TR EMERITUS

From our Correspondent The usually quiet Singapore People's Party has written to the Straits Times to rebuke Prime Minister Lee Hsien Loong's insinuation that Potong Pasir residents are "short changed" by its administration there. During a recent PAP convention held last Sunday, PM Lee was asked by a Potong Pasir resident if the PAP has any plans to win back the constitutency from opposition MP Chiam See Tong. PM Lee replied that the problem had to be looked at in a ‘detached way’, and that no easy solution existed. While there is the need to look after those in Potong Pasir who voted for the PAP, the party must be careful not to be taken advantage of, he said, recalling the 2006 election. “We took the approach of doing more for the opposition wards so they would be grateful and vote for the PAP. And Mr Chiam went around saying, ‘Why don’t you continue voting for me? Then you’ll have two MPs for the price of one’. After the experience, it was decided that the PAP would change the way it treated Potong Pasir,” he added. Mr Wilfred Leung, a Councillor with the Potong Pasir Town Council and a Executive member of the Singapore People's Party wrote a letter to the Straits Times Forum today disputing PM Lee's claims. He wrote that since the last election, Potong Pasir Town Council has been working hard to implement upgrading programmes to enhance Potong Pasir, bringing residents many benefits and more convenience. "Major repair and redecoration works included the latest precinct in Lorong 8 Toa Payoh. Covered walkways have been built in Toa Payoh, including one that links Potong Pasir MRT station to Block 147, where Mr Sitoh Yih Pin did not renew maintenance on the solar-powered lamps after he lost the election. The town council replaced 22 lifts for free just before the recent announcement of HDB's Lift Upgrading Programme," he added. Mr Sitoh Yih Pin is the losing PAP candidate for Potong Pasir. Before the 2006 elections, he held weekly "shark-fin" soup breakfasts for the residents and installed solar-powered lamps along the pavements in order to win their support. After he lost the election to Mr Chiam See Tong, the incumbent MP by a margin of less than 10 per cent, he discontinued the breakfast sessions. The lamps were also not maintained which he pushed the responsibility to the Town Council. Though Mr Sitoh is not the official MP of Potong Pasir, he is still able to "serve" its residents as an appointed "grassroots adviser" of the PAP which controls all the government agencies. Mr Wilfred Leung pointed the unfair advantage enjoyed by Mr Sitoh cryptically: "The Singapore People's Party (SPP), which administers the Meet-the-People sessions and mobilises alternative grassroots volunteers, does not have Mr Sitoh's advantage in tapping the resources of South East CDC or Potong Pasir Community Centre." The PAP caused a major furore lately when it got its two grassroots advisers in the two opposition-controlled wards to announce the Lift Upgrading Program (LUP) to give the impression that they are responsible for it. A few irate writers bombarded the National Development Ministry and HDB with questions on why the LUP was not implemented by the MPs instead. The National Development Ministry gave a lame reply through its press secretary Lim Yuin Chien that opposition MPs are not "accountable" to the government and therefore not "obliged" to be involved. Mr Lim's arguments contradicts the Town Councils Act (CAP 329A) which stipulates clearly that the minister have to work with the respective Town Councils from beginning to the end of the upgrading program. The Temasek Review had written a letter to Minister Mah Bow Tan, who incidentally lost Potong Pasir to Mr Chiam See Tong in the 1984 general elections, but has yet to receive a reply from him.   Related articles: >> PM Lee: PAP will not be taken advantage of again in Potong Pasir >> Town Councils Act (CAP 329A): Govt have to work with Town Councils >> Temasek Review writes to Mah Bow Tan seeking clarification on Town Councils Act >> Grassroots advisers should be independent of party interests >> MND continues to throw smoke bombs over role of PAP grassroots advisers >> A rebuttal to MND: Why Mah Bow Tan is wrong on upgrading >> LUP has to be implemented through government channels >> Low Thia Kiang strikes back at HDB and PA >> Lame reply by HDB and PA on why LUP are announced by PAP losers >> Mah Bow Tan:” I don’t expect non-PAP MPs to explain LUP” >> Eric Low rapped for stealing limelight of Low Thia Kiang >> Eric Low claimed credit for bringing LUP to Hougang EDITORS’ NOTE: If you like our work and would like to support us, please transfer your donations via paypal to our account ([email protected]). Any amount will be greatly appreciated! Alternatively, you can also help boost our advertising revenue by clicking on the ads displayed. Thank you! Join our tweet at: http://www.twitter.com/temasekreview  Read More →

By Damon Yeo, Business Correspondent HDB’s latest financial report reviewed that the Statutory Board had made a $2bn deficit for the financial year running from 1 April 2008 to 31 March 2009. The deficit had doubled since the previous period. To fully understand the numbers behind HDB’s financial year, one must first understand that HDB is a statutory board of the Singapore government. Its objectives are clear – to provide affordable homes and create vibrant towns. Profit-making is not one of the one of objectives. Its activities are historically funded by the government and hence a deficit should not come as a huge surprise. This is perhaps why in HDB’s 38-page Annual Report, there was no mention of this deficit at all. The report went on to highlight HDB’s newest Build-to-Order (BTO) projects and the Lease Buyback Scheme. An entire page was also dedicated to showcasing a host of awards won by HDB in the aforementioned financial year, some of them handed out by fellow government agencies. However, it is necessary to note that $2bn is by no means a small amount. Since its inception in 1960, HDB had obtained a cumulative government grant of $19.3bn. $2bn is almost ten percent of this amount - meaning that this deficit had no doubt been one of the largest in the Board’s history. Also, this $2bn is essentially taxpayer’s money and for the purpose of accountability, financial statements should be examined to identify any inefficiency in the organisation. First and foremost, on further inspection on the expenses incurred, it is noteworthy that HDB had stepped up on its effort to cut manpower costs over a period of difficult time in terms of the economy. Overall, salaries and bonus were reduced by nearly 4% across the board. Actual number of employees actually increased over the same period of time, meaning that on the average, every HDB employee took home nearly $6,000 less over the year. This pain is not just felt by the normal employees. Key management personnel in fact took home almost 10% less than the previous period.   Table 1: Manpower Cost - all   2008/09 2007/08 YoY change     $'000 $'000 $'000 % Salaries and bonus 374,833 388,790 (13,957) -3.59% CPF contributions 37,860 39,497 (1,637) -4.14%   412,693 428,287 (15,594) -3.64%   Table 2: Manpower Cost of key management personnel   2008/09 2007/08 YoY change     $'000 $'000 $'000 % Salaries and bonus 5,623 6,307 (684) -10.85% CPF contributions 126 130 (4) -3.08%   5,749 6,437 (688) -10.69%   That is, unfortunately the only piece of information which is consistent and easily explained by market conditions. In a media briefing, HDB explained that the deficit was driven by more flats being sold (and these flats were being subsidised by the government), higher construction costs and more upgrading works. Further scrutiny of the financial statements finds these explanations somewhat puzzling. As disclosed under home ownership segment of the report, we see that HDB sale proceeds from selling of flats had actually decrease by almost 57%. This poses a few questions, naturally. Firstly, HDB had claimed that they had issued 2,000 more BTO flats in the FY09. This increase in the number of flats sold does not seem to be reflected in the sale proceeds decrease in the year. Furthermore, since sale proceeds is a product of number of units sold and sale price, the decrease actually indicates a cutback in the number of flats sold by HDB in the year. (We know that prices could not have decreased, as we saw record prices over the period mentioned). This leads to a bigger question – if HDB knows that house prices are increasing, should they not increase the supply of flats to cool the market and make housing more affordable? (one of their mission statements) Also, assuming construction costs are all included in cost of sales [cost of sales are defined as costs incurred directly related to the purchase or production of the sales of an entity], it does not appear that they have increased materially. As a percentage of the sales proceed, cost of sales had actually decreased in terms. Unless construction cost makes up the immaterial portion of cost of sales (unlikely), HDB’s explanation is not in line with the numbers we are seeing.   Table 3: Gross profit of Home Ownership Segment   2008/09 2007/08 YoY change     $'000 $'000 $'000 % Sales proceeds 1,061 2,463 (1,402) -56.92% Cost of Sales (993) (2,389) 1,396 -58.43% Gross profit 68 74 (6) -8.11% Cost of Sales (%) 93.6% 97.0%       Overall, it does appear that the increase in deficit for the year has driven a $972m increase in operating expenses of HDB in the current year. Table 4 sums up the material expenses incurred. Upgrading costs did indeed increase by $197m, as explained by HDB to the media. However, as we know, upgrading is not 100% cost-free to homeowner. It may be highly subsidized but the homeowner does pay off part of the costs back to HDB. It is not further explained if these costs below include these payments from homeowners. Impairments losses have increased more than 100-fold in the current year. A large portion of this is the impairment on the value on leasehold land (almost $100m). There is no further explanation on this increase in impairment and it again appears odd prima facie. With property prices on the rise, it is thought that the value of freehold land is likely to remain similar in value or be re-valued upwards (though any upward revaluation cannot be taken through profit and loss under accounting rules). Provisions for foreseeable losses also drove up expenses by almost $0.5bn. This element is likely to be where the increase in government subsidies comes is explained. Similarly, it appears odd to see a 58% increase when sales had fallen by 57%. Both impairments and provisions are highly judgemental areas where management are required to make best estimates in current market conditions.   Table 4: Summary of material expenses   2008/09 2007/08 YoY Change     $'000 $'000 $'000 % Upgrading, improvements and demolition 820,248 623,033 197,215 31.65% Impairment losses on properties 117,806 1,067 116,739 >100% Provision for foreseeable losses 1,236,944 783,757 453,187 57.82%   2,174,998 1,407,857 767,141 54.49%   Reading through financial statements had left this writer with more questions than answers. There is no question on the integrity and truthfulness of the numbers as presented publicly, but more explanation and disclosure are required before anyone can examine the state of HDB finances critically. [All tables taken from HDB Annual Report for Financial Year 2008/09]   Other articles by Damon Yeo: >> Singapore v Hong Kong >> DBS and a series of ‘unfortunate events’ >> Sale of Chartered – An Anatomy >> 3rd most competitive nation in the world and what it means to the average worker   About the Author: Damon is a proud graduate of Nanyang Technological University in 2004 with a degree in Accountancy. He is currently working in the finance department of a UK Bank. He is also a regular contributor at redsports.sg.  Read More →

I refer to Tuesday's (27 October) Straits Times article "More cars, so public transport trips down". I find it puzzling that the local public transport community cannot comprehend the reasons behind this seemingly ridiculous trend in our "dense but well-orchestrated" public transport system. Let me summarise the available reasons as to why this phenomenon is occurring. It must be noted that this list is certainly not exhaustive. (1) Erratic bus frequency It used to be that more often than not, two buses of the same service will arrive at the bus stop at the same time. Common excuses: unpredictable traffic, bus breakdowns, high passenger volume. This problem has improved immensely. Recently, the average number of certain buses arriving at the same time has gone up to three. I find it incomprehensible that with our superb ability to monitor traffic (read: Expressway Monitoring and Advisory System, Intelligent Transport Systems Centre) and our numerous cameras, public transport companies cannot adjust their bus schedules to suit road and people conditions. (2) Unreliable contactless card technology There have been many complaints of people keeping their ez-link cards in their wallets and bags when they tap their cards, leading to huge queues that, obviously, defeat the purpose of the contactless system. These complaints are largely directed towards the "inconsiderate" people who can't bother to take out their ez-link cards. However, has anyone not questioned the reliability of a system with a reader-card sensing distance of 10cm? Even off-the-shelf card readers for home and office gates can do better than our $134.6 million smart card technology. (3) Early last buses / trains For a city with a Uniquely vibrant nightlife, I find it hard to believe that our last trains and buses stop operating at midnight. Fair enough, there are premium NightRider services available in these unearthly hours, but their exorbitant fares seem to suggest only ghosts roam the streets of Singapore at night. Even supermarkets and cafes have kept up with the times with 24 hour outlets. Should there not be 24 hour trunk services as well? (4) Poor decomposing stations I find it intriguing that many of the Circle Line stations are already built, and yet trains are not rolling. True enough, safety trials need to be conducted, but why is it that these trials are taking place after the station entrances have been completed and the escalators are ready to run? It is as if one has bought a Ferrari FXX without having passed his driving test. I wonder if the closures are more an issue of the trials or of low expected ridership. (5) Fluctuating travelling time It is understandable if travelling time varies due to road conditions like jams caused by accidents. However, if the time taken to travel from Point A to Point B depends on reasons like whether the driver is in a good mood to drive his bus more quickly or if he is behind or ahead of the stipulated bus schedule, I doubt anyone would want to risk his punctuality on public transport - especially if you are going on your first date or job interview. Strange that this idea was used for a public transport advertisement years back. (6) Low bus / train frequency Have you not been troubled by the fact that you actually have enough time to watch a drama serial episode (read: A Starry Night) before the next approaching train arrives? (7) No eating / drinking The regimentation in public transport is so strict that they should consider boarding and alighting drills for passengers. Perhaps sitting should also be banned so that there is no hoo-ha about seats in public transport. The push to get more people onto buses and trains has hit a speed bump, but think about it: why speed in the first place if you can't even drive properly? Ronald Chan  Read More →