Saturday, February 23, 2019

Why was the Hyflux perpetual securities allowed to be sold to retail investors?

Someone asked me to raise this questions - why was the perpetual securities allowed to be sold to retail investors?

He said that they are high risks and many of the retail investors are not sophisticated enough to be able to assess the risk.

These securities are more suitable for institutional investors who are able to assess the risk and to make an informed judgment.

He said that the regulator, i.e. the Monetary Authority of Singapore, has not learned the lesson from the collapse of Lehman Brothers in 2008.

At that time, 10,000 investors lost $500 million due to the structured bonds.

This time, the loss is bigger. It affected 34,000 investors (of the preference shares and perpetual securities) and the sum involved is $900 million. Under the restructuring plan, the investors get back only 10%.

He also asked i the Singapore Exchange had done its due diligence in allowing these perpetual securities to be sold to the retail investors.

Low enterprise value for Hyflux

An investor who followed the development in Hyflux closely asked me to point out the problem in getting a fair value for Tuaspring. The bidder needs to get approval from the Public Utilities Board (PUB) to have access to the confidential information needed for their due diligence. The approval took a long time. Finally, only 8 parties were interested to be pre-qualified and PUB only approved two parties. This has caused the value to be so low.

The outcome is quite unfair to the retail investors of Hyflux. They stand to lose 90% of the total sum of $900 million that they had invested in the preference shares and perpetual securities.

WOTC - Low trading volume in SGX

I asked this question in the Wisdom of the Crowd:

Why is there low interest in the Singapore Exchange (SGX)> 

Here are the responses: (39 Votes)
36 % - SGX and MAS have troublesome and impractical regulations 
33 % - SGX allows shady companies to be listed.
28 % - The listed companies are not exciting.
3 % - Investors have moved to trading in futures and forex, which SGX does well.

See the pie chart at:

WOTC - PPP on the Sports Hub

I asked this question in the Wisdom of the Crowd:

What are your views about the PPP on the Sports Hub?

Here are the responses: (46 Votes)
33 % - It reflects the inability of the govt to manage a business partnership.
33 % - It will be a white elephant.
26 % - The Sports Hub should be developed by the govt and not a PPP consortium.
7 % - We should have kept the old National Stadium.
2 % - It will become successful one day.

See the pie chart at:

Appeal to government to take back Tuas Spring

An retail investor in the shares and perpetual securities of Hyflux asked me to put up this appeal.

Please help to spread the word to people who have invested in Hyflux and ask them to sign the appeal.…

Please share.

Our Plight
We petition for the plight of 34,000 Hyflux stakeholders, many whom are Singapore Citizens and retirees who placed their CPF/SRS/retirement funds in Hyflux notes, perpetual securities and preference shares. It is clear now to us that Salim Medco (SMI) is no white knight and their offer is most disadvantageous to all stakeholders as they sacrifice junior creditors to maximise the value of Hyflux for themselves. SMI offers $400M for 60% of Hyflux which value Hyflux at $667M. This figure is just around 50% of the cost of building TuasSpring (TS) plant alone.Unfortunately, this massive loss in value is at the expense of our CPF/SRS investments and retirement savings!
Prior to TS fiasco, Hyflux was profitable. We understand it was the excess supply in the gas fuel contract and the prolonged weak power market which can be linked to Government (Govt) Agency policy that caused the Company to bleed badly, resulting in insolvency. What is most puzzling is why the Authority pre‐qualified only 2 bidders for TS which artificially depressed the price (resulting in only 1 bid) and yet approved foreign firm taking control of the entire Hyflux with TS as part of the deal at bargain price? This situation also allows SMI to place tough conditions on Hyflux as part of their investment conditions. Hyflux’s woes stemmed solely because they took on TS a Govt Public‐Private‐Partnership(PPP) Project.
Hyflux stakeholders now are facing this disastrous choice – Vote for the scheme and lose up to 90% of our investment or liquidate possibly get 0%. Faced with this dilemma, we have no choice but appeal to our Govt for help.
1. Tuaspring is a strategic national asset (One of “Four National Taps”)
Hyflux, for many years, was the pride of our nation (endorsed by our late Mr Lee Kuan Yew). Water is a critical asset to Singapore and NEWater together Desalinated Water formed two of Singapore much vaulted “Four National Taps”. A video on TS is also proudly shown on PUB’s webpage.
Therefore, TS cannot be seen as a commercial asset but strategic to Singapore much like Public Transport (MRT and Buses) and Infrastructure (reservoirs and water pipes). We cannot allow such asset to fall into foreign hands and face issues similar to that with Malaysia over water supply.
2. If the government can intervene with MRT and buses, why not Tuasspring?
Govt has already set precedence by acquiring formerly public listed SMRT because of public woes due to frequent train breakdowns. The Govt also spent $1.1 billion buying new buses for commercial bus companies to ease national transport problems. Similarly, TS which provides the nation with water is a matter of national interest and the government should step in to intervene to acquire it.
3. Our only hope of recovering our investment is Govt to acquire TS as Strategic National Asset.
The plant was initiated by PUB and built according to specs to serve National Needs. It is a bespoke National Strategic Asset. The Govt can justify taking over TS to protect national interest and to take ownership on a failed PPP. TS was built for $1.3 billion. Should the Govt acquire TS at Fair Asset Value, there will be enough money to pay off Malayan Banking’s lien on TS and some left to pay outstanding creditors. What’s more, Hyflux will remain viable as a going concern. This is not a BAILOUT but rightful Govt action.
OUR PLEA – All 34,000 stakeholders of about 150,000 family members, many Singapore Citizens and retirees whose livelihood will be severely affected if the Government do not step in to save our hard‐earned investment and precious retirement fund from being decimated by SMI.
We appeal to our Government to ACT Now to acquire TS plant as a National Strategic Asset at Building Costs (less depreciation) which should be worth more than S$1 billion. Please Acquire TS before the Restructuring Process starts or it will be too late for us after that to salvage our retirement funds.

Friday, February 22, 2019

Improve productivity in Singapore

The economists measure productivity by dividing the total output by the number of workers. During years of low productivity, the cause is usually identified by an increase in the number of low wage foreign workers allowed to work in Singapore.

This measurement fails to recognize some major issues. I like to touch of them.

Depleting value of HDB flat

When HDB flats were first build, the flats were sold at very low prices. In subsequent years, under the Asset Enhancement Policy of the government, the prices of the flats appreciated many times. The people who bought their flats earlier enjoyed a large gain. Those who bought the flats at the higher prices were still able to enjoy the appreciation as long as the flats continue to increase in price.

The government leaders also advised the citizens to buy a flat and enjoy the appreciation in the value.

However, most people do not realize that the HDB flats are sold on 99 year leases and that the flats will have no value at the end of the lease.

What can be done?

WOTC - American involved in HIV leak

I asked this question in the Wisdom of the Crowd:

How should the govt respond to allegations made by the American involved in the HIV leak?

Here are the responses: (42 Votes)
52 % - Extradite him to face charges in court.
36 % - Give a detailed reply to each allegation and continue to do so for each new allegation.
12 % - Do it only once to showed that he had lied, and ignore him after that.
0 % - Ignore him, as his statements are clearly not credible.

See the pie chart at:

WOTC - Free trade agreements

I asked this question in the Wisdom of the Crowd:

Are free trade agreements generally good for Singapore?

Here are the responses: (50 Votes)
54 % - They can be serious negative consequences, such as the free flow of foreigners to work in Singapore under the CECA agreement with India
18 % - They generally benefit the multinational corporations but not the workers
18 % - The new jobs created in Singapore are generally for foreign workers
10 % - They help to bring more jobs for Singaporeans.

See the pie chart at:

Thursday, February 21, 2019

Special Purpose Funds

I was surprised to learn that there were 9 special purpose funds created in recent years. A total of $41.2 billion were stashed away in these funds.

What are the risks and how can they be addressed?
I give my views here:

WOTC - Negative postings by foreigners

I asked this question in the Wisdom of the Crowd:

Are negative postings during the spat with Malaysia caused by foreigners?

Here are the responses: (44 Votes)
75 % - The Singapore authority should accept honest feedback instead of looking for scapegoats.
14 % - They are likely to be caused by Malaysians to put pressure on Singapore.
9 % - They are likely to be posted by travellers, affected by the jams.
2 % - It was true that there was a longer jam at the causeways caused mainly on the Singapore side.

See the pie chart at:

WOTC - Patient records stored in central database

I asked this question in the Wisdom of the Crowd:

Should patient records be stored in a central database?

Here are the responses: (48 Votes)
44 % - Patients should be alerted by SMS when their data is being accessed.
31 % - This is necessary for doctors to view the patient records prior to treatment.
15 % - Patients with sensitive data, such as HiV patients, should be allowed to request their data to be stored offline.
10 % - No - as there is a high risk that sensitive data can be hacked and stolen.

See the pie chart at:

Withdrawal of savings from CPF

I give my views about the withdrawal of savings from the Central Provident Fund.

When CPF first started, the withdrawal age was 55 years. Now, a large portion of the CPF savings are deferred to age 70 and can only be taken out in monthly installments.

Many members are angry about the delay in withdrawals. They insist that they be allowed to take out all of their savings at age 55.

I like to give my views about this matter.

Wednesday, February 20, 2019

Superannuation fund in Australia - compare with CPF

An Singaporean, who has migrated to Australia, sent me this post to share his views about the management of his superannuation fund, compared to our Central Provident Fund in Singapore.

Do you like our CPF to be more transparent in investing our retirement funds?

Budget 2019 - What are the key issues?

The minister of finance Heng Swee Keat presented the Budget for 2019 to Parliament. The analysts and public commented on the main items covered in the budget.

I like to talk about the items that he did not cover in the budget. These are the items that are critical to the future of Singapore.

What are these items?

WOTC - GRC system

I asked this question in the Wisdom of the Crowd:

What are your views about the GRC system?

Here are the responses: (48 Votes)
56 % - It breeds arrogance and brings down the quality of the govt.
35 % - It damages the accountability of elected MPs to their voters.
6 % - It ensures that MPs are elected from the minority groups.
2 % - It encourages competent people to enter parliament and serve as ministers

See the pie chart at:

WOTC - Immunity on safety breaches

I asked this question in the Wisdom of the Crowd:

Should the govt remove immunity on Mindef officers for safety breaches?

Here are the responses: (53 Votes)
87 % - This will bring better accountability and make the Mindef officers more careful in their work.
8 % - Leave it to Mindef to handle the safety breaches according to its internal procedures.
4 % - This will open the floodgates for all kinds of claims.
2 % - This will hamper the training of recruits.

See the pie chart at:

Tuesday, February 19, 2019

Tuas Spring - service concession arrangement with PUB

Extracted from 2017 financial report - Hyflux.

In 2011, the Group entered into a service concession arrangement with PUB, the Singapore’s national water agency (the “grantor”) to construct a seawater desalination plant and a power generation facility (collectively the “plants”) in Tuas, Singapore. 

The construction of the plants commenced in 2011 and the seawater desalination plant and the power generation facility was completed and available for use in 2013 and 2016 respectively. Under the terms of agreement, the Group is responsible for the construction of the plants. 

Upon completion of the construction, the Group will operate the plants and supply desalinated water to PUB and electricity generated from the power generation facility in excess of the requirements of the desalination plant will be sold to the National Electricity Market of Singapore. 

The concession period is 25 years, starting from 2013. The Group will be responsible for any maintenance services required during the concession period. The Group does not expect major
repairs to be necessary during the concession period.

The grantor will provide the Group a guaranteed minimum payments for the period that the plants are in operation. Additionally, the Group earned a tariff for the supply of water and has the right to collect and retain proceeds from the sale of electricity, both of which are collected and earned by the Group over and above the guaranteed minimum payments to be received from the grantor. 

At the end of the concession period, the plants become the property of the grantor and the Group will have no further involvement in its operation or maintenance requirements.

The service concession agreement does not contain a renewal option. The rights of the grantor to terminate the agreement include poor performance by the Group and in the event of a material
breach in the terms of the agreement. The rights of the Group to terminate the agreement include failure of the grantor to make payment under the agreement and a material breach in the terms of
the agreement.

WOTC - Tan Cheng Bock's party

I asked this question in the Wisdom of the Crowd:

What is your opinion of Dr. Tan Cheng Bock's party?

Here are the responses: (42 Votes)
43 % - It is a good start.
43 % - The party will be able to attract more high profile candidates nearer the general election.
14 % - It will cause three corner fights in several constituencies.
0 % - I am disappointed that the party did not include former PAP MPs.

See the pie chart at:

WOTC - Two ministers to run a ministry

I asked this question in the Wisdom of the Crowd:

Why two ministers run a ministry and a minister run two ministries?

Here are the responses: (46 Votes)
83 % - It is a wasteful way to run a government
13 % - This allows the ministers to have more exposure to two ministries.
4 % - PM Lee does not trust a single minister to run a ministry
0 % - This shows that the ministers deserve their high salary.

See the pie chart at:

Budget 2019 - my initial thoughts

Life is boring in Singapore. We are not encouraged to talk about or to criticize government policies. If we do, we have to be careful. If we are not careful, we can be sued for defamation or charged for criminal defamation.

Most citizens look towards the Budget Statement presented to Parliament to learn about the fiscal plans of the government and to comment on these plans.

The Budget Statement for this year is of special interest because it is the bicentennial of the colonialization of Singapore. I wonder if any other country in the world celebrates its control by an imperial power.

Never mind.

The citizens look forward in anticipation of the good news that the government will be presenting in the budget. The cynical ones say that this is to buy votes for the general election that is expected this year.

Budget time is usually good news, because it is usually bad news during the rest of the year – with increases in fees, taxes, government charges and consumer prices.

So what is the good news?

Monday, February 18, 2019

Need to review old policies

I express my opinion after I carried out the basic research. It may concern an area that I am not an expert in, e.g. health care or defense or any government ministry.

I present the facts that are available and the policy choice that I am prefer. I state my reasons for making that choice.

I have received the following kinds of responses.

What is the real problem with TuasSpring?

I have tried to find out the underlying problem with TuasSpring?

It was reported that the massive loss (of about $100 million a year) was caused by the weak wholesale electricity market.

I received some conflicting report that the electricity produced by this plant was mainly used for its own needs, i.e. to produce desalinated water.

There was no information about the amount of electricity that was supplied to the market.

I might have missed the information, but I did try to search for it from various sources, including the annual report.

I wonder if the real problem was caused by the production of water, i.e. the price for the desalinated water was contracted at a low price and is lower than the cost of production.

I also read a small mention that Hyflux signed a long term contract for the supply of gas. I wonder if the contracted price was too high, relative to the current market price.

Could Hyflux be suffering from this supply of gas contract?

I wonder if someone, who follow this issue more closely, can throw some light?

Tan Kin Lian

WOTC - Centralized health record system

I asked this question in the Wisdom of the Crowd:

Should we pursue a centralised health record system?

Here are the responses: (41 Votes)
49 % - We need a centralized system to improve delivery of the health services
29 % - The value is questionable, and the risk of hacking is worrisome.
17 % - The manual record of the GP has served us well, and is probably the most efficient method.
5 % - It is better to ask the patient to keep the personal health record in a flash drive or SD card.

See the pie chart at:

WOTC - Special fund for Merderka package

I asked this question in the Wisdom of the Crowd:

The govt will set aside a separate fund for the Merdeka Generation package.

Here are the responses: (44 Votes)
57 % - It is better to find a way to bring down the health care cost 
27 % - We don't want more scandals as had occurred with other funds, e.g. SkillsFuture.
11 % - We should avoid setting up so many special purpose funds, as they are difficult to track.
5 % - This is sound fiscal management.

See the pie chart at:

Sunday, February 17, 2019

Reduce postal mail

It was reported that a postal worker in Sing Post has to deliver 3,000 items a day. It seemed to suggest that the volume of postal mail has increased in recent years and is the reason for some mails being undelivered.

What it did not say is the reason for the increase. A large proportion of the mail is sent by govt agencies and business organizations that could have been sent by e-mail.

There is a paranoia among the govt that email is not secure and can be hacked.

Challenge to raise a family

A permanent resident working in Singapore told me.

a) They have two children. It cost $2,500 a month to send a child to child care, without any subsidy for permanent resident. This is extremely expensive. They cannot afford the child care, so they have to look after the children at home.

b) He does not wish to register his son as a permanent resident as he will be required to serve national service.

c) He and is wife intend to go back to work in Malaysia in the near future. His wife is also a permanent resident in Singapore.

I am sure that many citizens will say - okay, we do not need these kind of permanent residents. Let them return to their own country.

Instead of taking this shallow minded approach, let us consider the changes that are needed to make life more manageable for citizens and permanent residents.

Here are my suggestions

CHAS subsidy errors

There was a computer glitch that caused the CHAS subsidies for 7,700 patients to be calculated wrongly.

Some received more than they were entitled to; while others receive less. The entitlement is based on the means test that calculates the subsidy based on the income of the person or the family.

Here are my views about this incident.

WOTC - Side effects of medication

I asked this question in the Wisdom of the Crowd:

Should a doctor be required to tell the patient of all possible side effects?

Here are the responses: (52 Votes)
67 % - The doctor should tell the patient of all possible side effects, however small.
21 % - The doctor should only tell where the side effect could have serious consequences.
10 % - The doctor should only tell for cases where the patient can make an informed decision.
2 % - The doctor need not tell the patient of side effects for commonly accepted treatment.

See the pie chart at:

WOTC - Cemetery workers collect ang pows

I asked this question in the Wisdom of the Crowd:

Should the CPIB go after cemetery workers for collecting ang pows?

Here are the responses: (50 Votes)
36 % - It is a gesture of appreciation from the bereaved party and is not bribery.
36 % - The CPIB should be focused on going after big corruption and not small cases.
22 % - It is ridiculous for CPIB to go after treat this traditional practice as corruption.
6 % - It is a corrupt practice to receive money for work that is part of the duty.

See the pie chart at:

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