Are Singaporeans less hard working and hard driving?

Here is an interview given by Mr. Lee Kuan Yew to the National Geographic magazine:
http://ngm.nationalgeographic.com/2010/01/singapore/jacobson-text/3

Quote:
Over time, the MM says, Singaporeans have become "less hard-driving and hard-striving." This is why it is a good thing, the MM says, that the nation has welcomed so many Chinese immigrants (25 percent of the population is now foreign-born). He is aware that many Singaporeans are unhappy with the influx of immigrants, especially those educated newcomers prepared to fight for higher paying jobs. But taking a typically Darwinian stance, the MM describes the country's new subjects as "hungry," with parents who "pushed the children very hard." If native Singaporeans are falling behind because "the spurs are not stuck into the hide," that is their problem.
Unquote:

I find this remark to be quite unfair to Singaporeans. Already, they have to study very hard in schools, such that many children do not have time to play and enjoy their childhood. The male citizens have also to serve National Service. I read that many immigrants are not willing to become Singapoore citizens if they are required to serve National Service.

In spite of these efforts, Mr. Lee said that the Singaporeans have become "less hard-driving and hard-striving".

Confidentiality agreements

We read many inside stories about confidential decisions taken by large corporations which were leaked to the media. These information were leaked out by their employees who were covered by confidentiality agreements. The employees talked to the journalists and asked for their names to be not published.

Many investors in Singapore are required to sign confidentiality agreement by the financial institution and by FIDREC. They dare not even discuss the matter with people that they need to seek advice. I find that these investors  are rather naive about their legal rights and how to respond to such legal matters.

Compare their behavior with the American employees who are willing to give information to the media that were supposed to be covered by confidentiality agreements, on the understanding that their names will not be quoted and that the information cannot be traced to the source.

Did the investment banks benefited at the expense of their clients?

Read this report.

Old and new citizens

A reader wrote to the Straits Times to suggest that "old" citizens and "new" citizens should be treated differently for priority allocation into the choice schools. A new citizen wrote today to state that this would be unfair and is bad for Singapore.

For the past 20 years, I have strongly disliked the practice of our Government leaders and top civil servants in writing complicated rules to differentiate between different classes of people - graduates and non-graduates,  different allocation to benefits according to the type of house that you live in, different eligibility to tax relief according to the birth order of your child or the year of birth, different level of health care subsidy according to the type of house you live in and income, complicated rules to determine eligibility for welfare payments, and so on.

If you are caught on the wrong side of the rule, bad luck to you. And the people who write the rules will know how to be on the right side of these rules. It is unfair, but this is Singapore. We are used to this type of environment.

I wish Singapore to be fairer and simpler. We should make high income earners pay more tax, and after that, apply the same level of benefits to all citizens, regardless of income level or housing type. There is no need for complicated rules.

We should pay an adequate allowance, almost like a full time salary, to our National Servicemen. After that, there is no need to have complicated rules to give them slightly more in entitlement to Government benefits.

Tan Kin Lian

Will Goldman Sachs sue Thomas Adams?

Read this story.

I am surprised that Thomas Adams and the New York Times is bold to write the article in this direct manner. They are protected by a vigorous culture of tranparency and accountability that is available under the American system.

Singapore is far behind in this aspect. It is so easy for for big businesses and powerful people to sue individuals in Singapore and intimidate them into silence. It is unfair and undesirable, but this is the Singapore system. I hope that this situation will be corrected.  

Merry Christmas and Best Wishes for 2010

To the visitors of my blog, all the best for 2010

Tan Kin Lian

Playing with fire

An elderly bank officer told me. He spent a few years as a wealth manager of a bank. He knew the risks of the financial products and were careful in explaining the risks to his clients.

These same products were given to young bank officers to sell to their clients. The young officers did not understand the products but they were bold in recommending them to their clients. They were driven by the commission that comes with the sales and were keen to meet the sales targets.

Why are these young people allowed to play with fire? We need a better way of regulating the sale of financial products. Surely, risky and complex products cannot be allowed to be sold by inexperienced people?

Imagine someone who takes a 3 week course in medicine who is then allowed to prescribe drugs!

Churning the CPF savings

There is a report about financial advisers advising low income families to wthdraw their CPF savings for investment in unit trusts. The financial advisers earn up to 3% on the front end charges and give a rebate to the CPF member. By churning these investments many times, the CPF member is able to withdraw a fairly significant  amount of savings. The problem is - for every $1 that is withdrawn, the CPF member is likely to lose $3 (my guess) of savings.

The CPF tries to bar the errant financial advisers from being involved in the future. This is similar to telling a thief that if he is caught, he will be barred from stealing in the future. I hope that our Government will make this type of activity into a crime that can send the culprits to jail.

We have a law on Financial Advice, which is administered by the Monetary Authority of Singapore. Surely, this law requires the licensed advisers to operate ethically and avoid dishonest transactions, such as illegal withdrawals of CPF savings? If this is the case, the MAS should investigate and take action under this law. We cannot have people who are licenced to abuse their privileges.

Tan Kin Lian

Rechargeable torchlight and shape quiz

You can get them from the following shop in Sim Lim Tower:

Torchlight: $8, Shape Quiz: $2

Skylimit Int Enterprise Ptd Ltd

10 Jalan Besar

#B1-21 Sim Lim Tower
Singapore 208787
Telephone: 62929155 / 62935766
Emal: info@skylimitie.com

Vera and Nadya

My grand daughter Vera is now 3 years old. Her sister, Nadya, is 1 year old. They had a birthday party recently. Visit this blog.

Here is a video of their visit to my home.

Helping the poor

We need a better way to help the poor in Singapore, rather than the bureaucratic, "many helping hands" approach.

Ask about the charges

I am the trustee for a trust fund set up to provide income for a non-profit organisation. The trustees held a meeting with the investment adviser to discuss the investment policy of the fund. The investment adviser made some recommendations on the asset allocation of the trust fund, and in particular, how to invest the cash portion that has grown to a significant proportion.

After discussion, the trustees accepted the recommendation. I finally asked the investment adviser, "how much do you earn as commission through executing the transactions that you have recommended?"

The client service manager was taken aback by this unexpected question, but she quickly recovered and replied, "It is in accordance with what has been told and approved by the trustees previously and that is ....% for shares and ....% for bonds".

Lesson: Never be shy to ask this important question. Do not assume that you know. Even if knew, it s good to get the facts reconfirmed.

--
Tan Kin Lian
www.tankinlian.blogspot.com

Get full facts about the financial product

You should get full facts about the financial product before you invest in it. If there are any points that are unclear, you should ask the product seller. If you still do not understand the product, do not invest in it.

Always ask for the relevant facts to be put in writing. Do not take the verbal representations given by the seller. The seller may mislead you and later claimed that you had misunderstood the representations.

Always refer to the printed materials. If any important point is not covered in the printed materials, or is not explained in a transparent manner, you should be suspicious about the financial product. Most importantly, you should ask about the charges and commission earned by the product seller.

In the past, you could trust financial products to be transparent and fair as they were properly regulated. The standard of regulation and consumer protection has deteriorated in recent years, so you have to be careful and to do your own due diligence. 

If you are not clear about the financial product, DO NOT INVEST IN IT. Do not ask somebody else (e.g. TKL) to explain the product to you. 

--
Tan Kin Lian
www.tankinlian.blogspot.com

The Fed's regulatory errors

What were the mistakes made by the Fed in regulating the banks? Are there lessons for other central banks?

Observations about Hong Kong

Here are some observations about Hong Kong and lessons for Singapore.

Stress at FIDREC hearngs

Dear Mr Tan,

Thanks for your kind assistance and I managed to get back some compensation from the FI finally.

Nevertheless, for most of the victims like myself who had gone thru the hearings, we have to transfer our "Bonds" to the FIs and not entitled to anymore residual value. I questioned the fairness of this system, as the residual value may end up be higher than the compensation ? (so far I know all compensations are below 50%) We are not given any other options. If we do not accept the award, we have to engaged our own lawyer to fight with the giants. Many want to end this nightmare after more than a year and are forced to accept this "compensation".

Unlike HK, FIs will still refund the victims and not gain anything if the residual values are higher than the 60%-70% that had already been compensated.

In addition, I understand many cases are still pending at Fidrec, due to disputes between the IFAs & FIs. The MAS/ Fidrec has yet to settle whom should be liable for this saga, and the victims have to decide by themselves whom they want to go against .... again, is this FAIR ? If one choose to go against 2 parties, they were told to pay 2 times and have to go through 2 hearings (that means 2 times the stress!) Furthermore, Minibonds have to wait till the residual values are confirmed before able to proceed hearings with IFAs and FIs. Currently, only those bought directly with the Banks are allowed to proceed with the hearings. (Not sure why ?)

Recently, Fidrec has tried to conduct mediation with some IFAs, these are all wasting of time, as results is "we are only introducers". Yet, many are forced to attend, else, may not be able to proceed with the hearings.

I wonder why we victims have to shoulder all these stress ? We are just laymen and do not know what are the hidden "agreements" between these business partners. After more than a year, MAS/ Fidrec has to be firmed with the directions and make clear whom should we go after, rather than leave everything to the victims.

I really feel sad for the whole financial system here in Singapore .............. how to become a Financial Hub with this kind of unfair system in place ?

Many Pinnacle Notes are going bust soon ... would advice other victims to be strong, since no one able to help us.

  JL

Avoid ETF with steep fees

Some ETF have steep fees and should be avoided. Read this article. When investing in ETF, make sure that the annual fees is less than 0.5%. The STI ETF has annual fee of 0.3% only.

Need for savings and liquidity

It is important for each person to have savings and liquidity. I have suggested that each person should set aside 50% of current earnings (inclusive of CPF) for housing and the future. As CPF takes about 35% (including employer's contribution), the personal savings should be 15%. Younger people living with their parents can save a larger proportion (say upt o 30%) if they do not have to repay any study loan or contribute towards their family expenses.

It is also important for the savings to be liquid. They can be kept in a bank account to earn interest of 1% or less.  This allows the savings to be withdraw without any penalty, to meet expected cash needs, such as medical bills, down payments or temporary unemployment.

For longer term investments, the savings should be invested in financial products that have low front end charges. For example, they can be invested in stocks and bonds traded on the Singapore Exchange, where the transaction cost is 0.3% of the invested sum. They can also be invested in a diversified exchange traded fund, where the annual fee is also 0.3%. As these products typically earn a yield of 4% to 6%, the upfront charge can be recovered within one year.

You should avoid investing in financial products, including life insurance products, where the front-end charge can take away up to two years of your savings. As you need liquidity, you cannot afford to incur such a large penalty. As you have the choice of SGX products with a front end charge of only 0.3%, why pay up to 200%?

If you need life insurance cover, buy a term insurance and pay the cost of insurance. It is small. Do not worry about getting this money back. Treat it as an expense.

Make sure that your savings earn an attractive rate of return. Invest in products that have a low transaction charge (say 0.3%) and a low annual fee (say 0.3% per annum) to enjoy professional management and diversification. Make sure that you have liquidity and do not have to pay a high penalty when you need to withdraw your savings for the unexpected expenses.

Tan Kin Lian

Shape Quiz at $2

The Shape Quiz is now available for $2. It comprises of 100 shapes in a printed sheet and comes with 4 plastic pieces. Available from www.easysearch.sg (Internet shop). It is a good gift for children for the new year. You can order it to be sent to you by post.

Climbing stairs as an exercise

When I was in Sichuan the tour guide made this observation. When he was in Singapore, he was surprised that people queue up for the lift, even though they only need to travel a few floors. In Chengdu, most buildings are up to 5 stories only, and people are used to walking the stairs.

I agree with this observation. I have now decided to walk up the six floors to my office in Ang Mo Kio, instead of taking the lift. This will give me the chance to exercise a few times a day.