Saturday, January 28, 2012

Give fair wages and decent working conditions

If is difficult for a reputable manufacturer to get workers to accept depressed wages and inferior working conditions. They found a way to achieve this goal and boost their profits - go for outsourcing and contract work. Let the contractor handle this difficult matter.

It is not good for society, if the weaker sectors of our society continue to be exploited. It will lead to a higher wage gap and a poorer quality of life for the majority of the citizens.

Here are measures that a good government in any country can adopt:
  • Set a minimum wage and specific the standard terms and conditions of work
  • Set a good example in outsourcing their work and accept the contractors based on quality of service, rather than the lowest bid. It is possible for the government to know what the cost of the service should be. Use a transparent system to award the contract.

Thursday, January 26, 2012

Give a prompt reply

I make it a point to give a prompt reply to any question that is addressed to me personally, i.e. not part of a spam mail.

I received an email on behalf of a project group of students in SMU asking for explanation about the dual currency investment. I gave a reply immediately to two questions and also enclose my FAQ on this subject. The recipient must have been surprised at the prompt reply. She replied, "Thank you very much".

I reply with what I know. Even if I do not have the ready answer, it is quite easy for me to search for it in my website or in the Internet, using Google. If I do not have the answer to some questions, I will still give a reply to the questions that I know. A partial reply is better than no reply.

I want to encourage people to give a prompt reply, instead of ignoring an e-mail that is sent personally. My comment also apply to our ministers. Although they are busy, they do have an army of assistants who can give a proper reply, not just an insincere acknowledgement or worse - ignore it entirely! Our leaders need to set a good example in courtesy and the proper behavior.

Pawn and money lending shops

I was at Ang Mo Kio Central looking for a photocopy shop. I was surprised to see so many pawn shops and money lending shops in the vicinity of AMK Hub. It seemed that every other shop is in this trade. Have we became so obsessed with money?

Dilbert and pay of political leaders

Investigation for corrupt practices

I wonder if Singaporeans are over-reacting to the corruption charges against the former SCDF and CNB chiefs. We have not got the details about the misdeeds that they are being investigated.

I read that this may involve a woman executive of an IT firm. If this is the main factor, I would not consider it to be a corrupt practice that merit the level of attention. I have read of similar cases involving top executives in America and even a former President of the United States. In those cases, there were dealt with by the media and public opinion and not a corruption agency.

Let us wait for the actual facts to surface, and not speculated on this matter - which might be unfair to the affected parties. This is one aspect of the culture in Singapore that should be changed.

Wednesday, January 25, 2012

Reduce the compliance cost of GST

Singapore has become more costly than Hong Kong for many products that are manufactured in China and other countries. GST adds 7% to the cost of buying a product in Singapore (and Hong Kong has no GST) but imposes an additional cost due to compliance. Here is a way to reduce the compliance cost and make Singapore businesses more competitive.

Tax hikes

We need tax hikes to solve the deficit problems in the advanced countries. The governments have to pay unemployment and other benefits, to avoid extreme hardship on those who lose their jobs due to factors beyond their control. These payments have to be funded by those who can afford, so the taxes have to be increased. While it is necessary for governments to control their expenditures, it is also necessary to give the governments adequate resources to do their work.

Failure of deregulation

The story of Freddie Mac and Fannie Mae shows the failure of deregulation. Under a deregulated environment, the sub-prime mortgages were created recklessly, and this caused the sound institutions to be sucked into the mess.

We are experiencing our own problems of deregulation in Singapore. It is time to recognize the difference between good and bad regulation. Unfortunately, our regulators does not have this expertise, as they are brought up in a sheltered environment. The latest measure to protect consumers against bad financial products is an example of a bad regulation - as it does not address the real issue and make matters worse.

Misleading advertisements

The consumer watchdog in Australia is taken legal action against a budget airline for misleading advertisements about their fares.

Misleading advertisements of a worse nature, are rampant in Singapore. We need to address this issue as well.

Charges on Medisave withdrawal

Here is an example of wasteful and unnecessary charges being added to the high cost of living.

Mechanized car parks

Read this letter:

Mr. Paul Chan argues that it is more convenient and cheaper to park in the open car park. However, he did not take into account the cost of the land that is used in this way. If the land is priced at the market rate, the cost of the open car park will be several times of the mechanized car park.

It is costly to own a car and to find the parking space for a car. This is inevitable. What is needed is better public transport, feeder services and cheaper taxis. Buying a car is not the solution. Do not expect cheap car park space.

Driving children to school

Here is another bad example of the lifestyle in Singapore.

Parents want to send their children to "good schools" and that require long travelling distances. The public transport is bad, so parents have to drive their children to school - wasting two hours of time and adding congestion on the road.

If we do not recognize the inefficiency in our system, our economic performance and quality of life must surely drop.

The world needs 600 million new jobs

The world needs 600 million new jobs over the next decade. How can these jobs be created? Here are my views on  this global challenge:

  • Global competition results in income disparity
  • Stagnant wage for most people destroy their spending power for products and services
  • The reduced spending destroys economic growth and jobs
While globalization has been destroying demand and jobs for over two decades, its impact was temporarily hidden by the real estate and stock market bubbles, which created non-productive jobs in the financial sector to replace the destroyed jobs, until the bursting of these bubbles.

To create new jobs, the following steps have to be taken:
  • Reduce the wage disparity by introducing minimum wage and high taxes for extremely high incomes
  • Reduce the working hours, so that more people can be employed to share the available work
  • Introduce measures to restrict outsourcing and the inflow of foreign labor 
I am referring to the global situation and not specifically to Singapore. However, Singapore will also face the same impacts. While Singapore now benefits from globalization, it is at the expense of other countries, and is not good for the long term growth of the global economy.

Even the Republican candidates are willing to raise the minimum wage, as they recognize the realities of the bad economic situation.

Tuesday, January 24, 2012

Treat indexed ETF differently

I have written a letter to the Straits Times in  my capacity as President of the FISCA (Financial Services Consumer Association, www.fisca,sg) to ask MAS to treat the indexed ETF differently (from other ETFs based on derivatives) and allow consumers to make online purchase without getting investment advice. I hope that they publish the letter. If not, I will publish the letter here here on Saturday.

US taxpayers bear the loss

Read this story about the burden that will be shouldered by the US tax payers over the losses that are suffered by Fannie Mae and Freddie Mac:

Here is the background to this state of affairs:

  • The real estate market in the US was a bubble for one or two decades before it finally burst in 2008
  • During this period, large profits were made by developers, real estate agents, mortgage bankers and other people connected with the trade
  • The home owners were enticed to pay high and unsustainable prices for the property
  • The purchases were funded by mortgage banks and insured with Fannie Mae, Freddie Mac and other insurers
  • Bad financial products such as sub-prime mortgages and collateralized debt obligations (CDOs) were created to fund these unsustainable prices
With the bursting of the bubble, the drop in real estate prices have to be shouldered by the home owners, the mortgage banks and the insurance agencies. A significant part of the losses are now taken over by the taxpayers.

A lesson to be learned - if the real estate prices are allowed to appreciate to an unsustainable level, it will have to burst one day and bring big damages to the economy and the people. Several countries have gone through this phase. Other countries, including Singapore, will have to follow. There is no escape from the inevitable.

Be an Entrepreneur

Here is a way for someone to start a new business as an entrepreneur and achieve a greater chance of success and without the need for a large capital. You only need to have an idea, the passion and the willingness to slog it out.

Read this

Monday, January 23, 2012

PM Lee speech for Lunar New Year

PM Lee encourages Singaporeans to have more babies. The comments from netizens are overwhelming negative. It is so sad that Singapore has now reached this negative state. PM Lee has a difficult time to reverse the situation. It has gone too far down the road.
This is an interesting example of a democratic political process that works. Mitt Romney, the leading Republican candidate for the US Presidential Election has a high income background, as the former head of a management consulting firm. He lost the South Carolina primary election to Newt Gingrich due to his unwillingness to show his tax returns. He is now putting it right to tell the American people about his financial affairs.,-Romney-ready-to-right-tax-mistake

This lesson is also applicable in Singapore.

Salaries of ministers

I share my views about salaries for ministers. I find the basic salary to be acceptable, but the concept of a high rate of bonus based on performance is bad. Many Singaporeans are not aware that the concept of "pay for performance" has its negative impacts, especially in the public sector,  and how it has developed a bad culture in Singapore.

Invest in gold bar

I share this story of how a retired school teacher was almost cheated of a large sum of money by investing in gold bars at an inflated price. This type of scam is being applied to other products, such as industrial oil.

For FISCA members only:

For non-members (you have to provide your email address to retrieve the article)

Sunday, January 22, 2012

FISCA articles

There are several articles reserved for FISCA members only. Some articles can be read by the public. These articles are shown here:

Members can click on the "Login" tab and enter the email address and password to read the articles that are reserved for members.

Invest in overseas properties

What are the pitfalls to avoid? Is there a safe way to invest in overseas properties to enjoy the capital appreciation when the economy develops? Read this article (for FISCA members only):

Non-members of FISCA can read the article here (after submitting your email address).

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