TR EMERITUS

From our Correspondent In a letter published in the Straits Times Forum today, the director of Taipei representative office in Singapore Mr Peter Chen rebuts insinuations contained in a Straits Times commentary on 15 September 2009 that the prosecution of ex-Taiwanese President Chen Shui-Bian was politically motivated (read letter here) Mr Chen dismissed the article's suggestion that Taiwanese prosecutors might have leaked information about the case to the press. He wrote that the Ministry of Justice had conducted an internal investigation into the matter and so far no evidence was found. In fact, the leakage was likely to come from various witnesses and the accused who had been giving inappropriate public statements to the press. As for allegations of prosecutorial selectivity, Mr Chen explained that Ministry of Justice data do not reveal any pattern of selective prosecution of 'pan-green' politicians (belonging to the Democratic Progressive Party or the Taiwan Solidarity Union) within a multi-year timeframe. Over the nine-year period from 2000 to the end of last year, among the 75 legislators and officials in the central and local governments investigated or indicted for corruption or related crimes by prosecutors, 32 belonged to the 'pan-blue' camp (consisting of the ruling Kuomintang and its splinter parties), and 34 were pan-green, representing an insignificant difference. It is strange that the Singapore media would take a sudden interest in the domestic politics of Taiwan while it remains oblivious to the "rule of law" in Singapore. In a damning report released in 2008, the International Bar Association’s Human Rights Institute (IBAHRI) expressed concern about limitations on the freedoms of expression, assembly, and the press, and of the independence of the judiciary in Singapore. (Source: IBAHRI) The IBAHRI has identified a number of areas in which Singapore falls far short of international standards. In particular, democratic debate and media comment are extremely restricted and government officials have initiated numerous successful defamation suits against both political and media critics. Singapore was also ranked a dismal 19th in judicial independence by the World Economic Forum recently which was considered as a "competitive disadvantage". Again this important result was deliberately omitted by the state media while it crowed on Singapore being the third most competitive economy in the world. Since both IBAHRI and WEF were not sued by the Singapore government for defamation, we can safely assume that their assessment of the Singapore judiciary is fair, objective, balanced and true to a certain extent. As the saying goes, 'let not the pot calls the kettle back', the Singapore media should spend more time asking some serious and hard questions on the "rule of law" in Singapore instead of poking its nose in far-flung Taiwan.  Read More →

By Damon Yeo, Business Correspondent The new CPF Life (aka the National LIFElong Income Scheme) is an overhaul to the entire CPF system and a change in the wamy CPF is providing for all its members. It will mark a massive shift of principles and ideology which Singaporeans had gotten used to after its inception in 1955. Before the new scheme, CPF is simple. You earn a salary and CPF safeguards part of it for decades, so that you can enjoy the enforced savings upon retirement. What you have earned throughout your working life is yours alone to enjoy when you reach the CPF-determined retirement age. With CPF Life, the landscape changes entirely. Every CPF member, upon reaching 55, is shoved into a scheme where everyone gives up part of the CPF money that is put into a pot of funds. This monetary pot will eventually provide for every member for as long as he/she lives. Despite the marketing efforts by the CPF Board1, there is no denying that this is significant change. The question to be asked here is – why is there such limited public consultation for such a policy change? The government is again shoving stuff down our throats and insisting that they are “good for us”. Singaporeans have no choice but to swallow diligently. There are always two sides to every coin. Yes, the scheme somewhat solves the issue of ageing population faced by the government. With our life expectancy increasing, we will have a growing pool of elderly who survive well into their 80s. Under the old scheme, this group of elderly will stop receiving monthly payouts as their CPF accounts had run dry when they reach 85. If they are unsupported by their offspring, they may become a strain to social welfare services, healthcare services and society. From a public expenditure point of view, this scheme is a win-win for the government as long as the scheme is running at a surplus i.e. the pot of accumulated funds is always more than the amounts it has to pay out (highly paid actuarial analysts would have ensured this through complex projections and calculations). In the long run, the financial burden of supporting the elderly is passed on and then shared amongst all Singaporeans. On the flipside, there are several main drawbacks of this new scheme. Without CPF Life, most people will receive a monthly income (depending on the individual’s Minimum Savings balance) for 20 years, until the age of 85. The new scheme will enable those who live past 85 to continue receiving monthly income. Hence, anyone will only benefit from CPF Life if he or she can expect to outlive his peers by at least 6 years (national Life Expectancy is about 79). The scheme does not protect its members against inflation. Monthly payout amount is fixed at age 65 and will remain the same throughout for the rest of the person’s life. Inflation was 6.5% in 2008. Let’s say that 2008 was one-off because of record oil prices and assume that Singapore’s economy will move closer to developed countries. Inflation should be about 3.5% for years to come. At this predicted rate, prices will double in about 20 years hence halving the real value of this payout over the same period of time. CPF had defended not linking payouts to inflation by stating two blatant assumptions: Firstly, they state that “if we (Singapore) experience a period of higher inflation, nominal interest rates are likely to go up too” and hence we will receive “bonus” payments from CPF LIFE payouts. There is absolutely no basis to suggest that interest rates on CPF accounts are or ever will be held in line with inflation. To illustrate this, interest rate for Ordinary Account in CPF had been held constant at 2.5% since mid-19992, while inflation had swung wildly from -0.4% to 6.5% over the same period of time3. Secondly, CPF said that “with inflation, the value of your property is likely to go up”, thus shielding you from the effects of inflation. House prices do form a significant part when calculating inflation but to suggest that the inflation will drive house prices up is simply twisting logic. Singapore’s economy is highly driven by imports and exports so it is highly possible to experience a sustained period of inflation without house prices going over the roof. Also, ever-increasing house prices are never going to be sustainable and an asset bubble can never be a good thing for the economy. Because this is a national scheme, no one is allowed to opt out of the scheme (apart from some extreme exceptions). Once onboard, no one is allowed to withdraw from it unless it is on medical ground or one is leaving Singapore and West Malaysia with no intention on returning. This area is left somewhat vague to the benefit of CPF – they will of course ultimately decide if a person can withdraw from the scheme or not. The only “choice” available to CPF members is between varying levels of monthly payouts and if one wants to bequest anything to his/her offspring. Once a choice is made, CPF will not allow it to be changed. The rigidity of this scheme for its members is designed to protect CPF from uncertainties it may ever need to deal with. For the scheme to be sustainable and profitable, CPF needs as many people as they can get to be in the pot. Understandably, CPF was not set up in the first place to assist the poor. However, CPF Life further accentuates the rich-poor divide of the country. To be eligible for this scheme, a person needs to have at least $40,000 in their Minimum Savings (MS) account by the time they reach 55. A CPF-published brochure states that at least 60% of its members will have at least $67,000 in their MS account by 2013. It goes no further to state the percentage of Singaporeans who will not be able to join the privileged group of people protected by the CPF Life scheme because of poverty. All said, perhaps it is only reasonable for more Singaporeans to hear both sides of the story and be allowed to make an informed choice whether to be in the scheme or not. The new CPF Life (aka the National LIFElong Income Scheme) is an overhaul to the entire CPF system and a change in the wamy CPF is providing for all its members. It will mark a massive shift of principles and ideology which Singaporeans had gotten used to after its inception in 1955. Before the new scheme, CPF is simple. You earn a salary and CPF safeguards part of it for decades, so that you can enjoy the enforced savings upon retirement. What you have earned throughout your working life is yours alone to enjoy when you reach the CPF-determined retirement age. With CPF Life, the landscape changes entirely. Every CPF member, upon reaching 55, is shoved into a scheme where everyone gives up part of the CPF money that is put into a pot of funds. This monetary pot will eventually provide for every member for as long as he/she lives. Despite the marketing efforts by the CPF Board (source: MOM), there is no denying that this is significant change. The question to be asked here is – why is there such limited public consultation for such a policy change? The government is again shoving stuff down our throats and insisting that they are “good for us”. Singaporeans have no choice but to swallow diligently. There are always two sides to every coin. Yes, the scheme somewhat solves the issue of ageing population faced by the government. With our life expectancy increasing, we will have a growing pool of elderly who survive well into their 80s. Under the old scheme, this group of elderly will stop receiving monthly payouts as their CPF accounts had run dry when they reach 85. If they are unsupported by their offspring, they may become a strain to social welfare services, healthcare services and society. From a public expenditure point of view, this scheme is a win-win for the government as long as the scheme is running at a surplus i.e. the pot of accumulated funds is always more than the amounts it has to pay out (highly paid actuarial analysts would have ensured this through complex projections and calculations). In the long run, the financial burden of supporting the elderly is passed on and then shared amongst all Singaporeans. On the flipside, there are several main drawbacks of this new scheme. Without CPF Life, most people will receive a monthly income (depending on the individual’s Minimum Savings balance) for 20 years, until the age of 85. The new scheme will enable those who live past 85 to continue receiving monthly income. Hence, anyone will only benefit from CPF Life if he or she can expect to outlive his peers by at least 6 years (national Life Expectancy is about 79). The scheme does not protect its members against inflation. Monthly payout amount is fixed at age 65 and will remain the same throughout for the rest of the person’s life. Inflation was 6.5% in 2008. Let’s say that 2008 was one-off because of record oil prices and assume that Singapore’s economy will move closer to developed countries. Inflation should be about 3.5% for years to come. At this predicted rate, prices will double in about 20 years hence halving the real value of this payout over the same period of time. CPF had defended not linking payouts to inflation by stating two blatant assumptions: Firstly, they state that “if we (Singapore) experience a period of higher inflation, nominal interest rates are likely to go up too” and hence we will receive “bonus” payments from CPF LIFE payouts. There is absolutely no basis to suggest that interest rates on CPF accounts are or ever will be held in line with inflation. To illustrate this, interest rate for Ordinary Account in CPF had been held constant at 2.5% since mid-1999 (source: CPF), while inflation had swung wildly from -0.4% to 6.5% over the same period of time. (source: singstat) Secondly, CPF said that “with inflation, the value of your property is likely to go up”, thus shielding you from the effects of inflation. House prices do form a significant part when calculating inflation but to suggest that the inflation will drive house prices up is simply twisting logic. Singapore’s economy is highly driven by imports and exports so it is highly possible to experience a sustained period of inflation without house prices going over the roof. Also, ever-increasing house prices are never going to be sustainable and an asset bubble can never be a good thing for the economy. Because this is a national scheme, no one is allowed to opt out of the scheme (apart from some extreme exceptions). Once onboard, no one is allowed to withdraw from it unless it is on medical ground or one is leaving Singapore and West Malaysia with no intention on returning. This area is left somewhat vague to the benefit of CPF – they will of course ultimately decide if a person can withdraw from the scheme or not. The only “choice” available to CPF members is between varying levels of monthly payouts and if one wants to bequest anything to his/her offspring. Once a choice is made, CPF will not allow it to be changed. The rigidity of this scheme for its members is designed to protect CPF from uncertainties it may ever need to deal with. For the scheme to be sustainable and profitable, CPF needs as many people as they can get to be in the pot. Understandably, CPF was not set up in the first place to assist the poor. However, CPF Life further accentuates the rich-poor divide of the country. To be eligible for this scheme, a person needs to have at least $40,000 in their Minimum Savings (MS) account by the time they reach 55. A CPF-published brochure states that at least 60% of its members will have at least $67,000 in their MS account by 2013. It goes no further to state the percentage of Singaporeans who will not be able to join the privileged group of people protected by the CPF Life scheme because of poverty. All said, perhaps it is only reasonable for more Singaporeans to hear both sides of the story and be allowed to make an informed choice whether to be in the scheme or not. Other articles by Damon Yeo: >> DBS and a series of ‘unfortunate events’ >> Sale of Chartered – An Anatomy >> 3rd most competitive natio 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 →

From our Correspondent When Mas Selamat escaped from Whitney Detention Center, Singaporeans are blamed for being "complacent". In the aftermath of the Geylang Serai mass food poisoning outbreak, Singaporeans are criticized for being "unhygienic'. Naturally, the blame for the rising HDB flat prices fall squarely on Singaporeans this time too - buyers are too "choosey". It appears that our government can do not a single wrong according to the state-controlled media. It noted that in the past month, at least 15 people have written to The Straits Times Forum, venting their frustrations over escalating prices, premiums over official valuations and a perceived undersupply of HDB flats. "But have buyers really encountered a wall when it comes to housing options? Or is it also a matter of some people being too choosy and unrealistic in their expectations?", it asked. Of course the fault lies with Singaporeans as National Development Minister Mah Bow Tan urged buyers to "take a bigger view" in Parliament last Monday. For a household that earns $4,000 a month, he said the options might be: A new five-room flat in Punggol or Woodlands; A resale five-room flat in Woodlands; A four-room flat in a popular estate like Tampines; or A three-room flat in a mature estate like Toa Payoh. Those in the industry agree that buyers can be narrowly focused.  Read More →