Saturday, March 09, 2019

A very painful loss - Hyflux securities

Hi Kin Lian,
I don’t know who it seek advice and I hope you could help.

My Husband and I bought Hyflux shares through applying IPO. We each took 100k from our savings and apply for it.

To our surprise, we were allocated 80k each. Usually the ratio is not that high. We had 2 kids, aged 2 and 4, lives in a 5 room flat.

My Husband said Hyflux is going to return us 20k each only. That is very little. It means we will lose more than 100k.

I thought that preference shares is very safe; who can I go to appeal for my case? Do you think I could get my money back?

You can read my views about Hyflux here.

I hold a strong view that the government through PUB and the Energy Market Authority, caused this massive loss to the retail investors.

As things now stand, the prospects are very bad for the retail investors. You will get back only 10.9% of what you invested.

I hope, maybe, with the strong views that I have expressed, the government will step in and make sure that the retail investors get more.

With best wishes.

Tan Kin Lian

Hyflux is two times worse than Lehman episode

Someone compared the Hyflux perpetual securities with the Lehman Brother minibonds that occurred 10 years ago.

He did not realize that the Hyflux episode is two times worse!

The Lehman episode involved 10,000 investors and $500 million - and that includes all the structured notes issued at that time.

The Hyflux securities affected 34,000 investors and totalled $900 million.

Except that the Hyflux disaster is totally caused by people in Singapore, and not be external events. So, it is really very bad.

Read here.

Fly Scoot to Sydney?

My extended family discussed a trip to Sydney in October to attend the wedding of my nephew. The discussion was on WhatsApp.

Several family members discussed the air fare from SQ and other airlines. The best return fare was about $800.

I suggested to fly Scoot.

I received several immediate responses. - don't fly Scoot. Not reliable. Plane delay. Better to pay more for SQ.

I said OK.

I posted the return fare on Scoot to be $400 before baggage and food.

Two days later, the majority of the extended families opted to fly Scoot.

I have flown Scoot to Sydney a year or two ago. It was all right for both legs. The plane was good - Dreamliner.

Even if I was caught in a plane delay (it did not happen), it would not be a big issue.

My extended family reflects the behavior of most Singaporeans. They are influenced, may I say over influenced, by negative news.

When they spend time with research, they would probably change their mind and go for the best option.

Duplicate coverage lead to excessive cost

For many years, I disliked the integrated plans. I preferred that the government runs the health plan and do not allow the private insurer to offer the integrated plans.

I find the integrated plans to be too confusing and the public have to pay more than necessary.

Here is a latest episode that confirm my fear. This man has to pay to insure his mother and is paying for duplicate and unnecessary coverage.

We have a bad, broken down system.

Poor quality of the people in charge

I am worried about the future of Singapore. I am worried about the poor quality of the people appointed to be in charge of our ministries and agencies.

Things appear to be falling apart.

The latest evidences are the fines imposed by the Singapore Medical Council on two doctors for minor lapses. The amounts of the fines are $100,000 and $50,000 respectively.

A more effective defense strategy

I posted this view in 2014 - 5 years ago. This is largely relevant today.

If it was implemented, Aloysius Pang would not have died. Maybe more people would get married and have more children. Maybe, our locals would not have to worry about losing jobs to foreign workers.

Excessive fines imposed by the Singapore Medical Council

The Singapore Medical Council is geting out of hand.

It imposed a fine of $100,000 on a doctor for failing to inform the patient on the possible side effect of a common injection. Click here.

It imposed a fine of $50,000 on a doctor for giving private information to the wrong person. Click here.

In both cases, it was clear that the doctor had acted properly and the mistake was an oversight. Why was such a large fine being imposed?

The fine imposed by the Council was clearly excessive. Two separate petitions were organized by the doctors against the excessive fines. There were clearly out of proportion to the mistake.

A poison pill for Hyflux

A retail investor in Hyflux said that the government gave a poison pill to Hyflux. I asked him to explain his remarks.

He said that the government asked for tender for the Tuaspring project. It comprised a water desalination plant and a power generation plant.

If there was already an overcapacity in power generation, why did the government asked any party (Hyflux or others) to submit a tender for this project? Is it not giving them a poison pill?

WOTC - Appointment of auditor general

I asked this question in the Wisdom of the Crowd:

Is it proper a minister of state's wife to be appointed as auditor general?

Here are the responses: (59 Votes)
51 % - It is difficult for her to take an independent approach towards the spending of the ministry that is headed by her husband.
44 % - There are other suitable people that can be appointed into this position.
3 % - It is proper as there is no conflict of interest.
2 % - It is proper if she has cleared through the normal process.

See the pie chart at:

WOTC - Failure of second Trump Kim summit

I asked this question in the Wisdom of the Crowd:

What are your views about the failure of the second Trump Kim Summit?

Here are the responses: (47 Votes)
64 % - The summit should not be held without adequate preparation and prior understanding.
13 % - Kim was unreasonable in insisting on withdrawal of sanctions.
13 % - It is unfair to the host country which had put in a lot of effort for the summit.
11 % - It is irresponsible for Trump to walk out just like that.

See the pie chart at:

Friday, March 08, 2019

Double coverage for health insurance

Hello Mr Tan,
In 2005, I bought a hospital plan for my mother. Though the years, I was able to use my medisave to pay for her annual premium.

Lately my insurance agent updated me that I will have to top-up cash as my mum’s getting older and her premium is getting expensive. She is 70 years old currently.

With the various policy changes, and taking into consideration she is under the pioneer generation, what would you advise? Should I change a new plan for her?

Annual premium
CPF Medishield Life - $885
Great Eastern Supreme Health Plan A Plus - $1,410
Total $2,295

Cash top-up $510

Reply here

Depleting value of HDB flats

The minister has announced that the current rules will be changed to allow CPF to be used to purchase the older HDB flats.

This will help in some way to remove the sharp decline in value when the HDB flat reach 40 years. I made this suggestion a few months ago. I am glad that this change is being made.

However, it will not address the concern that the buyers are paying a high price for the HDB flat and the flat will have zero value at the end of the 99 year lease. The large sum paid towards the flat will be totally depleted.

Is it fair to the owners who paid a large sum to buy the HDB flats? No, it is not.

Advantages of public transport

I have been taking the bus to office and back for three years. I gave up driving after the COE expired.

My wife bought a new car for the home, but I agreed not to drive it. I often scratched the car due to careless driving.

Here are the advantages of taking public transport:

a) I do not have to look for a parking space in a full car park.
b) I do not have to look for the car after I forgot where I parked it.
c) I do not have to look for the machine to pay the parking fee - in the old malls.
d) I spend 20 minutes a day walking to the bus stop and to my office and home - it is good form of exercise.

I prefer public transport to Grab, even ignoring the cost of the Grab fare. I know when the bus or train will arrive. Grab is less reliable. Sometimes, the driver cancel the booking.

Another disadvantage of Grab is that I often have to tell the driver the direction to take.

It does take a longer time to travel on public transport. I leave early and allow for the longer travel time.

I have a friend who is a multi millionaire. He is older than me. He also prefer to take public transport than to drive a car.

Tan Kin Lian

WOTC - Basic military training

I asked this question in the Wisdom of the Crowd:

Who should provide basic military training for NS conscripts?

Here are the responses: (48 Votes)
88 % - SAF regulars who have several years of training experience.
8 % - NS officer s and NCOs who were trained a few years earlier.
4 % - NS officers and NCOs who were trained one year earlier.

See the pie chart at:

WOTC - A big bully

I asked this question in the Wisdom of the Crowd:

Who do you consider to be a big bully to other countries?

Here are the responses: (44 Votes)
66 % - America
20 % - China
9 % - Israel
5 % - Malaysia 

See the pie chart at:

Thursday, March 07, 2019

A "professional" property agent

A friend introduced me to a "professional" property agent. The agent strongly recommended me to invest in property as a good long term investment.

At first, he recommended residential property.

I told him that residential property is out, as I have to pay the ABSD - additional buyer stamp duty of 15%, as I already own more than 2 residential properties. With the high price, it does not make sense to invest with this additional cost.

The agent then recommended that I invest in shop units. He sent several offers and gave figures to show that they provide attractive yields.

I refused to consider any of them. I know that retail sector is very bad. Read about this story.
I stopped responding to the "professional" property agent. He only wants to close a deal and earn his commission.

Make CPF Life voluntary

Some 15 years ago, the government formed a committee to study the introduction of CPF Life annuity.

I met the review committee and gave my view - do not make CPF life compulsory, make it attractive.

I wanted the CPF member to have a choice whether or not to invest in CPF Life. It depends on their individual need and preference.

The review committee did not accept my suggestion. They made it compulsory.

Read here:

A memorable train journey in Switzerland

In January 2000, I was invited to attend an insurance conference in St. Moritz, Switzerland. The host arranged for a limousine to drive me from Zurich airport to St. Moritz.

I enquired about the cost of the limousine. It was more than $1,000, and more than the cost of the economy airfare from Singapore to Zurich. I cancelled the limousine.

At Zurich airport, I went to the train station to buy a ticket to St. Moritz. The staff did a lot of work and arranged the itinerary. The cost was only $50 (or thereabouts).

I was horrified to see the itinerary. I had to take three separate trains. Will there be enough time to move from one platform to another at the connecting station? I also had to carry heavy luggage.

This was the first time that I had taken a train in Switzerland or in Europe, for that matter.

I could not communicate with the staff because he spoken German and had a poor command of English.

The journey turned out to be quite easy. The staff made sure that the connecting train is on the same platform that I alighted. The interval was just a few minutes. The train in Switzerland are punctual.

The journey was quite effortless.

The train went up the mountain. It was early winter and snowing lightly. Along the way, I saw the mountain scenery and passed the Swiss cottages. It was exactly as shown in the postcards.

It was a memorable journey.

I wanted to make another journey to Switzerland in winter. 19 years have passed, and I have still not found the opportunity.

Tan Kin Lian

WOTC - Stand united with the govt

I asked this question in the Wisdom of the Crowd:

Should Singaporeans stand united with the govt in the dispute with Malaysia?

Here are the responses: (49 Votes)
45 % - No. It is better to adopt a diplomatic approach.
20 % - We should not treat this issue a reason to be "nationalistic".
18 % - Yes, Malaysia has been acting unreasonably.
16 % - Yes, we should stand united as a nation.

See the pie chart at:

WOTC - A separate fund for each special benefit

I asked this question in the Wisdom of the Crowd:

Should the govt set aside a special fund to provide a special benefit?

Here are the responses: (39 Votes)
33 % - It is unfair that the special fund benefit some recipients (i.e. generation) but exclude other recipients.
28 % - It should be reviewed yearly and come out of the general budget.
23 % - There is a risk that the special fund will not be closely monitored and can be abused.
15 % - It is a good idea to ensure that the cost are fully provided in advance.

See the pie chart at:

Wednesday, March 06, 2019

Need for patient's consent for medical treatment

I am critical of the Ministry of Health and in particular of the health minister for the confusion over the need to get the patient's patient for medical treatment.

This confusion arose from the decision of the Singapore Medical Council to impose a fine of $100,000 on a doctor who failed to get the patient's consent for a treatment.

Why do I blame the Ministry of Health?

Poor leadership in Ministry of Health

Someone said:

A proper consenting process protects patients by ensuring all important aspects of a particular kind of medical care are explained. But it must also be balanced with its practicality and the cost involved.

This is no easy task.

MOH must be applauded in taking the lead to ease uncertainties on the ground and provide a balanced consenting process.

My view: He applaud the MOH. But it is the poor leadership of MOH and the minister for health that caused the problem in the first place.

Many questions on consenting process

Someone said:

Following several recent verdicts by the Singapore Medical Council, doctors are experiencing many uncertainties on what qualifies as taking consent (MOH conducting thorough review of informed consent, March 3).

First, who should take consent, or be allowed to do so, when patients are managed by a team?

Should the senior doctors of the team be responsible? Or can a junior member like a resident or an intern be allowed to take consent for a complex operation?

Second, what types of procedures are exempted from official consent?

Slow response from PUB about Tuaspring

A retail investor in Hyflux told me that the Public Utilities Board had been very slow in responding to the problem faced by Hyflux over Tuaspring. The delay caused Hyflux to suffer a large loss and destroy the value of the company.

I do not know if his remarks are fair. He must have been very disappointed to see his investment in Hyflux lose 90% of its value.

I tend to sympathize with his view. It was quite clear that the power generation in Hyflux was losing a lot of money.

Review of insurance policies

Hi Mr Tan,
I have quite a few policies, bought for myself, and our 2 children. I am spending more than $X per year on these policies. Is it possible for you to meet me to help me understand what is your view on which policies i should keep? Meeting you face to face is easier for me to understand.

From a recent meeting with my long time agent, i am very disappointed her. I bought another policy from her in that meeting and after reviewing, I noted she didn't highlight to me about an important factor.

Please scan the policies into separate PDF files - 1 PDF for each policy. Several pages goes into 1 PDF. Do not send photos of the policies, as it is difficult to read.
I will contact you over the telephone to discuss it. If necessary, we can arrange a meeting in my office.

Exorbitant charge for roaming data

My mobile operator charged me $14.42 for 586 K of roaming data in a nearby country. This worked out to $24.60 for 1M of data.

I usually pay $1 for 1 G of data from the local provider in a nearby country. So, the rate charged by my mobile operator is 24,000 times of the package rate.

Although the mobile operator set a cap on the daily charge according to country, it still does not change the fact that their basic rate is exorbitant.

In my case, I have set my table to stop roaming data. It did not work. Some of the apps retrieved data in the background at the exorbitant rate. The only option was to close mobile data completely, but this can be overlooked.

I suggest that the authority required the mobile operator to charge for roaming data at a more reasonable rate. Perhaps the cap can be $1 per 1M of roaming data, subject to a daily limit.

Allow CPF savings to be withdrawn fully at age 55

I wish to give my views about the call for CPF savings to be withdrawn fully at age 55.
I support this call.
Here are my reasons.

WOTC - Restriction of foreign workers

I asked this question in the Wisdom of the Crowd:

Do you agree with the restriction on foreign workers for F&B and retail?

Here are the responses: (48 Votes)
58 % - The govt should provide a wage subsidy to allow the employers to pay higher wages for locals in these sectors.
15 % - It will help the employment of locals.
15 % - Locals are not keen to take up these jobs.
13 % - It will create problems for these two sectors.

See the pie chart at:

Remove streaming in secondary school

I agree with the decision of the minister for education to remove streaming in secondary school from 2024. This will get rid of the label of the students according to the normal or express stream.

He will introduce the subject banding system to replace the streams. I agree with this approach. It is likely to work well for most students. It will however not be a perfect system. There is no perfect system anyway for the complicated subject of educating our future people and workforce.

Read my full view here:

Tuesday, March 05, 2019

An event in primary school

When I was in primary 3, I did very well in my class. I get 100 marks for many subjects.

My mother asked my uncle to speak to the principal of the school and asked if I can be double promoted, i.e. go straight to primary 5 from primary 3.

The principal advised against it. So, I went to primary 4.

I am glad that I did not jump one year. It allowed me to do well in primary 4, 5 and 6 without too much effort.

I was not in a hurry anyway.

I did well in primary 6 and was accepted into Raffles Institution. If I had to go to another school it would still be okay for me.

My schooling years in Raffles Institution

I studied in Raffles Institution from 1961 to 1965. The school was located at Bras Basah Road.

I cannot remember much about my days in Raffles. I did well in my studies but was not the top student in the earlier years. I might have been the top in a subject or two in some years, but it was not outstanding.

Surprising, I did well in secondary 4 and was top in the school preliminary examination. In the final examination, conducted by Cambridge (predecessor to the GCE O level), I came second in Raffles. The top student was a Malay.

In that year, a few students from other schools did better than Raffles.

I left school to work as a clerk in an insurance company and to pursue the actuarial studies.

A few classmates remembered me more. One classmate told me that he saw my primary school report book when we were in secondary 1. I had full marks in several subjects in most years. He was intimidated by my result.

I had lost lost the report book. I wondered if that classmate threw it away! Most likely not.

I met my secondary 2 math teacher after 30 years. He recalled an incident that I had forgotten. He was explaining a problem to the class on the blackboard. He got stuck. I went up and helped me to explain the solution to the class.

A few years ago, I attended a reunion of my cohort in Raffles. I saw the school record of my results. My own report card had been lost.

I was surprised to see that I did rather poorly in some subjects in some years. I only scored good marks in some subjects.

Those were the old days. In recent years, many top students scored straight A during the years in secondary school. This was not the case during my time.

I preferred the old days when schooling was to learn something useful, and not to score As.

Tan Kin Lian

Relook at our CPF System

The CPF system used to be the pride of Singapore. It was a good and fair system. It was popular. It helped to build up the economic backbone of Singapore during our early years.

However, the CPF system has become quite unpopular in recent years. Some of the complaints are:

a) Low interest rate paid on the savings
b) Frequent changes in the rules on the use of the CPF savings
c) Delay in withdrawal of the savings at and beyond 55.
d) In spite of the high contribution to CPF, many people find the retirement income from CPF to be inadequate.

Many people have started to distrust the CPF system. They consider it another scheme by the government to take away their savings.
We need to revise our approach towards CPF. We need to rebuild the trust in the CPF and let the citizens know that they are getting a fair deal.

Here are my suggestions:

WOTC - Low birth rate

I asked this question in the Wisdom of the Crowd:

Is it important for the government to deal with the low birth rate?

Here are the responses: (49 Votes)
65 % - The govt should try a new approach and adopt the successful strategies of other countries.
24 % - It is critical for the survival of Singapore.
6 % - It is unimportant, as we can import foreigners and give them citizenship.
4 % - Nothing can be done, the birth rate will remain low.

See the pie chart at:

WOTC - Trade dispute between America and China

I asked this question in the Wisdom of the Crowd:

Do you expect the trade dispute between America and China to be resolved?

Here are the responses: (43 Votes)
37 % - They will not agree on an agreement due to unreasonable demands by President Trump.
33 % - The agreement will be for a short time before further disputes arises.
16 % - Both countries will form a lasting agreement.
14 % - President Trump has taken the right approach to being tough on China.

See the pie chart at:

WOTC - Asset Enhancement Policy

I asked this question in the Wisdom of the Crowd:

What are your views about the Asset Enhancement policy introduced by PM Goh?

Here are the responses: (54 Votes)
48 % - I prefer the HDB flats to be kept a affordable prices and to forego the appreciation.
43 % - It is harmful as the HDB flats are most costly and become a burden to the younger people.
9 % - It benefits the people by allowing them to enjoy the appreciation in value of HDB flats.
0 % - Higher property prices is good for the economy.

See the pie chart at:

Monday, March 04, 2019

Are we prepared to cope with declining property values?

Singapore has benefited from high property prices over the past few decades.

The high prices made all property owners, including HDB owners, feel wealthier.

Even if they income is low or the business lose money, most people think about the appreciation in their assets, and consider that they are still better off.

This situation is likely to change. The appreciation in property prices has now come to a stop. It will start to decline.

Worse, HDB flats which have passed the 40 year mark have seen a sharp decline, or a lack of market.

Private property will also follow. The market forces of supply and demand will always mark its mark.

Properties can be inflated when there is euphoria. But when the euphoria disappears, it must come back to earth.

How will Singapore cope with declining value? The wealth that was created in property will disappear. The high prices will now translate into high cost of living, and not appreciation in assets.

What are your views?

Tan Kin Lian

A wise finance minister

A few years ago, I read a statement from the Australian finance minister that he wants to keep interest rate high to give a fair return to retirees who depend on investment income for their retirement needs.

That was a wise finance minister.

Do we need a wise finance minister for Singapore?

WOTC - Sale of Hyflux perpetual securities

I asked this question in the Wisdom of the Crowd:

Should MAS have stopped the sale of Hyflux perpetual securities to retail investors? 

Here are the responses: (55 Votes)
55 % - MAS and SGX should be more diligent before approving the securities for sale to retail investors.
31 % - It is a risky product that should not be sold to retail investors.
7 % - It is a straight forward bond which the retail investors should have studied before they invest in it.
7 % - The investor should realize that it is risky when it pays a coupon of 6%.

See the pie chart at:

WOTC - Save Hyflux

I asked this question in the Wisdom of the Crowd:

Should the govt save Hyflux?

Here are the responses: (54 Votes)
56 % - Yes, the company manages our water treatment plant. It is strategically important for Singapore. 
17 % - Yes, the company has knowhow that is important for Singapore to offer services to other countries.
15 % - No, the government should not bail out any commercial enterprise
13 % - No, the company is badly managed and deserve to be bankrupted.

See the pie chart at:

Sunday, March 03, 2019

Abolish GST and replace it wit selective consumption taxes

Many Singaporeans do not mind GST but they like it to be exempted for food and medical care.

They do not realize that this will add to the cost of administration significantly. Imagine every retail outlet having to determine which items are subject to GST and which are exempt.

There is already a high cost of accounting for GST. If certain items are to be exempted, all invoicing system used by retail and F&B outlets will have to be re-programmed to differentiate the individual items.

We can expect this exercise to take several months to implement and the cost of changes in computer systems to be quite significant.

I know that some countries have already implemented this differentiation. Yes, they have incurred this high cost already. For us, we have to increase this cost now.

If we want to compare different countries, there are many other costs that are incurred in Singapore that they do not have to face. For example, we have different rates of charges for medical fees, different contribution rates to CPF, different wages for local and foreign workers.

Our aim should be to reduce the heavy cost of compliance and not to add more cost. Already, we have perhaps the highest cost of doing business in the world.

What should be the approach towards GST? We should abolish it totally and replace it with selective consumption taxes. Definitely, food and medical fees will not be taxed under this new approach.

An example of a selective consumption tax is the vehicle tax, which has been a part of the tax system in Singapore for many decades. And it is a big ticket item.

Instead of asking for certain items to be exempted from GST, be bold and ask for GST to be abolished and replaced with selective consumption taxes.

This is explained in this post.

Do you agree? Remember to submit your vote.

Many things that I like about Singapore

There are many things that I like about Singapore. Here are some of them:

a) A good living environment
b) An honest and hard working people (but with some exceptions, i.e. people who make a living by cheating other people)
c) An honest government (but with some exception, i.e. perceived favoritism of some connected people).
d) Things still work - electricity, water, transport, health care.

But there are things that I do not like about Singapore. Here are some of them:

Need to side with Singapore on the water dispute

Some people accused me of siding with Malaysia on the dispute over the water agreement. I was also accused of being "disloyal to Singapore".

We need to get above the pettiness and see the dispute from a higher perspective. We should see the issue from the perspective of both sides.

Let me address the key points.

A different approach towards streaming

I wish to suggest a different approach towards catering for slow learners that was implicitly adopted many years ago.

This approach was forgotten when the streaming system was implemented in the 1980s.

What was this original approach?

WOTC - Overcapacity in electricity market

I asked this question in the Wisdom of the Crowd:

Should the Energy Market Authority be responsible for the overcapacity?

Here are the responses: (52 Votes)
38 % - It is wasteful for the country to have excess capacity leading to big losses that are suffered by the investors.
33 % - The EMA should monitor the market and not allow too many producers to enter the market.
19 % - The EMA has the data and should share it with the producers early.
10 % - The energy producers should do their own study before investing in the capacity.

See the pie chart at:

WOTC - Should the govt take back Tuaspring?

I asked this question in the Wisdom of the Crowd:

Should the govt take back Tuas Spring from Hyflux

Here are the responses: (53 Votes)
58 % - It should take back Tuas Spring as a national strategic asset.
19 % - It should take back Tuas Spring as the value offered by the Salim Medco consortium is too low.
13 % - The government should leave it to the market to sort out this bad investment by Hyflux.
9 % - It is unfair for the retail investors to suffer a big loss of their retirement funds due to extreme market conditions.

See the pie chart at:

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