TR EMERITUS

Former SPH journalist Berthan HensonThere are some things that you do not do, not even in name of freedom of speech. Like, you don’t call someone a liar or cheat by alleging criminal wrong-doing – unless the person is really a liar and a cheat and you have evidence to prove this. (As an aside, it makes me wonder why the Workers’ Party doesn’t sue MEWR Minister Vivian Balakrishnan for accusing them of some errrm…improprieties in its town council management. Fudging here because I don’t want to get sued too). So Mr Roy Ngerng has made it into the rareified group of bloggers who have received love letters from Singapore’s busiest defamation lawyer, SC Davinder Singh. The lawyer for the People’s Action Party, a former MP, had been busy in the past on behalf of other ministers but seemed to have taken a break. Seems the break is over. I don’t follow Mr Ngerng’s blog closely but I have the distinct impression of it being somewhat erudite, with lots of infographics and statistics. He takes the trouble to dig out statistics. Now, whether he dug out the right statistics and interpreted them rightly – I confess I don’t know. I read his piece on the CPF system and came away with this: how come CPF interest rate is low when the GIC and GLCs etc have a much higher rate of return? Some answers would be good simply because it would be educational. We all take the CPF system somewhat for granted. It is there to pay for our housing and medical bills although now we worry whether there will enough for retirement. The minimum sum scheme has had its quantum raised to match inflation and today, we read about experts saying that more money should move from our own pocket into the CPF to fund future retirement needs. But it seems that the CPF Board has replied to some of Mr Ngerng’s allegations on Factually. This is what it said: Our CPF funds are invested in risk-free Special Singapore Government Securities (SSGSs). The returns on SSGSs are pegged to the returns of other bonds in the market with similar risks. There is no connection between GIC’s rate of return and the interest paid on our CPF accounts. GIC invests our foreign reserves in stocks, bonds, real estate and other assets that carry higher risks that SSGSs. The value of SSGS is assured, as they are guranteed by one of the few remaining triple-A credit-rated governments in the world. With our CPF funds being invested in SSGSs, we can be absolutely certain our funds will be there when we need them. CPF interest rates are guaranteed and risk-free. The interest is paid whether or not the Government’s investments backing its liabilities to CPF, including investments managed by GIC, do well or not. So if GIC’s investments actually lose money, as they did during the Global Financial Crisis of 2008-09, CPF members will still get the 2.5% interest on our funds in the Ordinary Account. Finally, apart from the CPF system, it should be remembered that we Singaporeans benefit from GIC’s and Temasek’s returns though these are not linked to the returns we get on our CPF funds. GIC’s and Temasek’s returns supplement the annual Budget through their Net Investment Returns Contribution (NIRC), which amounted to $8.1 billion this fiscal year. This money allows our Government to make further investments for our future, such as in education, R&D, healthcare and improving our physical environment. Aside from the return on our Ordinary Account, Singaporeans enjoy higher interest rates on their other CPF accounts- 4% on our Special, Medisave and Retirement Accounts, and an additional 1% on their first $60,000 in all our accounts: Mr Ngerng also said that Singapore has the least adequate pension fund in the world, which makes me wonder why other countries bother to study our system if so. The CPF’s response to this: Your CPF money is your nest egg upon retirement. The uniqueness of our system is that you can also use your CPF monies to pay for housing. Many Singaporeans have indeed done so and some have fully paid for their homes by the time they retire. The homes that we own are part of our retirement assets too, allowing us to save on rent while providing us with the option to sell our homes when we need to. When international studies on pension systems make comparisons across countries, they often ignore this fact. They paint an incomplete picture of what members have in their accounts. They do not take into account the fact that Singaporeans also have used their CPF monies to pay for their homes. Kudos to the G for giving answers lest people get away with the idea that the CPF scheme is …eerm..bankrupt. Now Mr Ngerng has written plenty of articles on the CPF system and wages. And frankly, I am uncomfortable with the picture he paints; however bad anyone might think of the G, I doubt that it creates systems to line its own pockets or is out to defraud the people (please do not say it’s so as to pay minister’s salaries) While commentators have the liberty to ask questions, newsmakers also have the liberty to rebut. I had wondered why the G wouldn’t simply sit down with Mr Ngerng and give him a lesson on the CPF system, but it seems it had already taken some steps on Factually. I suppose the idea is to counter what is online by posting online. While Mr Ngerng might have asked questions that the less mathetically inclined might have ignored or the conspiracy-minded might have, there was no call for him to defame the Prime Minister in such a personal way by drawing parallels with the City Harvest case. That was out and out defamation. He is saying that the PM has a criminal case to answer just as the church leaders do. He should drop all pretence that he has a leg to stand on where defamation is concerned. And now he wants to speak in Parliament. At the risk of giving him free publicity, this is what he said: I have received ongoing support and encouragement from Singaporeans to enter Parliament and I thank the vote of confidence and belief that many Singaporeans have given to me. I also thank this nomination and the publicity that has come with it. (Arrrh??? You mean he colluded with the PM? Or Mr Singh?) It is in the interests of a democratic Singapore for even the smallest voice in Singapore to be heard. It is also in the interests of the Singapore government to be able to hear what Singaporeans from all segments of society are thinking and saying. I present myself as a bridge for the government, and for the people of Singapore. As a known blogger who has a keen interest in our country and who has amassed support from the blog, through the nearly 2 million views on the blog, I hope to continue to engage Singaporeans on issues that matter to us and present these in Parliament to allow Singaporeans to have a bigger role in the democratic institutions of Singapore. The selection of representatives into Parliament will send a clear signal as to what the government is ready for. The publicity generated from this selection will also garner significant interest and anticipation of further representation in Parliament. I keep wondering what he is really saying. That this is a publicity stunt? And that if he didn’t get selected, it would be proof that he has been gagged? Or that the G isn’t listening to people? The “better’’ publicity is this: I keep wondering if there is a link between the love letter and the President’s announcement that the CPF system will be re-looked. Both have generated plenty of interest which means that the CPF will have to extremely forthcoming about the workings of the system during its review to give everyone a comfortable retirement. Or Mr Ngerng would have to prove what he said if he goes ahead to fight the case. Then those nitty-gritty questions on the Minimum Sum Scheme and how it is calculated, whether too much of the Ordinary Account is going into housing and how employer and employee contribution rates are decided can be brought up. We need an active citizenry which can only come about with more information disseminated as widely as possible. But we do not need to disrespect our leaders when we engage in debate. Bertha Henson * Article first appeared in Bertha Henson's blog.  Read More →

[Part 1 - www.tremeritus.net/2014/05/24/looking-into-our-sg-reserves-part-1] SG Reserves: A Little Light into the Dark Abyss - Part 2 Income from Reserves and Total Reserves MOF states that the Pioneer Generation Package of S$ 8.1b is drawn from the NIRC. As the 2014 budget has a deficit of S$ 1.2b, it is certain nearly the entire NIRC is used. Since the NIRC is 50% of returns after interest payments on government debt (est. S$ 11.4b), the total amount of returns and income generated from reserves is ((8.1 x 2) + 11.4) = S$ 27.6b. GIC’s reserves can then be estimated as follows: Entity Investment Returns & Income Notes MAS S$ 3.2b 1% of 320b Temasek S$ 10.6b 2013 net profits = 4.9% of 215b GIC S$ 13.8b 3.8% of 360b, 360b = 13.8 / 3.8% Total S$ 27.6b The writer surmised that the combined reserves of MAS, Temasek and GIC totaled S$ 895b, which is within the range of S$ 800 – 1,000b estimated by financial pundits. The combined return totaled 3.1% (27.6/895). A caveat is whether there is income from other assets, most notably rents received from leasing of government buildings. This would skew the total reserves lower but not by much. The writer advises to disregard MAS. 35% of its reserves is due to the exchange rate policy and bank reserves which are not permanent. The estimated combined 1 year return of GIC and Temasek is 4.2%. MOF HQ at The Treasury (Photo: Wikipedia) According to World Bank data, the government has generated S$ 393b in budget surplus from 1990 to 2012. With total CPF balance at S$ 260b and MAS foreign exchange inflows and regulatory bank reserves at S $112b (35% of MAS balances), the remaining S$ 130b must be due to pre-1990 budget surpluses, one-off boost to Temasek due to listing of GLCs and retained earnings. In the writer’s opinion, this remainder appears low and is probably due to the government frequently tapping the NIRC to the full. Why the Opacity on Reserves? By keeping the information on reserves opaque, the government has wide discretion in tapping the NIRC to serve political goals. The NIRC framework, itself gives the government an inherent bias to pay low CPF rates because low CPF rates equal low debt servicing which in turn provide a higher NIRC for targeted spending, e.g. Pioneer Generation Package. In effect, low CPF rates are an implicit tax. Paying back CPF Due to the persistent rise in the Minimum Sum, some citizens are afraid there is no money left in CPF. The total reserves estimated far exceed the S$260b members have in CPF. This should never have been in doubt due to two very obvious reasons besides the size of the reserves. 1) CPF has invested in SSGS, the debt obligation of the Republic of Singapore. If CPF cannot repay its members, then this is a sovereign debt default, a catastrophic outcome for a country as dependent on trade and investments as Singapore. Foreign investments flee overnight. Economic collapse ensues. 2) The government has the MAS under total political control and therefore has the option to compel the central bank to print money to repay its debt. The result may be rampant inflation which destroys the value of the monies CPF members received. This option does not exist in the advanced economies with independent central banks mandated to control inflation. The Minimum Sum is really due to the government ensuring that they do not spend a single cent on citizen’s retirement funding. This is a political issue, not one of a broke CPF. Links to CPF Rates From a strictly legal perspective, the statement by GIC and Temasek that they do not manage CPF money is correct. By legal compulsion, CPF invests in SSGS and is therefore legally entitled only to the interest the Government pays on SSGS. However, the government transfers the proceeds of the SSGS together with its surpluses to the two entities. Even if there is no strict legal connection, there are economic and financial connections. More so since the Republic of Singapore (and therefore its citizens) stands behind GIC and Temasek by guaranteeing their debts and obligations, enabling them to operate with the same AAA-rating as the Republic. As such, by compelling citizens to save in CPF, the government should be obligated to let CPF rates be linked to a real rate over inflation or to returns generated by the entities. To achieve this, either the design of the SSGS needs to be changed to build in an inflation buffer or the connection with SSGS be replaced by a legal connection to the entities. Implications on Spending The NIRC or even the entire investment returns can be used to fund healthcare and social programs by changing the current reserves framework but this should be seen as one avenue among others such as reduction in defense spending, elimination of persistent budget surplus or limited deficit spending (which requires a change in the Constitution). Since 1990, the government has generated a total surplus of S$ 393b in nominal terms or S$ 490b in today’s money. This is a whopping average 10.4% of GDP per year compared to average GDP growth of 6.4%. The total reserves estimated in this article equal to 23 years of spending without raising a single dollar in taxes based on 2014 Budget expenditures. This begs the question how much reserve is really enough especially when one considers that the persistent budget surpluses are the mirror opposite of insufficient spending on healthcare, social programs, education and productivity improvements. There has been no serious debate in Parliament in regards to the stark trade-off. Please feel free to challenge the findings and assumptions provided in this article. The writer does not claim to know the truth, the whole truth and nothing but the truth. The objective is to use whatever minute information made available to shine a little light into the dark abyss that is our reserves. Chris K * The writer holds a senior position in a global financial centre bigger than Singapore. He writes mostly on economic and financial matters to highlight misconceptions of economic policy in Singapore.  Read More →

Ravi and Roy This is simply absurd. Is it a co-incidence that right now both Roy and Ravi need to pay costs to the PM and the AGC respectively? AGC is seeking $1000 in costs from Ravi for “wasting their time”. They claim that M Ravi had been “negligent and unreasonable” and this has resulted in unnecessary costs. Ravi had been seeking to drop all charges for his 5 clients on the basis that their cases were prejudiced by the Committee of Inquiry hearing on the riot. He even went to India to hold a press conference and meet the family of the man who passed away during the riots. However, M Ravi’s lawyer, Mr Thuraisingam, pointed out that M Ravi was simply acting in the interest of his clients and if the court rules that he has to pay costs, it may deter lawyers in the future from representing their clients to the best of their ability. This is not the first time a defamation lawsuit is being brought against Political Opponents. JB Jeyaretnam, Chee Soon Juan, Alex Au, Leslie Chew, Han Hui Hui, these are some of the people who have ran into trouble with the law. But this is the first time it has received so much publicity that every other Singaporean knows about the Defamation Suit. On Monday alone Roy’s blog received more than a million views. This is also the first time so many of us are following a political story when in the past most of us couldn’t give too hoots about Politics. This is also the first time a lawyer is being asked to pay costs, its an unprecedented move. Well, if it is then we should do the exact opposite of what the Government expects us to do. We should be emboldened, instead of backing out. We should unite, instead of be divided. There is indeed strength in unity. There were 3 cases of Vandalism yesterday, 2 at bus stops and one at SMU about this CPF incident. Instead of Vandalism, we should instead use Social Media to Educate and Organize fellow Singaporeans. We could also gather in Hong Lim Park on 7th June at 4pm for a Protest to #ReturnOurCPF This protest is organized by Roy, Hui Hui and Leong Sze Hian. Presidential Candidate Tan Kin Lian would be delivering the opening speech there and Dr Chee Soon Juan will also be sending a message which would be delivered at the protest too. This incident has also resulted in a sharp increase in attendees for the Protest. Usually it would only have an audience of 100 – 200, but for this Protest the attendance is estimated to be about 600 – 800. Yes, we do have a Permit for this Protest, so grasp this golden opportunity and let your voice be heard! Furthermore, we could also give Monetary Support.  During the defamation lawsuit against Chee Soon Juan in 2011, he had to pay $30,000 in damages. This made him bankrupt and unable to stand in the 2011 GE. On Monday, more than a million people viewed Roy’s blog, if less than 3% of the visitors paid just $1 each, we would be able to cover the costs for Chee Soon Juan. A small step goes a long way. Personally, I want to see him stand in the 2016 Elections and give the Government a good run for their money. I don’t want this lawsuit to bankrupt him which would prevent him running in the next elections. Me and my fellow admins  at Wake Up Singapore will be crowdfunding  to raise funds once an amount has been agreed on. We are toying with the idea of selling T-Shirts from which proceeds would go to them too. More details real soon! Fellow Singaporeans, we must stand strong and not back down. Mavericks like Roy and Ravi have blazed the trails for us, and we must not let their efforts go to waste. We should build on their efforts and form a movement. Singapore is experiencing a mass political awakening. While dreams of the late JBJ are coming true, the PAP’s worst nightmares are turning into reality too. We must not back down. We’re in solidarity with Ravi and Roy. Onwards, Singapore. Ariffin Sha * I'm Ariffin Sha, 17. I enjoy being outdoors and engaging in debates. I'm an avid reader of Law, Politics and Philosophy. I started this blog to encourage people to think critically.  Read More →