Saturday, March 31, 2012

Kidnap of children

There is increased fear about the kidnap of children in Singapore. While some children may be kidnap for ransom, the bigger danger is that the toddlers may be taken away, never to be seen again. They may be given away as adopted children or, much worse, may be harmed in serious ways.

Read this report:

We should consider some possible ways to address this issue:
a) Use technology to locate children who are lost (similar to technology to locate a stolen car)
b) Use technology to identify a toddler or a child who may be lost from the parent (similar to tagging a pet?)
c) Set up a website for missing people so that the public can check against children or people who appeared to be "lost"

Any suggestions to deal with this matter?

Friday, March 30, 2012

Importance of Expectations

Read this article about the flaws in the education system in Singapore

I prefer the egalitarian system used in Finland. It is nice to have an environment where students help each other to learn, rather than compete against each other. 

No fault insurance

Motor insurance in Singapore is complicated. In case of an accident, there is usually a dispute on the party at fault. It  can be protracted and frustrating to all parties. The lawyers come in and legal expenses are incurred.

To overcome this situation, some countries have introduced a "no fault system". It has its advantages and disadvantages. I believe that, on balance, it is better to introduce a "no fault system" in most countries. It simplifies matters and reduces cost. The disadvantage is that some people may be inclined to be careless, but they can be dealt with through other means.

Here is an explanation about the "no fault system" taken from Wikipedia.

In its broadest sense, "no-fault insurance" is a term used to describe any type of insurance contract under which insureds are indemnified for losses by their own insurance company, regardless of fault in the incident generating losses. In this sense, it is no different from first-party coverage. However, the term no-fault is most commonly used in the context of state/provincial automobile insurancelaws in the United States, Canada, and Australia, in which a policyholder (and his/her passengers) are not only reimbursed by the policyholder’s own insurance company without proof of fault, but also restricted in the right to seek recovery through the civil-justice system for losses caused by other parties.
No-fault insurance has the goal of lowering premium costs by avoiding expensive litigation over the causes of accidents, while providing quick payments for injuries or loss of property. The victim's insurance company would only pay out the claim, while the driver-at-fault's insurance company would pay out a claim and charge that party a higher insurance premium as they are now higher risk. While this may disadvantage the victim's insurance company, as the at-fault driver's insurance company can recoup the claims quicker through raised premiums, accidents happen between drivers of both insurance companies with an equal chance of drivers from both sides being at fault, so this in theory should even out.
Critics of no-fault argue that it does not punish reckless or negligent drivers sufficiently, with only raised premiums and a higher risk rating, and no jury awards or legal settlements. Detractors of no-fault also point out that legitimate victims with subtle handicaps find it difficult to seek recovery under no-fault. In response, proponents of no-fault insurance point out that automobile accidents are inevitable and that at-fault drivers therefore should not necessarily be punished; moreover, they note that the presence of liability insurance insulates reckless or negligent drivers from financial disincentives of litigation.
Also supporting no-fault insurance, in regions with high numbers of uninsured motorists, at-fault parties are often “judgment proof” (i.e., unable to pay their liability damages) in any case. Another criticism is that some no-fault jurisdictions have among the highest automobile-insurance premiums in the country, but this may be more a matter of effect than cause (i.e., the financial savings from no-fault may simply make it more popular in areas with higher automobile-accident risk). Furthermore, no-fault systems often grant "set" or "fixed" compensation for certain injuries regardless of the unique aspects of the injury or the individual injured. Workers compensation funds typically are run as "no fault" systems with usually a fixed schedule for compensation for various injuries.

Thursday, March 29, 2012

Make it easier to submit income tax returns

Sent to Straits Times Forum Page on 24 March 2012

I want to thank the Inland Revenue Authority for making it easy
for taxpayers to submit their income tax returns.

I hope that the Authority can continue to simplify the submission in the
following areas:

a) Make it possible for the taxpayer to view the details of the 
remuneration that have been submitted by their employer or other
paying party. Where the details have not been submitted, show 
a remark "not yet received". This allows the taxpayer to know that 
the remuneration will be provided directly by these parties.

b) Allow individual taxpayers the option to claim for repairs, maintenance, insurance, 
commission and property tax at a certain percentage, say 20% of the 
rental income. This saves the hassle of keeping the detailed expenses and
is probably a fair estimate of the outgo, except for mortgage interest 
which can continue to be reported separately. 

I hope that, in the future, the Minister for Finance can consider waiving 
rental income from the computation of income tax, as the Government is 
already collecting property tax at quite a high rate.

Tan Kin Lian

Singapore-only toll unfair

The Straits Times Forum published a letter from Matthew Ong that it was unfair for Malaysia  to impose a toll that applies only to Singapore registered cars. If I am not mistaken, this was for construction of a link road to connect to the immigration checkpoint. This was a proposal made by a Malaysian politician. Mr. Ong described the proposal as ludicrous and said "seeking fairness is not too much to ask".

Recently, the Ministry of Education announced a measure to "differentiate" citizens from permanent residents and to give "absolute priority" to Singapore citizens in registering their children in choice schools. I posted an article to express mixed feeling about this proposal. While I am glad that Singapore citizens are being given priority, I felt empathy for those that are were being "discriminated" or, to use a new term that has now been coined, "differentiated".

I was strongly attacked by commentators in The Online Citizen. The rude and personal attacks, made mostly by anonymous people, were unwarranted. I felt sad about the bad behavior of my fellow citizens.

I wish to mention this letter from Matthew Ong about how he felt being "differentiated" against. I wish to ask my fellow citizens of Singapore to see a broader perspective, and to see the view from the other side. See the view from both sides, and see the longer term perspective, before you give your views, and avoid passing unwarranted judgment on the views of other people.

Accidents involving Malaysian registered car

The Straits Times Forum published a letter from Eunice Puay about an accident involving her and a Malaysian registered car on a road in Singapore. She was advised to make a claim under her own insurance policy and it was difficult for her insurer to make a successful claim against the Malaysian insurer or the driver. She suggested that the Singapore authority should make it compulsory for all Malaysian cars to buy daily insurance to cover the use of the car in Singapore. Do you agree with this idea?

Wednesday, March 28, 2012

Financial Planning Workshop - 31 March 2012 (Register now)

To learn about financial planning, attend the 6 hour workshop conducted on 31 March 2012. This is the last event that will be sponsored by SGX. Do not miss it.

Financial Adivsory Industry Review (FAIR)

Sent to the Straits Times Forum Page on 27 March 2012 

I welcome the announcement by the Monetary Authority of Singapore to 
set up a committee called Financial Advisory Industry Review (FAIR), to 
review the financial advisory industry.

I am particularly heartened by the focus of FAIR to put consumers first and 
to reduce the distribution cost by addressing the underlying inefficiencies 
in the remuneration and distribution structure.

Singapore had been following the practice adopted previously in the UK and 
Australia, i.e. to rely on disclosure to allow consumers to make the 
best informed choice.

However, these two countries had decided some time ago, that 
the disclosure approach did not work and that consumers had been misled into 
paying too much for unsuitable products. The regulators decided to ban the 
payment of commission for the sale of investment products.

It is likely that Singapore will follow this new practice, or at least mandate a 
cap on the amount of commission that can be paid to the financial advisers.

I wish to point out that the industry review panel now has the opportunity to use the 
trained financial advisers in a productive way to advice Singaporeans 
on how to carry out a proper financial plan for their future needs and how to invest 
the savings in suitable products that gives them a better long term yield.

In many countries in the developed world, the tax regime is skewed to 
encourage the people to make additional savings for retirement, such as the 
401k in the USA or the superannuation schemes in Australia. They usually
take the form of deferral of tax to a future date.

The potential savings in tax to the consumer can more than offset the 
remuneration paid to the financial adviser. It achieves an 
outcome that is good for consumers and allows the advisers to earn a 
living by performing a useful role for which they have been trained.

The government benefits when more people make adequate 
personal savings for retirement and rely less on state welfare. 

I hope that the FAIR committee can find a new productive role for financial 
advisers and reduce their fear of loss of earnings arising from the likely changes 
in the remuneration structure.

Tan Kin Lian

HDB Flats - are they affordable?

Sent to Voices, Today Paper, on 24 March 2012

I refer to the article entitled "PropertyGuru report misleading: HDB" (Today, 24 March 2012).

HDB produced figures to show that the monthly installment is about 25% of the
median household income for purchasers of the 4 and 5 room HDB flats.

The calculation is based on the average selling price of new flats bought under
the Build-To-Order scheme, less the additional housing grant. According to HDB,
this income ratio is affordable, compared to international benchmark of 30% to 35%.

The purchaser has to fork out 10% of the selling price and has to  take a loan for 30 years
at an interest rate of 2.6% to achieve this "affordable" monthly installment.

It is risky for a family to commit to a large mortgage payment on a 30 year loan, especially
as jobs are not secure. If any of the income earners were to become unemployed, the
financial burden can be quite severe.

If is also risky to assume that interest rate will remain at 2.6%. Global interest rate is
now at a historical low and if the interest rate were to increase in the future to keep
pace with inflation, the monthly installments will increase.

I have recalculated the monthly installment to allow for a higher rate of 3.5%
and a more prudent repayment period of 25 years. The revised monthly installment
represents 30% of the median household income.

Looking at another indicator, the net selling price represents 69 of the
median household income for purchasers of 4-room flats and 67 times for 5-room flats.
I agree with the PropertyGuru report that a ratio of 60 times can be described as
"severely unaffordable".

We can still hope that the burden on households will become smaller, if their
income were to increase in the future. In recent years, the increase has been
modest, so we cannot expect too much help from this source.

Tan Kin Lian

New consumer law in Singapore

The new consumer rights law, also called the "lemon law" is not as strong as seen by international starndards. See this comment from New Zealand,

Tuesday, March 27, 2012

A new role for financial advisers

Some financial advisers are worried that the changes being considered by the Financial Advisory Industry Review (FAIR) might lead to a severe drop of their earnings.

There is a silver lining.

 I hope that the outcome of the  review will allow the financial advisers to play a more constructive role in helping the public to better manage their financial planning and to get a better yield on their savings. This would require the finance ministry and MAS to recognize the importance of tax incentives to get people to make additional savings for their retirement - which is much needed in Singapore today, due to inadequacy of the Central Provident Fund.

In many countries in the developed world, the tax regime is skewed to 
encourage the people to make additional savings for retirement, such as the 401(k) in the USA or the superannuation schemes in Australia. They usually take the form of deferral of tax to a future date.

If similar incentives are allowed in Singapore, the potential savings in tax to the consumer can more than offset the 
remuneration paid to the financial adviser. It achieves an outcome that is good for consumers and allows the advisers to earn a living by performing a useful role for which they have been trained. The government benefits when more people make adequate personal savings for retirement and rely less on state welfare. 

The financial advisers can put up a case for the review panel to recommend tax incentives for long term savings in life insurance. This will allow financial 
advisers to find a new role and reduce their fear of loss of earnings arising from the likely changes in the remuneration structure.

Tan Kin Lian

Reply to Dr. Yik Keng Yeong

Sent to Straits Times Forum Page, 24 March 2012

Dr. Yik Keng Yeong had distorted my views quite unfairly in his letter "MediShield cover for birth defects: Seeking feedback not futile exercise", . Dr. Yik chose to challenge me on my statement about the futility of getting feedback from the public on covering birth defects under the Medishieldscheme. Clearly, this was not a major point in my earlier letter.

I mentioned "some people who do not face this risk" may object to the extension ofcoverage as it would add to their cost of living. I was referring to people who are unmarried or too old to have children. I did not use the words "no one is risk free" and do not wish to be quoted out of context.

Dr. Yik held a generous view that everyone would support extending the coverage. If this was the case, why did feel he felt that it was necessary for the Minister for Healthto get the views of the public on this matter?

I am not clear why Dr. Yik would want to allude to me as "passively believing in karma" or even to blame me for the "potential litigation" that may arise from a decision to cover birth defects - implying that this could be avoided through  public consultation.

Monday, March 26, 2012

Discrimination, equality and justice

I read about the priority scheme for Primary 1 registration with mixed feelings. While I am happy for Singapore citizens that they get priority over permanent residents (PR), I have empathy for the PRs that they will now be discriminated. Of course, the PRs benefit by not having to serve National Service, but there is a saying "two wrongs does not make a right".

Generally, all forms of discrimination are bad, and should be avoided. Discrimination is negative and leaves a bad taste among the people who are discriminated. Where possible, it should be avoided or kept under the radar - so that it does not become a hot issue.

In our National Pledge, we pledge to build a society based on "equality and justice". Our society includes permanent residents and foreign workers - who deserve to be treated equally and justly, as much as is possible.

I support one type of discrimination based on income, i.e. higher income earners should pay a larger share of their income in taxation.  I also support the levy that has to be paid to employ foreign workers. I would even extend this levy to permanent residents, if this is deemed to be necessary.

Apart from the difference in taxation and levy, I prefer that all residents in Singapore should be treated equally and justly on their access to education and health care. We do not want to see a foreign worker denied of basic treatment, because they are not insured for any reason, such as being temporarily out of work.

For the same reason, I do not like the "means testing" that is being applied in the hospital on citizens. Why impose this burden on the hospital workers to explain to a citizen why they should get a higher or level of subsidy, based on the type of house they live in, for example?

Let me now deal with the issue at hand - the limited places in primary schools of top choice. The root of this problem is the competitive environment, even before a child goes into primary school.  It is unfair that some people can get access to better schools compared to others. I find this to be another form of unfair discrimination.

I can understand the concern of parents who want their children to do well, but a discriminatory and self-centred system is not good for our society.

Almost 60 years ago, I attended a primary school near my home. It was a neighbourhood school that attracted students who lived nearby. There was no need for the parents to worry about school bus or to drive their children to school. Most students walked to the school and walked home after school. They fared well in life - some become doctors, actuaries and top civil servants.

The discriminatory practices adopted in our government policies over the past five decades have brought us to the present day situation. While we have some positive aspects in our society, including our economic well being and high standard of infrastructure, we also have the negative impacts such as a poor quality of life, high cost of living, wide income gap and low birth rate. Do we really want to continue this trend?

I feel strongly we need to adhere to the key pillars of equality and justice to build a better society for the people of Singapore.

Tan Kin Lian

Sunday, March 25, 2012

Unnecessary hassle

Early last year, I overlooked to top up my bank account. This caused all my GIRO payments to be terminated - property tax, income tax, club subscription, maintenance fee, insurance payment etc. DBS Bank did not call to inform me about it. They just cancelled all the GIRO arrangement.

Later, after I topped up the account, the bank was not able to reinstate the GIRO arrangement. I had to fill up the new GIRO forms again.

18 months later, I am still suffering from the effect of that incident. recently, I had to submit a new GIRO form to IRAS for my property tax and they returned it as I had entered the bank account wrongly (so they said). Actually, I entered the 14 digit bank code (including the 4 digit for the bank), and they expect a 10 digit bank code. They returned the form by ordinary mail. I had to enter the details again, and sent it back again by post.

I do not know why, in Singapore, we have procedures that cause so much unnecessary trouble and work. I suspect that this has to do with some instructions from MAS, but possibly it could be the mindless bureaucracy of DBS Bank.

Universal health care

Qing Ming in Cyberspace

Housing prices and birth rates

Quote from an article by Lucky Tan

The average US single family home is US$230K and the (S$290K) average size of such a home is 2500 sq feet[Link] - a landed home of the same size in Singapore costs more than $2M and something half the size in the form of an apartment costs $800K-$1M. We are often told that our fertility rate is falling because we are a developed country so people pursue qualification and careers rather than get married and have children.
"Partly, because it takes them longer to establish themselves (in a job)....people are staying in school longer nowadays. In the past, after their O -- Level and A -- Level, people start getting economically active, get a job, start a family and buy a flat. (Now) it is taking longer for young people to get to that stage because they feel they need better qualifications to get better jobs.....Elsewhere it has been shown that the demand of the job has increased and people need higher skills to enter the labour force and get a job before they start a family." - Lee Kuan Yew 
When a person starts a family, the one thing he needs is housing otherwise he has to squeeze his family into his parents' place and you don't expect him squeeze himself, his wife and children with his parents. The key to higher fertility is affordable housing and the size of housing. The PAP govt has wasted time and money on other incentives that have done nothing but failed - they claim they are trying very hard to bump up the fertility rate as it falls to the lowest in the world. HDB even said they build smaller flat these days because Singapore families are getting smaller - they are actually putting us in a vicious cycle. I think Singaporeans are really tired and fed up of the PAP creating the problems then blaming it on Singaporeans ...then waste time and money on schemes that will not work. The next time some one from the tries to explain our low fertility and talk about solutions ....remember unless they home prices are at truly affordable levels, it is yet another waste of time and our country is further endangered by importing more people which causes population density and housing prices to go up.
The root cause of our problem has been PAP policies - first the "Stop At 2" policy and housing policies. The PAP has been using revenues from our public housing programme to fill up govt coffers [HDB paying less for land is raid on reserves: Mah] from the CPF and savings of ordinary Singaporeans. No other govt does this with public housing - linking it to the market and creating reserves - the primary purpose is to provide cheap and achieve positive social outcomes. This is not what happened in Singapore and the PAP housing policy has led to whole array of problems e.g. inability to accumulate enough to retire, low fertility, indebtedness and social inequality. Now the problems have grown to endanger ordinary Singaporeans - we have stop procreating, we are being replaced by foreigners and we do not have children to pass our values and culture to.  Time is running out for the PAP govt to fix this and from what we have seen from them - they are not serious about it and Singaporeans are running out of patience.

Inspect your home

I received an indication of the fees to inspect a home, before the buyer commits to buy the property. See

Blog Archive