Home ownership and renting

Read this article about the merits of home ownership and renting.

Petition - Employ Singaporeans First

Dear Friends,

Do support my petition to "Employ Singaporeans First" -

   http://www.PetitionOnline.com/Employed/petition.html

Due to the recent high influx of foreigners, many of our own  people are been sidelined  by employers. Many new graduates are also  jobless now as they have to compete with  thousands of foreigners for jobs.

Our people are also not protected by any minimum wage policy here and their salaries have being pressed down by cheaper foreigner imports. Employers are kings now as they have a host of choices now whenever they advertise for positions. Many who apply  for jobs are foreigners.

This petition urges all employers in Singapore to consider employing Singaporeans FIRST despite the slightly higher cost and their older age. If not, we will see ourselves being over-run by foreigners in time to come.

If you support this cause, do sign on the peition so that we can rally together and bring hope to those who are jobless and struggling. Do also spread this cause to your friends for active participation! We need to send the right message out to our government!

Singapore for Singaporeans!

Gilbert Goh

Possible security fraud - Toyota and Countrywide

The US firm Kirby McInerney is investigating possible securities fraud cases against Toyota (TM) involving the decline in its common stock price following recalls related to brake problems, and Countrywide (CFC) involving the sale of certain mortgage backed securities (MBS) issued by it.

If you purchased a large amount of stock in Toyota or MBS issued by Countrywide, then you may wish to contact the firm to find out more.  You may email a partner at the firm Daniel Hume, who I have met, at dhume@kmllp.com.


Tan Kin Lian

Dementia (also called senility)

Dementia is a word for a group of symptoms caused by disorders that affect the brain. It is not a specific disease. 

People with dementia may not be able to think well enough to do normal activities, such as getting dressed or eating. They may lose their ability to solve problems or control their emotions. Their personalities may change. They may become agitated or see things that are not there.

Memory loss is a common symptom of dementia. However, memory loss by itself does not mean you have dementia. People with dementia have serious problems with two or more brain functions, such as memory and language.

Many different diseases can cause dementia, including Alzheimer's disease and stroke. Drugs are available to treat some of these diseases. While these drugs cannot cure dementia or repair brain damage, they may improve symptoms or slow down the disease.

Many people say that the best way to prevent dementia is to exercise your mind regularly, with games such as Sudoku or other puzzles. I have written puzzle books, which contain tips on how to solve these puzzles. After you learn the technique, you can go through the puzzles as a form of daily exercise.

You can view free copies of these puzzles here. For our seniors, you should invest time and a few dollar to keep dementia away.

Challenging Sudoku

I have published 2 volumes of my book containing challenging Sudoku puzzles. They are published for the Sudoku experts and have similar level of difficulty as the puzzles published in Weekend Today and in The Sunday Times. I enjoy working on these weekend puzzles - as a test of my mental agility.

I also work on the puzzles in my Sudoku books. If I am alert or lucky, I can complete a puzzle within 5 minutes. Sometimes, I take 10 minutes, if I get stuck. I write down the time taken to solve each puzzle in the book. I am also able to check the solution at the back of the book, although this is usually not necessary.

You can order Challenging Sudoku here. You can develop your own skill in solving difficult puzzles through practice. You can also buy this book as a gift to a friend or a relative who is hooked on Sudoku. The pocket book version (suitable to play in the train, bus and plane) is called Logic9.

Affordable housing

What is "affordable housing"? The minister for national development said in Parliament that new HDB flats are still affordable and has produced studies to prove his point. Critics have brought up arguments from the other side to show that HDB flats are expensive for the working people. I shall be writing to give my views of this point within the next few days.

In the meantime, I invite you to share your comments.

Productivity and related issues

Singapore is now embarking on a strategic thrust to improve productivity and reduce reliance on low cost foreign workers. A few people has asked, "What is productivity? How do we measure it?"

In its simplest form, productivity means to do a given quantity of work in less time, or to do more work in a given time. in both cases while maintaining the same quality of work.

We need to go to the next level and define, "If workers are more productive, should they earn more for their time and how much of the gain should go to the worker?". To answer this question, we have to recognize that the productivity comes from all factors of production - labor, capital, entrepreneurship and property. If the labor content is say 50%, then it is fair that 50% of the productivity gain should go to the workers.

We have to address another social question. If the productivity increases 100% and one worker can do the work previously done by two workers, who will provide the work for the displaced worker? The classic answer is "leave it to the free market". The displaced worker can find other suitable jobs in the market.

But this classic answer has proved to be false. During the past decade, the global economy was able to provide a lot of good paying jobs in the financial services sector, especially in creating "innovative" products. These innovative products are used to create bubbles in real estate, stock market, foreign exchange market and in other forms of financial speculation.  The bubbles have deflated during the past two years, causing massive loss of jobs. While  new bubbles can be created in other markets, history has shown that they will eventually lead to disaster. In the meantime, many countries will find it difficult to create new jobs in the real economy. This is why many economists hold the view that the recession in America will take a long time  to recover.

Here is my perspective. Each person needs only a certain amount of goods and services. The global demand will be limited by the population size and the time available to enjoy the goods that have been produced.  If people are working too hard, they do not have the time to enjoy the products, while unemployed people do not have the income to spend on these products. This is why the disparity of income in the past two decades have brought disaster to the global economy.

The answer to higher productivity is straight forward. With improved productivity, we should reduce the hours of work for each working person so that the total demand and necessary work is shared fairly by all available workers.This could mean a 35 or 30 hour week. The incomes do not need to be equal, but the disparity should not be so wide.

Tan Kin Lian

Buying a life annuity for a parent

Dear Mr Tan,
My father is going 58 and has  only $30,000 in his retirement account. I was thinking of helping him to purchase either the NTUC Income Classic Annuity or the Growth Plan.

Since both plans require a SRS account, I thought of buying a Growth Plan for my Dad using his retirement account to earn a get a greater return, by registering with one of the SRS operators and subsequently use this SRS account of $29K to buy Growth Plan.

Can I do that? I am not sure because I understand that there is a so called minimum sum required in RA and RA cannot be used to buy anything except annuity.

REPLY
The money in the CPF Special Account (or Retirement Account) now earns interest at 4% plus a bonus. The return from the Growth plan is likely to be 3% or less. The agent who made this recommendation is probably giving bad advice, either intentionally or by mistake.

Please ask the agent to give you a benefit illustration for the Growth plan and send it to me at kinlian@gmail.com.

It is better for you to help your father by topping up his CPF Special Account. You will enjoy tax savings on the contribution and allow him to earn a higher rate of return of 4%. When he reach age 62, it is better for your father to buy the CPF Life, instead of a life annuity from an insurance company.

You can read a chapter on life annuity and CPF Life from my book, Practical Guide on Financial Planning, which can be ordered here:

Robert Kennedy on GDP

Robert Kennedy was assassinated in 1968 while running for nomination as the US President. Someone sent to me the following quotation (which I am not able to verify) from him about GNP:

QUOTE
... Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children.

Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.
UNQUOTE

In our drive to increase the GDP of Singapore, we may be making the same mistake mentioned by Robert Kennedy, that we are degrading the quality of life for the people.

Tan Kin Lian

Contact person for Kirby McInerney

Dear Mr. Tan,

Of late, I have received calls from a few investors (who have read your blog about me) that they have been approached by an unknown person  saying that he also represents Kirby McInerney interests and that he could also help to facilitate.  

For all intent and purpose, perhaps you could inform all investors in your blog to direct their queries and address their concerns only to me.  They should not be talking to anyone else in Singapore who may mislead them.   Thank you

Teo Guan Hock

email: tguanhoc@singnet.com.sg 

Earthquakes are now quite frequent

I saw these news reports in Channel News Asia:

a. Taiwan quake causes millions of dollars in damage. A powerful earthquake that rocked southern Taiwan caused millions of dollars in damage to infrastructure and business operations, officials and companies said Friday.

b. Strong earthquake strikes off Indonesia. A 6.5-magnitude quake struck late Friday off the coast of Sumatra in Indonesia, seismologists said, but no tsunami alert was issued and there were no reports of damage or injuries.

We seem to have many earthquakes in recent years - starting form the earthquake that caused the Asian Tsunami in 2005 followed the big earthquakes in Sichuan, Haiti and Chile.

Any comments?

More grads join jobless queues

Read this article by Seah Cheang Nee published in The Star, Malaysia.

Investment tips for retirees

I write this article to help retirees, who are not savvy in investing, to decide on how to invest their savings to get a monthly income for a lifetime and leave behind some balance for their children and grand children. Should they buy a life annuity? If not, how should they invest their money?

Calculate the total amount of your assets, excluding the flat or house that you now live in. Estimate the monthly income that you need to live comfortably. If your total assets is more than 300 times of your monthly income, you are quite comfortable. For example, if you need $1,000 a month, you need more than $300,000 in savings (i.e. personal savings and CPF).

Another way to look at this matter is to take your total assets and divide by 300 to get the monthly income. Will this be sufficient to meet your living expenses?

If you have more than this ratio of assets that can be invested, you can manage your own investments. The best choice is to invest in a low cost investment fund, such as the STI exchange traded fund that is available from the Singapore Exchange (SGX). This fund is invested in the top 30 shares listed in SGX. It is well diversified and has a low expense ratio of less than 0.5% per annum.  It will earn a market rate of return, which is likely to average more than 5% over the long term, net of expenses.

If you invest all of your savings in the ETF, you can sell 1,000 shares to realize money to spend at regular intervals. If you need $1,500 a month, the sale of 1,000 shares will provide about $2,800 which can last nearly two months.

If your  ratio of assets to monthly income is less than 300 times, you may have to consider investing in a life annuity. The best annuity is provided by CPF Life. It provides an investment yield of about 4% and has low expense ratio. It operates on a mutual basis and shares the actual experience of the fund fairly among all the annuitants, i.e. it is not taken away as profits for shareholders.

Some people are uncertain about the choice of the four options. Look at the amount that you will get under each option and choose the option that suits your need. Do not try to calculate which option gives you the best value, as you really do not know how long your future lifespan is.

If your health is poor, relative to your age, you should avoid CPF Life and keep your money under the Retirement Account to be withdrawn monthly.  If you are in fairly good health for your age,  you can choose any of the option under CPF Life and leave the worry about future life expectancy and investments to CPF, instead of trying to manage the money yourself.

If you have to buy a life annuity from an insurance company, you have to consider the following - how much of the annuity payout is guaranteed and how much is variable? What is the amount taken away by the insurance company to pay its expenses, distribution cost and profit for shareholders?  If the answers to these questions are vague, or if the amount that is taken away is more than 0.2% per annum of your invested sum,  the annuity is likely to give poor value.

There is a chapter on selecting a life annuity in my book, Practical Guide on Financial Planning. It is available in the major bookstores and can be ordered online here.

Tan Kin Lian

China must reverse inequalities

By Michael Bristow

BBC News, Beijing


Chinese Premier Wen Jiabao has said China must reverse its widening income gap between rich and poor.
He said benefits of a growing economy - expected to expand by 8% this year - should be distributed more fairly.
In a major speech at the start of China's annual parliamentary session, the premier also said the economy needed restructuring.
He wants Chinese firms to improve their ability to innovate, producing high-tech and high-quality products.

The premier's comments came in a wide-ranging speech delivered in Beijing's Great Hall of the People, where the largely ceremonial parliamentary session is being held.
In the keynote speech, Mr Wen reviewed the government's work over the past 12 months and set out its policy goals for the coming year.


Registration reform
The speech touched on many issues, but on a number of occasions the premier spoke about the need to make China a fairer society.
"We will not only make the 'pie' of social wealth bigger by developing the economy, but also distribute it well," Mr Wen told about 3,000 delegates, returning to a theme that he has often spoken about during his premiership.
"[We will] resolutely reverse the widening income gap," he added later, in a speech that lasted more than two hours.
As part of that project, the premier said China would reform the household registration system that classifies people as either city or rural dwellers.
This controversial system means many migrant workers - farmers who travel to towns and cities to find better-paid work - are unable to get proper services.
"[We will] gradually ensure that they receive the same treatment as urban residents in areas such as pay, children's education, healthcare, housing and social security," he said.
But Mr Wen did not outline what policies would be introduced to achieve that aim, and when they would come into force.
And, importantly, he said reforms would only be carried out in towns and smaller cities, suggesting the system would remain in place in big urban centres such as Beijing and Shanghai.
Mr Wen also addressed what he called a "complex situation" facing the economy, which he said should expand by 8% this year.


Fuelled by innovation
Last year China was desperate to keep the economy growing following a global downturn that left many Chinese people without jobs.
But now, having weathered the worst of that crisis, Premier Wen said China needed to concentrate on restructuring the economy.
"This is a crucial year for…accelerating the transformation of the pattern of economic development," he said.
He wants future growth to be fuelled by innovation.
China should also expand consumer demand by getting people to spend on such things as tourism, fitness and other services.
Delegates to the Chinese parliament are selected, not elected, but in his speech Premier Wen indicated that he does listen to those outside the government.
Many people across China are currently concerned about rising house prices that mean many cannot afford a home.Mr Wen said China would do something about it.

eGovernment adds to stress and cost

As a director of a small company, I am required to submit application forms for Ministry of Manpower, Inland Revenue and other agencies. They expect me to log into their website using my Sing Pass, and to enter the details in the application form.

In the real world, the paper forms are completed by an office staff and submitted to a director for signature. In the e-Government, they expect the director to complete the form by entering all the details, just like an office staff. This is a big waste of time for the director and is likely to lead to many mistakes.

The e-Government environment should follow the real world and allow a staff to complete the details in the form and then submit it electronically to a director to "e-sign" the form, which can be done by entering the Sing Pass ID and password.

I have given this suggestion to the Infocomm Development Authority (IDA) but was told that these specific applications are under the control of the agency and is outside of the influence of IDA. This is typical of the "turf" mentality of Singapore organisations.

I know that for some applications, it is possible for the director to authorise a staff to submit the forms on behalf of the director. However, this is not practical in many situations and is tentamount to giving the check book and check signing authority to the staff!

The private sector has to work under stress and waste a lot of valuable time complying with the requirements of government agencies. With this type of waste, it is no wonder that the cost of doing business is so high and life is so stressful in Singapore!

Tan Kin Lian

Books by Tan Kin Lian

My books on financial planning and intelligence quiz are sold at the following bookstores:

1. Harris

2. MPH

3. Kinokuniya 

4. Times bookstores

5. Popular

They can also be ordered from my internet shop.

Wasteful security measures

To visit an office in Suntec City, I had to register with the security counter to get an access card and to fill in my particulars. On leaving the building, I had to return the access card. Both activity took me an additional 20 minutes, including time waiting in the long queue.  I had to carry two bags containing materials for my talk, so the security measures and waiting time is a big hassle. Nobody bother to look at the contents of my bag - to see if I was carrying a bomb.

Security is important, but are we overdoing it? Is there more effective ways to have security instead of asking visitors to spend a lot of time unnecessarily? All these hassles add to wasted time and higher cost of doing business. If there is a terrorist visiting any large office in Singapore, it is easy to bypass the security measures as the security guards are too busy doing paperwork and recording particulars of genuine visitors.

To be effective, it is better to employ more security guards (i.e. create more employment) to watch the strategic locations, such as lift lobbies or lift cars, and to watch people moving around the office. Security is watching people and not doing paperwork.

You can multiply the wasted time in all of the big office buildings in Singapore to get an idea of the scale of wastefulness. Anyway, Singapore is a wasteful society. We spend a lot of time and money on things that are look good but are not effective.

To be productive, we should be adopting practical measures that reduce our cost and achieve our goals. We have to cut down wastefulness.

Tan Kin Lian

High cost of driving

I went to Suntec City to deliver a talk. I had to drive there, as I had to carry the materials needed for the talk. I left home at 7.45 a.m. hoping to avoid the ERP charges at Central Expressway. I did not realise that the ERP charges start from 7.30 a.m. I paid a total of $6 for the ERP charges along the expressway and to enter the Central Business District. Parking at Suntec city for slightly longer than 4 hours cost $11. This reminded me of the high cost of driving in Singapore.

Promoting Singapore as a Financial Center

Dear Mr. Tan

From 2005, the MAS has been aggressive in promoting Singapore as a financial centre. Singapore gave tax incentives of all sorts to attract financial institutions to relocate their biz to Singapore.

Many banks relocate their FX, fixed income, structured products biz to Singapore. Also, Singapore has attracted many hedge funds to set up offices here. While the effort did boost Singapore's GDP, it might have also led to the following:
i. inflated real estate prices in commercial offices, residental
ii. more structured products being structured and sold here to unsuspecting retail customers.


HCM

Unemployment in Singapore

Hi Mr Tan,
I am a keen reader of your blog and I remember previously you were keeping track of employment and retrenchment statistics.

Just want to highlight that MOM recently updated their stats, and also included a new one: Re-Employment i.e. what percentage of retrenched workers were able to find another job within 6 months.

The numbers are not as nice as reported in the news:
1. For 2009, the overall unemployment rate is 3% while the unemployment rate for residents (incl. PRs) is 4.3%. This is higher than in 2001 and just slightly lower than for year 2002. If just looking just at citizens, the unemployment rate may be 5% or higher.

2. The total workers retrenched in 2009 is 19,500. This is similar to year 2002. If combined with 2008, the total number retrenched is 33,420. This is higher than in 1998.

3. Looking at the Re-Employment stats, the percentage of retrenched workers in 2009 who found another job within 6 months is only about 50% or less. This is worse than during the last long recession from 2001 to 2003.

Below is URL for MOM's main statistics page:
ttp://www.mom.gov.sg/publish/momportal/en/communities/others/mrsd/statistics.html

Ex-Con

Shape Quiz for a class

I gave the Shape Quiz Minipak to a business associate for his daughter. He likes it so much (or maybe his daughter likes it) that he decided to buy 40 paks to give to all of her classmates in a primary school.  Order here.

Free Gift - Shape Quiz Minipak ($2)

This is valid from 2 March 2010 until further notice. When you buy the Intelligence Quiz Vol 3 ($7.90) or the Practical Guide on Financial Planning ($12) from Internet Shop, you will get the Shape Quiz Mini-pak (usual price: $2) free.

Order here.

New Asia Republic

I introduce you to a new website, New Asia Republic. Visit it. There is a link on the right panel. I have written an article on taxation here.

Puzzleman

REVISED LINK:

Here are some interesting puzzles for you and your family. Download the PDF and print it out. You can do the puzzles in your free time. You can also pass them to your family members and friends. They can test their problem solving skills.

Many people were surprised that it was possible to make 100 shapes from the 4 plastic pieces. Many of the shapes are challenging and could not be done easily. When they learned the solution, there were surprised that it was simple and ingenuous. They also learn to have a flexible mind and see "out of the box". The Shape Quiz book is available at $6 and the mini-pak at $2. Each comes with 4 plastic pieces in a zip lock bag.

Click here

Increasing productivity in Singapore

There is now a strategic thrust to improve productivity in Singapore, to become less dependent on low cost foreign workers.  Some people are sceptical. They say that this slogan is nice to say, but difficult to achieve. In some respect, they are right. The productivity campaign was first launched in Singapore three decades ago. Why has it not made much progress during this time?

I want to give a honest view, although some people may not like to hear it. We have a culture in Singapore of saying nice things, but not addressing the root of the problem. This is why we were not able to improve the birth rate, in spite of top level priority and massive effort expended for more than two decades. Improving productivity is another challenge that has not been overcome.

What is the root of the problem? We tend to take a theoretically approach towards solving our problems. We can say nice things and adopt strategies crafted by consultants, who do not really know the problem. Their solutions come from the text books, but are not practical. Some people say that this is the price to pay for letting scholars run the country.

We need to look at the root of the problem, before we can understand and find lasting solution. To improve productivity, we have to overcome the risk adverse mindset of Singaporeans.

Many people feel safe in keeping the status quo and are quite good in identifying reasons to keep the status quo. They will not make a change, unless the decision is made by someone at the top. Singaporeans are generally good at identify problems, including imaginary problems, rather than implementing change and improvements .

Singapore is also a wasteful society. We spend a lot of money on technology and management consultants, instead of implementing simple and practical improvements. Many people do not want to take the responsibility, so they pass the buck to the consultants, who take the big fees and also do not find any solution.

Can this mindset be changed? Yes, it can. The best way is to require a change to be done and to give a small budget for the change. You will be surprised how resourceful people can be, if they have limited budget and the responsible to solve the problem. i.e. no excuse accepted.

Tan Kin Lian

Financial planning - reaching out to young people

Hi Mr. Tan,
I have your book "Practical Guide on Financial Planning". I find the stories and experiences of other people to be most beneficial. Because of my past experience e.g. Minibond, insurance, capital gurranteed products, I am able to appreciate your opinions and suggestions.

If I were an undergrad or secondary student, I would not be interested to read. This is a problem as financial education should not be learned from trial and error of a new worker. It should be taught in schools before they start drawing their first cheque.

Banks and FIs will continue to attract, promote, market products based on margin, profit or commission. The new workers continue to be bombard with the theme "credit is good for you" while "live within your means" is ignored by most people.

REPLY
I find that many undergraduates are also interested in financial planning. When I talk to them, they also find my views to be useful. They realised the importance of knowing what are good products to buy and bad products to avoid. I intend to hold many talks for young people so that they can benefit from my suggestions as well.

AIA and Prudential

Dear Mr. Tan
Does the purchase of AIA by Prudential result in less choice for consumers?

REPLY
Most insurance companies offer different products which are difficult for consumers to compare. Nearly all of them have charges and give a poor return to consumers. The reduction in yield is about 3% in most cases. This could reduce the payout on maturity by more than 40%. If your premium can accumulate to $500,000 over the next 30 years, the insurance policy pays you only $300,000 - with 40% being taken away.

Consumers have a choice to invest in a low cost investment fund, such as the STI ETF available on the SGX. It offers diversification and an attractive return over the long term (by averaging out the good and bad years of the market). They can buy term insurance, decreasing term insurance or personal accident insurance to cover the risk of premature death.

This is explained in my book, Practical Guide on Financial Planning ($12). It is available in most bookstores or can be purchased from my Internet Shop. It comes with a free Shape Quiz minipack (worth $2).

Work near your home

There are many advantages of working near your home. You reduce the travelling cost, which can be quite expensive. You reduce the travelling time and have more time to spend with your family and neighbors and have a community life.

We have to changes our recruitment practices to make this possible. We should make it easier for people to search for a job near their homes. Advertisements for jobs should state their location of their workplaces. HR managers should give preference to people who live near the place of work. It is an advantage to the business as well, as these workers are likely to stay longer with the employer.

For most jobs, it should be possible to find a suitable candidate who lives near the place of work. We only need to improve our ability to search for these workers, or for the workers to search for these jobs.

Businesses should also be encouraged to set up their workplaces near the residential estates. This will allow them to tap into a pool of suitable workers in that estate.

Reducing commuting and traffic congestion will also promote a green environment.

Tan Kin Lian

Home ownership

There is a general belief that owners will take care of their home better than tenants. This was the reasons given to promote home ownership.

This may be true to some extent. But, it should not be exaggerated. The care that is given to the home and environment depends not so much on ownership, but on the behavior of the person. A higher income person is likely to take care of the home better than a person struggling to make a living at a low income.

Most people in Switzerland rent, rather than own their homes. I believe that they do take care of the property as well as home owners. This is just a belief, as I do not have the chance to verify it.

The poor people who lives in slums in some countries cannot afford to take care of their own living, so they are not likely to take care of their homes either.

I believe that it is better to treat home owners and renters equally, rather than to promote home ownership on a wrong belief that it leads to a better society. If more people rent their homes, they will be able to move closer to their place of work and reduce the travelling time and expense. This will reduce traffic congestion and improve quality of life.

Some people will argue that it is not possible for everyone to live near their place of work. I agree. We only need to have (say) 30% to live near their place of work to reduce traffic congestion by 30% - which is a lot.

The next step is to abolish the stamp duty and legal fees for selling a home. This will reduce a financial obstacle and encourage some home owners to move closer to their place of work.

Tan Kin Lian

Integrity and honesty

Integrity is being honest. Some companies claim to serve customers, but they will find ways to make profits by overcharging customers or give them a poor deal.

It is acceptable for a company to make profit, but it has to be done in an honest and fair way. In the past, the standard of ethics and integrity was quite high. A trusted company would not destroy its reputation by telling lies or deceiving its customers.

In recent years, the standard of ethics had dropped significantly in the quest for profits or other commercial goals. This is what "being different" is now like.

Tan Kin Lian

Hassle to write many cheques

I bought a commercial property to be used as my office. The property is under development. I have to write two cheuqes for each progress payment. one cheque for the developer and another cheque for GST.

To make matters worse, the lawyer for the developer wanted the cheques to be made out in full, to "The Hongkong and Shanghai Banking Corporation account no XXX-YYYY-YYY for ABC Company Ltd". There is no space in the cheque to write this long name and the amount in words. It is so easy to make a mistake.

If I make a mistake, which is quite likely to happen, you can be sure that the bank will return the cheque and ask for a new cheque to be written. This will take time and hassle and give the bank, lawyers and the developers the opportuntity to charge a hefty interest on late payment and other charges for the mistake.

Why should our bankers and lawyers make life so difficult for consumers? Are they trying to find the excuse to levy more charges?

Why should the GST be written in a separate cheque? This is one more reason why I strongly dislike GST, as it is creating a lot of unnecessary work and burden.


Tan Kin Lian

Bonus on participating policyholders

During the past two years, many insurance companies had cut their bonus due to the global financial crisis. Although the investment markets had largely recoverd, these companies had still not restored their bonus. This has badly affected the policyholders whose policies had matured recently. They received payouts that are far less than what was originally projected, and less than what had actually been earned on their premiums.

I hope that the regulator (MAS) will look into this matter and ensure that policyholders of matured policies receive a fair payout, that reflect the investment return that has been earned on their premiums over the past years. The payout should not be reduced by the surplus that is retained in the insurance fund to fund the marketing expenses of the insurance companies, made at the expense of the maturing policyholders.

Tan Kin Lian

Prudential buys over AIA

Someone asked for my views about the impact to consumers, after Prudential buys over AIA. The policyholders should not be affected by the change of ownership. Their money is kept in a separate insurance fund. It does not matter who the owner is.

However, the change of management may affect the philosophy in the distribution of bonus. The new management may be more generous or less generous in distributing bonus to policyholders out of the surplus in the insurance fund, compared to the previous owners.

Tan Kin Lian

Hefty bank charges

Vincent Chan wrote to the Straits Times to complain about a hefty charge of $12 to pay for a budget air ticket of $50, using his credit card. I paid a bank charge of $75 to transfer $2,500 to a factory in China. My bank told me that if I pay late on my credit card, there is a fee of $50 in addition to the interest of 2% per month on the rollover.

It seems that the banks have gone overboard in levying exorbitant charges for essential banking services. The authority (MAS) sits on the side and allow them to charge what they like. The banks are able to make billions of dollars of profits from the interest spread and hefty charges. Are bank customers being fleeced?

Tan Kin Lian

Different functions of Government

REX has written about the macro and micro functions of politicians. They have to see the big picture and make macro policies. They have to attend to the nitty gritty of listening to their constituents. It is difficult to find people who have both skills.

In the USA, the elected members of Congress listen to their constituents and debate policies in Congress. Their primary role is to represent the people.

The heads of the different departments in Government (i.e. like our ministers) are appointed by the President, usually with the approval of Congress. They can be selected from anywhere in the country, i.e. from the business sector, academia, the people sector or from elected politicians. If they are appointed from elected politicians, they have to resign their elected seat to be in the Executive Branch of Government. Their seat is taken over by another person who can discharge the role of representing the people.

In UK, the ministers rely on the senior civil servants to administer the policies decided by the Government. They do not manage the administration. They remain largely policy making.

Singapore has a unique system where the Ministers play all three roles. They are over-stretched and do not have sufficient time and attention to discharge these roles properly. This is my humble view.

I prefer the system in USA followed by UK .

Tan Kin Lian

Missing the boat

Some people are worried that they have missed the boat and that property prices will continue to go higher.

They should not worry. Inflated prices will come down. Look at what has happened in Japan, USA and Europe. They went through their property bubbles and prices have dropped. It will remain low for one or two decades.

Singapore is not exempt from these forces. If prices are inflated and at unsustainable level, they will surely fall. In the meantime, be calm. Rent a flat or house. Wait for the prices to fall.

Tan Kin Lian

Train your mind

These puzzles will help to train your mind. It is fun, challenging and beneficial for children, adults and seniors. It helps you to develop a flexible mind and think "out of the box". This skill is important for Singaporeans, who tend to have a rigid mind and are fearful of trying something different. The puzzles are free and can be downloaded here.

If you are interested to have more puzzles, you can buy the books here. Share the books with members of your family. Invest a few dollars and help your family members to be innovative, creative and flexible. The books contain tips on how to solve the puzzles. Buy them as gifts for your children and grand children.

Survey: Elected Member of Parliament

I have now updated the report based on 92 replies here. The dislike for the current government is overwhelming. but this may be exaggerated due to the potentially biased sample. You can also read the detailed comments submitted by over 20 respondents.

Traffic after the Lunar New Year holidays

On the first few days after the Lunar New Year, the \re was reduced traffic on the roads as most workplaces were still closed. It was wonderful to drive along the roads, without the excessive congestion. How nice life would have been in Singapore, without the crowds and congestions. It was also easy to find a parking space.

Can Singapore afford to have the same roads and parking spaces, if it has a smaller population? The answer is "yes". There are many suburbs around big cities where there are ample roads and parking spaces. It is possible for a community to afford a higher ratio of roads and parking spaces and still be viable.

Businesses in Singapore are allowed to squeeze customers for the last ounce of profits. They pursue profit maximization without regard to other factors, such as the quality of service. This is the reason for the high cost of living and the poor quality of life in Singapore. This is why the MRT trains are crowded and fully packed, even late at night.

We need better regulation to ensure that businesses provide a standard of service that provides comfort and a better quality of life of the customers. They can still be allowed to make a reasonable profit after meeting these standards.

By allowing many foreigners to live and work in Singapore without expanding our public infrastructure and  facilities, the Government is also pursuing a similar goal of using our resources to the limit, and creating a poorer quality of life for the people. This type of bad policy should be avoided.

Tan Kin Lian

Staff quarters

A person needs a home to live in. The cost of the home should represent a fair proportion of the earnings. It should not take an excessive proportion. If you are buying a home that will last for a lifetime, you can set aside 25% of your earnings for the house. If you are renting, you should set aside 15% of the earnings.

In the olden days, a government employee (or servant) is provided with residence (also know as "staff quarters") by the government. While the government employee earns a lower salary compared to a private sector employee, the government employee does not have to worry about paying for the home. There is another advantage - the staff quarters are usually located near the place of work.

Government employees that earned a higher salary was able to afford a house in a private estate. In the old days, the price of houses were affordable and bear a reasonable proportion to the average earnings.

This situation changed during the past 25 years, when prices of houses were allowed to appreciate excessively. Initially, people thought that they were getting wealthier. Later, they realize that they were paying too much for a home and have to slog for a lifetime to pay the inflated prices. Most of the wealth went to the land owners, of which the state is the biggest.

Unfortunately, the high price of land and housing is now being used to "enslave" people to work hard for a lifetime.

Tan Kin Lian