72. patriot said

    Quote; “I prefer national schemes to be managed nationally. Do not give it to the private sector, which are profit driven.” Unquote.

    Kin Lian; may I ask, with reference to the Quote, are You saying the National Schemes are not run for profits and gains? Personally, I do not find any of the Schemes benefitting the people much except for those families that get some helps from the schemes(insurance related) for some reimbursements and claims for medical bills and when death occurs to an insured person. Do You consider NTUC Products under the so-called National Schemes?

    Are there National Schemes that allow citizens to make money without much risks? I thank You!

    patriot.

  73. Tan Kin Lian said

    Dear Patriot

    Some national schemes in other countries are runned on a subsidy basis, i.e. the deficit in the scheme is covered by taxpayer’s money.

    In Singapore, the national schemes, such as CPF and Medisave, are runned on a non-profit basis. If the scheme shows a surplus, it should be returned back to the participants.

    However, there is a tendency for the scheme to keep the surplus as a reserve, in case they are needed to cover losses in the future. The problem is that the reserves can grow to be too big.

    We need good managers to manage the scheme, so that there is a proper balance between keeping the cost low (as a non-profit scheme) and keep them solvent (by accumulating some reserves in good years). This requires someone to take the responsibility. The trouble is: in Singapore, most people do not want to decide.

    During the time that I was CEO, you can consider the schemes of NTUC Income to be almost non-profit, as it is a cooperative. I am not sure whether this still concept applies today, as it is now under a new management.

  74. patriot said

    Hi Kin Lian;

    thanks for your response. The ‘ifs’ and ‘shoulds’ in your response are ‘doubts’ in my understandings of National Schemes all these years. I now feel consoled that the understandings are quite fitting to the ‘ifs and shoulds’.

    And may I add that ‘if’ our essential goods and services providers did not ‘push’ for better bottomlines(profit/revenue), most of us ‘should’ be living much more comfortable now. Do You agree?

    I am much obliged, from: Yours truly; patriot.

  75. Tan Kin Lian said

    Dear Patriot

    I strongly believe that there is a place in the free market economy for non-profits, cooperatives and state schemes to serve the public. They play an important role to moderate the profit-drive sector.

    Our government leaders have the belief that the free market and profit-driven enterprises can produce the best results through competition. This is partly true, in the areas where competition can work best.

    But, there are many areas where competition does not work well, such as in financial services and health care. The economists call it “market failure”. I call it “exploiting the ordinary people”.

    Regulators have the duty to protect the interest of the ordinary people. In recent years, they have neglected their duty. They have the mistaken belief that the competition and disclosure can solve the problem.

    Look at disclosures in the financial services sector. It has been ridiculous. The product issuers can disclose a lot of details that are incomprehensible to ordinary people.

    For example, there is a disclousre in the life insurance policy that the “effect of deduction” is $100,000. What does this mean? It means that the product issuer and the intermediary takes away $100,000 from you during the lifetime of the contract. It is daylight robbery, but the general public does not understand it. This information is hidden within 30 pages of printed output.

    Back to your question. Yes, if there are more ethically runned businesses in our economy, most ordinary people will be more comforable in Singapore.

    These businesses can be runned efficiently and are entitled to make a fair profit. But they cannot be allowed to make excessive profit by cheating or short-changing the consumers.

    My entire paper is actually aimed at driving this point home – and at the role of regulators!

  76. Mr Tan,

    Thank you for your response. It seem that you have decided to continue this discussion here and it would be impolite for the KTM not to at least leave one reply for you. Note however that the KTM would rather continue our discussions at his KT stall because he is aggrieved by what he perceives to be irresponsible moderation by the TOC moderator.

    If you do not wish to continue this discussion it is fine too and you are welcome to have the final word here at TOC. Thank you for your patience.

    It will not be possible for the product issuer to answer my (b) and (c) questions, so the product will never get approved by me.

    Wah, isn’t it somewhat extreme to issue disclosure requirements that are not satisfiable?

    While the KTM still doesn’t understand completely what you mean by (b) and (c), he does not believe that your requirements are impossible to satisfy. It is just not plausible for MAS do something like that. In fact, let’s imagine that you are the MAS Director and KTM is CEO of the imaginary KT Income, and you issue this new directive. This is what the KTM will do:

    KT Income will kwai kwai follow your instructions and submit the data to you as required. Whatever PhDs you have, the KTM will also similarly employ to spit out the numbers you ask for. Throw in the partial differential equations, Black-Scholes, kitchen sink and all. Somehow, there will be these magic numbers all backed up nicely with data and charts. 😛

    That’s not it. The KT Income will not be submitting just one product for approval, but a whole range of products (10?) ranging from almost riskless bond-like products to the high-risk products. Why? The KTM is merely probing your system. You cannot possibly be blocking the bond-like products. The question will be: where is your threshold and how do you actually do the regulation?

    If your threshold is too low, the KTM will complain to the Finance Minister that you are killing the financial sector and Singapore can kiss it’s pipe dream of becoming a financial services hub goodbye. 😛 And it’s not just a complaint letter. The complaint will be a big stack of documents demonstrating to the Minister in no uncertain terms that MAS has disallowed a product that is comparable to products available in other major financial centres like New York or London – and you can go figure how to explain to Minister. The KTM’s numbers will be correct (‘cos they will be generated by this army of PhDs in the back room). 🙂

    Ding-dong enough and something will eventually get through ‘cos KT Income has the resources to play this little game with the MAS bureaucrats. And what happens after that? Two things:

    (i) What is submitted to MAS for approval and what is printed in the marketing brochures are not exactly the same. There no lies of course! By why the omissions? “Aiyah, not our fault. We did try to print (b) and (c) in our earlier versions, but we found out that the customers couldn’t understand and didn’t find it useful. We want to help the customers understand and so we only print useful information in the product description.” Actually hor, you want us to print also never mind, since like you say, nobody understands anyhow.

    (ii) There will always be risks – and if the product tanks, whose fault? Well, MAS has already checked and approved, so KT Income cannot accept responsibility. MAS’s approval means that we had already done our due diligence. Any losses arising are an act of God (or MAS’s failure in its checks. Complacency?)!

    Be aware that an approval process will have the unintended side effect of implicit endorsement. There is no reason why MAS would in its right mind want to accept responsibility for the downside of a financial product. It might not be MAS’s fault, but will the people understand? 🙂 Damned if you do; damned if you don’t.

    Frankly, the KTM does not disagree with the spirit of your proposal. Surely, protecting the people cannot be wrong. He just doesn’t believe that there is a practical implementation of what you’re proposing. We can continue our discussions here, or if not, we can end this discussion here.

    I strongly believe that there is a place in the free market economy for non-profits, cooperatives and state schemes to serve the public. They play an important role to moderate the profit-drive sector.

    The KTM agrees strongly with this statement and thanks you on behalf of his fellow Singaporeans for your services rendered as CEO of NTUC Income. Thanks again for sharing your views with the KTM. 🙂

  77. patriot said

    Dear Kin Lian;

    I must thank You for the interactions and I must say I am very comforted that You will be enlightening us lay people with your many years of experiences and expertise in the Insurance and other Financial products.

    The people have been and being exploited for many years and exploitative aspects of our market realities and practices sadly are also practice by our so-called National Schemes Planners. You have informed us here of a 30 Page Print and almost everyone who owns a HDB Unit can understand What You have said. Almost all of us who bought HDB Flat, Insurance and Financial Products do not read all the Rules and Regulations in all these products. Even if we do, we are unlikely to understand much of the legal jargons used in them and there is always the danger of missing the super fine prints in advertisements, annual reports and announcements.

    All in all, I will say the market place is full of frauds and hidden dangers and regulators have failed very miserably in the face of all these malpractices. It is indeed sad that Netizens have realized that our regulators have been very much ineffective and inclined to side with the businesses instead of protecting consumers.

    Well, not to bother You too much, I will just say it is good to have You here in TOC and I wish You will enjoy our companies(interactions). And You and your family have happy and healthy livings.

    Yours sincerely: patriot.

  78. Tan Kin Lian said

    Dear Keow Teow Man,

    KT Income can submit many applicationsas you wish, provided that you pay a processing fee of $500 for each application.

    I do not hesitate to reject applications that are frivolous. This will be accompanied by a reprimand to KT Income.

    If KT Income complain to the Finance Minister, so be it. I will tell the Finance Minister that I have approved a lot of suitable financial products, and they are submitted by financial institutions who decide that it is better to be ethical and give good products to the consumers.

    At the present time, the system encourages product issuers to “rip off” the consumers, as it is more profitable for them, and legal as well.

    If Keow Teow Man is the Finance Minister, I hope that I can get this imaginary job as “MAS director of regulations”.

  79. Dear Mr Tan,

    Thank you for your kind response.

    With your contribution to TOC (which I read often), I hope, in time, this platform will be as popular if not more than the sycophantic msm.

    Being your previous customer, I benefited from the major illnesses policy when I suffered a heart attack many years ago. The claim helped me feed and educate my kids when employers and the government gave up on me. As far as they are concerned, I was as good as dead. When you are over 40, you are over the hill. When you are hit with a dreaded disease, you are as good as 6 feet under! This is Singapore Inc! We are as good as what we can contribute to the economy. If we can’t, we become a burden and our past contributions doesn’t mean squat!

    Though the heart attack did not kill me, I’m sure the indignity of begging for public assistance from the MIW would have triggered another heart attack and finished me off! Thank you Insurance!

    The decision made years ago to protect my wife & kids paid off and I am grateful. If not, I would be dead now instead of having the opportunity of writing to you.

    I salute your courage to tell it like it is. I hope, I sincerely hope, to see more people with talent, experience and expertise like you, Ms Catherine Lim, Mr Aw and Mr Leong Sze Hian extract the wool pulled over our eyes by the arrogant eleetists and their media dogs!

    We need rational insights, responses and actions to truly build a democratic society based on justice and equality so as to achieve happiness, peace, prosperity and “golden age” for ALL!

    Thanks again for your precious time.

    Sincerely,

    feedmetothefish

  80. Tan Kin Lian said

    Dear Keow Teow Man

    Here is a further reply to your point in (76). As the imaginary MAS director of regulation, I will issue certain guidelines on suitable products that does not require my approval.

    The traditional products, such as savings account and unit trusts do not require approval, so long as the charges are below a certain cap, and there is no game of chance involved (apart from the market risks).

    However, if you wish to introduce products with an element of chance (such as a gambling product or options that are not traded on the market), you will require certification by independent financial experts. I will refer it to the experts, so that there is no conflict of interest.

    Most of the products that “rip off” the customers fall in this category. They have high upfront charges and give doubtful value to the consumers. After buying the products, the consumers are locked into it for many years. Anyway, I will set caps on the upfront charges to be at a reasonable level.

    Insurance products that take away two years of savings will not be approved. If the customer wants to pay this kind of fee to the insurance agent, they customer can pay it separately and directly. It will not be part of an approved product.

    Do I still get the job as imaginary MAS director of regulation from the imaginary Finance Minister, aka Keow Teow Man?

  81. Tan Kin Lian said

    Singaporean Says:
    Dear Mr. Tan,

    I am of the view that Singapore should not have this “sue-happy Singapore” culture as far as different or less than desirable tone of opinions are concerned.

    Having different opinions is not a crime. It is the onus (though not an obligation) on the party which possesses more accurate information to do the counter-argument – this can go on and on until the one with a stronger counter-argument prevails.

    If in the end, no clear outcome still exists, then a mutual respectable agreement to disagree should be on the table among all parties. That is how cross-learning and cross-education comes about.

    Dear Singaporean,
    I agree with you. I hope that the powerful people are more tolerant about opinions, and may even forgive the occasional oversight.

    At present, most people only dare to speak up in the internet, because their are anonymous. I hope that more people are willing to speak up with their name, so that other people can judge them in a more credible way.

    I make it a point to be non-judgemental in giving my views. I express my opinion and state the reason to back the opinion. I do not try to pass judgement on other people’s opinion. I just “happen” to have a different opinon or different point of view.

    This is not just being safe. It is being fair to other people.

  82. Fever Guy said

    Fortune 500 has clearly stated past history of errors on CITIBANK. It didn’t happen overnight there are many series of costly errors that befall Citibank and their past CEOs. No one is GOD and no banks are Heaven. Banks reputation is as good as their last balance sheet.

    Why did our GIC bought a stake in citibank? In Dec 2006, CITI has a market value of $280 billion dollars and now a mere $120 Billion. A lost of $160 billion roughly 6 times of bear stern. With great write offs in CDO in billions of dollars, i just cant imagined GIC will even think of investing more money in it.

    CITIBANK is too big to managed and might have to be broken up into two eventually. That will make our GIC investment ever more trickier. Of course, we have UBS too. Lets wonder what will happen to world no 1 weatlh management UBS ( CITIBANK was world no 2 in wealth management) more job cuts ard 8000, closed more branches and reduced operating costs? Finally i think the only solution is to raise more capital and thats bad for GIC. Really bad. The long term solution is to keep away from banks until more visible signs appeared for GIC to spend our reserves again. Bearing in mind, Singaporean’s life savings are at stake we dont want to be 100 years old to see our cpf money, thats not long term.

  83. Daniel said

    Tan Kin Lian ,
    kudo to you for your honest view. Hope that there is more people from the government office like you that willing to explain thing in objective manner. Your expertise and knowledge really help many to understand the financial service in Singapore. Moreover, been ex-CEO of NTUC, you have shown very impressive understanding of the ground and operation.

    The sad thing is there is lacking of such substances from our expensive gahmen and ministers. After listening to these gahmen in speech and questioning from time to time, I realize that their answer is simplistic, ‘naive’, insulting, lack substantial understanding and knowledge, and therefore their only argument is defensive and taking the worse case to backup their claim. I wonder is it something to do with their tour of duty or their ego or their ineptness ? Capable Ministers who do well in certain ministry suddenly been switch to other ministry, and military personal been post as chairman or executive. And ministers and others who have script written by scholars to ensure right thing and rhetoric are been said. I wonder how these ministers and many officials can make such important decisions without themselves understand what happening on the ground. There is fallacy to think that academically-capable gahmen can perform any task excellently. I really doubt so even if they have capable people around helping him because it takes time to earn respect and examine thing.

    Wish you become a model for the generation of leaders serving the country.

  84. Tan Kin Lian said

    One of my favourite subject is to reduce the need for commuting by encouraging people to work near their home or to move their home to be near their place of work.

    This requires the government to waive the stamp duty for purchasing a owner-occupied property, and other impediments imposed by government HDB loan financing.

    If commuting can be reduced, say, by 30%, it will produce the wonderful effect of reducing road congestion, reducing the demand for buses and trains and lead to a more comfortable journey.

    I am somewhat sad, that nobody take up this point. Maybe, I am too idealistic and impractical? Am I expected too much?

  85. patriot said

    Kin Lian;

    may I offer my views with regards to your suggestion for Singaporeans to work near their residence and or move themselves nearer to their work places. Your suggestion is not practical, firstly; most families are dual income(self/spouse working) but usually different professions. Offspring(s) schooling at different locations.

    Secondly, parents of both husband and wife maybe taking care of the children and again they may not be staying around the couple.

    Ideally, less time spent on travelling to workplaces and schools mean saving time and money with advantages of having more rest and sleep as well, but in reality, the practicality is not there. These are just some understandings that I can see. Do hope others may share more opinions with us.

    patriot.

  86. commoner said

    I agree with Patriot. Who doesn’t want to work near their home if they can? It will save a lot of time and money.

    It is just not practical. Imagine that you are manufacturing trained, then, most jobs would be at the industrial parks where the factories are and not in the neighbourhood. It is also totally senseless to move your house just to stay near where you work. The hassle and cost are way too high to do that. Also, does it mean that everytime you change your job, you need to shift your house? We don’t move our house for free. It costs lots of money and time.

    Besides, even if there are suitable jobs for you near where you stay, it doesn’t mean that you will get employed. The competition may be too high since if you thought of it, your neighbours will too. Moreover, the salary may not be below what you expect. Also, to just sit around to wait for that job which pays well and near your residence is a luxury most cannot afford.

  87. Dear Fever Guy,

    Perhaps reading this quote from Warren Buffett may hopefully make you feel a bit better.

    “There’s no reason we should become fearful if a stock goes down. If a stock goes down 50%, I’d look forward to it. In fact, I would offer you a significant sum of money if you could give me the opportunity for all of my stocks to go down 50% over the next month.”

    Look at that sentence again. What Buffett is actually saying is that most people’s emotions work backwards: They get greedy when stock prices go up and fearful when they go down. Instead, if you are a true investor, you should shop for stocks the same way you shop for anything else: Look for sale prices, and never regard falling prices as inherently bad news. Instead, falling prices create the opportunity to buy even more of something that was already worth owning.

    In that single sentence Buffett captured the difference between investing and speculating: An investor, like Buffett, wants the price of a stock to fall below the value of its underlying business so he can buy even more and hold for as long as possible. A speculator (like Jim Cramer) only wants the price of a stock to go up, with no regard for the value of the underlying business at all, so he can sell as fast as possible. To the investor, the market’s opinions do not matter. To the speculator, they are the only thing that matters.

    More can be accessed using the following link.

    http://money.cnn.com/2008/05/05/news/companies/buffet.pm.wrap/index.htm?postversion=2008050514

    By Buffett’s definition, GIC is an investor and people who are too caught up with share prices and the economic backdrop are termed as speculators …

    Take it easy guys, we are voicing our opinions because we care.

    Eaststopper

  88. Daniel said

    I wonder if that government could spend more resource developing infrastructure for knowledge-based workers or give incentive for companies that promote working at home, subsidising through boardband cost, etc just encouraging companies and individual working from home => More time with love ones, to reduce spending money on travelling etc.

    The reason are because Singapore has increasing knowledge-based workers and why not put this majority of works at home rather than office and communicate through using video conference ? And leave rest of other white collars workers for travelling instead etc… ? This will ease congestion and more… However human is social creature, so may or may not work out for many. Moreover, this will also affect the food/restaurant market. So no easy way out.

    May not be a good idea to encourage home ownership through close proximity to work and quite unlikely the government will consider this because it will pose a threat to government GRC election because if that vincity is all knowledge-based companies, then this people tend to be more educated and are highly to access info through blog , internet etc.

    Maybe politically why government will control quota by race, education level, and other concentration factor ? I rather think that too much educated/rich people concentrated on a region is more likely to pose threat to government. OUr gov is freaking paranoid, kiasu, kiase, kiaChao…

  89. Eveline said

    Mr Tan, on your housing suggestion, I can think of several reasons why that is not popular or feasible. To begin with, in order to be mobile, renting is more cost effective than buying, since you don’t have to deal with stamp duty fees, charges, HDB rules and so on. Renting however is not popular for several reasons:

    1) Mental block

    Almost all of us here grow up with the idea that “buy is good; rent is bad”. To many, renting is “throwing away money” because for all the money you have spent, you get nothing at the end of the day. The rental you pay could instead have gone into servicing a mortgage. So people buy HDB flats and stay put in them regardless of where they actually work.

    2) HDB rules

    HDB have pretty strict rules on renting that curbs the supply of HDB rental flats, as well as restrict the rights of HDB owners to rent an HDB flat elsewhere. For example, to rent out a flat or a room, you must have owned the flat for 5 years. To rent an HDB flat, you must not be an owner of a flat yourself (save a few exceptions).

    To deal with this problem I can think of two solutions:

    a) Bring Mountain To Mohamed: Bring the jobs to the doorsteps. I’m thinking of estates like Tampines, Toa Payoh or even Novena. Encourage companies to set up their offices at suburbs (which must be well-served by MRT and bus and be easily accessible). This spreads out the transport load so that you have a more even spread of people using various parts of the transport system. I think that’s actually being done already.

    b) Look for jobs near your place. It is not easy but not insurmountable. My mother (staying at AMK) used to work at Science Park as a cleaner. Now she’s working near Yio Chu Kang and that saves her much time (energy) and money from the transport.

    (And yes, I remember that stupid “workers are too fussy, don’t want to work in Tuas” comment from some Mini-star. I say, celestial beings living in ivory towers have no farking right to criticise peasants working hard on the ground.)

    Hope my comments contribute to the discussion 🙂

  90. Logicalman said

    I think on the whole, most people are rational, practical and mature. I am sure given an opportunity, they will work somewhere nearer home, all things considered, unless they really have no choice, as amply articulated by others. No one really enjoys the traffic snarls on the “expressways” or the overcrowded trains and buses during peak hours. I am also sure that many are aware of the financial and economic situations in and around Singapore, given the prominent coverage from local and international media, and that they will act with prudence and keep expenses down for the years ahead. I further believe that many have been living responsibly, even before the current financial and economic crunch.

    More often than not, the Govt and mainstream media like to portray us as hapless and immature people who need guidance and directions, down to minute details, like where to find $2 meals or when to substitute our staple with cheaper rice. For years, the Govt has been tweaking CPF policies in the name of helping us stretch our savings and ensure that we provide for our children. While the intent is good, on the whole, the Govt has to learn to respect and listen to the views and needs of the people on the ground, whose lifestyles are very different from the cabinet ministers.

    By nature, people know how to eke out a living and provide for themselves as well as their future generations. No reasonable person relishes the thought of getting handouts to survive. The PM reminded us how hard the foreign talents work in Singapore. He may wish to know that our forefathers were foreign talents too when they first came to Singapore, and that today, we still share that trait, clocking at least 12 hours a day in most professions, with some holding down 2 jobs or more.

    As I have said in earlier threads, the high costs that we see today can be mainly attributed to the proportionately low Govt spending and high taxes. The Govt appears to be highly paranoid about not collecting enough from, and spending too much on the people. In fact, Singapore today holds one of the largest pools of ready cash for investment, and is noted as an element of the emerging golden triangle of global wealth management, along with Middle East and China (google for SMEC, golden triangle). For a nation of 4.4m with no natural resources apart from people and a strategic seaport, to amass a wealth of a size that the world reckons with, over a few decades, is simply amazing, considering that we went through some economic downturns in between, even SARS, and that we are not a business to begin with, but a nation. Yet for all that wealth that ranks us among the best in the world, overshadowing even the former superpowers, the Govt has to give our GST credits and rebates to help people cope with inflation, and tell them where to find $2 meals. Something is amiss.

  91. Tan Ah Kow said

    Tan Kin Lian Says: May 5, 2008 at 10:33 pm

    “One of my favourite subject is to reduce the need for commuting by encouraging people to work near their home or to move their home to be near their place of work.”

    How about working from home where possible?

    It is quite common in Europe and even America now.

    Not practical in Singapore, I hear?

    Well as Eveline May 6, 2008 at 9:41 am points out, with respect to housing, it’s all about mental block. And like-wise with this notion of working from home.

    You see the “bosses” in Singapore simply don’t trust workers. And “trust” is the watch word here and in many cases can possibly solve a lot or problem.

    As for your suggestions being idealistic or not, well it boils down to, for want of term, a question of “trust” — i.e. is HDB willing to trust that waiver of stamp duties is not to be abused?

    In the Singapore context, I am afraid, the culture is to look at a problem and say it can’t be done rather than to say hey let’s try to overcome this problem with this solution even if it at least initially seemed too ambitious.

  92. Tan Ah Kow said

    Eveline Says: May 6, 2008 at 9:41 am

    Almost all of us here grow up with the idea that “buy is good; rent is bad”. To many, renting is “throwing away money” because for all the money you have spent, you get nothing at the end of the day. The rental you pay could instead have gone into servicing a mortgage.

    In continental Europe — i.e. not the UK — renting is a more common practice. But in many parts they have rent controls and banks have very restrictive mortgaging rules for domestic borrows. In Switzerland, you need a big deposit up front and not to mention building code to overcome before you can even secure a mortgage — but strangely their banks are liberal for their America consumers, somewhat ironic isn’t it.

    Anyway, in the UK there is also a similar mental block that you find in Singapore. This is in part people often see the value of ownership on the face value of the property — i.e. sale value and resale value. So if I bought for $10 and in 99 years I sell for $20 hey I make profit (100%) kind of mentality.

    Of course, many don’t take into account things like maintenance cost, interest re-payment (for Singapore possibly extremely low because of low interest), stamp duties, capital gains tax (does not apply to Singapore), etc. All these may add up more than what they would have to pay over live-in period of the “ownership” in rent!

    Worst some may not even be able to repay over the life time of their working live, so the property they thought they own get repossessed, which is no more different from being kick out of rental apartment due to rent arrears.

  93. commoner said

    I think if G says any company is good, it must be a “friend-friend” thing, “want to be friends” thing or “relatives working inside thing”. Maybe can get lots of free gifts.

    Nowadays, free lunch can also be termed as bribes, esp for big shots. I just don’t believe that these people will be interested to go for a $3.50 free lunch invitation. Or maybe they will go only during election time. That is the time when they curry favour us back.

  94. Tan Kin Lian said

    I suggested the stamp duty should be waived to encourage people to move their home closer to their place of work.

    Several people commented that this idea is not feasible, e.g. two income earners working in different locations, need to stay near grandparents, etc.

    What about the situation where this idea is suitable, e.g:
    > one breadwinner in the family
    > second income earner willing to change jobs
    > find child minders near the home.

    In these situations, the waiver of stamp duty may encourage some people to move their homes.

    We do not need this idea to apply to everyone. If it can reduce commuting by 10% or 20%, it can do a lot of good.

    I agree with the comments by Tan Ah Kow. I am in favour of “renting”. It gives greater flexibility. The “buy is good” mindset is created by government and tax incentives. But it has its rigidity and disdvantages.

    Let us think out of the box. Have a more diverse approach. Every step helps.

  95. Tan Kin Lian said

    I agree with the suggestion by Daniel to promote working from home.

    I work from my home 3 days a week. I only go to the office for 2 days. I am able to do a lot of consulting and other work by using e-mail, and talking over the telephone.

    Companies can have more work done by contract workers from their homes. They only need to pay for the actual work done, rather than a salary based on time. This mode of payment will become more common in the years ahead.

  96. patriot said

    Kin Lian;

    renting is good but greatly impeded by our Public Housing Authority and housing plannings.

    Working from home is very much desired by employees/workers, unfortunately, employers don’t seem to favour the idea. In the end it is still not workable.

    Singaporeans do not have the luxury of choices due to constraints of local culture, on the other hand it is such a tiny plot, so ones’ furthest distance from workplace hardly average more than 30 kilometres. If the transport system is good, most should be able to reach their workplace with 45 minutes.

    What can be improved lies in efficient, inexpensive public transportation system and improved road system. Singaporeans are most willing to forgo some rest/sleep if transport costs are not too high. The unfortunate situations of congested public transports and congested roads with frequent traffic accidents and breakdowns are the culprits that needs to be arrested.

    Dare I say Singaporeans are very compromising and obedient, no?

    patriot.

  97. Ennie said

    I agree with Daniel & Mr Tan Kin Lian on the option of working from home. This is fairly common in the states and workable.

    What I could think of the reasons for having remote workers are to:
    1) reduce carbon footprint, not to mention savings on commuting
    2) retain and attract valuable employee
    3) encourage women (stay-at-home mums) to join the workforce
    4) minimise the impact of emergency situations (crisis like SARS) to the economy. employees can still work from home and business as usual.

    However the adoption rate in Asia is slower, these might be some factors contributing to it
    1) High infrastructure/technology cost to fully support remote workers to access resources
    2) Mindset of employers – no visibility of employee, fear the lack of accountability (out of sight, out of mind)
    3) still thinking….

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