Tuesday, December 28, 2010

Singapore the next Las Vegas?

"CLSA estimates gaming revenues will hit US$6.5B (S$8.4B) next year matching Las Vegas and rise to about US$8.5B" - Straits Times, 28 Dec 2010.

When I visited the Singapore museum a few months ago, I read this interesting story. In 1819, Sir Stamford Raffles left the administration of Singapore to his deputy, William Farquhar giving him strict instructions on how to develop the island. When he came back 4 years later, he was horrified. Farquhar had taken the easy way to economic development by allowing vices such as gambling dens to spring up to fill govt coffers. Raffles upset at the economic short cuts taken by his deputy[Read the story here] sacked him a few years later.
I will keep posting about the casinos because I feel strongly that the harm it brings will far exceed any benefits. The govt enjoys the tax revenue it collects from this casinos while churches, temples and social workers are left to help the the broken families. The problem with the casinos is the same as cigarettes. When cigarettes were introduced many years ago, its cancer-causing properties were not known. If cigarettes are invented today, the authorities would have banned them outright. By the time scientists were sure that cigarettes cause cancer, millions were already addicted, companies selling them were rich, powerful and influential and millions of people dependent on the tobacco industry for jobs.....it becomes difficult to shut them down. Once the casinos are here, they take up a large amount of resources that could have been used for productive healthy economic activities. As the govt becomes dependent on the tax revenue, regulating the industrial becomes harder due to conflicts of interests - much of the social wreckage it simply passes to churches & social workers. The NCPG (National Council on Problem Gambling) has an annual budget of $2.5M[Link] vs the hundreds of millions the govt collect as tax revenue from this activity vs the hundreds of millions the casinos spend to entice gamblers to grow its business.

It has been almost 200 years since Raffles gave strict instructions to his deputy Farquhar not to allow gambling dens in Singapore. Instinctively, he knew that the harm caused by gambling will outweigh the short term economic benefits. When the PAP govt wanted to legalise casino gambling, they sold the idea by telling us we can easily exclude family members if we find out they have a problem. Today, families with problem gamblers faced plenty of red tape[Link] [Link] including the need to get the problem gambler to agree to the exclusion. We were also told that the main intention of having the casinos is to create jobs for Singaporeans - but Singapore is not short of jobs that is why we have hundreds of thousands of foreign workers here. The actual problem we have is structural unemployment and shortage of good quality jobs - judging from complaints from Singapore workers at the casinos, the casino solves neither of these[Link].

"My brother called the National Council on Problem Gambling (NCPG) helpline and left his contact details. When no reply came, I called a week later, only to be informed that there were more than 300 applications still waiting to be processed and a counsellor had to be assigned to each case.

We were told that only one place, the Tanjong Pagar Family Service Centre, processed all applications and the NCPG would start considering a ban only after it had received a lengthy report of some 24 to 27 pages from the centre.

What's more, the hearing to determine the ban would involve the addicted gambler as well as the family members to argue their case.

When I sought clarification, such as the need to seek the addicted gambler's approval in applying for the exclusion, the reply was that those were the rules."

- Casino Exclusion : Family Frustrated by Red Tape[Link]

The PAP govt was just thinking like William Farquhar 200 years ago when they allowed those casinos to be built - short term economic gains and tax revenues. Ordinary Singaporeans pay the price for the casinos as social costs mount.

Sunday, December 26, 2010

For the holidays, I wish you 'net happiness'

If you have not seen this video by Mr. Brown, you should to have a good laugh:

SM Goh has a masters degree in economics, yet he used the word 'happiness' rather than 'economic benefit' or 'wealth' when he gave that speech in Sept 2010. His idea of 'net happiness' may be a little shaky (or funny) but his choice of word 'happiness' is spot on. Some economists, like Nobel Prize winner Joseph Stiglitz, is now saying that happiness should be a measure of economic success not GDP[ Link]....but very often, in Singapore, happiness is what is traded off for money or GDP. The Singapore govt often say Singapore is an economic success because of our rapid GDP growth but what ultimately is the point if people are not happy....?

I want you to close your eyes and think about the happiest times of your life. For most people, it is time they spend with their family and friends celebrating birthdays, Christmas, New Year, etc. The source of happiness comes from human relationships, human interaction, people's feelings for one another that is nurtured over a period of time. For the few whose happiest moments are the day you got your first pay cheque, knowing the property or the stock you bought has gone up 30%, or winning money playing jackpot/4D etc, I'm old enough to confidently tell you that you're missing something very important in your life.....I'll get back to this point a little later to tell you why.

Yesterday I took a taxi home from the supermarket after collecting some food I ordered for a Christmas celebration. I wished the taxi driver 'Merry Christmas' and he replied with a rather tired 'Merry Christmas' so I asked him if he had enough rest. He told me that he drove 18 hours on Christmas Eve to make as much money as possible from the holiday eve surcharge. That is what many workers have been motivated to do year after year - work a little harder to make ends meet as the cost of living goes up. Singapore workers today clock the longest working hours in the world[Link]. We have given up time with friends and family to accumulate this thing they call money. It is suppose to make our life better but does it really? We work longer hours than ever before but the homes we can afford have shrunk, smaller % of Singaporeans can own cars as the number COEs are cut and the same money will buy you less next year. Why did the taxi driver drive for 18 hours on Christmas Eve? He knows he can't buy happiness - he is trying to avoid the misery of being poorer next year. You have to work longer hours just to be able to buy the same things you're buying...not just longer hours but later retirement ages because the cost of living goes up. ..and coincidently it goes up faster just after general elections are conducted in Singapore. Young people are entering the workforce at a time when they are asked to work longer hours than their parent, retire later, shoulder a much heavier debt burden when they get married to buy a much smaller home - struggle harder for less, you have to compete or you're even worse off materially. This is what happens when you pack in more people onto an island with limited living space and resources - the GDP will grow by this crude rather thoughtless brute force approach but so will the misery of the people on the island.

Year after year we trade away things we cannot buy to compete harder and struggle for more money just to keep up with the ever rising cost of living....and the govt wants to keep the GDP growing as fast as possible. GDP does not translate to happiness....in fact we trade off happy days and friends as the pace of life increased over the years. You cannot solve this problem by working 18 hour days and becoming cheaper, better and faster. For the ordinary Singaporean, there is little benefit focussing on GDP growth when the economic benefits of this growth so unequally shared with corporate profits taking the highest % of GDP in history. To create 'net happiness' policy makers have to start looking at a diferent set of measures and goals other than GDP growth - like how many hours a worker has to spend with his family, the quality of life of retirees,etc. The PAP govt goes on a growth formula of importing foreigners to expand the population and pushing the increasing cost of healthcare, transport and housing to ordinary Singaporeans who now have to trade off time with family & friends to up with rising cost of living. There is no net happiness in this formula....and there is little motivation for the PAP govt to change this. So how do you create 'net happiness' for yourself and your fellow Singaporeans? You start by removing your support for this formula and sending a clear signal that you want it changed....otherwise it is more of the same...and a few years from now you may find yourself working 18 hours on Christmas Eve just like the taxi driver I met.

Merry Christmas and a Happy New Year!!

Thursday, December 23, 2010

Why I think Inflation going to get more problematic....

The latest CPI report shows a rise of 3.8% in Nov 2010[Link] the highest in the past few years. This is after a rise of 3.6% in Oct 2010.

"While the usual suspects continued to drive inflation in November—including transport, housing and food costs—it should be noted that all major segments within the CPI basket are seeing price increases" - Standard Chartered Bank economist Alvin Liew said in a note after the data were released [Link]

If you have been watching the markets closely, you will know that oil prices have surged past US$90 a barrel, the price of wheat has double in the past year[Link], sugar has gone up 22% this year[Link] and coffee has gone up 69% this year[Link]. The price of raw commodities,after some lag, will find its way into consumer products.

The latest COE for big cars surged to $72K up 15% from the previous bidding 2 weeks ago[Link]. Housing prices rose something like 60% in 2 years.

Remember the economic expansion in 2007 also brought rapid price increases that was way above increase in wages. The price spike also erodes the purchasing power of CPF funds lock away at 2.5%[Link] and money in savings accounts which now pays below 1%. To adjust for inflation the CPF Minimum Sum was raised by 5.1% from $117,000 to $123,000 and Medisave Minimum Sum was raised by 6.7% from $37000 to $39500[Link]. You can check the previous previous hike of these minimum sums here - the 2009 jump in CPF MS was 10.3% and 7.2% for Medisave Minimum Sum. The CPF MS is adjusted to meet the inflation adjusted target of $120K in 2003 dollars because the minimum sum was less that $120K in 2003, they adjust this figure to close the gap and for inflation. The figure you should pay attention to is Medisave Minimum Sum because it is roughly linked how fast medical cost is increasing - we are looking at escalation of roughly 7% a year here.

The problem with Singapore is the wealth generated by GDP growth is unequally distributed among the people but the rise in the cost of living has to be borne by everyone. 30% of the population has low income that is relatively stagnant....the next 30% probably see wage increase that can hardly keep up with the rise in cost of living. Corporate profits as a % of GDP is at a historic high as we push ahead with economic growth....there is a feeling among many Singaporeans that the booming economy just cause their financial woes to pile up as things become more expensive.

You have to be poor and smart to get help from NTUC

Here is a response from NTUC to a letter by a certain Mdm Lui who asked why is it necessary for low income family to produce result slips when they apply for education grants. These grants to low income families amount to $8.3M per year - less than 1% of what the govt collects in COE revenue[COE revenue projected to rise by 50% to $900m]. I brought up COE just to give a sense of proportion of how much help we are talking about relative to what the govt collects. These are grants from NTUC and not the govt (unless you see NTUC as part of the govt) that have often been reported in the newspapers as an important source of help for children of low income families. Not everyone gets it - you have to score a "minimum pass" to get it. How does denying grants to poor students who are academically weak help them? According to the NTUC, the grants also serve as a form of motivation to do well. I thought just being poor in Singapore is painful enough to serve as motivation but NTUC thinks that denying help to the poor can motivate them even more.

Why NTUC requires results slip for education grants [Link]

WE THANK Madam Lui Bee Gek for her feedback ('Education grant denied for want of results slip'; Monday).

The National Trades Union Congress (NTUC) would like to clarify that the main objective of the NTUC GB Education Grant is to motivate members' children who are currently schooling to continue to strive for academic excellence.

It is necessary to produce the results slip of the preceding year of studies so as to allow us to ensure that the child scored a minimum pass, that is, 50 per cent.

At the same time, the grant serves to help low-income families cope with the educational expenses of their children.

This year, the NTUC U Care Fund disbursed over $8.3 million to low-income union members and their families through six assistance programmes - U Stretch vouchers, Family Recreation & Fun Carnivals, U Care Scholarship/ Bursary Top-Up scheme, U Care Back to School vouchers, and donations to NTUC Eldercare Trust and NTUC First Campus Bright Horizons Fund.

Out of the $8.3 million from the U Care Fund, over $5 million went towards supporting educational needs of children from low-income families.

We are happy to note from our records that one of Madam Lui's children was a beneficiary of the U Care Back to School vouchers last year. We would also like to invite Madam Lui to apply for the NTUC GB Education Grant for her child next year when her first year's results slip becomes available.

We will continue to monitor our members' needs and enhance our programmes along the way.

Vivek Kumar
Director, Membership
National Trades Union Congress (NTUC)

Saturday, December 18, 2010

Stark contrast between pre-school education of the rich and poor....

UPDATE 19 Dec 2010 : I want to thank everyone for their comments to this posting. I sense that my main message might not have been too clearly put across. I've nothing against rich parent who want to splurge $20K or $30K a year to give their children an edge before they enter primary 1 although I've serious doubts about the necessity of giving children more than a good solid foundation at pre-school. The main problem is many poor children start their primary school without a good foundation which is now needed because the child will have a difficult time in primary if he can't read and count[Primary School Syllabus]. The starting line for poor children is far behind others and Singapore's severe inequality (worst among developed countries) is passed on from parents to children. We are seeing the growth of an underclass in our society yet we are not doing enough when we have the resources to do so much more - how can we not help poor children to have a more equal start?

Straits Times 17 Dec 2010:

In a report that appeared yesterday, the amount that richer parents were spending on pre-school was discussed. 'High quality' pre-school programmes cost upwards of $6.2K with some schools charging up to $20K per year. Many Singaporean parents consider pre-school very important and are willing to spend tens of thousands preparing their children for primary school.

To illustrate the difference of between being born in a poor family and a rich one in Singapore, I attached another report from Straits Times that appeared today. 300 children from poor family received completed a pre-school programme organised by various self-help groups. Pre-school for these poor children is a 1 month programme that cost $10. Many children from poor families skip pre-school altogether because it is not compulsory and they cannot afford it.

30-40 years ago, the syllabus assumption when a child steps into a primary one class is he has no pre-school and he starts learning to count and his ABCs. The teacher spends the whole year teaching "A for apple", "B for boy" and so on. Today, teachers expect children to know how to read and count when the child enters primary one. For many children from poor families who have no pre-school or a poor quality pre-school education, their starting point is far behind what is needed to keep up with what is taught in school. It is a $10 one month pre-school vs $20K a year for 3 years pre-school.

PAP policies exacerbate the effects of the income gap. Parents having children are given up to $20K per child in the form of tax rebates that must be used within 5 years[Link]. Poor parents whose income are too low to pay taxes get nothing while the highest income earners get the enjoy the full $20K from the govt. Giving benefits to the rich who need it the least and denying help for the poorest members of our society increases the social divide and the disadvantages of children born in poor families. While the govt give $20K to richer parents for each child, they should at least ensure that children from poor families receive a good pre-school education - the the PAP refusal to do this show its ideological leanings and there will be no change to PAP govt policies unless we show more care for our fellow Singaporeans and their children by doing what is right.

300 children from lower-income families get a feel of Primary One

by Kavitha Karum 05:55 AM Dec 18, 2010

Three hundred children, some of whom have never attended pre-school, graduated on Friday from a four-week course to help them prepare for Primary One next year.

The graduation ceremony for the K2-One Bridging Programme was held at Bottle Tree Park in Yishun.

Pre-school is not compulsory in Singapore, and some children, especially from lower-income families, may not get to enjoy this benefit.

Singapore's four community self-help groups have been jointly organising the programme since 2006 to help these children improve literacy, numeracy and social skills and also adjust to formal schooling. The course fee is $10. KAVITHA KARUM

Thursday, December 16, 2010

Wikileaks : PAP govt's disdain for everyone else exposed....

So what else is new?....

Our diplomats have not been very diplomatic. Minister George Yeo calls it gossip or water cooler talk. Obviously the Americans didn't think it was gossip and diligently reported all this back to Washington. Sometimes you get to hear what someone really thinks at the water cooler when they let their guard down. Calling others losers, stupid and corrupted behind their backs when they are not around to defend themselves speak volumes about the characters whom we identify as our leaders. But really is all this even surprising? ...from an elitist govt that has show the same arrogance and disdain when dealing ordinary Singaporeans. Remember that they have called you daft, lesser mortals, lazy, champion complainers and small minded as you struggle to cope with their lopsided policies that increase your burden in life year after year.

It takes a kind of callousness and arrogence to behave is such a manner. That the PAP govt lack respect for ordinary citizens has been widely felt....they regard the ordinary Singaporeans they lead as lacking in talent, motivation and intelligence compared with the people they want to import. They merely extended this behavior in their dealing with foreign leaders. I'm still waiting for Wikileaks to reveal what other leaders have to say about our govt - apparently they are not so arrogant to run us down behind our backs.

Sunday, December 12, 2010

Healthcare cost and Singapore's medical hub aspiration....

There is one reason why Peter Lim, Singapore's most astute investor, has offered to takeover Thomson Hospital at a huge premium (62%) over market price of the company traded on the stock exchange of Singapore[Link]. It is the same reason why an Indian company Fortis and Malaysian Khazana were fighting over Parkway Holdings[Link] which owns 3 private hospitals in Singapore. Singapore's aspiration to be a medical hub for the rich in the region will generate huge and growing profits for these hospitals. These rich folks will pay top dollar for Singapore's limited medical resources and ordinary Singaporeans who get sick and need medical care will increasingly have to compete with the richest in the region for health. We have began to the see the effects of this "profits over people" policy of the PAP earlier this year when public hospitals ran out of hospital beds (Read : Bed crunch in hospitals forces hospitals to put patients in corridors) and public hospitals are losing specialists to private sector (see article below). Earlier this year during the US Healthcare debate which was tracked by my blog, one of the lessons learnt in countries with problematic healthcare systems hit by cost spirals is that allowing market forces to dictate the allocation of healthcare resources will lead to cost escalation - resulting in a large segment of the population finding healthcare cost burden unbearable. This is especially so in countries where the income inequality is high and healthcare resources are disproportionately allocated to those who can pay and not to those who needs it most.

A few years ago, Parkway bidded $1.2B a piece of land near Tan Tock Seng hospital. This land could have been used to build a public hospital for ordinary Singaporeans and provide affordable medical care for Singaporeans. Parkway used this land to build Novena Hospital at a cost of about $2B which will be opened in 2011. How will Parkway get back its investments? This is done by selling private luxury suites at the hospital for around $3500 per square foot[Link]. These suites will lock up more of our healthcare resources in the private sector to serve medical tourists.

As cost escalates due to the pursuit of profits in the healthcare sector, the govt shifts the burden of rising costs to sick Singaporeans and their families by implementing means testing at hospitals and cutting subsidies. The rising cost has resulted in adequacy of many of the earlier schemes such as Basic Medishield. Check the claim limits in amount for surgery, ICU, etc[Link: you better have a good look and be familiar] which were set when the healthcare cost was much lower is no long sufficient today as a protection against catastrophic illness - you are told to upgrade your insurance plan, however, for many they are not able to do so because of the higher cost or pre-existing medical conditions have emerged since they signed up for the previous scheme. Many Singaporeans are unaware of what is going on and the inadequacy of the schemes they are on because they have not been seriously ill and the govt keep pushing home the message that the 3Ms (Medishield, Medisave, Medifund) are comprehensive and sufficient. As medical costs keep rising, a situation similar to what have seen for housing will emerge - what do you expect the govt to do? They just simply insist it is still affordable, that it is due to reasons not within their control and they have already subsidizing you, your expectations are too high etc - they will never admit it is due to their lopsided policies.


09 December 10 The Strait Times
by Salma Khalik, Health Correspondent

Public hospitals lose more specialists

SINGAPORE is facing possibly its largest-ever exodus of specialist doctors from the public to the private sector, as the robust economy gives them the courage to leave secure jobs.

In the first half of this year, 68 specialists left the public sector, compared with 63 the whole of last year.

Among them were five cancer specialists, seven general surgeons, seven orthopaedic surgeons and seven diagnostic radiologists.

If this trend continues for the rest of the year, it will be the biggest outflow of specialists the public sector has ever seen. The previous high was a loss of 87 specialists in 2007. The Health Ministry could not provide more up-to-date figures for this year.

Industry observers say doctors are feeling confident enough to leave their safe jobs for private practice because of the booming economy.

A highly successful specialist in private practice can make up to 10 times what he was drawing in the public sector. These top doctors earn more than $1 million a year, with some reputed to rake in more than $5 million.

In the public sector, consultants earn between $12,000 and $60,000 a month, based on their seniority and specialty.

Even less successful private sector doctors would make about the same pay they were getting in the public sector, but with a much lighter patient load.

Not all who go private set up their own practice. Some find it easier to join an existing group practice, where their pay may not be as high but is regular.

Among them are about 20 specialists in seven specialities who have joined the Healthway Medical Group this year.

One is colorectal surgeon Adrian Leong, who is in his early 50s. He left the National University Hospital (NUH) in July to take on the role of group medical director.

He said the group pays more than the public sector, but 'not multiples' of what they were receiving.

Some specialists who have left said that pay is not the whole story.

Cardiothoracic surgeon T. Agasthian, 49, said there were many factors behind his decision to leave the National Cancer Centre in October to open his own practice. They included the desire to continue working beyond the retirement age.

'You can't start a practice at 62. It takes time to set up a private practice,' he said.

He added that while some very senior people are still around in public hospitals, not everyone is given the option to stay.

Dr Agasthian said he would have stayed on if he had been given a teaching post, since teaching the next generation is one of his passions. He added: 'To stay on in the public sector, we need to feel useful.'

Professor Leong, who holds an adjunct teaching role at the university, was also planning for his future when he left.

He said: 'You usually take about five to 10 years to make a significant impact in a particular arena. The time was about right to start on something new before I got too old.'

But he added that some of the new specialists at the group moved to private practice 'to get a better quality of life'. They now work part-time and choose their own working hours.

The Health Ministry has always maintained that it is the role of public hospitals to train doctors for the country. At the end of last year, Singapore had 3,180 specialists, of whom 1,927 worked in the public sector and 1,253 in the private sector.

There were then 42 oncologists in the public sector and 25 in private practice. With at least five moving out of public practice this year, the equation changes significantly.

Cancer is the top killer in Singapore, with more than 9,000 people diagnosed each year. The majority seek treatment at public hospitals.

Cancer patient Ananda Pereira has had two of his specialists leave for private practice this year, and is unhappy with the changes. Said the retiree: 'Patients often put their trust in their doctors. And when the doctor changes, it can affect their confidence in the treatment.'

Prof Leong said: 'I do feel sorry about some patients who wanted to continue to see me, including a very nice old lady who was crying in my NUH clinic when she was told.'

But hospitals said they have no problems coping with the losses.

The National Cancer Centre said its number of doctors is increasing and 'there is also no significant change in the waiting time for patients to see doctors'.

Tan Tock Seng Hospital, which lost nine specialists in the first six months, said the 'vacancies were quickly filled'.



Friday, December 10, 2010

Should casinos be allowed to lend money?

I strongly opposed the opening of the 2 casinos because I believe the harm it brings to our society far outweighs the benefits. Since the casinos opened there has been an endless stream of crimes committed at the casinos - impersonation, stealing chips, cheating, prostitution, etc. There were also many stories of families destroyed and people financially ruined by casino gambling. Singaporeans working there complained of the jobs are no good[Link]. Each of the foreign owned casinos are on target to earn about $1B in profits per year. The govt collects hundreds of millions in taxes and entrance fees to the casinos. It is clear who really gains from these casinos....and who the losers are.

.....What is worse than gambling your money away at the casino? Borrowing money to gamble at the casinos.....

A number of high profile cases of people ued by the casino to make good their losses have emerged in recent months. These cases usually involved "premium" members who are fairly rich (so we don't have to feel too sorry for them) and have impulsively gambled away more than they can afford to lose because the casinos extended credit to them.

The govt says it is concerned about problem gambling yet it allows casinos to lend Singaporeans money to gamble. Money lending and casino gambling are a deadly mix and we have string of cases of people (partially and completely) ruined by this.
Before the casinos were build, money lending was a tightly regulated activity - there are limits to the unsecured amount you can lend a person, there are rules on the type of loans you can make, interest you can charge. Earlier this year the govt acted to rein in unethical lending[Link] - moneylender doubling as housing agents were ripping off Singaporeans in need of quick cash looking to sell their HDB flats. I can't think of any form of money lending worse than lending money for a person to gamble - it was something only illegal loan sharks would do. The 2 casino are already making so much money ...the govt don't have to worry about their bottomline and ability recoup the billions they invested (much of which borrowed from Singapore banks!)...so why doesn't the govt rein in the casinos' moneylending activities?


MBS sues for alleged non-payment of credit extension
by Ng Jing Yng Updated 05:25 PM Dec 07, 2010
SINGAPORE - Marina Bay Sands (MBS) is suing a casino patron it describes as a "premium" player for alleged non-payment of $240,868 in credit extension but the man is disputing its claim that he owes it money.

In the first legal suit of its kind here, MBS claims it had extended credit to Mr Lester Ong Boon Lin, 30, as he was a premium player with a minimum deposit of $100,000 with the casino.

According to court documents filed by MBS, Mr Ong applied for a $1 million credit extension in May and presented a cheque of an unknown amount to the casino as a form of security. MBS then decided to extend $250,000 in casino chips to Mr Ong and both parties allegedly entered an agreement documenting this. It was not stated in the documents why MBS was not demanding the repayment of the full sum.

Mr Ong is denying these claims, saying he was not a premium player as he had withdrawn the $100,000 deposit to buy gambling chips before credit was extended to him.

In his defence filed by lawyer Sunil Singh Panoo of Messrs Dhillon & Partners, Mr Ong further contends that the MBS is deemed to be a moneylender under the law as it had extended credit to a non-premium member. He argues that the credit extended is "unenforceable and not recoverable" since MBS is not a licensed moneylender.

Mr Ong also claims that the credit extended to him was an unsolicited offer (corrected at 5:20PM, Dec 7).

Court papers showed that MBS first filed its writ of summons against Mr Ong on Oct 14, after failing to encash his cheque and unsuccessful attempts to seek payment from him.

Following Mr Ong's defence, the MBS'reply - filed by lawyers Surenthiraraj Saunthararajah and Toh Wei Yi of Harry Elias Partnership - reiterates that Mr Ong had deposited $100,000 cash to qualify as a premium player before credit was given to him. It says that $250,000 worth of casino chips would not have been offered in the absence of an agreement between the two parties.

The MBS also alleges that Mr Ong has never denied the debt when it tried to seek payment from him from May to August. He had also made various proposals for repayment.

The MBS is seeking at least $250,000 - the minimum for a High Court case - in damages and cost.

Thursday, December 09, 2010

Numbers don't say what has happened to Singaporeans.....

In a recent analysis of the Workforce 2010 Report in the TOC[Link], Leong Sze Hian crunched the numbers and found the following (orginal extracted text from TOC in italics) :

  • The real nominal median income for all employed residents rose by only 1.1% to $2,500 in 2010.
  • Real wage growth for the last 10 years or so, is only about slightly over one per cent per annum.
  • The real median monthly income from work of residents in full-time employment only increased by 1.8% to $2,710 in 2010.
  • Part-timers’ real median monthly income increased significantly by 11% to $700 in 2010. This due to in part to reclassification of part-timers from those working below 30 hours to those working below 35 hours. This reclassification will also also result in an improvement of median monthly income numbers for full time workers because you need to work 5 more hours to be considered a full time worker.

The report basically tells us that things have not improved much for the resident worker for the past 10 years. as measured by the median income. However, the problem I have with the figures in the Workforce 2010 Report is it does not provide separate figures for residents (citizens + PRs) and Singapore citizens. Permanent Residecies are granted based on income, education and job status of a person through a selection criteria. Lumping the PRs with citizens makes it hard to tell what has happened to Singaporean workers over the years. Unemployment is reported as 4.1% among residents...but what is the unemployment among Singaporeans? PRs need to have a job to granted permant residency so grouping citizens with PRs makes it unclear how serious the unemployment problem is among Singaporeans.

The PAP govt claimed that importing FTs in large numbers as it has done in the past decade was for the benefit of Singaporeans. Why then does it not want to show the figures for Singaporeans especially those workers who are born Singaporeans (vs newly granted citizenships which is another distortion to the picture) to illustrate these benefits?

You can't tell exactly what has happened to Singaporean workers from the Workforce Report...just that things have not improved much and have likely worsened in the past decade..by how much we do not know because the govt refuses to say.

Wednesday, December 08, 2010

Consequences of govt inaction in the housing market....

There are some lessons that should have been learnt from the 1996 property bubble and the link between the bubble and the effects Asian financial crisis that came shortly after that housing bubble.

Many Asian countries appeared to have learnt from that episode to keep bank lending in real-estate market low. If the lessons from 1996 have faded, there were reminders from the recent subprime crisis in the USA and what happened in Ireland.

Many Asian countries appeared to learnt the lessons well to contain the risks to financial system...but there are exceptions.
Hot property prices here 'worrying' [Link]
05:55 AM Dec 08, 2010
SINGAPORE - The Asian Development Bank (ADB) said yesterday that Singapore's fast-rising home prices are "worrying", as real-estate lending accounts for more than half of total loans in the banking system.

According to the latest issue of the ADB's Asia Economic Monitor, the share of property-related loans in total loans is as low as 9 per cent in South Korea, 15 per cent or less in Indonesia and the Philippines, and below 20 per cent in Hong Kong, Thailand and China.

At 51 per cent of advances, Singapore's banking sector's exposure to property is the highest among the nine major economies of East Asia, followed by 42 per cent in Taiwan and 38 per cent in Malaysia, ADB data showed.

The ADB report comes less than two weeks after the Monetary Authority of Singapore said in its annual Financial Stability Review that household debt has been growing at a faster rate in recent quarters - driven largely by housing loans which account for the bulk of household borrowing.

The study pointed out that Singapore had already taken steps to cool the property market, in line with measures adopted by other economies in the region.

As a result, the increase in home prices had started slowing in the third quarter in eight out of the nine East Asian economies, with Thailand as the only exception.

The ADB also called for greater cooperation among East Asian authorities on exchange rates, so as to reduce the volatility of currency fluctuations within the region and benefit the production network that spans East Asia. For Asean nations and China, Japan and South Korea, cooperation on exchange rates could also help "manage surging capital inflows to the region and better rebalance the sources of growth", the study said.

A single currency is not on the menu because "the recent debt crisis in the euro zone shows that stronger institutions than previously thought are required for monetary unions to function properly", the ADB said. Nor does it recommend that regional countries peg their currencies to one another's or benchmark their exchange rates to the "Asian Monetary Unit", the artificial basket of regional currencies first mooted by Japanese scholars.

East Asian countries could instead pick a reference currency from outside the region - either the US dollar, or a combination of the dollar and the euro - and then seek to maintain stability of their home currency's exchange rate against the reference unit.

Tuesday, December 07, 2010

PM Lee on Income Inequality....

"Over the past decade, stresses and strains both internationally and from within our society have impinged upon us. We have seen globalisation go further than ever before. ...Overall it's a great plus for Singapore but at the same time it is putting pressure on our low-wage workers and widening the income gap" - PM Lee [Link]

In a recent speech, PM Lee blamed globalisation for the widening income gap in Singapore. While it is true that globalisation has an impact on income gap and many countries have seen the income gap widening in the past 2 decades, it does not explain why Singapore has the largest income gap among developed nations. No other developed countriy has imported cheap foreign labor on the same scale as Singapore, no other developed country has tilted their policies as far as Singapore to favor big businesses and allowing the income gap to widen so much. In recent years, the govt cut corporate taxes even as corporate profits as a % of GDP reached record levels. Regressive taxes such as GST that impacted the poor the most were increased. The govt pursued policies that increased the financial burden for those who are sick (means testing), poor (most expensive public housing in the world) and old (limited public assistance). The income gap and rising cost of living resulted in a large segment of the poorer working population living in financial strain due various compulsory "self-reliance" schemes when they have to set aside their own money for retirement (CPF, CPF Life) and medical care (Medisave). These schemes were only workabe when the income gap was narrower and the cost of living was lower relative to income. The govt's policy to expand the population by importing foreigners has been great for the bottomline many of the businesses linked to the govt such as the telcos, supermarkets, transport companies and banks but has been disadvantageous to ordinary Singaporeans as the cost of living (in particular housing) rose and quality of life fell due to overcrowding (esp. public transport).

"But last year Singapore's government revealed that while average wages were rising with the economy, incomes among the bottom 30 percent of households had actually fallen since 2000. " - IHT Report [Link]

The PAP govt solution for income inequality is retraining. This mantra of retraining has been uttered for more than a decade, yet we see income inequality rising. The fact is many low wage workers are retrained from one low payng job to another low (sometimes lower) paying job just to stay employed as the govt opens the floodgates to foreign imported labor to keep wages competitively low for businesses. Productivity has fallen over the years and the govt continues to resist moves such as implementing a minimum wage that give businesses an incentive to automate and increase productivity.

The PM now tries to blame the income gap on globalisation. Our income gap is the biggest among developed countries and much of this the result of PAP policies. By saying this problem is the result of globalisation, PM Lee is also implicitly saying that there will be no major policy changes/initiatives to address this issue i.e. much needed change is not going to come unless you make it necessary for this govt to implement change. The PAP will preserve the current system and maintain the status quo because tnis is the best setup to serve their own interests.

Thursday, December 02, 2010

Cost of Living Comparison...

I've been travelling the past week to various places in Malaysia. If you're a price conscious person like me, you'll enjoy travelling in Malaysia because things are cheap...really cheap.

Singapore has a median household income more than 3 times than of Malaysia[Link]. Because Malaysia has a large part of its population living in rural areas involved in farming pulling down the per capita GDP, the median income difference between Singapore and Malaysia for people living in cities is probably smaller. If you take into account the cost of living, the difference in quality of life may not be so big.

Travelling across Malaysia, makes a person realise how much the cost of living has crept up in Singapore over the years. Many years ago, when you go to Malaysia, you find things are slightly cheaper than Singapore.....but now the price difference is really big. Here are some random snapshots to illustrate:
RM$4(S$1.66) for chicken claypot rice. This picture was taken not at some roadside stall but at the air conditioned food court of a mall called Mahkota Parade which is very similar to Parkway Parade in Singapore.

There is a reason why Singaporeans love to eat Aunt Annie's pretzel in Malaysia. The price is less than half of what it costs in Singapore:

Bubble tea?

There is a long list of things you can get for lower prices in Malaysia from your spectacles to shoes to medical care.

When I was in Malacca, I found out that one of my distant Malaysian relative got sick and was staying in a private hospital called Mahkota Medical Centre. It was pure coincidence that my hotel was located across the road from that hospital. I went to visit my relative at the hospital - I won't go into the details of his illness but he is seriously ill and bedridden. I chatted with him and he was quite upset about the cost of medical care at the hospital. Mahkota Medical Centre is owned by a Singapore-based company known as Health Management International (HMI). He was upset because the ward charges has gone up from RM$50 when his father was ward 5 years ago to RM$70 per day. RM$70 gets you something like our B class wards(?), 4 beds per room + air-condition. This Malaysian hospital is one of those where you're allowed to use your Medisave [Link]. When I spoke to the nurse there, she told me an increasing number of Singaporeans are seeking at Mahkota because the cost of medical care in Singapore has spiralled beyond the reach of uinsured and uninsurable Singaporeans. The problem with medical tourism is it strains the country's resources and imports inflation. The cost difference for medical treatment between developed countries like Singapore, US, Germany and Malaysia is huge. If they allow their private hospitals to expand and take foreign patients, they will see the same problem of cost spirals and strained capacity in public hospitals as Singapore. Minister Khaw exported some of our problems by allowing the use of Medisave for Malaysian hospitals as Singapore's public hospital experience bed shortages and long waiting times[Link]. My sick relative was told by his doctor to seek part of his treatment at a Malaysian public hospital where they can treat him for much lower cost and same effectiveness as Mahkota.

I took a taxi from Malacca to my next destination in Malaysia. The friendly taxi driver had many stories to tell. He told me that he has 12 kids and 2 grandchildren - he is 49 years old and got married at 19. His sister is married to a Singapore policeman. He told me that he had a shock when he visited his sister's HDB flat a few years ago - he couldn't believe that a tiny 4-room govt flat can cost S$250k....I didn't dare to tell him what it costs today. He told me that retirees and pensioners from various countries have found their way to Malacca where a semi-detached house costs about RM$330K.

2 decades ago, when you make a general statement that the life in Singapore is better than in Malaysia, most people would believe it and agree with you. Today the difference in the quality of life is not so clear. There are still many things that Singapore does better than Malaysia. We have low crime rates (hmm...gangs?), an outstanding education system and outstanding opportunities for a small number highly talented individuals. You can make millions of you climb all the way up to be a minister or CEO of a GLC. However, most Singaporeans are not highly talented - ordinary Singaporeans have ordinary talents....and by the law of nature about half our population have below average talent & IQ. The rising cost of living especially the cost of public housing means that the struggle for ordinary Singapore to stay afloat becomes tougher with each passing year. For the elderly and low income Singaporeans, the pain of poverty becomes harder to bear as the cost of living spirals up. Many ordinary Singaporeans are beginning to ask...what is the key selling point of our system? One that makes them struggle their whole life without a good retirement in Singapore to look forward to.