Saturday, October 24, 2015

Commercial challenges facing the Singapore-KL HIgh Speed Rail project

I expect there will be a lot of challenges to be overcome when it comes to negotiating the commercial terms for the joint venture to build the high speed railway between Singapore and Kuala Lumpur.

Some of them include:
a) Who will be invited to tender for the different parts of the project?
b) Who will form the selection committee?
c) Will the award process be transparent?
d) Will the ticket prices be on commercial terms?
e) Can the high speed rail compete with budget airlines?
f)  What will be the ownership split between the two governments?

I wonder if these terms have already been agreed between the two governments. We need to know the details - at least what has already been agreed and what remains to be negotiated. It is so opaque now.

Maybe, I overlooked the details. I hope someone can point them out to me.

The Indonesian government appear to adopt a better approach in building its high speed rail between Jakarta and Bandung. The government decided that it will be a commercial project and there will be no government funding or guarantee for the loan. However, they will probably provide the land at a nominal cost.

The operators have to ensure that it is viable and the prices are competitive compared to other modes of transport.

Weekend Votes

Can you spend some time this weekend to vote on the issues here?

Friday, October 23, 2015

Summary of voting

What do the ordinary people, or "the wisdom of the crowd" think about the issues affecting their lives? Here is a summary of the voting on these issues.

I encourage you to pick the issues and cast your votes. We need more votes to get more credible results.

Is it a bad decision to locate the HSR station in Jurong East?

I found it rather strange that PM Lee agreed to have the HIgh Speed Rail go all the way to Jurong East.

We spent 20 years "negotiating" with the Malaysian government to locate the KTM railway in Woodlands, instead of Keppel Road. The idea was that it will free up the land taken up by the rail, so that the land can be used for other purpose.

It seems to be a logical step for the HSR to terminate in Woodlands or Kranji. We do have a good network of MRT stations that can connect to these stations.

Why did PM Lee insist on Jurong East? He should have brought this matter for public discussion, rather than decide on his own with PM Najib of Malaysia. I think the Malaysian government are not in favor of Jurong East anyway.

It seemed to be a bad decision. The people of both countries would like to understand the rationale for this decision.

Use your initiative

Mr. Tan
I observe that many young people do not want to think. They only want to have instructions that they can follow, and they do it blindly. Even if the instructions are wrong, or they misunderstood it, they will follow it blindly. And they will later justify the mistake by saying "you told me".

I have read your postings and I think you share the same view. Is it correct?

Why don't you state your views, without "putting words in my mouth"? There is no need to. You are entitled to express your views on its own.

I do agree with your views on this matter. I have observed this behavior not only with younger people, but with older ones as well. This must be the outcome of our education system which has been around for 50 years.

Whenever someone ask for instructions on unimportant matters, I often reply "use your initiative" or "use your common sense" or "take the responsibility".

Thursday, October 22, 2015

High speed rail

Should the high speed rail stop at Woodlands instead of Jurong East? Cast your vote in this website.

How to get a persistent insurance agent off your back

Mr. Tan I have a good friend who works for a life insurance company. He has been trying to get me to save in a life insurance policy. I like to avoid it, as I read that it gives a poor return. He has been very persistent. How do I tell him politely? I do not wish to spoil our friendship. REPLY You can ask him to give you a benefit illustration of the policy that he is recommending to you. Ask him the following question: 1) Can you show me the "distribution cost"? 2) Please explain what this figure mean? 3) Is the distribution cost taken from the premium that I will have to pay? 4) Why is the amount so large? 5) Can you show me the "effect of deduction" 6) Please explain what this figure mean? 7) Is the distribution cost taken from the premium that I will have to pay? 8) Why is the amount so large? 9) How is this figure different from the "distribution cost"? He will probably say that he does not know what the figure mean. He will try to find out. Most likely, he will not come back to you. So, you can forget about this matter.

Review your existing insurance policy

If you have bought a life insurance policy many years ago and now wish to review the need to continue the insurance policy, you can contact me for consultation. 

You will have to ask your insurance company to provide a post-sale benefit illustration for your policy. You can register here and upload the benefit illustration.

I will review the policy and talk to you about your current financial needs. I will also prepare a brief report showing the key aspects of the policy that will assist you to make a decision.

If you wish me to review several policies, you have to merge them into one PDF (using an online PDF merging service) and upload them here.

Rejected insurance claim - getting help

I have been approached for consultancy on several cases of insurance claims that were rejected by the insurance company. The rejection was made on some weak grounds, such as the alleged non-disclosure of existing medical condition. In some cases, the policyholder was not aware about the medical condition. In some cases, the insurance agent did a sloppy job in helping the policyholder to complete the application form or the upgrading form.

If you have experienced such a rejection and wish to consult me, you can register here and provide the details in a PDF form. I will review your case without charge.

If I take on the case, I will do the following:

a) Assist you to prepare a full report of the claim, giving argument that the rejection was unfair to the policyholder
b) You can submit the report to the insurance company for a review.
c) If the insurance company still reject the claim, I will assist you to prepare a complaint to be lodged with FiDREC (i.e Financial Industry Dispute Resolution Center).

You do not have to pay me any fee for an unsuccessful claim. If  are successful in getting partial or full payment of the  claim, you will have to donate 10% of the claim amount to the Financial Services Consumer Association.

Rejected insurance claim - insurer finally pay

Recently, I was approached to help an elderly lady who was covered under a Shield plan for private hospital. She was treated in a private hospital for colon cancer. The total bill was $300,000. The insurance company rejected the claim as she did not disclose that she was being treated for diabetes when she upgraded the plan a year earlier.

I helped the daughter of the policyholder to prepare a report on this matter. It was submitted to the insurance company, and copied to the regulator.

After a few months, the insurance company changed its mind and agreed to settle the claim. It seemed that the agent was not thorough in asking the policyholder on her medical condition when helping to complete the upgrading form.

I have been approached on many cases of rejection of an insurance claim on flimsy grounds. I help the consumers to present their case for the insurance company to review their decision. If it is still rejected, the case material can be used to lodge a complaint with FiDREC.

If you are interested to consult me, register here.

High Speed Rail

The High Speed Rail to Kuala Lumpur will terminate in Jurong East. I wonder if most of the journey through Singapore is above or under ground?
It would have been better to have the railway terminate in Woodlands and for the passengers to travel to other parts of Singapore using our MRT system. This would reduce the cost of the system and make it available sooner.

Australia revised regulations on sale of life insurance

Australia will allow commission to be paid on life insurance policies but they will be regulated and lower than the rates paid previously.

The proposed reforms for adviser remuneration in the retail life insurance industry include:

Maximum total upfront commission of 60% of the premium in the first year of the policy, from 1 July 2018, with transitional arrangements to gradually reduce the upfront commission taking effect from 1 January 2016.

Maximum ongoing commission of 20% of the premium in all subsequent years from 1 January 2016.

Three-year retention (‘clawback’) period, to commence from 1 January 2016 ranging from 100% clawback of the commission on the first year’s premium in the first year of the policy to 60% in the second year and 30% in the third year.

Ban on other volume-based payments from 1 July 2016, with appropriate grandfathering arrangements.

Life insurance companies to offer fee-for-service insurance products to support advisers who wish to operate on a fee-for-service basis.

Wednesday, October 21, 2015

Take a loan from a policy

Mr. Tan,
Is it a good idea to borrow money from a life insurance policy that has accumulated a cash value? Or is it better to surrender the policy and take out the cash value?

Most life insurance policies give you a yield of 2%. If you borrow money from the policy, you have to pay an interest rate of 5% or even higher.

If the amount of loan is $10,000, the difference between the interest that you pay and the increase in the cash value is $300 a year.

If you need money for the short term and can repay back within 1 or 2 years, it is all right to take a loan on the policy.

If you do not expect to repay the loan within two years, it may be better for you to surrender the policy and take out the cash value.

But, you should buy term insurance to provide the life insurance cover before surrendering an existing policy.

Tuesday, October 20, 2015

Pay Jet Star tickets through SAM Web and save $18

Thanks to Ervin Yeo, I have now registered for SAM Web. This allows me to pay for my ticket booking for Jet Star and save on $18. I hope that this is the true saving, and there are no other charges.
SAM web can be found at:
I have to register an account. I also have to pay through eNETS.

Review your insurance policy

Someone posted this comment:
If the public is not sure what insurance to have or wonder if the insurance they bought is the right one, they should seek review early before the damage is out of control.
Paying or donating $150 to FISCA is minuscule a sum to pay when the benefits of not losing tens of thousand dollars to a rotten insurance product or being conned by insurance conmen and women, right?
Is it a surprise to hear consumers have not heard of term insurance or have not heard of the DPI site or have heard they need not pay commission to insurance agents to buy insurance? You see , the insurance agents do not want you to know what is good for you but what is good for their pockets.
If there is this review service from FISCA the public should take advantage of it and avoid losing tens of thousands dollar for rubbish insurance products and dishonest and incompetent insurance salesmen and women.
To consult me or FISCA, register here:

Australians can avoid paying service charge on Jet Star

I travel on Jet Star regularly and have to pay a service charge of $18 for each payment by credit card. The alternative is to pay at the Post Office SAM machine, which I find to be too troublesome. (But I might try it one day).
At the JetStar website, I found that I could avoid the service fee if I paid by JetStar credit card or at the POLI service.
I tried POLI and found that it is an online service operated by the Australian Post Office but they require an account with an Australian bank.
I tried to apply for a JetStar credit card (co-branded with Master Card) but found that it is available only to Australian citizens.
Bad luck. I have to continue to pay the $18 service charge. The Australian citizens have two options to avoid this charge, but not the Singaporeans.
I wonder if the Australia government imposes a regulation on the airlines? Or was it just commercial pressure? Whatever is the answer, the Singaporeans are neglected.

Monday, October 19, 2015

How to decide on whether to continue your existing life policy

A retiree sent the post sale illustration of three life insurance policies that he bought more than twenty years ago. He asked for my views if he should continue the policy or give them up.

He told me that he does not need the money but will give up the policies if they provide him a poor return.

I analyzed the three policies using this approach. I take the cash value now and the annual premium paid for the next five years. I looked at the projected cash value at the end of five years and compute the yield.

The projected yields on the three policies are 1.2%, 3.3% and 3.9%. I also looked at the life insurance cover provided by the policy now. This is the current death benefit less the cash value. I sent the detailed calculation to him by email and spoke to him over the telephone.

The first policy has a low yield and should be given up. The second policy is borderline. The third policy is attractive and can be kept.

My benchmark is a yield of 4%. The third policy has a yield that is closed to 4% and can be kept for the next 5 years. The policy has a death benefit that is higher than the cash value by $150,000, and the cost of this coverage is quite small.

I calculate the cost of the coverage as follows. The current cash value plus future premium accumulated at 4% is (say) $180,000. The cash value at the end of 5 years is $160,000. The cost of coverage for the next 5 years is the difference of $20,000. This should be compared with the coverage of $150,000 for the next 5 years.

This calculation is "look forward". It does not calculate the yield for the past years of the policies, which is "look backward".

As I made the analysis for 3 policies, I asked the retiree to donate $250 to the Financial Services Consumer Association. He was delighted to make this donation, as he found the information to be useful.

If you wish to do the calculation on your own, you can buy this e-book:

Restructuring of Deutsche Bank

It is interesting to watch the development and restructuring of Deutsche bank. Will this type of restructuring happen to one of our big three banks in Singapore one day? Most banks follow the same culture and will meet the same challenges.

BERLIN: Scandal-plagued Deutsche Bank, Germany's biggest lender, on Sunday (Oct 18) announced a major business and management shake-up that would "fundamentally change" its leadership structure.
The announcement came after Deutsche Bank this month braced employees for bonus cuts, announced its biggest quarterly loss in about a decade and warned that even dividends could be scrapped.
The bank has been undergoing a massive shake-up after its co-chief executives Anshu Jain and Juergen Fitschen resigned in June over a tangle of scandals and missed profit targets, replaced by new co-CEO John Cryan.
The investment and retail bank is mired in around 6,000 different litigation cases and was fined in May a record $2.5 billion (2.2 billion euros) for its involvement in rigging interest rates.
It has also faced probes by Swiss authorities for suspected price fixing on the precious metals market, and US investigators have looked at its Moscow branch on suspicion of possible involvement in money-laundering.
The Supervisory Board on Sunday resolved at an extraordinary meeting in Frankfurt to restructure executive committees and senior management.
The guiding principle was "to reduce complexity of the bank's management structure, enabling it to better meet client demands and requirements of supervisory authorities", the bank said in a statement.
"Deutsche Bank rarely underwent such a fundamental reorganisation in its history," said Paul Achleitner, chairman of the Supervisory Board. "This also requires tough decisions."
Cryan said that "we want to create a better controlled, lower cost, and more focused bank that delivers long-term value to shareholders and great experiences to clients".
"The new structure and management team are essential to getting this done. I am delighted to welcome six new members to the Management Board to form the team that together will build a better Deutsche Bank."
In the shake-up the bank's corporate banking and securities unit (CB&S) will be split in two from Jan 1 - Corporate and Investment Banking and Global Markets, while there would also be changes in Asset & Wealth Management.
Among the management changes, Jeff Urwin, currently co-head of CB&S together with London-based Colin Fan, will join the management board, responsible for corporate and investment banking.
Stefan Krause will resign from the management board on October 31, and Michele Faissola, head of the asset and wealth management unit, will leave the bank after a transition period, Deutsche Bank said.

Health Hub

This initiative, called the Health Hub, looks quite promising. I wish it success.

SINGAPORE: Singaporeans will be able to access their key medical records and appointments with HealthHub, a portal which provides a range of health information and services.
At an early launch of the portal on Sunday (Oct 18), Health Minister Gan Kim Yong said HealthHub aims to provide Singaporeans with easy access to a range of localised health and wellness information to encourage the adoption of healthy lifestyle habits.
"Through HealthHub, you can access your hospital discharge summary, lab test results for chronic diseases, and future medical appointments with the various public healthcare institutions, all at one location," said Mr Gan.
"You can also access immunisation records, dental health records as well as referral letters of your children. This means you can be more aware of your health status and that of your children's. Having convenient access to such information is a step towards helping you make decisions such as how you can take better control and better care of your health and encourage your children to lead a healthier lifestyle." 
Singaporeans can access their health records using their SingPass login.
HealthHub users can also earn and accumulate Healthpoints by sharing health articles, events and apps read through social media. These Healthpoints can be converted to rewards such as NTUC LinkPoints, which can be used to offset grocery bills, redeem vouchers and other deals offered by participating partners.
Some lauded the initiative.
"Sometimes when kids get checked up in the school, they may not come back and tell what's happening," said Padmanabhan Jumbunathan, 45. "At least we can go into this portal and check what their results are."
Others gave suggestions on how the portal could be improved.
"If it can be a whole family portal, it will be good as well because then I can access my husband's details as well as my parents," said 42-year-old Low Choon Luang, a housewife. "I need to take my parents to the polyclinics every three months for regular checks, so I think it is good that this information is also available for me, so that at any time I can check on the information and see whether there is any improvement in my mum's health as well."
The Health Ministry said the portal will be continuously enhanced over the next few years to incorporate features such as patient medication lists and push notifications.  
The ministry said the portal was made possible by consolidating information from public healthcare institutions. Information is also drawn from a number of IT systems, including the National Electronic Healthcare Record and National Immunisation registry. It added that the digitisation of medical records is an ongoing effort and will take sometime to complete.
HealthHub can be accessed at and can also be downloaded as an application on mobile phones through the Apple App store and Google Play Store. 

Sunday, October 18, 2015

Repaying a mortgage loan of $750,000

A new 5 room BTO flat in Tiong Bahru sells for $750,000.

Here are the figures on the monthly repayment over 99 years and 30 years at 4% and 2.6% interest.

Loan Yrs Int Annual Monthly
750000 99 4.00% $30,631 $2,553
750000 30 4.00% $43,373 $3,614
750000 30 2.60% $36,313 $3,026

If the buyer borrows $750,000 and repay over 30 years at 2.6%, the monthly repayment is $3,026. If interest rate increases to 4% (which is likely to happen within a few years), the monthly repayment increased to $3,600.

I have given the monthly repayment for a 99 year loan for comparison only. No bank will grant a loan for such a period. You will see that the repayment drops by only 30% even through the repayment period increased by more than 3 times, i.e. from 30 years to 99 years.

The true cost of ownership

Someone said:
750k (for a 5 room BTO flat in Tiong Bahur) ÷ 99 years ÷ 12 = $ 631 per month (haven't factor in interest ). At this lease price it's cheaper than renting a flat from open market. Right? If you look at it from this perspective, it is indeed VERY affordable.

You must add in the cost of interest for 99 years. The rate over the long term is 4% p.a. The monthly repayment will be $2,600 (or 4 times the rate ignoring interest). 

Add property tax, maintenance fees, repairs and other cost of ownership, your monthly cost would be close to $3,000. Is it still affordable?

Government agencies do not reply by email

Someone sent me this comment on why government agencies do not reply by email.
Mr. Tan,
The threat is real. Email allowed plain text in transmission. Imaging hackers harvest emails and use the sg ic number to request for singpass password reset a few years ago, that caused downtime to singpass owners. A https web form is still more secured than email.

It is the duty of SingPass website to increase its security protocol to deal with this threat They are many ways that people can get the NRIC of other people. Banning the sending of emails is a bad approach.
It is also possible that government emails do not show the full NRIC. They can follow the adopt of credit card, where only the last few digits are shown.

No need to be paranoid about security or privacy

Some people worry that Microsoft, Google, Apple or the cloud service provider would take look into their personal data.
I do not bother.
They have a few hundred million users. They don't have the time to look into the personal data of any specific user. (Only people with criminal intent will target a specific person. And they can be reported for the crime!).
Even our government is paranoid that emails could be hacked into, They refuse to send any communication by email, even though the information is quite routine, such as expiry of road tax. 
I am not paranoid about "security" or "privacy". I know that there is a small risk, but it is really too small for me to bother about it.

Difference between whole life and term insurance for 25 years

Mr. Tan,
You have often advised people to buy a 25 year term insurance policy, instead of a whole life policy.

If a young person takes your advice, what happens at the end of 25 years? The term policy would have expired and he would not have any life insurance for another 20 years of his life, or maybe longer.

Is it all right to be without life insurance?

You need life insurance to meet a financial need, i.e. to provide funds for your family in the event of your premature death. Your family needs the financial protection when the children are young.

After 25 years, your children would have grown up and are independent of you. During the 25 years, you would have accumulated savings. By investing the savings wisely, you would have accumulated sufficient funds that can take care of your future needs. You do not need life insurance any more, after 25 years.

Take a look at this example. If you buy a life insurance policy to cover $300,000, you have to pay $5,000 a year. If you pay $300 a year to buy the term insurance, you can invest $4,700 a year in an index fund, such as the STI ETF.

If the fund earns an average of 5% yearly, the accumulated savings would amount to $236,000. After another 5 years, it would have grown to $300,000. You don't have to die to get this sum. It is cash in your investment fund!

If you bought a whole life policy, the cash value at the end of 25 years is likely to be around $125,000 only, i.e. half of the accumulated sum.

Which is better?

Unconditionally helpful

Mr. Tan,
What is the most striking observation arising from your visit to Sydney?
The Australians are helpful and friendly. I will describe them as being "unconditionally helpful". When you ask for direction or for help, they go out of their way to help you.
Singaporeans used to have this kind of attitude 20 years ago. But, in recent years, our behavior changed. We became more distrusting and more complex in our behavior. We start to ask if we belong to the 30% or 70%, if we are locals or foreigners, etc.
We have changed, for the worse.

Upgrade to Windows 10

I asked my FaceBook friends about their experience in upgrading to Windows 10. 80% said that their experience is positive.
I decided to take the advice of the 80% and upgraded my home PC to Windows 10. My experience so far is positive.
I had problems with connecting to my bluetooth speaker under Windows 7. This problem had been solved in Windows 10.
The user experience so far is satisfactory.
I now have to upgrade my office PC and my laptop.
Note - if the recommendation came from 69% (instead of 80%), I would not have made the change. You know that 69% can be idiots, right? Hahaha.

All taxis should adopt the same fare structure

Should the same fare apply to all taxis picking passengers along the road or at taxi stands?
Give your vote here:

Singapore Parliament should meet at least once a week

I asked if the Singapore Parliament should meet once a week for MPs to ask questions to the ministers, i.e. 52 times a year. 50% of the people who voted felt that this is too often.
I checked Google and found that the Australian Parliament meet 75 days in a year. It is more troublesome for their MPs to meet as they have to travel to Canberra from all over the country and the distance can be several thousand kms, compared to 30 km in Singapore.

Singapore Parliament does not have fixed sitting dates

The Singapore Parliament does not have fixed sitting dates as stated here:
Sitting of Parliament
The Singapore Parliament can meet at any time of the year. The date of the sitting can be specifically named by Parliament upon its adjournment or, if no date is fixed, called by the Speaker.
A notice for each sitting is sent to the MPs who will in turn send in notices of questions that they wish to ask of the Ministers, amendments that they wish to propose to Bills already introduced, or issues which they want to discuss at the forthcoming Parliament sitting. The items of business to be considered on the sitting day are printed in an Order Paper and distributed to visitors on the day of the sitting.
Parliament sittings usually begin at 1.30pm, and the first one-and-a-half hours are allocated for Question Time. During this period, only questions listed on the Order Paper may be dealt with. As Question Time is limited to one-and-a-half hours, outstanding questions at the end of Question Time will be dealt with as questions for written answer or postponed to a later day.
After Question Time, Parliament moves on to Ministerial Statements, if any, and this is usually followed by the introduction of Government Bills. In this part of the proceedings, the Ministers in charge of the respective Bills will introduce new Bills to Parliament for the first time. Any Member of Parliament can also introduce a Bill in Parliament known as a Private Member's Bill.
Finally, Parliament will move on to the Orders of the Day and Notices of Motions, where it will review Bills that are set down for Second and Third Readings and debate motions moved by MPs.

In Australia, the lower house, i.e. the house of representatives sits 75 days in a year, or approximately one third of their working days. The upper house sits for 60 days. The question time in Parliament is broadcast live on television.

A narrow minded person

Someone said that there is no need to have clear directions to a MRT station because "there is a thing call google map in your smartphone. unless u still using ancient phone....".
This is an example of a narrow minded person. Because he uses Google Map, he assumed that other people should have Google Map.
He forgot that some people can't use smart phone, other people forgot to bring their smart phone, the battery has died, or there is no internet connection (e.g. visitors).
What's wrong with having proper signs?
I have seen many narrow minded people in Singapore. I do not know if this is caused by our education system, or that the people in other countries also have the same mindset.
During my visit to Sydney, all of the Australians that I met did not have this attitude. They went out of the way to give me the directions to the station or the bus stop.

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