Saturday, June 06, 2015

A coalition government is good for Singapore

A grassroots leader made this statement - "Even if the PAP were to lose more than  four GRCs and more than 50% of the seats in Parliament, they will still form the government. The other parties are not united and they will be unable to form a coalition government without the PAP.

I agree with his view. But, it will be a very different PAP when they do not have the absolute control of Parliament. They will be more consultative and will listen more to the voices of the people.

I envisage that the following changes will be made - National Service and reservists obligations will be shortened. GST will be abolished. Immigration will be further restricted.

That would be a good outcome for Singapore.

Friday, June 05, 2015

Increase the birth rate - a paradigm shift

Many countries face the problem of a declining birth rate. Singapore fares among the worst having one of the lowest birth rate in the world. These countries, including Singapore, have introduced many incentives and baby bonus schemes to increase the birth rate, but the results have been disappointing.

We need a new approach - a paradigm shift. If we keep repeating the old methods, we will get the same results. Albert Einstein said that only mad people continue the same methods and expect different results!

Underlying cause

What is the underlying cause of the declining birth rate? Women like to work. Many of them study to get suitable qualification and join the workforce. The high cost of living make it difficult for the traditional family (where there is one breadwinner) to earn enough to pay for the cost of raising a family.

This is a simple fact. It applies to most families. Wealthy families can afford to act differently. But the majority of the population cannot afford to live on one income.

Paradigm shift

The paradigm shift is to move the cost of raising children from the family to the state. It is in the interest of the state to have its citizens produce children for the next generation. If the citizens cannot afford this burden, the state must come in to take care of the financial burden.

This means free maternity care, medical care, child care and education for the child. If the mother does not work and takes care of the child, the mother should also receive an allowance from the state up to a certain age of the child, e.g. until the child is 6 years old.

Cost to the state

Someone will point out that this is costly to the state and means more taxes. My answer is - not necessarily. The state is already spending a lot of money on their current baby bonuses and other incentives, which are not working. We should be using the budget more wisely to get the result that we want.

It is likely that a higher budget is required under my proposal. But this can be calculated and the decision makers can consider if this higher budget is worth spending. I think that this is a priority issue, and is necessary for the future of our country.

Abuse of this scheme

I have also considered the possibility of abuse. What if some families wish to produce many children? Will this be a burden to the state?

This matter can be easily resolved. The funding by the state will apply to two or three children in each family. If the family opts to have more children, they should bear the cost of the additional children on their own. The policy can also address the issue of single mothers and for unexpected child births.

I do not profess to have all the answers, but I know that the lawmakers or the people at large can find out the practical answers to these issues through discussion and voting for their choices.

Mothering as an occupation

If there are adequate incentives, some women may prefer to be a mother as an "occupation" and join the workforce when the children have started schooling. As the mother receives an allowance from the state and the cost of raising the child is largely borne by the state, it is possible for the family to live well on one income.

Some women may prefer to be educated and join the workforce. But other women, who are not academically strong, may opt to be a mother initially and join the workforce later.

Women are most productively when they are below 30 years. This scheme gives a choice for women to opt to be mothers, without creating a burden on the family finances.


We have to adopt a paradigm shift to increase the birth rate. My proposal is that the state should recognize that it is a priority to encourage citizens to have children and to remove the financial burden from the family for up to two or three children. We should also offer an option for women to adopt "raising a family" as an occupation, at least for a certain number of years.

Tan Kin Lian

Thursday, June 04, 2015

How to get rid of GST

I have made this statement many times - the Goods & Services Tax (GST) is the worst kind of tax that can be introduced by any government.

Every one has to make one or two dozen transactions every day - public transport, meals, drinks, small purchases. The less frequent transactions include seeing the doctor, going for haircut, paying for services each month.

Every transaction has a GST component to be collected and accounted for. By introducing the value added system, the collection and accounting is taken upstream to include the value added at each stage of the process. This is madness!

Although there are computer systems that can help to reduce the work, the data entry has still to be done manually. While a large part can be integrated with the normal accounting process, there is still the portion that needed to be taken out to report to the tax authorities.

To make matters worse, the government starts to have complicated rules about what are to be "exempted" or "zero-rated".  And the public argues that it is a heavy burden to impose GST on medical bills and essential food items that are needed by the low income people.

After more than 20 years of implementation, GST continue to be perplexing and unpopular.

Better ways to collect tax

There are better ways to collect the tax that is required to run the government.

The first question to be addressed is - does the Singapore government really need to collect GST as it runs a large surplus, by IMF standards, even without GST.

However, if we take the accounting method of the Singapore government and the removal of GST leads to a budget deficit, what is an alternative to GST?

A simple way is to increase income tax to the rate that existed before GST was introduced. But if this was not desirable, here is another way.

We need to collect tax on employees and the self employed people using an approach that approximates to the GST that they would have spent. The key difference is that we collect the tax in a monthly sum, rather than on several dozen transactions every day.

a) For the employed, we can collect a payroll tax based on a certain percentage of the salary or wage. The tax could be 5% (compared to 7% of GST). It allows for some of the earnings not being spent on items subject to GST.

b) For the self-employed, e.g. taxi drivers, hawkers, small time contractors - the tax can be paid as part of the fee that is required to obtain a licence to run the business.

Employers need to employ workers to run the business. So, they have to pay the payroll tax, just like they now pay a levy to employ a foreign worker. The employer will treat it as part of the cost of running the business and may reduce the salary of the worker (who now does not need to pay GST). This can be left to market forces, subject to regulations on recommended wages for certain occupations.

The self-employed need to get a licence to run the business. They will also pay the licence fee and will treat it as part of the cost of running their business. While some of these businesses will operate in the black market, the majority will be law abiding. This has been the experience in Singapore.

For the high income earners, such as doctors, lawyers, senior corporate managers - there is still the income tax to catch their income above a threshold.


It is possible to scrap GST and replace it by a payroll tax and a licence fee to run verious types of businesses. As the payroll tax is paid by the employer, the workers do not feel the pinch in their daily spending, although they will have to accept a somewhat reduced salary.

The benefit to the country is to remove the waste of the collecting and accounting of GST on tens of millions of transactions every day, and to reduce the constant arguments on what should or should be subject to GST.

Why housing prices should be kept low

The success of the economy in Germany shows the importance of a government policy to keep housing prices low. This will encourage the funds to be invested in productive purpose, rather than in inflating housing prices.
Singapore must learn from this example. Our economic growth was largely fueled by inflated housing prices which is really stealing from the future of the next generation.
I have been strongly against the rising property prices for the past 2 decades. I knew that there was something wrong with this trend. I am glad now to find evidence from Germany to support my gut instinct.

Wednesday, June 03, 2015

Bombshell from a taxi driver

After visiting an exhibition at Marina Bay Sands, I took a taxi back to my office. I had a nice chat with the taxi driver who drove a Comfort taxi for more than 20 years. We discussed how good were the old days, when Singapore was under Mr. LKY. The HDB flats were affordable, and the cost of living was also low.

Things got progressively worse under the next two prime ministers. HDB flats are now too expensive. Many young men cannot afford to get married due to the high cost of housing.

Then he gave a bombshell. He said that the PAP would lose at least four GRCs at the next general election - Marine Parade, East Coast, Bedok and Aljunied. (Maybe GCT will not contest in Marine Parade at the next GE?) The Workers Party are working hard in Pasir Ris also.

Where are they going to get the candidates. His taxi driver friends had privileged information that Dr TCB and 40 ex PAP leaders will contest under the Workers Party banner. Wow!

He made the statements in a most convincing manner. He believed in the reliability of his source. His friends had attended meetings where these matters were discussed.

During the second World World, when Norway was occupied by the Nazis, there were regular rumors that the Allies had landed to liberate Norway. After a while, most people knew that the rumors were not true, but it was nice to hear them anyway.

This was how I felt about the statements made by the Comfort taxi driver. They were probably not true, but it was nice to hear about them anyway. But, maybe ... with Mr. LKY having passed away from the scene, the ex PAP leaders may be coming forward?

Building a culture of innovation

Here are some suggestions from a top person in Google on how to build a culture of innovation in an organisation.

The key points are:
a) Have a mission that is passionate and exciting
b) Be transparent and build trust
c) Give a voice for employeers.

GST is a nonsense tax

Here is another example why GST is a nonsense tax. It causes confusion when government hospitals do not charge GST (i.e. absorbed by the government) and private hospitals charge GST separately.

If the prices are not controlled, the hospital could have increased the fees to include GST.

Here are the reasons why I consider GST to be a "nonsense tax". There are better ways for any government to collect tax revenue. GST is one of the worse type of tax. It is troublesome and confusing.

Tuesday, June 02, 2015

Chasing your tail

I searched Google for an explanation of "chasing your tail". The explanation from Cambridge dictionaries say "to be busy doing a lot of things but achieving very little".

Something flashed at the top of the page. It is an advertisement from the Ministry of Health. It said, "Have you confirmed your household information?".

How coincidental. This is a really good illustration of "chasing your tail". 

The government wanted to enhance the benefit of Medishield Life. But it requires a higher premium to be paid. But they wanted to "calibrate" the subsidy according to several factors, including average household income and type of housing. It is the latter two categories that is a good example of "chasing your tail".

It takes a lot of work and trouble to find out about household income per member. Getting a person's income is already troublesome, as some people do not pay income tax. Getting the household income is more challenging.

It is also difficult to identify the type of housing occupied by each person. You require each person to give his or her residential address and to link to them to the household. Some people living in the same address are tenants or servants and do not belong to the household.

The government has to take the trouble to ask everybody to declare which people belong to their household. Besides creating a lot of work and problem for the civil servants, it also gives a lot of trouble for the public to make this declaration.  

What is the purpose of this humongous exercise? So that the government can calibrate the subsidy and reduce it to people whom they deem to justify a lower level of subsidy?

Are we talking of a lot of money? No! The amount of subsidy is just a hundred or two per person. Even if this is given to all citizens, regardless of income level or type of housing, the total amount of subsidy is still quite modest. It can easily be recovered by increasing the income tax rate by a negligible percentage. 

This is not the end of the story. The members of the household change their income each year, and the composition of the household also change each year. So, the data that is collected so painfully and expensively is good only for a one time purpose and cannot be re-used in a future year. How wasteful!

Accept uncertainty

Many people are not able to accept uncertainty. If you make a request that is 80% clear and 20% vague, they will find it difficult to work in that environment. Often the 20% that is vague is not critical for the completion of the project.

The mindset of these people is that they need the requirement to be spelled out 100% clearly and completely. This tends to lock up the project tightly, with difficulty to make changes. It takes too long to define completely what is not clear at the initial stage.

A flexible approach comprises of the following:

a) A clear purpose and a plan to achieve that purpose that is not fully specified. What is vague at the initial stage can be specified at a later date.
b) A willingness to experiment and modify the plan based on experience.

This will develop a lean and entrepreneurial approach.

Monday, June 01, 2015

Be careful of structured financial products

When you put your savings in a one year fixed deposit with a good quality bank, you get an interest rate less than 1 percent per annum. If your bank offers a promotion for new deposits, you may be able to get a higher interest rate of say 1.5% per annum.

If a good quality bank offer you a higher interest rate of say 3% per annum, you have to study it carefully. Here are some possible reasons why they pay a higher interest rate:

a) You have to lock up your deposit for a longer period, maybe 3 to 5 years.

b) It may comprise of a guaranteed component that is slightly lower than 1% and the additional payout is subject to conditions.

c) Your principal may not be guaranteed at all. These products are described as "investments" rather than "deposits".

These structured products are usually quite complicated. Most retail investors will ask the marketing person to explain the product. This should be avoided, for the following reasons:

1) The marketing person has to meet a sales quota, so they will present the positive features to get you to buy, and may not tell you the negative features.

2) Often, the marketing person is not aware about the negative features, as their trainer hide these negative facts from them. 

It is best that you read the product brochure carefully, and if it looks unclear, avoid the product. Or get independent advice - and pay separately for the advice.

Many people have lost their life savings buying bad products that they were not aware of. The marketing person who sold the products to them, may be their family or friend, and they are also not aware of the negative aspects.

Top up the minimum sum account

Dear Mr. Tan,
My wife was a home maker for most of your life. She does not have adequate savings in the CPF. While most people like to take out their money from the CPF as early as possible, I encourage her to put her savings in the CPF as it gives an interest rate of 4% per annum, which is much better than interest from the bank.

My question is - how can she top up her CPF savings? She prefers to transfer the savings from her bank account into the CPF special account to reach the maximum allowed. How do we find out what is allowed, as it is quite complicated.

Ask your wife to bring her NRIC and check book and visit any of the CPF branches. They have branches in the major housing estates. Make an appointment or just go and queue up. The staff will be able to advice her on the amount that she can top up, and also explain the restrictions and withdrawal options. The staff will also help her to fill up the required forms. She only need to write the cheque.
If she cannot pay on the same visit, she can come back another day to make the payment.

Avoid negative attributes

Dear Mr. Tan

Thank you for sharing your tips on how to change the mindset and attitude to become more employable. I agree with these tips. I have worked with Singaporeans workers over the past years and found that they have certain attitudes that need to be changed. Here are some of them:

1. Lack of initiative. They will not decide on their own or use what you say is "common sense". They want to get detailed instructions before they act. As if, they are afraid of making a mistake.
2. Not my job. They are not prepared to do anything that they perceive to be "not their job". There are a few employees in my office, and all of them refuse to clean the office, even the area that is in their workplace. They said that it is the job of the cleaner. You know, it is difficult to engage a cleaner for a small office.
3. Avoid responsibility. If there is a mistake, their reaction is to justify why the mistake was not made by them. I prefer them to find the solution, rather than to apportion blame.
I have also observed these attributes. I wonder if it is a typical Singaporean character, or it applies to the younger generation in many countries? Could this be caused by the education system?

Sunday, May 31, 2015

How to compete against foreigners with fake qualification

Some Singaporeans are unhappy that some jobs were given to foreigners who came into Singapore with fake qualification

It is bad for the government to allow foreigners to get a work pass with a fake qualification. The government should be more vigilant in scrutinizing the job applications, especially in checking that the qualification are valid.

However, the Singaporeans who lost in the competition for jobs should share some of the blame.

Ultimately, the employer employs a person based on his ability to perform the job. If the foreigner had a fake qualification and could not perform the job, he or she will be found out within a short time, and will be terminated. If the foreigner can do the job well, even though the qualification may be faked, the employer will not scrutinize the qualification as they found the employee to be satisfactory.

A person can do a job well if he or she has the combination of the following:

a) Qualification that can be applied to the job
b) Job skills and experience that are relevant to the job
c) Social skills in communication and in working with colleagues and in a team.

Some Singaporeans may have a good qualification, but they cannot apply that knowledge to their job. If they are also weak in their job skills, experience and social skills, they are not likely to be employed. They cannot complain that the job went to a foreigner with a fake qualification. They should make themselves to be employable by having the right attributes that are important to the employer.

I find that our education system did not prepare many school leavers well for the job environment. The emphasis on getting a degree, and ignoring the other important skills, is harmful to our locals when they have to compete for jobs.

They should realize what are the important attributes to get and keep a good job.

On a positive note, Singaporeans are generally hard working, honest and well educated. They need to use these positive attributes effectively, and learn how to make themselves more employable.


The writer of this article compared Trinidad with Singapore, and pointed out several attributes that make Trinidad better than Singapore. I checked Google Map to see where is this place. It is off Venezuela in South America.

Bad work habits

Here are some bad work habits of Singaporean workers, as posted in my Facebook. They do not reflect local workers in general, but perhaps these bad habits do occur frequently enough to pose a worry.

1) I think it is also quite true that some Singaporeans, despite having higher pay, are not any more productive, skillful or committed than foreigners, especially in the technical and IT fields. And this I speak from first hand observations.
Perhaps this is also due to the fact that there are not enough Singaporeans, and also the better ones do not want to take up technical courses in our Polys and U, resulting in a large number of places being given to foreigners and on scholarships.
So these Singapore students after graduation, also have skills, aptitude and attitude problems doing the type of work for which they were trained in their certs. And that's why many also ended up working in fields not related to their certs too.

2) I also know that in many companies, Singaporeans tend to takes many long smoke breaks, and late for work, they may not know that their employers are observing and monitoring..till then its too late to realized why they got replaced.

3) Locals will tend to skive, chit chat, act blur and push away responsibilities.

These comments are made by Singaporean workers who have observed the bad work habits of other Singaporean workers. We should be aware about these bad work habits and correct them.

Bad business practice of NETS

I wish to bring out a bad business practice of NETS, the issuer of the cash card. This type of bad practice should be stopped. Responsible business should operate more ethically.

I bought a cash card from a 7-eleven store. I paid $5 as deposit for the cash card and top up with money to be used. The cash card was faulty after a few months. I went to my bank kiosk and they refunded back the balance, excluding the $5 deposit.

I checked with my bank on how to get the $5 refund for the faulty card. They checked with NETS and told me that I had to complete a serially numbered form from the bank and submit it to NETS for a refund.

NETS do not provide a soft copy form that can be downloaded from the internet. I suspect that they did it intentionally to make it difficult for the customer to get the refund.

I visited the bank branch to complete the form. The bank helped to submit the completed form to NETS.

I received a reply from NETS that they had already refunded the balance to me. I called their call center and could not get to speak to their staff after waiting for 10 minutes. I sent an email to them to ask about the $5 that was to be returned. They replied by email that the $5 was not refundable.

Here are the issues;

1. If the $5 was not refundable, even for a faulty card, why not state it clearly in their website and in their refund form?
2. Why make the customer go through so much trouble and then tell the customer that the $5 was not refundable?
3. Was this an attempt by NETS to tell the authority that they are making a refund for a faulty card and then create obstacles for the customer to get the refund?
4. Is NETS trying to cheat the customer of what is rightfully due to them?

I find this business practice to be bad. It should be stopped.

Stop giving work pass to foreigners with fake degrees

There were several cases of foreigners who obtained work passes with fake degrees. The Ministry of Manpower do not carry out any verification of the qualifications when they issue the work passes. They rely on employers to do the checking. But most employers are not equipped to carry out this task.

How can this challenge be addressed?

First, we have to recognize that this responsibility should be place on the government, and not of the individual employers. Here are the reasons:

1) It is difficult to verify the qualifications. But it is important to find a solution, as this is a key attribute to granting a work pass.,

2) The government is better equipped to carry out this task, as they have the authority of the law and can impose sanctions on people who intentionally cheat the system. The individual employers do not have this power.

3) It is more economical for the government to carry out the task, as they can build a central database that can be used permanently.

If the government accepts this responsibility, here is my suggestion on how it can be carried out effectively.

1) The foreigner applying for a work pass should state up to three qualifications on which they based their application. They should state the educational institute, the year of qualification and the study course that they have applied for.

2) A central database can be built up to identify the recognized institute and to establish connection with these institutes to verify that the diploma or degree is authentic.

3) For institutes that are not registered, an external agency can be appointed to verify the status of the institute. The applicant can be asked to provide contact information of the institute. This process can help to identify the suspect institutes early. It is also possible to post the names of these institutes for the public at large to give information to identify the suspect institutes.

By adopting this approach, it is likely that most fake qualifications can be identified quite easily.

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