Coping with high property prices

Many young people find property prices, including HDB flats to be too expensive. Here are some suggestions on how they can cope. 

1. Rent a room first. Choose a location close to where you and your spouse work. The saving in travelling cost and time can be significant. Many people are willing to rent out a room to a newly married couple with no children. 

2. Stay with your parents, if they have a spare room. They may welcome grandchildren, and can help to take care of them. Remember to pay them a rental also.

3. While renting a room, you can keep your savings in the CPF to earn interest at 2.5% per annum or invest them in a low cost index fund (such as the STI ETF) to earn a higher return. Build up the savings towards the down-payment for the property that you buy later.

4. Wait for the property price to drop, before you buy your home. In a property slum, the prices can drop from 30% to 50%. A slump can come once every 10 years or so. Be patient. The drop is likely to be more severe with condos and less with HDB flats.

5. Some people expect the next slump to be in 2015, when interest rate spikes up globally and there is a large supply of new units. I tend to agree.

6. Buy a property within 5 years of your family income and pay off the loan within 25 years (or shorter). Choose one that is smaller or located in a new town to fit your budget. Do not take the maximum repayment that you can afford now, as you have to allow for an increase of interest rate in the future.

I hope that these tips are useful to you.

Medical Insurance for a child

Someone asked, "What type of medical insurance should I take for my child?"

The answer is - CPF Medishield. The premium for a child is only $33 a year. If you want to take a private Shield for treatment in non-subsidised wards, do not pay more than $70 a year.

You do not need to buy any rider to cover the deductible. You can pay the deductible from your Medisave account. It may cost up to $1,500 per year, but you only need to incur in once in many years.

The premium that you pay for the rider over the years is likely to be more than the amount claim - this is how the insurance company and the agent make their profit and commission.

You do not need to take critical illness insurance for your child, as the cost of treatment is covered by the Shield plan. Do not have duplicated coverage - it is not worth spending the money.

Here is the Medishield premium for various ages:

http://www.moh.gov.sg/content/moh_web/home/costs_and_financing/schemes_subsidies/Medishield/Premiums.html

How does a life insurance company make profit?

Someone asked me, "How does a life insurance company make money after giving away high commission to the sales people?"

The simple answer is - by taking away a large part of the return that should go to the policyholder; leaving a poor return to the policyholder.

Take the example of a person who saves $6000 each year over 30 years. The total savings is $180,000. If the savings are invested to earn a yield of 5% per annum, the total accumulated amount would be $400,000. The investment gain is $220,000.

Now guess how much of the gain is given to the consumer? Typically, the consumer gets $80,000 and the insurance company takes away $140,000 to pay commission and other expenses and keep the rest as its profits.

A fair amount to be taken away to provide the insurance cover and the administrative services should be $60,000 and not $140,000. If the consumer decides to buy term insurance to provide the cover, the cost should be only $15,000.

Most consumers are not aware that they are offered a financial product that provides a poor return (about 2.5% per annum); as a large part of the potential gain is taken away as expenses and profit.

To learn how to make a better plan for your finances, attend the talks organised by FISCA (www.fisca.sg). Your future and your family's future depends on your taking this important step.

Consumer consulting - book a slot

Do you face any of the issues covered here?
http://tankinlian.com/admin/file.aspx?id=740&IID=746

You can book a slot for consumer consulting here:
https://tklcloud.com/book/Public/Slots.aspx?key=41d39e7226d1461084fb18c8485e60b8

Loyalty to Singapore

A few people ask me to write about the meaning of "loyalty to Singapore". 

Loyalty means that if the country calls on you, you are willing to come forward to serve the country. At times of war, it means the willingness to give your life to protect the sovereignty of the country. It also means that you are willing to speak out the good values and beliefs of the country. 

You should also be willing to lose financially, so that the country can benefit more than the sacrifice. This includes the payment of fair share of tax needed to run the country.

For the people to have loyalty to a country, there must be good values and beliefs shared by all the people. If there are doubts as to what the country means to the citizens, the doubts have to be cleared. People must know what they are fighting for.

The citizens have to be treated fairly and given a say in the future of the country. Loyalty is a two way street.

Does migration from Singapore mean disloyalty to Singapore. I do not think so. If a person migrates and takes up citizenship in another country, but is willing to answer the call to serve Singapore in times of emergency, that person clearly retains loyalty to Singapore.

Most countries are quite open minded about their migrating citizens and will welcome them back, if they wish to return. We have to adopt the same open-minded approach. 

Population White Paper - TKL views

I will now write to give my views on the Population White Paper and on the target of 6.9 million people by 2030. 

1. Singapore is already too crowded based on our current population of 5.1 million. Look at our MRT stations, trains and shopping malls next to these stations. - teeming with people. Already life is quite stressful in these crowded conditions; it will get worse. 

2. We do not need a big economy to create sufficient jobs for our people. For each size of population, we need perhaps 70% to be working in the domestic sector, i.e. education, health care, housing, safety, law and order, and the other 30% in the export sectors. Our competitive export sectors, e.g. airlines, tourism, high tech manufacturing, education, financial services, trading, etc, can provide these jobs.

3. We have some economic activities that create jobs of questionable value, i.e. selling of properties and financial products, speculation in shares , COE and casinos and money lending (look at the number of pawn shops). We do not need so many people to be involved in these activities - which may be harmful for the future. If some of these people are deployed towards the other sectors of the economy, there is no need for a larger population.

4. We have to get rid of the wasteful activities in our economy; they create jobs but do not improve the quality of life. I refer to the people involved in GST accounting (my favorite grouse), in bureaucratic inefficiency (e.g. payments by cheques, submitting returns to complicated government websites), disruptions of town councils management, and the excessive time spent in National Service (most countries have reduced to one year).

5. We can allow some immigration of quality workers (i.e. those needed by our economy) and families who are willing to immigrate and make a home in Singapore, and to serve National Service and other obligations like the local born. We can accept them for a short term, but they have to make up their mind beyond the initial period.

6. Our population will grow, but much more slowly and consistent with our ability to provide the infrastructure and public services. For the time being, we should keep the population steady until the overcrowding and lack of infrastructure is sorted out.

Singapore's wealth funds

A few people have asked me to explain how GIC and Temasek are being funded. Some of them think that their CPF savings are tied to the performance of these companies. 

I must first declare that I am not really an expert in this area. You can take my comments as coming from a person who has been following the news over the years with some financial knowledge.

Temasek took over the shares of government linked companies that were previously held by the Ministry of Finance. These companies were set up by the Government during the early years of our development. The initial cost was low, but the companies have grown manifold over the decades. They include the telephone, power, transport and other utilities that have since been privatized.

If Temasek had continued on this model, they would have assets and no liability and would be very safe.

However, in recent years, Temasek had borrowed money by issuing bonds in the international market. This has increased risk for Temasek, but i think the scale is quite small.

While we read about some bad investments be Temasek causing billions of dollar in losses, we should also look at the good investments that made billions of dollar in gains. We should also look at the results over many years, instead of a single year.

Over a period of years, the results have been satisfactory.

GIC invests the budget surplus and foreign reserves of Singapore. They are required to invest outside Singapore. So far, their investment performance has been satisfactory, and follow the global benchmarks.

When there is a global crisis, the results of GIC will be impacted, but the performance should improve with a global recovery.

Some analysts, especially from independent sources and the social media, have published findings to show that the performance of these two companies have been mediocre, and not outstanding to justify the extremely high salaries and fees that were being paid. I agree with these sentiments.

Most of the CPF savings are invested in government bonds and are used for building HDB flats and national development. The CPF savings are safe. There is sufficient money to pay the monthly sums to those above 60 years.

The government chose to pay the minimum sum in monthly installments over a lifetime, in spite of the unhappiness of the general public. I agree with this decision, although there are valid arguments for flexibility in allowing early withdrawals under certain circumstances. I do not support the lack of flexibility.

I look forward to read other contributions.

Best places for Singaporean to migrate to

Several people have asked me to comment on the best country for Singaporeans to migrate to. 

My top choice is Australia, followed by New Zealand and Canada. They are English speaking countries and easy for Singaporeans to adapt to. They also have a high quality of life and a good work-life balance, and a good climate.

My brother migrated to Australia 15 years ago. I have seen how he adapted to the new lifestyle and how his two children grew up in their new environment. They love their new home.

I have also met many local born Australians. They are considerate, helpful, positive and broad minded people. This is a general observation; there are certainly exceptions.

The Australians have a term "fair-go". They believe in treating people fairly and helping others to succeed.

Taxes in Australia are high, but most people do not mind, as they have a high minimum wage, high wages and good welfare benefits. Net of tax, they have enough to live a comfortable life with good work-life balance.

I believe that high taxes is good, if the taxes are used to provide the health care, education, short term unemployment benefits and other public services. Most people need these services, which can be provided more economically by the state, using the principle of collective purchasing of the services.

I am sure that it is not all rosy in Australia. It should be possible for someone to bring up some parts of the life in Australia that is wrong. There is no perfect system that suits everyone. But, generally, I find the Australian system to be a good model; a good balance between capitalism and community.

For young Singaporeans who have a chance to migrate to Australia, I would say, "Take it". You have a high chance of making it there.

For those who stay back in Singapore, I would say, "Singapore is not too bad either". We can do well here, also.

It would be better, if our government change some of its policies to follow the good examples in Australia, such as more social welfare and welfare of workers. In spite of the obvious differences (i.e. large country with natural resources and small country with no natural resources), many good practices in governance can be applied to all countries.

Don't ask me how to get permission to migrate to Australia. Ask their embassy, or ask Singaporeans who have migrated there to give you some tips.

I welcome views on this topic, especially from Singaporeans who have migrated on the balance between the good and bad points of Australia.

Population White Paper - Lucky Tan's views

A few people have asked for my views about the Population White Paper. I will give them later.

Meanwhile, I like to ask you to read this article from Lucky Tan. Lucky is usually quite factual and objective in stating his views. He did a thorough research and write with strong reasons.

I recommend you to read his views and analysis and also to read the other articles in his website, "A Diary of a Singapore Mind". He has a strong following.

http://singaporemind.blogspot.sg/2013/01/population-white-paper-filled-with.html

Consultancy on submission of claims

Many consumers had their claims rejected for reasons that they felt to be unfair, e.g. alleged non-disclosure, unclear exclusions and other factors.

They lodged complaints to FIDREC, MAS and their MP. It got nowhere. They did not receive any reply or get directed to go somewhere else.

Often, the consumer failed to write a proper report to submit their claim for a review. If you encounter this difficulty, it is best that you get assistance to write a proper claim report.

Read this:
http://tankinlian.com/admin/file.aspx?id=740&IID=746

Singapore Conversation

A wrap-up session

involving more than 100 grassroots leaders

will be held tomorrow.

 

Lim Swee Say and Heng Swee Keat will be attending the event.

.

From next month to March,

the PA and grassroots organisations plan to organise more sessions

with the aim of engaging some 1,000 residents.

http://www.todayonline.com/singapore/12000-residents-have-taken-part-our-singapore-conversation

 

Party in Hougang

Mr. Feed shows a video of the party in Hougang during by-election night
http://feedmetothefish.blogspot.sg/2013/01/the-party-that-was.html

Let the banks fail

Says the President of Iceland
http://www.zerohedge.com/news/2013-01-26/only-3-minutes-worth-listening-davos

Bright Words

Rearrange the letters to form the right word to match the definition. Compete with your friends. Improve your vocabulary by regular practice.
http://tankinlian.com/admin/file.aspx?id=750&IID=756

Amazing numbers

Amaze your friends by your ability to "read their mind" and guess the secret number that they have chose.
http://tankinlian.com/admin/file.aspx?id=749&IID=755

Moby Pal - light weight, easy to use and fast

Do you like to have an app that helps you to find you car, send a security photo (when you are in an unsafe place) and help you to find someone to share a taxi? It also help you to send a pre-set SMS message to call someone, to get a return call, or when you arrive late. This app is light-weight, easy to use, and fast to run.  It is called Moby Pal.
http://tankinlian.com/admin/file.aspx?id=748&IID=754

Invest in an indexed fund

 often get questions on how to invest their savings to get a decent return, as the 0.2% from the bank does not match inflation. My answer is still, "invest in an indexed fund". Read this:
http://tankinlian.com/Admin/File.aspx?ID=731&Frame=1

Moby Pal

A app to help you use your mobile phone better.  Allows you to send pre-set SMS messages, find where you park your car, take security photo and share a taxi.
http://tankinlian.com/admin/file.aspx?id=748&IID=754

Alternative to elitist thinking

PM Lee said that a good mix is needed for the PAP team. But he lamented that it is difficult to find people who can both connect with the ground and come up with good ideas.

Why does he still persist in elitist thinking? 

We mainly need to elect people who can connect with the ground to understand what are the needs of the people. He can trust the "wisdom of the crowds". 

The ordinary people are not daft. They know that nothing is for free. They are willing to work hard. But they want to be treated fairly, to know that the reward from their hard work should be sufficient to give them a decent standard of life. They should not be stressed by high cost of living and housing.

The elected leaders do not need to be smart enough to find the solutions. They need to be smart enough to get the knowledge of the people with the expertise, experience and passion. This will produce a better outcome. It will also produce the flexibility to make changes, based on actual experience, and not on theory.

If the leader comes up with ideas on his own, they are likely to be bad ideas, and being his idea, the leader will refuse to recognize the failure and will persist in that idea. He will also refuse to allow other ideas to be tried. We have seen this kind of thinking in many of our failed policies.

If PM Lee persist in his elitist approach, he will continue to fail and things will continue to worsen.

Punggol East results

Lucky Tan gives his views about the results in Punggol East
http://singaporemind.blogspot.sg/2013/01/punggol-be-results-what-it-tells-us.html

How an alternative government can run Singapore

I wish to give a scenario in the future, where an alternative government is elected to run Singapore. While it create chaos? Will Singapore's future be damaged?

Let me first state that this scenario is not likely to happen in the foreseeable future. But in risk management, it is better to prepare for this scenario. And, if the unexpected happens, we do not need to panic.

Let us look at the example in Hong Kong when the British had over the government in 1997 to Communist China. Did Hong Kong collapsed? It did not. In fact, Hong Kong continued to prosper and to find a better solution for its people.

Let us go back to 1957, when the Peoples Action Party took power in Singapore, with the backing of the left wing faction. The leaders were inexperienced in government at that time. We found the right approach that suits our circumstances then, and made our progress.

The lessons to be learned from both examples are:

a) Keep close to the ground
b) Tackle the problems that affect the people most
c) Do not be afraid to use talents external to your political party

A new government is more likely to abandon the old policies that have failed and to try new policies. The incumbent will continue to stay with the old policies, hoping to "tweak" and "calibrate" to make them work, often without success.

Here is a practical solution for a new government that do not have experienced ministers. They can form an advisory committee for each minister.

The members can be drawn from people who have vast experience in the domain, and do not have any existing vested interest. They could be civil servants, business, political or social leaders who have since retired and now have time to give their counsel.

In America, the President formed a council of economic advisers to advise him on economic matters, and a national security council to advice him on security matters.  This can be a good model for the advisory council for our "inexperienced" minister.

I suggest that this approach can also be adopted by our current government, under the Peoples Action Party. They have to find new ministers all the time. These new ministers are inexperienced in their ministries. They can benefit from the experience and wisdom of the people recruited into the advisory council. This could be a good way for changes to be made.

The advisory council should be permanent, but the members can be changed from time to time. A standing council, rather than an ad-hoc committee, will be able to advice the minister more effectively.

Puzzles and thinking

Try the puzzles in this worksheet for the talk - Puzzles and Thinking. Send your answer to kinlian@gmail.com. I will check and reply to you. (No prize, sorry. but you do not need to pay any fee either).
http://tankinlian.com/admin/file.aspx?id=747&IID=753

PAP suffers 10.83% swing in Punggol East

Here is the view from Alex Au
http://yawningbread.wordpress.com/2013/01/27/pap-suffers-10-83-swing-in-punggol-east-by-election/

Workers Party win by a big margin

Here is the view from Lucky Tan
http://singaporemind.blogspot.sg/2013/01/wp-lee-lilian-wins-by-large-margin.html

History in the making

Here is another view, from a former member of the establishment
http://singaporerecalcitrant.blogspot.sg/2013/01/history-in-making-in-punggol-east.html

Payback time

Here are the views from Mr. Feed and a great video from the heartland of the Workers Party
http://feedmetothefish.blogspot.sg/2013/01/pay-back-time-is-such-bitch.html

Stop paying premium

Many consumers were told by insurance agents that they need to pay premium for 10 to 13 years. After that, they can stop paying premiums, and the policy can continue "smoothly".

The consumers did not realize that when the stop paying premiums, the premiums are being charged to their cash values and interest is added at a high rate. The cash value can run down and may eventually eat away the entire policy. All the premiums paid previously would be gone.

When the consumers learned that this is how the policy worked, they were shocked. They did not realize that their past savings would be gone.

This type of sales presentation had a high risk of being misleading to consumers. Many consumers had been misled into entrusting their savings into this type of policy.

Cooling the property market

Despite its limited land,

Singapore has long had one of the most open policies for foreign buyers here.

 

This has caused prices to spiral and cut into its voter popularity in recent years.

 

Recently, a friend read with incredulity

that a S$1.5mil private condo in Singapore was described as medium-cost.

 

“How on earth can a graduate start-up hope to afford one?”

he asked.

http://thestar.com.my/news/story.asp?file=/2013/1/26/focus/12625365&sec

Private settlement of Ferrari accident

The insurance company finally agreed not to recover third party liability claims from the family of the Ferrari driver. They do not have the legal right anyway. It was quite bad for them to posture in this manner.
http://www.straitstimes.com/breaking-news/singapore/story/ferrari-case-family-and-insurer-reached-settlement-20130125

Winner of Jan 2013 Quiz

Josh Kuah won the prize for being the first person to mail the correct answer to me for this quiz:
http://tankinlian.com/admin/file.aspx?id=746&IID=752

The correct answer is "Francis". A few other people sent the answer after him.

If you are interested to try other puzzles, here are the puzzles. The answers are on the next page:
http://tankinlian.com/Admin/File.aspx?ID=381&Frame=1

You can buy the book, Intelligence Quiz, at www.tankinlian.com/ishop

Long delay for GIRO authorization

21 January 2013 (not published)

Editor, Forum Page

Straits Times

I applied to Standard & Chartered Bank to have my 

credit card bills paid by GIRO from my DBS Account.

SCB required me to submit an authorization form. On

receiving it, they told me that it would take 4 to 6 weeks for

the request to be processed.

Why does it have to take so long? Why does the process

have to be manual?

I already have a security token with DBS bank. Surely, it 

should be possible for me to login with 

the security token, authenticate my identity and make the 

request to DBS Bank to accept bills from the billing organization?

SCB said that they did not receive my 

first authorization form sent by mail. I had to send them a second form.

 I finally managed to get the GIRO authorization approved after 

six months, allowing for time lost due to communication.

Why are we still using wasteful and time consuming 

process, when a more efficient online version should be 

provided?

Bad to allow advisers to sell investment-linked policies

It is dangerous to allow "financial advisers" to sell investment-linked policies and earn high upfront commission. 

There is a real risk of consumers being badly advised about the risks of investing, such as:

a) the projected return on the funds are often exaggerated, e.g. a gross return of 8% when a more likely return is 6%
b) the net return to the consumer is much lower than the gross return, e.g. a deduction of 4%, and this is "hidden" from the consumer
c) the assertion that the insurance company and the adviser has the ability to pick better stocks to improve the return on equities.
d) the false belief that they can improve their return through advice on switching and market timing

Many consumers have bought investment-linked policies on the above mistaken notions. Stock brokers are not allowed to give these type of advice, but it seemed to be quite rampant with the financial advisers.

In many cases, the advisers were not aware of the pitfalls. Being new to the game and inexperienced, they were taught the above marketing points by their trainers, and they pass the message to their family and friends, quite naively.

Even the reduced commission rates recommended by the FAIR Panel are too high and the risk of mis-selling remains, especially with the investment-linked policies.

I do not wish to imply that all financial advisers fall into this mold, but I suspect that many do. To a knowledgeable person, it just does not make sense for consumers to be bearing a high upfront cost where the adviser does not really give any value.

Oxymoron

Many of our government policies are quite complicated and baffling, e.g. public transport, foreign workers, housing, medical care. A good term to describe it as "convoluted".

Instead of addressing the root cause of the problems, the government has been applying the approach of "tweaking" and "calibrating", which often led to worse outcomes. 

I read a statement from a government leader that it is not easy to "re-nationalize" public transport. Many people may not realize that some parts of the system are already under central control, e.g. setting of fares, and funding of capital expenditure on buses. So, we are already partly under central control and partly under privte sector control. By continuing our current structure, we are getting the worse of both systems.

I wanted to find a word to describe our approach, and the word "oxymoron" comes to my mind. It is defined as "A rhetorical figure in which incongruous or contradictory terms are combined, as in a deafening silence and a mournful optimist."

I will be writing more about these issues. 

How to improve service quality

I agree with the views posted by several readers about improving service quality, such as:

a) better training
b) leaders to show a good example
c) create a service culture
d) instill pride in the work
e) better pay and tips
f) a better work environment

I wish to share my observation on one key practical measure that can be implemented in all service organizations, serving customers. It does not add to the cost, and make all of the above measures produce an effective outcome.

Over the years, I have seen just a few places, e.g. hotels, restaurants, with excellent customer service - and the captain or supervisor is visible. This is the person who is clearly identified and makes it a point to look around and see that all the customers are being served.

The captain does not do the work of the waiter, but is wiling to help on emergency, but the main function is to have a bird's eye view.

When the captain or supervisor is around, you can be sure that the waiters or service staff do not idle and gossip. they focus on their work.

The captain is also available to handle the difficult customer issues, so that the service staff can do their physical duties, without being distracted.

Forty years ago, I brought my guests to a restaurant in Raffles Hotel. My guest found a piece of metal in the meal and showed it to the waiter. Five minutes later, the general manager came out to explain how the metal got into the food and waive the entire bill! They have an excellent system of escalating difficult problems beyond the captain to the top.

Often, these excellent places have captains or supervisors that come from overseas. It seems that they have a better service culture and train their people better. We learn to learn from them on these skills and culture.

Learn how to solve Einstein's Quiz

Here is a chance to learn how to solve Einstein's Quiz and to win a Prize.
http://tankinlian.com/Admin/File.aspx?ID=746&Frame=1

How to cope with a demanding boss

Here are my tips on how to cope with a demanding boss. More people have to face this situation as the workplace becomes more stressful and competitive. 

I have to state upfront that these tips do not apply to everybody and to all situations. You can follow them if you find them useful, or just ignore them if you find them to be not relevant (please note that I do not wish to enter into a debate).

Here are some points for you to consider:

1. You cannot change your boss; but you can change your attitude adn your approach.
2. If you find your boss to be demanding, quite possibly, half of the blame lies with you.
3. If you are useful to your boss, your boss will not be demanding, as he would not like to lose you. If your boss is demanding, it is likely that you are not useful to your boss.
4. A boss who behaves unreasonably and over-demanding is likely to lose many workers, and that would reflect badly on his people skills.

Having worked with may people, I find that the bad performers tend to have the following characteristics:

1. They take too long to complete the work and often come with bad work.
2. They try to do the tasks that they are not capable of handling and cause more harm.
3. They tend to be stubborn in wanting to do things their way and may end up with bad work
4. They look for reasons to justify their actions rather than learn how to act differently.

Here are some tips for you to carry out your work:

1. Complete the part of the work that you know, as early as possible
2. Hand over the completed parts, so that your boss can evaluate them; this gives you the chance to discuss the phase with your boss. 3. You will be surprised that your boss can help you find the answers ot he parts that trouble you, or point you to the people who can help you.
4. In some cases, the boss may change the requirements, if they know that the work cannot be done as originally specified.

The approach that I have suggested can be described as "doing a big project in phases, and in an interactive and collaborate way".

In my consulting work, I also have to face clients who are my bosses. I use the above approach. It worked very well for me.

I hope that you find these suggestions to be useful and suitable. 

Winds of change

http://feedmetothefish.blogspot.com/2013/01/wind-of-change.html

FAIR panel has struck the right balance

22 January 2013

Editor, Forum Page

Straits Times.

I refer to the letter from Ms Maybel Tang "Look after financial advisers' interest as well, ST ....".

I commend the Financial Advisory Review Panel for striking the right balance between 

the interest of consumers and financial advisers and for setting the right direction for the future.

Ms Tang is worried that the direct channel will take away a large part of the business of financial 

advisers. Past experience has shown that this channel will only attract a segment of the population

who are self educated. The channel will probably offer only the basic insurance products that the financial

advisers are not interested to market, due to the low commission. 

The financial advisers can continue to sell the more complete insurance packages that are 

created to meet the more sophisticated needs of consumers.These packages require the expertise

of the financial advisers to find the right match for the consumer.

Ms Tang is worried that the capping of commission will reduce the supply of new entrants

to market life insurance products. This may be a desirable outcome as more entrants are 

needed for other sectors of the economy. We should not have a lop-sided concentration of

our young people in the financial services and property sectors. 

Consumers are willing to pay an fair fee for financial advice. After all, they now 

pay a fee for medical and legal advice that suit their needs. The financial adviser needs to 

show that their advice is valuable and useful to consumers.

Tan Kin Lian
President
Financial Services Consumer Association

6 month internship

Tan Kin Lian & Associates has a vacancy for an intern to work for 6 months to learn office skills.
http://tankinlian.com/admin/file.aspx?id=744&IID=750

Good maternity care in Hong Kong

This letter shows how the system can be good and low cost
http://www.todayonline.com/voices/tale-two-public-healthcare-systems

Distribute work opportunity fairly

I wish to explain my concept of distribution of work opportunities fairly among the people who are qualified for the work.

Let us look at a particular trade, say primary school teachers. We have to register those who are interested to work in this trade and have been certified to have the required qualifications. Next, we look at the demand for this trade. We adjust the working hours so that the available work is distributed fairly among those that are interested. If the demand is high, everyone works longer (but some may opt to work for less hours). If the demand is low, everyone works less hours (and they can use their spare time for other part time work). The remuneration will be based on hours of work.

This system has the advantage of job security. A person who is trained and certified to be suitable for a particular job will know that work will always be available.

If there is an excess of supply, some workers may opt to be trained for another trade. They can choose a trade in good demand and suits their ability. They do not have to worry about finding employment, after they are qualified.

The system of certification for a trade or profession already exists for doctors, lawyers, airline pilots, engineers, teachers, taxi drivers and others. It can be extended to more trades.

The distribution of the work opportunities can be made through the market, in the form of an online employment exchange.  Workers will register for the trade that they are interested to work in, and provide their certificate for screening. The exchange will be more capable of identifying candidates with fake certificates, compared to individual employers

Employers have to pick the workers from the exchange. They have the assurance that the registered workers have been screened to be suitable. The exchange will also provide a recommended rate of hourly pay for each trade, although both parties are allowed to negotiate the actual rate for each case, but should be above a minimum wage. They should also keep to the maximum hours of work for that trade, to ensure that there is a fair spread of work opportunities. Transparency helps to ensure that the negotiated rate is fair to both parties.

Discrimination by age, gender or culture can be minimized through this exchange. If a person is certified to have the qualifications, there is no need for the individual employer to make an individual judgement of suitability, which is likely to be marked by prejudice.

Young people can plan ahead for the trade that they like to do, and can take into account the demand for that trade. They can study in the polytechnic for the desired trade or profession, knowing that the work opportunity will be available, but the number of hours will depend on demand.

Older workers who are displaced by technological change can also prepare for a new trade or profession in a more productive way, knowing that their training and skills will be put to good use.

There is no need to compete for a job, so that some people get the job and others are unemployed. Sharing of work opportunities create a sense of community, rather than adversity. Fair distribution of work is an important strategy to achieve a better quality of life for all.

Some people will argue that this concept will lead to complacency. This risk can be managed. Even among professionals, there is the risk of unethical practice leading to their removal from the register.

Implementing this concept is not easy. It can be done in stages, starting with the trades and professions that are more suited to this model. Over time, more trades can be brought into the system. As it develops to involve a larger segment of the population, the new practice will become closer to the norm.

TKL books

Here are the books written by Tan Kin Lian.
http://tankinlian.com/Admin/File.aspx?ID=743&Frame=1

They can be purchased at www.tankinlian.com/ishop.

Talk on puzzle, thinking and problem solving

I will be organizing this free talk on how to solve puzzles and improve  thinking and problem solving. 90 people have expressed interest to attend this talk. It is suitable for children, adults and seniors. Most of them want to bring their children to attend.

It will be held on Saturday 26 February and 2 March from 9.30 am to 11.30 am at a venue close to a MRT station.

I will be setting up a registration website soon.
http://tankinlian.com/Admin/File.aspx?ID=742&Frame=1

How to create good jobs

Some people have asked for my views about the useful economic activities that Singapore can offer to the world to create jobs for our people.

We must not overlook that, in any country, a large number of jobs are created to serve the local population. They include teachers, nurses, doctors, police, public service, financial services, transport, housing, trading and many others. If we can improve the birth rate, there will be increased demand for these services.

Each country still has to offer its services to the world, to earn foreign exchange to pay for its imports. Singapore will remain attractive in providing the following services to foreigners:

- tourism
- medical services
- education services
- financial services
- legal services
- trading services
- manufacturing
- research and development
- a nice place to stay and work in the region

In recent years, the attraction of Singapore in exporting our services has been damaged by the high cost of doing business and, in some cases, by bad business practices. These shortcomings should, and can be addressed. We also have to bring down the cost of living, as it feeds into the high cost of doing business in Singapore.

Our strengths remain a highly educated and hard working population, and a good command of English and Mandarin.

We will be able to provide good jobs for our local population, and for immigrants who wish to make Singapore as their home.  We do not need to create wasteful jobs in the economic activities that are not good for the quality of life. Our people can work less hours and earn enough from productive activities to have a balanced and good standard of life.

Make the right decision for your future

Many young people came to see me after they had bought a life insurance policy with a high premium. They learned, too late, that they are getting a poor return on their savings. They would have got a much better return, if they had invested their savings in other suitable form. It is still time to change their savings plan, but they would have lost a few thousand dollars.

This could have been avoided, if they had spent 3 hours and $30 to attend the FISCA financial planning talk (or join FISCA and pay only $10 as a member).

If you do not wish to be caught in this situation, register now to attend the talk on this Saturday. Pass to word to your friends and family members, so that they will make the right decision about their financial planning.

http://easyapps.sg/assn/Org/Staff1/Event.aspx

FISCA Financial Planning Talk - 26 Jan 2013

The FISCA talk on Financial Planning will be held in Singapore Management University on Saturday 2 to 5 pm. This talk advice young people on how to save and invest their savings. If they make the right decision, and avoid the wrong decision, it can give them $200,000 more at retirement. The next talk will be held in 3 months time. Register now, if you are keen to benefit from this talk.
http://easyapps.sg/assn/Org/Event.aspx?id=5

Austrians vote to keep Compulsory Military Service

Like Singapore, Austria is a small country.
They have compulsory military service for their citizens.
They recently carried out a referendum.
The results of the referendum is a strong vote (60%) in favor of keeping the compulsory military service.
This is a good indicator that the Austrians recognize the value of a citizen's army
http://www.aljazeera.com/news/europe/2013/01/201312063442158644.html

The finding is relevant to Singapore in more ways that one.
Look at the length of their compulsory military service - six months
Singapore can learn from this referendum.

Review of Government Procurement

I get the impression that our government agencies are paying too much for their procurement. The Brompton bike is only the tip of the iceberg. Anecdotal evidences suggest that the over-payment is rampant and systemic.

I suspect that our government agencies are over-relying on "world class procurement processes" that produce these ridiculous outcomes. It is better for them to rely more on "common sense" coupled with simple process, transparency and accountability.

We have now got the disease of over-paying for government procurement. Our procurement process needs to be reviewed.

Consumer consultancy and Financial Adviser Act

Someone challenged me whether my consumer consultancy infringe the Financial adviser's Act. To overcome this challenge and potential difficulty, I have decided to put in this disclaimer:

* Note: Consumers are advised that the scope of this consumer consultancy is not to be interpreted as financial advice within the scope of the Financial Adviser’s Act regulated by the Monetary Authority of Singapore. Tan Kin Lian & Associates has not applied for a license under the Act.

The full scope is shown here:
http://tankinlian.com/Admin/File.aspx?ID=740&Frame=1

Minimum wage in Malaysia

Malaysia is implementing a minimum wage. As expected, employers are making claims of financial difficulties. Here is the view from the other side:
http://thestar.com.my/news/story.asp?file=/2013/1/21/focus/12604693&sec=focus

Fair distribution of work opportunities

I will now write about sustainable economic growth, i.e .growth that improves the quality of life for people.

The purpose of economic growth must be to provide sufficient opportunities for every person to have meaningful work and to contribute to the pool of products and services that are needed by other people.

Every one needs to have a meaningful life - to afford a comfortable home, food, education, health care, safety, leisure, raise a family. have friends.

We do not want excessive economic growth that requires people to work long hours at the expense of social and family life, or to over-produce products that consume resources that should be kept for future generations. We must be aware about the harm of over-production.

With science and technology, we are now able to produce the total needs with less hours of work, allowing more time for social and family life.

Instead, we are getting the opposite effect. Many people are working longer hours, not less, to produce things that are not really needed. These include bad economic activities, such as gambling, cheating and bubbles, that add to the GDP at the expense of the well-being of other people.

If the bad activities and over-production are eliminated, how do we spread the available work opportunities to the people who need to work?

We need a new system to distribute work opportunities fairly, based on supply and demand. If there is increased supply for a particular trade, every one should work less, so that the demand is fairly spread among the workers.

This requires a combination of market forces and regulation. Excessive and predatory competition and exploitation of workers should be prevented.

There is an argument that this approach will not work in a global environment. It is not possible to regulate employment practices and supply and demand throughout the world. Every country is competing against the other countries.

This argument is put forward by the multi-national companies that are now enjoying the benefit of globalization ,and are able to avoid paying any tax. This argument should be rejected. The harm from globalization, including the exploitation of workers and the erosion of wages, should be recognized and weighed against the benefits of globalization.

If we reject the notion that globalization is inherently good, and consider its negative aspects as well, we can come to a better balance. There are areas where globalization is beneficial, such as global production of certain products, and can be supported. There are areas where it is bad, such as depressing wages and create big disparity of income, and should be addressed.

One good solution is to return to some form of protectionism. Each country can decide on the type of economic activities that can be protected, and the extent of the protection, that produce a good balance for its people. The aim is to ensure that the people have jobs, are paid fairly and can earn enough to live a meaningful life and to raise a family.

For countries that subscribe to similar philosophies, it is possible to bring down the protectionist measures and to have a common market. We have seen that happen within the states of America and within the countries in Europe. They are the correct development.

SUMMARY. We need a system to ensure that the available work opportunity is distributed fairly among the workers, and that the workers are paid fairly to afford a good standard of life. This can be achieved through a balance between market forces and regulation, within a country that has some control over the negative effects of globalization.

Sustainable growth

The ruling Government's preferred policy is to focus on growing the economy, so that more jobs can be created for the people. Many pro-PAP thinks that this is the right policy. I wish to point out a flaw in this policy, that is manifested in the approach adopted in Singapore.

We have to differentiate between good growth and bad growth. 

Good growth are economic activities that benefit the people, such as in providing goods and services that improve the quality of life. They include education, health care, housing, recreation and family (i.e. more babies).

Bad growth are economic activities that are counted, but are bad for the people, including the following:

- casinos
- property bubbles
- bad financial products and scams
- cheating, crime
- wasteful and unnecessary activities
- import of low wage foreign workers

Many bad activities generate income for some people, e.g. casinos, financial institutions, property developers and their employees and agents, but are at the expense of the consumers who lose money in the casinos or bad financial products, or have to pay inflated property prices. Some of these activities may be good, e.g. property development (not bubbles), but some are very bad.

If we can get rid of the bad activities and focus the economic growth on the good activities, we have a good foundation to grow the economy. This is called "sustainable development". 

Talk in Hong Kong - financial regulation

I have been invited to be a panel speaker in a high level conference in Hong Kong about financial regulation. I wish to give my views about what needs to be done to regulate financial products and avoid mis-selling. My views are based on my personal experience in assisting consumers that have been misled in Singapore.

http://tankinlian.com/admin/file.aspx?id=741&IID=747

New policy strategies

Someone asked for my views on what changes I would do, if I were the Prime Minister. Without the benefit of a $1.5 million salary (hope this is the right figure), I will review the following:

- Reduce the minister salary to an average of $500,000

- Health care: adopt a single payer system of South Korea and Canada, to replace the wasteful and fragmented system now used in Singapore.

- Public housing: Reduce the price to an affordable level, say 3 to 4  years of the average family income

- Public transport: take over the planning and fares, but outsource the operations to private operators for an agreed fee, i.e follow the London model

- Wages: Introduce a minimum wage, likely to be at least $8 an hour.

- Taxation: get rid of the wasteful GST and replace it with a payroll tax (with suitable relieve for low income workers); other aspects of tax will also be reviewed.

-  Waste: Remove wasteful government processes that add to the cost and burden (there are plenty of them)

- Financial Sector: regulate the sector to give a fair deal to consumers for their savings.

- Attitude: create awareness that government leaders and civil servants have to serve the people, and are not the "masters:

I am confident that all of these measures can be done effectively, although they will not be easy. Some mistakes will be made along the way, and will need to be corrected.

Consumer consultancy

Tan Kin Lian will provide consultancy to consumers on the following scope of work, at a modest fee.
http://tankinlian.com/admin/file.aspx?id=740&IID=746

New HDB flats

In my financial planning talk, my advice is to spend not more than 5 years of the family income on their home. Many participants said that for a family income of $60,000, my 5 year benchmark is $300,000 and it is not possible to buy any HDB flat at this price.

I checked the HDB website and found that it is possible to buy a new 4 room HDB flat way below this price, if the government glrant is counted. Without the grant, it is still possible to buy with this budget.

http://www.hdb.gov.sg/fi10/fi10296p.nsf/PressReleases/176CF92493B9089848257A4C0019D9BA

Deceptive practices in property launches

Many new condos are still being sold at new property launches, and the prices are way above their actual price. The buyers were told that they are getting a discount and bought thinking that they got a good deal. The discount is false, as the prices have been marked up way above the actual market price for similar properties. 

The practice adopted by the marketing agents are also questionable, possibly illegal. The buyers are asked to give a blank check and to sign open ended powers of attorney to the marketing agent, in return for a deceptive "discount".

While the prices at new launches continue to show higher prices compared to previous launches, the buyers are not really able to sell their new properties to make a profit - the resale market show a big discount to the new launch prices.

This distortion is extremely bad, and is being tolerated in Singapore under the "free market" approach adopted by the government. The government should address this bad practice, in addition to the cooling measures.

Move to a flat rate tax

Most people still think that a progressive income tax system is fairer to society. Those who earn more should pay more tax. 

Many countries are moving closer to a flat rate tax system, where the majority of tax are paid at a flat rate of the earnings, rather than at a higher rate on the top bands of income. This move is a subtle one, and many people may not have noticed it.

When countries introduce GST or VAT, they are actually moving to a flat rate system. Most people spend 80% of the current earnings and they have to pay the same rate of GST or VAT on their spendings.

Singapore is mostly on this model. As a further example, look at the way that dividends on shares are taxed. In the past, the shareholders at the lower income brackets were allowed to claim back a part of the tax paid by companies, if their personal tax level is lower than the corporate rate. This has stopped for several years now, under the concept of a flat rate tax.

A flat rate tax is acceptable, even for the lower income, if the wages are set high enough so that the net income, after tax, is sufficient to meet the cost of living. This is the approach used in several countries; which I subscribe. Most of them have a high minimum wage.

The situation in Singapore is quite bad. We have a troublesome system of collect tax in "bits and pieces" through the GST system, and then to give permanent GST vouchers to the lower income. Our system is administratively wasteful and unfair (as some lower income people do not get the GST).

Some people will disagree with me, after they have given thought to the idea. There will be a large number of people who will disagree with me without much thinking; they just want to appear to be "smart"; want to justify the status quo for some "political purpose" or may have not given much analysis to the matter.

Health care in South Korea

South Korea has a better health care system
http://www.todayonline.com/Voices/EDC130118-0000038/A-prescription-for-healthcare-system

Here are some good features of a health care system:

a) The state should make basic health care available at affordable rates, through economy of scale and subsidy and provide adequate resources to meet the demand
b) Those who can afford private care can go outside of the state system and pay on their own or through insurance
c) Each person only needs to have one insurance plan to cover their health care needs, instead of the complicated and fragmented system that is adopted in Singapore.

Here is an excellent description of the health care system in Korea. It is much better than the fragmented system in Singapore
http://askakorean.blogspot.sg/2010/01/healthcare-system-in-korea.html

Put your spare cash into CPF

f you have adequate savings and cash in the bank, it is a good idea for you to put the savings into the CPF special account or the retirement account and earn interest at 4% per annum. 

You will be allowed to withdraw the savings monthly, from age 65, through CPF Life. The money is payable for as long as you live. If you are born before 1958, you are allowed to withdraw your money in monthly installments, instead of buying CPF Life. Both options are good.

Some people are worried that CPF does not have money to pay them back. This is not true. CPF has more than sufficient money to pay back all their members.

There is also the belief that the CPF money is invested by GIC and Temasek and they make loses on their investments. This is also not true. These fund managers make a good return on their assets.

If you have spare cash, it is better to put into CPF to earn 4%. You can top up the special account and retirement account to the full amount that is allowed for yourself, spouse, parents and siblings. Check with CPF on how this can be done.

Unnecessary terms and conditions

http://www.straitstimes.com/premium/forum-letters/story/so-much-hassle-just-get-new-currency-notes-20130118

31 January 2013

Editor, Forum Page

Straits Times

DBS Bank sent an e-mail to me, as their customer, to offer 

new currency notes for the festive season. This was

a nice gesture of the bank, but their process left a bad taste in my mouth.

I was asked to sign and fax a request form to the bank. It required me to read

and agree to one whole page of "terms and conditions" for the service.

I asked the relationship manager why it was necessary to impose

this kind of requirement for a simple transaction. I had thought that 

DBS Bank could be trusted to carry out a simple transaction, 

without the need to give this burden to the customer. 

Even if a mistake should arise, it would expect the bank to treat

its customer fairly to resolve the issue, without the need to hide under a pre-agreed

agreement.

Many elderly people, who are not financial savvy or literate, have were misled

into making unsuitable investments by signing forms that they do not understand. One

should be wary about signing documents without reading or understanding them.

After the fax was received, a received a call from the bank's staff to verify my 

identity. The verification procedure was, as usual, quite tiresome. 

My signature was already on the form and I had earlier signed another form to indemnity

the bank for the use of fax signature. Why was this further step necessary?

Furthermore, the bank had required me to show my identity card when I collect my new 

currency notes at the pre-selected branch. Why was the phone-call  verification
necessary then? Where has common sense disappeared to?

I would have expected the Monetary Authority of Singapore to ensure that simple

banking practices are carried out fairly, without the need for millions of customers

to have to bear the burden of reading and understanding the terms and conditions .

Tan Kin Lian

Discriminatory questions in application forms

I am shocked at the type of questions asked in the application form for public service jobs, relating to the past offences committed by the applicant. Questions were asked about past and pending convictions. 

The government is setting a bad example in penalizing a person for life, if he or she had been previously convicted, and had served a sentence. How can an ex-convict rehabilitate? Does thegovernment expect everybody to be angels? Can a person who made a mistake before, be allowed to turn over a new leaf?

I am aware that there are certain high or sensitive level position that need people of good character and that ex-convicts should be barred. But, this requirement should not be imposed for the front line jobs, where the risk is virtually non-existent.

I urge the government to set a good example, and remove these discriminatory questions from their standard application form for most entry level jobs. They can reserve these questions for promotions to sensitive positions.

CONTRIBUTED BY A READER OF MY FACEBOOK
If you apply for any government job they ask you that, as well as whether you have ever suffered from any mental illness, or have any disabilities:
*1. Have you suffered, or are suffering from any medical condition, illness, disease, mental illness, substance dependence1 or physical impairment?
Yes No 

*2. a) Do you have a criminal record in Singapore?2
Yes No 
b) Have you been convicted in a court of law in any other country (excluding parking offences or criminal records disclosed above)?
Yes No 

*3. Have you been charged with any offence in a court of law in Singapore or in any other country for which the outcome is pending (excluding parking offences)?
Yes No 

*4. Are you aware of being under any current police investigations in Singapore or in any other country following allegations made against you?
Yes No 

*5. Have you been or are you under any financial embarrassment i.e. (a) an undischarged bankrupt, (b) a judgement debtor, (c) have unsecured debts and liabilities of more than 3 months of last-drawn pay, (d) have signed a promissory note or an acknowledgement of indebtedness?
Yes No 

*6. Do you have intention to apply for foreign citizenship/foreign permanent residence within the next one year?
Yes No 

*7. If you are currently working in the Singapore Public Service, which Ministry/Statutory Board are you working in?

*8. If you have been in the employment of the Singapore Public Service before, which Ministry/Statutory Board were you last with before you left the Public Service?

*9. Please indicate the reason for leaving the Singapore Public Service.

Other grounds:

*10. Have you broken any bond, left an employer without serving your period of moral obligatory service or are currently serving any bond or moral obligatory service (e.g. bonds associated with scholarships or obligatory service related to training awards or no-pay leave, etc)?
Yes No 

*11. If your answer was "Yes" to any of the questions above, please give details :