The PAP story, blemishes and all Source: ST, 09 Sept 2009 What is Men In White all about? How different is it from previous books on Singapore’s ruling political party? Let me clarify what the book is not. It is not a re-telling of Singapore’s transformation from Third World ghetto to First World city, a story which Minister Mentor Lee Kuan Yew so vividly documented in his memoirs. It is also not about the PAP Government and the art of policy-making. Men In White is the untold story of the rise, fall, capture, split and resurgence of one of the world’s most successful and longest ruling political parties, a story narrated for the first time through the voices of the victors and the vanquished as well as eyewitnesses to its unfolding history. It is untold because many of these voices had not been heard in earlier books on the PAP – the voices of former PAP stalwarts and grassroots activists and their adversaries. The story is untold because the voices of the Mandarin- and dialect-speaking, Malay-speaking and Tamil-speaking cast of characters often overlooked are also aired for the first time. The result is a story of the PAP, warts, blemishes and all. It is a story which details the ups and downs and twists and turns of the PAP and the pivotal moments in its history. It is a story which combines political theatre with human drama. It tells of friends who turned foes when they found themselves on different sides of the ideological divide and of ordinary people who rose to meet extraordinary challenges in extraordinary times. This book marks the culmination of a seven-year journey for our project team led by former SPH editor-in-chief Cheong Yip Seng and later by Straits Times editor Han Fook Kwang. It all started in May 2001 when then-Prime Minister and PAP secretary-general Goh Chok Tong broached the idea of a book to mark the 50th anniversary of PAP in 2004. Mr Goh and Mr Cheong agreed that it should not be a commemorative coffee-table book, and that it should be well-researched. More importantly, it should be non-partisan and not written for the PAP, but rather the authors’ version of the PAP story. When Mr Goh Chok Tong told then-Senior Minister Lee about the book, the latter said that it would make for compelling reading if it covered the views of all the players in the struggle – those for and against the PAP. Mr Lee told the team: ‘If you’re going to tell my side of the story, then you might as well not write the book. This has to be your book.’ He stressed that the authors – Sonny Yap, Richard Lim and Leong Weng Kam – should get the facts right but stand by what they have written. When the initial drafts were shown to him, he pointed out factual errors but did not question the narrative thread or request that any of the critical and contentious points surrounding him be taken out. This approach meant keeping an open mind, unfettered by any preconceived notions. Just let the story unravel – through the voices of about 300 people interviewed and of some 200 oral history interviewees recorded in the National Archives as well as the voices resurrected from unpublished memoirs and declassified documents. The challenge for the team lay in tracking down former political players lost in the fog of history. After locating them, the next great challenge was in cajoling and coaxing them to give their side of the story. Many were initially sceptical if not cynical. Some were downright hostile, assuming that the book would be just a propaganda exercise. Typical of their responses were: ‘Why should I cooperate with you to do a book on the party whose government locked me up for so many years? ‘Are you sure that whatever I tell you will be printed?’ Fortunately, most of the people contacted gave the writers the benefit of the doubt and agreed to be interviewed. Despite being on the losing side and spending years in detention, many former leftists betrayed little bitterness or rancour and extended full cooperation to the team. Some of them are now with us in the chamber: Fong Swee Suan, Dominic Puthucheary, Lim Chin Joo, Chen Say Jame and Low Por Tuck. Unfortunately, some had passed away since their interviews. What proved to be a treasure trove of precious insights were the 200-odd oral history interviews released by the National Archives of Singapore. They included the voices of Lee Kuan Yew and his wife Kwa Geok Choo, S. Rajaratnam, C.V. Devan Nair, E.W. Barker, Fong Sip Chee, Richard Corridon, Lord Selkirk, David Marshall, S. Woodhull, James Puthucheary, Ong Chang Sam, Soon Loh Boon and Chen Say Jame. Apart from listening to hundreds of hours of oral history interview tapes, the researchers pored over reams of documents, scanned reels of microfilm, ploughed through volumes of Chinese and Malay newspapers and sought the help of libraries and government agencies for the required information. The team was also fortunate in gaining access to confidential party documents such as PAP’s Analysis of the 1984 General Election; declassified diplomatic records from British National Archives; Mr Lee Kuan Yew’s correspondence in the 1950s before he became PM and unpublished papers and memoirs belonging to Francis Thomas, Maurice Baker, SR Nathan and others. Singaporeans might ask: Why should we know the PAP story? Since 1959, PAP has won 12 general elections making it one of the most successful and longest ruling elected parties in the world. The 55-year-old party has ruled Singapore for 50 years. So whether you are for or against PAP, knowing the history of the party would mean knowing the political development of Singapore. As former leftist leader Fong Swee Suan said, modern Singapore and PAP are inseparable. Their stories are intertwined. They say that history favours the victors but in Men In White the voices of the vanquished are also aired. Many of the leftists and communists who found themselves on the wrong side of history were idealistic young men and women, fired up by the Chinese revolution and the rise of socialism, to fight against the colonialists and champion the plight of the working class and the poor. Their support for PAP in the early years contributed to the victory of the party in the 1959 elections. In some way, belated as it may be, the book has accorded recognition to their roles and contributions in the political development of Singapore. Thanks to their inputs and insights, Men In White is a rounded and balanced account of the Singapore Story. In relating the fortunes of Singapore’s ruling political party, the book also highlights the values, convictions, ideals, instincts, beliefs and world views of the generation of politicians who laid the foundation for today’s Singapore. Whether as protagonists or antagonists, they were fighting for the future of Singapore. The reader will be struck by the idealism, integrity and self-sacrifice of the first generation of PAP and non-PAP leaders: Lee Kuan Yew charging little or no fees as lawyer for political activists and trade unionists; Goh Keng Swee bringing soap flakes on his overseas trips to do his own washing to save taxpayers’ money; ministers and legislative assemblymen refusing to accept bribes; Francis Thomas requesting the Ministry of Education to drop his expatriate allowance after he became a Singapore citizen; and leftists leading an austere life which compelled PAP leaders to do likewise to win the hearts and minds of the people. Indeed Men In White can be read as a tribute to the generation born before the war who suffered under British colonialism and Japanese occupation, endured unimaginable poverty and privations, underwent social and political upheaval, and yet were able to overcome the tears and the trauma to lay the foundation for a new nation. If not for the thrift, frugality, hard work and tremendous sacrifices of the leaders and the people, the present generation would not enjoy the privilege of being the beneficiaries of Singapore’s peace and prosperity today. We believe that the book will be new grist for the mill, a source of reference for future writers, researchers and scholars to pursue new lines of enquiry and expand on the themes and issues raised in the book. This huge project will not be in vain if the book helps to equip a new generation of readers to rethink the Singapore Story, overturn some longstanding assumptions, question some conventional wisdom and debunk some myths and taboos. For the project team, it has been an epic journey into a long forgotten and fractious past. Many of you present here have helped our team to bring the past to life again. We thank you for sharing your recollections of those turbulent days. Whether you were on the side of the PAP or against the PAP or were bystanders and witnesses to unfolding history, you are honoured guests today. Directly or indirectly, in one way or another, you have all helped to contribute to the political development and common good of Singapore and your voices deserve to be heard. Friends and foes under one roof Source: ST, 09 Sept 2009 IT WAS a historic moment with friends and foes gathered together under the same roof where they last met more than four decades ago – at the Old Parliament House. The occasion was the launch of a new book on the People’s Action Party (PAP), which brought together Minister Mentor Lee Kuan Yew and his former political rivals. Against the backdrop of the august chamber, Mr Lee rose to shake the hands of his one-time rivals: people like PAP founder turned Barisan Sosialis leader Fong Swee Suan, and Mr Dominic Puthucheary, a Malaysian lawyer who was PAP assistant organising secretary before he joined the mass defection that led to the formation of the Barisan Sosialis in 1961. Many of them were later detained or exiled by the PAP Government. Among the 10 or so former leftists present yesterday however, hardly any rancour was evident. Instead, there were smiles as one by one, they greeted Mr Lee who then requested a group photo. It was a kodak moment that former PAP leader and leftist unionist Chen Say Jame, 77, had been hoping for but missed as he stepped out for a toilet break. Still, he returned to the chamber in time to say in Mandarin: ‘Hello, do you remember me’ to MM Lee who replied: ‘Of course, I do. How are you?’ The poignancy of the bittersweet reunion was not lost on Mr Chen, who last saw Mr Lee in the House in 1961 – when the Legislative Assembly took a vote of confidence in the PAP Government. After some harrowing twists and turns, the PAP won eventually by a razor-thin margin of one vote. Both men went their separate ways as the former PAP assistant secretary-general was detained in 1963 under Operation Cold Store, during which more than 100 leftist leaders were arrested. When asked about the past, he said in Chinese: ‘No point thinking too much, just let it go.’ About 100 guests attended the launch, most of them former and current politicians. Apart from MM Lee, no current Cabinet minister was present. Mr Ong Pang Boon, PAP founder and Singapore’s first Home Affairs Minister, declined to speak to the press apart from saying that he was last in the chamber in 1988. He stepped down as PAP MP that year. Former Speaker of Parliament Tan Soo Khoon, who quit politics in 2006, also declined comment. Former PAP MP Augustine Tan, who stepped down in 1991, described the gathering as a unique event, saying: ‘Many historical figures are here, which is a once in a lifetime event. It is good as it can help bring some healing.’ Mr Teo Ser Luck, a 41-year-old serving PAP MP, added: ‘MM and the leftists opposed each other; there may be some bitterness still. But to see them bring closure today was really the best moment.’ It was history in the making even as history was unveiled through the book, Men In White: The Untold Story Of Singapore’s Ruling Political Party. The book, published by Singapore Press Holdings (SPH), chronicles the PAP’s rise, fall, split and resurgence in the past 55 years since the party was formed in 1954. It is written by three senior Straits Times journalists – Mr Sonny Yap, Mr Richard Lim and Mr Leong Weng Kam – who interviewed 300 people, went through 200 oral history interviews, and pored over confidential documents. It was not an easy process as some interviewees were downright hostile, assuming that the book was a PAP propaganda exercise, the authors noted. But they managed to persuade most of them to share their stories, resulting in a book which SPH chairman Tony Tan said was ‘a story of the PAP, warts, blemishes and all’. Dr Tan, who was Deputy Prime Minister until 2005, said in his speech: ‘Whether you are for or against the PAP, knowing the history of the party would mean knowing the political development of Singapore and understanding how Singapore has evolved to what it is today.’ Men In White, he pointed out, captures alternative voices such as those of leftists and communists – some of whom were key players in the founding of the PAP. Many were giving their views for the first time. ‘In some ways, belated as it may be, the book has accorded recognition to their roles and contributions in the political development of Singapore,’ he said. With their input, the book provides a more ’rounded and balanced’ account of Singapore’s history. He added that the book, which was seven years in the making, would not be in vain if it helped a new generation of readers to rethink the Singapore story. It will also help ‘overturn some longstanding assumptions, question some conventional wisdom and debunk some myths and taboos’, he said. To Mr Lim Chin Joo, however, Men In White marks ‘just the beginning’. The younger brother of the late Barisan Sosialis leader Lim Chin Siong believes more can be done. ‘I hope more can be written as there are still plenty of stories that remain untold,’ he told The Straits Times. ‘If they are told, it may change the picture of the Singapore that is known to us. We owe this much to the younger generation. They ought to know everything, the whole story.’ Mr Lim, who was actively involved in left-wing student and trade union movements agitating for independence from the British, was arrested in the 1960s and spent nine years in detention. He described it as a ‘wonderful feeling’ to be mingling with the other guests at yesterday’s reception. ‘After all this while, we can still be, and ought to be, friends. As far as I’m concerned, what we’ve done is not for personal interests but for the country.’ PAP founder-turned-Barisan leader Fong Swee Suan, who spent more than four years in detention under Operation Cold Store, was equally peaceable: ‘I’m happy to have seen old friends. Like Mr Lee Kuan Yew…half a century and we haven’t talked face-to-face. ‘Today, I asked him how he is.’ sueann@sph.com.sg Another bit of history Source: ST, 09 Sept 2009 MORE than one for the album, this was a picture for the history books. If not for the numerous photographs capturing the moment, many would have scarcely believed what took place yesterday in the Old Parliament House – in the same chamber where the People’s Action Party (PAP) fought its fiercest battles with its breakaway faction, the Barisan Sosialis, in the early 1960s. Minister Mentor Lee Kuan Yew, a PAP founder, exchanged smiles and warm handshakes with those who had been his rivals from the country’s early years. Among them were Mr Fong Swee Suan, Mr Dominic Puthucheary and Mr Lim Chin Joo, all of whom, despite their advancing age, looked in fine form. At the launch of Men In White, a book chronicling the PAP’s history, the conflicts and differences of half a century ago seemed all but forgotten. The old foes agreed to stand together to have their picture taken. It was perhaps a fitting way to launch a book documenting their history: by creating another bit of history. (From left: Madam Ho Puay Choo, Mr Teo Hock Guan, Mr Low Por Tuck, Mr Ong Chang Sam, Mr Fong Swee Suan, MM Lee, Dr Tony Tan, Mr Dominic Puthucheary and Mr Lim Chin Joo.) Whither Temasek’s industry nurturing role? Source: Straits Times, 08 Sept 2009 A COLLEAGUE remarked to me the other day that something had struck him as he read Temasek Holdings’ updated charter released last month: Nowhere in the 200-word document is there a mention of Singapore. There is talk of delivering long-term value for its stakeholders and being an active investor. There is talk of Temasek’s corporate social responsibility (CSR) agenda. The five areas where it wants to work with its portfolio companies – including values, human capital and strategic options – are listed. But there is nothing to identify Temasek as Singaporean. Indeed, it might have been the charter or mission statement of any private sector investment firm, my friend said. In the 2002 formulation of the charter, ‘Singapore’ appears four times. The opening alone mentioned the country twice: that Temasek ‘holds and manages the Singapore Government’s investments in companies, for the long-term benefit of Singapore’. It went on to say that Temasek would ‘help broaden and deepen Singapore’s economic base’ by nurturing the vibrant international businesses of its stable of companies. And at the end, the charter said that Temasek ‘may also, from time to time, invest in new businesses, in order to nurture new industry clusters in Singapore’. When news of the updated charter broke, a large part of the attention was focused on the first of these four points. Temasek said that its relationship with its sole shareholder, the Ministry of Finance, had normalised – meaning that the Government was now more like any large shareholder in any other corporation. Temasek now has other stakeholders besides the Government: institutional investors who have bought Temasek’s bonds, for example. The removal of the first reference to the Singapore Government, therefore, seems natural because it brings the charter closer to today’s truth. There is also a strategic advantage to weakening the Government link, as it could help the agency manage foreign perceptions when pursuing investment opportunities. But what of the other references to Singapore that were dropped? The first is the pledge to manage investments ‘for the long-term benefit of Singapore’. In 2002, there was much talk about this, partly because of speculation over what Temasek would or would not divest. Temasek said at the time that it had a list of ‘Group A’ businesses in which the Government would hold a majority or significant stake – including the seaports, airport, water, power and gas grids. Such assets are indeed critical infrastructure that Temasek should own on behalf of the Government. But there is also a significant grey area in which Temasek arguably also plays a ‘national service’ role. I’m referring to businesses or projects that do not make commercial sense in the short-run – especially to cash-strapped private-sector investors in the midst of a recession – but are nonetheless essential projects for the long-term. The $1 billion to 1.5billion liquefied natural gas (LNG) terminal on Jurong Island is an instance in point. It is critical because Singapore needs to diversify its gas supplies. But the financial crisis caused the project’s delay and the Energy Market Authority had to take over from the private sector backers of the project. Should Temasek make it its mission to own and manage projects like these? If Sands or Genting ever pulled out of building the integrated resorts, should Temasek take over, given their importance? Then there are the giant overseas projects, such as the Tianjin Eco-City. It is a commercial development for sure, but it also serves to showcase Singapore. Shouldn’t Temasek hold such investments, some might ask, instead of companies like Keppel who have private sector shareholders to answer to? The second reference to Singapore in the 2002 charter was building Singapore companies so as to deepen the country’s economic base. I take this to mean building companies with a global reputation for excellence. Ask any man on the street and the names that spring to mind are Singapore Airlines (SIA) and perhaps Keppel. These companies are where they are today because of many years of careful attention from the Government. In their early years, at least, they may not have made commercial sense to short-term investors. So the question some people are asking is this: If Temasek does not perform such roles, who will? Who will grow the next SIA or Keppel? Shouldn’t this special nurturing role be part of Temasek’s role? Finally, the 2002 charter committed the investment agency to invest in new businesses in order to nurture new industry clusters in Singapore. Whether in wafer fabrication or the life sciences, the birth of a new industry cluster here has always been a much more complex affair than simply enticing large multinationals to set up factories in Singapore. For new clusters to truly succeed, there needs to be an ‘eco-system’ of large and smaller supporting companies interacting with each other and the outside world. The Government cannot ‘buy’ this eco-system and set it up overnight, but it can have an important role in catalysing its growth. This can mean setting up assistance schemes for private-sector firms. But sometimes it can also mean owning companies that plug gaps in a sector’s value chain. Here is where Temasek can play a role. In fact, there have been many calls for the investment agency to earmark some of its resources for investment in smaller Singapore companies that need that extra boost to grow. The updated Temasek charter walks a fine line between the short-term and the long-term, as well as between its public and private sector objectives. The trouble is that when it comes to what Temasek can or should do for Singapore, the commercial-speak of pure dollars-and-cents or global best practice is not enough. Perhaps Temasek’s bond with Singapore comes so naturally to the organisation and its staff that it can remain unspoken. Let’s hope this is the case and not that Temasek really isn’t interested anymore in developing and deepening Singapore’s economic base. ignatius@sph.com.sg Inflation hits poorest 20% twice as hard Source: Straits Times, 25 Aug 2009 This group was affected most by food and housing prices in first six months By Joyce Teo SINGAPORE’s poorest 20 per cent were hit twice as hard by inflation than better off households during the first half of the year, new Government figures show. Largely because of rising food and housing prices, the low-income group experienced inflation at 1.6 per cent in the six months to June, compared to 0.7 per cent for the middle 60 per cent and 0.9 per cent for the top 20 per cent of households. But these price rises are well down on the levels seen just a year ago. Overall, the average household saw a 0.8 per cent inflation rate in the first half of the year, compared with the whopping 7.1 per cent in the same period last year, said the Department of Statistics yesterday. The steeper rise for the lower paid is largely down to their being disproportionately impacted by higher prices for basic commodities such as housing and food. July’s consumer price index (CPI) – the main measure of inflation – was down 0.5 per cent on the same month a year ago due to lower transport, housing and recreation costs. Comparing July 2009 with July 2008, housing costs dropped 1.3 per cent – largely down to cheaper electricity – while transport and communications costs fell by 3 per cent, mainly because of petrol price falls. With lower holiday travel costs, recreation too dipped by 0.9 per cent. Economists are expecting these mild year-on-year price falls to turn positive soon. ‘Although prices are still dropping year-on-year, the rates of decline are starting to slow,’ said Mr Song Seng Wun, an economist from CIMB-GK which is expecting mild deflation for the remainder of this year. After stripping out the ’seasonal’ effects, the CPI was up 0.3 per cent in July over June, after rising 0.2 per cent in June and 0.8 per cent in May. This was largely due to a 1.4 per cent hike in housing costs because of higher electricity tariffs, plus service and conservancy charges. Rebates were given in June, but not July. Also, food prices dipped 0.1 per cent in July over June, while transport and communications costs rose 0.7 per cent, according to CIMB-GK. Mr Alvin Liew, an economist from Standard Chartered Bank, Singapore, said the data suggested that there may be price pressure building up even as the year-on-year figures could still be negative for a few more months. ‘Price increases now look to be rising faster than expected,’ said UOB Economic Research economist Chow Penn Nee. ‘The CPI will probably register monthly increases throughout the year, with economic indicators gradually improving, and crude oil price and accommodation costs also rising in tandem.’ The Monetary Authority of Singapore (MAS) is predicting full-year inflation will come in at between minus 0.5 per cent and 0.5 per cent. Looking forward, it is the lower income groups who will be the ones most at risk from higher food prices, said CIMB-GK’s Mr Song. Current higher crude oil prices and potential food supply disruptions because of El Nino may jack up utility and food costs from the fourth quarter, he warned. joyceteo@sph.com.sg How HDB keeps it affordable ST Letter by Ignatius Lourdesamy, 31 Aug 2009 WE REFER to the letters, ‘High HDB prices: Squeezed even harder’ and ‘Two shortcomings: Public housing too correlated to private market, and HDB has not regulated supply’ (both Aug 22); and ‘Flat hunting: Why was cash over valuation ever introduced?’ (Aug 20). # Cash over valuation: Resale flat prices are the result of negotiations between willing buyers and sellers. Cash over valuation (COV) arises when buyers are willing to pay more than the market value of the flat, as determined by professional valuers. However, for financial prudence, HDB and the banks will provide a loan of only up to 90 per cent of the market valuation. Therefore, if a buyer is willing to pay more than the valuation, the excess will need to be paid in cash, thus the term cash over valuation. COV is not determined nor imposed by the Government. However, we can expect a flat seller to ask for as high a price as possible. On their part, buyers should first arm themselves with relevant information before negotiating with flat sellers. To help buyers and sellers make informed decisions, HDB provides information on recently transacted resale prices and COV on its website. In July this year, 31 per cent of resale transactions were conducted with no COV. The median COV level was $7,000. Given the wide range of flats in the resale market, flat buyers should buy a flat they can afford. # Supply of new flats: Besides resale flats, new flats form another part of the housing supply to meet demand. In response to rising demand, HDB has steadily increased the supply of new flats. From just 2,400 new flats in 2006, in the first half of this year alone, 4,300 new flats were offered. Given the continuing strong demand, HDB will increase the new flat supply under the Build-To-Order (BTO) system this year to at least 8,000 units. # Affordability: HDB aims to make public housing affordable for eligible first-time households. These households are generously subsidised for their purchase of new or resale flats. On average, first-time households used 21 per cent and 25 per cent of their monthly income to service their loans on new and resale HDB flats respectively in non-mature estates. These figures are well below the international affordability benchmark of 30 per cent. The monthly household income ceiling of $8,000 allows a vast majority of Singaporean households – about 80 per cent – to qualify for subsidised housing. Households whose income exceeds this ceiling can buy resale flats, where there is a wide range of supply to suit varying budgets. For example, if a household with a monthly income of $10,000 buys a five-room resale flat in a non-mature estate at the average price of $364,000, it would need only about 15 per cent of its income to service its loan. Ignatius Lourdesamy Deputy Director (Marketing & Projects) Housing & Development Board Two shortcomings ‘Public housing too correlated to private market, and HDB has not regulated supply in line with immigration and demographic trends.’ MR TREVOR TAN: ‘Thursday’s report, ‘Cash upfront for HDB resale flats doubles in a month’, suggests that the recent ramp-up in HDB prices during the most severe recession since Independence signals that the system requires a thorough review. Two failings come to mind – that public housing has become too correlated to the private market, and that HDB has not regulated its supply in line with immigration and demographic trends. As housing is the largest financial obligation for most Singaporeans, I fear this ramp-up in prices will create a batch of young couples who are too highly leveraged and tied to their mortgages. Come the next economic downturn, we will have a demographic group unable to deal with the loss of their jobs, as they will be laden with other obligations such as their children and ageing parents.’ How HDB keeps it affordable ST Letter by Chew Kim Cheer, 22 Aug 2009 THE HDB resale price index has surged relentlessly since 2007. Since the first quarter of 2007, the index has increased 35.3 per cent and is now at a record high, even though the economy is still recovering from downturn. This is an anomaly the Government should examine. The recent Punggol Residences launch by HDB, which drew seven applications for every unit on sale, is another case to show the Government needs to increase supply to prevent housing prices escalating further. While there is the additional housing grant to help the lower-income group, I urge the Government not to overlook the sandwich class group – those who are not eligible for subsidised public housing, yet cannot afford private housing. The escalation of mass market property prices has made the dream of owning a private property even more distant. I urge the Government to reconsider the income ceiling of $8,000 as a criterion to be eligible for the Central Provident Fund (CPF) housing grant, which has been in place since 1994. Since 1994, the CPF Ordinary Account contribution rate has decreased from 30 per cent to 23 per cent and the HDB resale housing index has almost doubled from 75.5 to 140.2. The supply of executive condominiums has also come to a halt. For those who aspire to condo living, Design, Build and Sell Scheme units launched by private developers range in prices from $550,000 to $720,000. Given the income ceiling of $8,000, couples who buy such flats must take huge loans which may not be proportionate to their income. I urge the Government to look into the following to help the sandwich class: # Raise the income ceiling of $8,000 to take into account the almost doubling of housing prices, as well as general inflation; # Increase the supply of executive condominiums; # Increase the supply of new public housing so unsuccessful applicants for new HDB flats will not put additional upward pressure on the resale housing market; and # Implement anti-speculation measures to cool down private property prices. Given that the HDB resale index may be a lagging indicator since resale transactions entered by buyer and seller may take up to three months before HDB approves the resale application, the housing price index is even higher than it appears. It is already common in the resale market for sellers to ask cash over valuation ranging from $15,000 to $30,000. The Government is encouraging families to procreate, but imagine what future generations will have to fork out to own a place that they call home. Chew Kim Cheer Kass: Market Has Likely Topped By Doug Kass RealMoney Silver Contributor 8/26/2009 8:41 AM EDT URL: http://www.thestreet.com/p/rmoney/marketcommentary/10590587.html This blog post originally appeared on RealMoney Silver on Aug. 26 at 8:11 a.m. EDT. Back in early March, there were signs of a second derivative U.S. economic recovery, the PMI in China had recorded two consecutive months of advances, domestic retail sales had stabilized, housing affordability was hitting multi-decade highs (with the cost of home ownership vs. renting returning back to 2000 levels), valuations were stretched to the downside and sentiment was negative to the extreme. These factors were ignored, however, and the S&P 500 sank to below 700. To most investors, back in early March, the fear of being out was eclipsed by the fear of being in. Despite the developing less worse factors listed above, bulls were scarce to nonexistent in the face of persistent erosion in equity and credit prices. It was at this point in time, on RealMoney Silver, in an appearance on CNBC’s “Fast Money,” on “Mad Money” and in multiple appearances on “The Kudlow Report,” I confidently forecast the likelihood that a generational low had been reached. I went on to audaciously predict that the S&P would rise to 1,050, a gain of nearly 400 points from the S&P low of 666 during the first week of March, by late summer/early fall. I even sketched a precision-like SPDRs (SPY) expectation chart that would reach approximately the 105 level (a 1,050 S&P equivalent) within about six months. Yesterday the SPDRs peaked at 104.20, within spitting range of my intrepid March forecast of 105, and the S&P nearly touched 1040 in Tuesday’s early morning trading. Arguably, today investors face the polar opposite of conditions that existed only a few months ago, with economic optimism, improving valuations and positive sentiment. To most investors, today the fear of being in has now been eclipsed by the fear of being out as the animal spirits are in full force. Bears are now scarce to nonexistent in the face of steady price gains in equity and credit prices. As if the movie is now being shown in reverse, the bull is persistent, stock corrections are remarkably shallow, cash reserves at mutual funds have been depleted, and hedge funds hold their highest net long positions in many moons. Stated simply, in the current bull market in complacency, optimism and a boisterous enthusiasm reigns. As I have written on these pages, the investment debate has morphed in a dramatic fashion from concerns as to whether U.S. economy was entering The Great Depression II to whether the current domestic recovery will be self-sustaining. The primary question to be asked is, Will the earnings cycle dominate the investment landscape and cause investors to overlook the chronic and secular challenges facing the world’s economies, particularly as the public sector stimulus is eventually withdrawn and paid for and the economic consequences of the massive public sector intervention manifest themselves in the form of higher interest rates and marginal tax rates? Most now have accepted the notion that due to the replenishment of historically low inventories, extraordinary fiscal/monetary stimulation and the productivity gains from draconian corporate cost-cutting, the earnings cycle is so strong that it will trump the consequences of policy. More accurately, most believe that they can get out of the market before the full effects of policy are felt. I am less confident as a decade of hocus-pocus borrowing and lending and 35-to-1 leverage at almost every level in both private and public sectors cannot likely be relieved in the great debt unwind over the course of only12 months. It is important to emphasize that when I made my variant March call, I expected many of the conditions that now exist — namely, a resurgence of economic and investment optimism during the summer to be followed by a multiyear period of weak investment returns. Specifically, I expected a mini production boom and an asset allocation away from bonds and into stocks to be embraced and heralded by investors, who would only be disappointed again in the fall as it becomes clear that a self-sustaining economic recovery is unlikely to develop. My view remains that it is different this time. Again (now for emphasis), the typical self-sustaining economic recovery of the past will not be repeated in the immediate future for 10 important reasons that will weigh on the economy and markets like the governor that controlled the speed of the Good Humor truck I drove when I was in my teens during the summer: Cost cuts are a corporate lifeline and so is fiscal stimulus, but both have a defined and limited life. Cost cuts (exacerbated by wage deflation) pose an enduring threat to the consumer, which is still the most significant contributor to domestic growth. The consumer entered the current downcycle exposed and levered to the hilt, and net worths have been damaged and will need to be repaired through higher savings and lower consumption. The credit aftershock will continue to haunt the economy. The effect of the Fed’s monetarist experiment and its impact on investing and spending still remain uncertain. While the housing market has stabilized, its recovery will be muted, and there are few growth drivers to replace the important role taken by the real estate markets in the prior upturn. Commercial real estate has only begun to enter a cyclical downturn. While the public works component of public policy is a stimulant, the impact might be more muted than is generally recognized. There may be less than meets the eye as most of the current fiscal policy initiatives represent transfer payments that have a negative multiplier and create work disincentives. Municipalities have historically provided economic stability — no more. Federal, state and local taxes will be rising as the deficit must eventually be funded, and high-tax health and energy bills also loom. Just as I looked over the valley in March 2009 toward the positive effects of massive monetary/fiscal stimulation within the framework of a downside overshoot in valuations and remarkably negative sentiment, I now suggest another contrarian view is appropriate as I look over the visible green shoots of recovery toward a hostile assault of nonconventional factors that few business/credit cycles and even fewer investors have ever witnessed. Yesterday, the OMB/CBO provided an exclamation point to the secular challenges that the domestic economy faces in forecasting an accumulated deficit of $9 trillion over the next decade (up $2 trillion from the previous forecast just two months ago), and public debt as a percentage of GDP is projected at an alarming 68% by 2019 (as compared to 54% today and only 33% in 2001). Thus far, the drop in the U.S. dollar (influenced, in part, by the mushrooming deficit) has been viewed favorably by the markets, but we must now be alert to a downside probe that becomes a threatening market factor. In other words, what has been viewed positively could shortly become negatively viewed. A double-dip outcome in 2010 represents my baseline expectation. When the stimulus provided by the public sector is finally abandoned, it seems unlikely to be replaced by meaningful strength or participation by any specific component of the private sector, and the burgeoning deficit (described above) will ultimately require a reversal of policy, leading to higher interest rates, rising marginal tax rates and a lower U.S. dollar. My forecast assumes that the market’s focus will shortly shift from the productivity gains that have been yielding better-than-expected bottom-line results toward these chronic and secular worries. Even more important, my forecast of a 2010 market peak reflects that the aforementioned nontraditional influences (and the untoward policy ramifications) will, at the very least, yield a broad set of uncertain economic outcomes that (in consequence and in probability) tilt away from a self-sustaining economic scenario sometime in the following 12 months. Stocks bottom during times of fear. With the benefit of hindsight, the March 2009 lows represented a dramatic overshoot to the downside. Markets top during times of enthusiasm. I believe that the markets are now overshooting to the upside and that the U.S. stock market has likely peaked for the year. Doug Kass writes daily for RealMoney Silver, a premium bundle service from TheStreet.com. For a free trial to RealMoney Silver and exclusive access to Mr. Kass’s daily trading diary, please click here. At the time of publication, Kass and/or his funds were short SPY, although holdings can change at any time. Recognition for the way IMH handles its patients Source: Straits Times, 26 Aug 2009 SEVERELY mentally disturbed patients at the Institute of Mental Health (IMH) now spend far less time strapped to their beds or in straitjackets. They also spend less time – 21 days, down from the previous 27 – in the hospital’s eight-month-old high-dependency psychiatric care unit before being moved to the general wards. The IMH’s approach in handling acutely disturbed patients bagged it the Most Outstanding Project prize in the Customer Service Project category of the recent Asian Hospital Management Awards held in Ho Chi Minh City, Vietnam. The 10 beds in the $400,000 high-dependency unit are laid out in two rooms and monitored round the clock. At any one time, six to seven beds are taken, and the nurse-to-patient ratio is one-to-one, or, at most, one-to-two. IMH declined to say what the previous nurse-to-patient ratio was. The patients there have ailments like those in the general wards – such as schizophrenia, anxiety and bipolar disorders – but are in a more serious condition and are less stable. Most cannot be cured, but early and aggressive treatment gives them a chance to resume life in the community, say psychiatrists. Dr Habeebul Rahman, an associate consultant in general psychiatry at IMH, said the move to step up intensive care for this group of patients – which brings standards in line with those in Britain, Canada and Australia more than 10 years ago – has made a difference. He explained that IMH’s approach is three-pronged: # Biological, through the prescribing of higher doses of medication; # Psychological, through care associated with the medications provided; and # Social, through counselling. Mr Aziz Abdul Hamed, a nurse clinician at the high-dependency unit, said of the patients there: ‘Like you and I, these patients just need someone to hear them out most of the time. We do that and try to allay their fears and anxiety.’ Still, every nurse there – though trained to handle these patients – carries a handheld device to raise the alarm in case a patient turns violent. Closed-circuit TV cameras also monitor what is going on. Dr Habeebul stressed that while some patients lash out when they hallucinate or become paranoid, not all severely disturbed patients are aggressive. ‘Most of them tend to be depressed and suicidal and need intensive monitoring,’ he said. He said IMH was looking into introducing ’step-down care’, in which patients and their family members or caregivers are educated on the importance of following through with the medication after their discharge. This can speed up recovery rate and cut the length of hospitalisation for these patients. There are no figures for bipolar or anxiety disorders here, but an estimated 20,000 people suffer from schizophrenia here, 10 per cent of whom need institutional care. “Pledge ourselves as one united people” Written by Ng E-Jay, for the Online Citizen 06 Aug 2009 Original TOC link What does it mean to be “one united people”? Does it mean forging a national identity that can be shared by all Singaporeans regardless of race, language or creed? Does it mean accepting and respecting all our differences, whether in terms of political affiliation or sexual orientation? I can certainly agree with this. Or does it mean adopting an unquestioning attitude towards Government policies and social issues, and agreeing to make personal sacrifices whilst the PAP reaps the benefits, in the name of “staying together, moving ahead” (PAP’s 2006 GE slogan)? Does being united mean having to welcome large numbers of foreigners and accept them as part of the community, even if there are social consequences? Does it mean agreeing to allow our heritage and our sense of belonging to be watered down in order to achieve some higher national goal that the Government tells us is right? This year, Prime Minister Lee Hsien Loong has called on Singaporeans to stay united on at least four occasions. Touting the concept of “Singapore United” at the 50th anniversary celebration of the Singapore Manual and Mercantile Workers’ Union (SMMWU) on 28 March, PM Lee called on Singaporeans to stay united and focus their energies on finding practical solutions to the economic crisis. In the past, this has meant accepting cuts in CPF contribution, lower wages and longer working hours, while the Government continues to fatten its coffers through indirect taxation like GST and our ministers continue to pay themselves multi-million dollar salaries. At the same event, PM Lee also urged Singaporeans not to react emotionally during the downturn by lashing out at foreign workers and immigrants (Straits Times, “Singapore United the way to go”, 29 March 2009). This is an ironic way of passing the buck to Singaporeans, as it is the Government’s overly liberal pro-foreigner and pro-immigration policies that created the problems to begin with. In his May Day rally speech, PM Lee again called on Singaporeans to stay united under stress, and he acknowledged that two potential divides that we have to overcome are the divides between Singaporeans and non-Singaporeans, and between different races and religions in Singapore (Transcript of PM Lee’s May Day Rally Speech by Prime Minister’s Office, 01 May 2009). He admitted that in a downturn, the Government is concerned that non-Chinese workers will be more affected because larger proportions of them have lower skills. After 50 years of nation building and paying themselves astronomical world-class salaries, the Government still has not found an effective solution to this conundrum. Speaking ahead of Racial Harmony day on 21 July, PM Lee mentioned the threat of terrorism for the umpteenth time and told Singaporeans to stay united and resist that threat. I agree that the threat of terrorism is real and eternal vigilance is necessary, but by repeating it ad nauseum, the Government has slowly turned the issue into a bogeyman used to scare Singaporeans into focusing their minds on external threats rather than on the failings of the Government. By repeatedly mentioning terrorism In connection with racial and religious harmony, the Government has also indirectly reinforced unfortunate stereotypes that the Government itself tells Singaporeans to be mindful of. And finally, at the opening of the Sengkang Sports and Recreation Centre on 26 July, PM Lee again urged the nation to stay united against any challenge the country may face (Channel News Asia, “PM Lee calls on nation to stay united to meet all challenges”, 26 July 2009). His reason for regurgitating this tired refrain escapes me. Is PM Lee somehow afraid that the government is slowly losing its grip on this illusive unity that it keeps talking about? When we “pledge ourselves as one united people”, we are reaffirming our common identity as Singaporeans, that our similarities are more important than our differences, that we are proud to be collectively identified as Singaporeans regardless of our ethnic, cultural or religious backgrounds, that we resolve to work together to tackle the nation’s challenges and make Singapore a better place for all citizens. But this unity, this sense of purpose and the sense of having a shared national destiny can only be realized if we feel Singapore is truly our home, and not merely a stepping stone for all and sundry to use before venturing to greener pastures. This unity and togetherness can only come about if the Government places Singaporeans first and refrains from treating us as mere economic digits in a rat race that they themselves have created. PM Lee likes to parade his unique brand of unity, but his Government is not creating the economic and socio-political climate necessary for that unity to flourish. Until their policies change, all this talk about unity will be like echoes in the wind. Level the playing field for locals and foreigners in employment Source: The Online Citizen Recommended Reads: Singapore: A Model of Judgment for the United States? by Harvard Business Publishing. Leong Sze Hian was invited by BlogTV to pen an article for them. We publish it below. Before we talk about whether Singaporeans deserve to have more privileges than PRs and foreigners, perhaps we could first ask whether there may be any areas whereby foreigners or PRs have “more privileges” than Singaporeans? Employers which employ foreigners, do not have to contribute CPF.  So, the employer saves up to 14.5 per cent of the salary. Employ a female on the S-Pass or work permit, you don’t have to worry about the four months maternity leave if you employ a Singaporean lady.  As I understand it, the conditions of the S-Pass and work permit forbids them from becoming pregnant. If you employ a Singaporean male, he has up to 40 days of reservist liability in a year.  In contrast, employing a foreign or PR male, eliminates this problem. Since those on say work permits are stuck with the same employer for up to three years, the employer may not have a turnover problem – Singaporean employees can resign anytime. So, is the playing field level in employment, for Singaporeans, vis-à-vis foreigners? In this regard, I think Singaporeans may not even be asking for “more privileges”, but just a more level playing field. Moreover, since foreigners do not have to make their own employee’s CPF contribution of up to 20 per cent, their disposable income may be more than a Singaporean worker. This may be one of the reasons why the wages of lower-income, lower-skilled jobs may have been declining over the years. For example, cleaners that used to earn about $800 a month a few years ago, now only earn about $650. As Singaporeans typically have families to feed, mortgages to service, relative to foreigners or PRs who may generally be here alone, Singaporeans may find it more difficult to accept lower paying jobs, for the simple fact that it may not be enough for their basic needs relative to foreigners and PRs. The manpower regulations require employers to insure all foreign workers for at least $5,000 of medical insurance cover. However, there is no such requirement for Singaporean workers. So, in some companies, we have the abnormality of foreign workers being insured, whereas Singaporeans are not. This is another example of “less privileges” rather than “more privileges”. PR siblings (below age 35) qualify to buy resale HDB flats.  However, Singaporean PR siblings (below age 35) do not.  Why is it that in this aspect, even PRs may have “more privileges” than Singaporeans? I think what may really irk Singaporeans, may not be so much about how much more or less privileges there are, but rather how many Singaporeans these “privileges” policies may be affecting. In order to answer this question, we need for example, the break-down of the unemployment statistics into Singaporeans and PRs, instead of lumping them together as residents; HDB flats purchased by PRs relative to citizens, etc. PRs who have no jobs may be able to more easily return to their home country, sell their HDB flats, etc, but Singaporeans generally have no choice but to find work and stay in Singapore. We may also need to be more discerning in examining the statistics when we ask for more privileges, as sometimes, when say PRs and foreigners have to pay more for medical fees relative to Singaporeans, it may be Singaporean employers, Singaporean households, who may be bearing the brunt of the fees increase, as they are the ones paying for their foreign/PR employees, domestic maids, non-Singaporean spouses and relatives. For example, when fees increase for foreigners and PRs, but remain the same for Singaporeans, it may not be “more privileges”. Instead, it may be a greater financial burden for some Singaporeans, unless increase in fees for foreigners and PRs, means lower fees for Singaporeans. An alumnus of Harvard University, Leong Sze Hian has authored 4 books, been quoted over 1000 times in the media , host of a radio show on money matters and a daily newspaper column, has been a Wharton Fellow and invited to speak more than 100 times in more than 20 countries on 5 continents. He has served as Honorary Consul of Jamaica, Chairman of the Institute of Administrative Management, and founding advisor to the Financial Planning Associations of Indonesia and Brunei. The Greenback Effect Source: New York Times, 18 Aug 2009 By WARREN E. BUFFETT, Omaha IN nature, every action has consequences, a phenomenon called the butterfly effect. These consequences, moreover, are not necessarily proportional. For example, doubling the carbon dioxide we belch into the atmosphere may far more than double the subsequent problems for society. Realizing this, the world properly worries about greenhouse emissions. The butterfly effect reaches into the financial world as well. Here, the United States is spewing a potentially damaging substance into our economy — greenback emissions. To be sure, we’ve been doing this for a reason I resoundingly applaud. Last fall, our financial system stood on the brink of a collapse that threatened a depression. The crisis required our government to display wisdom, courage and decisiveness. Fortunately, the Federal Reserve and key economic officials in both the Bush and Obama administrations responded more than ably to the need. They made mistakes, of course. How could it have been otherwise when supposedly indestructible pillars of our economic structure were tumbling all around them? A meltdown, though, was avoided, with a gusher of federal money playing an essential role in the rescue. The United States economy is now out of the emergency room and appears to be on a slow path to recovery. But enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects. For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself. To understand this threat, we need to look at where we stand historically. If we leave aside the war-impacted years of 1942 to 1946, the largest annual deficit the United States has incurred since 1920 was 6 percent of gross domestic product. This fiscal year, though, the deficit will rise to about 13 percent of G.D.P., more than twice the non-wartime record. In dollars, that equates to a staggering $1.8 trillion. Fiscally, we are in uncharted territory. Because of this gigantic deficit, our country’s “net debt” (that is, the amount held publicly) is mushrooming. During this fiscal year, it will increase more than one percentage point per month, climbing to about 56 percent of G.D.P. from 41 percent. Admittedly, other countries, like Japan and Italy, have far higher ratios and no one can know the precise level of net debt to G.D.P. at which the United States will lose its reputation for financial integrity. But a few more years like this one and we will find out. An increase in federal debt can be financed in three ways: borrowing from foreigners, borrowing from our own citizens or, through a roundabout process, printing money. Let’s look at the prospects for each individually — and in combination. The current account deficit — dollars that we force-feed to the rest of the world and that must then be invested — will be $400 billion or so this year. Assume, in a relatively benign scenario, that all of this is directed by the recipients — China leads the list — to purchases of United States debt. Never mind that this all-Treasuries allocation is no sure thing: some countries may decide that purchasing American stocks, real estate or entire companies makes more sense than soaking up dollar-denominated bonds. Rumblings to that effect have recently increased. Then take the second element of the scenario — borrowing from our own citizens. Assume that Americans save $500 billion, far above what they’ve saved recently but perhaps consistent with the changing national mood. Finally, assume that these citizens opt to put all their savings into United States Treasuries (partly through intermediaries like banks). Even with these heroic assumptions, the Treasury will be obliged to find another $900 billion to finance the remainder of the $1.8 trillion of debt it is issuing. Washington’s printing presses will need to work overtime. Slowing them down will require extraordinary political will. With government expenditures now running 185 percent of receipts, truly major changes in both taxes and outlays will be required. A revived economy can’t come close to bridging that sort of gap. Legislators will correctly perceive that either raising taxes or cutting expenditures will threaten their re-election. To avoid this fate, they can opt for high rates of inflation, which never require a recorded vote and cannot be attributed to a specific action that any elected official takes. In fact, John Maynard Keynes long ago laid out a road map for political survival amid an economic disaster of just this sort: “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens…. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” I want to emphasize that there is nothing evil or destructive in an increase in debt that is proportional to an increase in income or assets. As the resources of individuals, corporations and countries grow, each can handle more debt. The United States remains by far the most prosperous country on earth, and its debt-carrying capacity will grow in the future just as it has in the past. But it was a wise man who said, “All I want to know is where I’m going to die so I’ll never go there.” We don’t want our country to evolve into the banana-republic economy described by Keynes. Our immediate problem is to get our country back on its feet and flourishing — “whatever it takes” still makes sense. Once recovery is gained, however, Congress must end the rise in the debt-to-G.D.P. ratio and keep our growth in obligations in line with our growth in resources. Unchecked carbon emissions will likely cause icebergs to melt. Unchecked greenback emissions will certainly cause the purchasing power of currency to melt. The dollar’s destiny lies with Congress. Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company. Why the Singapore Democratic Party deserves our support Written by Ng E-Jay 30 July 2009 The first SDP event I attended was the gathering at Hong Lim Park on 01 May 2007 welcoming Dr Chee Soon Juan and Ms Chee Siok Chin after they had completed a 2-day, 120km walk to mark Labour Day and to highlight the plight of Singaporean workers. Looking at the exhausted but determined faces of Dr Chee and Ms Chee, and hearing the short but edifying address Dr Chee made left me with the impression that perhaps, unlike the terrible vibes that the party constantly receives from the mainstream media, the SDP was a party of substance, that perhaps it was a party with a message worth listening to. I was not wrong. Over time, as I got to know the party, its members, its ideas and its political philosophy better, I found myself agreeing more and more with its vision and its values. The SDP is an opposition party that has been on the receiving end of a concerted torrent of negative Government propaganda, fueled by a compliant mainstream media that would stoop as low as need be to vilify, demonize, and ridicule the party. I constantly wondered why after having had their names dragged through the mud so many times, SDP’s leaders soldier on with their cause, never angry nor feeling victimized by the situation, but ever determined to get their message across to Singaporeans. I took a look at SDP’s performance at the previous two General Elections. It was not pretty, to say the least. The SDP only managed to obtain 20.36% of the valid votes cast in the constituencies they were contesting in during the 2001 General Elections. For the 2006 General Elections, they obtained an overall 23.23% of the valid votes cast. I wondered why, after having been trashed at the polls and after having been laughed at not only by PAP supporters, but even by supporters of other opposition parties, the SDP soldiers on, believing in what they are doing, trusting that they would be vindicated one day. After some time, I found the answer. It is about unyielding leadership, having conviction in their values and what they believe in, and having the stoic determination to press on with the good fight, out of an unbounded love for Singapore and for Singaporeans. That is why the Singapore Democratic Party deserves our support. That is why I am a supporter. Many critics have speculated that the SDP is not interested in participating in elections because it is not wooing the electorate over with bread-and-butter issues, and because its participation in civil disobedience and its focus on democracy and human rights issues have alienated it from voters. This is despite the fact that the SDP has stated categorically on its website that it remains committed to participating in elections and winning the hearts and minds of Singaporeans. With the mainstream media deliberately censoring news and comments from the SDP, it is no wonder that many people remain unaware of the activities the party is organizing and engaging in, and its stand on various issues. The truth is, the SDP has always paid close attention to bread-and-butter issues like jobs for Singaporeans, our CPF, and the cost of living, and suggested workable alternatives to our disastrous Government policies. But the SDP has also correctly recognized that to campaign effectively for bread-and-butter issues, we need democracy in Singapore, without which we would be merely going around in circles and championing those issues only on terms dictated by the PAP. Without transparency and without a means of making the Government accountable to the people, we would only be able to obtain token concessions from time to time, but we would never be able to compel the Government to act in the people’s interest. The SDP is displaying true leadership and moral courage by committing to participate in elections even though they know the PAP and the mainstream media will resort to all ways and means of fixing them and tarnishing their image in the eyes of voters. I feel that the SDP is correct in remaining committed to elections, because elections are a good opportunity for the party to make its presence felt and a good chance for the party to build awareness and cultivate the ground. The SDP must also show that it cannot, and will not be intimidated by the underhand, undemocratic tactics employed by the PAP. Consistent participation in elections is also a way of showing the electorate that despite insurmountable odds, it is fit and ready to lead, that it is willing to do so not because it is easy, but because it is right. But beyond elections, I believe that the SDP also wants to build an enduring legacy for itself, a legacy of championing the principles of democracy, of social justice, of human rights, of transparency and accountability of a Government to its people. I believe that the goal of the SDP is not just to do well in the next 1, 2, 3 or even 5 elections, but to be at the forefront of the wave of democratic change that must inevitably hit Singapore’s shores one day, no matter how long it takes. The SDP is not afraid of being dissolved by the PAP because it knows that what binds its members, supporters and friends together is not the party vehicle, but its values, its shared beliefs, its convictions, and its commitment to championing a more free and just society. The PAP can and will most likely use more and more sophisticated methods to marginalize the SDP, to alienated them from voters, and to discourage others from working with them and collaborating with them to build a better Singapore. But I also believe that eventually, the truth must prevail, because the causes championed by the SDP are just and right. There is little doubt in my mind that if the SDP continues the good work it is doing, it will leave behind an enduring legacy of being part of the democratization of Singapore, and that its work, its activities, its articles and writings will also form an enduring record for future generations of Singaporeans to reflect on. Bloggers, activists, friends and supporters of SDP should also try their best to be part of this legacy by openly supporting the party and penning their thoughts, feelings and ideas on the party and its role in the democratization of Singapore. Grossly inadequate protection for credit card users Written by Ng E-Jay 29 July 2009 If consumers have their credit cards stolen or used fraudulently, they may be liable for all transactions made even though they may have done nothing wrong. This is yet another sorry example of how the Government proudly sells the image of Singapore as a world-class financial hub, yet fails to offer consumers even the most basic protection against theft and fraud. Credit card holder Tan Shock Ling found this out the hard way when she was saddled with a $17,100 bill after having had her credit cards stolen. The banks insist that she must pay up and the Government sides with the banks. (See here and here.) Banks in Singapore claim that this policy is stated in the fine print on the contract consumers have signed, and will at most review cases individually. Only Maybank and American Express (Amex) have limited liabilities for lost and stolen cards, capped at $500 for Maybank and $100 for Amex. However, this is subject to the clause that the credit card holder must have “acted in good faith and exercised due diligence”. How exactly the banks determine that and whether there is any fairness or transparency in the process is anybody’s guess. Compare the situation in Singapore to that in the United States, where the US Truth in Lending Act (also known as the Consumer Credit Protection Act) has special provisions which limit cardholders’ liability to $50 for fraudulent charges. (See here and here.) But far from being ashamed at the gross lack of protection for credit card holders in Singapore, the authorities here have the temerity to literally ask consumers to scram if they don’t agree with the terms and conditions. Singapore Retailers Association executive director Lau Chuen Wei was quoted by the Straits Times as advising consumers to “vote with their feet and walk away if they disagree with the terms and conditions of the issuing bank.” Consumers Association of Singapore (CASE) president Yeo Guat Kwang agreed with this, saying: “Consumers can choose to take cards from banks that offer them terms they are satisfied with.” (ST, “Credit card stolen? Mind the pitfalls”, 28 July 2009.) This is an absurd proposition, given that consumers here have very limited choices as every bank offers similar terms and conditions. Apart from Maybank and American Express, all other banks in Singapore offer little or no protection to consumers against credit card fraud. It is even sadder to know that CASE prides itself on being the protector of consumer rights in Singapore. Obviously they are not walking their talk. Banks in Singapore are allowed to get away with this because the Government has chosen to ignore the rights of consumers in favour of Big Business. The Government can do so because it has disallowed the existence of independent lobby groups that can campaign for consumer rights, and there is no one to hold the Government accountable to consumers. Why Consumers Need Greater Protection Against Credit Card Fraud Even if consumers take the effort to inform credit card companies promptly of lost or stolen cards, there may be a lag between the time the consumer realized what had happened and the time the report was made, due to factors beyond the control of the consumer. It is ridiculous to penalize the consumer for fraudulent transactions made in this period. Secondly, fraudulent transactions can be made on credit cards even if there was no physical theft or loss of the cards. A customer service officer can easily copy down the credit card details when the consumer isn’t paying attention and use it to purchase merchandise online. The consumer may not even realize that the card had been fraudulently used until the monthly statement is printed. Similarly, if the consumer uses his card for online shopping, and the credit card details are subsequently stolen by computer hackers and fraudulent transactions are made, it may be a long while before the consumer finds out about it. In these cases, will consumers in Singapore still be liable for all transactions made on the cards? Consumers in Singapore clearly need much greater protection against credit card fraud. Current laws are skewed too much in favour of the banks to the point of being illogical and absurd. Credit card holders in Singapore pay an annual fee to the banks. Banks are supposed to use this annual fee as a form of insurance premium paid to cover fraudulent losses that are not the consumer’s fault. Instead, the banks here push the buck back to consumers and leave them vulnerable and deprived of their basic rights. All this is done with the consent and collusion of the Government. And the Government dares to call us a financial hub and a democracy. Is Singapore really in a better position to survive economically? Written by Ng E-Jay 28 July 2009 The Straits Times Forum (online) letter penned by Mr Tay Xiong Sheng on why Singapore is in a better position to survive economically compared to Malaysia makes for an interesting, but lop-sided read. In his letter published online on 28 July, Mr Tay argues that Singapore’s sovereignty was born out of principles and confidence, having refused to compromise on racial equality. Yes, that is the Singapore Story told by MM Lee’s memoirs, by the mainstream media, and regurgitated by forum writers like Mr Tay. Seldom mentioned however is the political power struggles initiated by the young and power-hungry Lee Kuan Yew against his Malaysian counterparts, and his strategy of using foreign influence, namely the British, to establish his political career, rid himself of his opponents, and extend his political footing across the causeway much to the chagrin of the Malaysian establishment including the Tunku. But that is history. Moving on, Mr Tay attributes Singapore’s economic success and its success at achieving racial and religious harmony to the Government practice of institutionalising what works and never wavering on the principles of equality that created Singapore. Few of us doubt that Singapore is an economic miracle. Few should also doubt that this miracle has come at a price, in the form of a huge and still-widening gap between rich and poor, in the form of a disenfranchised working and lower middle class. The Government has not pursued enlightened policies that seek to distribute the spoils of capitalism more evenly. Instead, it has pursued policies that have allowed Big Business to become dependent on an abundant supply of cheap foreign labour, and it has allowed monopolies in the form of Government-linked Corporations (GLCs) to flourish. Many working class citizens have fallen through the cracks due to the lack of a comprehensive social safety net and the Government’s overly liberal pro-foreigner policies. Mr Tay praises Singapore for having survived insurmountable odds, for being able to compel even China to model its cities after Singapore. He was responding to an earlier Forum letter penned by Mr K. Kalidas, entitled “Revisiting merger“. Perhaps before waxing lyrical over the Singapore Story, Mr Tay should have paid a little more attention to the points raised by K. Kalidas, who argued essentially that the road ahead may not be as sweet as the road just past. The rapid rise of China and India, coupled with the waning power of the United States and the European Union which account for a very significant portion of our export market, will have grave implications for Singapore, as K. Kalidas correctly pointed out. Has our Government positioned the nation to deal with these staggering challenges ahead? Unfortunately, I feel the answer is no. Our Government is pursuing policies that focus on ramping up GDP through population expansion rather than organic growth in productivity. Clearly, this is not sustainable in the long run, even if such a strategy creates enormous wealth for the powers-that-be and their surrogates in the short run. Secondly, the Government has not done enough to temper the volatile swings in our economy as we are still overly dependent on the US and G7 nations as export markets and we lack a strong domestic consumption sector. Our economy also remains insufficiently diversified despite the restructuring that has taken place since the crash of the dot-com bubble in 2000. If, as K. Kalidas has suggested, that the very economic fundamentals that required Singapore to join Malaysia may revisit us 30 to 40 years down the road for us to consider seriously the option of re-merger, it would be because the present Government is only keen on rapid short-term gain and has lost the will or the desire to govern in the interest of the people. Mr Tay’s letter would then be tragically ironic, after having heaped loads of praise on the Government’s “principled” approach. Ignoring the spirit of the law: Woman fined $30 for eating sweet on MRT to relieve motion sickness Written by Ng E-Jay 22 July 2009 A lady commuter was recently fined $30 for eating a sweet during an MRT train ride to relieve motion sickness (see embedded video below). Eating and drinking in the MRT carries a maximum fine of $500. However in this case, common sense has been completely thrown out of the window in what is apparently a silly over-reaction by the authorities. This is typically what happens in the civil service, Government departments, statutory boards, and Government-linked Corporations and service providers when unthinking subordinates blindly enforce regulations without regard to common sense due to intense pressure from their superiors to keep up appearances. This shameful episode was recently captured on video by Felicia Low, Multimedia Reporter at Straits Times Razor TV. She was accompanied by SMRT Enforcement Officer and Yishuan Station Master Roger Foo who spotted commuter Zaina eating a sweet while aboard an MRT train. Zaina explained that she ate sweets because she sometimes felt thirsty or giddy aboard the MRT train. She clearly knew that eating and drinking was not allowed in the MRT and she was obviously trying to be as discreet as possible. The sweet was only used to relieve her motion sickness. Enforcement Officer Roger Foo responded by saying: “But if everyone is going to tell us that they have to take sweets because they are thirsty or feel giddy, and if everyone were to start doing that, then where are we going to put a line on that?” I will tell Roger Foo this: We draw a line based on basic common sense and human decency. Obviously, the risk of polluting the MRT train by eating sweets is completely non-existent as long as the commuter throws the sweet wrappers away properly in rubbish bins. There is absolutely no reason why commuters should be forbidden from eating sweets to relieve motion sickness. Have we lost all sense of compassion in a bid to follow the letter of the law, never mind the spirit of the law? The reporter ended her video presentation on the note: “Nothing escapes the eyes of the law, including a sweet.” But clearly, common sense has. How it all began, and what is wrong with the Singapore system The crackdown by SMRT officers on commuters who eat and drink aboard trains is due to the recent spate of videos posted on STOMP showing youngsters blatantly flouting the rules by eating burgers and drinking soft drinks in the MRT. SMRT’s management must have become alarmed at the rules being openly disobeyed and videos of people eating and drinking aboard the MRT being circulated on the internet. They must have also come under intense pressure by LTA to act swiftly and make a grand show of it. Cherry picking on the weak and easily bullied is a technique often used by the PAP to frighten Singaporeans into submission. The trouble with this process is that very often, the spirit of the law is lost in the ruthless crackdown and innocent parties like Zaina become scapegoats in the classic game of “kill some chickens in order to scare all the monkeys”. The irony of this whole episode is that the majority of Singaporeans understand and accept why eating and drinking aboard the MRT should be disallowed. But clearly, there is always room to be flexible and to allow for basic common sense and human decency to prevail. Making such a ridiculous spectacle of punishing a commuter just because she had to eat a sweet to relieve motion sickness can only serve to antagonize other commuters, even those who are used to obeying the rules. The problem with our Government and with the civil service in general is that when orders are passed down from the top, officers often suspend their own common sense and their sense of right and wrong in an attempt at giving their superiors the impression that the instructions are being rigorously followed. They forget why the law is passed and why rules are made to begin with. They ignore the spirit of the law. That is the cancer that is infecting the Singapore system — people not exercising their own minds and using their own judgment and initiative, but merely following orders blindly and behaving in a ludicrous fashion in order to suck up to their bosses. STOP THE WAYANG, just return us our CPF! Written by Ng E-Jay 22 July 2009 More twist and turns have appeared in the CPF Life scheme, an annuity scheme to be administered by the CPF Board that promises to give lifelong payouts to CPF members. On Monday in Parliament, Manpower Minister Gan Kim Yong found himself clumsily trying to reassure Singaporeans that monthly payouts from the CPF Life scheme will continue as long as the CPF member is alive, despite a provision allowing the CPF Board to stop payments in the event that the Lifelong Income Fund becomes insolvent. Madam Halimah, chairman of the Government Parliamentary Committee for Manpower, had earlier noted that she found this clause “quite disturbing“. Mdm Halimah has a curious sense of humour and a vocabulary to match. This clause is not merely disturbing. It is monstrous because it allows the Government to completely shirk its responsibility and accountability to Singaporeans in the event that the Lifelong Income Fund becomes insolvent due to its mismanagement and incompetence. To Mdm Halimah’s credit, she did note that while similar clauses exist for commercial insurance companies, “the relationship between the CPF Board and the CPF members, however, is not just a legal contract (but) a social contract as the board has a social responsibility to manage CPF funds prudently in order to help Singaporeans meet their retirement needs.” (Straits Times, “CPF Life payouts to be lifelong: Minister“, 21 July 2009.) MPs Madam Halimah Yacob (Jurong GRC) and Madam Ho Geok Choo (West Coast GRC) also expressed concern about the lack of guarantee on premiums and payouts, which they argued gave the Government too much discretion. Mr Gan tried to ally all these concerns by repeating the tired refrain that the fund would be managed on sound actuarial principles, and that it was not feasible to guarantee the amount paid because monthly payouts have to be adjusted according to changes in prevailing interest rates and mortality in order to maintain the solvency of the scheme. However, without any transparency as to how to Lifelong Income Fund is managed, Mr Gan’s tepid reassurances give little comfort. We have just witnessed how Temasek and GIC lost billions in the recent financial meltdown as a result of dubious investments in foreign financial institutions. Without adequate disclosure or transparency, and without the ability to hold Temasek and GIC accountable to the general public, no one knows how big a hole they have truly dug for themselves and exactly how much taxpayers’ money has gone down the drain due to mismanagement. With similar lack of transparency and accountability in the CPF Life scheme and the way the Lifelong Income Fund is managed, can the same happen to CPF members’ hard-earned savings? With so much at stake, it is time for Singaporeans to stand up and demand that the ruling PAP stop creating new schemes to hold back their life savings in order to plug the holes of the sinking ship that is the CPF. It is time to ask the Government to stop the wayang, and return us our CPF. A summary of my critique of the CPF Life scheme In my view, the CPF Life scheme is highly deficient in that: the payouts are not indexed to inflation, the Government has not expressed any desire to co-fund the scheme, and the payout amount is subject to drastic change in the event that interest rates fall or life expectancies improve significantly. The compulsory nature of the CPF Life scheme, or more generally, the compulsory nature of the Minimum Sum scheme itself transfers both control and responsibility of a person for his assets to the Government. This places a great moral responsibility on the Government to manage those assets in a transparent and accountable manner, and deliver returns that are on par with or even better than the best that the private sector can provide. In particular, if both the Minimum Sum and CPF Life schemes are to be compulsory, the onus must be on the Government to play its part in ensuring that payouts remain relatively stable no matter how interest rates or mortality rates may change. This has not been done, and this deficiency form the crux of my critique of the scheme as it is currently presented. On self-reliance, sustainability, Government co-funding, and greater transparency The Government’s view is that the CPF system is fully funded because it should be based on the cardinal principles of self-reliance and self-provision, and these principles must be maintained for the CPF Life scheme which should avoid the pitfalls of under-funded national pension schemes in other developed countries. While the above reasoning appears logical on the surface, there are deep flaws which really speak of the cold, calculating attitude of the Government towards the people. During a citizen’s productive years, he or she works hard and contributes to our economic growth. The entrepreneurial drive and industry of Singaporeans is what makes our nation wealthy. The taxes paid by citizens are used by the Government to build infrastructure, develop new technologies, keep our streets and borders safe, and create a conducive environment that attracts investments and creates jobs. When people grow old and retire, it must be the responsibility of the Government to take care of them using the wealth built up by the nation, as it was these people who made that wealth possible in the first place. This is a basic tenet of democratic socialism. To suggest that people rely solely on each others’ pocketbooks and never on the Government’s surpluses for their retirement needs is mean spirited and heartless, and reduces each person to an economic digit. A country that is being run as a mere corporation loses its soul and its identity, and becomes a hotel rather than a home, a mere stepping stone for those who are able to come and go. Rather than leaving Singaporeans to fend for each other alone, the Government should co-fund the scheme by injecting surplus funds from the budget and directing more of the Net Investment Income (NII) into the scheme in order to enhance payouts. The NII is the investment income of our reserves, which are in turn derived from the blood, sweat and toil of generations past. The Government should use this rich source of funds to help Singaporeans retire with dignity. The Government is correct to say that the scheme must be financially sound and sustainable over the long run. But in the present situation without Government co-funding, the CPF Board reserves the right to drastically reduce members’ payouts should interest rates fall or life expectancy increases unexpectedly. This will certainly affect members’ quality of life and may cause hardship. Hence, Government co-funding is necessary to protect members from fluctuations in interest rates and life expectancy which are outside their control, and enable them to retire with peace of mind. Lack of adequate inflation protection Over the years, despite sporadic bouts of high inflation, interest rates have remained persistently low, and have recently fallen even further in the wake of the current financial turmoil. CPF members and retirees have had their purchasing power reduced as CPF interest rates and Minimum Sum payouts have not kept pace with inflation over the past decade. The CPF Life scheme does not index its payouts to inflation, putting participants at risk of not having sufficient income to meet their basic living expenses in their later years. For example, assuming that the inflation rate is a steady 3% per annum, a monthly payout of $600 begun at age 65 will only have the purchasing power equivalent to $385.12 at age 80, and $332.21 at age 85 — not very much different from the original amount promised by the Government under the now-defunct Longevity Insurance proposal with strictly non-refundable premiums! In the brochure “A Quick Guide to CPF Life” published by the Ministry of Manpower (MOM) in 2008, it was explained that the scheme offers some limited protection against inflation as payouts are pegged to prevailing interest rates, which are supposed to rise with inflation. However, experience in the very same year showed that this need not be the case. For example, the three-month Singapore interbank offered rate (Sibor) dropped to a record low of 1.76 per cent in Feb 2008, its lowest level since Feb 2005, despite escalating inflation during that time. The Sibor stayed persistently low in 2008 through periods of high inflation and subsequent disinflation when the credit crunch hit. Given the apparent disconnect between prevailing interest rates and the rate of inflation, I am concerned that CPF Life payouts will not be adequate for retirees’ needs should inflation take root and trend higher in the decades ahead, as is expected to be the case given all the money printing going on in the world right now. It is imperative that a greater degree of inflation protection be afforded to CPF members. Lack of universal coverage of the scheme and lack of a strong social safety net for the underprivileged An estimated 25% of active CPF members who turn 55 in 2013, the first cohort who will participate in the CPF Life scheme, will have less than $40,000 cash balance in their Minimum Sum and will be excluded from the scheme although they can opt in. And even if the Government provides financial incentives to encourage these groups of people to opt into the scheme, they will still be left without a strong safety net, given that their monthly payouts will likely be extremely small. A longer term approach has to be devised to help the poor, especially those without the minimum of $40,000 cash balance in their Minimum Sum. Some back-of-the-envelope calculations I have made some back-of-the-envelope CPF Life calculations. This example is for a male participant who has $67,000 cash in his CPF Minimum Sum (assuming a total Minimum Sum of $134,000, of which half is property pledge, and half is cash savings). These are my assumptions: The Government makes a consistent rate of return of 5% on ALL of its funds under management. That is, the Government is able to invest both the Retirement Account (RA) and Refundable Premium (RP) at an ROI of 5%. Any amount left in the RA is distributed to beneficiaries upon demise, but the RP fund is not. The RP fund is the “common pool” used to provide perpetual income for surviving members. The investment return on the RP fund is NOT accrued to the CPF member’s account but instead held in Government coffers. ONLY the investment return on the RA is accrued to the CPF member’s account and distributed to beneficiaries in the event of early demise. Monthly income of $610 begins at age 65. The member chooses the default plan. When the member is between the ages of 65 and 80, I am assuming his contribution to the RP fund is not used to provide monthly payments — only the RA funds inclusive of interested earned are drawn down to provide the monthly payments. I am also assuming that after the age of 80, the Government starts paying off the member using the pooled RP fund including any residual amount left in the RA, while continuing to invest the pooled fund at an ROI of 5%. However from this point onwards, none of the interest earned is accrued to the member’s CPF account as the RA portion has become nonexistent. The following table shows the balance amount in the member’s RA and RP account at each age from 55 to 95, the amount that the beneficiaries would get in the event of demise, as well as the net profit that the Government earns from the scheme, which is the interest earned from the RP pool minus the cumulative payouts made to the CPF member. The member gets $7,320 per year, based on a monthly income of $610. As can be seen from the table, the RA fund has insufficient balance to pay the member by age 80, and subsequent payouts are made from the pooled account. By the age of 80, the Government is estimated to have as much as $38,373 net profit. That is a HUGE profit for the Government! In fact, the net profit for the Government increases to a high of $45,723 by the time the member reaches age 83! Clearly if the CPF member passes away around the ages of 80-85, the Government stands to earn a LOT OF MONEY from the scheme! This is because the interest earned on RP fund is NOT given to the beneficiary but kept in the common pool upon the member’s death. As can also be seen from the table, the amount of money that left outstanding in the member’s account rapidly diminishes after 80, so that by age 84, the beneficiary would get NOTHING in the event of demise of the member. However, the Government coffers still have a lot of cash. There is enough cash in the Government coffers to pay the member $610 per month for several more years while still maintaining profitability from the scheme. It is only AFTER the age of 90 that the Government starts losing money on the scheme. This back-of-the-envelope calculation shows that even assuming the Government is right about half of CPF Life participants surviving to 85 years of age, the Government will clearly make a net profit from most members, given that comparatively fewer members will make it past 90 years of age. It is therefore very fair to assume that the Government could perpetually generate large surpluses from the scheme, especially when we take into account the fact that premiums and monthly payouts will be altered in accordance with morality experience and the return of investments, thereby ensuring that the Government seldom goes into deficit in any particular year. In conclusion The CPF Life scheme is an attempt to repair a national pension system that has become inadequate in sustaining members through old age. The reason why the CPF system has become deficient in the first place is because of persistently low interest rates paid on CPF accounts, which has prevented members from building their wealth, as well as members having to pay a large amount of funds towards their property. As a result of these two factors, and to some extent the inadequacies of the Medisave system in taking care of members’ medical needs, the CPF Life scheme is needed to fill the gaps of this sinking ship. My back-of-the-envelope calculation coupled with the Government’s current stand that premiums and monthly payouts will be altered in accordance with morality experience and the return of investments shows that even when implementing the CPF Life scheme, the Government is mercenery enough to insist that it has virtually a 100% chance of making a good profit from the scheme. My take therefore is not that people should be made to adhere to the principles of self-reliance and self-provision at all cost, but that the Government should be weened of its reliance on the people to fatten its already bulging coffers, and instead help provide for the peoples’ retirement from its massive vaults which house the blood and toil of generations past. To fight for bread and butter issues, we need democracy Written by Ng E-Jay 20 July 2009 In the article From Stifled Dissent to Managed Dissent, I discussed how the “hard repressive” tactics of the PAP Government such as the use of ISA on political opponents was being slowly replaced by “soft authoritarian” strategies that give the people a semblance of political space but without actually returning them their constitutional rights. Part of the strategy of “managed dissent” involves allowing citizens to express themselves freely on issues that do not threaten the ruling elite’s grip on power, such as bread and butter issues, but clamping down severely on activists and politicians who challenge the very basis of our political system and the undemocratic ways of the PAP. Think Dr Chee Soon Juan and the late J.B. Jeyaretnam. This strategy has worked well because of two main factors: Years of media propaganda has convinced the electorate that our political system is sound, and furthermore, that bread and butter issues can be addressed in isolation without regard to the overall political climate. Mainstream opposition groups have to a large extent bought into the idea that only bread and butter concerns will win them votes. They become unwitting supporters of PAP’s “managed dissent”. These misconceptions are highly unfortunate, because without true democracy in Singapore, bread and butter issues can only be championed on terms dictated by the PAP. As long as the PAP insists on governing in their interest rather than in the interest of Singaporeans, we will only be running around in circles, obtaining token concessions from time to time, but without the ability to compel the Government to place Singaporeans first and take care of their needs in any substantial way. As Singaporeans, we are told to welcome foreigners with open arms and to participate actively in integrating them into our community. There is nothing wrong with that per se. The issue, we must all realize, is not about successful integration of foreigners, but the Government’s accountability to Singapore citizens. With its “growth-at-all-cost” model of economic management, our Government is taking its pro-foreigner policies to the extreme. What is needed instead is a more sustainable model of economic management that recognizes the long term limitations of our nation’s growth rate, a more comprehensive social safety net for the needy, elderly and sick, and independent labour unions that genuinely seek to protect the rights of Singaporean workers. Without challenging the Government on its level of accountability to Singaporeans, all the Parliamentary debates on helping Singaporeans find jobs and helping foreigners settle into the local community do nothing to address the fundamental dilemnas faced by citizens. As Singaporeans, we are also told to tighten our belts in the midst of a recession and accept cuts in CPF contributions, reduced wages and longer working hours. Again, where is the Government’s accountability to Singaporeans, in allowing labour productivity to fall for so many years and allowing GLCs to become so entrenched that the economy has become uncompetitive? How can our ministers imagine that they have the moral rectitude to stand up to Singaporeans and tell them to make sacrifices whilst they themselves are being paid multi-million dollar salaries for mediocre performance? Without holding the Government to account, you can be sure that even if the Government gives us more today, they will find a way to take even more from us tomorrow. To fight for bread and butter issues, we first need democracy. Without democracy, there is no way to hold the Government accountable for its policies and actions. Without a system of checks and balances, the Government need not, and will not, place Singaporeans first nor pay attention to their basic needs. That is why we must support parties like the Singapore Democratic Party who not only champion bread and butter issues and provide workable alternatives to disastrous Government policies, but also work to raise awareness of the flaws in our political system and campaign for political reform. The Great Reflation Experiment (Source) By John Mauldin, 31 July 2009 The question we have been focused on for some time now is whether we end up with inflation, or deflation, and what that endgame looks like. It is one of the most important questions an investor must ask today, and getting the answer right is critical. This week, we have a guest writer who takes on the topic of the great experiment the Fed is now waging, which he calls The Great Reflation Experiment. One of my favorite sources of information for decades has been and remains the Bank Credit Analyst. It has a long and storied reputation. One of their enduring themes has been the debt super cycle. Investors who have paid attention to it have been served well. I am taking a little R&R this weekend, but I have arranged for my friend Tony Boeckh to stand in for me. Tony was chairman, chief executive, and editor-in-chief of Montreal-based BCA Research, publisher of the highly regarded Bank Credit Analyst up until he retired in 2002. He still likes to write from time to time, and we are lucky enough to have him give us his views on where we are in the economic cycles. Gentle reader, we are all graced to learn from one of the great economists and analysts of our times. Pay attention. Central bankers do. You can read his extensive bio at www.boeckhinvestmentletter.com and I will tell you how to get his letter free of charge at the end of this letter. And, he told me to mention that his son Rob is now helping him write, so there is a double byline here. Now, let’s just jump in. By Tony Boeckh and Rob Boeckh The Crash of 2008/9 should be seen as yet another consequence of long-term, persistent US inflationary policies. Inflation doesn’t stand still. It tends to establish a self-reinforcing cycle that accelerates until the excesses in money and credit become so extreme that a correction is triggered. The bigger the inflation, the bigger the correction. Once a dependency on credit expansion is well established, correcting the underlying imbalances becomes extremely difficult. Reflation has occurred after each major correction, and this one is proving no exception. Return to discipline in the current environment would be too painful and dangerous. Once on the financial roller coaster, it is very hard to get off. Moreover, the oscillations between peaks and valleys become increasingly large and unstable. Policymakers, money managers, and most forecasters have argued that the crash was a “black swan” event, meaning that it had an extremely low probability of occurrence. That is grossly misleading, as it implies that the crash was so far beyond the realm of normal probabilities that it was unreasonable to expect anyone to have foreseen it. That argument has been used to justify the widespread complacency that prevailed in the years leading up to the crash. Policymakers are still failing to recognize the systemic causes of the crash and seem to believe that enhanced regulation will prevent history from repeating. While it is true that regulators were asleep at the switch or looking the other way, they were not the cause. The Debt Super Cycle The real culprit is the US debt super cycle, which has operated for decades, mostly in a remarkably benign manner. The inflationary implications of the twin deficits (current account and fiscal), as well as the steady increase in private debt, have been moderated by the integration of emerging markets into the global economy. The massive increase in industrial output from China, India, and others has enabled persistent credit inflation in the US to occur with virtually no consequence to date (other than periodic asset price bubbles and shakeouts). How long the disinflationary impact of emerging-market productivity growth will persist and how long these nations will continue loading up on Treasuries, will be instrumental in determining the course that the Great Reflation will take. Tougher regulation is surely appropriate, but it will not stop the next inflationary run-up unless the system is fixed. In the final analysis, newly minted money and credit must find a home somewhere. Some Background on US Inflation Inflation, to be properly understood, should be defined as a persistent expansion of money and credit that substantially exceeds the growth requirements of the economy. As a consequence of excessive monetary expansion, prices rise. Which prices go up and at what rate depends on a number of factors. Sometimes it is the prices of goods and services that are the most visible symptom of inflationary pressures. That was the case in the 1970s when the Consumer Price Index (CPI) hit a peak rate of 14% per annum. Sometimes it is the prices of assets such as homes, office buildings, stocks, or bonds that reflect the inflationary pressure, as we have seen in more recent years. When inflation becomes pervasive, and other conditions are supportive, it can engulf a whole industry. We saw this in the financial sector in the period leading up to the crash. The supporting conditions or “displacements,” to use the terminology of Professor Kindleberger, were financial innovation, deregulation, and obscene profits and salaries. These drew millions of bees to the honey. All great manias are accompanied by malfeasance, in this case the biggest Ponzi scheme in history and many other lesser ones. It is relatively easy to steal when prices are rising and greed is pervasive. Overspending and a general lack of prudence always become widespread when a mania infects the general public. Rational people can do incredibly stupid things collectively when there is mass hysteria. The origins of post-war inflation go back to the late 1950s and early 1960s, though some would take it back much further. In the 1960s, the US dollar started to come under pressure as a result of US inflationary policy and foreign central banks’ ebbing confidence in their large and growing dollar reserve holdings. The US responded with controls and government intervention in a number of areas: gold convertibility, the US Treasury bond market, the Interest Equalization Tax, and, ultimately, intervention on wages and prices. These moves clearly flagged to the world that external discipline would be subjugated to domestic employment and growth concerns. The policy was formalized when the US terminated the link between gold and the dollar in August 1971, essentially floating the dollar and setting the US on a course of sustained inflation. Of course, the dollar floated down, which, among other things, triggered the massive rise in general prices in the 1970s. The next episode of credit inflation began in the 1980s, paradoxically triggered by the success of Paul Volcker’s move to break the spiral of rising general price inflation through very tight money. He succeeded famously, and the CPI headed sharply lower along with interest rates, setting the stage for the massive US debt binge and the series of asset bubbles that followed. It was easy for the Federal Reserve to pursue expansionary credit policies while inflation and interest rates were falling. The Great Reflation Experiment of 2009 Private sector credit, the flipside of debt, maintained a stable trend relative to GDP from 1964 to 1982 (Charts 1& 2). After that, the ratio of debt to GDP rose rapidly for the 25 years leading up to the crash, and is continuing to rise. The current reading has debt close to 180% of GDP, about double the level of the early 1980s. The magnitude and length of this rise is probably unprecedented in the history of the world. Even the credit inflation that was the prelude to the 1929 crash and the Great Depression only lasted five or six years. Prior to government bailouts and stimulus, the panic, crash, and precipitous economic decline of 2008/9 were clearly on track to be much worse than the post-1929 experience. The pervasiveness of leverage – from banks to consumers to supposedly blue-chip companies – and the illusion of stability in the system, were fostered through the 25 years that this credit bubble has grown, basically uninterrupted. The speed and magnitude of the bailouts and stimulus – the end of which we won’t see for a long time – aborted the meltdown. However, the story is far from over. The Great Reflation Experiment ultimately has two components. The first is a rise in federal government deficits, debt, and contingent liabilities. The second is an expansion of the Federal Reserve’s balance sheet. Both are unprecedented since World War II. US federal government debt is likely to reach close to 100% of GDP over the next 8 to10 years, according to the Congressional Budget Office (CBO) and supported by our own calculations (Chart 3). Anemic growth, falling tax revenue, increased government spending, and bailouts of indigent states, households, businesses, along with an aging population, will all undermine public finances to a degree never before seen in peacetime. According to CBO data, government debt could reach 300% of GDP by 2050 as contingent liabilities are converted into actual government expenditures. This massive peacetime deterioration in public finances will have grave consequences for living standards and asset markets, particularly in the longer run. In the short run, huge deficits and growth in government debt are necessary. They will continue to play a crucial role in deleveraging the private sector and in helping to fill the black hole in the economy that has been caused by the sharp increase in household savings. Further out, government deficits will put upward pressure on interest rates. However, much of the economy, particularly housing and commercial real estate, is far too weak to absorb an interest-rate shock. Therefore, the Federal Reserve will have to monetize much of the rise in government debt, making it extremely difficult to unwind the explosion in the Fed’s balance sheet and consequent rise in bank reserves – the fuel that could be used to ignite another money and credit explosion. The bottom line is that the Fed is in a very difficult position. Its room to maneuver is either small or nonexistent, and the markets understand this. That is why there is a sharp divergence between those worried about price inflation and those fearing a lengthy depression. Implications for Investors Investors are also in an extraordinarily difficult predicament. From the peak in 2007, household wealth declined by about $14 trillion, over 20%, to the first quarter of 2009. Tens of millions of people had come to rely on rising house and stock prices to give them a standard of living that could not be attained from regular income alone (Chart 4). They stopped saving and borrowed aggressively and imprudently against their assets and future income, some to live better, some to speculate, and many to do both. That game is over. Pensions have been devastated and people’s appetite for risk has declined dramatically. The return on safe liquid assets ranges from 0.60% to 1.20%, depending on term and withdrawal penalties. Reasonable-quality bonds with a five-year maturity provide about 4%. Bonds with longer maturities have higher yields but are vulnerable to price erosion if inflationary expectations heat up. As for equities, people now understand that blue chip stocks carry huge risk. GE, once considered the ultimate “bullet-proof” stock, dropped 83% in the panic, and Citigroup lost 98%. Revelations of massive fraud schemes have further damaged trust and confidence in markets. Against this backdrop we offer a few thoughts. First, an increase in price inflation as reflected in the CPI is a long way off. The degree of excess capacity in the world is probably the greatest since the 1930s, although excess capacity does get scrapped during recessions. Western economies will remain depressed for years, and China will also be important in keeping inflation down. Its capital investment is larger than the US’s in absolute terms. It is currently 40% of GDP and growing at 30% per annum. Profit margins in China will probably get squeezed, which, together with the huge amount of underemployed labor, means that the Chinese will keep driving their export machine at full throttle, continuing to flood the world with high-quality, inexpensive goods. Therefore, investors who need income are probably safe holding reasonably high-quality bonds in the five-year maturity range. A bond ladder is a very useful tool for most people. Holdings are staggered over, say, a five-year time frame, and maturing bonds are invested back into five-year bonds, keeping the portfolio structure in the zero-to-five-year range. In this way, some protection against a future rise in price inflation and falling bond prices can be achieved. Second, massive monetary stimulus is good for asset prices in the near term (e.g. stocks, bonds, houses, commodities) in a world of very weak price inflation and a soft economy. That is true as long as the economy does not fall apart again, which is very unlikely given all the stimulus present and more to come if needed. Therefore, investors who can afford a little risk should own some assets that will ultimately be beneficiaries of the wall of new money being created and thrown at the economy. There is a major risk to our relative near-term optimism, and that is the US dollar. Foreign central banks hold $2.64 trillion, overwhelmingly the largest component of world reserves. The US role as the main reserve currency country is compromised by its persistent inflationary policies and current account deficits, a subject high on the agenda at the recent G-8 meeting in Italy and referred to frequently by China, Russia, Brazil, and others. Foreign central banks fear a large drop in the dollar, which would cause them potentially huge losses on their reserve holdings. They don’t want more dollars, and yet they don’t want to lose competitive advantage by seeing their currencies go up against the dollar. To preserve their competitive position, they have to buy more when the dollar is under pressure. On the other hand, since the 1930s the US has never subjugated domestic concerns to external discipline. Officials may talk of a strong-dollar policy, but their actions always speak differently. Their attitude towards foreign central banks is, “We didn’t ask you to buy the dollars.” The US has typically seen such buying as currency manipulation to gain an unfair trade advantage. The most likely outcome is a nervous dollar stalemate or, as Lawrence Summers once described it, “a balance of financial terror.” The most important central banks will continue to hold their noses and buy the dollar to keep it from falling too sharply. However, this is a fragile, unstable situation, and the dollar must fall over time. Investors need to diversify away from this risk. There are three obvious ways. The first is investing in high-quality US equities that have a majority of their earnings and assets in hard-currency countries. The second is investing in gold and related assets. Gold will probably remain in a tug of war for some time. On the negative side, it is faced with nonexistent global price inflation, even deflation, and a sharp decline in jewelry demand. On the positive side, concerns over U. monetary and fiscal debauchery will almost certainly heat up. As the odds of the latter increase, gold will be a major beneficiary, and investors should have a healthy insurance position in this asset class. Third, most foreign currencies will also benefit from these fears, and hence investors can also protect themselves by diversifying into non-dollar assets in the best-managed countries. Some of these are emerging markets like China, which are liquid, in surplus, fiscally stable, and still growing well in spite of the global economic downturn. If and when the world economy begins to recover, and should price inflation stay low, asset bubbles are likely to recur. Where and when is always hard to tell in advance. Good prospects are in emerging-market equities, commodities, and commodity-oriented countries. So, to sum up, in the next six to 12 months we look for a weak but recovering US economy, a continued deflationary price environment, pretty good asset and commodity markets, and continued narrowing of credit spreads. This view is based on the assumption that the new money created has to go somewhere, a stable to modestly falling dollar, and an anemic world economic recovery next year. A buy and hold strategy has been bad advice for the past 10 years. The S&P is down 45% from its peak in early 2000. The investment world is likely to remain very unstable in the face of the difficult longer-run problems discussed above. Investors, whether they like it or not, are in the forecasting game, and forecasting is all about time lags. The exceptional circumstances of the current environment make any assessment of time lags extraordinarily difficult, and mistakes will continue to be costly. For that reason, holding well above average liquidity, in spite of the paltry returns, is sensible for most people whose pockets are not deep enough to absorb another hit to their net worth. They are in the unfortunate position of having to wait until the air clears a bit and more aggressive action can be taken with higher confidence. Warren Buffet has properly reminded us on numerous occasions that a price has to be paid for waiting for such a time, but then most of us aren’t as rich as he is. Disclaimer John Mauldin is president of Millennium Wave Advisors, LLC, a registered investment advisor. All material presented herein is believed to be reliable but we cannot attest to its accuracy. Investment recommendations may change and readers are urged to check with their investment counselors before making any investment decisions. Opinions expressed in these reports may change without prior notice. John Mauldin and/or the staffs at Millennium Wave Advisors, LLC and InvestorsInsight Publishing, Inc. (InvestorsInsight) may or may not have investments in any funds, programs or companies cited above. PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER. Communications from InvestorsInsight are intended solely for informational purposes. Statements made by various authors, advertisers, sponsors and other contributors do not necessarily reflect the opinions of InvestorsInsight, and should not be construed as an endorsement by InvestorsInsight, either expressed or implied. InvestorsInsight is not responsible for typographic errors or other inaccuracies in the content. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided “AS IS” without any warranty of any kind. Past results are not indicative of future results. Campaign against bottled water borders on sheer idiocy Why is there no mention of soft drinks, the manufacture and disposal of which poses the same or even greater environmental risks as bottled water, and which, unlike bottled water, is genuinely unhealthy to the human body? Also, shouldn’t the campaign be FOR water coolers to be installed all throughout the island and for people to bring their own reusable containers? Written by Ng E-Jay 15 July 2009 It was reported in the Straits Times article “Bottled water: People should be told the facts” that the Australian town of Bundanoon, south of Sydney, voted to ban bottled water last Wednesday, and that two individuals here are keen on campaigning for a similar move in Singapore. I was nothing short of flabbergasted when I read this. Ms Leong Ching, a PhD student at the Lee Kuan Yew School of Public Policy, and Professor Tommy Koh, chairman of the Governing Council of the Asia-Pacific Water Forum, are reportedly planning to lobby all ministries, statutory boards, Temasek-linked companies, and educational institutions to consider stopping the practice of serving bottled water, on the basis that bottled water wastes resources and harms the environment. Ms Leong, a former journalist, said: “I can understand why they drink bottled water in countries where they have no choice. But it is senseless when the (tap) water is fit for drinking (as is the case for Singapore).” First off the bat, I have absolutely no objections to Government departments, statutory boards, and dining establishments such as restaurants providing only tap water as opposed to bottled water. But if the campaign is also targetted at bottled water sold to the general public, it is nothing short of sheer idiocy. Bottled water is an extremely hygenic, convenient and healthy means of hydrating the body when one is in public and is in need of a thirst quencher. If bottled water is banned, wouldn’t that mean that people will instead have to opt for beverages like soft drinks, which are unhealthy as they tend to contain loads of sugar and other preservatives? I personally rely heavily on bottled water while not at home, as a source of hydration throughout the day and after exercise. Perhaps Ms Leong Ching and Professor Tommy Koh would rather that I spend even more money loading up on expensive soft drinks or caffeinated beverages instead. Without bottled water, if there is no water cooler nearby, I would have to go to the toilet to drink from the tap. Given the overall unhygienic state of public toilets in Singapore, I find that notion repulsive. Imagine calling ourselves a first world nation and then having to drink from a public toilet! Concerns over the environmental impact of bottled water are most probably misplaced as well. The greatest threat to the environment comes from carbon and toxic emissions from heavy industries. It is true that non-biodegradable plastics such as those used in bottled water also hurt the environment, but if so, shouldn’t the emphasis be on soft drinks instead, as soft drinks are genuinely unhealthy to the human body and use both metals and plastics for containers? Rather than campaign to ban bottled water, Ms Leong Ching and Professor Tommy Koh should instead be campaigning for water coolers to be installed throughout the island and for people to bring their own reusable containers. I simply do not understand why a campaign has to be directed against something so innocent as bottled water, when there are far greater environmental threats, when there are far unhealthier products in the marketplace, and when bottled water is of such convenience to people on the move. I also take offence at the notion of individuals going around trying to ban something just because they dislike it. It infringes upon the right of others to make informed choices and insensitively disregards the fact that those choices may be an important part of the lifestyles of others. As reported in the Straits Times, the bottled water industry is extremely lucrative. Perhaps some soft drink manufacturers are feeling the heat as a result of people like myelf opting to drink bottled water as opposed to their sugar-laden concoctions. Access to clean, healthy bottled water is to me a basic right. If Ms Leong Ching and Professor Tommy Koh insist on encroaching on my right to enjoy this magnificent product, I will oppose them come hell or high water. New NMP Calvin Cheng’s reply to TODAY betrays his lack of sense of accountability and political acumen Written by Ng E-Jay 14 July 2009 New Nominated Member of Parliament (NMP) Calvin Cheng has written an atrocious letter to TODAY newspaper betraying not only his absence of a sense of accountability, but also his complete lack of political acumen. I am truly shocked by his letter. In his online letter entitled “I am curious all the time“, Calvin Cheng attempted to rebut TODAY journalist P.N. Balji’s assertion in a column published on 11 July that he had joined the YPAP in a rather cavalier and whimsical manner in 2006. Calvin Cheng had earlier confessed to joining the Youth Wing of the ruling party three years ago out of “curiosity“.  These were his exact words as quoted in a TODAY article: “I joined YPAP in 2006 when I visited the Teck Ghee PAP branch with a friend, and I signed up out of curiosity. Due to many reasons, I never returned.” This prompted journalist P.N. Balji to ask if this “curiosity episode” should be dismissed as a case of boyish candour, and to assert that the burden is now on Calvin Cheng to prove to Singaporeans that the decision by the Special Select Committee to pick him was not misplaced. However, Calvin Cheng ended up shooting himself in the foot in his response to P.N. Balji’s missive. To start off, Calvin Cheng tried to deflect scrutiny from his YPAP membership by claiming that he had intended to resign from the party last Tuesday after the new NMP list had been released, and not only after his YPAP membership was exposed by TODAY newspaper. Mr Cheng is missing the point. If NMPs are truly supposed to be non-partisan, he should have resigned from the party upon submitting his application to become an NMP, not only after the results are out. That the Select Committee would entertain applicants from current members of political parties also makes a mockery of their claim that NMPs are meant to be non-partisan voices in Parliament. Even an aspiring Elected President must resign from any political party which he is a member of before submitting his candidacy for consideration. Next, Calvin Cheng launched into a long-winded thesis about the nature of human curiosity that would have made for good bed time reading had it not been so utterly constipated. Mr Cheng is completely missing the point again. TODAY journalist P.N. Balji was not questioning the virtue of being curious or having the drive to seek out new knowledge. He was questioning Calvin Cheng’s motivation to join a political party and what that said about his character. Besides, what kind of curiosity would drive a man like Calvin Cheng to join an organization only after one visit and then fail to even pick up his membership card? Does this not speak volumes about Mr Cheng’s ability to sustain a new interest or to see things through to the end? I am truly amazed at Calvin Cheng’s lack of a sense of accountability as well as his almost complete lack of political acumen. The current batch of new NMPs is truly disappointing. People like Siew Kum Hong who really provided alternative views and were hard hitting when they needed to be are now gone, replaced instead by people are not ashamed to parade their PAP affliations and say that they look up to MM Lee Kuan Yew whilst trumpeting the tired refrain that they are non-partisan. If the ruling PAP is willing to hold free and fair elections, we would not need to place so much increased emphasis on schemes like the NMP and NCMP to provide alternative voices in Parliament. It is time to stop the charade about Singapore being a democracy because the PAP allows non-party members to enter Parliament on terms which it sets. If Singapore is a real democracy, we would not need such gimmicks, and neither would the media feel the need to trumpet such propaganda over and over again. I am curious all the time Letter from Calvin Cheng, published in TODAY Online 13 July 2009 I refer to Mr P N Balji’s piece “My, My… Mr. Cheng” (July 11-12). Firstly, I would like to clarify that I did not resign as a reaction to TODAY’s reporting, as the statement “only after a TODAY report highlighted the issue on Wednesday” seems to imply. As I told TODAY, and as TODAY reported, when I was called on Tuesday night, I was already going to resign; shortly after, on the same night, I verbally told Mr. Teo Ser Luck, Chairman of Young PAP of my intention to resign. Due to the fact that offices were already closed, and also a technical issue about the exact status of my membership (whether I was a member of the General Branch or of the Teck Ghee Branch), I was only able to email my resignation the very next morning on Wednesday. This, including my verbal resignation before the article was printed, was conveyed to TODAY’s reporter the night before Wednesday’s report. Secondly, Mr Balji was right that I sincerely believed, and still do, that being completely upfront to the Select Committee of my party membership was sufficient. This is because as I was inactive, I was confident that it will not in any way affect my ability to be impartial, objective and non-partisan. I have now resigned to remove any residual doubts of this. Thirdly, I do feel the burden to prove to Singaporeans that my selection was not misplaced, a burden that I would feel regardless of this issue. I am however writing most of all, in response to Mr Balji’s assertion, that my initial decision to join the Young PAP out of curiosity, was “cavalier” and on a “whim”. I am curious how curiosity could be construed to be whimsical, and how something which I believe to be one of the most important faculties of the human intellect, could be seen as cavalier. I am curious all the time. I am curious because curiosity, to me, is the basis of all human inquiry, the foundation of any quest to seek knowledge. I am curious because I want to learn new things, to find out things that are unknown to me, to quench a thirst for new information. I am curious because I believe that curiosity must form the foundation of education, and it is the one thing that formal education can sometimes kill, and which Singaporean educators must avoid. I am curious because it was curiosity that led Ferdinand Magellan to lead the first expedition around the world, of Albert Einstein to seek to unravel the mysteries of the universe, to inspire the Wright brothers to ask and answer the question of whether man could fly; it was curiosity that led to mankind going to the moon. And even if an explorer, a scientist, an inventor or an astronaut I am not, I hope any child that could still be, would cultivate curiosity in their minds. I am curious whenever I meet any new person, as he could perhaps become a lifelong friend; getting to know this person is the only way I can tell. And perhaps as a single man, I hope upon hope that Casanova was right when he said that ‘Love is three quarters curiosity’. I am curious that Mr Balji does not hold curiosity as a more precious value, especially because in journalism, it is the yearning to keep questioning that should be the motivation of any good journalist. The French journalist Anatole France, who won the Nobel Prize for Literature in 1921, said ‘The greatest virtue of man is perhaps curiosity’. I hope he is right. When I signed up with the Young PAP out of curiosity, I genuinely wanted to find out more. By no means was it cavalier, or whimsical; unfortunately, circumstances prevented me from doing so. I am curious about what may have happened, if they hadn’t, but on the other hand it was no bad thing that I got busy with civic groups instead; civic groups that initial curiosity led to eventual involvement (with). It is this same curiosity that I hope I will bring with me to Parliament as a Nominated Member, to question things as often, and as impartially and objectively as I can. EM Foster wrote, “The four characteristics of humanism are curiosity, a free mind, belief in good taste, and belief in the human race.” Some of my friends would say my taste is suspect, but I sincerely hope I have the other three. Abortion and Comprehensive Sexuality Education Written by Ng E-Jay 13 July 2009 It was reported recently in Channel News Asia that around 12,000 foetuses are aborted every year in Singapore, with doctors claiming that not enough people are using contraceptives, or are using them incorrectly. At face value, the number of 12,000 abortions every year must lead some pro-life pundits to claim that our family planning policies have gone astray and perhaps to even question whether our social norms are degrading. Over the years, there have been repeated calls for Singapore’s relatively easy access to abortion to be examined with the view that it should be tightened. However, one must go beyond the superficial numbers presented and seek to understand the underlying reasons for those abortions. Although the Channel News Asia article focussed on the lack of use of contraceptives in explaining the abortion rates, I suspect many cases are due to socio-economic reasons and financial hardship. According to the Channel News Asia article, about half of the abortions are done by married women. The article also says that many women have misconceptions about the side effects of contraceptives, for example, inaccurately thinking that birth control pills may be linked to cancer or weight gain. Dr Beh Suan Tiong, president of the Obstetrical & Gynaecological Society of Singapore, said: “Every contraception method (carries) some potential side effects but they actually rank much less compared to the risk of abortion.” Don’t these misconceptions demonstrate clearly the need for Comprehensive Sexuality Education? During the AWARE saga, pro-life and religious-minded conservatives launched stinging attacks on AWARE’s Comprehensive Sexuality Education (CSE) programme, claiming that it promoted homosexuality and disregarded family values. The truth is the AWARE’s CSE programme focusses on empowering youths by providing them facts and information in a neutral setting and teaching them to make responsible, informed choices. The correct use of contraceptives is also a key component of the programme. There are yet other critics and bigots who still to this day claim that we should not teach our young to use condoms, lest they become promiscuous. (SEE: Medieval attitudes towards sex and sexuality, rather than tolerance of alternative lifestyles, undermine the social fabric.) But clearly, if the doctors are correct in saying that the lack of knowledge or misunderstandings concerning contraceptives are a key reason why abortion rates in Singapore are rising, then all the more we need CSE programmes that impart to our youths the information they need. MAS bans 10 firms from selling structured notes, but is this merely a slap on the wrist? Written by Ng E-Jay 08 July 2009 The Monetary Authority of Singapore (MAS) has announced that it has imposed temporary bans on the sale of structured notes by 10 financial institutions (FIs) which had distributed toxic structured notes linked to the collapsed US financial institution Lehman Brothers. The bans, which took effect from 01 July 2009, apply to ABN Amro Bank, CIMB-GK Securities, DBS Bank, DMG and Partners Securities, Hong Leong Finance, Kim Eng Securities, Maybank, OCBC Securities, Philip Securities and UOB Kay Hian. MAS revealed that during its investigations into the sale of the failed structured products last year, it found inconsistencies in the level of due diligence and internal controls applied by the FIs, resulting in various forms of non-compliance with MAS’ guidelines on the sale and marketing of these investment products. MAS has directed FIs to rectify all weaknesses identified in the investigations, appoint an external person identified by MAS to review action plans and report on implementation, and appoint senior management staff to oversee compliance with MAS’ direction. MAS also said that until it is satisfied with the measures put in place by the FIs, they will not be able to continue distributing structured note products. In my opinion, while the MAS is right to put a temporary ban on the sale of structured note products pending sufficient compliance by the FIs, so far the penalties enacted against the FIs have been nothing more than a slap on the wrist. Many retirees have lost their life savings as a result of the structured products fiasco. Although there have been some concrete attempts by both MAS and the FIs at ensuring accountability and punishing errant sales representatives who mis-sold structured products, too little has been done to address the underlying problem. Firstly, financial institutions marketed instruments to retail investors that should never have been made available to the general public to begin with, given their grossly lop-sided risk profile. Secondly, the entire structure of the financial planning industry puts immense pressure on sales representatives to meet sales quotas, and indirectly compels them to become slack on due diligence. Thirdly, MAS itself is to blame for allowing such toxic products to be introduced into the marketplace. The structured products fiasco happened not just because a few sales representatives mis-sold products or because some financial institutions failed to put in place adequate compliance procedures. Instead, there is a systemic lack of accountability in our financial institutions and in MAS itself. Until the real issues are addressed, what MAS has done so far is nothing more than applying bandages on the superficial wounds while ignoring the internal injuries. Temasek May Hire Internal Candidate for Goodyear Replacement Source: Bloomberg, 28 July 2009 July 28 (Bloomberg) — Temasek Holdings Pte said it will consider promoting an internal manager after abandoning plans to make Charles “Chip” Goodyear the first foreign chief executive officer of Singapore’s state-owned investment fund. “Temasek has in place a CEO succession planning process,” Temasek said in an e-mailed response to questions. “Our board reviews external and internal candidates over various time horizons.” Goodyear and Temasek said last week that differences over strategy would lead them to terminate their relationship before Oct. 1, when the U.S.-born former head of BHP Billiton Ltd. was due to replace Ho Ching as CEO and bring an outside perspective to the $88 billion fund. There are at least 13 internal candidates, including executive director and former Danone executive Simon Israel and ex-investment banker Charles Ong, the Straits Times newspaper reported yesterday, without identifying the source of its information. “An internal person would not only know the business aspects, but also the political elements and be sensitive to Singapore and our surrounding neighboring countries when making a business decision,” said Lan Luh Luh, co-director of The Corporate Governance and Financial Reporting Centre at National University of Singapore Business School, and an associate professor at the business school and Faculty of Law. Ho, wife of Singapore’s Prime Minister Lee Hsien Loong, will helm the investment company in the interim, Temasek said July 21 when it announced Goodyear’s departure. Internal Candidates Temasek has declined requests for interviews with Ho, Goodyear or other senior executives. “If it’s about Temasek, I’ve got nothing to say beyond what’s in the press release,” Israel, 56, said July 24 after Singapore Telecommunications Ltd.’s shareholder meeting. Israel is a director of SingTel, Southeast Asia’s largest phone company, which is 54 percent-owned by Temasek. The Singapore sovereign wealth fund has been hiring executives with experience at international companies as it expands in Asia with stakes in India’s ICICI Bank Ltd., China Construction Bank Corp. and lenders in Indonesia, South Korea and Pakistan. Investments in Singapore now make up a third of the portfolio from more than half five years ago. The Straits Times also identified as potential CEO replacement Michael Dee, 53, senior managing director international, who was hired from Morgan Stanley last year. Dee was the chief executive officer for Southeast Asia at New York- based Morgan Stanley in Singapore from 2001 until 2004, when he left to head the bank’s Houston office. It also mentioned Jimmy Phoon, a Temasek senior managing director, and a former executive director with the investment banking unit of London-based Standard Chartered Plc. Review Process Senior managing director and chief strategist Ong was the head of corporate finance at Frankfurt-based Deutsche Bank AG in Southeast Asia before he joined Temasek in 2002. “Hiring external executives has been a trend within SWFs for some time, and it is starting to intensify,” said Marko Maslakovic, senior economist at International Financial Services London and author of the group’s annual report on sovereign wealth funds. “There has been a gradual movement towards more transparency for sovereign funds, and hiring executives who’ve worked in Western institutions may help send the right message.” Temasek, with a controlling stake in six of Singapore’s 10 biggest companies, including DBS Group Holdings Ltd., announced 51-year-old Goodyear’s appointment in February after discussions over more than 15 months with Ho and her team. ‘Wealth of Experience’ Ho drove an expansion outside the city-state and increased financial assets to 40 percent of Temasek’s portfolio, including stakes in Merrill Lynch & Co., Barclays Plc and Standard Chartered. The value of Temasek’s assets fell 31 percent to S$127 billion in the eight months to Nov. 30 as the credit crisis drove down the value of those stakes. The investment firm, in the first quarter, sold its 3.8 percent stake in Bank of America Corp., which bought Merrill Lynch, at a loss that may have totaled $4.6 billion. It sold its stake in London-based Barclays at a loss in December and January, Reuters reported on June 3, citing people familiar with the matter. “Chip brings a wealth of experience,” Ho, 56, said at the time Goodyear’s appointment was announced. “He brings in capabilities that I do not have. Just as the team in Temasek, many of them have the capabilities I do not have. As a team, I think it’s a very strong team. I like to think that whoever is the new CEO would like to have maximum space without having to say, ‘Is this somebody’s pet project?’” Asia Exposure Goodyear, who presided over record profits at BHP and an almost 350 percent surge in the share price from 2003 to 2007, was seen as shifting the state-run investment firm’s focus to commodities that are rallying this year after the first annual decline since at least 1957 last year. In June, the fund bought a stake in Singapore-based agricultural commodities supplier Olam International Ltd. Temasek and Goodyear “have concluded and accepted that there are differences regarding certain strategic issues that could not be resolved,” the company said July 21. Temasek was founded in 1974 to foster development of the island’s banks, airlines and ports. The company will maintain “our exposure to rest of Asia at 40 percent, keeping Singapore at about 30 percent, reducing OECD exposure to 20 percent and adding exposure to other geographies such as Latin America, Russia and Africa of up to 10 percent,” Ho said in May. Women’s group proposes new authority to make ex-spouses pay up Source: Channel News Asia, 27 July 2009 SINGAPORE: The Singapore Council of Women’s Organisations (SCWO) is proposing that a new body be set up to enforce the payment of monthly maintenance sums from an ex-spouse to his or her family. Statistics show that even with a court-issued maintenance order, 1,700 people – mainly women – had to apply for the orders to be enforced last year. Nearly half of the 1,700 had to apply at least twice – a process that could take months if ex-spouses keep on defaulting on payments. An SCWO taskforce proposed that a new body – called the Maintenance Services Authority – be set up. The new authority would help to ease the recovery process in several ways. One is through powers the courts currently lack. For instance, the courts now leave it up to the claimant to locate the ex-spouse to receive payments, failing which, there is little other substantial remedy. It is proposed that the new authority be given access to the databases of the Housing and Development Board, Central Provident Fund Board and income tax departments in order to trace the whereabouts of the paying party. The authority should also be able to search for all assets related to the paying party. It could also reduce the acrimony between both parties and the time taken for payments to be made, benefiting the claimants. Ms Malathi Das, a member of the taskforce and the vice-president of the Law Society of Singapore, said: “Whenever you deal with a court system, because it’s an adversarial system, you’ll have the claimant’s side of the story and you’ll also have the other party wanting to contest and the judge has then to come back and make a decision. So it can end up being a very long-drawn process still. “Whereas, if you have the authority being the person in the middle, collecting and getting that information, not necessarily revealing the information to the other side, then you’ve a very comfortable intermediary that still achieves the purposes of getting that information, but balances that against the interests of the paying party with his needs for confidentiality and privacy.” The proposals draw from focus group discussions with counsellors, wives and ex-husbands among others, as well as the experiences of other jurisdictions like in Australia and Britain. - 938LIVE/ir Residents call for more transparency in use of sinking funds by town councils Source: Channel News Asia, 27 July 2009 SINGAPORE: Singapore residents have called for greater transparency over the way town councils’ sinking funds are used. The issue was discussed at a recent dialogue session on town council financial management aimed at helping the National Development Ministry draft a score card for town councils. Some of the service and conservancy charges paid by housing estate residents every month go towards improvement works like covered walkways and railings. But the bulk goes into a sinking fund for long-term maintenance projects and to guard against a rainy day. These reserves typically run into the millions and at a recent dialogue session, residents said they want the councils to be clearer on how this money will be used. They suggested, for instance, that the council publish a list of works to be carried out over the next few years. But Dr Teo Ho Pin, who is Coordinating Chairman of the PAP Town Councils, and Chairman of Holland-Bukit Panjang Town Council, said that while the information could be made available, it is only a forecast and is subject to change, say, should the precinct be later selected for government upgrading works like the Lift Upgrading Programme. The councils are also allowed to invest up to a third of the sinking funds in non-government stocks, securities and bonds. A controversy erupted last year over millions of dollars lost in soured investments, leading many to demand greater accountability from the town councils. Since then, most of the councils have published their financial reports online. But these documents are not always easy to read. So dialogue participants said an additional summary – written in clear, simple terms – should also be made available. Some residents suggested that town council funds be pooled together for investment to benefit from economies of scale. In late 2007, the 14 PAP town councils had discussed the same idea, but eventually decided against it. One of the reasons was that the profile of the various town councils was different, with some estates older than the others. Thus the amount of sinking funds available for investment may vary. Furthermore, each has its own schedule for long-term maintenance works, which will affect the investment timeframe. Dr Teo said: “You must be unanimous – that yes, we all go, we all come out at the same time – so it’s not so easy to coordinate. If we put in different amounts, let’s say I put in S$5 million and you put in S$30 million, who has the say in terms of whether we should liquidate the fund or not?” Residents also felt that the councils should enforce penalties, such as fines and high interest rates, on those who do not pay their service and conservancy charges without good reason. The annual Town Council Management Report, to be out next year, will assess town councils on level of estate cleanliness, maintenance of amenities and financial management. – CNA/vm Lift veil over NMP selection Source: Straits Times, 28 July 2009 GIVEN that Nominated Members of Parliament have been around for 19 years, it is perplexing that the scheme has yet to evolve clear and consistent criteria for the selection of an NMP. Ordinary Singaporeans – including aspiring NMPs – do not really know what the parliamentary selection committee looks for when it interviews potential NMPs. The selection committee currently consists of seven People’s Action Party MPs and one opposition MP, and is chaired by Speaker Abdullah Tarmugi. This issue of clarity deserves to be taken more seriously since the NMP scheme will soon be a permanent part of the political system. NMPs, who serve 2 1/2-year terms, are not elected but are nominated by various sectors or private individuals. They are then screened by the Select Committee and appointed by the President. The Constitution tells us that NMPs should have rendered distinguished public service, brought honour to Singapore or distinguished themselves in their professions. Each slate of NMPs should also ‘reflect as wide a range of independent and non-partisan views as possible’. However, one new NMP, entrepreneur Calvin Cheng, 33, was selected earlier this month despite being a Young PAP member. He terminated his party membership only after his appointment as NMP. He is not the first NMP with links to a political party. Current National Kidney Foundation chairman Gerard Ee was a PAP member when he was picked to be an NMP in 1997. Mr Ee, long active in community work, was reported to have said then that his party membership would not prevent him from expressing independent views in Parliament, since he would not be subject to the party whip as an NMP. Parliament’s website states baldly: ‘NMPs are not connected to any political parties.’ To remove any confusion as to what precisely ‘non-partisan’ means, perhaps the Constitution should simply bar people who are members of political parties from being considered as NMPs. That is not the only fuzzy issue in the selection criteria. Though the Constitution says NMPs should be public personages who have distinguished themselves in their professions or in some field, clearly that is not the only quality the selection committee looks out for. A past Cultural Medallion recipient, who asked not to be named, shared his experience of being interviewed by the NMP selection committee. He had expected to be quizzed on his views about the arts, assuming that his job as NMP would essentially be to represent the views of a particular sector. He was caught off guard when the committee asked him for his views on public policy instead. He was not selected. One person who was successful at the interviews was former NMP Siew Kum Hong, 34, an in-house legal counsel and social activist whose tenure as NMP ended on July 17. Asked at a recent forum what criteria he thought the selection committee had applied, Mr Siew’s reply was an honest: ‘I don’t know. I don’t think (the criteria are) fixed.’ He noted that he himself was not a leader in the legal profession. Having written outspoken socio-political newspaper columns, he was told that the interview committee may have seen him as representative of young Internet users, even though he did not position himself that way. As the committee does not publicise its reasons for selecting a particular slate of candidates, some NMPs are none the wiser as to what gave them the edge over others. ‘I only know some interviews are very short, and some are very long, and that’s a sign of how seriously you are being considered,’ one NMP candidate told The Straits Times. The NMP scheme is a unique creature of the Singapore system. It was introduced because the Government realised alternative views needed to be heard in Parliament. There are certain limits on NMPs and they are not meant to take the place of elected MPs. For example, NMPs cannot vote on money bills, no-confidence motions and constitutional matters. The Select Committee gets feedback from all 83 elected MPs, for the Speaker asks them for comments on the candidates applying to be NMP. Nine new NMPs, including Mr Cheng, were sworn into Parliament last week. The other eight were veteran unionist Terry Lee, sociologist Paulin Tay Straughan, managing director Mildred Tan-Sim Beng Mei, shipping industry veteran Teo Siong Seng, political watcher Viswa Sadasivan, eldercare services veteran Laurence Wee, arts manager Audrey Wong and former national swimmer Joscelin Yeo. What the selection committee should have touched on in its public report is what it thinks these nine will contribute to parliamentary debate. Will they provide input on sectors and issues that are currently not well represented in Parliament? Why are their areas of concern priorities for Singapore? These are key questions for many Singaporeans when it comes to choosing NMPs. Instead, the committee issued a generic statement that it found many qualified candidates among the 43 who were eligible, and so appointed the maximum nine as NMPs. The committee might also have released to the public the essays that the nine NMPs would have been required to submit in their application, saying how they hope to contribute in Parliament. That would help the public judge what these unelected representatives stand for, and hold them accountable. clare@sph.com.sg Investment products: Banks tighten rules Source: Straits Times, 09 July 2009 Cooling off period; extra care with elderly investors; better training By Fiona Chan BANKS are becoming stricter on how they sell investment products after the Monetary Authority of Singapore (MAS) found lapses in the sale of structured products linked to failed investment bank Lehman Brothers. Just hours after the MAS released its investigation findings yesterday afternoon, the Association of Banks in Singapore (ABS) announced a raft of measures that the industry will put in place to protect the interests of consumers who buy investment products. These include having a cooling-off period of up to seven days during which customers can cancel their investments. Banks such as DBS and OCBC introduced this last year. Extra care will also be taken with elderly customers and those with low levels of education. These groups were identified as particularly vulnerable investors in the Lehman-linked notes debacle. Bank tellers will not be allowed to refer customers to sales representatives who sell investment products. The representatives themselves will have to go through a more robust and specialised training programme, including a new examination the MAS is helping to design. Banks are also re-examining the way they reward their sales representatives and will not assess their performance based on sales factors alone, said the ABS. The association, which represents all banks operating here, will also step up education programmes for retail investors to make them more savvy. ‘We want banks to communicate more openly and clearly with consumers so that they make informed decisions about their investments,’ said ABS director Ong-Ang Ai Boon. ‘Banks have a responsibility to ensure that the right products are sold to consumers, depending on their risk profile and the suitability of products.’ The mismatch between investors’ needs and what they were sold was the focus of the MAS investigation report released yesterday. The 10 financial institutions that sold Lehman-linked products were found to have tripped up in areas such as assigning the correct risk rating to their products and customers, and ensuring that their sales representatives were properly trained and well-informed. Most of the banks and brokerages involved issued statements yesterday saying they had already paid compensations to the relevant investors. Hong Leong Finance, which was dealt the harshest penalty, said that ‘many investors have in fact redeposited compensation from their structured notes’ with the institution. It paid out the most – $57.6 million – in compensation. Some of the banks also said that they had already taken proactive steps to improve their sales processes. DBS Bank, which put a stop to bank tellers referring customers to investment products on Jan 1, has increased training and tests for its sales staff and produced ’summary sheets’ for all its products to explain their features and risks. It has also expanded its customer questionnaire to obtain more information on their customers’ investment experience, said a DBS spokesman. Sales supervisors will make follow-up calls to customers such as the elderly or lowly educated to make sure they understand their investments. OCBC, which has stopped distributing structured notes since November, said it is reviewing how it sells and distributes investment products. ‘We intend to make our business model even clearer for enhanced transparency,’ said OCBC Securities managing director Hui Yew Ping. ABN AMRO said it is being more careful about which investment products it brings into the market, and is retraining all its relationship managers. It will also change the way it appraises the performance of its sales staff. fiochan@sph.com.sg Passport mix-up man a bankrupt Source: Straits Times, 09 July 2009 A growing number like him have flouted rule on unauthorised travel By Carolyn Quek & Teh Joo Lin WHEN a retiree flew to Vietnam on his son’s passport in June last year, the immigration authorities came under fire. But it has since come to light that his son – an undischarged bankrupt barred from unauthorised travel – had used that same passport in the year before the incident to make 30 trips abroad without official approval. Mr Vincent Ang, 39, has pleaded guilty and since served a four-week jail term for flouting the law governing travel by bankrupts. Undischarged bankrupts are supposed to seek clearance from the Official Assignee (OA) ahead of any trip out of the country. An OA is a court officer who administers the affairs of such individuals, including ensuring that they do not stash away income or assets and keeping track of their movements for their creditors’ benefit. Mr Ang’s unapproved trips came to light last September, in the course of an investigation made into his affairs by the OA. He is among a growing number among the 26,500 bankrupts here caught leaving the country each year without prior approval: Last year, 114 bankrupts were taken to task, 33 more than the year before; in the first half of this year alone, the number had already hit 118. Court documents said that between March 2007 and April last year, Mr Ang, declared a bankrupt in June 2002, made 30 trips to places such as Hong Kong, China, Malaysia and France. Then on the morning of June 23 last year, his 61-year-old father mistakenly grabbed his well-travelled passport for his holiday to Vietnam. The older man made it through check-in, immigration and other checkpoints. It was not until he was airborne that he realised the mix-up. Meanwhile, the younger Mr Ang was to have made another unauthorised trip that day – to Hong Kong this time. Because he did not have his passport, he had to miss his flight. He subsequently made this trip after his dad doubled back to Singapore and father and son swopped passports. The passport glitch triggered a dressing down for the Immigration & Checkpoints Authority (ICA) from Deputy Prime Minister and Home Affairs Minister Wong Kan Seng, who said he was ‘appalled’ and ‘flabbergasted’ at the slip-up; he called for a tightening of operations on the ground across all the agencies of the Home Affairs Ministry (MHA). The lapse was among the few in MHA last year, including the escape of terrorist Mas Selamat Kastari. In response to queries, a Law Ministry spokesman said the Insolvency and Public Trustee’s Office (IPTO) and ICA have designed a system to exchange data on travel by undischarged bankrupts. Such individuals are now less likely to get away with unauthorised travel, as shown by the higher numbers of people prosecuted, fined or issued warnings this year, said the spokesman. Bankrupts deemed likely to skip town are on a watch list; they may also have their passports detained by the OA. The Law Ministry did not say how the younger Mr Ang managed to elude detection in 2007 and last year. The law puts the onus on bankrupts to declare when they want to go abroad. The green light to go is ‘generally granted’ for employment reasons, as this enables them to earn income to pay their creditors. Permission is also granted on compassionate grounds. About 90 per cent of bankrupts who apply for travel get the go-ahead. About 43,000 applications, including repeat ones, were made each year in the last two years. Mr Ang himself previously applied for permission several times in 2005, but stopped doing so for those 30 trips in 2007 and last year when he travelled for work. Speaking to The Straits Times from abroad yesterday, he declined comment on the matter but said he had obtained permission for his current trip. carolynq@sph.com.sg joolin@sph.com.sg Payouts just a fraction of total cash invested Source: Straits Times, 08 July 2009 THE compensation offered by financial institutions to investors pales in comparison to the total amount that was initially invested in the toxic structured notes, according to latest figures from the Monetary Authority of Singapore (MAS). Brokerage firm UOB Kay Hian offered the lowest proportion – just 1 per cent or $90,000 of the amount spent on the Lehman-linked notes it sold. Hong Leong Finance paid out the highest proportion – 66.9 per cent or $57.6 million – to investors who complained that they were mis-sold. The finance company was the first institution to compensate its elderly and less educated customers on ‘compassionate grounds’. The MAS yesterday released findings of its investigation into the 10 institutions which sold about $520 million worth of Lehman-linked investments such as Lehman Minibonds, DBS High Notes 5 and Merrill Lynch Jubilee Series 3 LinkEarner. About 9,900 retail investors lost huge sums after the US investment bank filed for bankruptcy last year. The institutions have ruled on 6,241 cases of complaints by investors who claimed that they were misled into investing in the complex structured notes. About 62 per cent of investors whose cases have been decided have been offered either full or partial compensation. But the amounts offered in compensation are only a fraction of the total cash invested. The proportions of cash offered for compensation indicated in the MAS report do not offer much hope for investors still waiting for their complaints to be resolved. Take DBS Bank. It sold DBS High Notes 5 and has ruled on 866 investor complaints but offered compensation to only 197 investors. It has offered $7.6 million in compensation out of a total of $84.1 million initially invested. DMG & Partners Securities compensated only one out of the 15 investors who complained they were mis-sold the notes by the brokerage. He was compensated in full, a sum of $20,000.