Rely on a professional army

Singapore has 25,000 full time soldiers and 45,000 active conscripts.

If we move to a professional army, we probably need 40,000 full time soldiers to man the weapons and systems and to train the conscripts.

This is just my guess - I do not have any information to give a reliable figure.

We can still have compulsory military service, but the conscripts need only to serve 4 months to receive basic military training.

In the event of hostility, we can get the conscripts below 35 years to return for intensive refresher training. We can mobilize 350,000 people and re-train them over a period of a few months.

I believe that this structure will better achieve the goal of having an adequate defense for the nation and reduce the heavy burden of time and opportunity placed on our local born male citizens.

WOTC - Choose your MP

I asked this question in the Wisdom of the Crowd:
Which person will you vote for as your Member of Parliament?

Here are the responses: (84 Votes)
48 % - An older candidate who is retired and does not need the income and wish to serve you.
35 % - A young candidate who promise to serve you as a full time MP
14 % - The candidate from Worker Party
4 % - The candidate from PAP

See the pie chart at:
http://www.wisdomofthecrowd.sg/chart.aspx?ID=831

WOTC - Choose your MP

I asked this question in the Wisdom of the Crowd:
Which is most important when you choose your MP?

Here are the responses: (76 Votes)
51 % - A non PAP candidate, to effect change.
36 % - The personal quality and background of the candidate.
8 % - The platform of the party.
4 % - The party that fields the candidate.
1 % - A PAP candidate to ensure continuity.

See the pie chart at:
http://www.wisdomofthecrowd.sg/chart.aspx?ID=832

WOTC - Taking the bus

I asked this question in the Wisdom of the Crowd:
Do you take buses?

Here are the responses: (86 Votes)
37 % - Often, mainly to MRT stations
28 % - Daily, direct to my destination and home
24 % - I hardly take the bus.
10 % - I prefer to drive or take taxi

See the pie chart at:
http://www.wisdomofthecrowd.sg/chart.aspx?ID=833

Recent developments in Forest City

A few people have asked for my views on the latest development in Forest City.

I agree with the views expressed by Dr. Mahathir - Forest City should benefit Malaysia and Malaysians.

He wants to see more of the construction work and professional services provided by Malaysian companies. He wants the development to create more jobs for Malaysians. He also wants more of the apartments to be affordable to Malaysians.

I agree with these goals.

I believe that the developer of Forest City also agrees with these goals. They are already creating more work and jobs for Malaysians.

However, the approach taken by Dr. Mahathir may cause a loss of investor confidence in Malaysia. This is a real risk that he has to deal with.

It would be bad not only for Forest City but also for other Malaysian properties and industrial and commercial developments.

I do not think that Dr. Mahathir will want to see Forest City fail or to see a loss of investor confidence in Malaysia.

Someone told me that the Johor sultan and the state government had a 30% stake in Forest City. I do not know if it is as high as 30%.

The people who have bought properties in Forest City may be worried about the value of their investment.

As an investor

I have bought an apartment in Forest City but I am not worried. Here are my reasons:

a) Forest City builds the apartments based on completed sales. They pre-sell the apartments and when it has been fully or substantially sold, they start construction. They will not have many unsold blocks of apartments or landed properties.

b) The original plan was to construct 4 islands to house 700,000 people. If there is insufficient demand, they can scale down their development or take a longer time to complete it.

The developer has already announced that this would be their plan. If they stop work with the first island, it will still be a substantial development.

c) Would the first island be a ghost town, i.e. the apartments have been sold but are not occupied? It might be the case.

But with the proximity to Singapore, and the possibility of ease of travel through the checkpoints, I see more people living in Forest City or in Iskandar and working in Singapore.

d) I am investing in my Forest City apartment for the long term, using my spare cash.

In 20 years time, Dr. Mahathir would be 113 years old (if he is still around). I would be 90 years old (if I am still around). My grandchildren will probably inherit the apartment - and it is freehold in tenure.

e) The recent annual report from Country Garden showed a healthy profit. They are financially sound.

Global Financial Crisis

Let me share this story. In 2009, a friend told me that she had taken my advice earlier and had invested in the STI exchange traded fund. She had lost 30% of her investment due to the global financial crisis.

I told her to see me in 20 years time to discuss her investment. A year later, she told me that she had recovered her 30% loss and the investment was showing a 30% profit.

This is called "investing for the long term". One should not be worried about short term issues. They will be sorted out.

I will tell the same story to investors in Forest City. Let us discuss it in 20 years time.

Tan Kin Lian

The fallacy of low income tax rates

The government reduced income tax and introduced GST two decades ago with the aim of attracting high income earners to come to Singapore.

The aim was to tax revenue from these super rich immigrants, although at a low rate of tax. It is better than getting nothing from them.

It did not happen. Why?

Most of the income of these super rich immigrants were overseas income and were exempted from income tax.

So, we are the winners and losers in this tax regime?

The winners are the high income earners - lawyers, doctors, bankers, property developers, corporate executives, politicians - who earn several million in income from local sources, and pay a low rate of income tax.

There is virtually no risk that high income rates will get these high earners to leave Singapore. They cannot run away because their income are from local sources. They cannot earn these income in other countries.

The losers are clearly the ordinary people who have to shoulder a large burden of the tax through GST.

A high income tax rate will allow GST to be removed and will reduce the cost of living. It will help to reduce the high level of inequality in Singapore.

Struggle to make a living

I made a statement that 10% are doing well and that 90% are struggling. I also said that Singapore should avoid getting into this position.

Someone challenged me to look at the National Statistics to prove that 90% are struggling. He estimated that only 20% are struggling.

It is a matter of definition. Although 70% appear to be getting by, according to his estimation, I would consider that a large proportion of them are struggling for the following reasons:

a) They are not saving enough for their retirement.
b) They are afraid to get married or have children because they find the cost to be too high.
c) They work long hours and on two jobs to meet ends meet.
d) They are afraid of losing their jobs.

Of course, they would not be struggling if they have been more modest in their spending or did not commit to expensive property purchases. To borrow the words of our ministers ... if they had been more frugal and live within their means.

I once asked a Russian woman - was Russia better in the old days under the communists or in the free market economy today?

She preferred the old days. Why? The cost of living was low and, while people had fewer luxuries, they felt secure.

I am not suggesting that we adopt communism, but I quote this story to show that there is another angle that need to be considered.

I leave you to judge - are many people struggling to make a living in Singapore? Do they feel secure?

High property prices

I made a statement that Singapore is exposed to the danger of depending on high property prices. If there is a serious correction, Singapore will be badly affected.

Someone challenged me to look at the National Statistics to look at the proportion that is contributed by property. He said that we have a highly diversified economy and does not have a high reliance on property.

I believe that the National Statistics may not record the correct picture.

Here are my reasons:

a) A large part of the profit of financial institutions can be attributed to high property prices and transactions.

b) A large part of the wealth of Singaporeans are linked to property. They can borrow against their high property prices for spending and for financing businesses. I have seen many small businesses close shop with large losses, but their owners appear to be financially sound, due to wealth in properties.

If property prices were to fall, the domino effect will be quite bad. We have seen it in Japan.

At present, property prices in many countries are being supported by very low interest rate and that has been going on for at least one decade. The situation will be quite different when interest rate goes up to much higher level at some time in the future.  However, the correction does seem to take a long time to happen.

Streaming under the German education system

A German woman, who had lived in Singapore for three decades, told me.

They have streaming under the German education system. The students were streamed to the academic field or the vocational field. The students in the academic stream go to university while the vocational stream go for apprenticeship.

The teachers assess the students and decide which stream they are more suitable for. This assessment is made over several years.

The advantage of the German system is that the earnings between the academic and the vocational fields are quite close to each other. There is no wide salary gap.

I don't know if this description is correct. But I generally respect the Germans for their approach towards the education of their people.

Streaming at upper secondary level

When I was in secondary school, there was streaming. In secondary 3, we were streamed into science or arts stream. We took different subjects.

Some other secondary schools have the technical stream.

The streaming was accepted at upper secondary. There was no controversy.

The streaming adopted by the government in the late 1980s applied to PSLE (primary six). It was a bad idea to stream that so early. Worse - there was a stigma between normal and express streams.

It would be better to get rid of the streaming in PSLE and revert to the old system - where the students are streamed at upper secondary.

Agree?

An alternative to streaming in education

The government introduced streaming of students in the 1980s. It has continued to today, although the system was adjusted a few times during the following years.

The concept of streaming was to put students in the appropriate system that suits their learning ability.

The students who can learn better are placed in the express stream while those who are slower are placed in the normal stream.

This system produced stress among the students as they and their parents do not want to be stigmatized by being placed in the normal stream.

When I was in school, there was another type of streaming system which seemed to work better.

The students who did badly in the year end examination were held back by one year. They repeat the syllabus. A small number was held back but most of the rest advanced to the following year.

Few people paid any attention to the fact that they were held back.

There was nothing to be ashamed of being held back. In each year, the difference in age among the students could be up to one year, i.e. those born in December could be 11 months younger than those born in January.

If the younger child did poorly because of age, they are hold back by one year. The difference in age with the students in the following year could be just a few months.

There will be instances where the age gap is wider, but it did not really matter. There were in the same class, and followed the same syllabus.

The old system of holding back a student who did poorly in the year end examination was better than the streaming that was introduced in Singapore.

Do you agree?

WOTC - Means testing

I asked this question in the Wisdom of the Crowd:

Should we have the same means testing criteria for all types of benefits?

Here are the responses: (78 Votes)

40 % - It is better to provide the same benefit to all citizens without means testing and make the higher income pay more income tax.
27 % - We should adopt different means testing for different benefits.
18 % - Yes, the same criteria should be applied and the eligibility should be assessed yearly.
15 % - Means testing is degrading to the recipients.

See the pie chart at: 
http://www.wisdomofthecrowd.sg/chart.aspx?ID=829

WOTC - Means testing

I asked this question in the Wisdom of the Crowd:

Should we continue with means testing?

Here are the responses: (77 Votes)

40 % - No, we should provide the same benefit to every person regardless of income. 
26 % - Yes, but it should only be based on personal income and residential housing.
25 % - Yes, it should be based on family income.
9 % - Yes, it should be based on residential housing.

See the pie chart at: 
http://www.wisdomofthecrowd.sg/chart.aspx?ID=828

WOTC - Adequate pension

I asked this question in the Wisdom of the Crowd:

How much is an adequate pension for people above 75 years

Here are the responses: (97 Votes)

35 % - $1,500 a month
31 % - $1200 a month
22 % - $800 a month
11 % - $500 a month 
1 % - $300 a month

See the pie chart at: 
http://www.wisdomofthecrowd.sg/chart.aspx?ID=827

New design for drains and utilities

I suggest that the ministry of national development consider this approach to provide drainage and laying of cables and water pipes.

1) Design a drain that can carry away drain water and have three compartments for running electricity cables, telecom cables and water pipes. The cables and pipes are located above the normal flow of water. The cover for the drains will be solar panels.

2) Use prefab technology to build these drain sections.

3) Replace the side walks of the roads with these covered drains and include the cables and pipes.

4) New buildings and additional supplies will tap into the new cables. No more digging up of roads.

Does this sound like a good idea?

Time to in-source they key operations

We are used to outsourcing that we do not realize its disadvantages. It took a visionary business leader to try the opposite approach.

When Genting Group wanted to build the $1 billion cruise ship Genting Dream, the CEO decided to buy the to buy the German shipyard.

This in-sourcing approach allowed him to have direct control over the design of the ship. He does not have to pay expensive variation charges. He does not have to worry about quality control - he has direct access to the detailed statistics.

He took over all the staff of the shipyard and have direct control over them. He saved the cost of contract management at the top level, although his management still has to handle the management of the sub contractors.

It is quite common among the government agencies to outsource their responsibility and to let the main contractor take over this task. It will end up with a higher bill and questionable quality.

It is time to re-think of what can be outsourced and what has to be in-sourced.

Simulation of general election 2020

Here are five factors that may affect the swing against the PAP at general election 2020.

Coalition under Dr. Tan Cheng Bock
Increase in electricity and water charges
Fall of Barisan Nasional in Malaysia
GST increased to 9%
Govt raise public transport fare

The percentage swing are decided by about 100 people who voted.

How will these factors affect the PAP?

You can find out here:
http://tklcloud.com/Election/const2.aspx?id=1539

You can select your own factors and run a separate simulation to see the results.
http://tklcloud.com/Election/const.aspx

CPF minimum sum

If we allow CPF to be fully withdrawn at age 55, there is a risk that many people will take out their savings and lose it on bad investments or in setting up a business.

How can we manage this risk?

The government decided three decades ago to require people to set aside a minimum sum for their retirement. But this minimum sum has been raised to an excessive high sum.


Would it be acceptable if the minimum sum is reduced to, say $60,000? I remembered that the minimum sum was $30,000 when it started in the late 1980s.

We also have many complicated rules on the sale of a property. The proceeds have to be returned to CPF and used to set aside the minimum sum before the balance can be withdrawn.

There is no need to have this complicated rule because the CPF savings that went into the special account could not be used to buy a property. It should be sufficient to cover the minimum sum needed for retirement.

Would a reduced CPF minimum sum, to be withdrawn in installments, be a suitable compromise between the need for an income during retirement and the access to the balance of the CPF moneys at age 55?

I wonder!

WOTC - Take care of rental flats

I asked this question in the Wisdom of the Crowd:

Will tenants take care of rental HDB flats?

Here are the responses: (82 Votes)

32 % - They have to take care of the rental flats as any repairs will be deducted from their deposits
29 % - They will not take care of the flats, as it does not belong to them.
22 % - They will care of the rental flats, if this is made a condition of the rental contract.
17 % - They will take the same care as owners, as they expect to live in the flats for a few years.

See the pie chart at: 
http://www.wisdomofthecrowd.sg/chart.aspx?ID=826

WOTC - Housing price problem

I asked this question in the Wisdom of the Crowd:

How can the government solve the housing price problem?

Here are the responses: (83 Votes)

35 % - Allow more rental flats for young people to rent, and maintain the prices of new flats.
31 % - Build more HDB and private flats to increase the supply and reduce the prices
23 % - Maintain the prices of new HDB flats, to protect the investment of the old owners.
10 % - Sell new flats at reduced prices and let the old owners suffer the loss
1 % - Allow the HDB flats to continue to increase in price. 

See the pie chart at: 
http://www.wisdomofthecrowd.sg/chart.aspx?ID=825