TR EMERITUS

It’s been a funny two months, as funnily enough, very good for the ego. The day I landed back in the UK, I ended up at a function where I was deemed “Good Looking,” by someone whose opinion on the subject matters to me. Weeks later, I found myself in a yoga class where a few people came up to me and asked if I was a fitness instructor because they found I had a “muscular physique.” That phrase would be repeated later on at a client meeting when the client noticed. I guess you could say that it’s an ego trip. I am now pushing 50 and words like “muscular physique” and “Good Looking” are not phrases associated with men pushing 50 and so I guess one might say that I should just accept the compliments where I can get them. However, the truth is I don’t feel particularly good looking or muscular, even if at least one of the compliments came from someone I wanted to notice. While I am fitter than I used to, I am well aware that I am far from muscular or good looking. The reason for that comes down to one peculiar quirk of my exercise routine – I’m usually topless when I exercise. Your own body, as they say, is the one thing that won’t lie to you. So, when people tell me I am good looking or that I have a muscular frame, the belly makes its presence quite clear when I go to work out. So, I am well aware that I am far away from being muscular I bring up this analogy because tomorrow is Singapore’s National Day and our 58th birthday comes at a very particular time. Singapore’s formerly “perfect” government has found itself in a rather “imperfect” position. We’ve had a corruption scandal involving a minister and our Speaker of Parliament who was once a prominent star in government had to resign over an affair. Our Prime Minister, who is over 70 and searching for a retirement option has had the unenviable task of explaining how the system is holding strong when a good portion of the public suspect it is falling apart. Our Prime Minister’s Speech on the issue can be seen here. How did this all happen? Why is Singapore’s once famously invulnerable and omnipotent government looking like it has feet of clay? Well, I would argue that the problem is that the government never got naked and looked at the one thing that would not lie – the body that is the nation of Singapore. Sure, Singapore does compare very well to most parts of the world and everyone who visits inevitably praises Singapore as wonderful place. We have, as our mainstream media has reminded us, have the best airline in the world, the best airport and we’re generally the best of everything, according to the number of international polls. I think of the people who have praised my physique and I’ve been really thrilled to get that praise. So, I can imagine what our cabinet must be feeling whenever one of the international polls rates something about Singapore amongst the world’s best. However, does the external praise do one any good? Well, I’m lucky in the sense that the faults of my own body are petty glaring. The tummy (the place where fat is often the most difficult to remove) makes its presence felt. Try as I might, the belly fat remains visible for all, including myself. So, whenever someone tells me I look good, I go back to my basic work out routine and my body has a way of reminding me that I still have plenty of work to do in order to get to where I would like to get before my 50th birthday. So, the question is, do our ministers have a “get naked” moment where the one thing that can lie, speaks to them. If you look at Singapore’s institutions, you’ll notice that our ministers have effectively become like a radio station commercial – “Hear only the good stuff.” Let’s face it, our President is supposed to be “independent” but two of the last four have been effectively selected. Our judges have made some good decisions but nobody seriously expects the judiciary to rule against any senior politician. As for our mainstream media editors, well, let’s put it this way, most know who not to offend. Nobody wants to get naked and look at the body that cannot lie. So, they only hear the good stuff and take it as the gospel truth of how things are. Talk to enough HDB residents and there is inevitably one complaint – the MP only appears during election. So, its this clear that the good stuff that our government has been hearing is not the whole truth. Shouldn’t we use this National Day to get naked to see the real state of our nation?   Tang Li *Although I’ve been based mainly in Singapore for nearly two decades, I’ve had the privilege of being able to meet people who have crossed borders and cultures. I’ve befriended ministers and ambassadors and worked on projects involving a former head of state. Yet, at the same time, I’ve had the privilege of befriending migrant labourers and former convicts. All of them have a story to tell. All of them add to the fabric of life. I hope to express the stories that inspire us to create life as it should be.      Read More →

This is the 3rd and final installment of Eh, Goondu series. Watching Indranee, 2nd Minister of Finance, explain land reserves back in Nov 2022 parliamentary debate, and reading Ho Ching’s Jun 24 post in Facebook on same matter, is an exercise in incredulity. Indranee expounded “ownself declare ownself” accounting principles and Ho Ching basically regurgitated same same. What I find exasperating is when word salads from the two luminaries threw Singaporeans into confusion, no one from academia or The Society of Accountants take it upon themselves to come forward to present their views. A community depends on the collective wisdom of our professionals to participate in intellectual discourse that helps shine light for everyone. Without doubt Indranee and Ho Ching are highly respected and brilliant individuals, but having a lawyer and engineer expound accounting matters is as good as an economist performing a surgery. Singaporeans must learn the danger of argumentum ab auctoritate, or argument from authority fallacy. Basically, this is a tendency for people to think that well the explanation came from such a high official, or expert, it must be true and correct. Where is state land booked? It is not accounted for by SLA which is merely the agency that handles the buying and selling of land on behalf of the government. State land is either acquired or reclaimed, so there is a cost which is the book value. In which agency of the government is this asset accounted for, we don’t know. Operating lease or financial lease model Accountants would talk in terms of these models regarding sale of land on 99 year leases. Indranee merely said “There is no net increase in the reserves when land returns to the State after the lease expires, as the value of the lease did not include the value of the reversionary interest.” From this we know the sales are all operating leases. That means the land reverts to government at zero cost after 99 years. Reserves Fig (a): As explained in 2nd installment of Eh, Goondu, our national reserves is the net assets of government + statutory boards + (GIC,Temasek). Net assets = Equity which is made up of Capital,P&L, General/Specific Reserves. Why is Equity shown on the right side with Liabilities? Because Equity is what the entity owes to shareholders. It’s what’s due to shareholders, thus it is a liability from the entity's point of view. In fig (a) our national reserves is $200m. So where are the assets that make up this $200m? Well, we don’t know specifically. We know $200m of the total assets of $600m are our national reserves. So the point is, if you want to know how much our national reserves are, don’t look at the assets side, look at the liabilities side. Valuation Fig (b): Now that you know what our reserves are, you want to know are the asset values realistic. Accounting standards require certain assets to be marked-to-market, eg listed equities and securities. Other assets are carried at historical cost less impairments, such as investment in unlisted companies. Mark-to-market gains/losses and impairment are unrealised. We are just writing the assets up or down to recognise changing values. To recognise means to take into P&L. The change in values affects both assets and our reserves, ie Equity (P&L) as shown in fig (b). Eg a plot of land cost $20m. It is now worth $22m. Asset and Equity are adjusted by $2m accordingly. For assets that cannot be marked-to-market, valuation is left to management. It’s basically "ownself declare ownself". In the case of Temasek for example, 53% of it’s $382b total assets are shares in private unlisted companies. You can appreciate the implications, especially now that they have stopped publishing statutory audited accounts. Disposal Fig (c): On disposal such as in sales, 3 things happen. (a) Asset type changes. (b) Value change (whether gains or losses) are now realised. (c) If the value change is higher than what has been recognised so far, the additional change affects reserves. Eg if that plot of land is now sold for $26m, the realised gain is $6m. Earlier, $2m of the gain had already been recognised. So $22m asset (land) has now been changed to asset (cash) $26m, and reserves (P&L) increases by another $4m. Indranee : “There is no net increase in the reserves when state land is first sold and the sales proceeds are transferred to the financial assets. It is just a conversion of one asset form to another.” The minister looked only on the Assets. What happened to Liabilities side of the Balance Sheet? If the cost of the land is $20m and realised for $26m, the Minister was writing new accounting principles to not recognising a $6m profit. I wonder if her colleague the Commissioner of IRAS will agree. State land Per CNA : “She explained that under Singapore land laws, which can be traced back to English land laws, all title to land in Singapore is derived from the State and the state leases the land to others.” Indranee : “Land that was not leased out by the state remains state land, and under Singapore’s Constitution, all state land forms part of the country’s reserves” Actually Singapore adopts the Torrent land registration system which is an Australian system. Is the minister saying there is no land in fee simple (freehold)?. When she said “all state land forms part of the country’s reserves”, we need to unpack this properly. Is she referring to “reserves” as defined under the Constitution (which means “net assets”)? If sold under 99 year leases, the asset has gone out of the Balance Sheet. From the legal perspective, ownership of the leased land remains with the government in the case of operating leases. The government owns reversionary rights to lands leased out, ie the land reverts back to government at the end of lease term. But from accounting perspective, the land is gone. It is no longer an asset in the books. Now if we were to compute the country’s wealth, then it is a completely different perspective altogether. We can include all those land sold off under operating leases because governmen retains ownership. This is taking the view that latent assets are wealth in the same way like untapped oil and gas reserves under the land or sea, or minerals, or forests, are wealth to some countries. So we need to be clear that here we are talking about the Constitution which uses the accounting concept of reserves. So those leased out land no longer forms part of the reserves. And to be absolutely clear, nowhere in the Constitution does it mention “all state land forms part of the country’s reserves”. There was misinformation or disinformation on the part of the minister and 90 odd members of parliament took it all in. Land as past reserves Indranee : “….. the reversionary interest in that parcel of land had all along formed part of our past reserves.” Ho Ching: “So land is part of our past reserves, and an inheritance to conserve and protect for our future generations. Hence, whenever we sell land, we must lock up the net proceeds as part of our past reserves.“ Here we have once again misinformation or disinformation by Indranee and Ho Ching. Singaporeans need to be crystal clear here. Nowhere in the Constitution does it define past reserves. The number of times the term “past reserves“ mentioned in the Constitution is ZERO. Yap, this is fact. The Constitution makes constant reference to what is not permitted to be “drawing on the reserves of the Government which were not accumulated by the Government during its current term of office”. There are 2 clear inferences here. (a) reserves are “accumulated” or built up, or gains made, by a government. (b) accumulation by present government can be considered “current reserves” and accumulation as at commencement of current government are “past reserves”. And in case you are wondering, the Constitution most definitely never mentions that proceeds from land sales cannot be spent. 100% fact. Because like I said, Constitution, like accountants, think of reserves on the Liabilities side of the Balance Sheet, not on the Assets side. I explained in the 2nd installment, assets are not fungible so we cannot itemise specific assets to represent “reserves”. Suppose just for the sake of illustrating a point, we look at a plot of land 100,000 sq ft acquired in 1970 at $10 psf. Cost is thus $1,000,000. Suppose it was sold in 2022 for $8m, thus making a gain of $7m. The proceeds is $8m. According to both Indranee and Ho Ching, the entire $8m are past reserves which cannot be spent. Well actually Ho Ching said net proceeds of $7m ($8m- $1m) must be invested as past reserves. Under the Constitution we need to see reserves are accumulated by which government. And this depends on government accounting policy. The present government term started in July 2019. If policy requires valuation gains/losses to be recognised yearly, then $4m of increase in reserves is due to past government, and $3m is accumulated by present government. So of the proceeds of $8m, past reserves is $5m (valuation gains + cost) and current reserves is $3m. But if policy is to carry land at cost, then there is no valuation. This is the case with government accounting, In this case, $1m is past reserves and gains on sales of $7m occuring in 2022 is entirely current reserves. Remember, the distinction of past or current reserves is important to the issue of whether the government can or cannot spend it as dictated by the Constitution. Past reserves NO, current reserves, YES, government can spend. Government policy on land sales It is government policy not to spend the net proceeds on land sales but to transfer the cash to the sovereign wealth funds to invest. There is nothing wrong for the government to make policy it deems fit so long as it does not conflict with any legislation. In this case, there is no conflict with the Constitution as regards restriction on spending past reserves. Seen in this light, the issue is crystal clear. Since it is government policy, it is open to challenge by opposition. There is nothing wrong with Leong Munwai asking all those questions and making suggestions. Indranee and Ho Ching’s bla bla bla on land reserves are confusing and tantamount to misinformation and disinformation.   Patrick Low * Article first appeared on Down The Rabbit Hole.      Read More →

I again express my views and concerns as a citizen. Not too long ago, two of lhl's cabinet ministers, K. Shanmugam (KS) and Vivian Balakrishnan (VB) publicly threatened to sue Lee Hsien Yang (lhy) if he fails to apologise and pay damages for what he has said about the renting of their Rideout Road black and white bungalows etc. Both pap ministers offered to donate any monetary compensation received to charity too. Lhy didn't take too long to reply. His reply was that what he has said happened in the United Kingdom (UK) and if both pap ministers decided to pursue their case legally, they should sue him in the UK. It was plain and straight forward and anybody who has read what he said will understand it. So far, as far as the public is concerned, both cabinet ministers are totally quiet about whether they will sue him in the UK or not. I ask what happened because I consider the question of credibility to be on the line. Both the UK and Singapore are members of the Commonwealth. It is unlike we both have different legislative backgrounds and laws such as chalk and cheese. When a threat is issued, much less one coming from none other than the honourable ministers, I, as a citizen expect my ministers to either follow through with their threats and if they decide to back down, then please let Singaporeans know the reasons because I believe that many citizens are concerned, are watching and are following the developments and they deserved to be informed . There is a Chinese saying that loosely translates as coming as a tiger but leaving like a snake's tail (蛇假虎威). Coming so strongly like a tiger and leaving like a snake's tail will aptly fit the above description if nothing more is forthcoming from both KS and VB as far as their threats to sue lhy is concerned. . Think.   Simon Lim        Read More →