TR EMERITUS

Written by Our Correspondent After losing a few billion dollars of national reserves, PAP Minister Lim Hwee Hua got the cheek to say it is "not realistic" to avoid losses on every investment made by the Government of Singapore Investment Corporation or GIC. Mrs Lim is responding to PAP MP Madam Ho Geok Choo's request in Parliament for an update on GIC's investments. GIC has suffered disastrous losses in its UBS and Stuyvesant Town investment amounting to more than $10 billion dollars which made international headlines in recent weeks. The state media has been quick to downplay the significance of the losses. What was not mentioned is the cavalier manner in which the investment decisions appeared to be made. For example, it was revealed by Bloomberg that GIC took only 3 days to make the decision to invest in UBS: “Marcel Ospel, then chairman of Zurich-based UBS, called GIC Chief Investment Officer Ng Kok Song, according to comments they made at the time. Talks began on Dec. 6, 2007, and by the evening of Dec. 9, GIC had committed to make its biggest single purchase at the time,” Bloomberg reported. [Source: Bloomberg, 1 March 2010] Mrs Lim claimed that both GIC and Temasek Holdings have so far delivered 'creditable' returns on their portfolios over the "long term" without substantiating her statements. Nobody expects GIC never to make any losses, but Singaporeans do expect a minimal degree of accountability and transparency in the management of Singapore's reserves which are accumulated over years of budget surpluses. It is not realistic to lose billions of dollars and still allow the same people to sit on the boards of GIC and Temasek Holdings. Neither is it realistic to expect people with no prior experience in the finance industry to head the two funds. And it is definitely not realistic for Mrs Lim to pluck figures out of thin air without opening the account books for auditing. Are we getting the best people to run GIC and Temasek Holdings? Definitely not, according to U.S investment guru Jim Rogers who questioned the intelligence of GIC fund managers after they made the hasty decision to invest in UBS: “I know these people, and they have never given me the impression that they’re smarter than anyone else. They have gigantic amounts of money, but they’ve made a bad judgment in these cases.” Mrs Lim should stop hiding behind the lame excuse of "long term returns" to defend GIC's dismal performance. If every single investment is assessed on the basis of "long term returns", then every Tom, Dick and Harry can be a fund manager including our own Harry Lee who said in the aftermath of the "blood-letting": “When we invest, we are investing for 10, 15, 20 years. You may look as if you are making a big loss today, but you have not borrowed money to invest. You will ride the storm, the company recovers, your shares go up.” [Source: CNA, 6 Feb 2009] We are sitting on actual and paper losses of billions of dollars. Imagine if a fraction of it is re-invested in Singaporeans within a ten year period instead of waiting for the shares to go up. It is not realistic for the PAP to play around with the hard-earned savings of Singaporeans like that. The reserves belong to every citizen of Singapore - our grandparents, parents and children and not to them. In private investment firms, CEOs and entire boards of directors can be sacked based on one wrong investment decision, but in Singapore, the same old people remain secured in their positions, is this realistic? If it is not realistic for GIC to avoid such gigantic losses in the future, then perhaps its Chairman should consider stepping down in a favor of a more qualified and experienced fund manager.   Related articles: 1. GIC incurs more than$7 billion loss in its UBS investment 2. Straits Times downplay GIC losses 3. GIC may have lost more than $13 billion dollars in its UBS investment on paper 4. GIC’s UBS investment: A chronicle of a disaster in the making 5. GIC’s $14 billion investment in UBS in jeopardy after it faces collapse 6. Dr Tony Tan: GIC in good shape  Read More →

Written by Our Correspondent In other modern democracies like Japan, South Korea, Taiwan, Australia, Canada and even Malaysia, parliamentary sessions are a matter of life and death to most politicians where major important policies concerning the nation are discussed, debated and decided on. For example, not too long ago, the Budget for Malaysia was almost not passed as there were more opposition MPs in Parliament when the bill was put to a vote and Malaysian Prime Minister Datuk Najib Razak had to rush back from a function to cast a deciding vote to break the impasse. In Singapore where the ruling PAP occupies 82 out of 84 seats in Parliament, the PAP MPs can afford to be relaxed, exchanged banters with one another and even sleep as amply demonstrated by DPM Teo Chee Hean when he was shown on TV enjoying a nap during a speech made by another DPM Wong Kan Seng. Life is getting tougher for ordinary Singaporeans with the relentless influx of foreigners, rising cost of living and declining standard of living, but the PAP MPs appear oblivious to their plight. Instead of addressing the real issues Singaporeans are concerned with, they frittered it away on frivolous speech either heaping generous praises on one another or licking the boots of their superiors. PAP MP Dr Lam Pin Min who had brought up nothing concrete during the last few days of parliamentary "debates" finally made his debut yesterday. He asked Health Minister Khaw Boon Wan his "secret" to looking young who replied giving a bashful grin (somemore): "There's no elixir or no secret recipe. Technology does help. I colour my hair but, of course, no botox. But I think the mind is important and attitude to life, so on. And if you go back to when I quoted Lao-tzu, you know, what is life all about, it is never about ourselves, it is about others and if you lead a life in that direction, whatever the physical form, I don't think it matters." If Dr Lam has nothing better to say, he should keep his mouth shut rather than to waste precious air-time in Parliament. As for Mr Khaw, he should have asked Dr Lam to ask him the question in private and not during a parliamentary session. Had this exchange taken place in other countries like United Kingdom or United States, both Dr Lam and Mr Khaw will be crucified by the public. The cavalier attitude displayed by the PAP MPs in Parliament is not surprisingly given the fact that there are literally no opposition present to challenge them. The decisions regarding national policies are already made by senior leaders within their party and all they need to do is to pretend to "debate" on it and to vote "AYE" when the time comes. As PAP's omnipresent octogenarian "Dear Leader' Lee Kuan Yew puts it succinctly: “To be the prime minister, you don’t have to know every instrument, but you got to recognise, ah, he’s a good violinist, he’ll be the first violinist, he’ll be the double bass. He will play the viola, he will have the trumpet, he will do the drums. Then you coordinate them and then you have great music. And if you already have a great orchestra, you can put a dummy there and you still got great music.” [Source: Channel News Asia, 5 March 2008] Singaporeans should not be surprised if George Yeo decided to move a motion in support of his personal friend PBM Jack Neo who was embroiled in a sex scandal, at the next parliamentary sitting.  Read More →

Dear Mr Mah, I refer to your comments in parliament as reported by Straits Times on 6 Mar 2010. There are not enough HDB flats to meet demand You said it is a myth that there are not enough HDB flats to meet demand because the 13,500 flats built last year and the 12,000 flats to be built this year add up to be more than the approximately 23,000 flats in either Clementi or Jurong East.  However, the 23,000 flats in either Clementi or Jurong East do not represent the demand for new flats.  Ms Chua Mui Hoong reported in her Straits Times commentary on 11 Feb 2010 that there is a potential demand for 95,600 flats over and above those who have already clinched their flats or will be buying other properties.  This demand for 95,600 flats far outstrips your supply of either 13,500 or 12,000 flats.  Hence, it is not a myth but a truth that there aren't enough flats to satisfy demand. You said that the massive oversubscription of new flats is misleading because many applicants eventually reject the flats they were invited to buy.  While it is true that applicants who reject flats available to them do not want those flats, it doesn't mean that they don't want a flat at the end of the day.  They still want a flat and so they still constitute part of the demand for flats.  Hence, the massive oversubscripton of new flats is indeed a reflection of the massive demand for new flats. You said that only 6% of complaint cases from first time buyers are geniune.  However, some of the examples you reportedly gave on 8 Oct 2009 were in themselves dubious.  Your case study of Mr C rejecting flats facing the mosque may be unreasonable to you and the HDB but may not be unreasonable to Singaporeans who wish for a more quiet place. HDB flats are unaffordable You said there is the CPF housing grant of $30,000 or $40,000 and an additional grant of up to $40,000 for low income families.  However, these grants are not even enough to make up for the more than $100,000 increase in flat prices across Singapore over the last three years.  You said that the government disbursed more than $330 million in housing grants to more than 20,000 families.  But a nominal increase of just $40,000 in the price of new flats multiplied by the 13,500 flats sold last year would have seen government coffers swell by $540 million.  That easily beats the government grants that have been disbursed.  Rapidly increasing flat prices have swelled government coffers a lot more than the grants that has been disbursed. You said that our house price to household income ratio of 5.8 is low compared to London's 7.1 and Hong Kong's 19.8.  However, the ratio for London was calculated omitting the 15% Londoners living in cheap rental flats while the ratio for Hong Kong was based on expensive Hong Kong Island alone which excluded Kowloon and the New Territories where the bulk of Hong Kongers actually stay.  Hence, the ratios you quoted are flawed and unfairly skewed towards more expensive accomodation in those cities.  Furthermore, the choice of highly expensive London and Hong Kong as comparison targets also serves to show just how expensive Singapore has become. You said our monthly mortgage payment to household income ratio of 22% is lower than the affordability benchmark of 30% to 35%.  But the international affordability benchmark is in essence an unaffordability benchmark that marks the level of absolute unaffordability much like the poverty benchmark of $1 per day marks the level of absolute poverty.  Just as an income of $2 per day which lies above the poverty benchmark does not imply that there is no poverty, similarly, a ratio of 22% which falls below the affordability benchmark of 30% doesn't imply that housing is therefore affordable.  Furthermore, it is misrepresentative to base our affordability ratio on new flats only since the 13,500 new flats last year is only a fraction of the 37,205 resale transactions registered last year. Your case study of Mr and Mrs S does not represent the average 4-room flat applicant which according to the HDB's reply to the Straits Times on 12 Sept 2009, has a household income of $3,800 paying a monthly mortgage of $955 for a flat priced at $265,000.  If we assume an average of four persons living in the household each requiring a monthly sustenance of $500 at a minimum, the family's total basic monthly expenditure would add up to $2,955 leaving only $805 for all other purposes and for retirement funds for both parents.  Is the measely sum of $805 sufficient for retirement and for all other purposes? PRs push up prices You said that PRs do not push up prices since they do not pay very high COVs.  But that is not how PRs contribute to high prices.  By simply taking up units, be it flats or private properties, PRs absorb the supply of available housing leaving less for Singaporeans.  When supply is less, price goes up naturally. Private property owners push up prices You said that private owners do not push up HDB prices since they are involved in only 11 out of 58 resale transactions exceeding $70,000 in COV.  But that is like looking at the tip of the iceberg and concluding that the iceberg is not very big.  Beyond those 11 resale transactions are countless other transactions involving private property owners.  Collectively, they soak up supply leaving less to be competed for by the rest.  Greater competition for a dwindling supply naturally leads to prices being pushed up. Thank you Ng Kok Lim  Read More →