Saturday, March 28, 2009

Survey: Ministers in the Prime Minister's Office

Are we having too many ministers in the Prime Minister's Office, including senior ministers? Survey.

Here are the survey results.

Ministers in PM Office
Lee Hsien Loong
Goh Chok Tong
Lee Kuan Yew
S Jayakumar
Lim Boon Heng
Lim Swee Say
Lim Hwee Hua

Thought for the week - Anger

Contributed by Ho Cheow Seng

Thoughts for the Week
"He who is not angry when there is just cause for anger is immoral. Why? Because anger looks to the good of justice. And if you can live amid injustice without anger, you are immoral as well as unjust." Aquinas
"I don't know a more irreligious attitude, one more utterly bankrupt of any human content, than one which permits children to be destroyed."-- Daniel Berrigan
"I have the audacity to believe that peoples everywhere can have: three meals a day for their bodies, - education and culture for their minds - and dignity, equality and freedom for their spirits"
 Dr. Martin Luther King, Jr.

Cheating and the rule of law

Here is the definition of cheating in the criminal code of Singapore.

Cheating – Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he or she would not do or omit if he or she were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat". For example, A cheats if he intentionally deceives Z into a belief that A means to repay any money that Z may lend to him when A does not intend to repay it, and thereby dishonestly induces Z to lend him money. Cheating is punished with imprisonment of up to one year, or a fine, or both.

A Singapore lawyer told me that the attorney general will only prosecute cheating when it is in the public interest. So, if a citizen is cheated and lodge a complaint, the attorney general may not take up the case.

My friend told me that in America, the attorney general will look out for cheating cases and prosecute the culprits. They do not wait for a complaint to be lodged.

It seems that the system is different between Singapore and America. I am not sure what is meant by "the rule of law", when the law is only enforced at the discretion of the authority.

MAS consultation paper: Unlisted investment products

Read the proposals contained in this consultation paper

Here is an explanation by a law firm.

I conveyed the views contained in this paper to the CASE forum on 28 March 2009.Publish Post

Friday, March 27, 2009

Survey: motor insurance claims

Give your views on how to prevent sharp increase in motor insurance premiums. Survey.

Here are the survey results.

Survey: News and information

How do you get news and information? Survey.

Here are the survey results.

Bank adamant despite advice

Letter to the Straits Times.

Sale of toxic products

A pharmaceutical company has discovered a new drug that is a seemed to be effective in curing certain types of cancer. According to an internal document, the drug used certain ingredients that may be harmful to people. Due to the rush to bring the new product to the market and to make big profits, the company was not able to complete the tests to identify and remove the harmful effects.

They were able to find two countries where the health regulators were willing to allow the drug to be sold to the public with a warning, "The new drug may, in some situation, be harmful for consumption".

The manufacturer advertised the positive aspects of the drug and many people bought it. Those who read the warning were told not to worry about it, as it was not likely to happen. After a few months, many people die from the drug, which turned out to be more toxic than expected.

The families were told that the patients should have paid attention to the warning. They had taken their own risk with their eyes open.

Language, literature and culture

I have studied science and mathematics for most of my life and have excelled in them. They are good for the world of business.

In recent years, I have learned to realize about the special quality of language, literature and culture. The language of any people is developed through the collective efforts of the best people in that culture, namely the writers, poets, and philosophers. The values of a people is embedded in their language. They  have to work together in harmony, so that their thoughts can be explained and understood in the language.

It is the talented people that are able to write the lyrics and musics to their popular songs. I learned some of these songs to appreciate the culture of the people in other nations.

Recently, I met a 80 year old professor who was able to recite the entire famous poem by William Wordsworth, "Daffodils".  He learned it more than 60 years ago, in school and in remained with him throughout his life.

I believe that the learning of language, literature and culture will build a better people. I hope that our schools will re-look at the syllabus and build a more considerate and thinking people.

Tan Kin Lian

Thursday, March 26, 2009

Proposal - Financial services safety board

There is discussion in USA about passing legislation to create a financial services safety board. It is similar to my proposal for certain experts to certify financial products to be safe and fair to consumers.,0,23991.story

A sense of fairness

Americans are outraged at the bonuses being paid to the top executives of AIG's financial products. Here are people who took big bets, lost and felt that they should be retained with fat bonuses to clean up the mess. The public felt that this is so unfair.

There was another past incidents were the Americans were outraged. President's Clinton's plane, Air Force One, was delayed in taking off, as the President was having his hair cut. The barber has to complete the job, get off the plane, before it could take off. This caused a delay in the departure of many flights. The public was outraged. They felt that it was inconsiderate of President Clinton to cause so much inconvenience to other people.

Our leaders in the corporate world and in government has to learn to respect the ordinary people, and be considerate to them. They should display a sense of humility and fairness. They cannot act arrogantly and regard the ordinary people as "lesser mortals".

ST Online: Don't break CPF piggy bank, but...

Straits Times

I REFER to the Ministry of Manpower's response last Saturday to readers' calls for earlier Central Provident Fund (CPF) withdrawal.

The response that it is not a good idea as breaking the piggy bank would lead to temptation to draw more and more from the CPF does not address the main point raised by readers.

What they ask for is not to break the piggy bank. But for members who already have funds above the Minimum Sum, why can't the CPF Board release the excess funds to those who are now struggling to live?

Why hold on to excess funds and make them wait till they reach 55, when they and their families are struggling now?

With the pain and stress these individuals and their families are going through, will they even make it to 80?

Tun Ah Heng

MAS consultation paper - sale of unlisted investment products

I suggest that the product issuer should be required to disclose the charges that they are taking away from the investment product for their distribution cost, expenses and profit margin. Under the current regime, this informtion is not required to be disclosed.

The disclosure should be done at two levels:
a) the prospectus should specify the maximum charges that can be taken away from the investment for the various items of expenses.
b) an annual report should be presented to show the accounts of the fund.

Unit trusts have to disclose the charges and to render an annual statement of the fund. These requirements are more important in the case of the unlisted investment products.

I am not sure if this point has been adequately addressed in the new regulatory requirements that is being proposed in the consultation paper. I hope that someone can check this point and inform me.

Buying bonds

Read this article.

CASE forum on MAS consultation paper

CASE will be organising a public forum to gather feedback in response to the latest guidelines put up by the Monetary Authority of Singapore (MAS).

The proposals were formulated based on MAS' review of the sale and marketing of unlisted investment products after the current global financial crisis led to the failure of several structured notes in Singapore. The public is invited to comment on the proposals to strengthen the regulation of the sale and marketing of unlisted financial investment products. CASE will then channel the responses to MAS.

Details for the forum are as follows:

Date: Saturday, 28 March 2009
Time: 10am - 12pm
Venue: NTUC Business Centre, Level 8, Theatre Room 801
1 Marina Boulevard, Singapore 018989

The forum will include a presentation on the paper and a Q & A discussion with a panel. Refreshments will also be provided.

For more information, please refer to the MAS website here and the consultation paper released here.

Interested parties are requested to RSVP to or fax to 6467 9055 by 27 March 2009.

Lim Si Hui Jean (Ms.)

A better way to regulate housing agent

26 March 2009

Forum Page
Straits Times

A better way to regulate housing agent

Senior Minister of State Lim Hwee Hua reported in Parliament that the Government is reviewing ways to strengthen the regulatory framework for housing agents. This is in response to complaints about malpractices by housing agents.

The measures being considered are:
1. raise professional standard of agents
2. quality and training requirements
3. dispute resolution framework
4. enforcement framework

This is similar to the regulatory framework used for the sale of life insurance and investment products. It has failed to deal with the problem of the mis-selling of credit linked notes and other financial products that are bad for consumers.

This approach relies on the principle of the free market - provide information for consumers to make their decision. The crux of the problem - the information is provided by the seller, who makes a bigger profit or commission by mis-informing the consumer. There is a serious conflict of interest.

If this approach is adopted, the regulator has to look after the interest of the consumers, and to take appropriate action against "cheating". Cheating is a crime - and include making an unfair profit by misleading the other party.

In my view, a better alternative is to have a strong regulator to set the rules for the market. An example is the regulation on the sale of medicine and food products. These products are tested to be safe and suitable for consumption. The regulator can carry out the test or engage independent experts to do the work. But the regulator take the responsibility to put the stamp on the product.

I prefer a system where the regulator licenses the agents and sets the professional standards of ethics and conduct. If the agents fail to meet the standard, they should be removed. This is similar to the licensing of doctors, lawyers and other professionals.

The regulator has the option to outsource the actual assessment to a professional or self-regulatory body, but this body should have the "teeth" and backing of the regulator. I wish to say that stronger regulation actually benefits the majority of ethical agents and create a better market for all parties.

I hope that the Government will consider the above suggestions.

Tan Kin Lian

Wednesday, March 25, 2009

Einstein Intelligence Quiz

Can you solve Einstein's Quiz be among the 2% who can do it?

TKL Intelligence Quiz

Try the intelligence quiz at this website. It is based on the famous quiz purportedly created by Albert Einstein. It is free for the initial period. Contests will be organised later, when sponsors are found.

The book is now available at all the airport outlets and major bookstores islandwide, including: Borders, Kino, Harris, Times News Link, MPH, Times, The Commercial Press & selected Popular outlets.

Price: $7.90

Earth Hour on Sat 28 March 8.30 pm

Support this call. Pass the word around.
EARTH HOUR: 28th March, 8.30pm - Sign Up. Switch Off. Make A Difference.

Big increase for motor insurance claims - the reasons

The General Insurance Association, representing the insurance companies, have introduced a Motor Claim Framework in May 2008, with the aim of controlling the inflated claims. It did not work and has, in fact, resulted in more claims being submitted to the insurance companies. Here are the reasons.

1. In the past, insurers encourage private settlements if the damage was small, i.e estimated repair cost less than $1,000. This was so that motorist can continue to enjoy their NCD. Under MCF, all accidents have to be reported to the insurers and claims will as a matter of course, be made. We all know that when insurers are involved, the workshops jack up the repair cost. From a repair of a few hundred dollars, the price is now a few thousand dollars.

2. The assumption is that the appointed workshops help the insurers to control the repair cost. This is not true because they in fact are out to make a good profit from the insurers. They put up high estimates. And some of them bribe motor surveyors to overlook many items which may be overpriced or which repairs/replacements may not be necessary. The trick is to overblow their repair estimates for the appointed surveyor to go through the motion of cutting a few items. This give the appearance that the surveyor has done his job. The going rate, I understand is for workshops to pay $100 per case to surveyors to gloss through the repair estimates. That is why the tender system is still the best to get around this.

3. Workshop owners work with lawyers and educate motorists on their legal rights with respect to personal injury claims. In the past, small injuries or soft tissue injuries may be overlooked. Now workshops refer them to lawyers to claim. I know of a person who was involved in an accident two years ago when a taxi collided into the rear of his car. He and his wife suffered slight pain in the neck. The workshop owner told them to claim for the injury and referred them to a lawyer to assist. That is why personal injury claims (especially for soft tissue injuries) have increased in recent years. I think most of these claims are genuine. In the past, they did not surface because people did not think of seeing a doctor and claiming if the injury was not serious.

Freddy Neo
(Mr. Freddy Neo was previously the general manager for general insurance in NTUC Income. )

Urban Public Transport

Read my views here.

Tuesday, March 24, 2009

NTUC is less pro-society now

Hi Kin Lian,
Are you aware of how NTUC Insurance has evolved since you left?

I entered the industry (as an independent advisor) the same year you left NTUC in 2007. I'm a newbie here. But it does not prevent me from observing (with a sigh), that NTUC, the company you led for a long time, has changed since you left - from an organisation that prides itself for being pro-society to a somewhat changed "organism".

NTUC used to be tolerant towards people whose health are not in "tip-top" conditions. I attribute it to its role of being a pro-society co-operative, putting more emphasis in social goodness rather than profit/loss (that's what the guys there always say). It's a humane organisation.

Of course, ultimately bottomline counts. But now, for unknown reasons, the same organisation is suddenly turning its back on the people it's supposed to serve. So much so that it has tightened its procedures so drastically, resulting in people being rendered uninsurable for slight ailments, ie, not in tip-top conditions. It wants to have a sure-win situation?

That's why I say its a systemic problem. Because if this toughness continues, many Singaporeans, especially the older folks, will be without insurance/ medical coverages. Imagine how huge an issue it can be, in an era of aging population, increasing medical expenses etc. I can't comment whether it's due to a change in management philosophy. But for any person who cares (& I think you might), I would say that this is a Mini-bond in the making. Some time, some how, things will blow up. And it can be quite disasterous.

I suggest that you write to the secretary general of NTUC, Mr. Lim Swee Say. I hope that he will respond to your feedback.

Survey: How will you vote in the General Election (1)?

The hot topic now is the next general election, which may be held in 2009. How will you vote? Give your views in this survey.

Please pass the word around to your friends and invite them to give their views in this survey. I like to have many people to participate, so that the results can be more representative of the population.

Here are the survey results based on 206 replies. The results are quite close to the results based on 149 replies. This shows that the results are not affected by the size of the sample, provided that the initial sample is quite large (say 50 replies)

How Can I Find Affordable Life Insurance For High Risk Individuals?

Read this article.

Tutoring, temp work can pay off

Advice to graduates looking for a full time job during a global recession. Read this article. Go to this portal.

Monday, March 23, 2009

MAS Consultatation paper - simple insurance products


This consultation paper is for regulation on investment products. I suggest that the regulation should make clear that life insurance products that provide only insurance protection (and do not have any saving or investment return) do not require to have any adviser. 

This will allow life insurance products, such as term insurance, accident insurance and medical insurance, can be marketed without the involvement of a financial adviser. This will reduce the cost of distributing the simple insurance products. 

It also avoids the conflict of interest, where unethical advisers may influence the consumer to buy an unsuitable product that pays a bigger commission to the adviser.

Tan Kin Lian

MAS Consultation Paper - Toxic Investment Products

Under the consultation paper, the issuers are required to provide more clearer information about complex financial products. But, the question is, will this approach prevent the sale of toxic products?

The credit linked notes, which were allowed to be sold, were toxic because they carry 5 to 8 times the risk of ordinary bonds. The issuer was able to package these toxic products and offer a low rate of return to the unsuspecting investors.

It will be difficult for the ordinary people to understand the risk of these products. They have to rely on the adviser. If the adviser is not aware of the risk, then the chance of mis-selling is high.

There is already an existing requirement for the issuer to provide relevant information about the product that is registered for sale to the public. If the authority is not willing to enforce this requirement under the existing regulation, will the "better disclosure standard" prevent a similar problem from recurring several years into the future?

A better solution is to have independent experts to certify the risk of the product. This independent experts must be appointed by the approving body and not by the product issuer.
If the independent experts cannot certify the products to be fairly designed and described, the authority should not allowed the product to be sold.

This is similar to the certification of drugs. If the drugs is not tested to be safe and effective, it is not allowed to be sold to the public.

I hope that MAS will consider this point. I shall be submitting this suggestion in reply to the consultation paper.

Survey: Politician Ratings

Who will you vote in the next general election? Survey.
Here are the preliminary survey results, based on 49, 112 and 178 replies. The latest rating has a more balanced distribution by age group.

Disclaimer. The people who participate in this survey do not reflect the population at large. This survey attracts a larger proportion of people who are unhappy with the Government.
It is more important to look at the relative ranking of the politicians in the PAP and the alternative parties.

AUD, NZD on way of recovery

The AUD and NZD dropped by about 30% a few months ago. It stayed at that level for a few months. They are now starting to recover. I saw that NZD had increased 10% during the past week .The AUD has recovered by 5%. Perhaps, the previous drop was too sharp and it is now reaching its fair level. But interest rate in AUD and NZD are now quite modest (compared to the high rates previously).

Sunday, March 22, 2009

Proposal to solve the global crisis

Here is my proposal to solve the global crisis. I hope that the US government will be considering an approach along a similar line. The strategy is to stabilise housing prices at replacement cost, less depreciation.

Buying a new HDB Flat

A Singaporean who worked in China for nearly 10 years. While in China, be bought a private property. He sold it on returning back to Singapore, after completing his contract.

He is barred from buying a new HDB flat due to the following condition. I find this condition to be unfair to him. I advised him to consult his Member of Parliament.

Ownership / Interest in Property
You, your spouse, any occupiers listed in the Application Form or their spouses must not own or dispose any other flat, house, building or land* or have an estate or interest at any time within 30 months before the date of application, or between the date of the application and the date of taking possession of the new flat.

* includes but is not limited to HUDC flats (whether privatized or not), properties acquired by gift, properties inherited as beneficiaries under a will or as a result of the Intestate Succession Act, private properties, commercial properties and industrial properties, as well as properties owned / acquired / disposed through nominees regardless of whether any of these properties are located in Singapore or overseas.

Save money with a basic Medishield plan

Hi Mr. Tan,
I find that the premium for private Shield has become more expensive at the older ages.  My father is 76 years old and my mother is 69 years old. Shall I continue to insure them under Incomeshield M Plans, or switch back to Basic MediShield? If there is a need, we can visit a private hospital and pay out of our savings.

If your parents find the premium for private Shield to be too expensive, it is better to switch back to Basic Medishield. They can go to subsidised wards in Government hospitals, rather than private hospitals. You can switch back to basic Medishield at anytime, even after gae 70.

Read this FAQ.

Fraud alert - insurance claim

Dear Kin Lian,

I like to report to our motor insurer about a suspicious accident with this vehicle on 19 Mar 09; (detail provided). The driver; man aged 50 something.

I notice from my right side mirror, he approached very close towards my right side and appears to deliberately hit my right rear side and bumper.

I got down checking and finding that his vehicle already had a bad pre-existing damage on his front lefts side that supposes to collide with me (it is a deep dent and paintwork scratches) but my car was only slightly scrapped. I confronted him and he drives off after a verbal exchange.

I was suspicious because I have been in front of him all the time and keeping on a straight path within my lane. And also my vehicle slightly damaged but he and his female passenger kept blaming me for cutting into his path.

He probably attempt to induce fraudulent insurance claim for his existing damage. To protect other motorist; any similar accident claim involving this vehicle should be carefully investigated.

I suggest that you lodge a report with the Police. It is their duty to investigate such matters.

Financial planning for newborn

Hi Mr. Tan,
I'm doing some financial/insurance planning for my newborn. I plan to purchase a Vivolife Policy (Sum Assured: $50K), with monthly premium of $86 payable over 10 years. And another term insurance (Sum Assumed: $100K), with monthly premium of $12. Is it recommended to do so?

In addition, to start a saving plan to accumulate his education fund in 20 years time. I would need some advise on which is the better option below;

Option 1: Monthly premium of $100 into Investment-Linked Product or Endowment Plan (PayMyUni under Income) ?
Option 2: Initial sum of $5K for Investment-Linked Product, with yearly top-up of $1K. Btw, which is the product worth investing in?
Option 3: Lump sum of $10K into SAIL (Income Policy), with projected return of $24K in 20 years.

I am not familiar with the Vivolife product, but I understand that it has high charges (to pay commission to the agent) and gives a poor return to the policyholder. You can search my blog for comments from people who are familiar with this product.

Read this FAQ about saving for your child's education.

Worse than being retrenched

Dear Mr. Tan, 
I was forced out by my ex-company(a listed local company) recently, without any form of compensation. I had been there for X years and the reason they gave was that the company has not planned for such exercise and even they do, they do not give it to ‘non-performing’ employee like me. While I did not agree to my ex-supervisor’s appraisal rating on me, I had no choice but to resign on my own or else my company will dismiss me!

Mr. Tan, do u think I have ground to approach MOM for help in seeking some form of remuneration package from my ex-company?

I suggest that you talk to Ministry of Manpower and get their advice. You can also talk to your Member of Parliament. 

Goldman made billions shorting AIG

Read this article.

SCMP:New bank rules should better protect customers

Asymmetric information is not an elegant phrase, but it is a useful economic concept by which to analyse situations that involve conflicts of interest - and whether, and how, they need to be regulated. A salesman who tries to promote a product is asymmetrically disadvantaged because he does not know - and can only guess - the size of your wallet. It is not so with banks, which have privileged access to clients' financial information and have often exploited it to sell risky financial products. The Lehman Brothers minibond fiasco has exposed that danger and become a catalyst for regulatory change. Hopefully, better supervision of banking activities, which will come into force this year, will bring more protection for clients and their financial information.

The banks have fought hard to resist changes, arguing at one point that knowledge of clients' finances enables banks to tailor services to their needs. Leaving aside this obviously self-serving argument, regulators around the world have been having the upper hand as a result of the global financial turmoil - and Hong Kong is no different. Instances of apparent mis-selling of Lehman minibonds have helped generate intense pressure on banks to adopt new regulations.

The new rules require banks to separate traditional banking services, such as deposit-taking and making loans, from retail securities and investment services. One of the most irritating and unfair bank practices in recent years has been allowing counter tellers to look at clients' bank books during ordinary transactions and then promote dodgy investment or insurance products. Under the new rules, they can no longer do so. Furthermore, one bank department cannot share clients' information with another to promote sales without their express consent. Recordings of investment transactions will be made and retained for at least seven years. In cases involving the sale of risky products, a third staff member needs to review the transaction. It is not clear what amounts to high-risk investments these days when the share prices of some US banking and insurance giants are behaving like penny stocks. Even the shares of locally beloved HSBC have plunged to lows most investors found scarcely imaginable.

The new rules will not ban all instances of cross-selling. That would not be desirable, because banks offer mostly legitimate investment products. But they should offer better protection to customers.

Singapore Equity Investments

Dear Mr Tan Kin Lian,

We are a team of independently opinionated Singaporean retail equity investors in Singapore and our website is at We would hope that you will allow our link to be placed on the bottom right corner of your blog with the other external links you have.

About us
Basically, the objective of our blog is to create investment awareness and set Singaporeans to think more about their investments.

We try to be different and state our own opinions instead of relying on what the crowd says or what analysts reports says. We do not recommend stocks, but instead, show data and fact derived from Reuters, SGX website or company financial reports/ announcement and present to our readers and hopefully, they can form their own judgement.

Hope to hear from you =)
Stephen Lim

US Treasuries - the next bubble?

It is not safe to invest in US Treasuries. When inflation returns, this investment will also drop in value. It may be safer to invest in stocks now. Read this article.

Creating jobs in a global crisis

I heard on CNBC TV that the banks are still not lending money. They take a lot of money from the Fed at low interest rate and invest the money in US Treasuries and other safe assets to make the spread. Meanwhile, businesses cannot survive due to lack of credit. More people will lose their jobs. 

There is no point in giving money to the banks or to businesses. They cannot survive, if there is no demand for their products. People are scared to spend, so they have to save their money to prepare for the bad times. The global economy will collapse, if things continue to spiral downwards. Fear will fear on itself.

The same condition will apply in Singapore. It is important for the Government to recognise the failure of the current system, and to implement a new approach. The Government can create many new social services jobs to keep people occupied and do some useful work in the following areas:

a)  Take care of the elderly people
b)  Take care of babies
c)  Provide local transport
d)  Provide tuition

These jobs can be at $6 per hour or at an specified rate (sufficient to balance supply and demand). 70% of the cost can be paid by the Government (subject to a maximum of $600 per month for each worker) and 30% can be paid by the user.

For example, an eldercarer can make a house visit at $30 per visit. Each nurse can make 3 visits a day to earn $90. The government pays $21 per visit (subject to a cap of $600 a  month for each carer). The user pays $9 a visit.  The carer can visit clients near their home, to reduce the travelling cost.

A person can provide local transport for $1.00. The user pays $0.30 with $0,70 paid by the Government. If the operator takes 100 passengers a day to earn $100 a day and incurs expenses of $60, there is a net income of $40.

The Government expenditure will keep people employed at a modest income level, and offer a service to improve the lives of people.  As the income is quite low, there will be a temporary measure. When the economy recovers, these people will find other higher paying jobs and the supply for this service will dininish. If there is still a demand for this service, the Government subsidy can be reduced to achieve a better balance of supply and demand.

I hope that this type of innnovative approach will be adopted in some countries or in Singapore.

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