Archive for March, 2012|Monthly archive page

An Exchange Trade Note is not an ETF

In ETFs, Financial competency on 31/03/2012 at 11:14 am

 [T]he buyer of the exchange traded note takes on its investment risk along with a big barrel full of counterparty risk, too. And perhaps some market or liquidity risk as well, as we’ve seen in recent days.

In short, an exchange traded note can be seen as a total return swap, sold to retail investors, that lacks all of the regulatory innovations that have developed over the past few years.


S’porean boy makes it big time among hedgies

In Financial competency on 30/03/2012 at 9:09 am

Mr. Yong’s Dymon Asia Capital, based in Singapore, has expanded to oversee $2.85 billion after starting in 2008 with $100 million from the Tudor Investment Corporation, Bloomberg News reports.

Where were you non-Indian PAP MPs, and WP MPs?

In Political governance on 30/03/2012 at 8:21 am

When I first read of the reactions of netizens about the rants of a Chinese gal against Indians, I tot, “Here we go again. The Indians are getting upset again.”

Yesterday, my amusement turned to annoyance when I realised that the only politicians who spoke out against the racist comments were two Indian PAP MPs, whom I associate with belonging to the attack dog section of the PAP kennel.

Hey ethnic Chinese, Malay and Eurasian PAP MPs, and WP MPs of all races, spotting and crying racism is not just an Indian  past-time or blood sport. Given the liberal immigration policies of the last decade, it is an issue that affects all S’poreans. I mean even the Chinese heartlanders feel discriminated against when ang-moh FTs are allowed to flee the country after beating up Chinese S’poreans, you know things are really, really bad.

What a lost opportunity for Flame On MP, Seng  Han Thong*, to  prove to S’poreans that he is not ant–Malay or Indian. All he needed to say was, “She was wrong”. But he was busy with other things?

And why were the Malay PAP MPs silent? Nothing to do with the Malay community? It’s an Indian problem? Hey the Malay community is a minority community that has suffered its share of discrimination over the years.

And where were you WP MPs? Shouldn’t parliamentarians who aspire to be first-world speak out against  racism? Or is the WP pandering to its core supporters?

Nope speaking out against racism is not an Indian sport or past-time like cricket. It is something that we should all speak out against. And my advice to Indians. Don’t always lead the charge. Try to get some brave Chinese (like Siow Kum Hong, the cat lover) to take a few bullets.


* “I noticed that the PR (SMRT public relations officer) mentioned that some of the (SMRT) staff, because they are Malay, they are Indian, they can’t converse in English well enough, so that also deters them, but I think we accept broken English.”

FAS: Learn from Chelsea

In Footie on 29/03/2012 at 8:52 am

FAS is trying hard to justify why our local footballers and coaches are no damned gd. Well they are not paying attention to what the Lions XII are doing. But then Sundram is not an ang moh from Serbia. He is juz yr ordinary S’porean. Worse he is a local Indian, not one of the Aryans. His team performs but as he isn’t an Ang-moh, not an FT Indian, so he must be lucky, FAS must be thinking.

Meanwhile, the rot continues.

Well look at Chelsea. It was really having a rotten season. Then the owner decided to sack the manager, and appointed his deputy to see through the season. Well the season has turned round and Chelsea beat Benefica away.

Chelsea fans and the owner can juz smell a European League final.

So maybe FAS, juz change the top guy. He has had years to prove himself.



How to invest if you are broke

In ETFs, Financial competency on 29/03/2012 at 6:35 am

Something to think abt

PAP in Aljunied GRC: No room for young blood?

In Political governance on 28/03/2012 at 5:22 am

It seems that like the SPP, the PAP in Aljunied, only want to rejuvenate the PAP there with old blood. Mr Chiam’s idea of new blood, is Mrs Chiam. Likewwise the PAP’s idea of new blood in Aljunied is to bring in the chickens that even the slaughter-houses don’t want.

It was reported recently that defeated PAP MPs for Aljunied GRC Mrs Lim Hwee Hua and Mdm Cynthia Phua will step down as grassroots advisers to Aljunied “grassroots organisations” (read PAP organisations?) on 30 April. Now both these ladies are no “spring chickens”. If one wanted to be rude, they could be classified a “lau kua boos”.

So it was a surprise to read that their replacements are 71- year old Professor Brian Lee  and 62 year old Mrs Daisie Yip and, much older than the two defeated PAP MPs. Oh dear, are things so bad at the grassroots in Aljunied that the People’s Association can only find two extremely old chickens (too old for the slaughter-house) to replace the defeated PAP MPs who were no spring chickens themselves?

What does it say about the PAP/ PA machinery in Aljunied GRC? A home away from home for the geriatric wards of the old folks’ homes in JB that cater for S’poreans?

To win back Aljunied GRC, the PAP  brought back in its former party chairman Lim Boon Heng, another 60-something. He has been apparently recruiting PAP activists to join a task force to win Aljunied back from the WP.

Looks like he is having problems recruiting the young, and middle class.

Maybe he should be looking to recruit ex-WP stalwarts Eric Tan and Goh Meng Seng into team PAP? The one thing that Eric and GMS have is passion: they hate Low Thia Khiang whom they blame for fixing them. They are also a lot younger than himself, and the two replacements for the defeated PAP MPs. Eric’s in his late 50s, while GMS is a spring chicken: he is only in his 40s.

Eric and GMS joining the PAP must have Low worried? More likely he’d say,”Good riddance to impotent haters”. Revenge is a dish best served cold, Eric and GMS.

Trying to outscam the scammers

In Financial competency on 26/03/2012 at 1:41 pm

Some people are putting money into online scams even though they know they are fraudulent, suggests research.

One of the first significant studies of cons known as High Yield Investment Programs (HYIPs) reveals that a small number of people are trying to use them as regular investment vehicles.

The research suggests that the investors use website tools to help them spot when best to cash out.

Any comments Vikram Nair?

TJS, Hazel Poa and Tony Tan

In Political governance on 26/03/2012 at 7:38 am

Both Tan Jee Say and the NSP have refused to rule out contesting Hougang. But this isn’t the only link between the two has-beens of opposition politics.

As readers will know, former presidential candidate Tan Jee Say is setting up a centre for policy discussion in Orchard Road.  Known as Heart Beat, he plans to host weekly policy discussions there. And I assume sell drinks and light refreshments to the thirsty and hungry participants of these discussions. An integrated model that sustains itself. Bully for him and his Mrs.

He hopes to sign up 100 people for his policy discussion group by year-end. The plan is for the group to meet regularly to research and brainstorm ideas, and draw up a set of alternative policies by 2014. These will be offered to opposition parties for use in their manifestos in the next general election, or submitted to the Government for consideration. Hazel Poa and her hubbie Tony have agreed to help him recruit people for this centre. 

The aims of this centre is  an advanced version of what he was thinking abt before the 2011 GE. In his article (in his book A Nation Awakes) “From Essay to Ho Say”, talked of “my plan for a non partisan [huh? strange this] central resourse pool of 15 to 20 candidates who could be distributed to the various opposition parties to augment and strengthen their existing team of candidates.” He described this to that Dynamic Duo (Hazel and Tony) “who promised help me find candidates”. The plan never took off, and TJS ended up being a GRC MP candidate for the SDP. And the dynamic duo stood as NSP candidates.

Well now it seems they are trying again. Let’s wish them luck in their plans to research and brainstorm ideas, and draw up a set of alternative policies by 2014. These policies will be offered to opposition parties for use in their manifestos in the next general election, or submitted to the Government for consideration.


Another Ang Mog bank retreats from Thailand

In Banks on 25/03/2012 at 4:10 pm

HSBC recently put put up a “For Sale” on its retail banking network in Thailand.

Now ING is doing the same for its stake in a Thai bank. ING has  put a US$775m price on its 31%  stake in TMB. It .bought the stake in Thailand’s seventh-largest lender in 2007 for US$607m. Nice profit if it gets its asking price.


Tesco Thai Property Fund Debuts Strongly as Yield Play

In Property, Reits on 24/03/2012 at 6:05 am

Even Bangkok punters play the yield game.

The silence of the NSP

In Political governance on 23/03/2012 at 7:13 am

Even more farcical than GMS’s call for Nicole Seah to avenge the humiliation that he and NSP felt when the WP refused to acknowledge the NSP’s “chopping” of Moulmein-Kallang, and Nicole Seah’s response of, “Don’t drag me into yr pettiness, I’m a fan of Low”, is the reaction of the NSP’s central executive council (CEC).

When Hazel Poa, the sec-gen, was asked months ago if the NSP would contest Hougang, her reply was the CEC had yet to meet to discuss the matter. Since then nothing has issued from the NSP’s CEC. Even after GMS’s extra-ordinary outburst, there is only silence. BTW, he forgot that he is no longer the sec-gen or a member of the NSP? Or is he Gong Mad Soon?

The reason for the silence is that the NSP’s CEC is split on the issue. Hazel, her hubbie and other ex-RP friends, and the two lady friends of Tan Jee Say (Nicole and Jeannette) have no problem staying away from Hougang. But the third faction, the old guard, are like GMS. They want to hurt the WP even if it means the Opposition losing Hougang. To them getting their revenge is the most important thing. The problem is that this lot can’t find anyone willing to stand in Hougang. Who wants to lose his deposit? And bear the shame of doing the PAP’s work for free. I mean PAP MPs are paid $15,000 a month for their efforts.

Enter GMS? Tired of waiting for Mrs Chiam to call him to invite him to donate his blood to the SPP’s rejuvenation, GMS it seems is eyeing to go down in history as the man who lost Hougang.

Think again GMS.

Cambodia: The Final Frontier

In Emerging markets on 22/03/2012 at 7:26 am

Cambodia will start trading on its stock exchange in April. It opened in July 2011 but there were no stocks to trade.

Another day, another sucker

In China, Corporate governance on 21/03/2012 at 8:53 am

First it was SGX, then US exchanges, now London’s AIM the target for Chinese IPO scammers?

A “populist” measure, can be a sound measure: ex-IMF Chief Economist

In Political governance on 20/03/2012 at 8:13 am

I tot of the word “populist”, when I read the reports of the SDP’s heathcare plan. I’ll have to go through it in detail before I dare comment on it. I know one of the doctors on the SDP panel. But it seems like a “populist” plan, a potential vote winner, especially aimed at older S’poreans like me and those who have to care for their elderly folks.

Except that the SDP doesn’t do “populist”. From a Today article few weeks ago, Even as it welcomed several help measures for certain population segments announced during the Government’s Budget last week, the Singapore Democratic Party (SDP) spoke out at what it deemed was an increasingly populist approach.

At a press conference to present its shadow budget to the media yesterday, party treasurer Vincent Wijeysingha, who is the principal author, noted that the Budget had “focused so significantly on the issues raised in the general election”.

This, he felt, was because the Government was trying to “sweeten or rebuild its relationship with the electorate” after its “poor showing” during the polls last May.

He added: “My concern is that this propels the mindset into one that is willing to play politics with the nation’s resources.”

When I read this, I tot to myself: The PAP may be losing popular support but it has won the battle of ideas. Even Dr Chee and his merry people think that “populist” is a dirty word.

The PAP and the government has a mindset that has problems distinguishing between “popular” actions and “populist” actions. They seem to think that the words are synonymous. They hate “populist” because by definition it is opposed to rule by the elite. Fair enough but then they think that being popular is being a populist.

Worse they think that the way to go is to do “unpopular” things. Witness LKY’s boast of not doing popular things to win elections, and Philip Yeo saying,”My greatest fear now is that the government is terrified of the people. You cannot have a system where the people are pampered.” They conflate “populist” with “irresponsibility”. 

They are wrong. According to  Simon Johnson, once the Chief Economist at the IMF, home of austerity’s the answer to almost any economic problem, and now the Ronald A. Kurtz Professor of Entrepreneurship at the M.I.T. Sloan School of Management, Populism and irresponsibility are not, in fact, synonyms. Populism can be sound, he argues. He argues that populism is often used in a pejorative way – as a putdown, implying “the people” want irresponsible things that would undermine the fabric of society or the smooth functioning of the economy.

So what if the people are to be “pampered”, if it is right thing to do by them. According to Simon Johnston, the issue is whether  a “populist” measure in question is a responsible one. If it is, then the label doesn’t matter, juz do it.

The SDP and this chap ranting about the bus subsidy, have got it wrong. The issue is not whether a measure is “populist”. It is whether it is a pragmatic, cost-efficient and responsible way of solving a problem. As the the PAP, it’s too early to draw conclusions about whether it’s changed it’s mind that “A populist measure is always bad.” The  populist measures on public transport, housing and healthcare could simply be a pragmatic response to ensure that its share of the popular vote at the next general election edges towards the 65% mark once again.

Wouldn’t it be a delicious irony, if the PAP starts believing that a populist measure can be a sound one, when its critics are still stuck with the PAP’s old way of thinking, “A populist measure is always irresponsible”.


Wall St’s finest after the collapse of Bear

In Banks, GIC on 19/03/2012 at 8:38 am

Citigroup’s down 82%

Trying to be more Tin than Tin Pei Ling?

In Political governance, Wit on 19/03/2012 at 8:38 am

“Vikram Nair: I should not have been sarcastic towards Chen Show Mao”. Err based on Rachael Chang’s ST report (see my take here) which Vikram has not denied, nor threatened with defamation claims, he wasn’t being sarcastic to Show Mao. He was, at the very least, being sarcastic towards the poor, bit like VivianB with his hawker food and restaurant remarks. Shumething that Nair later denied. Funnily, he has never ever disputed Rachael Chang’s reporting. So I assume he is happy with it. Yet he is upset with TOC, “It is extremely deceptive of TOC to attribute lies to me”.  Want to clear your name, sue SPH and TOC.

And it gets better. In denying to the media that he is a PAP attack dog, he does not deny that he is a dog. Though my two mongrels tell me that they’d rather not be associated with him, thank you very much.

Maybe it’s time to stop using Tin Pei Ling as the exemplar of the PAP’s boast that only the best of the best get asked to be PAP MPs. There are other candidates, this Nair being one.

To recap about Ms Tin. She was the exemplar because of her woodenness in public speaking, shallowness (regrets: not taking mum to a theme park and no clue of what policy she wanted changed), hard-heartedness (poor should only be given enough to keep up with inflation), perceived “tai-tai”ness (Kate Spade bag, expensive Jap food), and her new media spasticity (never privatised her personal Facebook page and having fat-fingered Denise He as her Facebook administrator). Then to crown it all, LKY walked out of parliament when she rose to speak.

But there are now three new contenders for Tin’s title of PAP MP Imperial Stormtrooper Extraordinaire. One is the aforementioned Vikram Nair, the guy who drank water from a tank where the corpse of an FT was found. He loves FTs so much that he wants to imbibe their germs?

Another is BaeyYam Keng .

Baey Yam Keng shows us how much a PAP MP has to be a “FT tua kee” kind of person and FT-lover. He told us not to jump to the conclusion that all foreign students are like the Sun Xu (a PRC guy on a S’pore government scholarship) who insulted our senior citizens and insinuated that “there are more dogs than people in Singapore.”

He apologised saying in parliament, “It was never my intention to undermine Singaporeans. But to those whose feelings my words have hurt, I am sorry.But added, “If we care too much about what people call us, we will find it difficult to be more than the stereotype or inaccurate label. Let us be confident and quietly proud of ourselves, of what we are.”

All this from what as S’pore Notes says is the Managing Director (promoted effective 4th January, 2011) of Hill & Knowlton, a global public relations company with the corporate boast: “We create value by shaping conversations: we start them, we amplify them, we change them. We can connect seamlessly with all of your audiences.” His boss, Regional President & COO Vivian Lines, must be wringing his hands why he ever let him replace Jimmy Tay, who was named PR Agency Head of the Year at the Asia Pacific PR Awards 2009. Surely a humble copywriter would have done a better job than the doggone China lover.

Recently Baey dragged his daughter into the gutter to make a political point. How low can a PAP MP get?

Finally, there is Hri Kumar Nair. To quote Kate Spade, “What can I say?”

This Senior Counsel extraordinaire decided to take on a Clark Kent look-a-like NMP who had the audacity to challenge the PM’s claim that the PM alone had the unfettered authority to suka-suka call or not call a by-election to fill the empty seat in Hougang.

Hri Kumar not only did not discredit the critic but he made this wimpy NMP look like a super hero and sound like an ant-PAP standard-bearer, when this person, before he became an NMP, often came across as someone who was trying very, very hard to become a PAP candidate MP. He always seemed to have a nice thing to say about the government. Any criticism seemed to be wishy-washy, and milder than mild. But Hri changed this perceptions. Eugene Tan became Super Critic and a flag-waving dissident.

The exchange of letters can found here.

And Hri Kumar got some serious legal academics weighing in on the side of the view that the PM had to call a by-election.

Bottom-line, he made PM look silly and petty and according to S’pore Notes, “cowardly”: “But Hougang is a hot seat…The by-election will surely generate much heat and debate across the island.” He’s not just saying that the kitchen is too hot, and the PM should get out of it, he’s telling us that the PM is too cowardly to face the electorate.

Now the PM has conceded the pass. He will call a by-election sometime in the future.

Now not even Tin or Baey or the other Nair managed to do that: make PM appear cowardly, and concede the point. So let’s move on from Tin to Hri Nair?

But Hri should be looking over his shoulder if he inherits Tin’s title. Other than Baey, the other Nair and Kate Spade Tin, two more contenders have emerged: Low Yen Ling and Foo Mee Har. The latter is re-emerging. She was once seen as Tin’s slightly more intelligent (juz) elder “sister”.

BTW, waz the Nair clan up to? Trying to show the PAP that Devan Nair was a black sheep? That the Nairs deserve a cabinet post? All they show is that there are now three lawyer Nairs that say the dumbest things. There is another Nair that says the dumbest things. (Go google “Singapore Dissident”).

Bond cycle turning?

In Financial competency, Financial planning on 18/03/2012 at 9:25 am

US tresuries are weakening (The interesting issue is the bond market which (as a regular commenter astutely noted on the last post) has seen a steady decline, taking the 10-year Treasury yield to a five-month high) while retail investors here are rushing into perpetual bonds (prices will fall, if interest rates go up) and retail investors globally are piling into bonds or bond funds. They are expecting a Japanese-like scenario with interest rates falling even lower.

Working for peanuts

In Uncategorized on 17/03/2012 at 9:07 am

By comparison, our entrpreneurs got it easy

See healthcare productivity from patient’s perspective

In Political governance on 16/03/2012 at 10:34 am

So the SDP says healthcare should be a “right not a commodity” while the WP’s Chairman (and a MP) points out, “Singapore’s total expenditure on healthcare as a % of GDP was far lower than international standards. More importantly, the government or public expenditure on healthcare is also far lower than elsewhere. Singapore’s government expenditure on healthcare is about 1.6% of GDP; nearly 4 times lower than the 6.1% global average in 2009”.

Here’s an interesting perspective from Jeremy Lim, a private sector healthcare manager, that appeared in BT sometime ago. The headlines sums up what I as a 50-something “new poor” but financially responsible voter want from a public healthcare system: not money being thrown at the system but

See healthcare productivity from patient’s perspective

Does their health improve in the shortest possible time at the lowest possible charges?

BUDGET 2012 reaffirms the government’s commitment to raising productivity and signals in no uncertain terms the stance that some short-term pain faced by companies is necessary for the longer-term good. However, even as we re-examine processes and traditional practices, it is timely also, especially in very tightly regulated sectors such as healthcare, to explore whether our rules and regulations encourage and reward productivity efforts.

In some instances, in the name of safety, do we actually stifle productivity and ‘kill’ innovation?

Funding is another key driver of behaviour – does the way we reimburse healthcare paradoxically reinforce inefficiency?

Healthcare trade-off

Healthcare is often characterised as ‘finite resources, infinite demand’. There is never enough to satisfy everyone and difficult choices balancing cost and effectiveness have to be made.

This necessitates that at the system level, clinical quality and patient safety are relative concepts.

Imagine a graph plotting ‘Cost’ on one axis and ‘Effectiveness’ on the other. The resulting 2 x 2 matrix conveniently categorises all healthcare interventions into one of four possibilities: ‘Less Expensive and More Effective’, ‘More Expensive and Less Effective’, ‘More Expensive and More Effective’, and ‘Less Expensive and Less Effective’.

The first two are easily dealt with: Do the first; it is a no-brainer, don’t do the second; another no-brainer.

If ‘More Expensive and More Effective’, then the pivotal question is ‘Is it worth the extra costs?’

For the ‘Less Expensive and Less Effective’ category, which we will focus on, the key question to ask is ‘Is it good enough?’

Over-specified standards

Singaporean readers old enough will remember the dental hygienists of yesteryear scaling and polishing teeth, especially of children. These hygienists were, compared to dentists, less well educated ‘technical staff’ and trained specifically in scaling and polishing, leaving diagnostics and more complicated dental procedures to properly qualified dentists.

As Singapore advanced up the economic ladder, the dental hygienist faded away and dentists dominated the landscape.

In recent years, the hygienist has made a comeback. With increasing recognition of the desperate shortage of dentists, dental hygienists are now resurgent. Of course a dentist should be more skilful in polishing and scaling teeth, but is a hygienist good enough?

Think about the MinuteClinic in the United States. Starting with a modest single clinic in 2000, the chain now has 600 locations across the US proudly proclaiming: ‘Our practitioners have seen more than 11 million patient visits, with a 95 per cent customer satisfaction rating’.

These practitioners are supported by sophisticated computer algorithms, treating only specific symptoms and conditions, and are priced much lower than traditional practices. Oh, retail clinics are run by nurses and physician assistants. Is that good enough?

Prescribed nurse-to-bed ratios are entrenched in healthcare regulations in many countries and a cheap and easy regulatory instrument. However, these may be an over-specification and penalise innovative organisations which embrace technologies to increase an individual nurse’s efficiency. Tele-health initiatives may permit offsite and even out-of-country monitoring, thus enabling fewer nurses to care for more patients.

But hospitals have little incentive to invest or even think about such possibilities if the ratios are rigid and allow for no cost savings from reduced manpower.

Dollars and sense

Years ago, some patients would be admitted to hospital overnight for an MRI. These otherwise well patients occupied a bed for one night so as to be eligible to use Medisave dollars to pay for the MRI! Today, while such blatant examples of ‘abuse’ are less common, Medisave, by design, is still biased towards hospitalisation payments. Choosing between a day surgery and an inpatient option for a minor surgery, say, a laparoscopic gall bladder removal, the sharp patient would note that Medisave claims for hospitalisation go up to $450 a day but only $300 for day surgery coverage.

Between two nights in a hospital with room rate claims of $900 and an outpatient procedure followed by hiring a day nurse for post-operative home care for which only a total of $300 is claimable, which would patients choose?

Are we inadvertently fostering prolonged admissions at a time when Singapore is furiously playing catch-up to the tune of 1,900 hospital beds?

Patients today resist moving from subsidised wards in public hospitals to community hospitals as the subsidy schemes are more generous in the public hospitals. Furthermore, half the patients would not qualify for government subsidies.

Finance Minister Tharman Shanmugaratnam announced in this year’s Budget that ‘all patients in community hospitals will now qualify for government subsidies . . . The middle-income group will receive the largest increase in subsidy rates, getting a subsidy of 20 to 50 per cent when they previously did not receive any’.

This is a step in the right direction to ensure a coherent financial gradient and, hopefully, will result in better use of very scarce hospital beds.

Productivity in healthcare needs to be reframed as value creation from the perspective of the patient and not simplistically as output for a given input, which is a common technical definition.

The hospital which has its doctors seeing a hundred patients a day may not be better than the hospital whose doctors treat on its premises only 30 patients a day. What matters to patients is whether their health improves in the shortest possible time with the least possible inconvenience at the lowest possible charges.

This engagement with the healthcare system may be in an institution, like a hospital, or in the home setting, offered by a doctor with over a decade of intense specialisation or a technician with two years of vocational training – it doesn’t matter.

What matters is the outcome and it is not simply a matter of productivity.

Governments have a role to play not just in doling out incentives to spur productivity and innovation, but in fostering an eco-system where smart regulations drive genuine value creation, and reversing payment perversions that result in inefficiency and wastage.

The writer is CEO, Fortis Healthcare Singapore

C: WP’s performance during the Budget debate

In Political governance on 16/03/2012 at 9:15 am

Low Thia Khiang got it absolutely right when he said, “This is the first Budget after the 2011 election. It points to the direction of future governing and the focus of government policy from focusing on economy to social policy, from the economy’s role to raising the wages of lower-income Singaporeans. This is a major shift in the government’s thinking and mindset. The government is therefore making a formal statement after much reflection after the 2011 election.”

And it not only us netizens who agreed with him. The international financial media say the same thing (Example).

Sadly the rest of Team WP did not live up to Low’s standards.

Sylvia Lim gave the DMP, Finance Minister a chance to imply that the WP only wanted the government to throw money at healthcare, not to use the money wisely. She had urged the government to raise spending on healthcare saying, “Singapore’s total expenditure on healthcare as a % of GDP was far lower than international standards. More importantly, … public expenditure on healthcare is also far lower than elsewhere … expenditure on healthcare is about 1.6% of GDP; nearly 4 times lower than the 6.1% global average …”

His reply was that the focus should be on outcomes, and that by 2016, healthcare spending would go up to 2% of GDP and by 2030 around 3.5% of GDP. He spoilt things for the PAP by raising the straw man of GST at 20% if the WP’s suggestion of ^% was adopted. Even my dog has heard of reallocating funds.

Show Mao talked of the need to do more for the poor. The PAP missed a chance to tarnish the halo around him that his fan bozs and gals have created around him. If Denise Phua or Lily Neo had only stood up to say, “You have been away too long, Mao. Look at figures since 2001. More has been done, and more will be done”, he would have looked silly and out-of-touch. Fortunately for the WP, it was Vikram Nair who tried to rough up Mao, with his “hurt feelings” and Nigerian Scam joke. Mao got away unhurt and Vikram looked as though his brains had been damaged by drinking water from a tank where an FT’s corpse was founding floating.  

Then there was PritamS, who I had once half-joked that the WP should muzzle by taping his mouth. Allies of the PAPpies had tried to savage Show Mao for not naming the person whose tots he had put up on his FB site. As it was clear that he was not claiming authorship of the stuff, nothing happened but this incident should have gotten PritamS to attribute what he said in a parly speech. He didn’t and was taken to task by a minister. He compounded his initial minor failing by admitting he screwed up. He should have stuck to the line that as he had gotten permission to use the stuff, he didn’t do any wrong, and any way where was the harm? Footballers who do dumb things get fined by their clubs. WP should fine him.

As to the other three WP MPs, I can’t remember anything memorable they said. But at least GG didn’t gift the PAP any gaffes like the one he gifted them during the debate on ministerial salaries, when he said he didn’t know about the benchmark civil service grade that the WP had proposed ministerial salaries be pegged to.

Conclusion? OK but can do better especially Sylvia and Show Mao. And please WP, get PritamS a minder, a good one, or tape his mouth. He is the WP’s equivalent of the PAP’s Nairs (lawyers like PritamS) and Tin combined. The PAP can afford the Nairs and Tin, the WP can’t.

The WP should use parly debates to build up the confidence among us S’poreans that the WP can lead a coalition government after the next general election or the one after that. This they failed to do in the two show piece debates (ministerial salaries and Budget). But its early days yet.

Still the PAP shouldn’t get complacent. Tharman’s image as a technocrat is being spoilt by his soundbites on 20% GST if more has to spent, CPF annuity is assured and nominee gets all, and $1000 monthly salary can afford HDB flat. It’s not true that Tin Pei Ling is helping to craft his sound-bites, I’ve been assured. I’m checking if she is helping Shanmugan (“only about 50% of S’poreans pay tax”).

As for Mrs Chiam, I think a “D” is fair, don’t you? The Chiams are squandering the goodwill he has with S’poreans in their attempt to renew the SPP through Mrs Chiam. SIGH.

Citi cont’d

In Banks, Financial competency, GIC on 15/03/2012 at 11:40 am

Citigroup’s CEO Vikram Pandit said the bank still has capacity to return more capital to shareholders and will seek clearance for a “meaningful” payout after the Federal Reserve rejected an initial plan, the wires report. The Fed allowed f\JPMorgan Chase and Wells Fargo to increase their payouts.

Despite this failure to payout more to shareholders, Vikram S. Pandit could see a total of US$53 million in compensation for 2011, from his yearly pay combined with a multi-year retention package, Bloomberg News reports, citing filings and an analyst’s estimate. Could remind TOC and TRE readers or their usual writers of the transport and HDB ministers who “retired” after failing to anticipate the problems that increased FTs would cause in their portfolios and of “50-year flood” Yacoob who got moved to MICA after Orchard Rd was hit by two such floods in two months in 2010.

Related post:

A Gamble Too Far? Pinoys gamble on China

In Casinos, China on 15/03/2012 at 9:45 am

The Philippines is not just ahead of other new casino markets [like South Korea, Japan and Taiwan]; it also has several key benefits over the more established ones, according to Gustino De Marco, vice-president at the Hong Kong-based brokerage BTIG and a specialist in this area.

Firstly, it has a strong domestic demand and the type of games Filipinos like to play are the high risk-high reward games such as slot machines, which give better returns to the casino operator than card tables.

Another attraction is geography, with the Philippines only a few hours flight from China, Japan and South Korea, where most high-rolling Asian gamers come from.

And while it is near China, it is not under any kind of Chinese jurisdiction. So, unlike Macau, which in recent years has had to ramp up its gambling tax and impose certain visa restrictions on Chinese gamers, the Philippines is free to offer all the incentives it can.

But is it realistic for the Filipinos to expect the Chinese authorities* and patriotic Chinese to co-operate when the Filipino government is the most hawkish of all the ASEAN nations when it comes to territotial disputes with China? The Institute of Southeast Asian Studies (a S’pore government statutory board thhin-tank) says in its inaugral ASEAN Monitor dated February 2012: Despite the weakness of its armed forces, the Philippines has assumed the role as the most outspoken of four Southeast Asian claimants against China’s assertiveness in the South China Sea. President Benigno Aquino has taken the lead in trying to rally ASEAN behind a common policy on the South China Sea, mainly to present a united front in negotiations with Beijing over acode of conduct. Defying threats from official Chinese media, Manila has encouraged the US to increase its military presence in the Philippines and supply the country with additional resources to patrol its waters … Will the Philippinegovernment maintain its hard line over the South China Sea, or prove as susceptible to China’s entreaties as some of its predecessors?


*They could make travelling to the Philippines inconvenient.

Citi falls Fed test: one of only four that failed

In Banks, Financial competency, GIC on 14/03/2012 at 1:41 pm

Four US financial institutions, including Citigroup, have failed stress tests designed to show they could withstand a financial shock. The Federal Reserve said Citi, SunTrust, Ally Financial and MetLife failed to show they have enough capital to survive another serious downturn.

Citigroup is the third-largest US bank. The majority of the 19 tested passed.

All those tested are in a much stronger position than they were after the 2008 financial crisis, the Fed added.The Fed tested the banks’ ability to withstand a similar crisis that triggered a rise in unemployment to 13%, a 50% fall in share prices and a 21% drop in house prices. Their strength is assessed by the amount of “buffer” best-quality assets, known as Tier 1 capital, they would hold if such conditions occurred. The regulator said Citigroup had a Tier 1 capital ratio of 4.9%.

Reminder, GIC still has a substantial stake in Citi. SIGH.

Update at 6.15pm on 14 March 2012: Despite failing the test, Vikram S. Pandit, Citigroup’s chief executive, could see a total of US$53 million in compensation for 2011, from his yearly pay combined with a multi-year retention package, Bloomberg News reports, citing filings and an analyst’s estimate.

“Younger S’poreans should not be burdened with taxes” and “only about 50% of S’poreans pay taxes”

In Financial competency, Political governance, Property on 14/03/2012 at 9:13 am

Minister K Shanmugam has said that the Government does not want younger Singaporeans to be saddled with tax burdens, even as it ensures that the elderly are taken care of and no one is left behind.

When I read the above, I could only chuckle and then sigh. I had juz posted my very mixed tots about Mohammad Charlie Jasni who is earning $850 a month, buying a $99,200 HDB 2-room flat, noting that after the $40,000 grant the HDB loan is $59,220. On a 30-year mortgage at the HDB Concessionary Loan rate of 2.6%, the monthly repayment is $237. Mohammad is only able to pay $83 a month because the mortgage was reduced to slightly more than $20,000 because he and his wife have used up their CPF monies of $40,000. If they default, they have lost serious money.

About 15 years ago, in 1997 or 1998, I had an interesting conversation with some expat couples in their early 30s at my club . What surprised them most about S’pore was the financial commitements that their S’porean contemporaries had: 20 to 25 year loans to buy public housing apartments, and 10–year car loans. They said that back home (Canada, OZ or the UK), they would never have dared to make such long-term financial commitements. But it was par for the course here. And they would have not needed to, I added. They agreed. Well, now HDB mortgages are an “affordble” 30 years.

Of course, the PAP doesn’t want to burden the young with more taxes. The young can’t afford to pay higher taxes: they are juz managing a decent, comfortable life after meeting the interest and principal payments on their 25 to 30-year HDB mortgages. More will vote Opposition if taxes are increased. And I don’t mean the bluish near-clones of the men in white. They will vote for the people in red. Or they will riot.

The minister also said, “[W]e also have to send another message, which is that, only about 50 per cent of Singaporeans pay taxes”. This surely is wrong? If only 50% of S’poreans pay taxes, then why is the government giving a permanent rebate for the poor so that GST becomes a lot less regressive*?

We all (rich, poor and so-so) pay GST. That is why economists consider this tax to be the most efficient and effective way of taxing people. Tax is paid when one consumes. We all consume. 

(It also has the added advantage of taxing consumption, not savings or investments. In traditional economics savings and investments are good, consumption is bad. Bit like how the PAP thinks? Investing in a 30-year mortgage is good, but spending more on consumables is bad.)

What he means by “taxes” is “income tax”. The minister when he was in legal practice was one of the top litigation lawyers around. He was very, very good. Err I hope that now he is a minister he doesn’t join the likes of PritamS, Vikram Nair and Hri Kumar Nair. Their use of words reminds me of::

    “I don’t know what you mean by ‘glory,’ ” Alice said.
    Humpty Dumpty smiled contemptuously. “Of course you don’t—till I tell you. I meant ‘there’s a nice knock-down argument for you!’ ”
    “But ‘glory’ doesn’t mean ‘a nice knock-down argument’,” Alice objected.
    “When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”
    “The question is,” said Alice, “whether you can make words mean so many different things.”
    “The question is,” said Humpty Dumpty, “which is to be master      that’s all.”
    Alice was too much puzzled to say anything, so after a minute Humpty Dumpty began again. “They’ve a temper, some of them—particularly verbs, they’re the proudest—adjectives you can do anything with, but not verbs—however, I can manage the whole lot! Impenetrability! That’s what I say!”

(Lewis Carroll’s Through the Looking-Glass, and What Alice Found There )


*But TOC’s Uncle Leong has described the problem with the government’s “solution”, “A new GST voucher will be given to help particularly lower-income and elderly Singaporeans, comprising three components – cash, Medisave top-up and U-Save.

‘So, you pay for your GST increase in cash, but you get the bulk of it back not in cash, but as Medisave top-ups which you can only use for medical purposes, and U-Save which helps you to pay for what has historically been generally increasing utility bills.”

A wicked, mean tot. Could one of the reasons for putting the money into CPF accounts rather than pay cash be to lessen the cost to the government? The real value of the cash in the CPF accounts are steadily and steathily eroded by inflation. With the Medisave account paying 4%, and the ordinary account 2.5%, and inflation at juz below 5%, could the government be hoping that inflation reduces its headline cost by the time the money is withdrawn? Even if inflation returns to the 2% range, the real cost to the government is reduced. As I said, a wicked, mean tot that would never occur to a PAP supporter or a journalist in our constructive, nation-building local media.

DBS: HR costs of private healthcare sector to rise substantially

In S'pore Inc on 14/03/2012 at 9:12 am

Last week DBS Securities came out to say that costs in the private healthcare sector will go up as a result of the government’s plans to spend more on the public healthcare system. What FTs and foreign medical tourists have to pay more to get treated here? Can’t be right can it? This is not PAP policy which is FTs and foreigners first. Juz kidding.

Seriously this increased spending has implications for Parkway’s pending IPO. And for Raffles (see DBS report below) and the micro healthcare counters listed on SGX.


The Singapore health minister unveiled a healthcare roadmap in Parliament yesterday, focusing on three goals: 1) Singaporeans to receive health care when needed; 2) healthcare services will be of good quality and effective; and 3) such services will be affordable to Singaporeans.

To achieve the above objectives, the government will be increasing hospital beds and manpower. These are: a) addition of 3,700 hospital beds by 2020; b) addition of 20,000 healthcare workers (+50 per cent) by 2020 and; c) lease capacity from private healthcare operators, namely Parkway East Hospital and Raffles Hospital, to treat subsidised patients, to ease the tight capacity in the short term.

Raising healthcare workers remuneration by 20 per cent. A new salary framework will be introduced to retain manpower in the public sector. On average, healthcare workers’ total compensation will increase by about 20 per cent by 2014*, with the first adjustments by April 2012. The measures to lease beds/capacity from private hospital operators will be positive in terms of operational utilisation, and could create some initial euphoria in share prices of private healthcare operators.

However, the financial metrics of how this will be done are still being ironed out. For example, patient charges, level of subsidies to be provided by the government, and the level of take-up rates (if based on patients’ preference), etc.

Furthermore, we believe there is a limit to the number of beds each operator is able to lease to the public sector given that this could compromise its service level if the public partnership saps too much resources.

Fight for manpower issues a longer term challenge: With the increase in public sector remuneration, the bar by private operators to attract healthcare workers is likely to be raised. This comes at a time when capacity is increasing in the private sector. These are Parkway’s Mt Elizabeth Novena Hospital, Singapore Health Partners’ Connexion One (at Farrer Park), Adam Road Hospital by Fortis Healthcare, and Raffles Medical Specialist Medical Centre at Bideford Road and 30 per cent increase in GFA at its hospital.

Essentially, both public and private healthcare sector will need additional manpower resources. Staff cost accounts for about 49 per cent of revenue at Raffles Medical.

Maintain hold on Raffles Medical. Despite some near-term boost from the public partnership to lease beds, the details are yet to be finalised and the financial impact is uncertain. Over the medium term, the challenge lies in managing costs, namely manpower.

As Raffles Medical is trading at about 22.2 times FY12F price-to- earnings (P/E), above its mean of 21 times and 60 per cent premium to the overall market, we believe the valuations have already factored in the positive outlook. Our target price stays at $2.48, based on 24 times FY12F P/E, a +0.5 standard deviation above mean.

*Bet you SingHealth charges will go up. PAP caught in vicious circle. Improve healthcare but have to charge more, and lose votes; or don’t recover costs and make a profit and become like West.

Gd call, Judge Low Wee Pin

In Internet, Political governance on 13/03/2012 at 8:45 am

I think that District Judge Low Wee Pin got it absolutely right when he found Gary Yue Mun Yew  guilty of two offences involving the incitement of violence via the internet but rejected the prosecutions call for a prison sentence. He fined him $6,000 for uploading a video clip and another $2,500 for posting a doctored photograph. On each count, the sentence could be up to five years’ jail or a fine, or both.

During sentencing, District Judge Low Wee Ping made it clear that the charges against Yue were based on the acts of posting electronic documents that contained incitement to violence. This, the judge stressed, was very different from the act of inciting violence (my emphasis).

The judge also said that the YouTube video and Yue’s comment (details below) were “without doubt, an incitement to political assassination of persons on the grand-stand” on National Day. But he ruled that Yue had no intent to incite violence (again my emphasis), saying Yue was “immature” and “attention-seeking”.

What the prosecution and judgement show is that the internet is not “injun territory” or Commancheria* or a lawless cowboy town, where laws don’t apply and criminals can escape detection via anonymity. But at the same time, the judge shows that commiting crimes on the internet do not mean that the ordinary rules of justice are thrown out in order to “frighten the chickens by killing brutally a monkey”.

Three cheers for this judge. Lawyers, of the do-good kind like Siow Kum Hong and Super Yadav, if it’s not illegal, offer to buy him a cuppa if you run into him. Send the bill to me, if he accepts. I believe do-good lawyers don’t earn much.


Gary Yue Mun Yew posted a video clip depicting the assassination of former Egyptian President Anwar Sadat on the Facebook page of socio-political website Temasek Review at about 3pm on Aug 9, 2010.

Along with the video, Yue wrote the comment: “We should re-enact a live version of this on our own grand-stand during our national’s (sic) parade!!!!!”

… was also found guilty of posting a photograph on his Facebook profile in late July or early August 2010, which depicted Vietnamese General Nguyen Ngoc Loan executing a Vietcong prisoner.

The face of Singapore’s former Deputy Prime Minister and Home Affairs Minister Wong Kan Seng was superimposed on the image of the prisoner.

The People’s Action Party logo was also displayed on the prisoner’s chest.



*In the 18th and 19th centuries, homeland of the Comanches (“Lords of the South Plains”). The Comanches traded with the Spanish, and later the Mexican and Texan lands adjacent to Comancheria, while other bands raided these territories, stealing horses, mules, cattle and maize, rather than exchange buffalo meat and hides for these items like the “good” Comanches. These bands complimented one another and gave the Comanches the upper hand over the Spanish, Mexicans and Texans, who didn’t know how to cope with the subtleties of the ”savages”.

Wilmar: Beneficiary of China slow-down?

In China, Economy on 13/03/2012 at 6:47 am

One reason why Wilmar had such a bad set of results was because it’s Jing Long YU (China’s biigest cooking oil brand) could not raise prices because of administrative measures imposed by the government to control inflation. Pre-tax margins in this segment more than halved.

Now that Chinese inflation has fallen to a 20-month low in February, Wilmar should be able to raise prices for this brand?

Casinos: Good for our banks

In Banks, Casinos, Economy on 12/03/2012 at 4:48 am

No, not profits from lending to gamblers and loan sharks but from raising money for Sands.

Las Vegas Sands, controlled by Sheldon Anderson, hired DBS Bank, OCBC Bank and UOB to coordinate a S$4.6bn loan for Marina Bay Sands, Bloomberg News reports. The loan may be split into a S$4.1 billion term facility and a S$500 million revolving credit facility.

Behind the $83 a month HDB flat

In Financial competency, Political economy, Political governance, Property on 12/03/2012 at 4:37 am

(Or “Mixed thoughts about the poor having to take out a HDB mortgage” or “What the HELL? PAP misses the plot!”)

In, I suppose, an attempt to show that ministers were not talking rubbish about someone earning less than a $1000 being able to afford a HDB flat (thanks be to a government subsidy, and forced savings via the CPF system), the constructive, nation-building ST had an article on how Mohammad Charlie Jasni who is earning $850 a month is able to afford a two-room HDB flat.

The analytical, compassionate, risk-adverse part of me agreed

– With the view articulated by TOC’s Uncle Leong that it would be better if Mohammad was allowed to lease, and not have pay a mortgage ($44 versus $83 a month)

  — It’s cheaper.

  — There is a possibility of him defaulting and losing all that he and his his wife have put in ($40,000 in CPF savings), “the probability of job loss, pay cut, sickness or accident, may be relatively higher than others … the likelihood of him defaulting on his mortgage over the next 30 years may be high”.

  — He and his wife would have some savings for the couple’s old age. He is only able to pay only $83 a month because his and his wif’e’s CPF savings of $40,000 have been used up, reducing the amount owed to slightly more than $20,000.

– And with this comment on this TOC article thread, “I find it very CHILDISH for the government to glamorise a policy that enables a low income earner to own a HDB flat, and yet ignoring the fact that the same low income earner will face the bigger problems of making ends meet on the daily basic necessities like food and transport.

‘These low income earns may own a HDB flat but cannot survive paying the basic expenses in our daily life, and then end up dying of hunger… good policy meh? …”

On the other hand, the analytical, risk-taking side of me thinks that here is a couple who because of the CPF grant and forced savings have been given the chance to better themselves.

The couple can sell off the property after five years and make a good profit (at least $100,000) on the flat, even assuming a slightly weaker market. They can move to Johor, rent a place there, and he can commute. Alternatively in five years time, assuming he is allowed to rent the place out, he can use the rent money to rent a place in Johor, and commute. He could even go into business, while living in Johor.

The couple has options that leasing does not give them, albeit at greater risk. Many of the comments I read on this issue on the internet portray people like Mr Mohammad Charlie Jasni as passive and helpless. The one good thing the ST article shows is that this is not true. They are just as keen to better themselves as better-off, more fortunate S’poreans. In its Alice-in-wonderland way, the government is trying to help them out of a surreal place that is largely the creation of the government.

The issue is why is public housing so expensive: a two-room flat costs $99,200?, Note after $40,000 grant, the HDB loan is $59,220. On a 30-year mortgage at the HDB Concessionary Loan rate of 2.6%, the monthly repayment is $237. Mohammad is only able to pay $83 a month because the mortgage was reduced to slightly more than $20,000 because he and his wife have used up their CPF monies of $40,000. If they default …

But let’s celebrate Mr and Mrs Mohammad Charlie Jasni. They give the lie to the Hard Truth that only immigrants work harder and aspire to have a better life. They also give the lie to the casual assumption of many do-gooders that the poor are passive and helpless.

Indonesia: Perennial Bearish Issue

In Indonesia, Mining on 11/03/2012 at 5:03 am

As regular readers will know, I’m a bull on Indonesia. But one problem that occurs regularly there is the inability of the Indonesian government to refrain from changing or trying to change the rules of the game. Very unsettling.

We see it in the regular calls by the government to re-negotiate the commercial gas contracts that S’pore has with Indonesia*. We also see it in the plan mooted last year by the central bank to limit bank ownership to 49%. This would mean Temasek, all three local banks, and M’sian banks having to cut back their holdings. So far nothing concrete has emerged.

Now Indonesia will force foreign firms to sell down stakes in mines by the 10th year of production, with domestic ownership to be at least 51%, in a move likely to hurt existing miners and scare off potential investors. The new rule is the latest government attempt to extract greater domestic profit from the vast mineral wealth in the world’s top exporter of thermal coal and tin. Indonesia contains some of the world’s richest mineral deposits, such as the Freeport-run Grasberg, the world’s largest gold mine, and its fast-growing mining sector accounts for about 11% of GDP.

The requirement, stated in a regulation on the mining ministry’s website, comes as the government is renegotiating contracts with the leading foreign metals miners in the country, Freeport McMoRan Copper & Gold Inc and Newmont Corp.

To be fair, the rule isn’t a brand new outbreak of resource nationalism. It is ad hoc legislation to fill in holes in a 2009 mining law, which followed 2003 revisions to royalties and 2001 rules on distributing mining revenue. The 2009 law required foreign owners to start divesting after five years of production, but didn’t say by how much. A number has now been provided, but it’s still not clear which existing mines the new terms will affect, if any.


*S’pore’s new liquefied terminal will be able to handle sufficient imports of the fuel to cover all of the country’s power needs, even if piped gas supply contracts with Malaysia and Indonesia are not renewed, a senior civil servant said a few days ago. It depends on natural gas for around 80% of its power generation needs, with the bulk sourced from Indonesia and Malaysia under long-term contracts.

Berkshire: No Buffett premium

In Financial competency on 10/03/2012 at 9:58 am

Time to buy?

And did you know Dairy Queen (his ice cream maker is in S’pore? I didn’t.

A reason not to help SMEs

In Economy, Political economy on 09/03/2012 at 7:43 am

Well when PAP and WP MPs. SDP activits and Tan Jee Say are worried about the fate of SMEs,all saying shumthing must be done to help the SMEs, then something must be done to help them?

Maybe not: Where small firms are most common, as around Europe’s southern periphery, their prevalence is sign of uncompetitive markets and low productivity … examines the problem of the stunted European business

Ah, what about the German SMEs? Well the Germans are different. They stated two world wars in the 20th century, lost both of them but 67 years after failing to create a Third Reich is now the dominant European power; restructured their economy when Eurozone interest rates were too high for Germany (they cut real wages and welfare payments, and raised productivity, unlike the lazy, lying, thieving Greeks who only know to riot, lie and steal); and sell to China the machinery to make goods that China exports.

S’poreans are not Germans. For starters, the German government, like the Germans, doesn’t believe in FTs to solve Germany’s vanishing workforce problem: 20% over the coming decades. The Germans believe in robots and moving manufacturing to eastern Europe (their M’sias and Indonesias).

Also unlike our SMEs, the most succesful German SMEs are global leaders in their very specialised fields. Finally most of our SMEs would not fit the German definition of SMEs. Ours would be classified as micro enterprises

WP does do Original Thinking PAP

In Political governance on 09/03/2012 at 7:42 am

(Or “Trumpets pls for WP” or “WP way ahead of PAP and S’poreans”)

So the PAPpies are accusing WP MPs of plagarising. The implication is that WP don’t do original thinking. Well it is clear from the responses of the “victims” that the PAP are peeing on the wrong tree. Wicked, mean tot: are the two Nairs advising their fellow PAPpies to use this tactic? Seems the kind of thing lawyers love to do: go negative on obscure technicalities. It also seems similar in nature to the Nair’s recent antics; antics that backfired badly on the Nairs, and on the PM in one instance. So the PAPpies should take care.

Seriously, the WP had an original idea that was way ahead of public sentiment in its 2011 General Election Manifesto. Instead of public transport being provided by profit-oriented companies, all public transport including the MRT & public buses servicing major routes should be brought under a National Transport Corporation, a public body, to ensure a smooth integration of the overall national transport network and to avoid unnecessary duplication of services and overheads incurred by multiple operators.

In simple English, the WP Manifesto called for the nationalisation of the MRT and bus systems.

At the time, there was very little mainstream (to be expected) or new media (more surprising this) attention, and very little public interest on this issue. But things are different now.

With $1.1bn of tax-payers’ money going into the bus system (two-thirds or 67% of it, $733m, going into ComfortDelgro where the state has a shareholding that is “peanuts”*), there are many voices wondering why private shareholders should benefit from a public good? Example: Since housing and transport are both necessities of life, and public transport is the only choice of the lower-income group, it is not unjustifiable to commit resources to keep the cost of public transport low … government spending on public transport is a form of income redistribution …

The key concern in the S$1.1-billion package to purchase and operate buses is not that it subsidises public transport per se but whether public funds could benefit a small group of shareholders, to whom bus companies are ultimately accountable.

This is what the Government will need to account to taxpayers.

Even BT, part of the nation-building, constructive media had this to say yesterday, The public transport model has come under scrutiny ever since a $1.1 billion package was announced by the government to supplement the existing privately run bus fleet with 550 buses.

But the minister responsible for the splurge can only parrot his predecessors, Our current model leaves the operations of trains and buses to commercial entities as we believe the long term public interest is best served this way. The profit incentive drives the operators towards higher efficiency and productivity, which keeps costs as low as possible . . . Otherwise, if the system is inefficiently run, the public will ultimately pay for the higher operating costs, either through higher fares, or greater government subsidies.

The WP should now be asking why despite the “higher efficency and productivity” (“which keeps costs as low as possible”) of the private companies, bus commuters keep paying more and more while getting worse and worse service, so much so that the government has to subsidise the companies to improve bus service quality. It should also remind the government and the voters that it called for nationalisation last year.

I’m sure the WP will soon rebut the minister’s The profit incentive drives the operators towards higher efficiency and productivity, which keeps costs as low as possible. But why is the WP so modest about getting it “right”? 

Being modest and understated are to me, great traits, in people. I hate show-offs and boasters. But being modest is not for a political party that aspires to form the government some day. Worse, there is the danger that the PAPpies persuade voters that the WP doesn’t believe its own manifesto, so why should they (the voters) believe the WP? It pointed out earlier this year (rightly) that the WP’s benchmark for ministers’ salaries had changed from the poor (in said manifesto) to a civil service senior grade (Gerald Giam in parliament).

If this silence persists, one can only wonder if the WP has forgotten its manifesto call on the nationalisation of public transport (see somewhere here) or changed its mind on public transport nationalisation? And then one can wonder why the forgetfulness or change, when the facts and public mood seem to favour nationalisation?

*Using back-of-the envelope calculations and figures in annual reports, since it was listed SMRT (over a decade ago) has paid $562.79m in dividends to Temasek (which owns 74%), and ComfortDelgro has paid the S’pore Labour Foundation (a statutory board affiliated to the NTUC which has 12%) dividends of roughly $150.46m since 2003 (Comfort and Delgro merged in 2003, and SLF had a stake in Comfort). The amount that ended up with the government was $713.25m, with SMRT contributing 79%. But ComfortDelgro is the main beneficiary of the $1.1bn bus plan, given that, at present, SBS Transit (a listed co 75% owned by ComfortDelgro) provides most of the buses. ComfortDelgro is getting $733m or 67% of the $1.1bn package.

M’sia: Juz wondering? cont’d

In Malaysia on 08/03/2012 at 5:23 am

Ananda Krishnan is nearing a deal to sell his US$3 billion worth of power assets to a M’sian government company. It seems that it is paying top dollar.

So was his auction of his power assets all wayang?

(Related post:

Anyway, strange things are always happening in M’sia. Juz last month, RHB is engulfed in a series of yet-to-be-resolved deals, some of them not of its own making. Aabar Investment group of Abu Dahi reportedly wants to sell its 25 per cent stake in RHB, just six months after buying it. RHB said it does not mind, nor does it make much sense.

Azlan Zainol, Chairman of the RHB Banking Group, said: “(Right now,) the price range in a Malaysian bank could be between 1.8 to two times the book (value). That’s the kind of range right now. If Aabar were to sell, I believe they may not be able to get the price of 10.80 ringgit at which they bought.”

Note that stake was bought from a n Abu Dhabi bank at 2.25 timmes book value, way above the market price.

Roxy-Pacific: Insiders buying

In Property on 07/03/2012 at 5:38 am

I’ve kept an eye on Roxy-Pacific since at least last March. It trades at a huge discount to RNAV, presumably because of its massive debts. I’ve concerns that it may not be able to refinance its debts if we have a repeat of the 2008 crisis.

Well, the executive chairman and an executive director were buying recently according to this BT report on Monday: Executive chairman of the board and CEO Teo Hong Lim and executive director Koh Seng Geok acquired shares of residential property developer Roxy-Pacific Holdings in the second half of February with a combined 1.849 million shares purchased from Feb 20 to 29 at an average of 45.5 cents each. The acquisitions, which accounted for 21 per cent of the stock’s trading volume, were made after the stock rose by 17 per cent from 39 cents on Jan 20.

The purchases were also made after Roxy-Pacific Holdings announced on Feb 16 a 5 per cent drop in Q4 profit after tax to $11.40 million for the three months to Dec 31, 2011. Earnings for the full year, however, rose by 16 per cent to $49.65 million. Chairman Teo Hong Lim picked up 1.399 million shares from Feb 20 to 22 and a further 380,000 shares on Feb 29 at an average of 45.5 cents each, which increased his holdings (direct and deemed) to 366.512 million shares or 57.57 per cent. He previously acquired 2.5 million shares on Jan 12 via a married deal at 40 cents each and 1.528 million shares from May 9 to Aug 22, 2011, at an average of 46 cents each.

Executive director Koh Seng Geok, on the other hand, bought 70,000 shares on Feb 21 at 45 cents each, which boosted his direct holdings to 4.398 million shares or 0.69 per cent. He previously acquired 40,000 shares from September to October 2011 at an average of 39.3 cents each and 100,000 shares in February 2011 at an average of 44.5 cents each. The counter closed at 47.5 cents on Friday

Not quite correct, Tharman

In Financial competency, Financial planning, Political economy, Political governance on 06/03/2012 at 6:32 am

(Or “Wrong, Minister”) (Updated at 9.20 am to explain the “premium”)

“The bequest goes to your loved ones, not to other CPF members and not to the Government. You get all of your capital back either through your monthly payouts or in a bequest that you leave to your family and loved ones.”

Err you don’t. What about the “premium”* that one pays to ensure that one is covered for life? This is “lost” if one dies too early to benefit fully from the annuity. The “premium” amounts to 10% of the amount in the Retirement Account (at age 55) for the Basic Plan and 30% for the old Balanced Plan. Both are not “peanuts”.

BTW1, I was not one of those who criticised or raised an eyebrow at Tharman’s remark that one could earn only $1,000 a month and still buy a HDB flat.

BTW2, I know that Tin Pei Ling is not helping to create sound-bites for Tharman, juz as she isn’t helping Vikram Nair with his jokes, Hri Kumar Nair with his research and MoE with gathering data on FT government scholars. She is focusing on helping the uncles and aunties in her self-styled SMC. By all accounts, she is doing a good job.


*”Premium” is the amount that a CPF holder has to pay from his minimum sum in order to get life-long “assurance” of an annuity till death.I put the word “assurance” within quotation marks because technically if the CPF Plan that one is in goes bust, one’s annuity payments ceases. Taz the law.

“Subsidy” is NOT a four letter word

In Financial competency, Political economy, Political governance on 06/03/2012 at 5:33 am

Many bloggers are upset that the govmin is giving S$1.1bn to SMRT and ComfortDelgro to help improve bus services. Seems to them, “subsidy” is a dirty word. Hmm, didn’t they get the idea that subsidies are always bad from the PAP idea, particularly one LKY?

But maybe, the PAP has changed its mind that the word “subsidy” is a dirty word. Reminds me of what Keynes is supposed to have said In response to an accusation of inconsistency: Keynes is often reported to have said “When the facts change, I change my mind — what do you do, sir?”. More to the point, he is reputed to have said: “When circumstances change I change my mind. What do you do?”

Well the facts and circumstances have changed. The PAP’s share of the popular vote is only 60% and its perceived presedential candudate won by just 7000 votes or less than 1%.

I’m not complaining that the PAP is being pragmatic by addressing the hot issue of overcrowded public transport: I take the bus. I’m not one of those who don’t take the bus regularly, has one car per family member, doesn’t pay income tax, and bitches abt this subsidy.

BTW, I don’t own shares in either company, nor in SBS Transit. I never bot as I tot dividends might not be sustainable. Juz look at the share prices in recent years. The yield remains highish because share prices have collapsed i.e. dividend payments have fallen.

But now the 2011 dividend payments for ComfortDelgro and SBS Transist look sustainable.

Anyway, here’s an example of a subsidy. I own shares in HSBC which I’m glad took advantage of the European crisis to get a subsidy from the European Central Bank. Let the BBC’s Robert Preston tell the story,

“HSBC, widely perceived to be the strongest of the UK’s banks and one of the strongest in the world, borrowed €5.6bn from the ECB … The reason it may be controversial that British banks have borrowed so much from the ECB – a bit less than 4% of all the money on offer – is that the interest rate is so low, just 1%. So arguably eurozone taxpayers are subsidising UK financial institutions.

Indonesia: More private equity funds are a’coming

In Emerging markets, Indonesia, Private Equity on 05/03/2012 at 5:19 am

Also, buyers from Singapore completed the largest number of transactions as Indonesia witnessed a record year for M&A activity.The 12-month M&A activity for Indonesia ended 31 Jan, 2012, saw 78 transactions worth a total of US$9 billion being recorded, with Singapore-based companies completing nine transactions worth US$372 million, according to global risk management company Kroll and M&A intelligence service mergermarket.

The nine transactions completed by Singapore-based buyers were in a diverse range of industries, highlighting the investment potential in Indonesia. Two transactions were in the energy sector, the rest of the deals were in transportation, consumer food, real estate, construction, financial services, internet and e-commerce, and in other services.

Japan was the most prominent country in the South-east Asian nation’s M&A activity in terms of value and volume, with US$1.1 billion across six deals. The largest Japanese transaction of the year was Mitsui Sumitomo Insurance’s US$827 million, 50% stake acquisition in life insurance provider PT Asuransi Jiwa Sinarmas (Sinarmas Life Insurance), according to the report.

Deals by Asia-Pacific buyers accounted for 72% \of Indonesia’s M&A deal count while 28% of bidders were from outside Asia, with US bidders completing the most transactions,

 Indonesia is expected to see continued strong M&A activity, particularly in the technology, media and telecommunications, financial services, energy and mining & utilities sectors.

But there are problems as highlighted by a corporate governance spat: Indonesian tycoons versus Nat Rothschild.

“Investing in emerging markets is always challenging for investors. Indonesia in particular requires deep local insight into the market and potential target companies, as various reforms continue to raise both opportunities and challenges for potential bidders,” said Kroll.

“Many investors interested in Indonesia tend to seek help from local third-party advisers or partners to assist with administrative functions during a transaction. However these intermediaries may not necessarily have sufficient understanding of global anti-corruption legislation. Overlooking such legislation can lead to costly violations for investors in their home markets … investors also need to be aware of other operational pitfalls that may impact their business such as the state of local infrastructure and the integrity of business partners. These risks often vary according to sector.”

Strikes could also be a problem despite the consumer boom.

Its booming economy also masks its problems with politcal governance and corruption. This is what ISEAS* says about the country in its inaugral ASEAN Monitor dated February 2012


Indonesia is in a period defined simultaneously by stasis and stability. It has yet to move into the next phase of its democratic consolidation, and it is unlikely to do so in 2012.

In fact, several indicators suggest an overall deterioration in earlier democratic achievements. First, the country’s judiciary and police are — and most likely will remain — notoriouslyunpredictable in upholding the rule oflaw. Second, large sections of the bureaucracy are in disarray; they will continue to perform poorly for theforeseeable future. Third, Indonesia’s main political parties have fallen increasingly into internal turmoil over positions of influence and finances.

Those problems and frictions are boundto persist in several important parties in the coming months.

Externally, Indonesia is expected continue playing a fairly minor role despite being the dominant power inSoutheast Asia. This is largely because of the strong emphasis on purely domestic political issues. As the next generalelection and the presidential electionapproach in 2014, all of Indonesia’s political parties will become increasinglypreoccupied with preparations for the polls and the selection of candidates. It must be remembered that an anti-porn bill was introduced in 2008, just before the general election the following year.

The coming months will tell if there is to be a similar populist legislative measure to win conservative votes this time. Overall, it is unlikely that Indonesia’s status as a stable yet static democracy will change substantially during 2012.

Key points: The current consumer boom in Indonesia will continue to mask its problems with corruption. And though Indonesia is less likely to be adversely affected by a global economic slowdownthan other regional countries, will global risk aversion stem the investment inflows it has enjoyed in recent years? Read the rest of this entry »

Shouldn’t Vikram Nair tell us if ST’s Rachael Chang misreported him?

In Political governance, Wit on 05/03/2012 at 5:13 am

So we now know that Vikram Nair denies that he “considered investing in the elderly, the disabled, the poor and other needy Singaporeans as being akin to a Nigerian scam.”

But what did he say in the first place that gave me, for one, the impression that he “considered investing in the elderly, the disabled, the poor and other needy Singaporeans as being akin to a Nigerian scam”?

Didn’t Rachael Chang of ST report as follows, Likening it to a Nigerian scam e-mail where receipients are urged to transfer funds in return for a pay-off later, he said Mr Chen had promised something “even better, because you don’t have to put in any money at all, and you get more than money in return.”? And didn’t Today had this to say?

What could a reasonable man think he meant when the person read the ST’s words? A reasonable man could reasonably conclude that he was implying that “spending money on the vulnerable was like a scam” because [the poor] “don’t have to put in any money at all, and you get more than money in return”.

I certainly tot he was implying it. I further tot what kind of PAP MP is he? It is official government policy to help poor, and the PAP is the governing party. I tot maybe he was the PAP’s equivalent of the WP’s PritamS or GG, an unguided missle.

Well I now know he says he does not mean what I tot he implied because he has said so. (If this sentence makes no sense,  please let me know.Getting brain-dead using words like “reasonable”.)

He should have chosen his words more carefully to prevent reasonable people (like me) thinking that the PAP (and in particular its MPs) does not ‘do” compassion. He should learn from another Cambridge-trained lawyer, one LKY, that words have natural meanings outside the intentions of the user, something that LKY tot Dr Chee and the late JBJ (a so-so lawyer, not trained in Cambridge).

Which reminds me of this

     “I don’t know what you mean by ‘glory,’ ” Alice said.
    Humpty Dumpty smiled contemptuously. “Of course you don’t—till I tell you. I meant ‘there’s a nice knock-down argument for you!’ ”
    “But ‘glory’ doesn’t mean ‘a nice knock-down argument’,” Alice objected.
    “When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”
    “The question is,” said Alice, “whether you can make words mean so many different things.”
    “The question is,” said Humpty Dumpty, “which is to be master      that’s all.”
    Alice was too much puzzled to say anything, so after a minute Humpty Dumpty began again. “They’ve a temper, some of them—particularly verbs, they’re the proudest—adjectives you can do anything with, but not verbs—however, I can manage the whole lot! Impenetrability! That’s what I say!”

(Lewis Carroll’s Through the Looking-Glass, and What Alice Found There )

He should also leave jokes to comedians, or get a good script writer. BTW, I know Tin Pei Ling is not moonlighting as his script writer. And neither was she compiling the figures on the FTs that get government scholarships.

A wicked, mean tot. As there is another lawyer Nair (Hri) who has also gotten the PAP some bad publicity by insisting that PM has the unfettered discretion not to call a by-election irrespective of the wishes of the affected voters, maybe the PAP should send these Nairs for some elementary public communications training or make sure they clear their comments with MP Baey, the boss of an int’l PR firm’s local unit?. I mean the PAP doesn’t need another Devan Nair to spoil its “whiter than white”, “smarter than smart” image. One bad “Nair” is enough?

Global & ASEAN perspective on S’pore’s vanishing workforce

In Economy, Political economy on 04/03/2012 at 6:39 am
“Singapore labour force to start shrinking: DPM Teo” was the headline in Friday’s Today. The next decade will see the Singaporean workforce start shrinking, while more go into retirement, such that come 2030, there will be only six citizens starting their working lives for every 10 going into retirement. And beyond that, the Republic’s population will start to “decline sharply”. Article
The chart here shows that the following nations are all set to see declines of more than 10% in the expected change in working age population between 2010 and 2035. ; Switzerland, the Netherlands, Austria, Hungary, Italy, Portugal, Poland, South Korea, Russia, Japan and Germany. In the last two cases, the decline is set to be 20%. Despite the comments of one LKY, the Japanese are happy and prosperous, happily ignoring his advice on demographics.

Well I don’t see waz wrong being in the company of  Switzerland, the Netherlands, Austria, South Korea, Japan and Germany. S’pore’s decline is much less than 10%, and it has the company of HK, Thailand, Denmark, Finland and China.

But maybe the government is worried about Indonesia, Malaysia and the Philippines? Don’t want them to be more successful than S’pore?

Whatever it is, maybe it’s about a variation of the theme behind this poem by Bertold Brecht, a famous playwright and Marxist activist (he was even a Hollywood screenwriter in the golden years of Hollywood in the 1930s):

After the uprising of the 17th of June

The Secretary of the Writers Union

Had leaflets distributed …

Stating that the people

Had thrown away the confidence of the government

And could win it back only

By redoubled efforts. Would it not be easier

In that case for the government

To dissolve the people

And elect another?

How to analyse a bank

In Banks, Financial competency on 03/03/2012 at 3:21 pm

Here’s a good report analysing why JPMorgan Chase should be broken up

Dow at 13,000

In Financial competency on 03/03/2012 at 4:59 am

This chart shows how the Dow regained 13,000. It is just below that level now.

As to whether it will correct seriously, keep an eye on the Dow Transport . The theory is that the Dow cannot maintain a trend, if the Dow Trasport does the other way. Well transport stocks are affected by higher oil prices and you know the price of oil.


Managing people, the S’pore way cont’d

In Footie, Political economy on 02/03/2012 at 7:08 am

In January 2011, after the footie authorities disbanded the national team after a dismal showing in the 2010 Suzuki Cup, but kept the manager, and promised the start of a rejuvenation process, I wrote “Managing people, the S’pore way”.

Well under the same manager, but with different players, the Lions have lost all six games in the third round of the FIFA World Cup qualifiers.

So I republish what I wrote then. Let’s hope this time the footie authorities stop their Serbian tua kee and FT loving ways. Pigs would fly first methinks.


Managing people, the S’pore way

In the English, Italian, German and Spanish footie leagues, if a team does badly,  the manager gets the sack. The view is that the manager is responsible for managing the players to get them to perform at thier best.

In S’pore, the manager retains his job, the players get the sack, even if the manager has been around for almost a decade.

In Western democracies, the ruling party gets replaced if voters are unhappy.

In S’pore, the ruling party creates GRCs, then super-GRCs, all the time telling the voters they are daft and lazy. And, juz to make sure, imports voters. Reminds me of what Bertold Brecht, a famous playwright and Marxist activist wrote:

After the uprising of the 17th of June

The Secretary of the Writers Union

Had leaflets distributed …

Stating that the people

Had thrown away the confidence of the government

And could win it back only

By redoubled efforts. Would it not be easier

In that case for the government

To dissolve the people

And elect another?

He was writing about the East German government after its soldiers had shot some protesters.

At least here, the unhappy voters are not shot, juz ignored, and threatened with a military coup if there is a” freak election result”.

Uniquely S’porean, this method of managing people.

M’sia: Juz wondering?

In Malaysia on 02/03/2012 at 6:00 am

Wonder if Malaysian tycoon Ananda Krishnan is selling assets (juz put his satellite firm on the market after getting bids for his power plants) because of the expectation of an early general election that could further weaken the governing coalition, or which it could even lose? He benefited over the years from government policies.

In its inaugral ISEAS Monitor, this is what ISEAS* says about M’sia especially the probability of an election soon:

Opposition leader Anwar Ibrahim’s recent acquittal on sodomy charges has dominated the media, and will be asignificant factor in Malaysia’s forthcoming 13th general election.

Barring unforeseen developments,Prime Minister Najib Razak will dissolve parliament and call the election no later than June. Both the Barisan Nasional (BN) government and opposition Pakatan Rakyat (PR) will accelerate preparations for the much anticipated poll.

Although Najib’s administration is saddled with several thorny problems and the election does not have to be held before March 2013, he may feel the need to go early for two reasons.

First, Najib has to consolidate his position within his United Malays National Organisation before UMNO’s own elections are held in the second half of 2012.

The second reason is that a weakening global economy in 2012 can adversely affect largely export dependent Malaysia. With inflation already hurting ordinary Malaysians, a slowing domestic economy will cost votes for the BN. The budget deficit is estimated at 5.4% of GDP in 2011, limiting the government’s ability to provide further stimulus spending in 2012. The government’s hand will be further constrained by the next round of reduction and rationalisation of subsidies, expected soon.

Since 2009, millions of dollars have been spent on public relations efforts to burnish the image of BN and of Najib in particular. The government has awarded bonuses and salary increments to the 1.4 million-strong civil service,and more handouts can be expected in the coming months. In January 2012, Najib toured Perak, Selangor, Penang, Perlis and Perak, as well as the Federal Territory of Kuala Lumpur, to rally support. He is scheduled to visit Terengganu and Johor in February.

UMNO, through the mainstream media,especially the party-owned Utusan Malaysia, and its NGO proxies,spearheaded by PERKASA, can be expected to ratchet up race and religion themes. The mainstream media predictably will publish more reports that detail or generate conflicts within the PR component parties.

For their part, the opposition parties will use the alternative and social media to highlight the government’s corrupt and crony practices. It will promise clean and transparent governance, using the example of members of the Executive Council of the Democratic Action Partyled Penang state government declaring their assets. It will also offer to revise the lucrative terms granted to highway toll operators and independent power plant companies, and pledge to retain if not expand subsidies to ease the plight of Malaysians in anticipation of the economic slowdown.

Key points: What impact will freshly acquitted Anwar have on the elections,especially in view of the prosecution’sdecision to appeal? How are the election results likely to affect relations between Singapore and Malaysia?


*”The Institute of Southeast Asian Studies is a regional research centre dedicated to the study of socio-political, security and economic trends and developments in Southeast Asia and its wider geostrategic and economic environment”. It is also a statutory board whose funding comes from the S’pore government.

Oh what a tangled web we weave: MRT, ComfortDelgro and the Government

In Infrastructure on 02/03/2012 at 5:58 am

According to the Christian doctrine of the trinity, there is only one God but God is three persons: the Father, the Son ( Jesus Christ) and the Holy Spirit. But each person is God, whole and entire.

Well our public transport system is some sort of trinity: the government*, ComfortDelgro and SMRT. Except while they are legally separate entities, in practice there is a kind of blending. This makes the Christian doctrine of the trinity easy to understand by comparison.

I’ll use the flow of funds between the companies and the government to illustrate an example of S’pore’s unique trinity at work. Using back-of-the envelope calculations and figures in annual reports, since it was listed SMRT (over a decade ago) has paid S$562.79m in dividends to Temasek, and ComfortDelgro has paid the S’pore Labour Foundation (a statutory board affiliated to the NTUC) dividends of  S$150.46m*since 2003 (Comfort and Delgro merged in 2003, and SLF had a stake in Comfort). The amount that ended up with the government was S$713.25m, with SMRT contributing 79%. But ComfortDelgro is likely be the main beneficiary of the S$1.1bn bus plan**, given that, at present, SBS Transit (a listed co 75% owned by ComfortDelgro) provides most of the buses. Taz an example of how messed up things are.

The funds’ flows also show that the government is putting back all the dividends it received from these two companies and then adding 35% more. So it’s wrong to say that the SMRT and ComfortDelgro are getting free lunches. At most the government is subsidising their lunches by 35%.

The government should get credit for ploughing its share of the “loot” (as the proponents of nationalisation would put it and MPs Puthu, PAP, and PritamS, WP, might put it), but it doesn’t. Taz how messed up are.

(Incidentally, one could reasonably argue that the other shareholders — and the minority shareholders of SBS Transit, remember ComfortDelgro owns around 75% — are getting a free lunch while the government returns its share of the dividends. But let’s not get into that today.)

What a mess. Even the government implicitly accepts that the present “rojak” system of organising the public transport here is not something that it would have introduced, if it had been prescient:

— it is is now planning to publicly funding the bus fleets of Comfort Delgro and SMRT with S$1.1bn; and

— in 2009, the then transport minister, a private sector PAP “catch” (“retired’ after the 2011 general election when the WP almost won the GRC he was helming) that joined the government was trying to fix the system while not admitting that the system was broken even then. (Thank Alex Au’s write-up on this for reminding us what that minister said in 2009.)

So it is no surprise that the the WP’s call in its 2011 general election manifesto to nationalise the public transport system**** is getting a lot of support (the nationalisation, not the WP’s call) from netizens. There may be merit in a nationalised public transport system: instead of being run for shareholders who are only interested in profits, and dividends, the system is run for the benefit of commuters. One of these days, I may run through the arguments. But don’t hold your breath. I think the debate is sterile as it all depends on one’s assumptions and definitions.

Sorry, back to the “rojak” system:  in the short-term, there is a problem of overcrowded buses. And this problem needs fixing. Nationalising the system ain’t as easy as passing a law. Shareholders have to be compensated and this requires valuations to be made, and agreed upon, or adjudicated. And it ain’t as though the shareholders are FTs. As mentioned earlier:

— Temasek owns 54% of SMRT; and

— The S’pore Labour Foundation, a statutory board linked to the NTUC, holds 12% of Comfort Delgro. SLF is Delgro’s single largest shareholder.

(Incidentally these stakes especially Temasek’s controlling stake shows how absurd the system is. S’pore has public transport private monopolies that are partially owned and controlled by the government. And the government regulates the fares and the routes. And as mentioned earlier, the government’s share of the dividends are now ploughed back and added to, but not appreciated by the public.)

Meantime, who is to run the system, and fund the fleet expansion? Public has to wait while these issues are sorted out? It’s OK for those critics who don’t use public transport that often, especially those who have one car per family person. But most S’poreans are not that fortunate.

To me, the government spending on the buses is a pragmatic quick fix both for the public and itself. The commuting public (self included when forced to travel during peak periods, admittedly a rare occurrence) gets less annoyed with the government, while the government is seen as publicly responding positively on a matter of public unhappiness.

As to the concern that the system is being fixed to bring more FTs in, let’s reserve judgement on that. Too early to even speculate. To even speculate, shows the level of mistrust that some people have of this government. I’m not one of them.

So while longer term, nationalisisation may be the best way to run a public transport system, it ain’t a short-term fix. The short-term fix is what the government is doing, throw money at the problem.

Critics should focus on whether the fix is the most cost-effective means of solving an immediate problem, not focus on a possible long-term solution. They should be making a case (not juz asking) for ComfortDelgro and SMRT to make massive rights issues to fund bus fleet expansion. Or asking for detailed details on what taxpayers get in return? Or how to ensure that the other shareholders don’t get a free lunch because of the S$1.1bn package.

Plenty of things to do to keep the government on its toes.

BTW, the full quote in the title is:

Oh what a tangled web we weave,
When first we practise to deceive!


*I’ve simplified: there is a universe within the government — including the Land Transport Authority, the Ministry of Transport, the committee that fixes train and bus fares, the S’pore Labour Foundation, the Minister of Finance (owner of Temasek), the Singapore Civil Defence Force and the police force.

**Dodgy this calculation as I’ve used a dodgy, lazy assumption, but near enough for all but CFAers, or investment analysts, or myself when analysing an investment)

***The government has allocated S$1.1bn to the purchase of 800 new buses, 550 of which will be paid for by the government (that is, through public funds), with the remaining 250 paid for by the PTOs. The S$1.1bn is also to fund running costs over the next 10 years. More on the use of the money, and an assurance that the operators will not benefit because it is a subsidy for us commuters. [Last sentence is an update on @ March 2012 at 9.00am]

****Unless the WP has quietly ditched this too like its benchmarking of ministers’ pay to the poor. I am not being mean or nasty. In January 2012, Gerald Giam had to be reminded in a private conversation where I was present that nationalisation was in the party manifesto for the 2011 general election. GG seems to have difficulty remembering things. He had some problems in parliament during the ministers’ salaries debate.

HSBC: Which number to focus on?

In Accounting, Banks, Financial competency on 01/03/2012 at 1:55 am

 (Or “HSBC: Glass half empty or half full?” or “The difficulty of analysing a company esp a bank”)

HSBC Holdings, one of Europe’s biggest banks, said on Monday that its profit rose 27 percent last year in part because of greater demand for loans in the developing world.

(“Profit” here means profit attributable to shareholders)

But FT preferred to focus on the 6% fall in pre-tax underlying profits to US$17.7 bn.

But pre-tax profits actually rose 15% to US$21.9bn. But FT, rightly in my view, took out the US$13.9bn gain in the value of the bank’s own credit. This is Alice-in-wonderland accounting that banks have to use (some happily, some reluctantly). The weaker banks love it.

HSBC is currently the most profitable Western bank, with its nearest rival, JP Morgan having profits 15% lower.

HSBC Asia Pacific posted profits before tax of US$13.3 billion – 15% more year on year. The region accounted for 61% of the group’s total pre-tax profit.

As regards HSBC S’pore, it posted a pre-tax profit of US$595 million for FY2011, up 14% from a year ago.  A lot better than OCBC’s and UOB’s S’pore operations. I plan to blog on how well Citi’s, HSBC’sand StanChart’s S’pore operations compare to our three local banks, one of these days. BTW StanChart juz reported that its pre-tax profit from it’s S’pore operations has hit US$1bn, up 40%.