Friday, June 29, 2012

CHC case spotlights the need to regulate big charities.

In March 2010 before CHC was investigated by CAD, I wrote about my concerns surrounding mega-churches like City Harvest Church[Mega-Churches, Mega-Finances]. I looked at the CHC 2008 financial statement and found that they used $2.9M of their funds for charity but paid out $9.2M in allowance and salary to staff. $9.2M is enough pay to pay 100 people $92K per annum.  CHC is registered as a charity but the amount of funds used for salaries and allowance was 3 times more than the amount used for charity.
"Now when Jesus heard these things, he said unto him, Yet lackest thou one thing: sell all that thou hast, and distribute unto the poor, and thou shalt have treasure in heaven: and come, follow me. " - Luke 18:22
We now know the problems at CHC run deeper than the lack of spending on charity. Money is alleged to have been siphoned off to fund ventures in the pop music industry - $23M of funds used for this purpose. CHC is just one of a long list of charities that have run into problems since the NKF scandal broke in 2005. Following the scandals, a set of guidelines was issued for the charity sector [Link]. The Singapore govt, however, continues to use the "light touch" to regulate this sector, however, given the rising magnitude of wrongdoing and alleged wrongdoing, this "light touch" approach may have to be limited to smaller charities. While there is fear that regulation will stifle the growth of this sector, it has to be balanced against the potential damage caused by big cases such as the CHC which was collecting donations from 40,000 followers many of whom made personal sacrifices to donate to the church.  
"It has been suggested that the church has been cheated of S$50 million. This is not accurate. The S$24 million, which went to investment bonds, was returned to the church in full, with interest. We didn't lose the S$24 million, nor did we lose 'another S$26.6m' as alleged. The church did not lose any funds in the relevant transactions, and no personal profit was gained by the individuals concerned." - CHC Pastor Zulkarnain, 28 June 2012[Link]

The COC and CAD investigated this case for 2 years to gather evidence before the case goes to court. Putting a charismatic pastor  with a following for tens of thousands in court is not something they will do unless it is completely necessary and there is compelling evidence to go to trial. A mistake here will end the careers of senior officers involved in the case. This is very unlikely that what Pastor Zulkarmain said above is true because it is very easy for the church accountants to prove what he said to satisfy the investigators if the money is there. It is unwise for CHC people uninvolved in the alleged crimes to put themselves and their church on a collision course with the authorities. While they may want to support Kong Hee as a friend in his  time of need, they should be careful when dealing with the facts surrounding the case. If they continue to demonstrate a denial of the facts, the outcomes can show that their faith is blind and the credibility of their church can be destroyed and the church may not be able to recover from this setback.  Kong Hee has hired one of the best lawyers in town. Justice should be allowed to run its course and all evidence surrounding the matter will emerge in the coming days.
A pastor during a sermon I attended a few years back said, "Do not put your faith in me.". He went to tell the congregation not to put their faith in their children, their parents, their spouses and their leaders. His message was that human beings are never perfect. They are always tempted to sin and not matter how strongly virtuous they have been in the past, they can succumb to various temptations. This is an enduring piece of wisdom from the Bible we should always remember when we deal with systems that involve human beings. When there is a lot of money involved, full transparency, accountability and sufficient check and balance are the best ways to safeguard the system from fraud and abuse. We cannot trust what we cannot see fully and never trust people who keep black boxes in accounting.

A few years back, a businessman who was a devout Christian suspected something was not right at CHC and wrote a letter to the Straits Times. He was forced to withdraw his allegations and apologise when they threatened him with a defamation lawsuit[Link]. This was also what happened in NKF - use of threats to silience critics. When there are questions surround the accounts of these charities, they responded with threats of lawsuits instead of greater transparency. When people refuse to tell you the numbers, they have something to hide and history tells us we should continue to probe because there is almost always something there they don't want you to see. For Singaporeans there is something very large and very opaque and we have been told to have faith and trust in the people managing it without full access to numbers.

Tuesday, June 26, 2012

ESM Goh : Do Immigrants Create Jobs?

Yesterday night on his Facebook ESM Goh posted:

Do skilled immigrants create jobs or take away jobs from locals?…This
subject is a hot button issue in Singapore. It would be good if economists could
research this subject in depth. It would help advance debate on this politically
sensitive issue.” - ESM Goh.

In a way, Singapore has to go into ‘cold-turkey’ after years of allowing huge
inflows of foreigners.
Politics should be about having the courage to make the
best decision at any given point in time, and act on it” - PAP MP Tin Peh Ling [Link]

It is strange that ESM Goh is asking the question now since he was the one who allowed the large influx to take place under his leadership. Shouldn't such questions be asked before policies are implemented? The PAP very often sold us this idea that "foreigners create jobs for Singaporeans" to promote the FT policy - it is strange to hear now that ESM Goh is not certain this is true. I appreciate his desire to "advance the debate" - it is long overdue and Singaporeans now know that things cannot be taken at face value be it "foreigners create jobs for Singaporeans", "foreigners help to improve your income" and so on. If everything the PAP said about the FT policy is true, we should all be jumping for joy and asking for more ..more and more. But this is not the case and a real in-depth debate is long overdue - our dependence on foreign labor might have grown to the point of irreversibility and I believe there are now long term unavoidable effects that may be unfavorable for the majority of Singaporeans.

ESM Goh asks the question in a very broad manner that makes it hard to collect data answer the question - how skilled is skilled? What is the meaning "take away jobs" ? If jobs are taken away shouldn't we see higher unemployment?  Also at what level of immigration do we see jobs "taken away"? Has Singapore crossed this level? . I know with some level of certainty some of the effects of immigration on our labor market and have written about them in the past. Here is a summary.

1. Falling productivity growth.

Chart from [Link]. This is a trend that goes bat to 2003 and correlates with the large influx of foreign labor. Correlation in itself does not equate to causation and causation is hard to prove. However, the most viable explanation is once employers have access to cheap foreign labor, there is less incentive to change work processes to improve productivity. Even the ESC (Economic Strategies Committee) set up the govt put forth this explanation in Dec 2009 when the found that Singapore's labor productivity lag behind all major developed countries[Link].

2. Widening Income Gap and stagnant wages
The influx of cheap labor depressed the wages of our low wage workers. The real wages of these workers have remain stagnant for last decade. At the same time,  the GDP growth generated by the large foreign influx resulted in gains  concentrated in a small segment - corporate profits as a % of GDP grew to record levels and the top brass in corporations whose remuneration depends on profits rather than productivity were the big winners.

3. Structural Unemployment

One of the growing problems we see in recent years is that of structural unemployment.  With our liberal foreign worker policy, hundreds of thouands of young workers from India, China, Phillipines etc were added to our workforce. Our workforce demographics has been distorted by this high influx. With a large pool of young workers available why would employers try to retain or hire older Singaporean workers? Remember in the past we never had the structural unemployment problem because during the boomtime, employers will have a hard time find workers and they are 'forced' to hire older workers and give them a chance and retain these workers even when labor market conditions ease. This does not happen today because there is a large supply of young foreign workers. Along side the structural unemployment problem is that of structural underemployment - highly qualified taxi drivers, highly qualified people taking up menial jobs because employers refuse to hire them due to age even though they have the qualifications resulting in an under-utilization of our high skilled Singaporean labor.

4, Rising cost of living

The large influx caused our population density to rise to the highest in the world putting  a strain on our infrastructure like public trains and public places and driving up the cost of living sharply when it comes to cars and housing. 

When the PAP open the floodgates to cheaper foreign labor, the one thing that was certain was it would drive up GDP growth and it did - any economy that allows a foreign influx will expand. Many of our economic competitors have chosen not to go down this path at least not with the same magnitude as the PAP govt.  Developed countries that allow foreign labor to enter also have minimum wage laws to prevent its own citizens from being exploited.  One of the problems in UK was unscrupulous employers flouted the minimum wage laws to exploit foreign worker (see video in previous posting).

As our GDP grew so did the number of people who needed help to make ends meet (Workfare, charity etc). The longer we stay on the model the more dependent our economy become dependent on foreign workers and the harder it is for us to break the cycle. MP Tin suggests we go "cold turkey". ..."cold turkey" is no different from "shock therapy". For MP Tin who started her political career "naively" sticking closely to PAP ideologies and strongly supporting PAP policies to say this after seeing first hand what is going on at the ground, tells us how far down this road we have traveled. It is now so difficult turn things around and remodel our economy to maximise benefits to Singaporeans.  

Saturday, June 23, 2012

UK Labor Party Chief Admits Error in Immigration Policy

In his speech to the IPPR (Institute of Public Policy Research) think-tank yesterday, Ed Miliband, the current leader of the UK Labor Party admitted that the immigration policy implemented when his party was power was wrong.

I recommend you listen to his speech in full but in case you don't have time, here are extracts from his speech.

"By focusing exclusively on immigration's impact on growth, we lost sight of who was benefiting from that growth - whose living standards were being squeezed. We became disconnected from the concerns of working people."

"I think immigration benefits this country, but I think there are costs as well. And I think when we were in government, we were too slow to recognise some of those costs – the pressures on public services, the speed of communities changing, and the pressure on wages.

"It’s not wrong for people to employ Polish builders or French chefs or Swedish childminders, that’s a part of our economy, lots of people do it. What’s wrong is when for example the minimum wage isn’t paid, and there is evidence of that."

“The idea that in industries like construction or agriculture you can get recruitment agencies who boast all their workers are Polish or denigrate the talents of those who are living locally isn’t right.”

“Worrying about immigration, talking about immigration, thinking about immigration, does not make them bigots. Not in any way. They are anxious about the future.”

"But we do need to offer working people a fair crack of the whip and set out a new approach to this issue which can offer real ways of addressing their legitimate concerns."

Comparing Singapore's policy to that of UK's we are actually not comparing apples to apples. Only 11% of the people in Britain are foreigners[Link] compared with 36% in Singapore[Link]. We have a immigration policy on steroids. 

While there are numerous integration issues and many Singaporeans disadvantaged by the liberal immigration policy, the mainstream media has chosen to focus on the "anti-foreigner sentiment" expressed by a small but sometimes vocal minority on the Internet. Given the level of influx, it is unavoidable that there are people who are angry, frustrated and use the Internet as an outlet for their anger. This is expected given there are people badly hurt by this policy. The best way to address this is to make significant changes to the policy to ensure that it is beneficial to Singaporeans. 

Most Singaporeans who strongly oppose the policy as it is do not harbor ill feelings towards foreign individuals who are here for job opportunities that will provide a good income for themselves and their families. Singaporeans will do the same if we are in their shoes. While they are here, we should treat them fairly just as we would like to be treated when we are working overseas. Personally, I find the treatment of foreign workers in certain sectors deplorable. There are numerous cases of foreign workers abused by unscrupulous employers[Link] - not paid for their work, transported dangerously on the back of vehicles etc. Such poor treatment of foreign workers by employers will ultimately hurt Singaporeans as it undermines the rights of workers in general and employers'  habit of exploiting foreign workers will spill into treatment of Singaporeans. 

It is irresponsible to label those who raise concerns and genuinely oppose the large foreign influx because they know it is not beneficial for Singaporeans as "anti-foreigners".  One of the biggest mistake Gordon Brown made during his election campaign was to call a woman who expressed genuine concerns about immigration in UK a "bigot".  We have to be very careful with labels such as "anti-foreigner", "ultra-nationalistic", "xenophobic", "small minded" because they are too easily pasted on people speaking up out of frustration after lives have been adversely affected by policy and have suffered due to the large influx. 

“Singaporean's dislike of foreigners can be found online and offline, said Ravi Philemon and most bloggers feel that it is the most pressing issue that has not yet been addressed."

"There are websites that seem to be driving these ultra-nationalist, anti-foreigner sentiments, and when you see something like that, you get worried,” he (Mr Philemon) said. “I’ve also heard friends remark about foreigners. They feel they have lost out in work and school to them.”

Mr Philemon declined to identify the websites. But online sites such as The Temasek Times and TR Emeritus often highlight the issue of foreigners in Singapore. - Straits Times,21 June 2012

I too am concerned about the friction that has arisen between Singaporeans and foreigners - we can all behave better towards one another. While I applaud the move by the 16 bloggers who have come stepped forward to promote better understanding of the issue, lets not lose sight of the fact that Singaporeans have been extremely tolerant of immigrants. There was little sign of this "anti-foreigner" sentiment until the influx became so large foreigners form close to half our workforce. This negative sentiment has been caused by extremely large influx and I believe no other society in the world would have responded better to the same situation. In asking the question whether Singaporeans are xenophobic or not, whether we harbor "anti-foreigner sentiment" or not, we can easily fall into the trap of assigning blame to Singaporeans for the numerous problems that have arisen due to PAP's extremely liberal immigration policy. By urging Singaporeans to more tolerant and more welcoming, there is insinuation that Singaporeans have been hostile and intolerant - when the extreme situation we are asked to accept is not present in any other society. 

We have to be cautious not to shift the focus from the real problems and issues to the behavior of Singaporeans some of whom have acted out of sheer frustration and natural human anger - doing so will undermine the discussion that will lead to a better understanding of how the policy needs to be reshaped to broadly benefit Singaporeans, 

Thursday, June 21, 2012

High nursing home cost over-burdens Singaporeans....

In 1994, the Singapore govt enacted the Maintenance of Parent Act shifting the responsibility of care of the old to their children[Link]. On the surface it looked like something out of Confucian ethics put into law - children should be filial to their parents so we might as well legislate it. So instead of the govt providing a safety net for the old, this was shifted to Singaporeans. A tribunal was setup to allow parents to legally force their children. 

For high income individuals, taking care of their parents isn't really a big issue but that is not the idea of the PAP govt. Their approach has been to push as much of the financial burden of care from the govt to children of the old folks even those in the low income bracket. The biggest strain comes when the parents of low or lower middle income earners need special care - nursing home care or they are sick and need to be hospitalized often. If the person is struggling to take care of his family, the added financial burden of caring for his parents can be extremely challenging to shoulder.

The level of Government subsidy will depend on your family income. With effect from 1 July 2009, the Government subsidy framework for community hospitals has been enhanced from 4 tiers to 9 tiers with subsidy level ranging from 10% to 75%., as shown in the table below. The same framework has taken effect at the hospices from 1 Oct 2009 onwards, and will take effect at the nursing homes, chronic sick facilities and psychiatric homes from 1 Jan 2010 onwards.[Source]

Total Family Income (based on family of 4)
Subsidy Level for Citizens*
< or = $1,440
$1,441 - $2,200
$2,201 - $3,000
$3,001 - $3,800
$3,801 - $4,600
$4,601 - $5,200
$5,201 - $5,400
$5,401 - $5,600
> $5,600
Nursing home stay can cost from $1500 to $3000 depending on the needs of the elderly under care and the quality of care. A man supporting his family of 4 (his father in a nursing home, one child and wife) on a gross income of $1500 will have to pay $450-$900 for the care of his father in a nursing home.

The high cost of nursing home has driven some Singaporeans to send their parents to nursing homes in Johor where the quality of care is generally lower and it is far more difficult for friends and relatives to visit the elderly.

Under the PAP govt, Singapore has the lowest expenditure as a % of GDP on healthcare and  elderly care among developed countries. We have the highest number of millionaires per capita[Link]. As the sale of luxury cars surge to record levels [Link] so has the financial strain on working class Singaporeans. If you watch the video, it tells of a sad situation. Half the people who send their parents to one particular nursing home defaulted on payment. They don't to visit their own parents because they are afraid they will be asked to pay up or bring their parents home. One poor Singaporean abandoned his mother at a nursing home in Johor because he lost his job and can no longer afford the nursing home payments.  This approach pushing responsibility of care for the aged from govt to ordinary Singaporean to amplify the effects of the income gap in Singapore which is the highest among developed countries.

If Singapore is an impoverished state, we may forgive the govt for neglecting old folks and the heavy burden poorer citizens have to shoulder for the care of their parents. However, this not the case for Singapore. The govt spends excessively on defense - far beyond what is necessary to defend  the island. Vast reserves are accumulated and there is limited transparency and accountability in this area. The old folks of today are the ones responsible for creating Singapore's economic miracle - they were the number one workforce in the world and attracted the large foreign investments that propelled our economic growth in our first 3 decades as a nation. Today we have elites that reward themselves with the highest salaries in the world as these old folks are made to take up low paying menial jobs in the last years of their lives. To say this is unconscionable and deplorable is an understatement.

Friday, June 15, 2012

Christopher Balding is back and he makes another point.....

Prof. Christopher Balding's new website: http:\\

In this latest posting he makes a less controversial point backed up with good statistics for comparison. Before I go into it, here is a photo I took from TOC showing 2 Workers' Party members holding a sign at one of the rallies at Hougang.

The WP supporter's English is not too good and he got some of the numbers wrong -our reserves are closer to $600B than $60B! But it does echo the sentiment on the ground of "rich govt, poor citizens".

Professor Balding's latest posting [Link] explains clearly that this is not just sentiment on the ground but the assertions can be supported by numbers and facts.

Here's a summary Balding's findings:

1. Among the countries with the biggest surpluses measured as a % of GDP, the Singapore govt spends the least on its people:

Note that the other countries are oil producing or resource rich countries. While Balding says on his blog that some people may accuse him of making an unfair comparison, I would think that since most of the govt revenue in Singapore is collected from economic activity (say, sweat and blood of working people), the Singapore govt should feel even more obligated to return this money to improve the lives of the people through social spending.

2. Next the Prof Balding shows the countries that has similar level of govt expenditure as Singapore. Singapore is ranked 181 just above Myanmar and below Bangladesh, Nepal and Cambodia.

3, Balding concludes that "Singapore is treating its people as sources of wealth extraction. Rather, people should be considered resources. The people of Singapore deserve better than Myanmar and Bangladesh".

As our SWF gets bigger so is number of Singaporeans are falling into poverty.  Today, 400,000 workers belong to the low income group and work at jobs that don't pay enough for subsistence [Link]. What Prof. Balding is telling us is consistent with what is felt on the ground in Singapore. 

Thanks for the numbers Professor Balding....but Singaporeans already know because they feel the real effect of this "wealth extraction". 

The TRUTH about taxes....and human dignity

Here is the Q&A session following PM Lee's speech at the ESS (Economic Society of Singapore).
The first question came from a Danish gentleman who took a swipe at his speech by saying the Danes are very happy paying taxes and surveys show them to be the happiest people in the world.

"I do not believe that Singaporeans would be willing to pay the taxes that Scandinavians pay, or that our economy could be competitive at such heavy tax rates." - PM Lee, Speech to ESS [Link]

You look around at friends especially those with talent who have immigrated to other countries. Where have they gone? Most of them have gone to Australia, New Zealand, Canada etc, countries with higher taxes and better social safety nets than Singapore. The most competitive economy in the world is Finland[Link] and it has a proper progressive taxation system that results in more equal society.  Highest income earners and corporations in Singapore pay low income taxes - under PM Lee as Finance Minister, he cut income tax for the highest earners and corporate taxes and raised the GST. He also eliminated inheritance tax when nobody called for it.  Companies pay low corporate taxes but we pay a lot at the worse times of our lives - when you're sick, when you're old and need support, when you're poor. The worse combination being old, sick and poor. When you have someone who is disabled that you have to support and you need a car to help him get around - that is when you really pay.

"We face a fundamental choice as a society - do we want low taxes and targeted welfare benefits; or high taxes on all and comprehensive welfare? Singapore has chosen the first; the Scandinavians the second." - PM Lee

Actually the choice is not between "high taxes for all and comprehensive welfare". PM Lee again puts up a false choice - most economists suggest progressive taxation i.e. those with the highest earnings pay more. What he has done in the past was to cut corporate taxes and income tax for those in the highest bracket and then later his govt did things like cutting healthcare subsidies for the middle and lower middle class(remember means testing?), The poor in Singapore ended up paying more taxes when he raised the GST. Parents with special needs children ended paying more[Link]   Many talented individuals have voted with their feet leaving Singapore. PM Lee claims that this "choice" is made by Singaporeans when actually it is made by his govt. PM Lee chose to do all this at a time when corporate profits as a % of GDP was reaching historic highs and our income gap was growing. 

What the PAP govt has done is amplify the inequalities in our society through the taxation system. It creates a big gap between the needs of the people and the ability to meet those needs. The PAP govt euphemistically calls this self-reliance:

"Whatever we do, we must uphold and strengthen the spirit of self-reliance that has enabled us to succeed. We will always give Singaporeans the means and the incentives to help themselves, for personal effort and achievement are essential to our sense of dignity and self-worth, and the means to achieve our vision of becoming a leading global city." - PM Lee....

By importing cheap foreign labor, he undermined the ability of a large segment of the population to support themselves and their family. His govt then implemented Workfare as workers' salaries fall to levels below what they need to subsist and this was not needed in the past when workers make enough to support themselves and their families. Workfare is in fact a subsidy for employers paying low wages and incentivise their low wage low productivity approaches locking the low wage worker in his menial job and a lifetime of poverty and eventually he will not be able to have a proper retirement. Today if you open your eyes when you eat the food courts and hawker centers, you will see our working elderly going from table to table to clean the mess you left them. Every day we see poor Singaporeans digging the trash for aluminium cans to eke out a living. You call this dignity? A worker who works a full time job and cannot earn enough to support his family because there is no minimum wage in Singapore....what does that do to his sense of dignity and self-worth?  By importing labor from developing countries to keep wages depressed and allowing our income gap to grow to be the highest among developed nations,  the PAP has undermined the Singaporean labor force that was once so proud to be named the number one workforce in the world. If the PAP govt keeps its policies, a sense of anger will soon overrun the sense of indignity. Singaporeans know that their self-worth comes standing together as a people to help those who have fallen due to bad govt policies. In an indirect way the PAP govt forces Singaporeans to close ranks, find our courage to stand up against their system. The sense of dignity will come when we find our voice as a people, regain our democratic rights and empower the ordinary people to bring about meaningful change in our society.

Thursday, June 14, 2012

The Real Economic Trade-offs for Singapore....

Here's PM Lee's speech at the ESS (Economic Society of Singapore):

In his speech he outlines the main economic challenges that Singapore faces and goes on to describe his govt's approach towards these issues. Most of what he said is familiar to us - need to keep taxes and govt expenditure low, maintain growth to grow the pie and need to import foreign labor so on. Essentially, he propose to keep going along the same path of the last 15-20 years with adjustments  to address the challenges. His speech was titled "Remaking the Singapore Economy" contains little remaking but excuses on why we cannot make fundamental changes to economic model.

"Globalisation and technology will widen income distributions all over the world. You can see this trend in all developed economies, from capitalist USA to socialist France, over the last 30 years. Talented and enterprising individuals will continue to earn a high premium, while pressure will grow on jobs in the middle, because competition is intensifying globally. So inequality will grow worldwide, and angst and social pressures will go up." - PM Lee

In this part of his speech he suggests that income inequality is a global phenomena. This is partially  true but it is seen as unacceptable by leaders elsewhere in the world and their approach is to proactively reduce the inequality or mitigate its negative effects in their society. Singapore has the highest inequality among developed countries  and our leaders try to blame it on globalization. While globalization is a factor, it does not fully explain why inequality in Singapore is so much higher than elsewhere.

"I know that some Singaporeans welcome the prospect of slower growth. Some go further, and want us to slow down even below our economy's potential. They argue that we already have enough material success, and should give less weight to economic factors, and more to social considerations. And that we should spend more on ourselves and our generation, and put aside less for the future.

I respect these views. I agree fully that material goals are not everything in life. But we are not going for growth at all costs, nor have we done so. Growth is not an end in itself, but a means to improve our lives and achieve many of our other goals. We must always maintain the balance between economic and non-economic objectives, and ensure that the fruits of growth are invested for social purposes which benefit the wider population." - PM Lee

PAP does not go for growth at all costs? ....Look at what they are willing to do to capture growth - building casinos, massively importing labor and accepting a high level of income inequality. Singaporeans have seen the "cost" to them of this growth. Few or no other govt in the world go to the same extreme as the PAP to keep the GDP numbers up. Since 2003, Singapore has an average growth of 6-7% ...this is very high but has it translated to improvement in the quality of life for ordinary citizens? 

"Nevertheless, without growth, we have no chance of improving the collective wellbeing. Far more countries worry about growing too slowly, than growing too fast. For Singapore, slow growth will mean that new investments will be fewer, good jobs will be scarcer, and unemployment will be higher. Enterprising and talented Singaporeans will be lured away by the opportunities and the incomes they can earn in other leading cities. Low-income workers will be hardest hit, just as they were each time our economy slowed down in the last decade. Over time, our confidence will be dented." - PM Lee

The real economic trade-off for Singapore is not between fast growth or slow growth. It is also not a trade-off of economic equality for faster growth. After our rapid development in the 70s and early 90s, Singapore economy was suppose to go through a period of remodelling and pause so that we can go on growing in a more sustainable manner. But the PAP stepped on the accelerator - importing foreign labor and supplied our companies with cheap foreign labor. Instead of rising productivity and a more innovative economy, we had a economy driven to grow by importing foreign labor. Our social inequality has expanded to untenable levels. The tradeoff has already between made - there is no more equality to trade-off for more growth. There is nothing to tradeoff now.

The focus now for govt has to be to fix the excesses that have build up due to very unbalanced policies. History has shown time and again that if social inequality persists, people will reject the system and the govt. There are numerous examples from the past and in recent times of govts voted out or thrown out for this reason.

There is a big difference between the PAP and the Hong Kong govt....and the PAP and the Obama Administration. When confronted with comparable levels of inequality, the attitude of these other govts have been to do everything politically possible to address the situation - Hong Kong implemented minimum wages with good results[Link]. Obama quickly put in place a healthcare bill to ensure that every citizen is covered by health insurance to mitigate the effects of income inequality.

The PAP has been trying to explain away the high income inequality here wrongly blaming it on globalisation and telling us it is acceptable - making hard-to-believe claims like those earning $1000 a month can still afford a flat and that the poor are better off in Singapore than elsewhere in the developed world including USA . They have blocked and rejected every idea that will have a real impact on the problem such as minimum wages, Lim Chong Yah's "shock therapy" and Tommy Koh's ideas for universal healthcare.

PM Lee now tells us the trade-off is between fast and slow growth. He misses the point completely - from 2003 to 2010 Singapore grew an average of 6.3%, Singaporeans already know what the PAP way of obtaining high growth is about and how it impacted their lives - they expressed their understanding by sending and clear signal to the PAP govt in the 2011 GE.

Many countries have gone through periods of slow growth or even recessions during which they restructured their economic and political system to comeback stronger to achieve sustainable growth. The S. Koreans is a good example - they had a growth model that ran its course and broke down during the Asian crisis. They restructured and made their comeback. The US economy saw a major "reset" in the 1930s during the Great Depression. In the 1920s, they were on an unsustainable growth trajectory of rising debt and social inequality. The lesson here is if you keep pushing for growth and allow imbalances such as income inequality to keep rising, you will see abrupt breakdown of the system.

The real trade-off for the PAP govt is this : make fundamental changes or be forced to change. The signals are increasing in amplitude and the time they have is running out. Yet they resort to little tweaks and still continue to present to the people false options and trade-offs to justify a system that is no longer sustainable.

Saturday, June 09, 2012

Dr. Lim Hock Siew - Unfulfilled Dream of the Fajar Generation....

We are all saddened by the passing of Dr. Lim Hock Siew, a patriot who lived by his principles and held on to his ideals throughout his life.

The past few years, members of the Fajar Generation came forward to speak to the present generation to tell us of the truth behind historic events and bring to us lessons from the past. There is a string of history that connects the masses standing in the field in Hougang several weeks ago to the men and women in the Fajar Generation 50 years ago - it has been a long struggle to fulfill a dream for Singapore.

51 years ago, Dr. Lim and his colleagues broke away from the PAP to form the Barisan Socialis. Here s the editorial from the Fajar, the organ of the USC(University Socialist Club) in Aug 1961, one month before the formation of the Barisan Socialis.  It outlined the difference in principles that led to the formation of the Barisan Socialis.

"We call the PAP not to resort to undemocratic practices in its bid to remain in power, lest the few democratic rights we have painfully achieved will be lost and the next stage......." - The Fajar 1961.

Lim Chin Siong outlined the goals of his party and his vision for Singapore in 1961 after the formation of Barisan Socialis. He envisioned a Singapore that is democratic and  free.  In 1963 while they were preparing for the General Election which they had a good chance of winning, they were arrested and jailed without trial. Operation Cold Store crushed the dream and vision of Dr. Lim and his colleagues for a free and democratic Singapore. 

"The Big Six – Mr Lim, Mr Fong Swee Suan, Mr Woodhull, Mr Dominic Puthucheary, Mr S.T. Bani and Mr Jamit Singh – had stated that while they supported the PAP in the coming by-election, they would not compromise on issues such as detention without trial and freedoms of press, speech, assembly and organisation.

Dr Poh argues that these statements amounted to a ‘request’, not an ‘ultimatum’. But Mr Lee, he says, saw this as a challenge to the PAP leadership and decided to make the split."

- Dr. Poh Soo Kai, Straits Times Interview "Dr. Poh:Why I parted company with PAP", 27 Dec 2009.

50 years later, Singaporeans live in a semi-authoritarian state still struggling for their basic rights to assemble and to speak freely. Elections have been tweaked to preserve PAP's dominance and Singapore ranks very low in press freedom. The same laws that were used to detain these leaders still exist in Singapore today. Why do we need the ISA when no other developed countries need this law to ensure the security of its citizens?

Dr. Lim's stood by his principles and never wavered from doing what was right. He was detained for 19 years for his beliefs by those who resorted to undemocratic means to retain power.  His life is an inspiration for  current and future generations of Singaporeans. We must keep fighting for a democratic future and never forget if we ever waver, the other side will win and govern us and our children using fear and propaganda. 

Today the Asian countries around us have progressed and moved away from their authoritarian and undemocratic past. Many have found new and better ways to thrive and succeed in a freer more democratic environment achieving more equitable outcomes for their citizens. When we look at the dream of the Fajar Generation, it is not the dream of a past generation but a dream for our own generation and a dream for our children. We have to keep this dream alive by not falling for tricks used by men who will resort to undemocratic means to retain power. We must not succumb to greed and easy promises. The path to democracy will always be made hard and painful for Singaporeans. Dr. Lim fought for it all his life and the people of Hougang fought against threats and financial temptation for 20 years to retain a small area that serves as a beacon and inspiration for the rest of us. 

Yesterday, Dr. Vivian Balakrishnan said on his Facebook page:

" He was a good and honourable man" Dr. Vivian Balakrishnan

Why does the law that detains good and honourable men without trial still exists? Dr. Vivian Balakrishnan should do the honourable thing and ask the gvot to repeal ISA and replaced by an anti-terrorism act. By retaining the ISA, the PAP govt reminds us that it has not changed and  the existence ISA symbolises the frustrating lack of political progress in Singapore.

Tuesday, June 05, 2012

Issues raised by Christopher Balding on our reserves...

Professor Christopher Balding's blog: raises a number of issues related to our reserves. These issues are very interesting but there is insufficient information available explain the discrepancies - we were supposed to elect a president who would ask these important questions about our reserves but we elected Tony what has he done in this area? With hundreds of millions of our CPF money moved to the reserves and much of the heavy debt we incur to pay for HDB flats going into the reserves, the secrecy is surrounding our reserves is not longer acceptable. I hope elected representatives from the opposition raise these questions to pierce through the secrecy. Singaporeans are increasingly concerned and want answers.

Issue 1 : Temasek claims average returns of is this possible? 
[Comparing Temasek’s Performance in Two Pictures]

1. Temasek assets  are mostly in the form of  in a diversified portfolio of listed companies many listed in Singapore.

2. Since 1974, the annualized returns of the MSCI Singapore and other Singapore indices have performed nowhere close to the 17% return reported by Temasek.

This issue has been discussed by a Singaporean J.P Tan. I first read about J.P. Tan from a a highly acclaimed book on Warren Buffett by authorAndrew Kirkpatrick. J.P. Tan had independently deciphered one of Buffett's investment move and wrote to Buffett....a very impressed Warren Buffett replied to J.P. Tan to say his analysis was spot on. J.P Tan's letter and Buffett's reply both appeared in "Of Permanent Value: The Story Of Warren Buffett".

J.P. Tan has used his analytical skills to decipher Temasek's accounts from 1992-1993 and found that Temasek had book a $40B in gains following the listing of SingTel[Link]. J.P. Tan explains that this is most probably achieved by the transfer by the Singapore govt of SingTel to Temasek at book value of $20B and when SingTel was listed, the market value of $60B was used to record profits of $40B. J.P Tan takes issue with this as it "misrecords" profits at Temasek. The $60B should be record as cash infusion rather than profits. This form of accounting obscures the actual fund management performance at Temasek and makes it impossible to tell how well managed our reserves are at Temasek. It is very dangerous for us not to know the actual performance of Temasek.

Deceptive as it seems, I wrote to Prof. Balding that this is one possible explanation for the high investment returns claimed by Temasek. He agrees that this is a plausible explanation.

The question that our MPs can raise in parliament for this issue that concerns all of us are 1. How are assets transferred Temasek accounted? 2.  How does Temasek record profits from sales and listing of these assets? 3. What is the real performance of Temasek if we take out these 'profits'?. Our power plants are a good example. They were transferred to Temasek and then later sold off to foreign investors. Temasek shouldn't book any investment profits from these sales as it would these are "inherited assets" and booking returns on them will obscure the real performance at Temasek.

Issue 2: What happened to hundreds of millions?[Singapore, Inc.: Just When You Thought it Couldn’t Get Any Worse]
1. Professor Balding compiles a spreadsheet showing our surplus all the way back  to 1980. He also compiles the net  liabilities incurred per year.

2. The sum total of surplus, liabilities and returns should give us the size of GIC assets. GIC return is given as roughly 7% per annum.

3. Prof. Balding estimates the size of GIC's assets to be  $2 trillion.

4. GIC has assets reported to be $700B.

I think the simple explanation is nobody knows the size of GIC's assets and how much surplus is transferred to GIC. We just don't have enough information to tell if there is something really wrong here.  The PAP govt simply refuses to be transparent and accountable when it comes to the accounts of the GIC. - they just simply refuse to let us know and we are supposed to just accept this.

Voting for an independent presidential candidate would have help to answer some of these questions but we missed this 2011.

"Unfortunately, I have this crazy idea that governments should be responsible to the people. Whether it is the United States, Chinese, or Singaporean government, I believe leaders should be accountable and transparent to the people of their country. Governments do not have unlimited powers. I believe that the government of Singapore should be accountable and transparent with the people of Singapore. I believe that the people of Singapore have a right to demand answers from their government." 
- Professor Christopher Balding[My only vested interest]

Sunday, June 03, 2012

Irresponsible framing of our integration woes....

Today the Straits Times reported an interesting incident that occurred on one of our public buses.

A woman, with the help of the driver, took a loaded shopping trolley onto a public bus. What is incredible is not just this amusing incident itself but Straits Times' report on the incident. The witness to the incident who posted the video on YouTube said that both the driver and woman were "PRCs" -  a term commonly used to describe mainland Chinese who have come here recently retaining much of their language, habits and culture etc. This piece of information missing from the Straits Times report is key because given China is so big it is possible that in some parts of China, it is actually common practice to bring trolleys onto public buses. The woman may be just unaware that such practices are not allowed here.  If the driver knew it was wrong, why would he risk his job to help the woman?

I once saw a foreigner (his clothes and mannerism were dead giveaways) push an NTUC Fairprice trolley along a pavement. The nearest NTUC supermarket  is 400 meters from where I spotted him. Maybe in some parts of the world this is common practice. I would give these people some benefit of the doubt that they are not so familiar with the rules here. One important part of integrating people is for them to learn the rules here. There are written rules and unwritten rules ...and in Singapore we have mamy rules so it takes time to integrate people.

I have seen Indian Singaporeans and Malay Singaporeans going up a bus to ask for directions and the bus driver from PRC couldn't help them because he spoke no English. It is not his fault because when he was hired by the bus company there was no requirement for him to speak English.

In the recent incident involving a Ferrari and a taxi, many Singaporeans asked if we should allow foreign drivers to just go onto our roads especially if they are from countries where the driving standards and  habits are completely different from ours - this is a legitimate question.
It takes time for us to get used to their behaviour and for them to get used to ours. This is a long and sometimes frustrating process but the difficulties should surprise no one. As a result of frustration, Singaporeans have expressed the the problems they face and unhappiness resulting from these integration problems on the Internet. Where else can they bring up and highlight these problems? The mainstream paper tends to obscure the facts (like in the trolley incident) and play up the "intolerance" of Singaporeans in such situations.

Because of the high influx of foreigners, Singaporeans have suffered from structural unemployment, depressed wages, high cost of living and crowded public transportation. There is higher competition now for many things from jobs to cars (COE) to university places.
"The truth is that we pay some workers such low wages not primarily because their productivity is inherently low but largely because they are competing against an unlimited supply of cheap foreign workers." - Tommy Koh

The fear of income and job loss among Singaporeans is a real one. The effects of overcrowding has undermined the quality of life here. The high foreign influx has generated negative sentiment and fueled the anger among some Singaporeans. Some Singaporeans have turned to the Internet to express this anger. While this anger finds outlets in specific events involving foreign individuals, the underlying cause of this anger is unhappiness over the policy to allow the high foreign influx.

The mainstream media and PAP politicians have started to frame the concerns and unhappiness as "anti-foreigner" sentiments[Has anti-foreigner sentiment gone too far] and "tirades". Through this re-casting of the problem,  the MSM and PAP puts the blame on Singaporeans for being intolerant and harboring "anti-foreigner" sentiments. This characterisation is not only incorrect, it is unfair to Singaporeans who have suffered from PAP policies. While this "blame the victim" approach has been used by the PAP to promote their past policies, there is general consensus on the ground against the high foreign influx. This tactic to turn play one group Singaporeans against another in order to achieve their own political goal will divide Singaporeans. Singaporeans should not "stand up against" one another on this, we should stand to gather in order to move ahead on this issue.

Nowhere else in the world have citizens been as tolerant as Singaporeans when it comes to the acceptance of foreigners. Just look at what has happened in Australia and Hong Kong[Link] where there has been a far stronger reaction even though the influx to those places is far lower on a per capita basis. Singaporeans have only reacted because the numbers have become so large and they have personally experienced the negative effects of these policies. The concerns of Singaporeans have to be properly addressed and the the policy must benefit native Singaporeans as a whole in the long run. Otherwise, Singaporeans will oppose the liberal immigrant policy to stop further deterioration to their quality of life.

Labelling those who oppose the liberal immigration policies as "anti-foreigners" and calling their expression of frustration "tirades" are irresponsible attempts to divide Singaporeans in order to advance a policy seen as harmful by most Singaporeans. The focus of govt should be on how the problems faced by Singaporeans should be addressed and on changes that will lead to long term benefits for Singaporeans. By failing to do this, the govt has deepened the anger and opposition to this policy. By putting forth fallacious arguments such as foreigners create jobs for Singaporeans when more than 70% jobs created are taken up by foreigners [Link]they have added to the frustration and anger.

We all know that foreigners are here because they want to have higher incomes to create a better future for themselves and their families . We, Singaporeans, will do the same if we are in their shoes.  It is not their fault that integration problems have arisen and our public transport is overcrowded just as it is not the fault of Singaporeans that they feel frustrated and angry with the situation. We depend on our leaders to formulate beneficial policies and get the numbers right to achieve the desired outcomes. When they don't do their job well, it is unfair and irresponsible to blame Singaporeans who are at the receiving end of their policies.