Friday, May 04, 2012

Crying wolf over minimum wage policy

Employers are crying wolf over the minimum wage policy, making dire predictions of a disorderly labor market.

The evidence from many countries with minimum wage policy is that they will be observed and that the income gap will reduce. I expect that this will be the outcome in Malaysia as well. We have to study the outcome in Malaysia. If it is implemented successfully, there will be one less reason for Singapore to reject this policy.

Perpetual bonds

Read my views about perpetual bonds in

Medishield and private Shield

A reader asked for my views. Her mother had hypertension and was rejected for insurance under Medishield. She asked if it she should apply for private Shield.

My reply

If she apply for private Shield, she is likely to be rejected anyway. 
Do not worry if your mother does not have Medishield. 
If she is sick, she can go to B2 or C ward and the bill will be quite affordable. 

You can read my articles here

My thoughts on Medishield

Over two million Singapoerans are covered under Medishield and similar policies, called private Shields, issued by the insurance companies. 

All the private Shields are required to reinsure the basic component of their coverage with Medishield under the "integrated Medishield:" arrangement. In essence, Medishield is almost a universal insurance scheme covering most Singaporeans.

Medisheld now has two restrictions, namely

a) It excludes pre-existing illness and congenital conditions at the time of coverage
b) It rejects applicants who are not in good health, e.g. suffering from chronic illness

It is appropriate for Medishield to be amended to cover congential conditions and people with pre-existing conditions, and adopt other risk management methods to handle the pre-existing conditions.

The other methods are:

a) require applicants with pre-existing conditions to pay a higher premium, also called a loading
b) exclude coverage of pre-existing conditions for a waiting period of one or two years, and provide full coverage thereafter

These other methods of risk management are appropriate for an insurance scheme that has standard coverage, such as Medishield, and also has a large base of people who are covered.

If Medishield provides this coverage, all the other private Shields will automatically provide the same coverage, due to the reinsurance arrangement under the "integrated scheme".

The purpose of insurance is to provide the benefit of risk pooling to large numbers of people in an economic way. This includes the need to insure people with congential conditions and pre-existing conditions. While the insurance scheme should be run on a viable basis, and appropriate risk management methods should be applied, the purpose should NOT be to maximise profits for the insurance company. It should have its social purpose of providing cover to those who need it at an economic cost.

We all now that as a person gets older, there will be some chronic illness that have to be managed and insured. This can represent a large part of the population. They should not be excluded by the restrictive underwriting standards.

I suggest that the Minister for Health seek the advice of suitable experienced people who do not have any conflict of interest, i.e. running an insurance company now, to provide advice to him on the insurance aspect of this review of Medishield. There are many retired insurance practitioners who are able to play this role.

Tan Kin Lian was the former chief executive of NTUC Income. He is now the director of a consultancy and software development company called Tan Kin Lian & Associates Pte ltd. He is also the Founder and President of the Financial Services Consumer Association (FISCA), an organisation with the aim of educating consumers on financial planning, insurance and investments, and to promote the interest of consumers. ( He writes a blog

Insurance should cover everyone

I have given my views on Medishield and it is quoted in this article in Yahoo

Thursday, May 03, 2012

Cheating - using counterfeit chips

If a person uses counterfeit chips in a casino, the person is considered as cheating the casino and will be charged.

We need to apply the same standard of diligence for other types of cheating - for example, when someone makes untrue statements and collects money from people from people who were misled by these statements.There are many victims who paid a lot of money to attend  forex training courses, or who buys land, wine or other products at inflated prices.

Good for expatriates

Singapore is the 4th most desirable place to work, according to this report. I observe that it is good for expatriates, but not so good for locals, based on the complaints about the cost of living and competition with foreigners.,-work

Wednesday, May 02, 2012

Get updated information on a property

Before you buy, sell or rent a property, you should get the latest prices on the property. In this talk arranged by FISCA, a speaker from a prominent website will explain how to get the useful information that can help you to make a better decision.

Pay a fee for financial planning advice

29 April 2012

Editor, Forum Page
Straits Times

It is important for Singaporeans to follow a properly designed
financial plan to ensure that they have adequate savings for their
future needs.

This involves budgeting, putting aside part of the earnings
as savings for the future, investing the savings to get an 
adequate return that can more than cover inflation, and buying
the right type of insurance to cover the contingency of
premature death.

This financial plan involves more than just buying life insurance. 
In fact, the wrong type of life insurance policy can give a poor return 
that can make damage a person's financial security. 

Indeed, most life insurance policies require a fixed amount of 
regular savings, making them unsuitable in an environment of
rapid change and job uncertainty.

The financial adviser should focus on holistic financial planning 
and should recommend a financial plan that is adaptable and 
suit a person's circumstances. 

Consumers should approach a financial adviser that is 
not tied to selling any specific financial product. Consumers  
should be prepared to pay a fee for the advice, based on the time
spent by the adviser. 

Consumers should also invest the time and money to attend
educational talks on financial planning that are organized by 
consumer based organisations that do not have any ties with 
any financial institution. (

Tan Kin Lian
Financial Services Consumer Association

Pro-active regulator

The UK regulator is taking pro-active action on behalf of investors to seek compensation for their losses due to mis-selling of financial products.

Fuel subsidy in Indonesia

The price of benzine (a low octane grade of petrol) was 4,500 rupiah a litre (about SGD $0.60). This is used by most vehicles, including non-luxury cars and motor cycles and is heavy subsidized by the government. The government wanted to raise the price to about $1 but could not push it through, due to large demonstrations.

The fuel were provided by Petromina and Shell. They received a subsidy from the government to sell the fuel at below the market price. There was also a need to prevent the subsidized fuel from being used for other purposes. For example, a consumer cannot buy the subsidized fuel in a can and has to be pumped into a vehicle - but there is really no way to stop the consumer from pumping the subsidized fuel out of the vehicle later.

Luxury cars in Indonesia have to pay a price of about $1.20 for a higher grade of petrol. This is still much cheaper than petrol in Singapore - which cost about $2.20, nearly double. Petrol is more expensive in Singapore due to tax (about $0.44 cents per litre).

May Day Demonstration in Jakarta

I was in Jakarta on 1 May. It was a working day. There were several big demonstrations in various parts of Jakarta which were well covered on television. The demonstrations were peaceful and orderly.

Unlike most countries, Indonesia does not declare 1 May to be a public holiday. I was told that they already have 20 public holidays in a year, as they recognise 1 or 2 public holidays for each religion and they recognize many religions.

Many workers turn out for the demonstrations because the law requires them to be paid by the employer even when they are out on demonstration. My Indonesian friend said that this is a "crazy" law. I said that after letting off steam, they can be more productive when they are back at work.

I had to attend a meeting in an office near Parliament House, where I large demonstration was being held. I had expected that there will be a bad traffic congestion. To my surprise, the roads were clear. Many cars avoided that area. The demonstration ended before my meeting, and before the cars came back. It was the first time that I experienced light traffic!

Here is a report from Channel News Asia

Tuesday, May 01, 2012

Forced to work after age 70

This IS whast will happen when we are forced to work after age 70.

Midview City

A few owners of strata title units in Midview City have expressed unhappiness with the managing agent and wishes to get together to discuss possible actions. If you are an owner and wish to join this meeting, please send your particulars to with your name, telephone, email and unit number in Midview City.

Monday, April 30, 2012

No end in sight to global job crisis

The International Labor Organization has stated that there is still no solution to the Global Jobs Crisis.

I have held this view for a long time. I do not see how the world can create enough jobs, when those with jobs are working long hours and the available work has been reduced through mechanization and other labor saving devices.

The only solution is to reduce the number of hours of work, so that the available work can be distributed fairly among those who are willing and able to work. Some economists have suggested a 20 hour work week.

It is not possible a country to be competitive, if its people work shorter hours than workers in other countries. We need to have an international agreement to reduce the working hours, or to implement some form of protectionism of certain domestic jobs. There is no other solution.

Special lane for frequent flyers

I find airport security check to be a hassle. I hope that this new arrangement can be implemented soon in many airports around the world, including Singapore.

Sunday, April 29, 2012

Protests in Bahrain

Licence to take deposits

In most countries, an operator who take deposits from the public and pays interest on the deposit is required to get a licence from the authority. In Singapore, this role is performed by banks and finance companies. It would be illegal for someone to take deposit without a licence.

There is a company that sells gold bars at 20% to 25% higher than the actual value of the gold bar and promises to pay 2% interest a month on the contract. I consider this arrangement to be a hidden form of deposit. If the actual value of the gold bar is $100,000 and the company sells it for $120,000, the company is actually taking in a deposit of $20,000 and paying interest on this deposit.

As the return is so attractive, the early investors are likely to be putting in more money and getting their friends to join the scheme. It is possible that the attractive return to the investors are being financed by the funds provided by the latter investors. In essence, this would be a ponzi scheme.

The law against deposit taking without a licence is to ensure that the the licensed companies have sufficient capital and assets to meet their obligations. They should not be allowed to collect tens or hundreds of millions of deposits and run away with the money.

Since the Monetary Authority of Singapore is responsible to issue licence for approved institutions to take deposits from the public, it should also be their responsibility to take legal action against operators who take deposits without a licence.

I consider the arrangement by the gold bar company to fall within the scope of responsibility of MAS and that MAS should investigate and, if appropriate, charge the operators for infringing the law.

The officials of MAS may not have the resources to carry out criminal investigations. But they can lodge a complaint with the Commercial Affairs Department, for the latter to make the investigation. MAS can also seek the legal advice of the  Attorney General's Office. It is important for the three agencies to work together to deal with this issue. So far, my impression is that  each party considers that they are not responsible for this matter.

I hope that early action can be taken, before this matter grows too big and the whole arrangement collapses like a house of cards, or rather, like a ponzi scheme.

Avoiding tax

Profitable companies should pay their share of tax and should not be allowed to avoid tax. To hold ethics and integrity, lawyers and accountants should not use their professional knowledge to help profitable companies to avoid tax, for the sake of earning large fees. This is immoral. Countries and states should not have laws that allow companies to avoid tax (and my statement applies to Singapore as well).

Plight of 60 immoral men

We need to implement our laws in a fair and just manner. This statement applies to the prosecutor and our courts. We also need to compare our standards with the standards in other countries. Read this analysis by Lucky Tan.

Bersih rally attracted 25,000 protesters

Blog Archive