Yaw Shin Leong is Right! Yaw Shin Leong is currently being attacked by many for his comment that he had voted for PAP MP Teo Ho Pin during the last General Election.It is quite clear that politicians walk a tight rope and some things are better left unsaid. There are many (KTM included) who have doubts about the wisdom of Yaw making his vote known, but that is not the subject of this blog entry. Some things done cannot be undone and so there's really no point crying over spilt milk. The KTM has been in this dunno what philosophical mood recently and he's more interested in Yaw's position that he votes for the person rather than the party. Sounds reasonable enough, until you hear the last part, where Yaw says that he might even consider voting against a WP candidate. In fact, the KTM posted the following comment on Yaw's blog:Agree in general except one point: if there is a contest between WP and any other party, you should vote WP. Because you belong to the party, it is only right that you should support your own party. That much loyalty you owe to your party.If you cannot agree with the people that your party has accepted into its ranks, then you should change parties so that your loyalties do not continue to be divided.The KTM didn't even need to think on this one (which turned out to be his mistake). While the KTM's views are generally not very popular, it seemed clear to the KTM that most would probably agree with the KTM on this statement. Sounds right what. How can it be wrong? You pick a party, you have to show loyalty to a party no?For dunno what reason, the KTM was thinking about this "loyalty" principle and trying to figure out how one can seek to justify this principle. Surely, if this is right and reasonable, we must be able to explain to people why this is a reasonable principle. Strangely enough, the KTM couldn't. :-(The way that one can go about reasoning about such things is to construct really warped thought experiments that gives us a headache. One simple and related example: suppose that one was a magistrate in imperial China and one's father was caught and charged with murder. The evidence is conclusive and penalty is death. Well, the magistrate has pretty much absolute power, so what should one do? Do the "right" thing and sentence one's father to death, or do the "filial" thing and find some excuse to acquit him? Now for the thought experiment (Disclaimer: the following is pure fiction. Any semblance to any persons dead or alive is mere concidence): fast forward to year 20XX, SP (Sarong Party) has become the dominant Opposition Party in Singapore neck-to-neck with the PAP. The PAP till that point has not lost a single election, though the margins have steadily been thinning and GE20XX looks like the year that change was going to happen. Suppose for a moment that there are 85 seats in Parliament (This is a rant: KTM never understood why we have 84 seats. Scully PAP 42, Opposition 42 how?). As it turns out, in this pivotal year, after 84 seats have been contested, the results indeed show a neck-to-neck fight PAP 42: SP 42 and there is one last SMC remaining. KTM belongs to the SP of course. :-) This last SMC fight is really interesting - it is a fight between the then PAP PM Lee Hiang Lung and a major SP stewart, Slimy Two-Face (STF). More background: SP is generally filled with lots of patriotic people who love the country. Sarong Party Secretary-General is a well-respected figure encik Mee Pok Man. But MPM is old and STF is his designated successor. If SP wins, STF will likely be the next PM. The KTM happens to be a small fry activist in SP - but as it turns out, KTM has had dealing with STF. STF as it turns out is extremely good looking and suave and he NEVER says the wrong things. Unfortunately, the KTM had on several occasions caught sight of STF doing some unscrupulous things that makes the KTM despise this character. It is nothing personal. STF has no integrity period. It also turns out that STF is extremely good at covering his tracks, so no one else except the KTM knows about it and the KTM has thus far been unable to find any incriminating evidence against STF. What about PM LHL? Well, he is very much like all his PAP predecessors. Career bureaucrat. Does his job. Foot in mouth every now and then. Runs the economy reasonably well, but policies are considered too money-minded and lacking in compassion (which is why the gradual decline in "mandate" to begin with). So fast forward back to Polling Day GE 20XX. As fate will have it, the KTM actually lives in the contested SMC and has to decide who to cast the vote for: PAP or SP. It turns out that the KTM has philosophically objections against spoiling the vote and so rules that option out. So, should the KTM vote PAP or SP? By dogma, it will be SP - but should we vote by dogma? Note also that if the KTM votes against STF, he is compelled to come up with a damn good reason because he doesn't like STF to begin with. The KTM believes that in casting one's vote, personal feelings shouldn't figure. So how?After much thought the KTM decided that he couldn't follow dogma in this instance and would vote against STF. The reasons are as follows: Why did KTM join the Sarong Party? Nope, not for the SPGs. Rather, it was because his philosophical learnings were closer to those of SP rather than PAP and he prefers the policies proposed by SP over those by PAP. The KTM would avoid using qualifiers like "better" because at this juncture in this imagination world, Singapore is already close to the US Republican/Democrats model and any policy can be both good and bad depending on where one is standing.So in this light, it is really first the country and then the party and not the other way around. Next, the KTM believes that a PM without integrity is the quickest way to ruin the country and so STF as PM is unacceptable to him because he doesn't believe that it is in the interest of the country.Consequences if STF loses? PAP will run the country for another 5 years -- might not be ideal, but PAP has already run the country (20xx-1969) years, so there'll be no surprises. There's always the next election and at the meantime, the KTM might be able to uncover STF's evil deeds and clean house for his party. In fact, if STF did come to power and did bad things, SP's hard and good work would be completely crushed (c.f. DPP, Taiwan). Okay. The KTM admits that most of this story is pretty bogus and contrived, but what it has demonstrated to the KTM beyond reasonable doubt, is that Yaw Shin Leong is perfectly justified to say that he cannot be sure that he will necessarily vote for a WP candidate. And in summary, the fundamental reason why Yaw Shin Leong is right is: nation before party, principles before dogma. Truly, it takes some guts and integrity to say that what is right, instead of what is politically correct and expedient. We live in interesting times. :-P Three Questions Someone commented that the KTM has recently come out of the woods out of nowhere guns blazing. Hehe. Perhaps. :-)It is indeed true that the KTM has taken quite a long hiatus from blogging. But truthfully, the main reason is this: the KTM didn't find anything he wanted to blog about. The KTM isn't paid to blog (at least not anymore), so it really doesn't matter. Perhaps it was a writer's block? Perhaps Singapore is just really boring? Who knows, but these last couple of days has been interesting because the KTM now has three questions swimming in his head. :-) Inspiration? Perhaps. Why does the KTM care about these questions? 'cos there are no easy answers. :-) What investment policies are acceptable for our reserves? How can we judge if the Government is doing the "right thing" with the reserves? This is not a question about whether we should use the reserves to subsidize the price of rice. The question we are asking here is the following (and in a vacuum): suppose GIC has $xx billion dollars in the reserves, what sorts of risks should GIC be entitled to take? The point here is the following: even for individual investments, this question is not easy to answer because different individuals have different risk appetites. Two individuals who have the same nett worth may decide to invest in two different portfolios and they may both be "optimal" if the risk appetites of the two individuals are taken into account correctly. This question is hard because of a number of reasons: (i) the money doesn't belong to one individual, but to a collective entity of 3 million people. How do we ensure that the final decision is really what these 3 million people want? Should it be a democratic process and we have referendum? (ii) SWFs attract unnecessary attention and often become political problems when we invest our money in foreign countries. Foreign countries are often enamoured with the idea that we're buying and controlling key assets (e.g. ports). (iii) Investments will entail downside and in cases like Shin Corp and to a lesser extent UBS/Citibank, these downsides can become political issues - so SWFs are quite different from regular funds and hedge funds because they are susceptible to public pressures. While one may argue that the PAP has successfully brushed aside all such concerns, the KTM doubts this is a viable strategy in the long term because there is certainly a political cost. Next, there is the question of how we can and should define accountability. Why is this complicated? Because there's risk and it's very hard to measure. First we need a "target" - GIC definitely shouldn't under-perform compared to the market average, but what is the "correct" premium that we should demand as "acceptable performance"? 1%? 2%? 5%? Unless we set the bar really low, some years, GIC will not make it - then what? Fire the Chairman? What should be the people and MOF's response? Finally, there is also question of the relation between our CPF money and the reserves, 'cos presumably our CPF monies constitute a portion of the reserves? So what should be the right interest rate for CPF viz-a-viz the expected return on the reserves? "With great pay comes great responsibility" What does high pay in the public service really mean? While people may think that the KTM is referring to the MSK case, nah. The MSK is really straightforward in the KTM's view and not very interesting to discuss. What the KTM thinks would be interesting to do is to think of an imaginary scenario (or perhaps cite a real one) where things are really screwed up and ministerial liability is clear cut, and then we ask ourselves: how should we be attempting to reconcile the high ministerial salaries with the mistakes.And even before that, it would be interesting to think about what high ministerial salaries mean. The Govt has said that salaries should be pegged to the top dunno 24 people or something and given their reasons. Others have disagreed. The question is: what should be the relation between pay and responsibility? MSK is a really lousy example, but suppose for a moment (and many probably won't have too much trouble with this) that we can find DPM Wong personally responsible for the fiasco, but only slightly so. Slightly only lah. If fully, the answer is obvious and we don't want that. We want to construct a somewhat ambiguous problem here so that we can have something to reason about. Next, we put DPM's pay on a slider start at say $100. There is a school of thought that probably believes that as we move the slider and increase his pay, he therefore becomes more and more "responsible" and at some point, perhaps when the slider reaches $1 or $2 million, he should be sacked? How reasonable is this argument? Why is it reasonable/unreasonable?To what extent should the Government "take care" of its people? What is our response to our old folks cleaning tables in the hawker centres? There was this article today in the Sunday Times on this 83 year old cleaner who is still working and there was this other guy Tired Man who claimed at TOC:I believe it is a duty of the government (of course not the annuities as I see economic component it.) to look after her elderly as they had contributed to the society for the past few decades. I do not wish my mom to pick up aluminum cans for living. Am I watching a movie of my future? It is such a disgrace for a PM to encourage his “mothers” and “fathers” to work at their age. To become a graceful society, the government must be equiped with graceful brain and policies.This statement is probably not new to the reader and many people probably have come across something similar, or even hold a similar opinion.It is a no-brainer that the Government should "take care" of its people, but the question is how do we reconcile the role of Government with the opinion expressed by Tiredman et al. that "it is a duty of the government to look after her elderly as they had contributed to the society for the past few decades"? Prema facie, the KTM believes that most people (even the KTM) can and will agree with this statement. The key issue is essentially: what is the "extent" of this duty?To take this question of what "take care" should mean further, it is perhaps interesting also to also explore this question in the context of local vs foreign workers, as people must be aware of the recent spat between MPs Seng Han Thong and Low Thia Khiang over the employment of locals at our town councils. It is likely that the KTM will blog about these three questions in the days to come. Not exactly sure when 'cos the KTM still hasn't come to a conclusion on what his views are on these issues -- and more importantly, how to even think about these questions. Entries will be published either at Singapore Angle or at this KT stall depending on how polished the final product ends up. :-)Readers are welcome to leave comments for the KTM on what they think. It is unlikely that the KTM will engage in a full debate at this point 'cos his still trying to figure out what he thinks, but he might ask questions and we can have a short preliminary discussion going. :-)The Sunday TimesMay 4, 2008 You're so old. Why are you cleaning toilets?Is it a sad reflection of society that the elderly are in such jobs, asked a readerBy Teo Cheng WeeCleaning toilets. Clearing plates. And many of these cleaners are elderly.Indeed, in the 13 years that Mr Ahmad Aman has been cleaning the toilets in shopping centres, two questions are constantly posed to him.They are: 'Uncle, why are you still doing this job at your age?' and 'Uncle, why aren't your kids taking care of you?'The father of nine is 83 years old. But he says he has to work because he has a family to feed.He has two school-going children with his second wife. The former seaman is divorced from his first wife.He is reluctant to take money from his other seven children, who he says do not earn very much either. With only a basic education from Malaya before he moved to Singapore in 1946, there are few other available jobs for him.The sight of such old cleaners prompted Straits Times reader Anne Chong to write to The Sunday Times last month, saying that the situation was 'a sad reflection of society here'.'During my travels through China, from rural Yunnan to cosmopolitan Shanghai, I never once encountered an elderly toilet cleaner.'This is perhaps because in China, it is considered a stain on the family honour if your mother, grandmother or aunt has to clean toilets to support herself, so the elderly are usually supported by the family network.'The situation is the same in the Philippines,' she wrote.Restroom Association of Singapore (RAS) president Tan Puay Hoon responded in a letter two weeks later. She said RAS was 'looking into the possibility of designing jobs for elderly toilet cleaners'.'With sufficient funding, they can be trained as restroom assessors to audit and rate public toilets (for RAS),' she wrote.Elderly cleaner Chuy Chee Yong, 76, who has worked for eight years as a table cleaner in Lavender Food Court, said he is 'somewhat ashamed' of his job.The father of three would like to retire if he could, but needs money to pay for his heart medication and to take care of his wife, who is also ill. Like Mr Ahmad, he does not want to take money from his children because he feels that they too are struggling to make ends meet.Cleaning contractors estimate that workers aged above 65 make up about 10 to 20 per cent of their total staff. They reckon that, of this estimate, perhaps half - people like Mr Chuy and Mr Ahmad - work because they need to. The rest do so to earn a little more pocket money.Many of these elderly folk, moreover, are illiterate or have minimal paper qualifications. Cleaning is their main avenue of work because the barrier to entry is low.The Ministry of Manpower (MOM) said that 'cleaners, labourers and related workers' make up the biggest number of jobs for people aged 65 and above here, with about 16,000 people employed in such jobs last year.That makes up 35 per cent of the total number of workers for that age group. In comparison, these jobs comprise only 2 per cent of the total number of jobs for Singaporeans aged from 30 to 34 - and the percentage rises with each older age group. Cleaning contractors say that they are not out to look for older workers as the salary is the same - about $500 to $800 a month - whether one is young or old.Mr Jason Low, head of operations for cleaning contractor Sun City Maintenance, put it this way: 'Who are the people who can survive on this amount? It's the old folk, who live frugally and need only to support themselves.'RAS' Ms Tan agreed, saying that the industry will not be able to hire younger cleaners if the pay stays at this level. 'If you are young and need to support a family, you will need to earn at least $1,000 to $1,200,' she said.A few contractors told The Sunday Times that hiring older workers is not a bad thing, even if they may be slower.At cleaning contractor A&P Maintenance, for instance, about a quarter of its workers are aged 65 and above.'What we like about older workers is they don't job hop, they're more loyal and they put in more effort. The young ones will go absent regularly,' said Mr Kenny Tan, executive director of A&P.Mr Alvin Tan, operations manager of S21 coffee shops, said they also try to hire more old people. 'As there are limited jobs for older workers, this is our way of doing public service'.Acting Labour Minister Gan Kim Yong, who is the chairman of the Tripartite Committee on Employability of Older Workers, said that 'all workers, including toilet cleaners, make a meaningful contribution to society and should be respected'.Labour MP Halimah Yacob agreed. She said one should not assume that all older workers doing dirty jobs are unhappy.'Many of the older workers I have met in these jobs have a great deal of pride in their work. I don't think we should be too judgmental about whether their work is shameful,' she said. To regulate (and how) or not to regulate? The KTM got involved in a discussion with Mr Tan Kin Lian on the question of the regulation of financial institutions w.r.t. "questionable" financial products at TOC. This entry is a short summary of the crux of the exchange. The KTM is hoping to continue the discussion on the regulation of financial products with Mr Tan here. :-PMr Tan said in the article that “(MAS presumably) should disallow financial and insurance products that have excessive charges and offer unfair terms to consumers”, which seems to imply that MAS should start playing the role of HSA for financial products. Would such regulation be prudent and how should it be done?The KTM disagreed with this statement because he is of opinion that if the Govt tried to regulate, it’s probably going to screw it up - because MAS won’t be able to do it right. However, the KTM could most certainly be wrong if there’s indeed some way of regulating the industry, which is why Mr Tan's views on “how” the regulation should be done were sought.The following question was posed to Mr Tan:Imagine. Just imagine that the Government agrees with you that we should regulate more and you are appointed the Director at MAS in charge of the regulation. In addition, you have a small army of analysts at your disposal to help you with your work. My question: what is your directive to your army of analysts w.r.t. what should be considered “questionable” products?Obviously there are many factors, e.g. liquidity, maturity, etc. etc., but at the end of the day, it’s all about the tradeoff between rate of return versus risk. So what are you going to do? Are you going to say that only products with a minimal “effective” (nett of fees) rate of returns of say 5% can be sold? How would you even begin to quantify the risks and are you going to make decisions on behalf of the people w.r.t. their risk appetites?Since you were from the insurance line, so perhaps we can do a simple case study for insurance products that typically have two components - guaranteed and non-guaranteed. What sorts of conditions would you impose on them? People surely haven’t forgotten the recent episode where AIA zeroed the bonuses (because investments didn’t do so well)? When insurance companies sell their products they always have this dunno what projected returns. If they cannot meet how? Should MAS keep track and fine them?? If MAS passes such a law, the KTM is sure you know the reaction of the insurance companies. As we know, NTUC Income is a major player in the financial sector in Singapore and since NTUC is a co-operative, which means that it is supposedly owned “by the people for the people”, how is it possible that NTUC will come up with “questionable” products, which seems to be what you are insinuating as you sweep the financial landscape with your broad strokes?Now suppose the KTM has misunderstood, and NTUC Income is flush with lots and lots of “good products”, then isn’t the solution simple? Government can just tell the people, “Let’s buy NTUC. NTUC will take care of all your retirement needs!”. In any case, if NTUC Income is “doing the right thing”, wouldn’t it already be exerting competitive pressures on the other financial institutions to fall in line?Mr Tan said that he would like the regulator to require the product issuers to answer a few key questions:what are the charges levied on the consumerwhat benefits is being provided by the product issuerwhat is the best estimate cost of the benefitsThe KTM was frankly quite surprised at this 'cos he thought that there were already rules on disclosure. Mr Tan also cited an very interesting example of a product meant to skim consumers:A structured product is being introduced to give a capital guarantee at the end of 5 years. If the yield on government bonds is 4% per annum, the product can earn 20% from this investment. If the charges taken away for the marketing, issue expenses and the profit to the issuer is 15%, the product is likely to return 5% for 5 years or 1% per year. To hide this miserable yield, the issuer invest the remaining 5% in an option. Many of these options expire without value. The investor is likely to get back the original principal - nothing more.The KTM then responded as follows:Your cited example is interesting - but it is still not clear that regulation (in the sense of banning such products) is necessarily the only way. You seem to have described a problem of misrepresentation. My question on your 5%-gamble-on-option product is the following: how does/can a financial institution get away with it?Even a naive investor will ask the question: how much can he expect to get after 5 years, above and beyond the capital guarantee? Surely the bank rep must cough up a number and the expected returns must be more than you regular bank savings rates for him to invest in the structured product. Are you suggesting that there a problem in that number? In your example, the bank rep should have said 1% p.a. right? If not, then shouldn’t MAS simply take action against misrepresentation?Frankly, the KTM has no issues with MAS requiring financial institutions to make full (or what’s deemed “sufficient” ;) disclosure of financial products (but he thought this has already been done what no?). Where the KTM disagrees quite strongly with you is the statement that “(MAS should) disallow financial and insurance products that have excessive charges and offer unfair terms to consumers”, because the terms “excessive” and “unfair” are highly contentious (and he was basically seeking to understand where in your opinion is that threshold separating “reasonable” from “excessive” and separating “fair” and “unfair”).If there’s is no misrepresentation and it’s a case of willing buyer/willing seller, why should we stop people from buying/selling? You seem to be implying that your invest-5%-on-option instrument is bad. Perhaps you are right, but there is this organization called Singapore Pools and they sell this thing called 4-D. Is buying 4-D necessarily better or worse than investing 5% on options?Now the question about NTUC Income was not random (and neither was it a personal attack - merely an unfortunate coincidence that Mr Tan was former CEO of NTUC Income). The point very simply is the following: NTUC Income is a subsidiary of the NTUC, a national co-operative under the control of the Government. And hor, co-operatives aren’t usually supposed to be making tons of money since they are supposedly “by the people for the people”.The answer to “questionable” financial products thus seems pretty obvious (or perhaps not): if NTUC Income is doing its job and coming up with quality products, it should be hard for other financial institutions to sell their “questionable” products. All NTUC Income has to do is to take up ad’s side-by-side with these “questionable” products with accurate information and let these products sell themselves. Of course, this might not eliminate “questionable” products completely, but it should make these products relatively unpopular if the uptake isn’t high enough. So ends the KTM’s logic. :-)This argument could however be flawed since the KTM is not sufficiently familiar with the financial landscape to see where the underlying assumptions might fail. Addendum:Mr Tan replies:The product issuer tells the financially naive investors that their money is invested in certain combination of shares or bonds that will give certain yield under certain circumstances in the future.The ordinary folks have no way of calculating the probability of the “happy events” occuring. As a financial expert, I will not be able to calculate this probability as well, but I guess that the chance is very, very small.What happened? Most of these “happy events” did not occur. The investor is likely to get his principal back. In some cases, they lose part of their principal - as they were not aware about the risks.I understand that some of the structured products are invested in CDOs. They have not matured yet. Let us see if the investors can get back their principal.As the so-called MAS director of regulation (if I ever get appointed), I will never allow this type of “rip-off” to happen. It will not be possible for the product issuer to answer my (b) and (c) questions, so the product will never get approved by me.Why did the government regulate gambling? It is to ensure that the consumers are not “rip off”. They should be given a fair game of chance, and may pay some loading to cover expenses.Sadly, this kind of protection does not occur, when financial products are concerned and reputable, trusted banks are involved.And the KTM responds:Wah, isn’t it somewhat extreme to issue disclosure requirements that are not satisfiable?While the KTM still doesn’t understand completely what you mean by (b) and (c), he does not believe that your requirements are impossible to satisfy. It is just not plausible for MAS do something like that. In fact, let’s imagine that you are the MAS Director and KTM is CEO of the imaginary KT Income, and you issue this new directive. This is what the KTM will do:KT Income will kwai kwai follow your instructions and submit the data to you as required. Whatever PhDs you have, the KTM will also similarly employ to spit out the numbers you ask for. Throw in the partial differential equations, Black-Scholes, kitchen sink and all. Somehow, there will be these magic numbers all backed up nicely with data and charts. :-PThat’s not it. The KT Income will not be submitting just one product for approval, but a whole range of products (10?) ranging from almost riskless bond-like products to the high-risk products. Why? The KTM is merely probing your system. You cannot possibly be blocking the bond-like products. The question will be: where is your threshold and how do you actually do the regulation?If your threshold is too low, the KTM will complain to the Finance Minister that you are killing the financial sector and Singapore can kiss it’s pipe dream of becoming a financial services hub goodbye. :-P And it’s not just a complaint letter. The complaint will be a big stack of documents demonstrating to the Minister in no uncertain terms that MAS has disallowed a product that is comparable to products available in other major financial centres like New York or London - and you can go figure how to explain to Minister. The KTM’s numbers will be correct (’cos they will be generated by this army of PhDs in the back room). :-)Ding-dong enough and something will eventually get through ‘cos KT Income has the resources to play this little game with the MAS bureaucrats. And what happens after that? Two things:(i) What is submitted to MAS for approval and what is printed in the marketing brochures are not exactly the same. There no lies of course! By why the omissions? “Aiyah, not our fault. We did try to print (b) and (c) in our earlier versions, but we found out that the customers couldn’t understand and didn’t find it useful. We want to help the customers understand and so we only print useful information in the product description.” Actually hor, you want us to print also never mind, since like you say, nobody understands anyhow.(ii) There will always be risks - and if the product tanks, whose fault? Well, MAS has already checked and approved, so KT Income cannot accept responsibility. MAS’s approval means that we had already done our due diligence. Any losses arising are an act of God (or MAS’s failure in its checks. Complacency?)!Be aware that an approval process will have the unintended side effect of implicit endorsement. There is no reason why MAS would in its right mind want to accept responsibility for the downside of a financial product. It might not be MAS’s fault, but will the people understand? :-) Damned if you do; damned if you don’t.Frankly, the KTM does not disagree with the spirit of your proposal. Surely, protecting the people cannot be wrong. He just doesn’t believe that there is a practical implementation of what you’re proposing. Addendum 2:The KTM was thinking through this problem and he suddenly realized that there's probably an easier way to regulate financial products. This is perhaps what MAS can do: inform all financial institutions that it is not adverse to making a public announcement if customers complain and it discovers that a product is "questionable" - and don't define "questionable". :-)Frankly, then MAS doesn't have to do much and life goes on. After a while, some fellas will think that MAS is sleeping? Good for them and they try something funny - and someone gets conned essentially and complains to MAS. MAS verifies the complaint and makes a big story of this case, call in the press, have reporters do sob stories on how some poor folks have lost their life savings, yada yada. Stock price of the offending institution takes drastic beating and everyone falls in line thereafter because they know that MAS means business? Sounds plausible? :-) Questions about the Reserves While kaypohing elsewhere, the KTM was asked the following questions by one Family Man:Kway Teow Man,Please advise me. When I was a kid, I understand we need to store a big reserve to help Singaporeans in times of emergency. As it is now, inflation and the price of rice has increased tremendously.However, our govt has indicated the subsidy of rice is the start of a slippery road. So our govt decides to buy more citibank and UBS shares, leaving our singaporeans without a cent of subsidy.What is your take on this?Should our govt spend some billions to subsidise the price of rice? When do you think the reserves will EVER be used to help Singaporeans? Or should only be kept in GIC to grow and grow and grow (hopefully)When a meteor hits us?When an earthquake hit us?When the sea overflow the banks?The KTM thought that these were really good questions and they deserved a considered response.First, a disclaimer: this is the blogosphere where the norm is to pretend one is an expert and spout nonsense. The KTM really is no expert and is not pretending to be one - but he does like to spout nonsense. :-) The KTM's response below is by no means authoritative and Family Man is encouraged to write to his MP, to the Finance Minister, to the PM or Forum Page to seek the authoritative answer from the horse's mouth. To begin, there is a need to be clear that there are two separate issues in these questions: (i) whether we should invest in UBS/Citigroup; and (ii) whether reserves should be used to subsidize the price of rice. The former is GIC's problem, while the latter is the Finance Ministry's business. GIC's responsibility is clear and that's to maximize returns on the reserves. On the UBS/Citigroup deal, the KTM is of the opinion that most bloggers dunno jack about that they are saying - but since in Rome, you do as the Roman's do, so the KTM will join the fray and kay poh with his two cents worth. Notwithstanding the paper losses, the KTM is of the opinion that it is too early to say whether the deal is a good or bad one. First, the KTM's understanding is that these deals are actually interest-bearing convertibles with relatively high coupon rates and not actual stock. Is there a difference? Yeah, but this is probably not the forum for a discussion on the differences. Next, given the nature of the deals and the premiums that have to be paid (and the bankers that get involved) of course there will be some paper loss. In fact, given the looming recession, it's probably going to get even worse, so people brace yourselves. :-P What people fail to remember is that as a Sovereign Wealth Fund, GIC has a significantly longer investment horizon than what most people can appreciate.Third, you dun get to buy into UBS and Citigroup everyday and on such a scale. Hopefully, the US financial markets don't have meltdowns too often lah - doesn't do us much good also. If we win, there's the potential to win big (but of course in such gambles, there's always a downside also). But even if we win and say in 15 years, GIC makes an effective annualized rate of return of 10% (20%?), will it make them heroes you think? People will still bring up the Shin Corp deal. :-) Indeed, GIC has a pretty shitty job (but they apparently pay their people well to make up for it). :-PNext, we come to the question of when and how to spend the reserves. Frankly, this is not a question for the KTM to answer. The elected Government of the day has the responsibility of explaining this to the electorate. The following are some issues that people might want to understand so that even when (and if) the Government explains, the explanation is hopefully less cryptic.One, it is the KTM's understanding that something like 50% (someone can check this figure) of the Net Investment Income from the reserves is already being spent by the Government even as we speak. What seems to be happening is that the money is just added to the state coffers just like your regular tax revenue - but then again, money is money what. Does it matter what source (as long as it's not illegal or immoral)? The KTM is lazy lah, so he didn't go and check the figures (so someone can help do it), but his understanding is that even this 50% is substantial and in the order of billions. Definitely more than enough to subsidize rice. So really, the question really isn't a matter of whether reserves should be used to subsidize rice, but a question of whether to subsidize rice to begin with. Just look across the causeway and see what happens when you subsidize necessities. Essentially, you distort the market and cause people to hoard or export your commodities for profit, leading to increased enforcement/policing costs - and for what?Dunno about you lah, but the KTM received a couple of cheques in the mail in recent weeks for dunno what GST rebates, Singapore shares,.... Aiyah, it's all very confusing and the KTM isn't quite keen to rack his brains to understand what's going on also. Government give money, the KTM take loh. How often does one get free money in the mail right? :-) Actually, the KTM sometimes thinks that it wouldn't be too bad if every year also election year ..... :-PAs it turns out, the KTM probably got a thousand plus - really cannot keep track, but definitely more than enough to buy rice for the next three to five years probably. Of course, people will then say that it's not only rice lah, the cost of living is going up. Even the PAP kindergartens are going to charge more... and that's correct but what this shows is that the price of rice really isn't a problem (or more precisely isn't THE problem). Perhaps it is in the surrounding countries, but not in Singapore. Even the price of pork, chicken or duck isn't really a crisis. In short, to respond to Family Man's point about an "emergency", the KTM is actually of the opinion that we're aren't quite in an "emergency" just yet -- but the "emergency" might just be lurking around the corner under the present global climate. For how long can the US hold back a recession? Our problems are significantly more complex and endemic - and with the looming recession, the Government will have an even more serious problem to grapple with and that's the problem of jobs. Yes, jobs are being created at a phenomenal rate over the last few years and this will continue for a short while more before the job market starts to shrink - but the jobs are not the jobs that the Government needs!! Maybe the Government will bring forward the IR projects? Whatever. Structural unemployment is still an issue and it will not go away. But imposing high tariffs and quotas on foreign workers is also not the solution because this will slow down economic growth and probably reduce corporate taxes. Also, businesses will complain (people think that businesses dun pay taxes huh?) and allowing foreign-labour-dependent businesses to grow will at the very least stimulate the creation of some jobs for the locals. However, at this rate, the proportion of foreigners in the workforce will continue to grow and fuel xenophobic sentiments. So how?Dunno leh. If the Ministers cannot take it, maybe they can quit and fry KT? Definitely much more fun and stress-free frying KT than running a country. And the best part, can anyhow open gap to spout nonsense with impunity on the side. That said, fry KT dun need 4 A's one. Must just be able to take the heat and the grease. After the latest MSK incident, they are probably used to the heat already lah, so maybe just the grease is new. :-P Numbers that tell us nothing The KTM read with interest this article that came out in the news today about MOH doling out some $39.6 million for 301,000 needy patients. Unfortunately, the KTM can make no head or tail from the report. The number of patients helped at 301,000 looks pretty good, except when we realize that we only have about 3 million citizens (since the PRs have been cut out from healthcare subsidies -- but even if we include everyone, it's only 4.5 million). Question number one: isn't the Medifund reserved for the really poor and needy? We have 10% of population poor and needy meh? Correction, these people are needy and SICK. Got so many needy and sick people? The KTM finds it hard to believe. Anecdotally, the KTM's dad got hospitalized briefly this past year and the KTM forked out about $2K and didn't apply to the Medifund. Mrs KTM also got hospitalized briefly and it was paid for by insurance. Yes, it's a pretty suay this year for the KTM's family - but that's precisely the point. How many people are suay enough to have to end up in hospital in any given year? Are these 300,000 individuals really distinct people or do we have some folks who are chronic hospital stayers and every time they apply for Medifund, they get clocked as a new applicant? Another possibility, are Singaporeans anyhow applying for aid under Medifund and the Government giving out small grants to pacify them even though they are not entirely "poor"?If we divide $39.6 million by 300,000, that's about $130 per person. The KTM seriously cannot believe that in a given year, we have 10% of the population who are suay enough to get sick and hospitalized and cannot afford to pay $130.The fact of the matter is that it's probably much less than $130 for most since we know that most of the nasty medical bills are these thousand-dollar items that the poor and needy definitely cannot afford. The KTM's view is that MOH shouldn't go and give out these kachang puteh amounts to people so that the total number of patients helped seems large. We are wasting eveyone's time. Medifund should just focus on helping the poor and needy on the big bills. The KTM would rather Medifund just helped 30,000 Singaporeans instead of claiming we helped 300,000 and it becomes pretty meaningless when we work out the numbers. Some clarity on exactly what's going on with the Medifund might be helpful to the kay pohs like the KTM. :-)The Straits TimesRecord 301,000 needy patients get help from MedifundThe fund handed out $39.6m to cover hospital costs, nursing home and hospice fees last yearBy Lee Hui ChiehCONCERN: Madam Halimah Yacob says that due to rising medical costs, more middle class patients may face difficulties.A RECORD number of people asked the Government for help with their medical bills in 2006, according to numbers released yesterday.Over 307,500 Singaporeans applied to Medifund, which covers hospital, nursing home and hospice fees for the needy.More than 301,000 - or 97.9 per cent - were successful in getting financial aid.But almost 6,500 people were not - a 30-fold increase over 2005.In the wake of rising medical costs, more middle class patients may be facing difficulties but do not qualify as needy, said Madam Halimah Yacob, who heads the Government Parliamentary Committee for Health.Constituents have asked Madam Halimah, a Member of Parliament for Jurong GRC, for help because they could not afford 'big-ticket costs such as treatment for cancer and heart disease', she said.She expects more people to run into trouble as the population ages and health-care costs continue their upward swing.Health-care costs rose by 6.2 per cent from Sept to Oct this year, almost double the rate of inflation.The number of aid recipients grew 4.5 per cent last year to hit a record high of 301,126.Medifund handed out $39.6 million in 2006, also a record. This was 1.2 per cent higher than 2005, according to government statistics.The growth rates, though, appear to have slowed. From 2004 to 2005, the amount of money given out had leapt 20.9 per cent and the number of applicants had increased 15.7 per cent.Last year saw rejection rates top two per cent; in the five years before that, the approval rates were above 99 per cent.Madam Halimah said she hoped the Medifund criteria would be made more flexible.As in previous years, most of the Medifund money - close to $37 million - was handed out by hospitals, with the rest given out by community hospitals, nursing homes and hospices.And as before, the Institute of Mental Health, which houses many destitute long-staying patients, continued to top the list.Last year, it doled out $10.4 million of Medifund money, up from $10.2 million in 2005.About a quarter of Medifund assistance last year went to those over 65. From the end of this year, the Government will set aside a portion of Medifund, to form a new fund called Medifund Silver, for this group.huichieh@sph.com.sg Sustainable Funding Model for Charities Ren Ci is currently under probe for alleged irregularities on its accounts. The jury is still out, but lots of Singaporeans are already saying all kinds of unkind things. Why are Singaporeans so quick to jump to conclusions?In any case, an article today highlighted that some interest-free loans were made to a Buddhist artefact shop, and the proceeds of the shop were supposed to have been ploughed back into Ren Ci. Unfortunately, the shop had yet to make money. What is the significance of this revelation? Personally, the KTM actually thinks it's okay for huge charities with lots of reserves to set aside a portion of the reserves for business ventures (with a view to making higher returns on the reserves). This is especially true if the business concerned has some sort of synergy with the VWO. In this case, Ren Ci and Buddhist artifact shop seems like a good fit what. In other words, the KTM believes that the ideal funding model for charities should be one where a charity is supported by a strong business outfit. Ideally, the profits of the outfit will be enough to cover the expenses of the charity so that donations need not even be collected from the public or subsidies sourced from the Government.The benefits of this arrangement goes beyond a purely monetary issue. One important element is that it will provide the staff of the charity with opportunities for career advancement and scope. Personnel can move between the charity and business outfit for development purposes and for variety. The business outfit can also train capable administrators for the charity. One of the issues faced by charities is a high turnover and a difficult in recruiting good people. By the story of Ren Ci highlights the problem with using donations for business ventures. There is the question of accountability. How can charities convince donors that their money has not been siphoned away to feed some fat cat?Then there is also the question of risk. Sure, if we look around, the rich dudes are almost always the businessmen. The truth however is that for every business that succeeds, many others would fail. What if a charity starts a business venture and it fails?The KTM has two ideas on how the proposed funding model might perhaps come about:Charities start a enterprise development fund and donors can donate directly into this fund, knowing full well that the money will be used to fund some business outfit that will eventually support the charity (if it doesn't fail). Some socially-conscious shrewd businessman who already has a successful business, "donate" his business to some charity or spawns a charity on he side. Point here is that since it's his money, he can do what he likes. The pitfall however is the evilness in the hearts of some Singaporeans. Remember the undertaker Roland Tay who was accused to siphoning donations to the families of the suicide/murder cases that made headlines? Such a businessman is susceptible to accusations that he is out to make money out of the charity. Ultimately, there is a fine balance between flexibility and corporate governance/accountability. Many Singaporeans only like to talk and accuse charities of this and that. Perhaps if they will get off their butts for a change and do something, they will realise why life ain't quite so simple and sometimes, trying to do good can be a real pain. :-PThe Straits TimesNov 10, 2007 Ren Ci lent money to Buddhist artefact shopShop's registered owners are charity's CEO and a former board memberBy Ho Ai LiA COMPANY selling Buddhist artefacts has emerged as an external organisation which borrowed money interest-free from Ren Ci Hospital and Medicare Centre, now the subject of a Ministry of Health (MOH) inquiry.Mandala Buddhist Cultural Centre was set up in 1996 with a loan of between $200,000 and $300,000 from Ren Ci, said one of its two registered owners, Mr Wee Beng Seng, 52, a former Ren Ci board member.Mandala's other registered owner is Ren Ci honorary chief executive officer Venerable Ming Yi.As an external body that got a loan from Ren Ci, Mandala's books have also been looked into by MOH, said Mr Wee.Profits from the business, started at Fu Lu Shou Complex in Rochor Road in 1996, were to have been ploughed back into Ren Ci, Mr Wee told The Straits Times yesterday.But business was poor and the cost of operating out of Fu Lu Shou Complex high, as the shop employed a clerk and a sales assistant, he added.Three years ago, Mandala gave up its two Fu Lu Shou shop units and moved into Foo Hai Ch'an Monastery in Geylang East, where Venerable Ming Yi is abbot and Mr Wee, a member of staff.Asked about the money, Mr Wee said: 'It hasn't been returned yet. Unfortunately, the shop is not making any profit.'Ren Ci made the news this week with an MOH statement announcing an inquiry into the charity's books after 'possible irregularities in certain financial transactions' came to light during a general review last year.Replying to questions from The Straits Times yesterday, MOH said it has no reason so far to conduct a similar inquiry into the 11 other charities it reviewed last year.Where Ren Ci is concerned, however, The Straits Times understands it is believed to have made interest-free loans totalling millions of dollars to various companies from 1996, and there are discrepancies - amounting to several hundred thousand dollars in some cases - between what the charity recorded it lent, and what the companies involved recorded they borrowed.Venerable Ming Yi told Chinese daily Lianhe Zaobao on Wednesday the money it lent had mostly been recovered, with only $200,000 to $300,000 still unaccounted for.A check showed that besides being listed as the owner of Mandala, the monk is also a director and shareholder of Bodhicherie Vegetarian Food and Semco Design Communications.Ren Ci has about 120 nursing home patients and 300 chronic sick patients.With the inquiry expected to take about three months, Ren Ci's Institution of a Public Character status, which expires on Nov 27, will not be renewed for the time being, said MOH. This means donations made to Ren Ci by the public after then will not be tax-deductible.hoaili@sph.com.sg How about Auctioning the Olympic Tickets? The KTM reads with interest that the ticketing system for the Beijing Olympics crashed after getting 8 million hits in the first hour. :-)Another 1.8 million tickets are on going to be offered only to people living in China on a first-come-first-serve basis. The KTM believes that this is the wrong move. They should sell the tickets by auction in batches eBay-style.This is just a random thought that came to the KTM. Selling 1.8 million tickets on a first-come-first-served basis is definitely going to cause problems because it is quite clear based on anaedotal evidence that the demand outstrips supply.In such situations, selling on a first-come-first-served basis provides speculators with the opportunity to try their luck -- since there is likely going to be a black market subsequently where they can offload tickets for a profit. This first-come-first-served approach will also cause everyone to try to buy at the same time and to provision for this phenomenon which is known as a "flash crowd" is big problem.The KTM firmly believes that an eBay-style second-price auction is the way to go. :-) The Straits TimesOct 31, 2007 Olympics: Beijing apologises after ticket sales suspendedBEIJING - ORGANISERS of the Beijing Olympics apologised on Wednesday for suspending ticket sales for next year's Games, after unexpectedly high demand caused the computer booking system to crash.The second phase of sales began on Tuesday morning but, with over eight million hits on the booking website in the first hour, the Beijing Organising Committee for the Olympic Games (BOCOG) had to stop sales.'We sincerely apologise to the general public,' a BOCOG statement said, adding sales would resume on Nov 5.BOCOG blamed the problem on the sheer number of people who had sought to buy tickets.'Because of the overwhelming volume of page visits, the technical system was unable to perform the tasks well enough, and many applicants were unable to successfully submit their applications,' the statement said.'The ticketing centre had underestimated the demand from the public, resulting in shortcomings in the preparations and causing inconvenience to ticket buyers.'Aside from the eight million clicks on the website, the number of calls to the ticketing phone line exceeded 3.8 million in the first hour.In the now suspended second phase of sales, roughly 1.8 million tickets are on offer only to people living in China on a first-come-first-serve basis.The first round of sales that ended in June was decided by lottery and saw 1.6 million tickets snapped up.China will eventually sell a total of seven million tickets over three phases, with about 75 per cent going to residents of China and the rest to overseas buyers.Overseas sales begin in April.The ticketing suspension has proved an unexpected glitch for BOCOG, who have previously been praised repeatedly by the International Olympic Committee for their preparations. -- AFP On Section 377A As usual, the KTM is slow. He is writing about 377A after everyone else on the blogosphere has had his say. :-) First, a declaration of position: the KTM considers himself "homo-neutral", that is, he is not homo-phobic and considers homosexuals "normal people". At the same time, the KTM is by no means inclined to join the straight "liberals" in lobbying to repeal Section 377A. The KTM believes that the homosexuals have a right to live their own lives without interference from the State, but at the same time, doesn't really like the idea of "gay parties" and "pride parades" (do we have parties in celebration of heterosexuality or heterosexual pride?), or have people try to "educate" his children that "a homosexual lifestyle is normal and acceptable". In case people think the KTM strange, the KTM believes that his position is shared by the MAJORITY of Singaporeans today. Don't believe? Get out there and do a poll. :-)Frankly, this whole business of repealing Section 377A is not high on the agenda for the KTM. The KTM is spouting a bit of nonsense today because he hasn't blogged for a while and just feels like writing something and there isn't much interesting to write about nowadays (it was a close call between 377A and the Myanmese situation...)It was clear to the KTM right from the start that this whole petition to repeal 377A was a non-starter. "Why do people even bother?" the KTM has always wondered.Some say that even though the outcome was as expected, this was a sign of progress.... Huh?? Perhaps someone can explain to the KTM what sort of progress we have made by starting a process that was doomed for failure? :-) There was an interesting Forum letter (attached below) by a gay man living in Singapore stating in no uncertain terms that he disagrees with the manner in which the pro-gay activists are pushing their agenda. He believes that it will only hurt their cause. It turns out that the KTM agrees with him. While the KTM is gay-neutral (and honestly doesn't care if Section 377A is repealed or not), he will most certainly vote against the repeal of Section 377A if we have a referendum. Why? Not because the KTM has against the gays, but because the KTM thinks that this whole thing is a bloody circus and the repeal of the Act DOES NOT make us a more progressive society despite what the "liberals" claim -- and fundamentally, the repeal of the Act will only encourage the gay-activists to lobby for "gay marriages", i.e. an even bigger circus that the KTM is not keen to see happen. [Simply put, what the KTM is trying to say is that the aggressiveness of the gay activists are very likely to put off the moderates instead of helping their cause.]Let's take a step back and ask ourselves a very simple question: DO people think that the Government really cares about Section 377A? The Government has declared (in what the KTM interprets to be no uncertain terms) that Section 377A will not be enforced. Why should a Government care about repealling an Act that they don't enforce? The Government shouldn't and it probably doesn't. The KTM is quite certain that Section 377A is not something that keeps ANY of the Ministers or senior Civil Servants awake at night. :-)(i) Why then did the Government not repeal the Act and (ii) how to get the Government to repeal the Act? Question (i) is really a no-brainer. People have to realize that ALL major religions in Singapore condemn homosexuality and while the KTM is sort of sitting on the fence, there are A LOT of Singaporeans on the anti-homosexual camp (though not all are quite as rabid as the learned Professor Thio Li-Ann :-P). The KTM believes that the fact is: the number of Singaporeans who are homo-phobic is SIGNIFICANTLY larger than the number of gays. So do people think that the Government will do something that pisses off more people or fewer people? Simply put, it is not politically profitable to repeal 377A (and cut that bullshit what the rest of the world thinks about Singapore. The Government has never cared about what the rest of the world thinks, except for the prospective investors -- and surprise, surprise, most businessmen really don't care about gay rights and only whether the taxes are lower and whether there is money to be made). Also, there are the concerns that it's not going to end with the repeal of Section 377A ... and that the repeal of Section 377A will be followed by lobbying for gay marriages. And you know what -- it's also quite clear that the gay activists are not going after 377A either (why should they care about an Act that is not enforced?). They are going for something bigger and 377A is just one of those obstacles on their way to their final goal -- and with that understanding, the Government is going to be even more resistant to lose any ground on this issue. As for Question (ii), the KTM doubts it's going to happen in his lifetime. People have to face it -- the homo-phobes DO NOT WANT TO BE EDUCATED on the fact that "homosexuals are normal"; the major religions are NOT going to change their doctrine; and homosexuals will remain the minority for the forseeable future. The minorities in any society are bound to suffer some sort of discrimination. One doesn't even have to be gay. One can just be good at art and lousy at taking exams, and will already suffer similiar discrimination. The minority must understand their place and live in harmony with the majority. ST Forum PageOct 27, 2007 Why this gay is for keeping Section 377APRIME Minister Lee Hsien Loong made the right decision to keep Section 377A of the Penal Code, a law criminalising gay sex.As a gay Singaporean, I agree that keeping Section 377A would maintain the social status quo and harmony.Gay activists are trying to push the gay lifestyle to mainstream society. I do not agree with the activists' stand and I believe there is a silent majority of gay people who chose to keep quiet about the drama surrounding the bid to repeal Section 377A.I live my gay life discreetly and I am happy to have been able to do so without any legal interference pertaining to my homosexuality for the past 30 years.Singapore is a good place for a gay man to live in, as long as one understands the social contract involved and respects the mainstream's wish to have the traditional family unit as the social norm.Aggressive promotion or campaigning for gay rights is counter-productive and I am strongly against such action.Goh Kim Soon Give the Hawkers a Break Can? Recently we had a case of a curry-puff man who was jailed for evading taxes. Today, an editorial appeared in the Straits Times arguing that hawkers should be required to issue receipts, in the name of plugging revenue leakage.Does this make any sense?First of all, the Government already has a tendency to over-react. One jilted boy sneaks out of an army camp with a stripped down rifle causes the entire SAF to review its security procedures.... were the procedures really so broken to begin with? Now, one curry-puff man jailed, we therefore presume that all hawkers are cheating and under-declaring their incomes to evade tax??? Do people think that every hawker sells a million curry puffs a month and is capable of under-declaring hundreds of thousands of dollars of taxes even if they wanted to?Also, how many Singaporean customers want receipts? We think the cleaners got not enough litter to sweep up izzit? Perhaps people can consider giving up their fixed income jobs and come sell KT before they talk. The Straits Times, EditorialOct 12, 2007 Hawker-hero as tax diddlerTHE jailing of a million-dollar curry puff seller for under-reporting income is exposing a deficiency in Singapore's otherwise efficient tax collection. It should be eliminated for the sake of parity in tax-paying, to say nothing of plugging revenue leakage. Tax reporting for fixed-income workers is leak-proof because clarity of procedure makes it so. Employers certify the earnings on a single form; employees sign off after reporting non-employment income and making standard deductions. It is more complex for corporates and smaller businesses, but no more so than the varied nature of income, outgoings, depreciation and deductions requires. But an honour system in reporting sales income is still allowed food vendors. Why should this be? The problem, or the cause, is that many if not most hawkers do not give receipts for sales transacted. They are not required to. They 'estimate' income in filing returns; this is giving them carte blanche for big-scale fraud. How many hawkers can resist the temptation? For illustration, the Ang Mo Kio curry puff hawker under-declared earnings by 85 to 90 per cent over a period of six years. The penalty levied, of half a million dollars, showed the impressive extent of tax evaded and of earnings among unprepossessing food sellers.In this age of organised sole proprietorships in the cooked-food business, persisting with the lax practice amounts to allowing a large underground economy to operate. Leakage is impossible to estimate. The size of the business alone should tell the Internal Revenue Authority (IRAS) efficient tax collection requires that changes be made. The obvious solution is to make receipting a requirement, with no exception. Better-capitalised foodcourt stalls practise this. Scrupulous receipting and record-keeping, with frequent machine audits by the taxman, are normal in developed countries. From that has grown a culture of honest dealing between seller and buyer in the smallest of businesses. Having cash registers and issuing receipts for every yummy meal sold admittedly is not very practical. Hawkers will grumble that sales would be reduced and costly space is taken up to accommodate a bulky machine. Cashiers may need to be hired.The IRAS would likely have required receipting long ago if it was the most feasible approach. But not to mandate a transparent method (conceded: receipting can be manipulated) is intolerable. Singaporeans who love street food as an integral element of their culture admire 16-hour-day hawkers who own a string of properties. They would be less admiring of them if they knew their workaday heroes became rich as much by cheating on taxes. On the Corporate Governance of Religious Organizations An interesting Forum letter was published today. In that letter, a concerned parent wrote in to complain about the apparent bad influence of an unnamed mega-church. The KTM thought it was interesting because this letter is likely to spark a controversial debate. Why controversial? Because it involves religion and the OB markers.The KTM tends to steer clear of religion and racial issues 'cos despite all the talking big, he's really a chicken and doesn't want to get into trouble with the law. What interests the KTM however is a related issue of the corporate governace of religious organizations.This is a question of law and NOT a question of religion. The following is the hypothetical scenario (any resemblance to any existing organization or person, living or dead, is purely coincidental): suppose we have this large religious organization. By large, we mean that it has a lot of members and therefore also a lot of cash (which is, of course, contributed willingly by the members).Suppose again that the leader of the organization decides to use the organization's funds to buy himself a nice car and pay himself $600K a year, and on top of that, installs a golden toilet bowl costing $50K in his office. Suppose a small number of the members are not happy, do they have legal recourse? [Digression] Actually, do people know if the State taxes these large religious organizations and mega-churches? Of course, we have all heard about an embezzlement case by a priest who was later sued by the Catholic church. That's fine and dandy 'cos the Catholic church is a huge organization and there's the Pope to keep everyone in line -- but suppose the same thing happened in a different and less hierachical setting, where the priest-equivalent person is really the head of the organization. What then? Is it still embezzlement? Suppose the KTM starts this new religion called the Kway Teow Cult that worships the Kway Teow God. The KTM will of course be the High Priest of the KT God lah. Then hor, suppose this new religion teaches that the believers must give 5% of their income to the High Priest in order to receive blessings (and people actually believe). Is it legal? If this is legal, perhaps the KTM should just hang up his KT wok and start the KT Cult. :-) Yes, the KTM must be very bored today to be asking such boh liao questions (or maybe he's just looking for a quick way to get rich). :-P ST Forum PageSep 19, 2007 Some mega churches affect students adverselyI READ with deep interest the article, 'Drawing the line between Caesar and God' (ST, Aug 2).The objection of one of the large independent churches in Singapore to complying with provisions in the draft code of governance for charities would logically provoke concern about its financial transparency. This is especially so as these are 'rich' churches, judging by their well-equipped premises and set-up. These circumstances bring to light another concern. Some of these 'mega churches' have relentless recruitment activities in many schools and junior colleges.My friends and I have loved ones whose lives and attitude have changed after they joined these churches. They lose interest in schoolwork to the point of academic failure. Family time is curtailed drastically, and they stop attending family functions. Parental objections are ignored, family squabbles ensue and family harmony is disrupted. It's heartbreaking. It is like we have lost our children.I write this not to impugn any religion, but to warn against the abuse of religion. Having had such traumatic experiences, I cannot remain silent. I hope this letter will serve as a warning to parents regarding such youth activities that may destroy their personal lives and family harmony.Dr Lee Bee Wah Legislation of the Virtual World The KTM was asked about his views on the regulation of cyberspace, to which the KTM expressed concern over AGC's current policy on cyber-disputes involving virtual worlds. According to a recent article (attached below for easy reference), "the police and the AGC have better things to do with their time than trying to sort out 'crimes' in these make-believe online zones".It seems to the KTM that implication there is that the AGC has decided that 'crimes' in cyberspace are not the same as real life crimes (and therefore not worthy of their time and attention). Perhaps AGC is right. Or perhaps the Straits Times has not presented an accurate picture of the AGC's position.Fundamentally, the KTM is of the view that virtual objects do have value (and he's probably right 'cos they are being sold in eBay for hard cash), and if people are cheated of their virtual objects, then it is a crime, period.What is the difference between Paulina being cheated of his $500 family-heirloom bracelet by Peter the conman and having the bracelet sold to a pawnshop for $500 and having Paulina the Night Elf Hunter being cheated of her uber powerful Bracelet of Mauling, which the owner of Peter the Troll Shaman subsequently sells on eBay for $500? What's "Coca-Cola"? It's just a name what. Why can't the KTM go and sell "Coca-Cola" Kway Teow? Because it's a trademark -- which means that virtual things can and do have value.There was another recent report about some Governmental organizations (IDA and STB?) venturing into Second Life to buy virtual real estate. Of course, it is clearly a crime if someone hacks into IDA's account and "steals" IDA's virtual real estate in Second Life. But suppose instead, there's a conman who somehow manages to convince the IDA staff managing IDA's Second Life account to transfer ownership of IDA's virtual real estate to him in a fradulent way? Maybe there's a virtual Singapore (KTM is guessing) and this fella then proceeds to build a virtual brothel there. Is it a problem? If AGC's position is that only if virtual terrorists start flying virtual planes into virtual Changi Aiports or if virtual Singaporeans start throwing virtual racial insults on other virtual Singaporeans, then we should be concerned, then the above scenario is clearly not a problem (or is it so clear?).What is clear however is that even if the AGC decides to take action, the process is fraught with many technical difficulties and potentially legal minefields. Does the AGC even have jurisdiction to deal with the crime? Suppose a Singaporean gets cheated of his virtual uber powerful and rare sword by the Russian mafia on a US server, what can the AGC legally do?Not being able to effectively prosecute is one thing. Not seeming to understand that virtual objects do have value and is deserving of legal protection is another. :-)The Straits TimesAug 23, 2007 Virtual world spat? Settle it yourselfThe authorities will act only in certain cases like those involving race and religion, or childrenBy Chua Hian HouSINGAPOREANS who get into disputes over their 'virtual world' activities are unlikely to find resolution by going to the police or prosecutors.At a conference here yesterday, the Attorney-General's Chambers (AGC) principal senior state counsel Charles Lim said that 'the police and the AGC have better things to do with their time' than trying to sort out 'crimes' in these make-believe online zones.Two popular 'virtual worlds' here include the World Of Warcraft, a fantasy-themed adventure game, and Second Life, where people construct alternative lives.A dispute might arise if one participant defaults on the sale of a magic sword, or sells a condo to another that is smaller than advertised.But, Mr Lim told the State of Play conference organised by the Nanyang Technological University, there are exceptions.It will act on racial and religious vilification, repeated fraud, or attempts to target vulnerable groups like children.For instance, if a participant 'created an avatar to advocate flying a plane into Changi (Airport)', or someone peddling a non-existent gaming account to multiple buyers.That such seemingly odd questions are even being debated shows how complex legal issues are as virtual world sites grow in popularity.There are more than 50,000 local players of World Of Warcraft and 5,000 inhabitants of Second Life. Both 'virtual worlds' attract many millions worldwide.As the popularity of virtual worlds rise, so will disputes involving magic swords or virtual land sales, Mr Lim acknowledged.Aggrieved parties with disputes in the virtual world can always take out a 'private summons', or hire a lawyer to seek civil redress, he said.Rodyk & Davidson law partner Gilbert Leong said that 'as a private individual, I would think carefully before doing this as any legal proceedings take up significant resources'.The issue of how to handle disputes within the virtual world was one that countries worldwide are grappling with, said National University of Singapore law professor Lim Yen Fen.In South Korea, she said, statutes have been passed on virtual world 'crimes' and it now treats virtual theft as severely as physical theft.In 2004, more than 1,000 South Korean teenagers were arrested for offences related to virtual 'crimes'.The conference attracted about 100 delegates, including international legal experts, virtual world developers, judges and legal officers from Singapore and South Korea.chuahh@sph.com.sgENOUGH ON OUR PLATEThe Attorney-General's Chambers (AGC) principal senior state counsel Charles Lim said that the 'the police and the AGC have better things to do with their time' than trying to solve 'crimes' in the online make-believe world.VIRTUAL THEFT IS STILL THEFT IN KOREAIn South Korea, virtual theft is treated as severely as physical theft after statutes were passed on virtual world 'crimes'.In 2004, more than 1,000 South Korean teens were arrested for offences related to virtual 'crimes'. The Problem with Social Mobility The KTM once argued that "we should not try to carry all Singaporeans up with everyone (and everything) else as the tide rises. This is not a feasible and sustainable approach in the long term and it is likely to hurt our competitiveness since we are so small and we are being squeezed by humongous neighbours. Rather, perhaps consider putting some effort into ensuring that the poor folks dun drown and their kids have a chance at swimming to the top".A recent article in the Straits Times seems to have address some of the KTM's concerns. It was reported that "students in the bottom third, in terms of parental income and educational background, have a 50 per cent chance of making it to the middle or top third in the Primary School Leaving Examination (PSLE)". While the PSLE is probably not a perfect predictor of future success, it can be argued that good examination results is as good an indicator as we are going to get (at least for now). In a backdrop where more than half of the PSC scholarships are going to folks who live on landed property, this latest report is welcome news. Nevertheless, the KTM has come to the conclusion that the problem with social mobility .... quite frankly, is social mobility. :-) To begin, perhaps we should start with a working definition of social mobility. The KTM once defined social mobility as "the phenomenon where a person is able to move into a higher income bracket relative to the rest of the population than his parents", and thinks that this definition is still good.In addition to the article, what prompted the KTM to think about social mobility is also the recent ruckus over university education. The KTM is a part-time social scientist and so the question he likes to ask is: what's really going on.In the attached article, it is said that those at the bottom third have a 50 per cent chance of making it to the middle or top third. In other words, 50 per cent of the bottom third move to the middle or top third right? Which leaves only one sixth of the population in the bottom third? :-) Of course there's no such thing lah. Basically, if some people move up the food chain, then others must have been pushed down loh. It cannot be that everyone moves upwards in a relative sense, even if in the absolute sense but some objective measure like $$$, everyone is moving up. Next, what is it that really makes people unhappy? Is it not having enough in absolute terms? The KTM thinks not. At least not in Singapore. It seems to the KTM that a lot of unhappiness arises when people are compare themselves to others. Therefore, social mobility is likely to cause a whole lot of problems. If there was no mobility then people might actually be more resigned to their lots in life ... and perhaps they might be perhaps be less unhappy? Actually, the KTM also doesn't know lah, but it's a thought.Back to the issue of university places, the KTM believes that it's insatiable. Reason is very simple: with social mobility, it means that it is possible for people whose parents did not go to university to get to university. This is definitely true. The KTM knows of many examples. Now suppose you have a university graduate and he/she has kids. Do you think that he/she will expect the children to also go to university? You bet. So, there we have it. Those who make it to university will continue to stay university educated in general, and you have more and more moving into this category. How not to have an increasing demand for university places? :-PThe Straits Times,Aug 13, 2007 Schools help poor children out of poverty trap: TharmanSCHOOLS here are helping children from poor families break out of the poverty trap, said Education Minister Tharman Shanmugaratnam yesterday.Students in the bottom third, in terms of parental income and educational background, have a 50 per cent chance of making it to the middle or top third in the Primary School Leaving Examination (PSLE), he revealed.The upward trend is seen in secondary schools and tertiary institutions too.'With effort and determination, everyone can do well,' he said, unlike in many other countries, where students from low-income backgrounds end up in the same position while those at the top stay there.But there is 'constant movement' in Singapore as the education system here seeks to give equal chances to all regardless of family background. Every school, not just a few, has good teachers and resources, he added.Speaking at an award ceremony held by the Chinese Development Assistance Council (CDAC) yesterday, he cited the evidence to show that 'no group is stuck permanently in the same place'.To keep up the social mobility, Mr Tharman said the whole community must chip in to help children from poor families do their best in school.He noted that the CDAC has contributed significantly through its education programmes and has helped students from poor families to improve and gain confidence.Mr Tharman also gave out the CDAC's Best Progress Awards to 97 primary and secondary students for their remarkable improvements in their examinations last year.Secondary 3 student Pang Xue Yao, 14, had found Maths difficult since primary school, where he would often fail the subject.Last year, Xue Yao, whose father works as a driver and mother is a housewife, decided to improve his grades by signing up for tuition classes run by the CDAC.It worked. The Normal (Academic) student went from scoring D7 to A1 for Maths.His maths tutor, Mr Chua Tan Huat, 65, said: 'He's a good student. He'd always sit in front of me during class.'Another CDAC tuition beneficiary is Adeline Chong, 16, a Secondary 4 Normal (Academic) student who improved her Maths grade from C5 to A1.Adeline, whose father is a computer repairman and mother is a housewife, said she found the tuition classes boring at first but bucked up as she felt she had a point to prove to classmates.'Even though my PSLE aggregate score was lower than theirs, I felt I could do better,' she said.hoaili@sph.com.sg On Universal College Education In the light of the recent debate about whether there are sufficient university places, it is interesting to read about the Taiwan experience, where 96% of each cohort is able to get places in a university. Another interesting fact is that while Singapore has 3 universities for a population of 4 million, Taiwan has 163 (!) tertiary institutions for a population of 23 million. Interesting. So, which approach is the right one? The Singapore approach or the Taiwanese one? If the Taiwanese are correct, we better do something about it soon since we are already some 10 years behind them.While looking for data on university education in Singapore, the KTM came across an interesting report (dated 2003). The following are some interesting highlights: The university cohort participation rate was only 5% in 1980 and the Garmen has promised to increase this to 25% by 2010. To the KTM's understanding, the cohort participation rate is currently 23%. The Garmen decided against building a fourth university because it was not confident of being able to set up one with the requisite quality. (Of course, this stand has apparently changed in recent times. Perhaps it's because of the UNSW fiasco and the empty plot in Changi?) Provisions were already being made for the Dragon Year cohort.In addition, the KTM believes that around 40% of each cohort is currently being enrolled in the polytechnics. If Singapore is to go the Taiwan way, the first step would be to "upgrade" all the polys to full universities, thereby achieving a university cohort participation rate of 65% overnight -- and this is on public funds. There are actually a large number of private universities and distance learning (twinning) programmes that are not included in these figures (so a conservative estimate might be something like 75%, leaving 25% to go). At this point, there are two (for a start lah. There are probably more) questions worth asking:Does this change the price of pork, i.e. are Singaporeans therefore able to compete more effectively?Who pays? Upgrading the polys means that poly education will now because university education and hence attract larger subsidies. Understanding the Price of PorkSeriously, the KTM does not think that giving everyone a university education will change the price of pork because at the end of the day, there will always be a pecking order -- and it is this pecking order that determines one's place in the grand food chain.Nevertheless, there are probably many, many people out there who do not share the KTM's view and would like to believe that with a college degree, they are therefore more employable and will be better able to compete with the foreigners. It is perfectly plausible that they are right and the KTM is wrong. The obvious downside to universal education is quite likely to be a massive increase in unfulfilled expectations. Question: if 80-90% of each cohort is so-called university educated, are 80-90% of the jobs generated each year jobs that meet the expectations of a college graduate? Perhaps in time to come, it would be perfectly acceptable for graduates to work as cashiers, bus drivers and waiters -- but wait? Then what for waste fours years to go to university? Need to be college-educated to be cashier, bus driver or waiter meh?Some smart alecks will then talk about the universal good of education, that it is GOOD for everyone to get a good education regardless of whether he/she will end up being a cashier or banker. Sounds good, except that people have to realize that the MAJORITY of Singaporeans do not go to school for love of learning. They go to school to get that piece of paper to allow them to get THAT job. If THAT job is a cashier's job, would they still want to go to university? Would it then lead to mismatched expectations? Actually, the KTM doesn't really know also. He is merely thinking aloud. Why is it not impossible for the Garmen to pull off a hat-trick and generate 80-90% of college-level jobs each year? What really is the limiting factor in the generation of jobs? Paying for ItNext comes the thorny question of how to pay for universal college education. The key in universal college education is in equity. Under such a system, EVERYONE would be entitled to an education. Sounds fine and dandy, except that higher education doesn't come cheap. The KTM estimates that current subsidies enjoyed by each publicly funded university student is something around SIN$50-70K.If everyone is to enjoy the same, then it will cost A LOT of money -- and the obvious question of who pays will come up. Does the Taiwanese Garmen pay all 95% of the college students? The KTM actually doesn't know, but he doesn't believe so. It's probably impossible.Why not just let privately-funded universities pick up the slack? Well, easy to say. Does our Garmen currently disallow people from setting up private universities in Singapore? The answer is no. The reason why people dun any old how set up such universities (but to be fair, there are already some) is that it's really expensive and it's not a very attractive business venture (think UNSW).Singaporeans are also not stupid. If the KTM set up the Kway Teow University and offer B.S. (KT Frying), people will all flock to KTU and sign up meh? Singaporeans also want some assurance of quality and more importantly GOVERNMENT ENDORSEMENT. They want to know that if their sons and daughters go to KTU, that the Civil Service will employ their kids on par with graduates from NUS/NTU/SMU. This highlights the structural difficulties in setting up another university. :-(But seriously, this discussion actually highlights and interesting fact about the current allocation of education subsidies. Think about it. Who are getting the most subsidies? Obviously, university graduate > poly graduate > JC graduate > others. On the other hand, who will be earning the most money after graduation? Again, the same relationship holds. This means that unlike the taxation structure, the disbursement of education subsidies is actually regressive. More is given to fellas who will eventually be earning more! Interesting hor?But then again, there is also some sense in the current madness. The reason why we see what we see is a need to ensure equal access to education. This means that regardless of whether a person is rich or poor, it shouldn't cost excessive amounts to go to school. Since university education is the most expensive, it also attracts the highest subsidies. The equity comes from equal competition. The idea is that all can compete fairly for the university places. Winner takes all. It's fair because every individual has an equal chance at it. To be fair to the current scheme, it has worked well. However, moving forward, as income inequality is accelerating, it might perhaps be time to think about whether the current scheme is necessarily the most appropriate one. Shouldn't those who are not quite as academically gifted be allocated more resources (actually not necessarily more, but at least as much resources for fairness) so that they don't suffer a double whammy? Actually, this is a hard question with no easy answers. Some people can study, so $60K of university education subsidies makes sense; others seriously are not cut out to study and so even if you gave him $60K worth of education subsidies, he/she also cannot make use of it. Should we thereby give cash instead? No lah, the KTM is not suggesting this at all. The KTM actually hasn't actually quite figured out what to think yet. All he has are but questions at this stage. :-)Not every question needs an answer. Not every question HAS an answer. :-PThe Straits TimesAug 10, 2007 5 out of 100 points enough to enter varsity in TaiwanFears for quality of education as universities lower entry requirements to woo studentsBy Ong Hwee Hwee, Taiwan CorrespondentIN TAIPEI - IN TAIWAN, getting into a university these days is a breeze.The university admission rate hit a record high of 96.3 per cent this year as some universities lowered entry requirements to boost intake.The lowest admission score came from a student who got a place despite scoring less than five points on average out of 100 for each of four subjects.Of the 90,000 students who applied for university admission, some 86,000 secured a place, said the Education Ministry.Only 3,000 students - or 4 per cent - were turned away, according to ministry results released on Wednesday.The admission rate has risen sharply in recent years, as a disproportionately large number of universities vie for a dwindling pool of students.Last year, the acceptance rate was 91 per cent. In 2005, it was 89 per cent.But while the admission rate hit a record high this year, the entry score plunged to a new low.The lowest admission score was 18.47 points out of a total of 400 for four subjects.In contrast, the lowest admission score was 100.59 points last year.The latest results have thrown the spotlight on an issue of growing concern: lax admission criteria which have affected the quality of tertiary education in Taiwan.The root of the problem, say observers, lies with the fact that there are simply too many universities in Taiwan.The sheer number of tertiary institutions is widely seen as a result of the government's controversial education reforms, launched in the mid-1990s, to popularise tertiary education.To achieve the target, more high schools were established, enrolment for universities was expanded and vocational colleges were upgraded to full-fledged universities.As a result, the number of tertiary institutions surged to 163 last year, from 139 a decade ago.To compete for students, universities - especially the less competitive ones - resorted to lowering their entry requirements.Taiwan's falling birth rate has further aggravated the problem.The island's birth rate hit a record low of 1.1 last year, one of the lowest in Asia.'It boils down to the debate over which is more important when it comes to promoting tertiary education: equity or quality? Taiwan appears to favour the former,' said Professor Fang Der-long, who heads the Department of Education at the Kaohsiung Normal University.'But it is true that we are witnessing a stratification of Taiwan's tertiary education because the standards of the cohort are so diverse,' he told The Straits Times.To gain admission to top-notch universities like the National Taiwan University, a student needs to score 400 points or more for at least five subjects.In a bid to arrest the declining standards, the Education Ministry said it may impose a minimum entry requirement with effect from next year's university intake.The ministry said it is also looking into a grading system for tertiary institutions.Universities which fail to make the grade could be forced to cut down their intake or barred from enrolling new students.The ministry is also urging poorly managed private universities to close down, merge with other institutions, or convert to elementary or high schools.Some universities, however, argue that a better solution would be to allow schools to enrol mainland students.But President Chen Shui-bian has rejected the idea, saying such a move could open the door for Chinese nationals to compete against Taiwanese for jobs in Taiwan.If nothing is done to address the problem, the Education Ministry says the admission rate could hit 100 per cent next year.By then, it would be impossible not to be able to get a place in university.hwee@sph.com.sg The Sunday TimesAug 12, 2007 S'pore to up number of varsity placesBy Keith LinTHE Government is studying ways to increase the number of university places and whether to build a fourth university, Senior Minister Goh Chok Tong revealed yesterday.The aim: to give more Singaporeans, especially polytechnic graduates, a chance to study at a university here.Now, about one in four in each cohort receives a university education.'We will up the percentage,' Mr Goh promised.Speaking to about a thousand residents and grassroots leaders at a National Day dinner in his Marine Parade constituency last night, Mr Goh also pledged a stronger social safety net for those struggling to cope with changes in the economy.Measures being studied include topping up the Central Provident Fund (CPF) accounts of lower-income senior citizens, securing higher returns on CPF savings and raising the retirement age, he said.Prime Minister Lee Hsien Loong will discuss new ways to help Singaporeans work longer and build up their retirement savings during the National Day Rally next Sunday.Mr Goh's announcement comes after several parents and students complained about the difficulty in securing places in the three local universities this year.In June, Dr Tony Tan, who heads Singapore's high-powered International Academic Advisory Panel, suggested the setting up of a liberal arts college as one way to increase the number of university places.If not for its decision to pull out in May, the University of New South Wales would have been the fourth university here, with a planned intake of 15,000 students by 2020.Business administrator Elizabeth Moses, whose 18-year-old son is at a local polytechnic, said more local university places could save her the high cost of sending her son overseas.'It's great news,' she said.Turning to the outlook for Singapore as a whole, Mr Goh was upbeat, saying that 'our boat is now entering a favourable stretch of the journey'.He cited several reasons for his confidence.Economic restructuring was paying off and the economy was being upgraded.The external outlook was also positive.He said that the current turmoil in stock exchanges worldwide, sparked by problems in the United States mortgage market, was in his view 'temporary'.On Singapore's other strengths, he said it was well plugged into the global economy and had a Government that thought long term and acted to solve problems.It also has in place the unique practice of planned political leadership succession.Mr Goh said that he was, however, also aware that some Singaporeans found it difficult to keep up with the fast pace of life or rising cost of living.The Government would help them to cope better, he added.He also called on those who had done well to share their wealth through acts of philanthropy, so as to 'give something back to the community on which their success has been built'.klin@sph.com.sg On Quantifying National Leadership It was reported in the Straits Times that the MM remarked at a recent lecture that he gave that the present leadership is not inferior to the old guards. In fact, "'intelligence, administrative capabilities and political sensibilities' have improved over the years".Given the nature of the blogosphere, the KTM is certain that there will be snide remarks from certain quarters and skepticism. The KTM is an empirical man and somewhat of a skeptic and doesn't just take things at face value. The question that he would like to ask is the following: suppose we claim that the present leaders are superior to the old guards, what exactly does that mean? This may sound like an obvious question, but it's not 'cos the answer is by no means obvious. The KTM would like to give the MM some credit and believe that indeed "'intelligence, administrative capabilities and political sensibilities' have improved over the years". Is leadership the same as intelligence, administrative capabilities and political sensibilities, or some combination of these attributes (however they are measured)?Suppose we have two leaders X and Y and we say that X is a better leader than Y, what exactly are we saying? Is X better because his policies lead to greater GDP growth? Is X better because he is able to reduce income equality? Is X better simply because people think he is better (because he is populist and implements policies that look good, but will cause the country to go under in some distant future when he is no longer in power?)? Is X better because his party garners more votes at the last elections?Then it suddenly dawned on the KTM that this question is hard to answer because there isn't even a consensus on what is a good Government to begin with. Do people really understand what a Government is? Do they even know what is a good Government? Actually hor, KTM once tried to explore this question by getting feedback, but the response was pretty lukewarm and he subsequently forgot about it. To make the problem more concrete, the KTM would like to ask and answer the following questions:Is the current Government good? Should good be defined by one's views on what a good Government should be, or the collective view of what a good Government should be?Suppose for a moment that goodness should be defined by the collective view, WHAT exactly does the general population think is a good Government? The KTM is well aware that the last question may not have an answer because people haven't actually been thinking about it, or perhaps people really don't care. If people don't know exactly what they want in a Government, then perhaps it is time to think about this and articulate it. The Straits TimesAug 6, 2007 S'pore's leadership not inferior to old guardsBy Imelda Saad, CorrespondentSingapore's Minister Mentor Lee Kuan Yew does not think that the present leadership team is inferior compared to the old guards.He was speaking on Monday at the first pioneers lecture series organised jointly by the Economic Development Board and The Straits Times.Asked to give an assessment of the Singapore third generation leaders, Mr Lee said in fact, standards have gone up.He added, 'inteligence, administrative capabilities and political sensibilities' have improved over the years.What's missing, Mr Lee noted, is the 'combat experience' of Singapore's first generation leaders who have gone through the tumultuous indepedendent years.'There's a vast difference between soldiers trained in actual combat who've seen casualty, blood and horror and soldiers trained in simulation. You can't recreate the same set of circumstances,' he said.Despite this, Mr Lee said today's team 'is as good as you can get'.He noted that the present leadership has gone through its own baptism of fire such as SARS and the Asian financial crisis without losing its nerves.'People think I'm holding their hands but they're in charge,' Mr Lee said. 'From time to time, when I see something that will lead to dicey results, I ask them to think through.'He said his hope is for the current leadership to find another team in the next one to two elections to replace themselves.It takes five to 10 years to nurture a team, he said, and to get the public to accept them as leaders.The concern however, is that it's getting harder to rope in good people.Mr Lee noted even in the current team, there's going to be attrition.Hence, there's a need to find younger leaders in their 30s and early 40s.'The system is working but you need capable men to make it perform,' Mr Lee pointed out.Turning reflective, the minister mentor closed the hour and a half dialogue session with this message to Singaporeans, 'There's no steady state of growth forever.'Mr Lee said Singaporeans must be prepared to accept painful measures to ensure Singapore's progress.He cited examples such as the CPF cuts and GST hikes as 'unpopular' policies.Had the leadership flinched on such policies, he said, Singapore would not be where it is today.Other special guests throughout the Pioneers series of seminars - to be held once every two months - include former Cabinet minister S Dhanabalan, and former top civil servants Sim Kee Boon, Ngiam Tong Dow, JY Pillay and Philip Yeo. Why Insurance is not the Solution to our Healthcare Woes A couple of days ago, a speech by Health Minister Khaw at some insurance conference was published by the Straits Times. In addition to telling the world why MOH has done a great job in setting up the health insurance schemes (as expected), the Minister did quite a good job at explaining the moral hazards associated with health insurance and he challenged the insurance companies to come up with more innovative products.Given that MOH has announced that means testing will soon be introduced (actually, it's already there in the form of Medifund!), there's going to be a big debate about means testing. The KTM has no idea what this means testing scheme is going to be and so it would not be appropriate for the KTM to comment on whether it's a good or bad thing.The KTM is however very interested in the issue of healthcare costs and he doesn't believe that healthcare insurance is going to the solution to rising healthcare costs going forward. Why?First, we need to understand how insurance works. Suppose one is worried that his/her house burns down. What to do? Buy insurance. Why should insurance companies sell insurance? Because they can make money out of it.Basically, the point here is that while it is pretty catastrophic and costly if a house burns down and an insurance company has to pay out, an insurance company can amoritize that risk if it can find sufficient numbers of risk adverse people such that the expected damages exceeds the total premiums collected.For a simple example, suppose that there is a 1% chance that a house will burn down (reality is that the probabilities are significantly smaller than this) and that every owner pays $400 per annum to insure his/her house against fire. Then as long as the payout is less than $40,000 and there are at least 100 households who want to buy insurance, then it's perhaps a viable venture. Reality is significantly more complicated that this, but that's roughly the principle. There are still risks and that's why insurance companies sometimes go under when something *REALLY* catastrophic happens.What this tells us that for insurance companies to want to sell healthcare insurance, the sum of premiums collected *MUST* exceed the total healthcare payouts. Next, let's think about how much an average person is likely to incur in his/her lifetime. Do people believe that it's not very hard for each person to incur $200K in healthcare expenses in his lifetime? Don't think about here and now. Think about the days and weeks, or even months, just before dying (yes, it's a bit morbid :-(). Are people willing to pay this out of pocket? If not, who should pay? Garmen pay? Er, easy to say, but given that Singapore's reserves per capita is about $30K, there's still a shortfall of some $170K per head even if we liquated all the reserves to pay for healthcare. :-(The KTM doesn't have an answer to this question. What's clear however is that the amount is pretty mind boggling and if we depend on healthcare insurance to pay for it, everyone will eventually have to pay out $170K in premiums in total. There's no free lunch lah. The KTM believes that the only reasonable approach to addressing our looming healthcare costs is not simply a matter of increasing healthcare insurance coverage or getting more people to sign up for healthcare insurance. At the end of the day, we have to focus on containing healthcare costs, but as the attached speech rightly highlights is a rather sticky problem given the availability of extremely expensive treatments (of questionable efficacy). How do we quantify the value of medical treatments? Suppose we have the following options:extending life by one month for $10,000 extending life by one month and a week for $100,000extending life by one month and a week and a day for $1,000,000How do decide on the right treatment? To complicate matters, it's never quite so clear like an MCQ. Fact is: nobody knows exactly how long a patient will live after a major operation. What the KTM has been trying to understand are the reasons for the recent increases in healthcare costs. While it is true that these ultra-expensive procedures will bring up the average, what seems to be the case is that even the "regular" treatments (whatever that means) are getting more expensive. If a reader can enlighten the KTM on this matter, the KTM would be much obliged. Let's face it, we are all mortalsHealth Minister Khaw Boon Wan delivered this speech at the opening of the South-east Asia Health Insurance conference on 1 August 2007.LAST week, The Straits Times carried a thoughtful article by Professor Muriel Gillick of Harvard Medical School, entitled 'Major surgery for a 97-year-old?' (ST, July 27).She wrote about Dr Michael DeBakey, a famous cardiac surgeon, undergoing cardiac surgery using a technique which the doctor invented many years ago. What made the surgery newsworthy was that Dr DeBakey was now 97 years old and the surgery was against his express wishes. He had stated while in good health that he would not want to undergo major surgery.We are mortalsHOWEVER, Mrs DeBakey demanded that the surgery be done and it was duly carried out. The operation involved putting him on cardiac bypass and opening the aorta. The damaged part of the aorta was then replaced with a synthetic graft. The risks were high. Moreover, surviving the surgery does not mean returning to one's usual state of health. It typically means an extended hospitalisation marked by multiple complications and considerable suffering. Dr DeBakey spent three months in hospital, much of the time unable to speak or eat. He was hooked to a respirator and to another machine to clear wastes from his body, and was fed through a stomach tube. The cost of the hospital stay exceeded US$1 million (S$1.5 million).The number of potentially life-prolonging technologies offered by modern medicine is proliferating. Some of these therapies have brought benefits to patients.But where the treatment is invasive and costly, has a minuscule chance of success and is proposed for people at the very end of life, Prof Gillick asked if we should not limit such treatment and concentrate instead on improving these older people's quality of life. By this, she meant 'assuring compassionate nursing home care, coordinated management of chronic diseases and competent palliative care as death approaches, rather than using ever more technology to try to eke out a little more life'.In short, Prof Gillick reminded us to accept human mortality. We are all mortals, so let's accept it. I noted that she has also authored a book, titled The Denial Of Ageing: Perpetual Youth, Eternal Life, And Other Dangerous Fantasies.Postponing deathPROF Gillick's article has highlighted one reason why health care has now become such an intractable problem. When medical science was less developed, ageing, sickness and death were readily accepted as facts of life. But with progress in medical science, people often forget that we are mortals after all and there are limits to medical science, with eternal life as mere fantasy.The US health-care system now consumes 16 per cent of the country's gross domestic product (GDP). A big part of that expenditure goes to sophisticated high-tech hospitals trying to postpone death by a few days or weeks, often with little or no quality of life to the patients. The problem is that there is no natural limit to such pursuit, and so some US economists have already projected their health-care spending to go beyond 20 per cent of their GDP.In the upcoming US presidential elections, all candidates are calling for health-care reforms as the status quo is not sustainable. They know that health care is not immune to the law of economics, and unlimited demand has to be rationed.But nobody dares to talk about getting the economics of health care right. Instead, the tendency is to continue to feed the fantasies and somehow hope that the future will take care of itself.Protecting self-interestsPART of the problem is that many interest groups and lobbies will be hurt by any serious reform. Under their current operating models, hospitals and specialists are rewarded for high-tech interventions. Costs are high but Medicare pays the bills for the elderly, and Medicaid, for the poor. For the employees, their insurance, paid for by their employers, will pick up the tab.As patients do not have to pay, most have little interest to find out what goes into hospital bills or whether the services rendered are necessary. Some weeks ago, there was a media article on one American patient who took the trouble to understand his bill and was shocked to find it exceeding US$1 million for a treatment which was not particularly complex. When he called up his insurer to question the details, he was shocked a second time to find the insurer not particularly worked up by the seemingly ridiculous over-servicing and over-pricing.In other economic sectors, we do not find such unusual consumer behaviour.We ask and shop around before we decide which mobile phone to buy. We yell if we are overcharged for food, or services. Yet somehow, health-care consumers behave differently. Why?'Someone else is paying my bill'THIRD-PAYER payment systems are at the root of this market failure. When a buyer does not have to pay the bill, he has no incentive to seek out the most efficient and cost-effective seller. Instead, he goes to the seller who can most meet his demand. When a seller is paid by a third party and not directly by the buyer, he is less inclined to try to save money for the buyer. For example, he would not bother to offer a lower-cost but similarly effective treatment for the patient. After all, somebody else is paying.Whether the third-party payer is an insurer or a government, the distorted outcome and the damage to the system are the same. Singapore is not sheltered from such human behaviour.Recently, our hospital reported a case of a patient whose doctor prescribed two years' supply of a health supplement. The patient demanded such a prescription, knowing that the bill will be fully paid by his employer. The doctor, pressured by the patient and others waiting to be treated, went along. A conscientious pharmacist called the doctor to double-check the prescription, which was then amended. The patient left the pharmacy angry! While good service means satisfying the customer, it takes courage to say no to a customer who is out to abuse the system for his self-interest. I commend the hospital pharmacist. We must say no to such irresponsible behaviour.Not mindlessly copying othersTHAT is why we decided that Singapore's health-care financing system cannot simply follow the US insurance model, or the UK taxation model, or any other model.Instead, we carefully incorporate the best elements from each model, and evolve one that would best serve the interests of Singapore.First, we incorporate the UK taxation model as a first tier of health-care financing. Our public hospitals and polyclinics provide heavily subsidised treatment.The subsidies also extend to intermediate and long-term care in community hospitals, hospices, nursing homes and day rehabilitation centres, where we require means-testing so that subsidies go to those who need them most.Second, we also incorporate the US insurance system of risk-pooling. We help organise financial protection for patients requiring major medical treatment through MediShield and those with severe disability requiring long-term nursing care through ElderShield. While these insurance products are private-sector driven, the Government plays a key role to protect the national risk pool to the largest possible extent, thus keeping premiums at the most competitive level.Third, we strongly emphasise the need for personal responsibility and actively implement this through policy. We require our subsidised patients to co-pay a meaningful proportion of their medical bills. Co-payment helps to re-establish the primary relationship between buyer and seller, so critical in ensuring the proper functioning of any market. But knowing that co-payment can sometimes be a burden, we instituted Medisave, a compulsory health savings account, for all economically active Singaporeans.Finally, we provide a means-tested social safety net in the form of Medifund, through which the Government provides financial help to the needy. This way, no patient is left in dire straits after medical treatment.In simple terms: pay cash for small bills, use Medisave for medium-sized bills, insurance and Medifund for large bills. This is how we manage our health-care expenditure, and we think it is the most sensible way to go.Managing moral hazardAS THIS is a conference on health insurance, let me share our thoughts on this important subject.First, unlike others, we discourage comprehensive first-dollar coverage insurance for Singaporeans. For MediShield, we insist on a deductible and a co-payment.Our MediShield coverage only kicks in for large hospital bills. Setting a reasonable deductible reduces premiums considerably, and keeps the product affordable for the vast majority of the population. Co-payment reduces the moral hazard that risk-pooling creates. Without deductibles and co-payment, there will be a tendency for patients to unnecessarily and indiscriminately consume, or what we call the 'buffet syndrome'. It is human nature to want a lot but pay as little as possible - that is why we over-eat at buffets. This buffet syndrome ultimately hurts the patients as insurers need to balance their accounts. When payouts grow rapidly because of over-consumption, insurers will have to raise premiums to keep pace with the payouts, or face financial insolvency.Second, we safeguard market competition so that insurers have full play in competing to provide innovative products that meet the diverse needs of the people.The needs of four million people in Singapore vary over a wide range, as do their ability and willingness to spend. But while we encourage an active insurance market, we consciously ensure that the national risk pool is not fragmented through adverse selection.For MediShield, the Government operates a basic product, and requires all participating insurers to operate compatible rider products on top of this basic layer.The insurers compete aggressively for customers on their riders to provide additional coverage. There are today more than 20 MediShield riders, allowing Singaporeans a wide choice.MediShield and MediShield riders now cover more than three-quarters of Singaporeans. Our next priority is to get other Singaporeans not yet insured to purchase coverage early, before they develop pre-existing illnesses. A large proportion of those uninsured are children. A common reason for staying uninsured is inertia. We will get people to overcome their inertia and get insured in a hassle-free way. We should be able to get those newborns from this December onwards automatically covered by MediShield. In parallel, we are working with the Education Ministry to extend coverage to students.For ElderShield, we require the insurers to provide the same basic ElderShield product, on top of which they market their ElderShield supplements for additional coverage. I am pleased to report that Great Eastern Life will shortly be marketing two approved ElderShield supplements, allowing policyholders who pay more to top up their basic ElderShield with higher payouts. One supplement will provide monthly payouts of up to $3,000 for 10 years, in the event of severe disability. I am sure that NTUC Income and Aviva will finalise their supplements soon.Value-added innovationsOUR health-care financing policies have helped us to achieve good results so far, but imminent ageing of the population will present new challenges. We must continue to anticipate problems, adapt and stay ahead.Besides demographics, we also have to adapt to societal changes. Better-educated consumers have higher expectations of their health-care providers and their insurers. This is a plus. Better-informed and better-engaged consumers will make better-informed choices and be more pro-active in maintaining their health and managing their chronic diseases. Our job as the ministry is to collect and publish timely and relevant information on health products, services and pricing.In Singapore, some hospitals publish data on clinical outcomes on their websites. The Ministry of Health also publishes data on hospital bill sizes.Singaporeans welcome this transparency and want more. We urge insurers to take this cue and do the same - publish to demonstrate your competitiveness. With greater competition, consumers will seek better services. For example, there have been recent comments by Straits Times readers on how patient admissions to hospitals could be facilitated if their insurers could make prior arrangements with the hospitals to waive hospital cash deposits. I support the call by the policyholders. Singapore has only a few hospitals and it should not be too difficult to make such prior administrative arrangements. NTUC Income has done so with public hospitals. I encourage the other insurers to follow suit.Another example of service improvement is in the rate of claims assessment.Insurers used to take between seven and 28 days to process a claim. After we published the data, they reviewed their processes and were able to cut it down to only one to two days to process a claim. This has benefited the policyholders.But more can be done, especially in two areas. First, give your policyholders the incentive to stay healthy and prevent existing illnesses from worsening. This is a good way for insurers to add value to their policyholders and to society at large.This is a trend overseas where there are insurance plans that provide no-claims bonuses, premium discounts for non-smokers and discounted or complimentary health screenings.Second, give doctors and hospitals the incentive to focus on the health outcomes of your policyholders. Try piloting pay-for-performance measures that reward doctors based on the health of the patients they care for, and not the number of procedures performed on patients. For example, when a diabetic patient visits a doctor, the doctor bills the buyer for checking the patient's feet and eyes. But the doctor is today not paid for ensuring the patient controls his diet and exercises regularly, which may really be the most important thing to do.I am sure our insurers too can come up with such innovations and more.Addendum:It seems that Catherine Lim likes the speech too. :-)ST Forum PageAug 6, 2007 An enlightened approach to health careI WRITE in response to Health Minister Kwaw Boon Wan's speech on the direction of health-care policy and philosophy, 'Let's face it, we are all mortals' (ST, Aug 2).He said: '...the doctor is today not paid for ensuring the patient controls his diet and exercises regularly, which may be the most important thing to do'.This last paragraph of his speech, I applaud as the most enlightened I have read in a long while; a refreshing well-thought through principle in what has primarily been a debate on cost-efficiency, and implementation of health policy.I call on the Singapore Medical Association to respond to Mr Khaw's challenge and not just insurance companies to 'incentivise' their clients to hold up the carrot of bonuses and reduced deductibles for clients who are proactive in their own mental and physical health care.Companies which are also stakeholders should take note of this fundamental principle of co-responsibility and explore, expand their counselling and well-being programmes for their workers.There is both a collective responsibility of stakeholders as well as an individual responsibility to ensure the health-care system here serves the people who can serve themselves best while still making provisions that would take care of those who can't.In the meantime, implementation and fine-tuning of day-to-day administration and weaknesses in operations will continue to be highlighted in the media by ordinary people who will provide feedback to health-care providers and policy architects that they may continue to improve cost-effective and more efficient services.I thank the tireless workers in the service of our sick - the nurses whose commitment to their vocation and calling, especially in times of crisis, has been nothing short of admirable and at times inspirational.Catherine Lim Suat Hong (Ms) Of Winners and Losers In response to a parent's letter to the Forum Page about not applying too much pressure on kids, another parent bemoans that often times, there's no choice because: (i) getting a certificate is the key to a bad job and a better life; (ii) some parents cannot afford to send their kids overseas; and (iii) foreign students are depriving local students of places at local universities because some 20% are "reserved" for themThe letter concludes by suggesting that we should help children "to accept that life is made up of uncertainties and changes" and to ensure that "they have (and know about) avenues of assistance they can turn to".This letter brought to mind a comment left at Singapore Angle recently by a student, Jonathan, who failed to win a scholarship:Very quickly, my self-esteem and self-confidence slipped away, and three months later, I've not felt them coming back. After placing all my hopes, dreams and entire life on the prospect of getting one of these scholarships, the thorough rejection is making the coming years, months and days seem not worth living.At 19 years old, I feel like my life is basically over. I'm not confident at all of trying my hands at private sector jobs that I'm completely uninterested in, so I am completely clueless about filling up the next fifty years of my life. After being carried for years from one top school to another, I'm feeling as if the world has abandoned me and left me to fend for myself, with nobody else to guide me anymore. The problem it seems is that our society is stratified by processes that divide the people into two groups -- the winners and the losers. May it be university places or scholarships, it's the divide of the have's and the have-not's. Even among the scholars, life isn't so different since after they start work, some will waltz to the top while others won't.The KTM is of the opinion that such artificial divides are not very healthy because it creates a lot of unhappiness -- but seriously, is there a solution? Is this not simply a natural function of the circle of life?Let's face it: people are not born equal. If this a finite number of something, whatever the thing, then some will get it and some will not. That is the natural order of things. The KTM has been thinking about this issue for a while and IHHO, it's not about "accepting that life is made up of uncertainties and changes". The KTM believes that the key is to have kids develop reasonable expectations and a realistic understanding of where they stand relative to their peers, since much unhappiness is the result of expectations that cannot be met.In the case of Jonathan above (and the KTM is not making light of his plight), Jonathan said that he "had a near-empty secondary school CCA record and didn't have perfect A level scores to make up for it". Given his situation, he probably understood what he was up against when applying for scholarships. Why then is he so devastated? There is seriously a disconnect here and it's not at all clear (or is it?) how it could have come about and how it should be addressed. In addition to realistic expectations, there's also the general principle of competing where one has a natural advantage. This is a principle that Singaporeans don't seem to understand and it manifests in the over-emphasis on university education and scholarships. Who in his right mind (other than Phua Chu Kang because he blur) would want to go and compete with Jocelyn Yeo in the pool? There are many routes to success in life, even in hair styling (David Gan) and cooking (Sam Leong), so why the fixation on the academic route?The KTM is not one with the answers, but he would like to offer two reasons: (i) people like guarantees and (ii) natural insecurities.Let's take a step back and think about it: why do people want university education? Because they think it is the key to a good job that pays well. Why scholarships? Some because they desperately (rightly or wrongly) want to study abroad and their families cannot afford it. For others (esp. the parents), scholarships seem like a guarantee to a successful career (though this notion is becoming less popular in recent times as people become increasingly sophisticated). Yet others because it is a proof of their worth. Really? But why not become a musician or an entrepreneur instead? Because that's not what society at large will recognize as "worthy". Is there hope? Yeah, if more Singaporeans will simply learn to follow their hearts -- and go figure out what they like to do and are good at doing, and keep doing it, regardless of what others may think or say. Winning is an attitude, not an outcome. :-)ST Forum PageAug 2, 2007 Education without pressure not open to allI REFER to Mr Yeoh Beng Cheow's letter, 'Help kids to succeed, without pressure' (ST, July 31). Ideally, the path of education should be as Mr Yeoh has described - helping children to develop the right attitudes and values and spending time discussing with them issues of interest, guiding them to think rationally and, in the process, helping them to develop an analytical mind.However, how to strike a balance between what ought to be and what is, is the million-dollar question.Firstly, there are parents who received little or no education. Holding low-paying jobs and having to watch every penny, there is no time or opportunity to do as Mr Yeoh prescribed. What many of these parents would do is to exhort their children to study hard so that, with a certificate, they can get a good job and have a better life.In addition, average Singaporeans just cannot afford to send their children overseas if they fail to qualify for higher education locally.To be able to allow their children to have breathing space and to enjoy their childhood means that should they fail to further their education here, the parents must have the means to send them overseas. It is realistic, therefore, for parents to hope that their children can enter the local universities, or have the academic excellence to qualify for a scholarship.Is it any wonder, then, why many average Singaporean parents feel bitter that local universities reserve 20 per cent of their vacancies for foreigners, to provide 'vibrancy and diversity' to the education scene here?The blame game - who is responsible for giving our kids pressure? - is as old as the hills. The Ministry of Education and schools blame parents, while the latter point the finger at those who implement education policies.We should instead focus our energy and effort on helping our kids to cope with ever-changing policies and spotting children who are falling behind, so that they can be helped in time.Helping them to accept reality is a start. Help them to accept that life is made up of uncertainties and changes and that to survive in the face of this onslaught of unpleasantness, they have avenues of assistance they can turn to, if they feel suffocated and defeated.Ng Kim Yong (Mrs) End of a Forced Sabbatical This KT stall has re-opened. In case people were curious about the recent closure of this KT stall, here is the story. Warning: it really ain't that exciting. The KTM went up north during CNY to visit relatives. When he got back, he discovered that he couldn't publish articles on this blog any more for some strange reason. This led to the temporary closure of this KT stall.Honestly, the KTM wasn't too upset with the forced closure of this KT stall. Blogging does take up quite a lot of time. :-P Okay lah, the KTM hasn't exactly been sleeping either and he did publish a couple of articles at SingaporeAngle at the meantime.Recently, the KTM decided to check on his Blogger account and it seems that things are back to normal. Or maybe not. The KTM has gotten quite used his sabbatical and isn't quite sure he'd be blogging much again -- but who knows? The KTM writes as and when he feels like it. Actually, the KTM isn't completely sure why he's blogging any more. :-) One young blogger suggested that the KTM "probably blogs because he feels that there are too many anti establishment fellas around (Ie Black Ninjas) and thus someone needs to bring “balance” to the blogosphere". Why should the KTM try to bring balance? Is that his job? Is that anyone's job? What is balance? Why do people think that the blogosphere isn't balanced? Can we realistically expect it to be balanced? Is it possible for there to be balance on the blogosphere? Much Ado About University Admissions [Publ