Saturday, February 23, 2013

Advantages of renting a home

1. Singaporeans have the mindset that they must own their home. I wish to give some views on the need to change this mindset.

2. Owning a home make sense when property prices are low. When the prices are too high (and currently the prices are too high), it is not the obvious choice. We should be open minded and consider other options. 

3. There are advantages in renting a place to live in. When you rent, you have the freedom to move at the end of the lease period. You can move to a place that is closer to your work place or to your parents or the children's school.

4. If the rental rates are high, you bear the cost one year at a time. You can also opt to rent for 2 years or longer, if you wish to fix the rates.

5. When you buy a property at a high price, you have to pay a high mortgage for the next 20 or 30 years. You are stuck with this high cost.

6. It is possible for the property prices to go into a slump. Just see what has happened in Japan, USA and Europe. This will come to Singapore. When that happens, the property prices will stay low for a long period. Japan has the slump for more than 20 years and has not recovered yet.

7. If you are renting a place, you will be able to buy a property at a lower price, maybe up to 50% cheaper, in a slump. If you have bought before, you will not be able to take advantage of this opportunity.

8. In Singapore, you are allowed to use your CPF savings to pay for your home, but not for rental. This force most people to buy a property. If you do not join the herd, you have the option to invest your CPF savings in blue chip shares or an index fund, and earn a long term yield of 6% (my guess). This yield is better than the yield on properties bought at an inflated price.

9. If you rent a property, you can pay up to 25% of your annual income for the rent. This may be painful, but it is for one year at a time. When there is an over supply, you can expect the rental to drop by up to 50%. At that time, you will pay a much lower rental or you can buy a property at a lower price.

10. For young couples who are newly married, you can stay with your parents, if they have a room for you to use. Alternatively, you can rent a room from another family. If you do not have any children or just one baby, a room is sufficient.

11. It is all right to buy a new flat from the HDB, i.e. a BTO flat, as the price is much lower than the market price. Be patient and wait for the BTO flat. In the meantime, consider renting as an option.

How to increase the birth rate

1. I will now give my views on how to increase the birth rate in Singapore.

2. We must give an option to women to be a full time mother and raise children. The mother will receive, from the state, a monthly allowance of $500 for each child, up to a maximum of three children, until the child reaches 12 years old.

3. If this allowance is given, some women may opt to be a full time home maker, instead of a career women. They can opt to get married at a younger age, and raise their children. When the children go to school, the mother can enter the workforce and do the types of jobs that are suitable for them, which do not require a high level of education.

4. There are many suitable jobs in the economy for women, with experience in raising children. They can be assistants to teachers, or work in taking care of children and the elderly, or can go into the food business. These jobs can also pay well.

5. The choice is still available for women who wish to enter the business world and compete with men. These women are likely to marry late and to be not keen to raise children, as it is difficult to do both.

6. My suggestion is to give women, who are more inclined to the family, to choose this option, and to receive a monthly allowance that make it possible for the family to meet the living expenses.

Critical illness policy

Someone said:

Should the MAS bans / regulates more strictly such or similar "critical year" policies. 
For this case :-
"In a written judgment, the Learned Judge dismissed her claim. The judge found that the document, a policy benefit illustration, was not part of the contract. He noted that a clause in the policy booklet states that the policy and policy application constitute the agreement between Madam Zhu and AIA. This statement is mirrored in a declaration in the application form."...

Although not "a clause in the policy booklet" and therefore not a "term or condition" in contractual terms, the "policy benefit illustration" is a common instrument used by agents (who are supposed to be professionally trained) to induce parties (as consumers & layman) into purchasing such policies ... and therefore easily "misrepresented".

IMO, the plaintiff in this case was set-backed because she had represented herself in Court...she could probably have a strong case. I purchased such a policy in the 80s which was subsequently handled as a "support package" collectively ... but the same "sales techniques" seemed to have been followed through after that ...and now another case in Court when many are supposed to be already wary of such bad sales techniques.

Fair wage for a job

What is the fair wages for a job? 

Some people think that it can be left to the "free market", i.e. supply and demand. This is the approach adopted in Singapore. Look at the mess that it has created - so many locals out of job or not earning enough to meet the cost of living. 

Some countries have strong trade unions to negotiate the wages for various categories of workers, e..g Australia and Europe. They also use the tool of a minimum wage. While not a perfect system, it seemed to produce a better outcome than the "free market approach".

There is an alternative approach - somewhere in the middle. It uses the free market approach to determine the wages, but removes the weak bargaining power of the workers. It also ensures quality, reliability and profitability of the workers and allows them to earn more, and allow their employer to be profitable. What is this method?

I like to have some discussion about this "alternative method", which is a better way.

Low risk of critical illness

When an insurance agent tell you that you need critical illness insurance to cover the high cost of treating cancer, you should consider the following:

a) The chance of getting serious cancer that requires expensive treatment is extremely low before the age of 60
b) The chance of being killed by an accident, e.g traffic accident, is higher
c) You need to pay only $70 a year for accident insurance to cover $100,000
d) If you want to buy critical illness insurance to cover $100,000, you should pay not more than $70 a year.

See if the insurance agent is keen to offer you the critical illness insurance at this premium. If they want you to pay many times more, they are trying to get you to pay a lot more, so they can earn a hefty commission.

High inflation rate

Mr Tan,
As inflation rate for last year is about 5%. What do you think of any investment that is over that 5%?Is the world changing?

Inflation was 5% last year. The STI ETF earned 19%, so it is much higher than inflation. 

Over the past 10 years, the average inflation was around 3%. The STI ETF earned about 8%, so it is higher than inflation.

Over the long term, the STI ETF is still be best investment. Attend the FISCA talk and learn about why this is the

Thursday, February 21, 2013

Where are the missing billions?

1. Someone asked me to give my views the articles written by Professor Christopher Balding regarding the finances of the Singapore Government. A summary of his article is shown here:

2. Here are the key points:

a) During a period of 20 years from 1991 to 2010, the Singapore government borrowed $250 billion and had a budget surplus of $262 billion, making a total of $512 billion.

b) If this money is invested to earn the average yield, it should accumulate to $1,000 billion, or $1 trillion.

c) The total assets of Temasek Holdings and GIC is estimated to be $500 billion, a part of which were accumulated prior to 1990. According to Professor Balding, there must be more than $500 billion in assets that are missing?

d) There are $300 billion in foreign reserves managed by the Monetary Authority of Singapore. Professor Balding argued that this is accounted by the current account surplus, and is not related to the $500 billion that is missing.

3. Can you identify some possible gaps in the reasoning given by Professor Balding? I do not agree with his reasoning, so there is the possibility that he is right, or maybe wrong.

Apps for your iPhone/ iPad

Amaze your friends with this simple trick. Most people are amazed at its simplicity.

Download this app now and give it a try. And give a rating as well.Thank for your support.

The Moby app is now available for download. It has useful features for users of iPhone, including pre-fix SMS, security, and find your car. More details here:

Download it and give a try. And give a rating as well. Thanks for your support.

Wednesday, February 20, 2013

Myth about welfare states

Ideas for a public housing policy

1. I like to give my views about what are the elements of a good public housing policy.  The Singapore Government is in a unique position to implement this pubic policy, as it owns 80% of the vacant land in the country.

2. The Government can set a policy to ensure that housing is available to the citizens at an affordable price, which I will define as 5 years of the average household income. Based on an average income of $60,000, the flat should cost $300,000. This can be for a size of 1,000 sf.

3. Smaller flats can be made available to poor families at a lower price, say $180,000 and $240,000.

4. Housing at these prices will be build by a government agency, i.e. the HDB, based on these prices. These prices can be adjusted yearly according to changes in the average income.

5. Those who earn over the average income can buy a home from the private market. They are also given the option to buy the public housing i.e. there is no income ceiling.

6. If the Government is willing to provide the public housing at the benchmark price to all families who opt for it, the price in the private market will not run off too far from the standard flat. Similarly, the resale market for the public housing will also not move too far off.

7. Instead of allowing the resale market to set the price for the new public housing, it should be the other way round, i.e. the benchmark price for new flats provided by the housing agency should influence the resale market.

8. Each family is allowed to buy a public housing at the benchmark price only once. If they wish to upgrade, they have to go to the resale market. As indicated, earlier, this market will not deviate much from the pricing of the new flats.

9. The housing agency should also build flats for rental to locals, who are not yet ready to commit to the purchase of a flat, or to foreigners working here. The rental rate should bear a reasonable ratio to the purchase price.

10. People who be encouraged to relocate closer to their place of work. If they sell their home and buy a new home, they should only be required to pay stamp duty on the difference in the value of the homes.  The transaction cost, i.e. agency and legal fees, should also be reduced.

11. Housing should not be allowed as a form of speculation or making profit. It should be a place to stay and to moderate the cost over the long term.

Guess my birthday

Enjoy this challenging puzzle

Tuesday, February 19, 2013


Please send email to your friends and ask them to sign this Petition for a Referendum on the Population White Paper

Monday, February 18, 2013

Suggestions to improve the bus service

13 February 2013

Editor, Voices
Today Paper

To solve the over-crowding on the MRT trains, it is important
to make it convenient for commuters to take buses.

I suggest the following steps be taken by the Land Transport 
Authority together with the bus operators:

1. Educate the public about how to find the convenient bus
services, using the websites and mobile apps

2. Allow commuters to know the arrival time of the buses, using
the mobile apps. This information is available for SBS buses, but
is not provided for SMRT buses.

3. Display the sequential stop number in the bus, so that 
commuters will know when to alight from the bus, without having 
to look outside for landmarks.

I have taken the bus regularly and know the importance of 
providing useful information to encourage commuters to try this

My suggestions are can be implemented easily, at low cost and quite
quickly. I urge the Land Transport Authority to be proactive in improving our 
bus service. 

Tan Kin Lian

Sunday, February 17, 2013

My view about the need for foreign workers

1. I wish to give my views about the current Government policy of giving permits for foreigners to work in Singapore. I do not use the word "foreign talent"; instead I will refer to them by the more common terms of foreigners, foreign workers or expatriates.

2. I disagree with the strategy of employing foreigners to reduce our business cost and improve competitiveness, or even to do the work that Singaporeans do not want to do.

3. I believe that there will be Singaporeans who are willing to do most kinds of work, if the pay is adequate and the working conditions are safe and satisfactory. This applies even to the more risky jobs in construction sites and ship repairs. In the developed countries, they are able to find locals who are willing to do these jobs, so why can't we?

4. When foreign workers are taken in at lower salaries to reduce business cost, there is a risk that they will displace our local workers. In this past, this was confined to the sectors considered to be risky, such as construction and ship repair, but it has now expanded  to many other sectors, including cleaning, nursing,  service jobs and even the PMETjobs.

5. The foreigners are able to accept lower salaries because their goal is to earn money to send to their families back home, where the cost of living is only a fraction of Singapore. Our locals cannot compete with the foreigners because they have to earn enough to meet the high cost of living in Singapore.

6. Our males are further handicapped by the need to go for reservist duties, which disrupt the work schedules and make them less preferred by many employers.

7. This situation in Singapore is now quite untenable. Having opened the flood gates, the Government does not know how to deal with the situation. Is there any other option? Can we rely more on local workers and less on foreign workers?

8. An economy that entirely on local workers will adjust the wages for various occupations to the appropriate level based on supply and demand. If the economy is competitive and vibrant, there will be sufficient jobs for all the locals, especially if they are well educated and highly trained.

9. Even the less educated can get employed in the jobs that suit their skills, such as cleaning and manual work. If these jobs pay adequately, they will be Singaporeans willing to do the work.  We have no shortage of locals doing cleaning, nursing and other manual work in past years.

10. We can have continue to bring in foreigners with the skills that are needed in our economy and are in short supply, including the expatriates and entrepreneurs. We should be prepared to give them permanent residency after a few years, and allow them to bring them families here.

11. If they fit into our environment, our aim is to make them into our citizens and integrate them into our society. This is similar to how we treated Malaysians in the past. We can now extend this treatment to other nationals, who have an interest to make Singapore into their home.

12.  The foreign workers should be placed on the same salary levels as the locals for the same type of work and performance, so that their cost to the employer is the same. It is all right for the Government to impose a levy to be paid by the foreign workers, if their family do not live in Singapore.

13. There is a fear that our businesses will not be competitive, if the wages are increased. This fear is largely unjustified. Wages are only one component of the total cost of doing business. The other costs, such as rents, taxes and bureaucratic costs and transaction costs can be reduced through government policy and national collaboration.

14. If Singaporeans are assured that they can get jobs that are suitable to their skills, and they can earn adequate wages to meet the cost of living, to afford a home and to save for the future, they will be willing to welcome immigrants to contribute to a better life in Singapore.

15.  We need to manage immigrants in a more holistic way. We have to access their skills and their desire to make a home in Singapore - instead of their willingness to work at lower pay to make our businesses more competitive. If they do not serve National Service, they should be expected to pay an additional tax.

16. It is possible for us to re-think about the structure of our work force, and if work towards a more sustainable model.


Stop charging of unwanted SMS messages

13 February 2013 

Editor, Forum Page
Straits Times

The Infocomm Development Authority is probing into the activities 
of a company that attracts customers to participate in an online contest
and, without the knowledge of the customer, sends SMS messages to the 
customers at $3 per message.

It is possible that the customer might have inadvertently clicked on a
link that gives consent to the sending of the SMS messages. Usually, 
the customers are distracted by the details of the contest that they have
let down their guard.  

I suggest that the IDA officials should seek the assistance of the Police in
this investigation. This case could  be classified as "cheating", which is a 
criminal offence, and has to be prosecuted by the Police. Cheating is the 
use of deception to take money from the victim.

The offender might not be aware that they are committing a crime, and 
can be given the opportunity to compensate the unsuspecting customers, and 
also to cease this dubious operation.

If they persist, the Police can charge them in court and let the judge decide if 
this activity amounts to cheating.

I urge the IDA and the Police to take proactive action on this matter to stop 
this type of dubious activity. Similar schemes had been around for a long time and 
has given a bad name to Singapore.

I also urge them to have a talk with the mobile operators, so that these operators
are made aware that they might be abetting a crime.

Tan Kin Lian

Find a Life Partner

Here are three tips on how to find a life partner, written for people who faced difficulty before.

Find a Life Partner

Here are three tips on how to find a life partner, written for people who faced difficulty before.

TKL speech at Hong Lim Park, 16 February

If you like the Government to hold a Referendum, sign here,

Speech by Tan Kin Lian at Hong Lim Park, 16 February 2013

1.     When the population white paper was first announced with the headline of 6.9 million people, many people were shocked. Were you shocked? Well, it shocked me. Why?

2.     With 5.3 million people, Singapore is already too crowded. Each day, we travel in packed trains and buses, and on congested roads. There are long queues in hospitals, schools and shopping malls or just to get a flat. If the quality of life is bad with 5.3 million people, it will get worse when with 6.9 million!

3.     The Government heard the uproar and came in with damage control! They said, 6.9 million is just a “worst case scenario”. Later, they amend the motion in Parliament to say that it is just a roadmap, not a target, not a projection, but a roadmap for planning purpose.

4.     But people still worry: if the infrastructure is built for 6.9 million people, will it be left idle? Is there a risk that the government will be tempted to use the slack?

5.     While we object to the 6.9 million, it is our duty as citizens to understand the key challenges facing our country. I like to deal with two important ones raised in the white paper.
6.     The white paper said that a bigger economy is needed to provide good jobs for Singaporeans. 65% want to have PMET jobs, i.e. professional, managerial, executive and technical jobs. Therefore, we have to import foreign workers to do the work that Singaporeans do not want to do, i.e. the manual, service and manufacturing jobs.
7.     Are we sure that they will only take jobs that Singaporeans don’t want? We have seen many PMETs lost their jobs to foreigners and have to become taxi drivers. A bigger population is not the solution. 

8.     Our problem is that the economy structure is now in somewhat of a mess. Too many qualified people are working in sales and speculation of properties, financial products, shares, money lending and even COE papers that pay well, but do not create real value. Because they pay well, few people want to be engineers, teachers, policemen and nurses.

9.     In the offices, many people do work that are unproductive and unnecessary, handling payment by cheques, accounting for GST, submitting returns to government agencies. There are more efficient ways to carrying out these activities, but we have become complacent.

10.  We have to restructure the economy, to distribute our human resources more evenly to the various sectors of the economy, to reduce the cost of doing business, to reduce the wastage.

11.  We have to give adequate wages, dignity and fair employment terms to service and manual workers, so that Singaporeans will be willing to accept these jobs. In the advanced countries, many of these jobs are held by their local people. Why can’t we? We need to have our locals working in all segments of our society, rather than in a narrow sector.

12.  The white paper said that an aging population will create a financial problem for the young. By 2030, only 2.1 young people will be available to support an elderly person, compared to 6.5 now. Is this true?

13.  As a whole, the elderly generation is actually quite well off, as they had benefited from the asset appreciation. Most of them do not really need to depend on their children. Instead, it is the other way round. They have to support their children to make the down payment for their HDB flat!

14.  There are some elderly people who are poor, but this is caused by the unequal distribution of income and wealth. The burden of taking care of them should be borne by the Government, and not on their children. We need a new mind-set towards welfare of the elderly.

15.  Our key challenge is to raise the birth rate in Singapore. This problem was recognized 30 years ago, and several measures were tried, baby bonus 1, 2, and 3, but they did not work. It is time for us to look for new approaches.

16.  To solve this problem, we have to look at the root cause. Young people find it difficult to get a job that pays a salary that is adequate to pay for their home, to raise a family and to save for the future needs. They also do not feel secure of keeping their job. In the face of the uncertainty, many opt to avoid the financial and other burden of raising children.

17.  We also have to work long hours and hard to be sure to keep their jobs. Many do not have the time to socialize. They are also not sure if they have time to spend with their family, after they get married.

18.  I have some ideas on how to achieve these goals, but due to lack of time, I shall not discuss them here.

19.  My key message is – tackle the root of the problem. This will encourage young people to start a family and to have children. But, we have to make it feasible and enjoyable for them. Only then, can we achieve a sustainable population for a dynamic Singapore.

Tan Kin Lian

Protests at Hong Lim Park, 16 February 2013


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