Saturday, December 24, 2022

Property tax for 2023

 This article shows an average increase of 16% in property tax in 2023 for the 3 properties that I own.

Wisdom of the Crowd - New Issues

1. How should wages for each job be determined?
2. What will happen to the covid infection in China?

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Friday, December 23, 2022

What is the difference between e-CNY and RMB in wallets?

The e-CNY is a digital currency operated by the central bank of China. How is it different from the RMB that exists in private wallets (i.e. AliPay and WePay)?

In my opinion, there is no difference between the e-CNY and the RMB in private wallets.

When a consumer in China wants to pay to a merchant in a physical store, he can pay with RMB in his private wallet or with e-CNY in his central bank wallet.

He can also pay an online merchant in the same way, i.e. using a private wallet or a central bank wallet.

If this is the case, why does the central bank in China wants to issue the e-CNY?

I cannot see any useful purpose in issuing the e-CNY as a different currency from the RMB in the private wallets.

Some people say that the central bank has better control over the e-CNY, compared to the existing RMB. I do not think that this is the case for the following reasons:

a) The private wallet platforms need to be approved from the central bank
b) The RMB in the private wallets are transferred from the RMB in the bank accounts under the control of the central bank.
c) The central bank is already able to monitor the digital payments using the RMB, without creating a new currency (i.e. e-CNY).

The only reason for the issue of e-CNY is that the central bank can allow foreigners to hold the e-CNY and prevent them from holding the digital RMB.

I am not able to understand the logic. Surely, the central bank can allow foreigners to hold the RMB in the banks or the private wallets and still monitor the payments?

My conclusion is - there is no need for the central bank to issue the e-CNY as a separate currency from the RMB that now flows through the bank accounts and private wallets.

Maybe, there is a real purpose that I am not aware of.

Tan Kin Lian

WOTC - National Service

 Wisdom of the Crowd: 69% of respondents said that National Service should be shortened or abolished.

Potential benefits and limitations of blockchain technology

 Potential benefits and limitations of blockchain technology

I share my views about the potential benefits and limitations of blockchain technology.

I became interested in blockchain technology when I learned that it is the underlying technology that is used for processing bitcoin. The key features are:

a) It uses a distributed ledger
b) It does not rely on a central database, avoiding the risk of manipulation by the people who have access to it.
c) The distributed ledger is validated by a large number of validators (also called miners).

I enrolled for an online course on blockchain technology and paid the appropriate fee. After attending the two lessons, I felt that I knew enough of the technology to understand its potential benefits and limitations.

I did not want to attend the other lessons, as they contained technical details that are best left to younger people who have the passion and time to master it.

If I need technical knowhow to develop a blockchain application, there will be many qualified people who can take care of the work. I do not need to be that expert.

My key findings are:

a) Blockchain technology is useful for crypto-currency and NFT (non fungible tokens), but there does not appear to be any use for this technology outside of crypto assets.

b) The technology appears to be trying to solve an problem that does not exists, i.e. the use of a distributed ledger to enhance "trust". The integrity of the system can be enhanced by its proper design, and not by using a distributed ledger.

c) It is costly to process transactions using blockchain technology. It also has several shortcomings and risks that are not adequately addressed. (I shall not talk about the shortcomings here).

The most successful use of blockchain technology is in the managing of crypto assets, i.e. crypto currencies and non fungible tokens. Even so, many of these crypto assets have failed. There are still a few crypto assets that are still being traded, but their future is bleak. I do not see them surviving over the long term.

Beyond its use in crypto assets, blockchain technology is still being explored by several governments and businesses.

I personally remain skeptical about their potential benefits. However, I am aware that I might be wrong, and that the powerful brains behind the projects might produce something useful in the future.

The central bank of China embarked on a project to develop a digital currency, called e-CNY, based on blockchain technology in 2014. They committed substantial resources behind this project. They have a strong motivation to introduce the e-CNY as an alternative to the US dollar in international trade.

After 7 years, the central bank has decided not to use blockchain technology for the e-CNY. See this article. It stated: PBOC officials have confirmed that it does not use distributed ledger, or blockchain, technology because it would be unsuited to handle anticipated transaction volumes.

This finding is in line with my common sense and understanding of the technology.

I searched the internet for examples where blockchain technology has been used by businesses to better manage their processes. I came across a few websites listing these examples. These websites are managed by consultancy and technology enterprises that markets the blockchain technology.

They mentioned a few examples of success applications. I read these examples. I could not find any mention of the cost of implementing the blockchain technologies and the advantage over the traditional technologies. I am not convinced that these are real successes.

I will continue to research and follow up on this subject. Meanwhile, I remain skeptical.

Tan Kin Lian

How to preserve the benefits of globalization

 Globalization has its benefits and shortfalls.

The shortfalls, which have not been adequately recognized and addressed over the past three decades, have resulted in a massive reaction by ordinary people in developed countries who were badly affected by globalization through a loss of jobs.
Many countries have started to de-globalized. This will lead to disruption to the supply chains and possible conflicts between nations.
There is still a chance to preserve globalization, but still protect jobs in developed countries. It will allow international trade to continue in an orderly and beneficial way (but not like before).
This approach is to allow countries to levy import tariffs and provide subsidies to their domestic manufacturers to remain competitive.
It requires the World Trade Organization (WTO) to update their existing regulations.

Covid situation after relaxation of restrictions

 Several reports from the western media, and from Channel NewsAsia and SCMP of Hong Kong said that the wave of covid infections had overwhelmed the health system in China and covid deaths were soaring.

They suggested that the official statistics of covid deaths in China was grossly under-reported due to a change in definition by the China authority (which they suggested was unjustified).

Several media mentioned that the daily covid deaths in China has probably reached 5,000. If this is extrapolated for 365 days, the death would be between 1 to 2 million (which was carried in several reports).

There was a positive observation by a German journalist (from the DW media, I think) that the situation is returning to normal in Beijing. There is no more queues in front of fever centers and drug stores. He thinks that the wave is probably over in Beijing. He said that the challenges could lie ahead for the other provinces that do not have the medical facilities in the cities.

I will monitor the reports and make a critical judgment between reliable and smearing reports. Each comment represents the opinion of a journalist based on what he saw and hear. The journalist may or may not be honest in his or her reporting, or may analyze the situation wrongly.

Let me take the figure of 5,000 covid deaths. I consider it to be normal. This figure may persist for several weeks, not will not continue for 1 year. If I take 8 weeks, the figures will reach 250,000 deaths.

Without covid, there are 10 million deaths in China. With the spread of the covid infections, it is likely that some of these "normal deaths" would be from people who are infected by covid. It is also possible that the covid infections accelerated their deaths. The 250,000 projected deaths represent 2.5% of the normal deaths. This is not an alarming figure.

Even if the covid deaths reach 1 million, it represents 10% of normal deaths. Again, I would not be alarmed.

If it passes 2 million deaths (based on a wider definition of covid deaths used in western countries), I might be worried.

Tan Kin Lian

Thursday, December 22, 2022

The paradox of globalization

 During the past 30 years of globalization, one cardinal rule under the World Trade Organization is that a country should not subsidize its domestic manufacturers and that global competition should be open.

America has been criticizing China for its "industrial policy", i.e. that China subsidizes its domestic manufacturers to become more competitive in global trade.

The recent legislation by America to subsidize its semiconductor industries has drawn complaints from European countries.

I wish to point out a paradox.

I believe that globalization will thrive better when a country is allowed to subsidize its domestic manufacturers. This is necessary to allow each country to mitigate the disadvantage from the higher wages in that country, ensure that there is sufficient jobs for the people in that country and keep essential production within the country.

My concept does not mean that international trade will be totally stopped. Many countries will still want to have international trade to get better quality products at lower prices.

However, the "protectionist" measures will ensure that some of the production and jobs remained in the country.

There is no need for there to be too much international trade. It is better to have a balance - some of the products are produced domestically and other products are imported.

Tan Kin Lian

Review of Tesla (TSLA)

I hold 2,100 shares of Tesla at an average cost of $251. At the current price of $137, I see a paper loss of $240,000 USD (SGD 324,000). This wiped out most of the profits that I realized on Tesla during the previous two years.

Part time work for workers above 65 year

Many people think about retiring at 60, or 65 or 70.

Actually, it is better that they do not retire, but instead work part time (say 4 hours a day), provided that they are still healthy. They keep their mind alert, and keep in touch with their professional knowledge.

When I started work in the 1960s, people retire at 55 and pass away at 65 (on average). Today, people pass away at 85 (on average). So, they can continue to work until 75. Some may prefer to continue working until they die, but at a slower pace.

We should make it possible for older people to continue to work in useful jobs that are suitable for their age. It should be not strenuous, not mentally stressful and should be for a few hours.

This will also solve the problem of a low birth rate, and an aging population.

My friend in Australia, who is 75 years old, spends 4 hours a day on several days in the week to take care of an older person who is probably 10 years older. He gets an allowance from the community to do this care work.

I read an article that retired doctors in China are now being called back to help in taking care of people who are mildly infected with covid.

These are examples of how "retired workers" can continue to do part time work and be useful to the community.

The part time work should be provided by and funded by the community (i.e. the government). The rate of pay can be modest. The "retired" workers usually has reduced financial commitments as his children would have grown up.

Many countries provide a state pension to people who passed the retirement age. However, they find the pension to be a financial burden on the state. It is also difficult to change the terms of the pension as it becomes an "entitlement".

An alternative to providing a state pension is for a country to create part time work for retired people. This scheme will probably cost the same or less than a pension.

The part time worker will be doing work that is useful to the community, such as taking care of older people or young children, or being a mentor, companion or guide.

These services can be useful to parents who are busy at work and are not able to give sufficient attention to their young kids.

I hope that Singapore will pursue this suggestion actively.

Tan Kin Lian

WOTC - Temasek Holdings

 Wisdom of the Crowd: 71% of the respondents said that Temasek Holding should not invest in startups. These investments should be left to hedge funds.

Wisdom of the Crowd - New Issues

1. What will happen to China after it relaxed its covid restrictions?
2. Will China achieved strong economic growth for 2023?
3. What is the economic prospect for Singapore in 2023

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WOTC - Communist Party of China

 Wisdom of the Crowd: 46% of respondents said that the Communist Party of China (CPC) should keep its present name. 42% said that it should change its name to the People's Party of China (PPC).

Wednesday, December 21, 2022

Wisdom of the Crowd - New Issues

1. Does increase in GST help the poor?
2. Does abolishing of estate duty help the poor?

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Why GST is wasteful and should be abolished

I share this example to explain why I oppose GST strongly.

a. When I sold my office property, I had to collect GST from the buyer and pay GST to IRAS (the tax authority)
b. The buyer does not mind paying the GST, because they can recover it from the IRAS.
c. I have to pay GST on the lawyer fees, and can recover the GST from IRAS

Basically, it is a game of collect GST, pay GST and get GST refund. It is a waste of work. It is unproductive and wasteful. Many people have to spend time to do the wasteful work.

This does not apply only to the occasional transactions, such as the sale of office property.

It applies to all transactions that occur everyday, most of which attract GST. It creates a lot of accounting work to bill GST, collect GST, pay GST to IRAS, get GST refund.

The large companies can computerize the accounting. Even so, they required manpower to identify and sort out the transactions that require GST or are exempt from GST.

Smaller companies have to employ staff to manually manage the GST accounting.

The small companies that are exempt from GST do not get away either. They have to pay GST on their purchases or supplies, and that add to their cost of operations.

Many people ask for essentials, such as food and medicine, to be exempt from GST, to reduce the impact on people with lower income. The government does not like this suggestion as it would complicate the GST accounting further. (Although, I must point out that many countries manage to exempt these essential items).

For the past three decades, I held the view that GST is a very bad tax and is also costly and troublesome to administer. As time goes by, GST becomes worse and more costly.

I hold the view that the government needs to collect sufficient revenue to run the country, to provide public services, to build a credible defense and to build infrastructure.

There are better ways to collect the tax revenue. GST happens to be a very bad way. I held the view, for three decades, that GST should be totally abolished.

Tan Kin Lian

Tuesday, December 20, 2022

WOTC - Help to cope with higher mortgage payments

 Wisdom of the Crowd: 69% of the respondents said that the government can help home owners who face higher mortgage payments due to increase in mortgage interest rates in two ways.

WOTC - Increase in mortgage interest rate

 Wisdom of the Crowd: 76 % of respondents said that the home owner should be allowed to keep to the same monthly repayment and to repay the loan over a longer period when mortgage interest rate rises sharply.

WOTC - Moderation of social media content

 Wisdom of the Crowd: 73 % of respondents said that social media platforms should exercise moderation to ensure that the content are truthful and stop the spread of harmful content.

Wisdom of the Crowd - New Issues

1. What is the best way to reduce cost of living in Singapore
2. Was it a good strategy to develop crypto currency and blockchain
3. Why was the DPMs not allowed to be acting PM?

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Monday, December 19, 2022

Review of Sinopharm (1099.HK)

 I hold 30,000 shares in Sinopharm. My average cost is HK$21.2. The current price is $20.3. I have a loss of SGD $5,500 on this holding.

Sinopharm hit a low of $14.6 on 7 Oct. It has recovered 40% from this bottom.

The current price earning ratio is 6.77 times and the dividend yield is 4.2%. Sinopharm is expected to report better profit for the current financial year.

With the surge in covid infection in China, following the recent relaxation of covid restriction, I expect an increase demand for Sinopharm's products.

I will buy another 15,000 shares.

Note - I am sharing my personal investment decision. Do not treat it as " investment advice".

Sunday, December 18, 2022

Wisdom of the Crowd - New Issues

1. Should Temasek Holdings issue bonds to raise money for investment?

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Relaxing the covid restrictions

Recently, the China authority relaxed the covid restrictions rather hastily, in response to the large scale protests by residents against the strict restrictions (practiced over three years).

They have have managed the relaxation differently, and prepare the people for the change.

I give this suggestion with the benefit of hindsight. This is how they could have managed the change.

1. They should announce that the relaxation would be implemented in 2 weeks time. This would allow the residents to prepare for the change.

2. They should distribute the necessary medication and test kits to the residents. This would avoid the rush by residents to overstock the supplies and leave nothing for the late comers.

3. They should educate the residents about the possible outcomes, namely:

a) The virus could spread, but they are likely to be mild and not cause much harm
b) The virus would be more severe than expected, in which case, the covid restrictions would be reimposed.

4. They can advise the residents to continue with their personal protection, but it would be voluntary.

By giving 14 days notice of the change, the residents would be better prepared to face the possible outcomes in a calm manner.

I do not know if the China authority had indeed taken the above measures before relaxing the restrictions. Anyway, I just want to give this opinion based on my limited knowledge.

Tan Kin Lian

WOTC - Increase in mortgage payments

 Wisdom of the Crowd: 47 % of the respondents said that the govt should ask the bank to keep the existing mortgage payments and allow the loan to be repaid over a longer period.

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