Saturday, August 11, 2012

Elevated walkway in Calgary, Canada

I like the idea of an elevated walkway that allows people to walk for a long distance without having to cross roads or get up and down the bridges. I saw the walkway in Hong Kong and in Taipei. Here is another example in Calgary, Canada called the Plus-15 system. The feedback from the citizens are mostly positive.

There is no glitter in imported talents

No glitter in ‘imported’ medals
As the public opposition grew,
the pro-government media argued strongly for the players,
and acting Cabinet Minister (for Social and Family Development) Chan Chun Sing
congratulated the table tennis team for “uniting the nation”.
Some observers believe
the public feelings reflected the country’s mood against foreign workers in general,
blaming them for taking away jobs and opportunities.
To me,
it’s too big a number for the People’s Action Party (PAP) government to ignore
given its weakening popularity.

A bridge that divides

The 'bridges' that divide
by Mak Yuen Teen
Having travelled extensively, it struck me
that we may be one of the countries
with the most overhead bridges relative to size and population.
I see these bridges as a metaphor for the divide
between the rich and the poor, the sick and the healthy,
the young and the old, "old" citizens and "new" citizens.

My wife and I returned to Singapore in 1996 with our children, aged three and one,
after living in New Zealand for 15 years. 

CASE should take a more active approach

8 August 2012

Forum Page
Straits Times

I read the the letter from Mr. Lim Biow Chuan, President of the
Consumer Association of Singapore (Tutor breached law: Case, ST 8 Aug 2012) with 
some disappointment.

Mr. Lim said that the tutor, who had falsely advertised his qualification, had 
breached Section 4(b) of the Consumer Protection and Fair Trading Act and asked
consumers to take legal action for the breach. 

In my view, a breach of a written law, is usually an offence that should be prosecuted
by the relevant authority. In this case, the law is administered by the Consumer 
Association, which should be the party to take the appropriate action.

Even if CASE does not have specific responsibility to enforce this law, it should be the 
party to act on behalf of consumers on a matter of public interest and knowledge. CASE 
should not expect ordinary consumers, who do not have financial and legal resources, 
to take legal action on their own. 

There is a potential criminal offence of cheating, when a party
knowingly put up false statements to take money from the unsuspecting public. It 
would be appropriate for CASE to put up a complaint to the Police that this matter 
to be investigated.

In recent years, the standard of business ethics has deteriorated in Singapore due to
weakness in enforcement of the law. It is time to review the situation and revert to a more
active approach.

Tan Kin Lian

Friday, August 10, 2012

Views from a 61 year old

Singapore Flags at Sin Ming HDB estate

 While walking to my office from the bus stop this morning, I observed the HDB flats at Sin Ming Avenue.

About 10% of the flats displayed the flag. All of them appear to be the effort of the individual owners, and not the organized work of the Resident Committees.

This is not bad, considering that I have read in the Internet that there were hardly any flags displayed this year in most parts of Singapore apart from those put up by the Resident Committees.

However, 10 to 20 years ago, the situation was quite different. I remembered that in most places, there were a much higher display of the Singapore flag. It was a matter of pride.

Clearly, the level of commitment to Singapore had declined during the past two decades. While the country had progressed, the people seemed to be have a harder life,with the high cost of living and high cost of flats.

This situation, and the level of unhappiness, have to be addressed.

No claim bonus for Medishield

I will be publishing my views about this suggestion later ...

My observations on a morning walk

Twinkle is my pet dog, a Schnauzer. She is now 12 years old.

During the past year, I have taken her out for a walk several times each week. Initially, I had to use a leash, so that Twinkle will stay close to me, and not run away on a busy road with cars. (She was knocked down twice in past years and had to be nursed to recover).

I have started to take her out without a leash. She has now learned to stay close to me. I had read this tip in a booklet on training dogs, and it worked.

Walking back this morning, I had to cross a busy side road where many cars were driving by. The drivers of two cars on both sides of the road saw me with a dog and stopped to let us cross safely.

They are considerate people, and I want to thank them. Although in a hurry, they do take the time to give way.

The house on the opposite side of my house displayed a Singapore flag to celebrate National Day.  I observed that one in three houses in my neighborhood did put up the flag. I had also put up the flag much earlier, for Singapore - and not for any political affiliation. 

Lee Kuan Yew and National Day 2012

I was relieved and happy to see Mr. Lee Kuan Yew appear at the National Day Parade, and to put to rest the false rumors of his ill health. Like most Singaporeans, I like to wish him good health and a happy retirement from public life.

I will be writing a separate (and longer) post about my personal views on his contribution to Singapore and what I hope to see for the future. 

I will also reflect on the Norwegian joke that caught the ire of many Singaporeans in Facebook.

Be prudent in buying a home

6 August 2012 

Today paper

I agree with the Minister for National Development Mr Khaw Boon Wan
that Singaporeans should be prudent and avoid buying an expensive property
on a long term mortgage loan, such as the 50 year loan that is introduced 
recently by a local bank.

I urge the Minister to review the practice of pricing HDB flats and  
the financing terms offered by the Housing and Development Board and their
partner banks.

Many Singaporeans are paying for their HDB flats on loans that stretch to 
30 years and require the income of both spouses to service the loans. 

Can these working people be sure that both of them can maintain their current jobs 
and earning capacity over a long period?

The mortgage payments may appear to be affordable under the 
low interest rate of 2.6% per annum. The current low interest 
environment cannot continue forever. The mortgage payment will increase by a 
hefty 26% when the interest rate is increased to (say) 4.5%, which is more 
compatible with the prevailing inflation rate.

Recently, the Canadian government took the step to limit mortgage loans to 
25 years to combat the bubble in property prices. I suggest that HDB should 
follow this prudent example, and keep the prices of HDB prices at an 
affordable level, representing not more than four years of the average combined 
family income. 

Tan Kin Lian

Thursday, August 09, 2012

Manage personal risks

What are the tips on managing personal risk?
What are the types of insurances to buy and how to use non-insurance techniques to manage risk?
How can a consumer manage the risk of critical illness without paying the high cost of insurance?
Here are the answer in two pages. Article

A looming food crisis?

Drought in America and the use of bio-fuels may lead to another food crisis. We have to get prepared and monitor the trend.

Conflict of interest

It is quite difficult to manage conflict of interest, especially when the relationship seem to be somewhat distant, e.g. a cousin, and two big organizations are involved which employ many people. Article

How to avoid a costly mistake

A life insurance policy can be a good investment, if it gives a yield of at least 4% per annum in today's climate. This is possible if the policy has low expenses for marketing and administration, and is invested to earn an attractive yield for the long term, in a diversified fund. This type of structure can pay an adequate commission to the agent, and give a modest profit to the insurance company, and still give good value to consumers.

There are too many products that offer a poor deal to consumers, and continue to perpetuate high charges. Consumers should learn how to tell the difference and make the right choice. If more consumers are aware about it, there will be pressure on the insurance companies to design and market the right and fair products.

You can attend the FISCA talk on "Consumer Guide to Life Insurance" on 25 August. Do spend $30 and 3 hours and save yourself a lot of headache in the future. If it is already too late for you, you can tell your children and younger colleagues to attend, so that they can avoid a costly mistake.

Prime Minister's National Day Speech 2012

Starbucks approach to mobile payment

There has been many attempts to introduce mobile payments using smart phones. Here is the approach taken by Starbucks with Square. They use an application that can read a bar code. It seems to be a great idea.

Investing in stocks

Comment posted in my blog 
Martin said...

While I do agree in principle with Mr Tan’s approach to stock investments for average Singaporeans who know little about financial markets, a few practical realities give pause to me in fully supporting SGX and SIAS’s push to increase retail participation.

To start off, there is no universal definition to differentiate investment from speculative activities. The formers sounds learned while the latter concords negative images of a gambling addict. As a result, most participants define their market participation as investments rather than punting. General rules of thumb like the time frame of holdings, the practice of fundamental and/or technical analyses, concentration on “blue chips” (whatever that means) are woefully inadequate to come out with a set of coherent identifiers that separate investments from speculations. Most laymen do not have the required knowledge to make the distinction and may end up speculating in the market heavily all the while thinking they are “investing”.

It is also important to note that SIAS in general does not advocate the sort of consistent, broad based and mechanical approach that Mr Tan is advocating. Most of their activities and materials are focused on market timing, technical analysis, fundamental ratios etc. The underlying educational theme of SIAS is to help investors pick the right stocks at the right time. A relatively small proportion of their time is devoted to ETFs and even when they do, the focus is more on picking the “right” ETF based on analysis on market conditions. This is of course contrary to what Mr Tan is advocating.

Then there is also the SGX’s irreconcilable conflict of interest where their clearing fees depend on trading velocity, i.e. it is in their interest to encourage people to leverage up and trade actively as much as possible as opposed to Mr Tan’s recommendation to make relatively small purchases every few months consistently.

To sum it all up, the general direction of SGX and SIAS to increase awareness and knowledge in the financial markets is a step in the right direction, but its execution is fraught with moral hazards and potential mischief. The whole exercise requires closer supervision by the relevant authorities to keep things in check than what is being practiced now. One only needs to briefly read through postings in a few popular local forums like CNA, HWZ or Valuebuddies to see that a sizable group of laymen neither know the distinction between investments and speculation nor care about the subject.

I want to thank Martin for explaining my views quite clearly and in his own words.

Cyber security and privacy

This is an interesting discussion in America about the balance between cyber security and privacy. One important feature is to allow sharing of information about computer hacking - which should be considered as a crime and the enforcement agencies should have information to combat this threat. I hope that some meaningful outcome can be achieved on this matter. Article

Wednesday, August 08, 2012

Every bank does it

Standard Chartered Bank is being penalized by New York for dealing with Iran. This article said that other banks are doing the same.

Corporate Fraud

Pharmaceutical companies, military contractors, banks and other corporations are on track to pay as much as $8 billion this year to resolve charges of defrauding the government, analysts say — a record sum and more than twice the amount assessed last year by the Justice Department.

Terms of employment for SMRT bus drivers

The SMRT bus drivers have asked to revert to the old terms of service, rather than the adjusted salaries and longer working hours. It is strange that the changes, which was supposed to be improvement to the old terms of service, are now perceived to be less favorable to the workers.

False rumors

A rumor was circulating yesterday that a well known personality in Singapore, who is somewhat respected and generally feared, had passed away. That rumor turned out to be false.

I recall a story told by a Swedish friend. In a speech 20 years ago, he said, "During the dark days of the second world war, Norway was occupied by the German Nazis. Every few days, there was a rumor that the Allies had landed and that Norway would be liberated. It turned out to be another false rumor. After a while, the people became skeptical of these rumors, but felt that it was nice to hear them anyway! "

My Swedish friend gave this speech in response to accolades that were given to him.

Ha, ha!. Happy 47th National Day!

Happy 47th National Day

Tuesday, August 07, 2012

Sale of PCs has stagnated

Skewed maturity value projections

There are new life insurance plans introduced in the market with skewed maturity value projections. These policies appear to provide a fairly reasonable yield on maturity. Consumers should be wary of these plans, as there is a high risk of being disappointed in the future, i.e. the projected values may not materialize. These policies should be avoided. Read

Hong Leong Finance sues Morgan Stanley

It is commendable for Hong Leong Finance to sue Morgan Stanley over the Pinnacle Notes. I understand that Hong Leong Finance had been quite generous in compensating the investors who made losses on the Pinnacle Notes - not fully, but they help to share in the loss. They are now, rightly, recovering the loss from Morgan Stanley.

I commend Hong Leong Finance for taking this approach in looking after the interest of their customers. They set a good example of how a trustworthy institution should behave. I hope that other financial institutions will follow their excellent example.

Minister K Shanmugan talks to bloggers

Minister K Shanmugan is spending time to talk to bloggers. That is a commendable effort, considering that he has to run two ministries, i.e. Law and Foreign Affairs.

Expenses of Committee of Inquiry into SMRT

The total expenses of $10 million is quite high. Read this blog

Investing in the stock market

6 August 2012 

Editor, Forum page
Straits Times

I agree with Mr. George Lim "Wrong to encourage heartlanders to 
play the stock market" (ST 6 August) that heartlanders should not speculate 
in the stock market. However, I wish to point out that there is a difference 
between speculating and investing for the long term.

Research studies have shown that the investing in equities produce a higher 
return, over the long term, compared to investing in bonds or in bank deposits.

The risk of the stock market can be mitigated through diversification, 
investing for the long term (to average out the good and bad years) and 
dollar cost averaging (i.e. investing in small amounts over a long period of time). For
the long term investor, the daily fluctuation in the stock prices does not really matter.

The difficulty of selecting the right stocks can be overcome by investing in an 
indexed fund, such as an exchange traded fund (ETF) that is available through the
Singapore Exchange. However, investors should learn about the different types
of ETF and choose an indexed ETF that has lower risk.

The low interest rate environment in Singapore has forced savers to look for better 
alternatives to provide a modest return. Equities and property trusts should be considered 
as they are likely to give a return that is better than inflation rate over the long term.

I discourage investing in life insurance policies as they do not provide an adequate long term 
rate of return, due to the high charges and do not provide the flexibility in cash flow that may 
be needed. However, it is all right to buy low cost term insurance to provide 
life insurance coverage.

I support the effort taken by the Singapore Exchange and the investor's association to 
educate heartlanders about investing in equities and investments in general.

Tan Kin Lian
Financial Services Consumer Association

Monday, August 06, 2012

Limit mortgages to 25 years

Dear Mr. Tan
Do you think that a tigthening of mortgage rule such that only 25 years maximum is allowed will occur in Singapore? 
In Canada to avoid the housing bubble to expand further, their government has now eliminated the 30 years loan:
James Neo

I agree with the approach taken by the Canadian Government. I hope that the Singapore Government will also set a limit of 25 years for mortgages. This will prevent people form over-paying for their property.

$1.1 billion subsidy for public transport

The Government is setting aside a $1.1 billion subsidy to develop public transport in Singapore. However, our big operator has the funds to expand its business overseas. Why is the subsidy needed then? This is a question raised by this blogger:

Is corruption a part of human nature?

The Law Minister had said that it is part of human nature to be corrupt. This has invited a rebuttal from a blogger.

Developing local talent in sports

It is more important to develop local talents in sports, than to cheat by importing a talent to win Olympic medals.

Sunday, August 05, 2012

AIA Critical Year Policy

Many policyholders were affected by the missed projection under the AIA Critical Year policy. When they bought the policy long ago, they were told by the agent that they could stop paying premium after a certain number of years, called the "critical year". They were given a benefit illustration that showed the calculation. In some cases, the critical year looked "guaranteed" and contractual. In other cases, it was shown as being "projected".  When the policy reached the critical year, they were told that the projection was not valid and they had to continue paying the premium for several more years.

Here is a letter sent by AIA to its policyholders to explain the situation. 

I still get questions from the public asking if they have the right to sue AIA for the missed projection. It depends on the presentation of the benefit illustration at the point of sale.

Here is a statement from MAS Money Sense

Statement for Life Insurance Association

Here is a report of a legal suit taken by an AIA policyholder

This report from CASE indicated that 110,000 people were affected. That is a very large number of people.


I like to quote this example to warn consumers about the benefit illustration that are being issued today. I have seen some new policy plans that showed quite attractive maturity benefits, but a large portion of the projected values are "not guaranteed". Furthermore, the projected values were miserable for most of the duration, and were only adjusted sharply upwards during the last five years. 

I do not know what is the basis for the sharp adjustment in these projected values, and if the insurance company decide not to honor the projection, e.g. by quoting difficult investment conditions, the policyholder will not have any recourse.

It is important for the consumers to be wary about these kind of projections, which do not have any sound basis, other than to show an attractive value at a remote date. If you receive a benefit illustration, take a look at the trend of the projected values. If you find that it increased sharply during the last five years, and are "not guaranteed", you should not believe it its sustainability!

Malaysian Government keeps EPF withdrawal age at 55

A Malaysian can withdraw the entire EPF saving at 55. This will not be changed, even though the retirement age will soon be increased to 60.

Constitutional rights in Malaysia

The Malaysian judiciary is willing to rule against the Government in its exercise of powers.

Appreciation to an old teacher

My teacher in Secondary 1B - Mr. Lim Guan Kin
This is Mr. Lim Guan Kin. He was my form master in Secondary 1B at Raffles Institution in 1962. I met him again after 50 years on the 50th anniversary re-union of the cohort in my school.

Mr. Lim taught English to the class. When he marked the composition of my classmates, he quite frequently use the word "Verbose". I have not seen this word used by another other person. I will always remember him by this word.

"Verbose" means "having too many unnecessary words. I learn from Mr. Lim to write clearly, without being verbose, and that is the hallmark of my writing for the next 50 years.

My appreciation to Mr. Lim Guan Kin.

MyRetirement Policy

Read my analysis of this policy, which is marketed actively by a large local bank. I am quite worried about the feature of this policy, as the yield is poor during most of the duration and is jacked up towards the end, based largely on non-guaranteed bonus which is distributed in an uneven manner. (my analysis is shown as a comment).

The manner of distribution of the bonus is not transparent to the consumer, and may be changed to the disadvantage of the consumer. I may bring up this matter as a complaint to the Monetary Authority of Singapore.

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