Perspiration without Inspiration. Singapore’s Role in the Asian Economic Boom.

The death of Lee Kuan Yew has shown that much of the rest of the world believes that he  brought about an economic miracle in Singapore. Furthermore the world believes that this miraculous progress  was due  to his leadership skills alone and that no other person except him would have been able to achieve the same.  The iconography and the hagiography have long been etched deep  into the mythology of Singapore and almost universally  accepted.The fact that Lee senior was not even an economist and so an unlikely proponent of an economic miracle seems to have passed everyone by as have the contributions of Goh Keng Swee and Albert Winsemius.

Like all Singaporeans I have become inured to the never-ending, “Oh hail the dear leader who led us forth from the primordial mangrove swamp” type of propaganda.  The hapless and charmless Singaporean teenager Amos Yee pointed out in his now illegal You Tube broadcast that Lee Kuan Yew’s books are shoved in your face at every turn. But then Amos Yee is only 16 and hasn’t had as much time to get bored with it all as some of us older Singaporeans.  Despite this, even I was  impressed by the cringe-worthy  sycophancy of  an FT editor, David Pilling who wrote just before LKY’s death that, His [LKY’s]  punchily written memoir, From Third World to First, shows an acute awareness of his achievement in conjuring a prosperous city state from an unpromising history and geography.”   Sadly, Pilling’s paean was as short on quantifiable facts as it was high on praise. I wrote a letter to the FT rebutting it which as usual the FT declined to publish. You can read my letter below and the original article here.

David added a new twist to the old myth with his assertions about our unpromising geography and history. Not to mention that he unquestioningly accepts the title of Third world to First. I will just take a short detour into a mini blog article, to deal with that book’s unpromising title as it perfectly illustrates Lee Kuan Yew’s second rate intellect, willful adoption of outmoded ideas and deliberate mendacity.

From First World to First World and how we never achieved Third World status.

The terms  First,  Second and Third World  came into usage in the 1950s at the height of the cold war era. First World referred to the nations that allied with the United States namely: The UK, Western Europe and  other Allies such as Canada, Apartheid South Africa, The Philippines, Thailand, Iran under the Shah, Turkey, Namibia and Australia.   Second World referred to those nations that allied with the Communist nations of  the Soviet Union and China namely: Ethiopia, Yemen,  Eastern Europe, Vietnam and Cambodia. All other Nations  that were not aligned with either the US/UK  as First World or with The Soviet Union /China as the Second World were called the Third World. Namely India and Pakistan much of  Africa but also Sweden and Finland and Switzerland.  Yes, those Swiss standards of living are Third World standards.

So if we want to be accurate the title of Lee Kuan Yew’s book could be translated as From Switzerland To The Philippines, From Sweden To Namibia or the more snappy,  from Finland To Thailand. The fact is that by those definitions we were already First World by 1975 when the terms came into being and definitely by 1959 before Lee Kuan Yew came onto the scene.  It is true that possibly because much of Africa was in the Third world it became common to link Third World with  underdeveloped, lacking economic prosperity or poor standards of health and education.  Similarly prosperity and democracy became synonymous with the US and The First World. However and this is a big however,  used in that way these terms are not only inaccurate but are viewed as pejorative terms, as classifications that judge rather than describe. Educated people don’t use them as we have more accurate terms such as lesser developed, fully developed and emerging. I remember my own son at the Primary school level talking about developing and emerging economies in geography.  As those World Classifications  were outmoded and false decades before the paperback of his self promotional opus hit the shelves why then did Lee Kuan Yew still use them? He could not have been unaware that he was pulling the wool over everyone’s eyes.

Returning to Pilling’s paean let’s examine his claim that we in Singapore had an unpromising geography.  Whereas before he was uncritical now he is simply spouting nonsense. The less dramatic and simple fact is that our geography has always been our blessing, going a long way to make up for our shortage of land and natural resources. Already under the British, Singapore was one of the busiest ports in the world. Singapore is and always has been blessed with one of the best natural harbours in the world. We have an unparalleled strategic location at the mouth of the Straits of Malacca through which around 40% of the world’s container traffic and a large part of the world’s oil passes.  Lee Kuan Yew didn’t arrange, lead or masterfully control this. Talking about history lets go back to the 16th century when the vitally strategic location of the Malacca Straits was recognized by the Portuguese who took Malacca in an effort to dominate the world spice trade, then in the hands of the Venetians. Swap spice trade for oil and you can see that from medieval times through to contemporary days of international sea borne trade  our geography has been so promising that it is difficult to see how we could not have progressed.

Malacca Sultanate and Temasek

Malacca Sultanate and Temasek

We find a similar story with our historic economic record. In 1929 according to the Maddison Project data (comparing GDP per capita for countries around the world over long time periods and converted into  1990 Purchasing Power Parity [PPP] $) Singapore’s GDP per capita was significantly higher than Japan’s.  I repeat in 1929 our GDP per capita was already higher than Japan’s.  In 1950, after the Great Depression and the War, Singapore’s GDP per capita was still significantly higher than the rest of Asia.

There is a wealth of other data, photographic images and contemporary source material that I could produce in the same vein such as our exceptionally low infant mortality rates which in 1960 were already lower than Germany, Spain or Italy and close to US and UK levels.


Infant Mortality

Infant Mortality

I could show how the seeds of a middle class, one of the defining features of a developed economy, were already evident in the Chinese merchant classes of the late 1800s, then swelled by the British Empire’s Eurasian civil servants and their Indian clerks.  The fact is we weren’t an underdeveloped country before Lee Kuan Yew but did Singapore do noticeably better later in the period under Lee Kuan Yew’s authoritarian leadership than it would have done without the PAP in charge?

While the counterfactual is impossible to test scientifically, we can compare the periods before the PAP came to power with the period of PAP rule and also the records of comparable countries. So here  using  that Maddison Project data again, I have looked at Singapore’s GDP per capita  growth record. These are the figures for annualized compound growth for different periods:

1919-29 5.6%

1950-60 0.4%

1960-70 6.8%

1970-80 7.4%

1980-90 4.6%

1990-00 4.1%

2000-10 3.2%

So during the relatively brief period of prosperity after WWI before the Great Depression and WWII Singapore’s GDP per capita grew only slightly slower than the growth rate during the 1960s and 1970s and faster than it grew after 1980. Interestingly in 1950 Hong Kong had almost the same per capita GDP as Singapore and in 2010 it was still slightly higher.

The only period against which the PAP’s growth record looks noticeably better was the 1950s, when of course there was a chronic  dollar shortage caused by a persistent American current account surplus. This led to constraints on the growth of world trade and the recovery of the war-affected economies.   It was only in the latter half of the 1960s with the US involvement in Vietnam, the overvaluation of the dollar and the deterioration of the US current account from surplus to increasing deficit that world trade really took off.

Singapore’s economic growth is of course directly related to the growth in world trade given its position as one of the world’s major ports. After 1965 world trade grew at a much faster rate than during the interwar or immediate post-war years, which explains a large part of Singapore’s faster growth after independence. This suggests that Singapore could hardly have failed to prosper as long as it adopted an open-economy export-led industrialisation strategy capitalizing on our position at the centre of world trade. It suggests that Lee Kuan Yew’s skill was in grabbing hold of the tiger’s tail at an opportune moment and hitching himself a ride.

Lee Kuan Yew and Tungku Abdul Rahman

However, even though LKY had Goh Keng Swee, an LSE economist on his team, the adoption of this strategy may not have happened if Tungku Abdul Rahman, the Malaysian PM, had not thrown LKY out of the Federation. LKY was of course not much of an economist. Before Singapore left Malaysia, LKY favoured a Soviet- or Indian-style import substitution model rather than an export-driven one.

After Malaysia threw Singapore out, the PAP leaders did not have much choice but to adopt an export-driven industrialisation strategy. Credit for this belongs to Albert Winsemius who was Singapore’s economic adviser from 1961 to 1984. There was nothing particularly cutting-edge about it. In fact, the plan was based on a simple model in vogue at the time called “Economic Development with Unlimited Supplies of Labour” put forward by the West Indian economist and Nobel prize winner Arthur Lewis in the 1950s. Lewis’s model was similar to the Soviet model of extensive growth relying on using abundant cheap labour employed at subsistence wages, which could then be used to finance investment and employ more labour.

That is precisely what Singapore did. The CPF scheme channeled workers’ savings into investment. Foreign investment was encouraged through tax breaks and the availability of cheap reasonably educated labour.  The Government  also nationalised much of the land and established state champions in what were judged to be the most promising industrial and service sectors taking control of much of the economy that was not owned by MNCs.

A large part of Singapore’s growth in GDP per capita after 1965 was the result of adding more inputs rather than getting higher output from each unit of input. While Singapore’s economic development appeared miraculous, it was really no different from the Soviet Union’s a decade or two earlier, as Krugman pointed out in his 1994 essay in Foreign Affairs. At one time many economists feared that the Soviet Union was about to overtake the US economy in size because of its much higher rates of growth even though its productivity was much lower. Similar fears were expressed about Japan in the 1980s.

To quote Krugman:

Consider, in particular, the case of Singapore. Between 1966 and 1990, the Singaporean economy grew a remarkable 8.5 percent per annum, three times as fast as the United States; per capita income grew at a 6.6 percent rate, roughly doubling every decade. This achievement seems to be a kind of economic miracle. But the miracle turns out to have been based on perspiration rather than inspiration: Singapore grew through a mobilization of resources that would have done Stalin proud. The employed share of the population surged from 27 to 51 percent….. 

Even without going through the formal exercise of growth accounting, these numbers should make it obvious that Singapore’s growth has been based largely on one-time changes in behavior that cannot be repeated. Over the past generation the percentage of people employed has almost doubled; it cannot double again…….And an investment share of 40 percent is amazingly high by any standard; a share of 70 percent would be ridiculous. So one can immediately conclude that Singapore is unlikely to achieve future growth rates comparable to those of the past.

But it is only when one actually does the quantitative accounting that the astonishing result emerges: all of Singapore’s growth can be explained by increases in measured inputs. There is no sign at all of increased efficiency. In this sense, the growth of Lee Kuan Yew’s Singapore is an economic twin of the growth of Stalin’s Soviet Union – growth achieved purely through mobilization of resources.”

What this shows is that clearly Singapore’s growth was based on perspiration not inspiration. There was nothing innovative about what LKY and his team did. They cannot even claim originality which belongs to Stalin and the Soviet Gosplan economists and Arthur Lewis. I would never refute an assertion that Lee Kuan Yew was an efficient but ruthless administrator who would have thrived in the Soviet Union.

Of course this growth strategy carries within it the seeds of its own destruction as increases in investment on such a scale lead inevitably to diminishing marginal returns. Krugman thought that the economic growth would slow down and stop when Singapore ran out of additional labour inputs. But for a long time the PAP were able to postpone the inevitable slowdown by throwing the floodgates open to abundant supplies of cheap labour from the surrounding region. Krugman could not have imagined that the PAP would increase our population by 60% in twenty years.

The PAP leaders would of course like to keep adding meat to the sausage machine by increasing our population further to seven, ten million or even twenty million. Recent measures in Parliament to reserve space deep underneath our present buildings for future development hint at the magnitude of future population plans and also convey the poverty of LKY’s ideas.

At the same time as the constraint on labour inputs was relaxed with unprecedented levels of immigration, there was no shortage of capital due to the very high levels of enforced saving through CPF. The share of savings in GDP (gross fixed capital formation plus net exports) has risen to more than half. Domestic consumption is only 34% of GDP, lower than in China. For a long time our excess savings have been channeled into buying overseas assets as the PAP Government  have run out of investment opportunities in Singapore.

There can be no better illustration of how inefficient our economic growth has been then our poor productivity record. LKY’s PAP always point with pride to Singapore’s high level of GDP per capita, which was ahead of the US but behind Norway and Luxembourg in 2013. But firstly Singapore should be compared with other cities not countries. On this basis according to the Brookings Global Metro Monitor our  GDP per capita measured on a Purchasing Power Parity (PPP) basis ranks fourteenth globally below Macau at the top with twelve North American cities above it.

Screenshot 2015-04-07 20.31.58


I would caution that Singapore’s PPP GDP per capita is not a good measure of how productive the Singapore worker is. Singapore has a very high ratio of the employed labour force to total population. This is because almost 40% of the workforce are foreign workers with no dependents. Singaporeans also work the longest hours of any developed country. A better measure is to look at the productivity of Singaporean workers. As you might expect from the way growth has been generated without any rise in efficiency, on a GDP per hour worked basis we were in 21st place in a list of 43 developed and developing countries at only  62% of the US level as of 2013 (US Conference Board). Our GDP per hour worked is below Japan’s and around the same level as Hong Kong and Taiwan where there was far less state intervention and mobilisation of resources and also where the people have considerably more freedoms than Singaporeans enjoy. By contrast our GDP per capita ranking was 3rd. Over the period 2007-12 our GDP per hour worked fell by 0.1% per annum coming near the bottom of the table and above only Norway, Greece and Italy. In 2013 and 2014 productivity growth was 0.3% and -0.8% respectively.

Screenshot 2015-04-01 22.22.52

However GDP per capita and GDP per hour worked include the share of income going to profits and is thus not a good measure of middle-class incomes. Singapore’s inequality is higher than most developed countries, including the US, whether gross or adjusted for taxes and transfers.

Thus median real income is a better measure of a country’s living standards since it avoids the skewness which is likely to affect the  average caused by the concentration of income in the top 1% of the distribution. Gallup did a ranking of countries by gross median household income measured at PPP. using data from 2006-2012. This put Singapore well below Hong Kong, Taiwan, South Korea and Japan and on about the same level as the UK. However adjusting the figure for per-capita rather than household income pushed Singapore well below Hong Kong, Japan, South Korea and the United Kingdom:

Screenshot 2015-04-01 22.21.18


Even that is not the full story because Singaporean workers work by far the longest hours compared to workers in other developed countries. According to the US Conference Board Singaporean workers work 25% longer hours compared with US workers who in turn work about 20% longer hours than most European countries. Singapore’s median per-capita income figure per hour worked would thus be about 20% lower if Singaporeans worked the same number of hours as US workers. This would put us below Spain and closer to Greece in terms of median per-capita income.

Again Singapore’s figures need to compared with other global cities and not with countries. A UBS survey in 2011 of the domestic purchasing power of workers in 72 cities around the world put Singaporeans’ purchasing power on a par with Kuala Lumpur and below that of Moscow, Taipei, Tokyo, Hong Kong and Seoul. Mysteriously, after the PAP Government was sufficiently concerned to comment on the results, Singapore was quietly dropped from the following year’s survey while cities such as Kuala Lumpur, Mumbai, Jakarta and Manila continued to be included.

At the beginning I looked at two areas: firstly in 1965 was Singapore an underdeveloped country devoid of natural advantages and secondly did Lee Kuan Yew’s policies result in rises in living standards that justified authoritarianism, the destruction of thousands of lives and the instilling of fear in a whole nation.  I have shown the answers to the first two questions to be definitely no.

Finally, would a different less repressive and more democratic system of government have been able to achieve the same results? The answer is definitely yes. Despite the carefully crafted hagiography and the promotion of Lee Kuan Yew as a role model for the developing world, he was not an original thinker but merely followed standard development theory at the time which owed much to the Soviet model. Just because Lee Kuan Yew ruled Singapore during a period of exceptionally rapid world growth does not mean that he should be given the credit for Singapore’s development, which in any case has been dressed up to look more impressive than it is. It is a false causality based on a statistical correlation. Western commentators are, in the words of Nassim Taleb, “fooled by randomness“.

After fifty years it is clear that the next generation of PAP leaders have no new ideas and we are increasingly falling behind in the productivity and innovation race. We must move on from the claims of how much we have advanced and gained and look at how much we have lost, how much better our lives might have been how much better they still could be with a modicum of freedom and a large dose of inspiration.

Letter to FT

Letters Editor

The Financial Times

1 Southwark Bridge

London SE1 9HL


Dear Sir,

I refer to today’s article by David Pilling on Lee Kuan Yew’s legacy where several inaccuracies stand out

Pilling asserts that Singapore has a higher material standard of living than the UK, US and Norway. This is simply untrue. Even on GDP per capita, Norway’s is about twice Singapore’s. In any case, Singapore should be ranked against comparable cities and not countries. On the Brookings Global Metropolitan Monitor by comparison, Singapore does not even come in the top 20 metropolitan areas and in Asia Macau ranks above Singapore.

GDP per capita is also not a good measure. Singapore has a very high ratio of employed labour force to total population because almost 40% of the workforce are foreign workers. Singaporeans also work the longest hours of any developed country. On a GDP per hour worked we rank near the bottom of the OECD countries at a level that is only about 60% of the US.

Our distribution of income is also one of the most unequal in the world with a Gini coefficient of 46.3, higher than the US. A UBS survey in 2011 found the purchasing power of Singapore’s workers’ wages to be well below that of many other Asian cities and around the same level as workers in Kuala Lumpur or Moscow.

Incomprehensibly, Pilling talks about LKY’s achievement “in conjuring a prosperous city state from an unpromising history and geography”. The Straits of Malacca have always been at the intersection of major global trade routes. As early as the 16th century the Portuguese said “Whoever is Lord of Malacca has his hand on the throat of Venice.” In 2011 one-quarter of the world’s traded goods or about 35% of the world’s container trade and the major part of the Asian oil trade passed though the Malacca Straits. Historically It was Stamford Raffles not Lee Kuan Yew who spotted Singapore’s potential as the best harbour in the region and long before 1960 we were one of the top three busiest ports in the world.


Yours sincerely,


Kenneth Jeyaretnam


Will the Taxpayer End Up Subsidizing Ho Ching’s Bonus?

In Budget 2015 the Finance Minister allocated $3 billion towards the construction of the new Terminal 5 at Changi Airport. He stated that he would be setting up a new fund, the Changi Airport Development Fund (CADF). The Transport Minister subsequently explained in a debate in Parliament on 11 March 2015 that this was just a downpayment and that the eventual cost would be many times more.

I have written more about the Finance Minister’s fondness for padding the Budget with allocations to new funds. These keep springing up like weeds. I have argued in “Smoke and Mirrors in the Government’s Accounts” and “How to Make A Surplus Disappear Without Anyone Noticing” that their purpose is to make current spending look higher than it is and prevent Temasek, GIC or MAS having to actually pay out the Net Investment Returns Contributions (NIRC). They are part of a circular closed system that prevents Singaporeans knowing the true state of the reserves. Once money is allocated to a fund Parliamentary accountability disappears since only the Finance Minister scrutinises the Fund’s spending. The Finance Minister is supposed to lay the fund’s accounts before Parliament but there is no evidence that any time is allocated in Parliament to discuss the performance of the funds.

My concern with the Changi Airport Development Fund is more specific. In 2009 the Government corporatized Changi Airport Group (CAG) through an Act of Parliament transferring it from the Civil Aviation Authority of Singapore in return for a capital injection valuing the CAG at $3.2 billion.

Looking at Changi Airport Group’s latest accounts for the year ending 31 March 2014 (see below) Earnings Before Interest Tax Depreciation and Amortization (EBITDA) was $1.34 billion. Putting that on an Enterprise Value to EBITDA multiple of 20 times (not unreasonable in the current low interest environment) would value CAG at $27 billion. Not a bad return considering that when MOF transferred CAG it also included $1.09 billion cash on the balance sheet so the true cost was around $2.1 billion.

CAG Accounts

The Ministry of Finance (MOF) currently still owns CAG. Such a valuable asset should be included in the Net Investment Returns Framework and also be accounted for in the Statement of Assets and Liabilities (SAL) of Singapore, which the Finance Minister is obliged to publish every year with the Budget. There are no notes to the SAL so it is not clear whether it includes CAG just as it is not clear whether it includes Temasek’s assets. However legally all assets owned by the Government should be included. That should include Temasek, GIC, MAS, CAG, CAAS, land sales receipts as well as the freehold interest in 80% of Singapore’s land owned by the Government. The taxpayer is also losing out because it is not included in the NIRC, which is defined under Article 144 of the Constitution to be the returns from GIC, Temasek and MAS even though the Government is funding the development of CAG out of taxpayer monies.

Lui Tuck Yew said that Terminal 5 would have an initial capacity of 50 million passengers a year and an eventual capacity of more than all the current terminals put together. That means it could easily double CAG’s EBITDA and raise its potential value to greater than $50 billion.

If the taxpayer is paying for the construction of Terminal 5 but the asset is owned by CAG or subsequently transferred to them for a nominal sum then whoever owns CAG will reap a huge gain perhaps even exceeding what it has made on the original transfer of Changi Airport. The Transport Minister failed to disclose the terms under which Changi Airport Development Fund will operate and how the taxpayer will be paid back. Under the Constitution, there must also be an Act of Parliament setting up CADF and its existence must be disclosed in the SAL.

At some point in the future the PAP Government clearly intends to sell or transfer CAG to another company. Article 35 of the Civil Aviation Authority of Singapore Act states that as soon as practicable after the transfer date the successor company (CAG) may be sold in accordance with Article 35 (see below). Presumably the likeliest buyer is Temasek.

Screenshot 2015-03-20 12.56.47

If CAG, which also manages foreign airports, is sold, whether to Temasek or to a foreign company or private equity firm, then the Finance Minister must ensure that this is an open auction in which the taxpayer receives full value for money. This would be true in any event and particularly the Government is getting the taxpayer to fund the new terminal. The Government must also disclose any bonuses paid to the management of CAG and to any subsequent role for the former management with a new company because of the potential conflict of interest.

The Chairman of CAG, Liew Mun Leong, a former civil servant, was formerly the head of CapitaLand Group, formerly wholly owned by Temasek and still 39% owned, was paid a $20 million bonus in just one year by his boss, Ho Ching, It was shocking to many Singaporeans at the time that a former civil servant could be paid so much when before joining CapitaLand he had been a loyal apparatchik of the Government. The CEO was formerly with the RSAF and apart from that his principal qualification seems to have been as Principal Private Secretary to Lee Kuan Yew. Many of the board members also have a role with Temasek so the connection with Temasek is pretty close, incestuous even.

Temasek’s management, and in particular Ho Ching, the PM’s wife, are paid bonuses depending on Temasek achieving more than a hurdle rate of return, which is pegged to the cost of 10-year debt according to the Temasek annual report. The report discloses that staff may get co-investment grants in which they share directly in Temasek’s returns. If Temasek succeeded in acquiring CAG this could then result in a massive bonus for Ho Ching and her management team. If she was to get even 1% of the value accretion from floating CAG this could potentially be worth up to $500 million at some point in the future.

This is all pure speculation since Singaporeans are not told how much Ho Ching is paid or how her remuneration is calculated. No one in Parliament has asked about her or her team’s remuneration. When questions were asked in Parliament about Chip Goodyear’s resignation and his leaving package Tharman was evasive and rebuffed questions with “People do want to know. There’s curiosity. But that is not sufficient reason to disclose information.” and “It will not be advisable, nor in the interest of Temasek or Mr. Goodyear, for us to comment further. It serves no strategic purpose.” It is incredible that the PAP Government were able to get away with this reply and with not disclosing Ho Ching’s remuneration given that Singaporeans own the assets and the managers who run them are public servants.

Even if CAG is not sold to Temasek at a knock-down price, we need to be vigilant against any other attempts to transfer value from the taxpayer to the management of CAG or a new purchaser. At some future point the Government may decide to put in place a poison pill triggering its sale on a change of government, rather like the PAP did with AIM. The management could decide to form their own company and acquire the assets themselves, or in partnership with a private equity firm, at a significant undervaluation, particularly if no one in Parliament is aware of or prepared to question their true value. This is not just a theoretical possibility. It actually happened with state assets that were sold off after the collapse of the Soviet regime. Similarly Nomura’s private equity group in the UK were able to purchase the Ministry of Defence’s surplus housing stock at a fraction of its true worth in the 1990s and make reported profits of US$1.9 billion.

We need full disclosure from the PAP Government on how it accounts for enormously valuable but apparently unrecognised assets like CAG and the value it assigns to them. We need to ensure that the taxpayer reaps the full financial vale of these assets particularly if she is asked to add value by paying for investments. Finally safeguards need to be put in place that the civil servants running these businesses do not enrich themselves at the public’s expense in the event of a sale and in particular that any sale, even to Temasek, takes place at full open market value. This is particularly important given the inside information possessed by the management and the PAP’s preference for secrecy. Given the close connection between Temasek and CAG and the dual roles played by many of the directors of CAG, Temasek will have insider information and an edge even if there is an auction. We have to ensure that the management of Temasek, including Ho Ching, do not reap a windfall profit because of this insider knowledge.


Weak Exports Confirm We Were Right to Call for A Stimulus Package Last Year

The latest figures for non-oil domestic exports were extremely weak and signal that GDP growth is likely to be weaker than the MAS’s projection for this year of 2-4%. They fell by 9.7% in February compared with the same month last year. As non-oil domestic exports comprise about 40% of GDP, it is likely that the economy will enter a recession later this year if the trend is confirmed (though on the past track record one cannot rule out further manipulation of the figures by the Statistics Department). The decline in exports to China can hardly have been a surprise for the Government as most data have indicated that China is already in recession despite the official figures purporting to show that the Chinese economy is still growing at 7%. In addition the Japanese government’s deliberate depreciation of the yen is doing exactly what it is supposed to do-curb imports and stimulate exports.

The PAP Government does not have any strategy to deal with this other than to blame it on industrial restructuring caused by their decision to restrict the inflow of cheap foreign labour in an effort to boost productivity growth. However if this were part of a planned restructuring we would expect to see a booming export sector complaining about lack of access to cheap labour. Instead local manufacturing has been forced to restructure by a combination of weak global growth and uncompetitive or poorly positioned exports. The fact that commentators expect the MAS to respond by depreciating the SGD further, a move that will cut real wages, shows that the Government is panicking and this is not a planned strategy to increase productivity. The fall in exports and manufacturing output, unless accompanied by lay-offs, will actually have the opposite effect of leading to negative productivity growth.

Reform Party have consistently called for a stimulus package to boost domestic demand since April last year in order to restructure the economy away from its dependence on exports. We called for a stimulus package of about 0.5 to 1% of GDP. Needless to say, the Government and the State media ignored our calls.

There is ample fiscal room for a much larger stimulus of about 2-3% of GDP since the Government runs a true surplus of about $30 billion a year. In addition the current account surplus has consistently been around the same size. In Budget 2015, the Finance Minister used the usual sleight of hand to produce a headline deficit for 2015 of $6.7 billion. However, he lumped together transfers to funds, like the Productivity Fund and the newly set-up Changi Airport Fund, with current spending. Once these are properly allocated and the usual conservatism in forecasting spending taken into account, the Government Budget will probably show a surplus. This is despite ignoring returns from Temasek, GIC, MAS and land sales, which need to be taken into account if we follow the correct IMF accounting framework.

In light of the latest figures showing the situation has got considerably worse we repeat our calls for an enhanced stimulus package. As we indicated in our previous calls, this should take the form of cash rebates concentrated on the middle to lower income groups. The depreciation of the SGD, whether engineered by MAS or the result of massive capital outflows, is unlikely on its own to revive the economy. Most exporting countries, like Germany, Japan, Korean, even China, are resorting to deliberate weakening of their currencies to try and boost exports in what will undoubtedly be a self-defeating strategy.

Amendments to bill will allow HDB to enter flat by force and without a warrant.

I am seriously concerned by the new Housing and Development (Amendment) Bill, which was read in Parliament for the first time on 12 March 2015. As Parliament is dominated by one Party these amendments will be passed with no real debate or oversight, that is they will be rubber stamped. Yet 87% of our citizens live in HDB so any amendments have far reaching consequences.

Firstly the HDB are given new sweeping powers to enter your flat without a warrant in cases of imminent threats to public safety and public health. They would be the judge of whether there is an imminent danger and they would only have to show subsequently that they acted “in good faith”. If the owner is not there they can enter and demolish any obstacles in their way or remove anything that impedes their investigation, like pulling up the floor or kitchen units to carry out their investigation. HDB would not have to pay compensation to the owners even if they had made a mistake, provided they acted in good faith.

Secondly even if there is no imminent danger HDB will be able to enter your apartment after a 24 hour notice period without your permission if they obtain a warrant. Again they would be allowed to use force to gain entry and to remove any obstacles that impede an investigation. No compensation would be paid provided HDB acted in good faith and followed the rules.

Thirdly, HDB gains new police-like powers to enter an apartment, make audio and video recordings and seize evidence if it believes the flat is being illegally sub-let or the owner has broken any of the other rules applying to purchasers. Under the new amendments it will be an offence not to answer the HDB officer’s questions and those refusing to answer can be compelled to do so by a magistrate. The HDB officer cannot compel you to give evidence if that would incriminate you in a criminal offence but without legal representation how many residents will be aware of their rights?

In the case of entry to effect repairs the Government has justified the new amendments by saying that they are necessary to deal with the problem of owners who refuse to cooperate or to put right problems they are causing, like water leaking from their flat and damaging the ceilings of the flats below. Khaw Boon Wan has said that in one-third of cases of ceiling leaks the problem takes over three months to fix.

However I can see several problems both with HDB

  1. The HDB has a conflict of interest in investigating any problems, as it was responsible for the construction of the flat. Quality failings in construction may be blamed on the renovation contractor and the householder will be forced to bear the cost of the repairs. There are many leaks and cracks in areas that are common and have no upstairs neighbour. There should be an independent entity involved in investigations.
  2. There are good reasons why obtaining a warrant should be necessary. Just as the police are required to obtain a warrant before carrying out a search, a warrant should be necessary for HDB to enter an apartment without the owner’s permission in all but the most serious emergency. While obtaining warrants may seem like an obstacle to efficiency, the process is supposed to act as a check on the powers of the police by requiring an independent authority (a magistrate) to sign off on the request. In cases where it goes ahead without obtaining a warrant, HDB should be held to account subsequently for the consequences should the emergency not exist or not be caused by a problem in the apartment to which forced entry has been obtained.
  3. A 24-hour notice period is too short in cases where the owner may be away or hospitalized. More effort should be made to contact him or her.
  4. HDB should not be given police powers to interrogate suspects and to seize evidence in cases where it suspects a breach of the rules. HDB officers are not police and do not have the necessary training. Also there is a clear conflict of interest just as in 1 above because the HDB will be bot investigator and judge as to whether the owner has breached its rules. Only the police should carry out such investigations.

Despite the current problems with non-cooperative flat owners and breaches of HDB rules, the proposed amendments give too many powers to the HDB with insufficient safeguards. We need to ensure that these are in place before we give HDB new powers. In the case of serious breaches of the rules the police should be the appropriate investigating authority and not the HDB. The PAP Government already possesses too many powers over citizens’ lives and acts in a high-handed and autocratic manner to which Singaporeans have few rights of appeal.

The amendments do contain some sensible suggestions such as more serious penalties for using non approved contractors and I would like to see stricter vetting of approved contractors.

I have said before that Singaporeans should be given the freehold of their HDB as part of a process of transferring power from the state to the individual and to further the goal of a property owning middle class. This has been part of Reform Party policy since 2011. A new Government should also set up a Housing Ombudsman with special powers to hold HDB to account and set aside their decisions and/or pay compensation to homeowners in cases where their rights have been abused.

Exposing the problems with CPF


Ho ChingAuthor’s note: This is an edited version of article I originally wrote for TOC which has not been published on my blog before today. Reading this article I surprised even myself, to see that back in 2009 I had already exposed the link between  GIC’s  funding and Temasek.  You’ll read in the article where I say,  “However a significant portion of its funding may come indirectly from the CPF which invests primarily in debt issued by MOF.

If I wrote this today I wouldn’t  put in the word “may“. That is because since  2009 GIC has confirmed what I wrote that in fact GIC’s funding comes from CPF.   They say so here, “GIC, along with MAS, manages the proceeds from the Special Singapore Government Securities (SSGS) that are issued and guaranteed by the government which CPF board has invested in with the CPF monies”. I have also updated the level of assets of GIC. These are really the only parts of the  article that need updating.

Everything else is as true today, so maybe back in 2009 Singaporeans just weren’t ready for the message.  Fast forward to the last two years or so and thanks to the dedicated blogging and  brave public rallies of  Han Hui Hui and Roy Ngerng who started blogging on this in 2012,  my central ideas as to transparency and how our wealth is invested  have become  popularised and  a hot button issue. No doubt CPF will be at the forefront of every Opposition Party’s manifesto next GE.

My view on investments is that an extra 1% or 2 %  return is a red herring. Investment in our only natural resource, our people, could potentially have a much higher internal rate of return, in the form of a more highly educated workforce, than that achieved by Temasek or GIC on their overseas investments.

What is a Sovereign Wealth Fund?
Sovereign Wealth Funds (SWFs) are not a new idea. According to Wikipedia, the term Sovereign Wealth Fund was first used by Andrew Rozanov in an article entitled, ‘Who holds the wealth of nations?’ in the Central Banking Journal of May 2005. A SWF may be defined as a state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments.

Two types of SWFs.
1. The first, and the oldest form of SWF, is one set up to manage revenues from an exhaustible resource such as oil, or one which derives its assets from government budget surpluses.

One example of this type and possibly the oldest known is the Kuwait Investment Authority, a commodity SWF created in 1953 from oil revenues.

A more recent example of this type is the Norwegian SWF which was set up primarily to ensure that the wealth represented by Norway’s oil reserves was not squandered on current consumption but turned into financial assets which would benefit future generations.

The example we are interested in is Temasek.  It was set up in 1974 to hold stakes in the various government-controlled companies, such as DBS, SIA and Singapore Technologies, that had previously been held by the Ministry of Finance. The Temasek Holdings website states that, “Our investments are funded through dividends we receive from our portfolio companies, our divestment proceeds, commercial borrowings, a maiden Yankee bond issue in 2005 and occasional asset injections from our shareholder, the Minister for Finance (Incorporated).”

2. The second type of SWF is one set up to manage a country’s excess foreign exchange reserves. GIC is probably an example of this type of SWF since it was set up in 1981 with the explicit objective of managing our foreign exchange reserves for long-term capital appreciation. I say probably, as there is very little transparency, so it is not clear whether it is also funded by capital injections from the Ministry of Finance in the same manner as Temasek. However a significant portion of its funding may come indirectly from the CPF which invests primarily in debt issued by MOF.  ( see my note that this information is now updated) No information is available on the current level of assets. The website states only that the investment portfolio is in excess of US$100 billion. However various estimates have put the level of assets at between US$250 and US$330 billion.  (Author’s note: I know now from the Statement of Assets and Liabilities that the Finance Minister has to include with the Budget (though I have not been able to access it this year) that the global total of financial assets owned by the Government is about $800 billion. Subtracting Temasek’s assets ($223 billion in 2014) and the Government’s deposits with MAS ($113 billion in 2014) from this leaves a figure for GIC’s assets of about $460 billion. However in the absence of even minimum levels of transparency this is still guesswork and could be completely wrong.)

Does Singapore  even need a Sovereign Wealth Fund?
Singaporeans need to ask,  particularly in the light of the recent investment losses, why Singapore even has a SWF  let alone two.

Look at my definition for the first type and you will see that Singapore does not meet the criteria since we do not need to manage a windfall from any natural resources. If Singapore had expanded its domestic investment and consumption over the last 30 years it would have had smaller current account surpluses and thus smaller foreign exchange reserves needing management. MAS already has sufficient foreign exchange reserves necessary to manage  the Singapore dollar. No second SWF was needed to fulfil this function.

Again without transparency we have no breakdown of how much government saving in the form of surpluses has contributed to both Temasek and GIC’s growth over the years. But we do know that the cumulative budget surplus over the last thirty years has been considerable.

Budget surpluses
Where have these budget surpluses come from in the first place. Well we all know how to save money. We cut back on expenditures. When a country cuts back on the absolute basics such as free education for its children then it creates a budget surplus. Let’s make no mistake here. No other First World Nation only has compulsory education up to the end of Primary school and even that only for a very short day.  Even our very minimal compulsory education is not even free (although heavily subsidised). I am not advocating a full welfare state but to put it bluntly, Singaporeans have helped to pay for our enormous overseas investments by going without the brights and benefits that citizens in a democracy demand.  So Singaporeans go without free universal education to secondary level, a national health insurance system and other elements of a social safety net which are characteristic of most countries at Singapore’s level of development. By making you go without the PAP builds up a huge surplus for investment overseas.

How the budget surplus should be invested: In Singaporeans
SO, the budget surplus, has been taken from the pockets of Singaporeans and represents money that you not only could  have but should have. It could and should, be returned to the citizens of Singapore in the form of lower taxes, fees and charges. It could have also been used to finance much higher domestic investment in education or in health and welfare.

Their website states that Temasek has achieved an annualized return of 18% since inception though that is based on the March 2008 asset figure of S$185 billion rather than on the current valuation of S$145 billion announced by CEO Ho Ching yesterday. Investment in our only natural resource, our people, could potentially have had a much higher internal rate of return, in the form of a more highly educated workforce, than that achieved by Temasek or GIC on their overseas investments.

Instead of the Government investing our money to pick winners through an industrial strategy there could have been greater incentives for investment and R&D in the private sector which might have led to faster productivity growth and higher levels of real incomes. And even if GIC has not been funded directly by the MOF, the growth of our foreign exchange reserves has come about through chronic external surpluses which represent domestic under-consumption and under-investment.

As a final insult, CEO Ho Ching announced on July 29th 2009 at the Institute of Policy Studies that Temasek was thinking of allowing Singaporeans to co-invest alongside Temasek sometime in the next ten years. How kind of her. I thought we had already invested as outlined above.  The only positive side of this news is that it would presumably force Temasek to be much more transparent about its investment process and corporate governance. In any case any personal financial adviser  would not advise an investment in a company without sufficient transparency that required due diligence.

The next step: issue shares to Singaporeans
As we all know, calls on the government for accountability and transparency in its sovereign wealth funds is not new.  However; I would go one step further! Many of you know that I gave a speech at the Foreign Correspondents Association lunch on the 2 July 2009. In answer to a question put to me after the lunch I went on record as saying that Singaporeans should be given a direct stake in our SWFs. One way to do this is  through the privatization and listing of Temasek and the issuance of shares to Singapore citizens. Another way is  through the explicit linkage of part of the value of these assets to the welfare of Singaporeans, as is done in Norway through the Pension Fund.

To counter one possible objection that our national “crown jewels” could end up being bought by foreigners the government could retain a golden share which would prevent this happening to Temasek’s portfolio of domestic GLCs. Longer term there is no reason for Singapore to continue to run large budget surpluses over the course of an economic cycle.

In conclusion whilst I will not stop any time soon on calling on our government for greater transparency and accountability into how it manages our money, I would urge us to look at credible new proposals such as mine.

Reform Party’s Wishlist for Budget 2015

The Budget Statement is only a few hours away. The Government-controlled and-owned media is full of speculation about the “goodies” that Singaporeans can look forward to. The Straits Times estimates that Government surpluses since 2011 have totalled $10-12 billion though it doubts that all or even most of this sum will be spent. Predictions for the use of all or part of this money include enhanced support for seniors, an SG50 bonus payout across the board, an extension of the Productivity and Innovation Credit (though even the Government media admit it has not worked) and tax reliefs rather than tax rebates.

Reform Party has since 2009 argued that the Government’s Budget presentation is deeply misleading and presents a wildly inaccurate picture of the resources available for extra spending or tax cuts. We begin by looking at the potential resources available and following the Norwegian model suggest that a fixed percentage of the total value of assets under management be made available for current spending. We then build on our previous proposals as to where the additional money should be allocated.

Government Resources and the Medium Term Spending Framework

The $10-12 billion total surpluses given by the ST are based on the format given in the Budget presentation, which excludes returns on reserves accumulated before the current Parliament. However we see no justification for this exclusion even if current legislation prohibits spending out of past reserves without the President’s approval. This is a basic lack of transparency and accountability which the PAP have never addressed.

In order to gain a true picture of the Government’s finances, we need to use the IMF framework, which includes interest and investment income on past reserves as well as realised capital gains on assets sold. This can be found tucked away in the Monthly and Yearly Digest of Statistics. Surprisingly no one in Parliament has mentioned this. In our response to Budget 2012, Reform Party set out the IMF framework for the Budget and demanded to know why the PAP do not follow this method

This is the table of accumulated surpluses on the IMF framework since 1999:


Year $ millions
1999 10,004
2000 16,0,16
2001    7,885
2002    8,715
2003 11,994
2004 12,820
2005 18,024
2006 18,347
2007 35,084
2008 21,797
2009    2,905
2010 28,247
2011 36,461
2012 29,457
Total 257,756

Using the IMF framework, which presents a much more accurate picture of the Government’s finances, we have accumulated about $258 billion in surpluses since 1999. If these were handed out to Singapore citizens we would all be approximately $80,000 richer. The real surplus over the last few years has been of the order of $30-40 billion per annum though we are missing the figures for 2013 and 2014. These figures include the returns of the Sovereign Wealth Funds run by Temasek and GIC, as well as the reserves managed by MAS and the revenue from land sales.

Reform believes that these surpluses belong to the people and are the fruit of many years of austerity during which our citizens have been forced by the PAP to go without many of the basic benefits that citizens of other rich countries enjoy, such as free education, health care, a state old age pension, and help for families with children and the disabled. We have proposed the drastic but simple solution of returning control over these accumulated surpluses by privatizing Temasek and GIC and distributing shares to Singaporeans. This was part of our Election Manifesto in 2011.

However this may be impractical in the short term. Therefore drawing on the Norwegian model we propose that every year a certain percentage of the assets managed by Temasek and GIC be added to current spending. Norway has one of the world’s biggest Sovereign Wealth Funds, the Norwegian Pension Fund, which was set up to manage revenues from its oil wealth not extracted through mindless austerity from its citizens as in the Singapore model. In Norway this is currently 4% of total assets, which represents a target real rate of return after inflation.

Every year the Government is required to produce a Statement of Assets and Liabilities (SAL) which is unfortunately two years out of date. According to the last published SAL for the year ended 31st March 2013 (which has mysteriously disappeared from the Budget website) total assets amounted to about $800 billion. However many of the assets managed by GIC are matched by liabilities to CPF holders so the net assets amount to roughly $360 billion. However it is not clear whether this includes Temasek’s $223 billion of assets. GIC should be able to make more than the assumed average 3.5% the Government pays on CPF balances but conservatively we assume that 4% of net assets can safely be spent every year without diminishing the real value of the net assets belonging to the Singaporean people. Therefore,

Total Funds Available on $360 billion = 4% x 360 = $14.4 billion

Total Funds Available on $583 billion = 4% x 583 = $ 23.3 billion

So we can safely spend between $14 billion and $23 billion extra per year without diminishing the real value of the people’s assets.

The Government already claims to allocate up to half the Net Investment Returns Contribution (NIRC) from our surplus assets to the Budget. This amounted to some $8 billion in the last Budget. However as we explained in “Smoke and Mirrors in the Government’s Accounts”, “How to Make A Surplus Disappear without Anyone Noticing”, and “Budget 2014: A Very Generous Amount of Wool Pulled over Your Eyes” this is not real spending since the Finance Minister always transfers the money to an unaccountable fund. In 2014 there was much fanfare about the $8 billion Pioneer Generation Package, which was funded by that year’s NIRC. However actual spending was estimated to be only some $400 million per annum (in 2014 only $230 million).

Reform Party proposes to increase current spending by at least $14 billion per annum and potentially more than $20 billion per annum once we get transparency on the total size of the Government’s assets. By spending we mean actual spending rather than a fictitious transfer by which the PAP shuffle money between accounts without any actual outflow. We can do this without raising taxes or cutting defence spending.

We set out below our spending priorities.


Reform Party’s Spending Proposals


  1. A Basic Old Age Pension

In our press release entitled “CPF Needs Radical Reform Not Cosmetic Changes”, we proposed that the Government fund a basic old age pension for our seniors of $500 per month over and above CPF balances up to the Minimum Sum. We costed this at less than $3 billion per annum even if this was extended to everyone currently over the age of 65. If it were only given to those on low incomes the cost would be considerably lower. We assume for the purposes of this exercise that a more targeted pension would cost less than $2 billion per annum.


  1. Higher Health Spending

We would allocate another $6 billion to Health expenditures. This would take spending in the current year, projected to reach $8 billion this year, to $12 billion, reaching the Government’s target for 2020 five years early.

Reform Party is in the process of reviewing our current health system with a view to combining Medishield Life, Medisave and Medisave into a unified system that would provide universal and comprehensive health insurance, including full coverage of pre-existing conditions without additional cost and ensuring that no Singaporean should live in fear of being bankrupted because they have reached their insurance limit and exhausted their Medisave funds. We shall release more details shortly.


  1. Family Credit

In order to help low-income families with children and as a step towards reversing our current low birth rate Reform Party proposes to institute a system of payments to families with children. We propose initially a payment of $300 per month for each child below the age of 18. Based on estimated numbers of around 800,000 children of Singapore citizens the total cost would be around $3 billion though this could be lowered considerably by restricting it to families on median incomes or less.


  1. Higher Spending on Education

Reform Party proposes to allocate an additional $2 billion to education spending to help pupils from low-income families, increase teaching hours, abolish fees for education, reduce class sizes and improve teaching standards. We believe that while our overall standard of educational attainment is satisfactory, this masks considerable variations between elite schools and the rest. In addition parents are required to spend considerable amounts on tuition, which should not be necessary.

Total Cost of Reform Party’s Proposals

The total cost of these proposals is $14 billion. Based on the PAP Government’s own figures, we believe this additional expenditure is both prudent and easily affordable.

We consider it to be an investment that will pay dividends in the medium to long term by increasing the productivity and quality of our future workforce. It will also help to reorient the economy more towards domestic consumption and become less dependent on exports. Finally we expect a significant portion of the cost to be recouped through higher tax receipts from higher domestic incomes and expenditures.

The Problem with Husbands and Wives in the WP, in the Ruling Family, in Our Reserves

The husband and wife team at FMSS

The husband and wife team at FMSS

The husband and wife who run the country

The husband and wife who run the country

Over the last few days PAP Ministers and MPs have lined up in Parliament to attack the WP for its lack of transparency and accountability in running AHPETC. As I said on my Facebook page, it’s about $6.6 million of Aljunied residents’ money versus $800+ billion of Singaporeans assets in GIC, Temasek, MAS and who knows how many other entities. That’s less than 0.001%.

Where does the bigger problem lie with accountability and transparency?

I will remind you of what  Khaw Boon Wan (KBW)  said during Wednesday’s debate:

“The Town Council also did not “adequately manage the conflicts of interests of related parties arising from ownership interests of its key officers,” said Mr Khaw. “It was very convenient. Husband issued payment voucher, wife issued payment.”

Yes, Khaw really did bring up husbands and wives in a debate on conflicts of interest. The phrase: The pot calling the kettle black, does not even begin to cover this.

I wonder whether the PAP appreciates the hypocrisy in attacking the WP over transparency and accountability.  While not wishing to minimise the conflicts of interest of AHPETC, the consequences are fairly small compared to the glaring conflict of interest in which the PM’s wife (Ho Ching) runs one SWF (Temasek) while Lee Hsien Loong is the Chairman of the other (GIC).  Lee Hsien Loong as the head of the Cabinet and the PM had ultimate authority to approve the appointment of his wife. As a result the PM and his wife control over $800 billion of assets.

We are not told how much Ho Ching earns as CEO of Temasek, though the fact that her husband is in a position to influence the terms of her employment and remuneration must be a serious conflict of interest that should be covered by the same disclosure requirements as related party transactions. Certainly she probably earns considerably more per annum than the $6.4 million that WP are accused of overpaying to FMSS. We also do not know whether Lee Hsien Loong is paid anything for serving as Chairman of GIC or Tharman is paid for being the Chairman of MAS.

Shanmugam weighed in to say that the MA fees had been inflated to benefit FMSS by some $6.6 million over the past four years:

“The rhetoric from the Workers’ Party is always about helping the poor man. The reality is that the Workers’ Party took money from the man in the street to give to their friends in FMSS,”
hoching580280Again the mind boggles at the lack of capacity of the PAP for self-reflection on the irony of what they are saying. We all know that Temasek has sustained serious losses before now. How much have the returns of Temasek and GIC been inflated over the years by ripping off CPF account holders and paying them a below-market rate of interest? How much has Temasek gained by gifts from the Treasury of assets below their fair market value on which the managers were able to make enormous revaluation gains when they were listed or sold? SingTel and Singapore Airlines spring to mind. This still goes on. Changi Airport Group was transferred to Temasek at a valuation of $3 billion a few years back when its true valuation is probably closer to $20 billion now. Read the TOC article on Ho Ching’s losses here:

Hari Kumar  was not slow to add his criticism:

Mr Nair said that it’s not that the AGO did not note any criminal activity, but that the AGO does not know if there was because of the state of AHPETC’s records.

Hri Kumar making sure I can't look him in the eye and demand transparency.

Hri Kumar making sure I can’t look him in the eye and demand transparency.

We have not seen any evidence of outright corruption in Temasek and GIC but we would not know anyway because of the complete lack of transparency. Parliament does not even question the fake Budget presentation which is used to hide the Government’s obscene surpluses, running at about $30 billion a year, and fend off any pressure for higher spending on social programmes.

On Friday KBW outdid his previous performance with the words:

“Where the water is murky, it’s easier to fish. Opacity creates opportunity for crooks to make money.”

Talking about murky water is especially ironic given that Muddy Waters, an American short-seller that specialises in ferreting out companies committing fraud or hiding their true financial position, said that Olam was likely to go bust because of its heavy debt load and lack of positive cash flow.  Inexplicably and inexcusably, Ho Ching chose to buy out the major shareholders of Olam by making an offer above the market price rather than wait for the company to fail and buy it out of bankruptcy with an offer to debt holders. I blogged about it in March 2014

And here is one of the many stories on it covering Muddy Water’s analysis.

The PAP manage our reserves in a totally opaque way. Yet the PAP wants us to believe that they are immune from what history has shown to be true time and again.  Opacity and lack of accountability breed mismanagement and at worst, corruption.

These are the real conflicts of interest that pass almost unnoticed and yet are of far greater consequence to Singaporeans than a mere few million dollars in overpayments:

  1. The conflict between paying you a fair rate of return on your CPF savings and exploiting you as a cheap source of funding for GIC so it can make higher returns.
  2. The moral hazard which encourages Temasek and GIC to take higher risks because they know that the Singapore taxpayer and CPF holder will bail them out. Also if Ho Ching can never lose her job, she is incentivized to take maximum risks as she will then get a higher bonus with no downside if she loses money.
  3. The conflict between the Government’s role as owner of most of the land and desire to make a profit and its role in providing low-cost social housing
  4. The conflict between the Government’s monopoly control of many domestic industries and ensuring a competitive environment so that you get lower prices
  5. The conflict between the Government’s desire to grow the economy and revenues through the import of cheap labour and driving down wages and improving the real earnings of mid- to low-income Singaporeans.
  6. The conflict between the role of an Opposition MP as a check on the Government and a proposer of alternative policies and the job of running the TC. MPs should not be estate managers, which requires people with specialized training. One of the reforms I want to see is elected TCs and MPs free to concentrate on their proper role.


We should not lose focus on what this attack is really about. We must resist the PAP’s attempt to turn MPs into mere town council managers. By putting the WP on the defensive over their failings in corporate governance the real aim of the PAP is to deter the Opposition from carrying out their proper function, which is to force the Government to be transparent and accountable and govern in accordance with the people’s wishes.

We must keep out focus on what really counts and that is transparency. It is transparency that comes first and every other improvement we want to see in our society, whether freedom, justice, compassion or a more equitable share in our Nation’s wealth, flows from that. We must keep up the pressure to demand that our government supplies transparency. On the other hand, should they continue to give us only muddy waters, then we will have to make use of secrecy, the secrecy of the ballot in the coming GE.

How Lee Kuan Yew and Hitler Both Love Authoritarian Capitalism

I wrote a letter to the Financial Times last week in response to an article dated 1 February 2015. The article, by Slavoj Zizek, international director of the Birkbeck Institute for the Humanities, suggested that Lee Kuan Yew would have statues erected in his name a century from now as the founding father of authoritarian capitalism. My letter has predictably not been published although the FT did get back asking me to cut it and then that they were considering it.

Dear Sir,

I refer to the article in yesterday’s FT by Slavoj Zizek.

Let me respond as a citizen of Singapore.

The writer refers to Lee Kuan Yew as the father of authoritarian capitalism. This is simply incorrect. Nazi Germany and Mussolini’s Italy were both authoritarian capitalist states and so were late-Czarist Russia, Bismarck’s Germany and Meiji Japan. Lee Kuan Yew and China have merely taken a pre-existing model, which was never particularly Asian, and adapted it.

At least Zizek sees through LKY’s and his son’s claims that the state they reign over is a “robust democracy” and rightly calls it authoritarian. He says that a century from now monuments will be built to Lee Kuan Yew implying that Singapore’s model is somehow superior at delivering the goods to the general population than democracy. However he is wrong to call Singapore’s or China’s model a free market one or even really a capitalist one. He is also wrong to say that it results in superior performance compared to democratic countries.

There is nothing particularly clever or novel about Singapore’s economic growth model. It is one based on access to unlimited supplies of cheap labour and cheap capital, obtained through forced savings, without any underlying growth in total factor productivity. Krugman expected this model to reach its limits pretty quickly. However Singapore, unlike China which is approaching its labour force limit, has the advantage of being a relatively small city economy surrounded by countries with large amounts of surplus labour. Singapore keeps its model going by allowing employers access to almost unlimited supplies from this labour pool. Foe many, if not most of these foreign workers, often heavily in debt to agents and middlemen, conditions constitute a modern form of slavery. Without a minimum wage, this supply of cheap labour undermines Singaporeans’ own job security and wages.

Whilst supplies of cheap labour and overinvestment in construction and infrastructure have fuelled our impressive rates of economic growth, productivity has predictably stagnated. On the Brookings 2013 ranking of the 300 fastest growing metropolitan areas, we came 61st below London. Our GDP per capita on a PPP basis was still below that of many US cities. However GDP per capita is an inaccurate measure of how productive our workers are since we work the longest hours of any developed country and our labour force to population ratio is much higher because of the large number of guest workers. As a result our GDP per hour worked is only some 60% of the US level and below that of most developed economies, let alone the major cities to which we should rightfully be compared. Our productivity has not grown at all since 2007.

China has adopted our model of extensive growth but a rapidly declining labour force and the falling profitability of investment are likely to bring an end to China’s rise in living standards earlier than Singapore. In fact Chinese growth, properly measured, has already fallen below that of India, a democratic model.

While incoherent and difficult to follow, Zizek seems to be making the argument that Western freedom is a burden for the ordinary citizen. Having to plan for your old age is worse than state provision. The freedom to make choices becomes a “burden”. People are better off when decisions are made for them by their rulers. Zizek has not discovered some new truth,. Fascist and Communist philosophers have made all these arguments about the supposed illusion of democracy and freedom since the 1920s.

The unspoken assertion is that authoritarian rulers acting benevolently will produce better results for their citizens than a democracy. Singapore’s Gini Coefficient is higher than that of the US and considerably higher if taxes and transfers are taken into account. There is no Welfare State and even the limited forms of public assistance available are very difficult to access. Health care is on a pay-as-you-go basis and despite the recent introduction of a limited health insurance scheme that is self-financing, heaven help anyone who through no fault of their own suffers a critical or chronic illness such as cancer. The choice is frequently between destitution or going without treatment.

Neither is Singapore a free-market paragon. All Singaporeans are required to contribute nearly 40% of their income to a regressive forced savings scheme, the Central Provident Fund (CPF) on which the Government pays a low rate of interest. The government on-lends the money to the sovereign wealth fund, GIC, whose Chairman is the Prime Minister. If that seems like a conflict of interests the PM’s wife is head of the other SWF, Temasek Holdings. Figures for the SWFs’ assets and performance are kept secret on the grounds of national security.

The Government owns 80% of the land that it compulsorily acquired, or rather expropriated, at prices well below market in the 1960s and 1970s. It controls the supply of housing in the same way. Money in the CPF can be used to buy overpriced housing from the Government monopoly. People can also buy private property but due to the artificial shortage of land this is out of the reach of most Singaporeans. While the ruling party, the PAP, claims that 87% of people own their own homes this is a fiction. In reality 10% own their own freehold homes that they can buy and sell without restriction with all the burdens that attach to freedom. 87% of our population are on 99-year leasehold in tower blocks built on land owned by the government. Singapore’s form of apartheid, the Ethnic Integration Act, determines where you can live according to a racial quota. If you are a member of an ethnic minority you may find that you can only sell your unit to another member of the same race at a discount to what you could obtain if you sold it to the majority Chinese. This is a clear restriction of the free market and a basic human rights infringement. Giving the overwhelming majority of the population no choice but to live in leasehold public housing, allows the PAP to intimidate voters.

Even in the supply of many basic goods and services Government-owned companies have either a monopoly or share the market in an oligopoly with a few private sector competitors who remain dependent on Government goodwill. Examples include mobiles, broadband, broadcasting, public transport, newspapers, electricity supply, and banking. As a result prices are often higher than in other developed countries for utilities like mobile services.

No doubt Zizek would salute this as removing freedom of choice from the ordinary person who finds freedom a burden. Far better a benevolent dictatorship that has a monopoly on most basic goods and services rather than a democratic one where capitalists make profits exploit consumers and workers.

However Zizek fails to explain how authoritarianism prevents the state from being a worse exploiter than a democratic capitalist one. Communist governments in China and the Soviet Union killed tens of millions of their own people. The death toll in China alone during the Great Famine and the Cultural Revolution is reckoned at 50-60 million. For all the hype from apologists like Zizek that regimes like China and Singapore are delivering the goods and making their people happy, what is to stop another Cultural Revolution or Stalin? The American Founding Fathers were quite correct when they placed the prevention of tyranny as a goal above that of government efficiency. While the PAP Government constantly points to supposed US gridlock as a justification for authoritarianism, that gridlock is there deliberately. US economic performance has been superior to Singapore’s on the productivity front for some time.

Singapore, while not on the scale of Chinese human rights abuses, is a good example where the Government exploits the people more ruthlessly than a democratic state would be able to. The Government makes a surplus of $30 billion a year and has supposed reserves net of debt of around $400 billion. Yet Singaporeans are denied the most basic information about the state of the reserves and the Government Budget is a model of opacity. While Western think tanks rate Singapore as corruption-free, Singapore’s system is rife with conflicts of interest and cronyism. PM Lee, the son of Lee Kuan Yew, has never held a job in the private sector and clearly would never have been PM but for his father. The Prime Minister’s wife is CEO of Temasek while the PM is Chairman of GIC. The Government says it is not in the public interest for Singaporeans to know what the PM’s wife is paid. Many MPs from the ruling party are on the board of or head up Government-owned or –linked companies, as are members of the PM’s family and his wife’s family.

Despite Zizek’s claims that the “Singapore” model of authoritarian capitalism has been wildly successful or morally superior to the democratic model, there is no doubt that most Singaporeans if able to would vote with their feet for the Western democratic model as seen in the high rates of emigration and the large numbers in surveys who say they would emigrate if they could.

Where the PAP Government has been hugely successful though is in creating a myth of success that has fooled many Western academics from both left and right. Instrumental in this has been the ability to use state wealth to shape opinion through donations to foreign think tanks while deploying the threat of defamation suits and trade sanctions to cow much of the Western press into not reporting criticism of their version of history.

Yours sincerely,

Kenneth Jeyaretnam

Singapore Gets into Currency Wars

Did you know that on January 27th the value of the Singapore Dollar dropped by the greatest amount in a single day since 2010?

Screenshot 2015-01-31 12.35.51

FT report

Screenshot 2015-01-31 12.39.11

A few days ago  the financial press  globally were startled into reporting that our currency had suddenly depreciated. Yesterday MAS put up a belated official announcement explaining that it had been a deliberate policy move.

I’d like to take a closer look at this monetary easing and show you why it will lead to Singaporeans getting shortchanged unless it is accompanied by fiscal easing and how ultimately disastrous the PAP policy of relying on exports and overseas investment is. I will show how it links to immigration policy, forced CPF savings. health care and so on. I will demonstrate  that the only solution is to re-balance the economy towards domestic consumption.

What is monetary easing good for?

Monetary easing, often referred to as quantitative easing, or QE (as the policy of monetizing government debt and other financial assets through open-market purchases by the central bank is called) has been billed as a tool to fight deflation. For the purposes of this post you will have to accept that deflation is a bad thing and to be avoided. If you want to know more or disagree just drop me a comment and I will be happy to respond.

For this post  I am also making the assumption that we only avoided a double dip recession because our government went backwards and retrospectively amended earlier figures downwards so that the drop was not so pronounced and technically we avoided a recession. But it is only technical and we are in recession to all intents and purposes or constantly on the verge of recession. The CPI ( consumer Price Index) here did in fact decrease by 0.2% in December compared to a year ago so MAS has good reason to be concerned

Why did MAS take the step of Monetary Easing ?

Naturally financial analysts have focused on the move by MAS as part of a strategy to fight deflation. This is the same reason given by the Japanese and European central banks on why they embarked on massive monetary easing.

The MAS’s own announcement states the reason is an attempt to slow the Singapore dollar’s appreciation against a basket of currencies.  So everyone agrees that MAS has got us into monetary easing in order to fight deflation.  In fact our currency immediately responded to the QE by dropping roughly 1.5% against the US dollar and is expected to fall further. We will know more on Monday.

So if our currency is dropping what’s wrong with Monetary easing?

Because monetary easing on its own is unlikely to be effective except insofar as it weakens your currency and boosts exports. The problem is that QE needs to be accompanied by a more expansionary fiscal policy aimed at boosting domestic demand.  As you depress the currency value on one side of the equation you must balance it by pumping up the domestic demand on the other. Back in the 1930s Keynes already said that a monetary policy easing unaccompanied by fiscal measures was unlikely to be effective in stimulating demand and getting an economy out of recession. Also you cannot keep your currency depressed for ever without incurring costs which mount over time.

Why are people talking about Currency Wars?

By deciding it can no longer sit back and let other exporters like Germany and Japan gain a trade advantage by depreciating their currency MAS has joined the currency wars.  Make no mistake, the latest rounds  of QE, accompanied in Japan by tax increases and in Europe by German demands for similar measures in other Eurozone countries, are not really about increasing domestic demand,no matter what they claim.  They are called currency wars because it’s about the battle over the export market. It is a move by the countries involved to gain an unfair competitive advantage by making their export goods cheaper.  It’s just an old-style currency manipulation exercise aimed at beating export competitors (South Korea and China) and gaining a bigger share of the US market, which is the only one still growing. For now.

We cannot rely on US growth. If all these countries depreciate their currencies and get a bigger share of US exports they actually detract from US growth because they are not importing equal amounts from the US. By pushing exports over imports they accumulate reserves, the bulk of which are invested in low-yielding Government securities, which become worth less and less over time. These wars are actually subtracting from US growth (which the Americans are unlikely to tolerate indefinitely) and exerting a deflationary impact on the rest of the world. Ultimately the US has the option of going bust (though more a theoretical possibility than an actual one) or imposing negative yields on foreign holdings of its currency like Switzerland. All those  countries with a claim on them via Treasury bonds in the reserves will be royally shot in the foot.

What do you mean by fiscal easing?

When I say fiscal easing I mean moves to boost domestic consumption, that is spending more or collecting less by cutting taxes.

The PAP have a mercantilist mindset. Running a big current account surplus and accumulating reserves is part of the mercantilist mindset that also sees exports as good and imports as bad. To the mercantilist, there can never be too much investment and the less domestic consumption there is the better. Since the 1970s there has been a huge drag on world growth caused by the desire of mercantilist nations to run big current account surpluses and accumulate reserves. First it was Japan in the 1980s and then South Korea and China, particularly after the Asian financial crisis of 1997. Germany also has a mercantilist mindset. In the past the PAP has expressed views that there is no point in increasing domestic consumption, as it will all be spent on imports.

As I said before if everyone together tries to reduce domestic demand and increase exports simultaneously the end-result will be a worldwide slump. The result of a much bigger accumulation of reserves is that the returns from these reserves over the long run fall to such a low-level that it would have been better if the surplus countries had spent it on consumption in the first place. Add in the fact that we are probably poised on the cusp of an era of accelerating productivity growth with automation and artificial intelligence and a strategy of hoarding reserves in ever-increasing amounts for a “rainy day” that never comes makes no economic sense.

How is this relevant to the Singapore context?

The immediate effect of our currency depreciation will be to make overseas travel or study less attractive in particular to the US and imported goods may become more expensive such as the costs of fuel but Singapore and Singapore housing in particular will start to look very attractive to overseas investors.

Many of the PAP’s economic policies are aimed at running a large current account surplus and accumulating reserves. The Government runs a budget surplus (on the correct IMF format and not the misleading one presented to Parliament as part of the annual Budget farce) of about 8-10% of GDP. That is very large indeed and means that the reserves are rising by about 10% every year.

The QE is abetted by other policies to achieve the mercantilist goals. Of course there is the  open-door policy on cheap foreign labour which makes our exports extra-competitive. At the same time this reduces Singaporeans’ wages which cuts domestic consumption. A forced savings scheme, CPF, cuts consumption even further and recycles our savings into foreign currency via Temasek, GIC and MAS to assist in keeping the Singapore dollar undervalued. The end-result of these policies is that Singapore runs a current account surplus of around 20% of GDP and continues to rapidly accumulate foreign reserves

At our stage of development such a high rate of savings is unnecessary and means we forego a higher level of consumption. Taxes on the middle and lower classes and prices for a range of products that we are forced to buy from government monopolies are higher than they should be. Spending on health, education, children and the elderly is kept down despite the fact that the first three items at least would yield higher rates of return than our SWFs are able to generate on our foreign reserves. (I have since 2012 questioned the returns that Temasek and GIC are achieving and some of my many articles are listed via links at the bottom).

What can be done instead of QE?

The Government could allow the Singapore dollar to appreciate thus cutting the cost of imported goods and raising the real value of our wages. If the Statistics Department measure of overall unemployment at 2% and citizen unemployment at 2.9% is accurate then the economy is operating at full capacity. By keeping the Singapore dollar artificially undervalued the PAP Government are acting contrary to their stated policy of encouraging Singaporean manufacturers and producers to raise productivity and move up the value chain to higher value-added products.  Decreasing the currency by QE is actually subsidising producers discouraging productivity and imposing a forced real wage cut.  This is the clearest sign that despite the lip service paid to productivity the PAP Government is returning to the only growth strategy it understands and finds easy to implement: low value-added service and manufacturing industries based on cheap foreign labour.

The Government should also loosen the fiscal austerity that it has practised for so long and spend more on domestic programmes like health, education, families and the elderly. At the moment the Net Investment Returns Contribution which is supposed to be used for current spending is instead saved in a round-tripping charade which I have called “Smoke and Mirrors in the Government’s Accounts”.  We can spend at least another $10 billion a year on social programmes without denting the reserves if the Government is being honest about GIC’s and Temasek’s returns.

As for housing I have often warned here of the dangers of a housing bubble when everyone gets excited over the rising value of their property. Government measures to cool the market did just that and now this latest currency depreciation move will reverse that and prices will go up again.


There is one other possible reason why the Government has chosen the path of currency depreciation.  It has to do with our secretive Sovereign Wealth Funds with Temasek headed by the Prime Minister’s wife whilst he himself heads up the board of GIC. Depreciating the Singapore dollar would very effectively offset losses or bolster returns generated from the assets of our SWFs invested in foreign currencies. The last public Statement of Assets and Liabilities at 31 March 2013 showed total Government assets net of cash held with MAS of around $650 billion. All of GIC’s assets are external so currency depreciation will have the automatic effect of increasing returns denominated in Singapore dollars. The same goes for Temasek. Even the value of their holdings in Singapore equities will also go up if the Singapore dollar depreciates depending on how much the companies export. The Singapore dollar has already fallen by some 8% since June 2014 which will artificially boost the returns achieved by Temasek, GIC and MAS when translated back into Singapore dollars. We do not know how Ho Ching is paid but it seems safe to assume that higher returns will result in her receiving a higher bonus.

So not only is the PAP Government cutting the value of your wages by an unnecessary and counterproductive currency depreciation. It is cutting the value of your CPF savings too. This demonstrates, as I have always said, that the risks of Temasek and GIC will not be borne by the managers, including the PM’s wife. They will instead be borne by Singaporean CPF holders and taxpayers.


Garbage City : brought to you by monkeys.


Photo put up by PM Lee.

Yes, I got pretty angry on so many levels when I read the latest outrageous attempt by our PM LHL and ESM Goh with reference to the 2015 Laneway Festival at the Meadow at Gardens by the Bay.

Many levels.
Level 1 : Let’s start with just the plain offensiveness of it. Goh said, “Our reputation as one of the world’s cleanest cities is going down the rubbish chute. It looks like a case of ‘monkeys see, monkeys do’.” Goh went on to say “Without foreign workers, Singapore is likely to become a ‘garbage city’. Cleanliness is a character thing. It shows who you really are. “

I find it deeply offensive that our public servants, paid enormous salaries out of our taxes, should criticise their employers ( that’s you and me) in this manner. They are public servants. They owe us their livelihood. Goh went as far as calling us monkeys, which carries racist overtones. Of course the real instance of  “monkey see monkey do”,  to borrow that horribly offensive and demeaning phrase, is that Goh was just seeing his master spouting off and copying him.

PM Lee kicked it off by  posting a picture on his Facebook page showing the litter which he said,  “13,000 festival goers left behind”   He contrasted this with what he said were the actions of the Myanmar sports fans in picking up litter at the National Stadium after their team lost to Singapore last November. He put up two pictures to illustrate his point, one of the litter and another  picture which supposedly showed a Myanmar fan picking up litter  after his team’s game.

Offensive because Lee, who never had a real job in his life and has always been in the public sector and has never travelled on public transport,  actually thinks he can talk down to us as though he were our parent and we the stupid children.  I can tell you now that a father shaming his child into good behaviour by comparing him unfavourably to his peers  ( “You are disgusting, why can’t you be more like Winston?” ) is an emotionally abusive father and storing up self esteem issues for his child in later life.

Level 2: Let’s look at that third world comparison. Why do we continue to pay for a Government that lords it over us and runs us down compared to a third-world country like Myanmar? How dare Lee Hsien Loong say that Singaporeans are not as good as the Burmese? If that is the way he feels then he should move there and stand for election. I am sure the Burmese junta would love to have him on board. After all, the Burmese leaders have been keeping their ill-gotten gains here for years because they can benefit from  banking secrecy  and a low level of scrutiny. I’m sure LHL wants to flatter them.  I’ve actually seen a protest held in front of the Burmese Embassy in London by Burmese exiles and I can tell you that they didn’t pick up their litter

However take a closer look at the picture ( top of page) that LHL posted up as  supposedly a Myanmar fan.  I believe the picture shows a paid stadium cleaner (whether from Myanmar or not) since the person is wearing  latex gloves and clutching a huge garbage bag.  I’ve never seen a fan go to a match wearing disposable latex gloves and I’ve been to some pretty rough games. That would be more American psycho than American soccer. Is Lee Hsien Loong trying to pull the wool over our eyes?

Level 3:  Only Blaming Singaporean festival goers. His  vitriol is clearly aimed at Singaporeans despite the fact that the Laneway music festival was largely attended by expats and foreign talent. The PM should get his facts right before he opens his mouth. How could he make such a basic mistake and wrongly blame us?  In any case Singapore is more than 50% non-Singaporean already. Why are we to blame for the mess? I suppose the tickets to have been about S$150 each. Does he think the average Singaporean youngster can afford that?


Level 4: Not blaming the organisers. If you hold an event in Hong Lim Park, say a protest about CPF and you make a public nuisance then you can get arrested. You may even be fined so much that you are banned from being eligible to stand for election to public office. As we have established that it most likely wasn’t ordinary Singaporeans responsible who should have taken the garbage out? NEA would surely fine you for littering anywhere else.

I did a bit of research  into the background of the Laneway music festival and the venue. Laneway music festival is a private, for-profit business that organises rock festivals in several Australian and North American cities besides Singapore. They sold out all the 13,000 tickets for the event at Gardens by the Bay. The ticket price is S$160 for one and S$150 in bundles. As all 13,000 tickets sold here, that would mean the organisers earned gross revenues of several million from ticket sales, merchandising and F&B sales.

The venue was rented from Gardens By The Bay, which is a charity set up by the Government. Why were the Laneway Festival organisers not required under the terms of their contract with Gardens By The Bay to pay for the clean-up afterwards? They made a tidy profit, no pun intended so could afford a small army of cleaners.  Can you imagine any other public amenity being rented out to a foreign corporate to make a huge profit with no responsibility for upkeep, damage or litter ? The photo of the mess and especially the discarded plastic looks like a public nuisance to me.  If we citizens hire a venue for a birthday party we have to clean it up before handing it back, unless cleaning is included in the venue hire fee.  We certainly don’t put up on Facebook the next day that our guests were disgusting.

Normally at these events the organisers get on stage and make a closing announcement along the lines of, “don’t make too much noise when you leave and please take you rubbish with you.” They could have even given out or supplied plastic bags. In fact Laneway have a whole list of rules about what you can bring and they ban umbrellas but allow and encourage plastic ponchos. It would have been so easy to include in these rules, “Make sure to take your poncho home with you or we will fine you.”  Here are the rules”

“Things not to bring

The following items are prohibited:



Skateboards, scooters, rollerblades, bicycles

Milk or bread crates or metal cans or containers

Chairs (folding, portable, camping) or any other furniture

Anything studded or spiked (belts, wristbands, etc) or large chains

Club patches and jackets

Weapons of any kind (poles, rackets, “selfie sticks”, sticks including potential missiles)

Flares, Fireworks or Sparklers



Sound or video recorders or professional cameras  (with removable lens)(small still cameras are allowed)

Laser lights or laser pens

Umbrellas (bring a plastic poncho or raincoat instead)

Water pistols

Dogs or other pets (service dogs excepted)

Fires and open flames of any kind

Sound systems

Eskies, coolers or chilly bins

Any other items deemed dangerous or potentially disruptive by Laneway in its discretion”

Again how dare the PM balme us and not the organisers

Right now Laneway should be getting hit with a penalty for not cleaning up.

Or maybe Laneway were not required to clean up. Maybe Gardens By The Bay, management team forgot to stipulate that or maybe they themselves are responsible for cleaning. Maybe they thought the rubbish from 13,000 party goers would dissolve into thin air. So who is this incompetent  team that manages Gardens By The Bay. The directors are mostly civil servants including the CEO of the People’s Association and an ex-NMP. In an ironic twist of fate they include the CEO of NParks.

The team needs to be fired and replaced for leaving such a health hazard. Roy Ngerng and Han Hui Hui will likely be barred from running for Parliament if they are fined $2,000 for alleged public nuisance or breach of NParks regulations.   If it is true that the Directors and management of Gardens By The Bay failed to organise cleaning, then they should have similar sanctions applied to them.

Do the guests at the  F1 night race have to pick up the rubbish? I would also be interested in looking at the accounts for the festival. Like the F1, does it result in a net loss for Singaporeans? Did the Tourist Board give Laneway the venue for free?
Someone is responsible for that mess, literally.  NEA should sort out who it is. Then the son and the holy Goh should apologise to us.

5: Politicking. I am angry that they both use this mess to make apolitical point. Notice how Goh warns us that we need foreigners to clean up our mess for us. It is all part of the PAP’s campaign to belittle Singaporeans compared to foreigners in an effort to foster insecurity and to keep Singaporeans distracted by anti-foreigner sentiment rather than focusing on what should be the real cause of our anger, the PAP’s policies. It is also a great big fat excuse for giving us yet another reason for why the population needs to keep increasing. It makes me furious that they are both of them leaping on any excuse to ram that message home even using  false information and misleading photos. If Idid that Hri Kumar would be going berserk, calling me a liar.
If this is about foreigners being such good cleaners then please explain those rats in our HDB blocks.

Well that is just me and you will say I am biased so let’s take a look at what the netizens have been saying on LHL and Goh’s Facebook walls and give them the final word.

Here is Kendo Lee agreeing that we need looser immigration policies.

Screenshot 2015-01-29 23.57.14

Here is a foreign talent Thom Bush explaining  how foreigners are only dirty because locals were dirty first. He also has the audacity to tell us to go somewhere else if we cannot keep our city clean.

Screenshot 2015-01-29 23.58.50

And here  Calvin Pillai predicts how the election is going to work out

Screenshot 2015-01-30 01.45.03

Kenneth do you put your money where your mouth is?

I am grateful for the following question left in my comments:

Kenneth, if Roy wishes to contest a future election under your party flag, will you accept him? Or will this “extraordinary Singaporean”, IMO a potential time bomb and a liability for any party, suddenly not be so extraordinary anymore?

As it required a thoughtful answer and more space I answer it here.

The short answer is Yes. Feel free to skip the longer rationale.

BTW this is not my Reform Party blog so I don’t answer here as a politician but as an economist. That question also requires me to speculate as Roy will no doubt get fined and banned from standing and it would depend on who he is 5-10 years from now and what he does in-between so I can’t comment on future elections.

I’m sure he will continue to be extraordinary,though. The only ticking time bomb I see is LHL himself and his wife’s continued role as head of our SWF. This kind of situation and the whole PAP set up has reached the end of its shelf life.

So all other things being equal yes, Roy in very broad strokes, would be welcome.

In reality it wouldn’t be my decision within the Party. Reform is not a fiefdom it doesn’t have Cadres and a system where only a few get to vote. It is set up as a representative democracy and decisions as to whether or not a person is approved after probation are not mine to make.

That is not to say that I don’t get annoyed that Roy makes many basic errors with statistics, methodology and even giving wrong figures. Kirsten Han dealt with this is in a news article she wrote where she explained why I support Roy even though I don’t always agree with him. He has the broad brush strokes right and the heart. I could supply the maths and the economics. Then again so many commentators do get the figures and methodology wrong. As for the PAP, as my breakdown of the budget shows, they cannot add up but that may be deliberate misdirection rather than basic incompetence. I prefer to think it is both.

Do you not realise that unaccountable governments are the ticking time bombs? Do you not understand the danger in not having an early warning system and a lack of oversight that can allow anything, including hidden losses, to fester? Can you point me to any set of figures or accounts that shows conclusively where our money is allocated within our Sovereign Wealth Funds and in what quantities? The Norwegian people can.

Certainly most recently Roy has been writing as though he has nothing to lose as he is under great pressure but after all Roy was always just asking for his elected representatives to be accountable to the people who elected them. Nothing wrong with that.

The only liability I would envisage for our Party is that we exist to form an alternative government and Roy seems rather too fond of the current government.That’s a cultural clash. I’m not convinced he is truly committed to voting all the PAP out and he may be one of the many who mistakenly believe the PAP government can be persuaded to work with them and respond to citizen pressure.

In fact your question is the hypothetical equivalent of asking me whether I would accept JBJ to contest an election under our Party flag with his criminal record and recently paid off bankruptcy. Or whether I would accept Dr Chee. Both could have been called ticking time bombs and liabilities. Both like Roy subjected to the most extreme and concerted character assassinations and smear campaigns. Something I am no stranger to either.

No offence to you but I am not sure why people persist in asking me questions such as yours as though they cannot read the writing on the box or as though they think I write and do what I do for some kind of stage effect? Do they think I sit on a fence, wait to see which way the tide is turning and then leap? Do they maybe imagine that as an economist who espouses feee market principles rather than the usual marxist/socialist ones that I must also be far right wing and authoritarian or opportunist?

I am sure I am seen as a ticking time bomb and a liability but over time we have seen how the PAP are being forced to pick up my ideas and implement them one at a time.

Those who demand accountability and point out discrepancies and conflicts of interest should not be seen as ticking time bombs. Rather they should be regarded as sniffer dogs who find the time bombs and assorted nasties that might lurk underneath the gleaming facade. In the time-honoured manner of authoritarian governments the PAP and PM Lee seek to deflect the tough questions and make the issue about the sniffer dogs rather than the lack of accountability. Unfortunately Singaporeans have been so brainwashed by fifty years of indoctrination and the systematic demolition of those who stand up to demand answers that they allow those in power to escape scrutiny by this reversal. Roy and others like him become the potential time bombs and not our whole secretive and unaccountable setup riddled as it is with serious conflicts of interest.

The basic premise of this blog is and always will be, that freedom is actually good for the economy and that liberal policies not authoritarian ones are the best way forward for a better standard of living for everyone. You can’t uncouple the freedom from the prosperity equation. People like Roy are hugely beneficial to our society’s progress and not detrimental.

I write that as a liberal and as an economist.

On Roy, JBJ, Fines and Defamation


Many of you will have seen Roy’s latest blog piece by now. You will also have seen a letter put together by some concerned supporters including me that was published in the Asian Sentinel and later by TOC. I was particularly struck by Roy’s reference in that blog to the S$2,000 fine that stops a Singaporean from standing for election for 5 years and his mention of the S$8,000,000 suit and being an ordinary Singaporean.

Being a couple of decades older than Roy and being related to one of our historical law suit defendants allows me to add some personal insight into those proceedings and their results. I will also explain my reasons for continuing to support Roy, why he should not lose faith and why you all, previously so numerous in your support, should not now be silent.

Right now Roy has become his own sideshow and a distraction from his own message. None of that is his fault of course. This is the way the PAP machine works and is typical of the way in which the PAP undermines its opponents and silences dissent. Truly it’s not healthy for any society to have no debate or dissenting counter view.

Let’s not get distracted from the key issues. The one big, basic question has still not been answered. Why is the CPF minimum sum being raised? The one big fear that is not being dispelled is the fear that the minimum sum has been raised because GIC and/or Temasek has lost money and the government needs to get the money from somewhere else.

In fact this use of a sledgehammer to crack a nut, as we see with Lee junior versus Roy, will only increase that fear. Or it should at least increase our suspicions. As I always say if there is nothing to hide then throw open the books for inspection! It comes down to trust between the people and the government which is at an all time low. Instead of taking steps to rebuild that trust our PM has sued a blogger. Don’t get distracted. See what is really happening here, what is really at stake?

The fact is that the issue of Temasek Holdings investing or managing CPF money has not been satisfactorily explained. Temasek say they don’t do it. This is simply sophistry. It is half a lie and wholly economical with the truth.   Money that the government receives from CPF savings goes to GIC and the profits that GIC earns investing those funds, swells government surpluses, enabling the government to  inject more capital into Temasek. Furthermore Temasek’s own internal rates of return – that it is supposed to earn on new investment will no doubt be related to CPF interest rates. Like everything else we have no disclosure on this but trust me, this is how it is done.

The irony is that Roy was not even, judging from his earlier writing and blogs, that strong an opponent of the government/PAP. (Well he wasn’t before all this) Let me explain. He was an opponent of the way CPF returns to the citizens had to fight with GIC’s and Temasek’s need to make profits. So if more money was paid out then GIC’s track record went down. If less was paid back to us then GIC made a bigger profit. He objected to the system that allowed this conflict, as he quite rightly saw it..

If you read his blogs, watch his videos, went to hear him speak, he was more often to be found talking in terms of campaigning for the government to reform the system, asking the government to be more fair, asking the government to put the people as a priority, not the profits of Temasek and GIC. In fact when you look at Roy’s speeches and writings it is very much about the government. For goodness sake the Facebook page attached to his blog is called I want the people and the government and people to work together for Singapore’s future. ..

At the same time, clearly Roy is a supporter of our way of life and society here in Singapore and not a revolutionary. His biggest failure was in believing that asking for the government to reform and provide some transparency was a perfectly reasonable request.

This makes his approach very different to mine. I don’t believe that asking the PAP to change is the way to go. I want the PAP voted out and the structures put in place that will ensure strict rule of law, protections, oversight, accountability, transparency so that democracy AND prosperity can flourish and so that the people prevail no matter what colour shirt sits in the house.

A true opponent would be campaigning to change the government not ask it to reform or improve in response to citizen concerns so why did Roy become Public Enemy Number One? Roy just wanted you all to make a bit more noise about where your money went, how it was used, what GIC’s and Temasek’s profits were, MPs’ inclusion on boards and the PM as head of GIC and his wife as head of Temasek.

I do firmly believe that the PM has been incredibly foolish and ill-advised in making an example out of Roy. Whatever the outcome it will come back to bite him in the next GE. We owe it to ourselves now, not to Roy, but to ourselves, to not let ourselves be distracted by the defamation circus. We owe it to ourselves not to be scared off. If in fact Roy is sued out of existence, which I hope doesn’t happen, then we owe it to ourselves to pick up his voice and carry it on where he left off.

Roy mentions the fine over S$2,000 that would prevent a Singaporean from standing for election. The ban is not life long but for 5 years. Roy, we are all thinking, is still young. Actually it is to all practical purposes a 10 year ban. I feel that Roy can learn a lot from JBJ’s example. In particular my father never gave up and never left his beloved country. I remember an Economist article said of my father, “whereas others prefer to speak from the safety and comfort of exile, Jeyaretnam stands his ground, as solid and immoveable as his name.”

I was forced into a form of exile as a young graduate much against my will. I was always extremely unhappy to be away from home and from my mum, who died whilst I was serving NS and then from my Dad and my wider family. I was not even a real exile just persona non grata who couldn’t even get a job interview in Singapore let alone work there, as part of a process of punishing the eldest son of JBJ. I at least could fly back to Singapore whenever I wanted and my dad was, even as a bankrupt, always able to travel and visit me and join us on family holidays. We had some fantastic time together. More importantly I have seen the devastating effect that being a exile from the PAP’s Singapore has had on the Singaporeans around me when I lived in London. Each one not able to return home, especially now that their parents are elderly and suffering. Poor gentle Francis Khoo- finally only able to return to his homeland in an urn . No, being an exile is not an easy option.

My late father J B Jeyaretnam was fined an amount to keep him from standing for election and just as the 5 years elapsed the PAP called a snap election before he could become eligible. They then took a full 6 years to the next election so almost 11 years but he still didn’t give up. The cycle after that he stood and no doubt he would have been a full MP if not for the Polling Booth-Magic-Teleportation-Paradox ruling. Still he became an NCMP. Roy is a young man still, flexible enough to enter a different career path, educated, with family here who can support him. He should not give up on plans for standing. One of the first things I was told back in 2009 by the venerable Mr Chiam was to expect it to take three election cycles for an impact to be felt. Singaporeans appreciate consistency, dedication and perseverance.

Now let us turn to Roy’s mention of defamation as a tool for quashing dissent. Something I am also all too familiar with. His previous blog entry is a vlog interview – here– he talks about the ISA being used as a tool for rounding up dissenting voices but Roy’s view is that after international media attention after 1987 the government was too embarrassed to use it again. Whatever the reason, defamation suits are clearly the preferred weapon of repression, more insidious and difficult to criticise.

This is exactly what I said when I wrote to the WSJ decrying the use of defamation suits to silence opposition. At great expense to you my dear readers and tax payers, a civil servant was hired to rebut me with a letter that the WSJ was forced to print or lose their distribution rights. That civil servant besides being a moron who couldn’t get his spelling right, was wrong of course. He later sent in a secretly edited version to replace his first idiotic response. Still wrong. I put both his letters on my blog with my letter. Did I get sued? No. I told the truth.

However, as soon as that imbecile civil servant who owes his salary to us, wrote his letter to WSJ, the State Media machine went mad, printing that I was wrong quoting him, etc etc. Almost instantaneously every blog, new media outlet pulled my letter without asking my opinion or even giving anyone a chance to say: actually, hold on.. Kenneth is right you know. Self censorship is not a strong enough term to describe this phenomenon. This extreme caution borne of fear .

It is every Singaporean running to hide under the table as soon as the PAP yells a little.

FYI-The legal blogger Article 14 explains why I was right and is included in sources at the back.

So we have established that defamation suits have replaced the ISA as the new tool for quashing dissent. Each time the PAP twists the screw of repression and tightens up their control they get a bit smarter. That should mean that the new tool of defamation is more finely tuned, more effective and something that we Singaporeans should be more afraid of… right?

No. Be afraid but thanks to Roy, not that afraid.

First of all the Lee family, the government ministers, MPs to be and various worthies have overused this tool. In this joined up and wired world nations such as ours, relying on multiple free trade agreements with democracies, cannot continue to use such draconian methods without embarrassing themselves.

Secondly Roy is not an ordinary Singaporean. I don’t know why he says he is. Maybe he means he is non-partisan, not with a Party. Whatever the reason Roy is in fact an extraordinary Singaporean and I hope he was just being humble. He makes some claims for landmark cases but the true landmark in Singapore’s history will be that S$100,000 dollars that he raised, seemingly effortlessly. Defamation is civil. It is not similar to political donations in that Roy can raise money from anywhere in the world.

I remember, I watched in absolute amazement as that sum went up and up and up. Previously when deciding whether to appeal the IMF case against the government or not, I threw it to the public and said if I could raise enough for my fixed costs, I would take it as a sign and proceed. I raised S$10,000 and was pretty pleased with that and stopped it there. I took the losses on myself and the Government’s legal costs as I felt that was right but at least I raised enough from the public to pay my lawyer and the filing fees.

But even with that happy experience I was astonished by the money Roy raised. Yes I am banging on about it because it is very exciting to me. You see the PAP had to stop using the ISA and switched to defamation suits. But if those sued raise money so effortlessly then the whole bloody circus become neutralised. It reminds me of the way hippies put flowers down the barrels of rifles back in the 60’s. When MM Lee is not threatening his opponents with knuckle dusters he has always made it clear that he favours hitting people where it really hurts, in their pockets. Raising money online takes the pain away and is the virtual equivalent of ten new heroes rising up for every one that is cut down.

I am sure that Roy is very anxious right now. He talks about a suit of S$8,000,000 that was awarded against Tang Liang Hong. But let’s not be flexible with the truth here or re-write history. Tang left the country, didn’t appear in court and that punitive amount was awarded by summary judgement in his absence. Tang was my father’s running mate and so that whole JBJ vendetta thing also took a role. Also one of the key reasons for Tang leaving was that his wife, terrified by death threats, begged him to. I don’t think it will come to that. Yes the venue seems to suggest S$250,000 but that would be extraordinary. How can the PM prove that amount of damage to his reputation? Has his earning capacity suffered? Of course I remember George Carman Q.C. asking Goh Chok Tong on the witness stand, when he sued my father over the police reports, whether he had suffered any damage and Goh being forced to agree that he had not. The first judge, Rajendran, only awarded Goh $20,000 but Goh appealed and was able to find a more sympathetic judge who raised the damages to $100,000. But that is still a whole lot less than $250,000.

Truly it would be incredible if Roy was to take whatever amount the judge sees fit to determine and to dedicate himself to raising it online. What a hero he would be. Then he could use terms like “Landmark” and no one would deny him. None of these internet options were available to my father who instead took great delight in embarrassing the PAP by selling books on the street (a hawker’s privilege allowed to those with no income). Roy can learn from the perseverance of those who have gone before him-the Lion of Anson, Dr Chee and others- but benefit from the modern tools of the 21st Century.

If he cannot raise the whole amount online then he can file for bankruptcy and come up with a payments schedule plan agreeable to the AG, take up a new position and come back to public life when the ban is lifted and bankruptcy paid off. There is no shame in being taken down by the PAP and being smart enough to come back at them. Bankruptcy is not such an awful fate for a young man who can raise money on the internet particularly considering that in the US most successful entrepreneurs have gone bankrupt at least once.

Roy is by every measure an extraordinary Singaporean. His blog readership is extraordinary. His ability to raise money on the internet is extraordinary. In the coming GE, CPF and the minimum sum will be at the top of every Party’s agenda and that is extraordinary.

Finally Roy mentions the trouble he is having finding a meaningful relationship . He can learn a thing or two from JBJ on that score too. Many a time I was somewhere eating a meal out with my father when an attractive woman my age would approach us. To devastating effect on my self-esteem that was invariably coming over to hit on my Dad. ( I hasten to add this is when I was single). Notoriety can work both ways for attracting a partner.

Did I mention the key issue is still unanswered? Why is the Central Provident Fund Minimum Sum being raised and why can’t we take out money out when we like after 55? Why GIC and Temasek make money (if that is what they are doing) from using our captive savings and paying us a non-market interest rate? Roy has done us all a favour. He got so close to showing us how to demand accountability and stand up for our rights. If each Singaporean can in her or his own way be a little extraordinary now in support of our right to demand accountability of our government then together we can help him finish the job and prove that the pap is just a paper tiger into the bargain.


The PAP Sausage Making Machine, Foreign Professors and Our Inferiority Complex

George Borjas

George Borjas

A warning

I have been warning for the past five years about the effect of an open-door foreign worker policy in depressing the wages of native Singaporean workers and in particular low-income workers. I have pointed out both in Reform Party press releases  such as our yearly Budget analysis- see here for 2014- which is never printed or quoted in the Singapore  State Media, and in my blog, Rethinking the Rice Bowl,  (ditto) that the PAP have had one economic model for fifty years for achieving growth which is to add more labour inputs rather than increase productivity.

The sausage making machine

Sausage Maker

In 2013, in response to a comment by the former NMP Eugene Tan that took the title of my previous article, I wrote “When Immigration Stops Being the Elephant in the Room and Becomes the Great White Shark in Your Parliament”:

 The PAP government knows only one economic model. That model which I first pointed out and which these days is explained back to me by taxi drivers is this. It is a sausage-making machine.  You feed in additional inputs of labour at one end of the sausage machine to produce additional units of output, or GDP, at the other. In between there is no rise in underlying productivity. Despite a Budget devoted to productivity in 2010 and Tharman’s promise to raise productivity growth to 2-3% per annum and real incomes by 30% by 2020,the facts show that productivity growth was -2% in 2011 and 0% in 2012. That’s a clear sign for you. Wake up!

 A Nobel Prize-winning economist Paul Krugman exposed this same model in the 1990s when he debunked the Asian economic miracle and that led to the downfall of the Soviet Union in 1990. This is a basic model of economic development that has been around since 1954 when Arthur Lewis first propounded it (“Economic Development with Unlimited Supplies of Labour”). Sooner or later this model just runs out of steam or collapses because there is no innovation. The PAP have just put off  the day of reckoning by opening the floodgates to cheaper and cheaper labour supplies from the developing countries of Asia…

The PAP government is the principal owner of land and capital. By transferring resources from us the workers to themselves, facilitated by the role of immigration in depressing wages and pushing up land prices, that wealth stays out of our hands. Make no mistake, in the last 50 years that wealth could have been used to develop a strong middle, each generation better off than the one before, free universal education, joined up health care, a professional paid army, benefits for the most needy.

Stagnation of median real wages

in 2011, in an article entitled “Immigration is the Elephant in the Room”, where I criticised a discussion on the causes of rising inequality and the stagnation of median real wages by the chief economists at GIC and Resorts World Sentosa I wrote:

However they fail to mention the elephant in the room, which is immigration policy or the lack thereof. Undoubtedly the government’s determination to allow our wages to be determined by those in the poorest economies in Asia has played a major part in depressing real wages, particularly for the lower-skilled workers. Not only was there very little restriction on foreign labour, and no restriction at all for those earning more than $2,500 a month, but there appears to have been lax enforcement of what rules there were and ample loopholes. This has been demonstrated by a recent case where an employer was jailed for putting phantom Singaporean workers on his payroll to allow him to bring in more foreign Work Permit holders…

 What we have in Singapore is a situation where the wages of those who can be replaced by cheap foreign labour have been held back or in many cases cut.  Even those with higher-level skills have undoubtedly been held back by competition from third-world graduates from India, China and the Philippines, even Eastern Europe.  Worryingly there are clear indications that advances in software and machine intelligence are starting to make redundant even highly-paid white-collar jobs in areas such as law and financial services that were hitherto relatively protected from foreign competition. But this government’s open door policy to foreign labour has been the main cause of rising inequality in Singapore.

Opening the Floodgate




In  2013 I wrote an article entitled “Singapore’s Economic and Immigration Policies are Insane” in which I said:

In the 1990s Singapore began to open the floodgates to the import of labour from Asian low-income countries, nearly doubling our population. As I keep telling you, this has resulted in real wage stagnation for the bulk of the working population and declines for those in the bottom quartile. Particularly because our work force isn’t protected by a minimum wage so wages can keep getting lower and we enjoy minimal labour protections.

Given my previous extensive writings on the PAP Government’s use of immigration to depress wages and boost profits, I had a strong sense of déjà vu when I received an email from Tan Jee Say yesterday. This contained an account of the conversations he had with his professors at Harvard about the economic effects of immigration. He quotes George Borjas, a labour economist and one who has warned about the consequences of large-scale unskilled immigration into the US, as saying:

There are gainers and losers of a country’s immigration policy. Gainers are the users of immigrant labour namely, employers and consumers. Losers are native workers who compete with the immigrants.”

I can understand why it is tempting for Tan Jee Say to be swayed by the opinions of foreign professors as he is currently at Harvard and in close contact with them.  After all he was PM Goh’s Principal Private Secretary for  a long time and the PAP have always taken their ideas from academics overseas. But I think it is a mistake and even shows signs of a Singaporean inferiority complex. We do not need foreign professors to tell us what our home grown pundits have been saying- in my case for years. I would prefer that Singaporeans started to think for themselves rather than act as sponges for outside influences.  It is also dangerous because the US economy is so different  to ours.

In the article Borjas repeats what I have said previously on many occasions. A frequent argument in favour of immigration, and one used by the PAP, is that immigrants do jobs that native workers shun. However as Borjas rightly points out the main reason why native workers no longer want to do those jobs is because the competition from immigrant workers has reduced wages in those occupations to levels where they are no longer attractive. This has happened to a large extent in Singapore. In many occupations such as construction, cleaning and food services it is cheaper to substitute lower-skilled and less productive foreign labour rather than invest money in automation and continue to employ more productive but more costly Singaporean workers. Our low productivity is a direct consequence of the easy availability of low-cost foreign labour.

While there are some analogies with the US, the Singapore situation is very different. The US has abundant land and is on many measures extremely underpopulated while Singapore is the second most densely populated country in the world (after Monaco). US workers enjoy the protection of a minimum wage and a probably too restrictive immigration policy. While the proportion of immigrants in the US population is around 12% as compared to a proportion of 40% foreigners in Singapore, the US figure includes new citizens whereas new citizens are excluded from the Singapore figure. Excluding PRs and new citizens from the residents figure would undoubtedly take the proportion of foreigners in the employed labour force  in Singapore to well above 50%.

Borjas says that the US minimum wage, which is set on a state-by-state basis, is too low to protect low-wage American workers. However that is still a big improvement over Singapore which has no minimum wage and no real protections for employees against being sacked and replaced by cheaper foreign labour. While Tan Jee Say is on the right track in calling for priority for Singaporeans in hiring this is not sufficient. Reform Party have called for a cap on the total number of foreign workers rather than the current situation where there is practically no upper bound on the number who can come in under the Employment Pass system. We want to replace the foreign worker levy with an auction that will ensure that more of the producer surplus from being able to employ cheap foreign labour is retained by the government and used for the benefit of Singaporean workers. The cap can be raised or lowered in line with economic conditions and to keep wage growth in line with productivity growth.

While it is good to see that some of the most prominent US academics in this field arrive at the same conclusions that I have, it is slightly disappointing to see that Tan Jee Say feels that the analysis of foreigners is more likely to impress Singaporeans than the same conclusions arrived at by a Singaporean economist. Until we can shake off this inferiority complex which has been inculcated by the PAP our people will never receive their just reward in the marketplace irrespective of government policy.

Inferiority complex

Singapore: No Bullet Was Fired in the Harming of Our Cartoonist.

How Singapore crushes cartoonists

How Singapore crushes cartoonists

Yesterday’s attack on the French satirical magazine Charlie Hebdo has been seen quite rightly as an assault on the fundamental values of liberal democracy and freedom of expression. The attackers claimed to be avenging the Prophet Mohammed but this attack was not about Islam. Instead it was all about intimidating us from expressing our views and our beliefs where they are something that the attackers do not like.

Watching commentators across the globe condemn the brutal murder of these eight cartoonists  and seeing the huge crowds that rushed out to stand vigil not just in Paris but in London and elsewhere, I couldn’t help but think of our political cartoonist Leslie Chew  banned films from local filmmakers such as Martyn See, Mirabelle Ang, and Tan Pin Pin, as well as imprisoned septuagenarian author Alan Shadrake and embattled human rights lawyer M Ravi.

No bullet was ever fired in this war on freedom, no one was disappeared in the night (although thousands have fled the scene) but the Lee family and their government have just as surely slaughtered freedom of expression in Singapore as any terrorist with an AK 47. In fact they have the whole nation cowed in fear, living on land the government owns, forcibly contributing tax dollars to secretive funds the Lee family manages  and the Western Press is dead, bowed or complicit.

Anyone who thinks it is a faceless bureaucracy or a board of censors making these decisions should read here:

While murder is an extreme way of achieving these goals the terrorists differ only in degree and the power at their disposal from the world’s authoritarian governments that give themselves the right to control what we can read or say. Authoritarian governments globally have not shied away from murdering journalists and those who ask inconvenient questions, whether it is Sri Lanka, Thailand, the Philippines, Indonesia, Mexico, Russia, Egypt or countless other countries throughout the world. In other countries journalists, cartoonists, bloggers and ordinary people are imprisoned or sued by regimes that dislike what they say or in the name of religious dogma. Examples include the use of lese-majeste laws in Thailand, blasphemy laws in Pakistan or criminal defamation and sedition laws in South Korea or Malaysia.

We can expect the PAP ministers to condemn the attacks today as barbaric and an assault on civilized values. But the PAP Government and the Lee family have achieved a degree of control over what can be said in Singapore that would be the envy of many authoritarian regimes and of the terrorists who committed the atrocities today.

Since they came into power the PAP and the Lee family have sought by all the means at their disposal (and they control all the means) to control the press and ensure that people are intimidated or prevented from criticising them.

I remember a cartoon from the 1970s published in the Singapore Herald, a short-lived and solitary experiment in independent media that soon incurred the wrath of Lee Kuan Yew and was shut down. The cartoon showed Lee Kuan Yew in a tank crushing a baby. The baby was labelled something like “A Free Press”. After that the PAP made sure that no one could read any views other than those they allowed in their State-owned or –controlled media. The Newspaper and Printing Presses Act followed soon afterwards ensuring that the Government has a veto over the ownership and appointment of the editorial staff of every newspaper. Though this was not even necessary in the case of broadcast media and many print titles, which were all controlled by Temasek.

Seriously who needs to send their zealots to Syria to train with ISIS when they can learn everything they need to know here.

The foreign press has been intimidated into silence by defamation suits and threats to restrict their circulation in Singapore. The Wall Street Journal, the Far Eastern Economic Review and the Economist are just a few of the publications that were sued for saying things that are said every day about politicians and institutions in the West.

When Western governments speak out now about the need to send a strong signal to Islamic extremists that the West will not be intimidated into silence I can only recall the spineless way they failed to support their media in their battles with the authoritarian regime in Singapore and have these restrictions declared a breach of Singapore’s obligations under bilateral and multilateral trade agreements. With the lack of support pretty soon most publications found it expedient to regurgitate the PAP’s version of history. These include the myth that Singapore was a mangrove swamp before Lee Kuan Yew transformed it or that Singaporeans have willingly sacrificed their freedom for the promise of prosperity.

The use of defamation laws, detention without trial and politically motivated prosecutions on bogus charges have been successfully used in parallel to create a climate of fear and stop Singaporeans from speaking up. A trumped-up charge was used to remove my father from Parliament because Lee Kuan Yew was unable to answer his questions. Subsequently he was sued into bankruptcy to prevent him from standing again or even speaking at election rallies. He became a virtual non-person just like dissidents under the Soviet regime which was condemned so forcefully by the West.

The climate of fear and self-censorship is still as strong as ever despite the PAP pretence that there has been liberalization.

Dr Chee was silenced. The ReformParty suffered a media black out during GE 2011 ( but still they won a greater share of the national vote than SPP for example). I am banned from attending debates and talks at our national universities and  one university even attempted to prevent me from being in the audience. Of course Hri Kumar tried to keep me out of a consultation on CPF, dodged my questions and then resorted to lying and smearing me.   Mr Chiam was himself the victim of vicious smears as all opponents of the Lees have been. Leslie Chew, the cartoonist, was arrested and held in jail without bail for an extended period. Academic Cherian George is this week  finding out for himself that there is no such thing as being a mild opponent of the regime as he experiences the same backlash we have all suffered.

My own family (and I) were subjected to maybe some of the most extreme versions of this- threats of rape, violence and even death in an attempt to silence me and crush plurality of thought.  This off the scale attack on a politician’s family members was aided and abetted by both Government and alternative media and the silent complicity of the other political parties.

What is most depressing is that, in contrast to the spontaneous rallies that have erupted in France and elsewhere in response to the murders of the journalists, Singaporeans have been mostly silent just as they were over what happened to JBJ or the alleged Marxist conspirators.

It is a blot on Western values that authoritarian regimes like Singapore are not only tolerated but held up as shining examples for democracies to emulate.  Only Jim Sleeper got this right when he so vehemently and intelligently objected to the liberal values of Yale being compromised through setting up an offshoot in authoritarian Singapore.

It is pure hypocrisy if the reaction to this barbaric attack is just about combatting the threat from Islamic extremism and does not grasp the wider lesson about standing up everywhere for universal values like democracy and freedom of expression.
Just now on CNN  Bruce Shapiro editor of the Dart Center for Journalism and Trauma at Columbia University in New York spoke about the attack which he categorised as an attack on journalism:

” People are united in saying this is an attack on journalism. We as journalists now are saying ‘we are all Charlie Hebdo’. This is part of a global pattern of using journalists as a capillary system for fear and terror. Whether it is terrorists in Paris, whether it is ISIS in Syria, whether it is Narco gangs or politicians who have assassinated journalists in Mexico, in every case it is about seeing the only value of journalism as a corpse to spread fear… and that I think is at the heart of this. Are we going to stand up in general in the memory of great cartoonists but not stand up for the value of independent journalism and value of satire in democracy. That’s what’s at stake here, democracy.”

King. The silence.
As Martin Luther King said, ” In the end we will remember not the words of our enemies but the silence of our friends.   There is little doubt that democracy, plurality of thought and freedom of expression would have great difficulty finding a friend in Singapore.

Ho Kwon Ping’s Self-Serving Proposals Have No Merit.

Ho Kwon PIng2Yesterday I wrote about why the general Singaporean public paying for foreign workers’ medical care was a bad idea. If companies are allowed to get away without providing adequate medical coverage for their foreign workers this would effectively be a subsidy to those employers to employ foreign workers rather than Singaporeans.

Today I read about the proposals from the Executive Chairman of Banyan Tree, a luxury hotels and resorts group, Ho Kwon Ping.

Who is Ho Kwon Ping?

Mr Ho was detained in the 1970s for writing critical articles about the PAP Government. During his imprisonment, according to an interview he gave to the BBC,  he had a conversion realising that he wasn’t Nelson Mandela. Purely coincidentally he became very rich but after assuming the leadership of the family business and purely coincidentally he has become a vocal supporter of the PAP.

What is his proposal?

Ho advocates converting the foreign workers’ levy into a deferred savings account akin to CPF, which the foreign worker would be able to withdraw when he left Singapore.

What is the Foreign Worker’s Levy?

This is a sum paid to the government by the employer. At the moment the foreign worker levy acts as a tax on the use of foreign labour. It should make foreign workers more expensive to employ and thus encourage employers to substitute Singaporeans.

Isn’t that a good thing?

Unfortunately, as I have pointed out repeatedly, if the supply of foreign labour is inelastic ( which means that even if their salaries are cut the amount of labour supplied does not fall by very much ) the levy could act merely to drive down wages for foreign workers while the gross cost to the employer (wage plus levy) remains unchanged. In this case the government is benefitting from the levy but the foreign workers are worse off. Most importantly Singaporeans are even worse off as no new jobs have been created for Singaporeans.

Tax with inelastic supply

Tax with inelastic supply

So the Foreign workers levy doesn’t help Singaporeans and is ineffective.

So isn’t Ho’s proposal an improvement?
Ho’s proposal is to convert the levy into a deferred savings account for the foreign workers. The same problems apply.

  •  Employers can theoretically reduce their foreign workers’ direct pay by up to the full amount of the deferred savings because these workers will be able to access their savings when they return to their home country.
  • Given foreign workers’ weak bargaining power it is likely that employers will be able to cut their direct pay substantially.
  • Ho’s proposal thus amounts effectively to a removal of the tax on foreign labour.
  • Employers are likely to respond by employing MORE foreign labour and cutting back on their usage of Singaporeans as far as they are able.

Why is that self -serving?

While the number of Mr Ho’s employees in Singapore appears to be small, he speaks clearly with the economic interests of employers in mind and not Singaporean workers or even foreign workers.

What’s your solution?

  •  A better solution would be to have a minimum wage that was mandatory for all workers, both local and foreign.
  • This would remove the ability of employers to drive down foreign workers’ wages to the detriment of Singaporeans competing with them for jobs.
  • The levy could then be converted into a CPF account for foreign workers or retained as a tax on foreign labour.

My preference would be to have a cap on the overall number of foreign workers and then auction the entitlements to the highest bidders. This would ensure that foreign workers were allocated to where they would be most productive while controlling the overall levels. The cap could be adjusted up and down to keep wage growth in line with productivity growth.

Unfortunately judging by the comments on my Facebook page many employers are unhappy that the Government is not subsidising them more to take on foreign workers and making it easier for them to employ foreigners. This will always be so as far as employers are concerned. Labour can never be cheap enough. Slave owners in the American South worried that if slavery was abolished labour would become too expensive to allow them to profitably grow cotton and other crops.

Lets hope that Singaporeans are not too naïve to see through the arguments of special interest groups that appear to have altruistic motives but are actually trying to gain a commercial advantage.

Why Donating Money for Foreign Workers’ Medical Bills is the Wrong Approach

I’m going to upset a lot of people here and come across as a heartless B*****d but here goes! There is a “heart warming” story out on Channel News Asia and Today concerning a Bangladeshi work pass employee who was discovered to have a brain tumour. The man was brought over from Bangladesh two months ago to work as a construction supervisor for Singaporean firm Archetype Pte Ltd., a group of six companies in the construction Industry. According to the story, Archetype’s medical insurance policy only provided the minimum medical cover for its foreign workers of $15,000. This has already been exhausted after Mr Shah’s three-day stay in intensive care. Archetype had not covered themselves with any extra critical care or serious illness plan for their employees.

A MOM spokesperson is reported as confirming that all employers are liable for their work pass holders’ medical care whether it is work related or not and presumably whether they have insurance for it or not..

I would not wish brain cancer on anyone and I have the deepest sympathy for the unfortunate Mr Shah and his fiancée back in Bangladesh. However there are several things that I find outrageous about this episode. I am going to go against the tide of public opinion here but I wonder why we are so naïve.

Why are companies allowed to bring over foreign workers without adequate insurance? MOM only requires employers of work permit holders to buy $15,000 of medical insurance. This is nothing if a worker suffers a serious illness or accident. MOM then allows companies to send the workers home where their condition allows it whereupon the companies have no further obligation for medical care.

Companies should be made to provide critical illness cover. Singaporeans are made to contribute to Medisave and Medishield to pay for their future medical expenses. The amounts contributed by Singaporeans are considerably in excess of Singaporeans’ current medical needs as evidenced by the huge surplus in Medisave and Medishield.

This means that Singaporeans’ wages have to be higher to compensate them for these additional costs. Foreign workers, already have much lower wage costs than Singaporean workers. Bangladeshi workers are probably the lowest paid in the world. Certainly Singaporean construction firms are finding Malaysians and Indonesians less exploitable and have now turned to Bangladeshis.

As I always say without a minimum wage employers can just keep turning to poorer and poorer countries. Real wages will continue to drop and Singaporeans will be continuously undercut.

By allowing companies to employ workers without adequate medical coverage, the PAP Government is just subsidising companies, many of which are foreign-owned, at the expense of Singaporean employees. If companies had to pay the same costs for a foreign employee as a Singaporean one then perhaps they would hire more Singaporeans.

Artificially subsidising the construction industry as I have described is also another way that the PAP Government boosts GDP growth by encouraging the excessive tearing down and construction of new buildings compared to other advanced countries. This contributes little to the welfare of citizens since most of those employed are foreigners. Certainly the constant upheaval and noise 7 days a week for SMRT projects is a cause of much stress. GDP calculations do not take account of the cost of traffic and public transport delays caused by the constant construction.

Why are Singaporeans, who are already disadvantaged by the subsidies given to these companies, being asked to contribute to help this company evade its legal and moral obligations and perpetuate a system that stacks the odds against them in the employment market? It is disappointing to see comments on Facebook like “The company deserves a medal”. Why?
The company and its directors and shareholders have not dug into their own pockets to help Mr Shah. They are expecting you to do so. Their profits however are not being shared with you but staying in their pockets. The crowd sourced campaign fund is in the company’s name not in that of the poor man himself or his family.

Archetype approached Jolovan Wham from HOME for help in raising money.  Jolovan is quoted as saying   “Mr Alam’s case raises the question of whether the medical coverage provided to work permit holders is comprehensive enough. This is definitely something we need to look into again. “ He is right but it is not just about protecting foreign workers. Eliminating unfair subsidies and bringing costs for foreign workers up to the level of local ones will save jobs for Singaporeans . Presently 18% of our population is comprised of foreign workers.
It appears that HOME are raising funds on their portal. It would have been more appropriate for HOME alone to run the donations campaign as a registered Charity. That is something I could buy into. Even if treating this as a hard luck case masks the rotten system at heart and the wrong people are being asked to contribute.

The employer has also set up an Indiegogo fund but I’m not even sure it is legal to use Indiegogo to raise funds when MOM puts a legal obligation on the employer to meet the costs. It smacks of scam. How can we be sure that the money raised is all going to Mr Shah’s treatment? Singapore hospitals are profit centres and presumably the same treatment in Singapore will be much more than in India or Bangladesh.

What is there to stop companies in future from trying to raise money from good-hearted and naïve Singaporeans to save themselves the costs of repatriation and so that they do not have to bear the cost of locating and employing another worker.

While I hope that Mr Shah receives the best treatment, Singaporeans should not be taken in by a system that exploits foreign workers and undercuts their own employment conditions.
Crowd source funding looks like a magic formula for whisking up money from thin air but it Is not the answer to everything. This is a classic example of how the excitement of a new media campaign has completely covered up the real issues.

  1. We need to stop subsidising employers to hire from overseas
  2. We need to preserve employment for Singaporeans.
  3. We need to make it more difficult for employers to exploit workers from poorer nations
  4. We need to keep reminding ourselves that our GDP growth is falsely inflated by subsidies for activities that do not contribute to our welfare.
  5. We need to understand that our abysmal productivity record stems from these abuses.

Singapore and LKY- Darlings of Western Think Tanks. (at a price)

While Singaporeans may long ago have lost their admiration and affection for Lee Kuan Yew and the Lee family, though not their fear, there is one constituency where LKY’s reputation seems undiminished. This is of course with foreigners and particularly Western think tanks and academics. The Western media may have been cowed by fear of defamation suits or the loss of advertising revenues but it has always been a mystery why Western think tanks and NGOs are always ready to sing the praises of the PAP government or LKY’s wise foresight.

Among the myths that are endlessly repeated are that Singapore was a mangrove swamp before the genius of LKY transformed it or that Singapore is a barren rock devoid of natural resources. Like citizens of a communist country Singaporeans find this endless repetition of lies and propaganda offensive. In response to LKY being called the “founding father” of Singapore in the book “Hard Truths”, one netizen’s response was to say that LKY was not his father and how dare he call himself founding father.

One reason for this naivety on the part of foreigners may just be the very skilful marketing and hype done by the PAP Government and ignorance on the part of Western pundits. Nevertheless, I have always wondered how the PAP Government ensures that they are rarely criticised by Western media and think tanks.

Sometimes the people peddling the myths have never even visited Singapore or looked for a counter factual. It is sheer ignorance that allows  a Nobel Prize-winning economist like Stiglitz to write a shockingly ill-informed pieces like this and then ignore my rebuttal. Then it turned out that he had written his piece based on conversations and impressions of his Singaporean students in the US. No doubt they were government-funded scholars.

Or John Kampfner, a clever and good man  whom I have met and  author of “Freedom for Sale” an important book, who did at least visit Singapore. He  always stayed with elite Singaporean friends in condos and landed houses.  He wrote a chapter praising the  miracle of  Singapore’s public housing while never having visited an HDB block.

But how does Singapore, with its state control over most sectors of the economy, manage to come top of indices of economic freedom compiled by right-wing think tanks like the Heritage Foundation? Thanks to a New York Times (NYT) article the mystery is solved. Ignorance is not the answer here. Money, it seems, buys an awful lot of influence.

 This is evident from the way Lee Kuan Yew, who recently celebrated his 91st birthday, he was showered with the predictable awards from a number of international organisations. The Atlantic Council, which “promotes constructive leadership and engagement in international affairs based on the Atlantic Community’s central role in meeting global challenges.”, on Sunday gave Lee Kuan Yew its Global Citizen Award. Henry Kissinger, the former US Secretary of State, who is the same age as LKY, paid tribute to him while our Foreign Minister, Shanmugam, was on hand with a gushing tribute, “This is an age where words like ‘outstanding’, ‘extraordinary’, ‘great’ are overused to describe leaders. But few will challenge that Mr Lee deserves to be described in those terms and more.”


A few months ago the Brookings Institution, a leading American think tank, which is often critical of US economic policy but usually has nothing but praise for Singapore’s Government, established a Lee Kuan Yew Chair in South East Asian studies (see link).

Lee Kuan Yew is not the only member of the Lee family to receive an award this year. In June 2014 his daughter-in-law and the PM’s wife, Ho Ching, received the Asian Business Leaders Award from the trustees of Asia House, a London-based “centre of expertise on Asia”.

To quote from the press statement, “The annual award recognises individuals who embody the ‘Servant Leader’ – economic success and professional excellence accompanied by moral leadership and service to society, Ms Ho Ching was selected to receive this year’s award because of her impressive business credentials and her significant efforts to inspire a commitment in others to improving society.”

The State Media and the PAP Government would like you to believe that these awards were just a recognition of the individuals’ achievements and talents.

However the New York Times recently carried an article exposing the substantial amounts given to several US-based think tanks, including the Atlantic Council and the Brookings Institution, by foreign government donors (see link). I was not surprised to learn in the same article that the PAP Government had given money to at least two US think tanks, the Atlantic Council (which gave LKY the Global Citizen Award) and the Centre for Strategic and International Studies.

To quote the NY Times, “The think tanks do not disclose the terms of the agreements they have reached with foreign governments. And they have not registered with the United States government as representatives of the donor countries, an omission that appears, in some cases, to be a violation of federal law, according to several legal specialists who examined the agreements at the request of The Times.” The law in question is the Foreign Agent Registration Act which was passed in 1938 to combat a propaganda campaign by Nazi Germany.

In many cases, according to the NY Times, these donations come with expectations that the think tanks will promote the interests of their foreign donors, particularly in lobbying the US Government. In at least one instance the head of a think tank set up by the Atlantic Council, the Rafik Hariri Center for the Middle East, was removed because she put forward views to the US Congress which were opposed to those of the donor that had paid for the new centre. As the NY Times says. “Sometimes the foreign donors move aggressively to stifle views contrary to their own” and they quote another scholar in a phrase chillingly reminiscent of Singapore, “It is the self-censorship that really affects us over time”.

 The PAP Government’s donations to the Atlantic Council and the Centre for Strategic and International Studies not only appear to have secured Lee Kuan Yew the Global Citizen Award. They also ensure that these think tanks are unlikely to criticise them.

Likewise, presumably the PAP Government and/or the Lee family get to appoint the holder of the Lee Kuan Yew Chair at Brookings. In addition the money paid to Brookings would make them reluctant to criticise an important actual and potential future donor. The first appointee, Joseph Chinyong Liow, is currently professor of comparative and international politics and associate dean in the Rajaratnam School of International Studies (RSIS) at Singapore’s Nanyang Technological University.

The list of donors who contributed to the setting up of the LKY Chair also makes for interesting reading. Brookings says “generous contributions have been made by Ray and Barbara Dalio, Chevron, Hotel Properties Limited, Keppel Group, Robert Ng and Philip Ng, Sembcorp Industries Ltd., Edwin Soeryadjaya, STEngineering, and The Starr Foundation.” No information was given about the relative amounts contributed.

Ray and Sarah Dalio

Ray and Sarah Dalio

Ray Dalio is the owner and CEO of Bridgewater Associates which claims to be the world’s biggest hedge fund. According to this 2011 article in the New Yorker, a quarter of Bridgewater’s capital comes from sovereign wealth funds like GIC. In 2013 Dalio earned $700 million according to Forbes so our investments contribute to his and his wife’s earnings through the fees Bridgewater charges. There is thus a direct conflict of interest since LHL is the Chairman of GIC as his father was previously. In effect, Singapore’s CPF holders are paying indirectly for the setting up of a chair in LKY’s name without their approval being asked.

Keppel Corp, Sembcorp Industries Ltd and STEngineering are all GLCs and partly or wholly owned by Temasek Holdings which is of course headed by the PM’s wife and LKY’s daughter-in-law.

Hotel Properties Limited (HPL) was the company that was infamous in 1995 when it was discovered to have given discounts on properties in developments like Nassim Jade to LKY, LHL and many other members of the Lee family without seeking shareholder approval. Though PM Goh declined to refer this to CPIB, wrongly in my view, the fact that the individuals paid back the discounts was an admission that they should not have received them, particularly given the Government’s control over land sales.

As the Government owns 80% of the land in Singapore, it would be fair to say that all property developers are dependent on the Government. In fact the Economist in its survey of crony capitalism in March 2014 ranked Singapore as fifth, largely due to the concentration of its billionaires in areas like property where government support or subsidies are essential.

Robert and Philip Ng top the Forbes list of the 50 richest Singaporeans. Their wealth stems from property like Ong Beng Seng at HPL. Thus exactly the same conflicts of interest apply as with HPL. In fact Robert Ng sits on the board of Temasek.

Ho Ching’s award from Asia House is also just as dubious as her father-in-law’s award from the Atlantic Council. Since she is a civil servant (albeit one with multi-million dollar remuneration) she would naturally be expected to embody the ideals of “Servant Leader”. How also can she be said to have impressive business credentials. Unlike some of the other recipients she has not built a business from scratch. In fact she has never worked in the private sector. She was appointed head of Temasek by the PAP Government of which her husband is the head. Her father-in-law, LKY, is on the International Advisory Council of Asia House. The Council also includes several representatives from the founding stakeholders of Asia House, HSBC, Prudential and Standard Chartered. They all have significant business interests in Singapore while Temasek owns nearly 20% of Standard Chartered.

The revelations from the NY Times are an eye-opener. They shed light on the extraordinary thoroughness of the PAP’s influence-buying strategy and the lengths the PAP will go to, using taxpayers’ money, to get a favourable rating, even if it means sowing misinformation and rewriting history. It is particularly hypocritical that the PAP should give our money to US think tanks with a view to influencing government policy when they are always warning foreigners not to interfere in Singapore politics and ban Singaporean NGOs designated “political” from receiving foreign funding.

Next time when you read that a  prestigious and independent institution has placed Singapore at the top of some global ranking or given its leaders an award you will be asking yourself, “How much of our tax payers money did they receive?”

Clash of the Grossly Overcharged Means Alvin Yeo Must Resign

alvin yeo

I am sure the case of  Dr Susan Lim is still in many people’s minds. She was the doctor taken to court by the SMC for overcharging the Brunei royal family and  suspended from practice for three years. The courts found her guilty and after her appeal failed they awarded costs against her.  This means that not only did she have to pay her own lawyers but also the SMC’s lawyers’ costs.

Acting for the Singapore Medical Council (SMC) in the case against Dr Lim were  a team led by Alvin Yeo, Senior Counsel and PAP MP for Chua Chu Kang (CCK) GRC, and  lawyers Melanie Ho and Lim Wei Lee. They submitted their bill to Dr Lim for payment and in one of life’s exquisite ironies Dr Lim herself found that she herself had been grossly overcharged by the MP and his team. Her husband objected to Yeo’s bill and had it sent back to the court to be “taxed” which is the process whereby the Registrar of the Supreme Court scrutinises the bill.

A few days ago I read here that the Supreme Court ordered that Alvin Yeo’s bill be reduced  from $1.33 million to $317,000. That is they found the correct amount to be charged was 25% of the original submitted. In other words Alvin Yeo and the team he led had overcharged by a staggering 300%.

Lawyers, let alone a Senior Counsel and an MP such as Yeo of whom higher standards are expected, who overcharge their clients by that multiple, frequently face disciplinary action and either a large fine or even a suspension from practice.  The judges in previous disciplinary tribunals have made it clear that sanctions include the power to strike off.  So what disciplinary action has the Honourable MP and Senior Counsel faced? At the time of writing this I can find no evidence that any disciplinary action against Yeo and his team is scheduled. 

There have been several precedents where  the consequences have been severe.  For example, in 2011 lawyer, Andre Arul was found guilty of overcharging his client by a multiple of approximately 200% and fined $50,000. In addition costs were awarded against him by a Court of Three Judges (including the then CJ, Chan Sek Kheong, of the teleportation into the polling booth controversy in Cheng San in 1997.) You can read the judgement here  Law Society of Singapore v Andre Ravindran Saravanapavan Arul [2011] SGHC 224The judgement also mentioned three other cases where lawyers were suspended from practice for between three and six months.

In the case of Low Yong Sen, the amount overcharged, which took the form of inflated disbursements for items like stationery and photocopying , was found to be less than $3,000. However the lawyer in question was suspended for six months.

As it was Dr Lim who had asked for the SMC’s costs to be taxed, it is not clear whether SMC will in turn make a complaint to the Law Society about their bill or whether they will just pay the difference between what the court said was a fair amount and the full amount of Wong Partnership’s ( Yeo’s firm) bill.

Even if the SMC are reluctant to make a complaint against a PAP MP  Sections 85(2) and (3) of the LPA allow the Council of the Law Society or a Supreme Court Judge to refer the matter to the Inquiry Committee or, in the case of a Supreme Court Judge, to appoint a Disciplinary Committee directly.

I for one will be watching closely to see if the CJ or the Law Society takes any action or if Alvin Yeo is let off the hook. If he is, then this would appear to be evidence of discriminatory treatment given the penalty meted out to Andre Arul and the other lawyers. The margin of overcharging (300%) was significantly greater in Alvin Yeo’s case than in Andre Arul’s (200%).

Even if no disciplinary proceedings are initiated, I do not see how Alvin Yeo can continue as an MP. I do not see how Alvin Yeo can keep his seat if he is found guilty of gross overcharging and is either fined, censured or suspended from practice.  The law makes it clear that the penalties in these cases are for damaging the integrity of the profession.

For a politician Integrity is also paramount. I would like to draw your attention to one item on the overcharging that I found striking.   Stuck amongst the high figures charged for days in court, up to  $100,000 per hour on  the last statement, was an item for ring binders. Ring binders which SMC’s lawyers  had priced at $6 per unit for Dr Lim to pay were cut to $2.50 per unit after the court found it had used the cheaper version in past hearings. Who overcharges for Ring Binders? The mind boggles that there was not even one item so small that they could not see an opportunity for a mark up of over 200%.

Those with a keen interest in the politics of office stationery will remember that Dr Chee was fired from his job at NUS for overcharging for photocopying and taxi fares. I remember the amount he was found to have overcharged for taxi-fares was less than $10.  Compare that to Alvin Yeo’s charges..

Maybe the PAP should upgrade  Dr Koh’s “everyone owns two cars” to “everyone earns $100,000 an hour”.

Alvin Yeo should resign immediately paving the way for a by-election in CCK. After the Appeal Court’s decision in the case of Madam Vellama, the PM is required to hold a by-election within a reasonable period of time, though that judgement only applied in the case of an SMC. I do not know whether it would be possible to file an action in the High Court to attempt to extend that judgement to GRCs and, if so, whether an action would have any chance of success.

While Alvin Yeo’s conduct is shocking, I am not surprised at the low standards set by PAP MPs and their seemingly insatiable greed. Just as the Communist Party in China has allowed its top officials to accumulate vast wealth to buy their complicity and head off any democratic challenges (see here), so the PAP’s philosophy has been one of vastly overpaying Ministers to ensure that they remain loyal to the leadership and are prepared to ignore whatever principles they may once have had.

The PAP’s philosophy that you go into government to get rich extends to its MPs, most of whom hold lucrative primary jobs, like Alvin Yeo, Janil Puthucheary, Hari Nair, Lim Wee Kiat, and Vikram Nair. For them  being an MP is merely a (very) part-time role. They are enabled to do so by the fact Parliament is little more than a rubber stamp, which works the shortest hours of any legislature while paying its representatives one of the highest allowances (tax-free as well!).

In fact Eugene Tan, a former NMP, in the last Parliamentary sitting drew attention to how poorly attended Parliament was when he had to point out to the Deputy Speaker, Halimah Yaacob, that there were not even enough MPs to constitute the necessary quorum to pass a Bill.

My first thought when I read about the Susan Lim case, was that the Brunei royal family, who are rumoured to be worth at least US$20 billion, should be able to look after themselves. They could have sued Susan Lim themselves or refused to pay her excessive bills.  However Brunei and its royal family are of course extremely important clients of Singapore. One of the SMC’s objectives in bringing the action against Dr Lim presumably was to show wealthy foreigners that Singapore was a safe and reliable place to live and seek medical treatment in and that we uphold the highest standards of professional integrity. In that case this is more than just irony.  It is an attempt to reassure Brunei that has disastrously backfired giving the impression that Singapore is rife with rogue professionals lacking integrity. Unless the full force of disciplinary action is now directed at Alvin Yeo our reputation will be in tatters.




Teo Chee Hean Fails in his Duty to Guard Singapore and Protect Our National Interests.

Like many other Singaporeans I was shocked when I heard about the case of  the UK  mother divorced from a Singaporean husband and the ensuing  bitter custody dispute over their son. Custody battles and marital breakdown are never pleasant but what shocked me most was the light this case shed on our Ministry of Home affairs whom it appears have been literally asleep on the job. Who actually is guarding our Island and protecting our interests?

To recap on the case. The mother had obtained  a court order in the UK giving her custody of her son but the boy’s father had successfully applied for an injunction in Singapore to prevent her taking the child whom he had taken to reside with his Singaporean parents. I do not understand why the father was able to block enforcement of a UK court order granting the mother custody and I sympathise with the mother who was able to convince a UK court that she was a fit person to have custody. However, what she did next was extraordinary.   She hired a former London Metropolitan detective to help her recover her child and to abduct him back , by return as it were.
I do not understand why the agency she hired, Child Abduction Recovery International, did not advise her to use the legal route rather than embark on this course of action. But whatever the  reason we should be grateful that and the former London Metropolitan detective, Adan Whittington she hired was able to uncover a huge breach in our National security. After just one day of reconnaissance in Singapore  he found out a universal truth about Singapore and they were able to easily enter Singapore illegally (see link).

The universal truth he uncovered is that (particularly wealthy) foreigners enjoy privileges and freedoms in Singapore denied to us lesser mortals -( the locals).  In this case Mr Whittington soon identified a bastion of privilege and wealth, almost another country in itself, namely Raffles Marina.

Yet again our border protections and security services have been shown to be inadequate and the personnel charged with enforcing border security incompetent if not criminally negligent. The former Met detective should actually be praised for his public service to Singapore in highlighting the huge flaws in our security. In a day he was able to establish that our marinas are unguarded and an easy entry point into Singapore for any potential terrorist with a dirty bomb or biological weapons or dirty funds for laundering or indeed human trafficking. I am often told by anti-death penalty activists that drugs are still very easy to obtain in Singapore despite the well used death penalty and now I understand why.

It was not as though the couple landed on a beach or secluded inlet. Why are yacht marinas which one would have thought would have been an obvious weak point, not under 24 hour surveillance and security? If no immigration personnel are on duty between 6pm and 9am then surely it should be impossible to access or exit the marina? Perhaps the PAP Government’s over eagerness to establish Singapore as a yachting hub for gambling millionaires makes them unwilling to subject owners of yachts to the same laws that lesser mortals like you and I have to obey. After all the PAP’s thinking is probably that anyone who owns or is a passenger on a yacht must be a person whom we want to attract.

flotationdevicemas selamat

Mas Selamat

The fact that this kind of blunder has happened so frequently would be farcical were the implications for national security not so grave. There was the Mas Selamat incident in 2008, though there the security services were unable to prevent him leaving the country rather than entering. Recently there was the case of the Malaysian woman who was able to get through the Causeway checkpoint by tailgating another car. She was able to drive off before the immigration officer raised the alarm or lowered the barrier. Then she was able to give the police the slip for three days. She actually had to drive into the MFA and create a disturbance before the police were able to apprehend her.

This failure at the most basic level of border security is inexcusable, particularly when contrasted with the amount of money  spent on defence and defending our skies. This amounted to some $12.5 billion in 2014 or 3.4% of GDP. By contrast Malaysia, Thailand and Indonesia spend much less than Singapore on defence as a proportion of GDP (see link). Parliament is not provided with a breakdown of this spending between equipment and manpower  so once again we are left to speculate. My conservative guess would be that more than one-third of this goes on equipment purchases. Recently Jane’s Defence Weekly speculated that Singapore had increased the number of F15SGs, one of the most advanced fighters in the world,  it operates to 40. Coupled with over 70 F16s we have by far the most powerful air force in ASEAN.

I am not advocating cutting defence spending, particularly at a time of rising external threats. There is certainly no economic need to do so since the PAP Government is running a budget surplus of about three times the current level of defence spending. I support the reduction of NS to twelve months or less and a larger professional army which may even lead to higher defence spending. However, I do feel that we need to evaluate the effectiveness and relevance of existing weapons programmes and proposed future purchases, particularly when the Government is unable to prevent what next time could be terrorists landing at a regular marina in Singapore without any kind of border control or screening. Without surveillance what is to prevent them offloading miniaturised Weapons of Mass Destruction (WMD) such as dirty nuclear bombs or lethal biological weapons. Even conventional weapons could be smuggled in.  We are an Island and our coast is a natural barrier but also a potential weakness. Let us spend a fraction of what we spend on sophisticated air weapons like the F15 and the proposed F35 Lightning II purchase, on ensuring these basic security lapses do not recur.

Having such negligent border oversight demonstrates that the Home Affairs Minister, Teo Chee Hean, is incompetent and should be replaced.  In any other country sch a serious lapse would result in a public enquiry and heads would roll. How did he get to be Admiral without understanding seaborne threats to our security?  At the very least he owes us Singaporeans an apology. He is clearly not fit to be a Minister drawing over two million dollars a year plus his MP’s allowance. What are the chances of him doing the decent thing and resigning?  I think the chances are close to zero but  the people of Pasir Ris-Punggol deserve better and presumably can make their feelings known at the next election!

Leaked: The letter that Ho Ching received from a Nigerian lawyer.

A copy of a letter sent to Temasek Holdings urging them to invest in Nigerian energy company Six Energy has fallen into my hands.  I share it with you. (Warning! I have no way of confirming that this letter was really sent or received. It may even be a parody. Judge for yourself.)

Agabi and Associates.
Solicitors and Advocates for Six Energy.
5th floor, Kelong House.

To the Honorable Madam Ho

Temasek Holdings

Re: Strictly Confidential and Urgent  Business Opportunity.

Dear Madam Ho (wife of glorious Prime Minster of the fully Democratic Republic of Singapore, the Honorable Mr PM LEE)

I am the representative of the Nigerian energy company ‘Six Energy’.  In Nigeria we have long admired you  as a market guru seemingly able to seize every and any opportunity to make money. We are mesmeric by the incredible track record of the company, Temasek Holdings, which effortlessly has made annualized returns of 16% since inception.

Even when your countrymen discovered that you had made elementary mistakes during the financial crisis of 2008 this did not end of your career as in a lesser fund manager. Truly your esteem is such that the Government of your country, headed by your illustrious husband, had sufficient faith in your  abilities,  to confirm his appointment of you as CEO.

Please permit me to make your acquaintance in so informal a manner.  This is necessitated by my urgent need to reach a dependable and trust wordy foreign partner. I am in a position to uplift your esteem even higher and present Temasek Holdings with an unbeatable business offer.

You must have heard over the media reports and the Internet of various huge sums of money invested in our company by such elite organisations as the International Finance Corporation, part of the World Bank Group of companies (see link).

We know you are not a charity despite the fact that Singaporeans sometimes may be forgiven for thinking you are, even if most of your charity work benefits foreigners. We know that Temasek’s principal aim is to make money for its shareholder, the Government of Singapore. We agree with you that this money would be wasted on Singaporeans who are a weak and whining lot, unappreciative of all that you, your husband and your father-in-law, may he live forever, have done for them. We know that without his guiding genius your esteemed country would just be another disgusting mangrove swamp, like much of our coastline after the Western oil companies started pumping oil.

We therefore humbly beseech you for a small investment, nothing too big for an esteemed and magnificent company of your stature cannot handle. S$200 million should be suffice for now though we may kindly call upon your esteemedness for  further and larger amounts in the future. This money will be part of a total fundraising of over S$300 million in new equity capital (alas we do not know where the money we raised before has gone!) and will be invested with most care and utmost diligence in development of our growing portfolio of energy assets in Nigeria.

You may be concerned that all the other participants in our fundraising are there with charitable objectives, to reduce poverty and create prosperity in Africa. You may be worried that the International Finance Corporation, which will be a junior partner in the investment, is principally concerned with ending extreme poverty and creating shared prosperity rather than making money for its shareholder. This may suggest to you that investing in Six Energy would not meet the investment criteria of Temasek Holdings .   Don’t worry this just means that there will be more money for you.

Madam Ho, you may ask yourself why your exaltedness should be investing your country’s citizens’ precious money in a Nigerian energy company when the only other investor is a multilateral institution who is not there to make money. After all your countrymen and women may ask what you know about Nigeria or about investment in Africa.  They may be concerned at the risk that those evil rascals and thorough bad fellows, Boko Haram, are getting stronger on a daily basis and that our army appears powerless to stop them.

Tell these ungrateful wretches to be no concerned. Kidnapping a few schoolgirls and bombing our capital is much different from attacking a well protected  first class company like ours. In case you have trouble with your investment committee, we have prepared many sets of cashflow statements to show you the huge IRRs that your investment will be sure to earn.  Just do not ask us to pay you any dividends. Or if we do pay you a dividend please be advised that instantaneously you must invest that back into new shares. We know that this will not shock you as Temasek and your sister company GIC have used a similar scam to avoid paying any money to their shareholder for years.

We know your immense appetite for foolhardiness and high risk  which has been demonstrated by your decision to double down on your investment in another company, Olam, which has extensive interests in Nigeria. In such case we truly can appreciate the immense generosity and kindness of your benevolent leadership towards the management and shareholders of that company which rescued them  from bankruptcy without them having to lose any of the huge wealth and large properties they had accumulated. We also truly thank the good people of Singapore for going without basic health care or even free education so that others in our countries can be helped. In particular the recent generosity of their Government which put another $5 billion in surpluses extracted from your people into your esteemed organisation is to be highly commended. Even some of our Illustrious former Presidents, like Mr Abacha, clearly have a lot to learn.

Though we have neither seen nor met each other, the information we gathered from an associate who has worked in your country has encouraged and convinced us that with your sincere assistance, this transaction will be properly handled with modesty and honesty to a huge success within two weeks.

Please note that we have strong and reliable connections at the Central Bank Of Nigeria and other Government Parastatals and we hear that you have also banking secrecy in Singapore and do not engage in public disclosure of Temasek deal details,  hence assistance in this regards, would not be a problem.   Indeed Madam, you will be absolutely right when you say that this project is risk free and viable for you (although possibly not so good for your citizens). If you are capable and willing to assist, contact me at once via email with following details:

1.Your Full Name, Company’s Name, Address, Telephone and Fax Numbers. 2.Your Bank Name, Address. Telephone and Fax Number. 3.Your Bank Account Number and Beneficiary Name – You must be the signatory.

Rest assured that the modalities I have resolved to finalize the entire project guarantees our safety and the successful transfer of the funds.

Kindly contact me as soon as possible, whether or not you are interested in this deal, so that whereby you are not interested, it would give us more room to scout for another partner.  But if you are interested, kindly contact me via above email, telephone or fax, so that we can swing into action, as time is not on our part.

I wait in anticipation of your fullest co-operation.

Yours Faithfully,
Dan Agabe

P.S. Also this transaction demands absolute confidentiality which our associate in your country tells us is Temaask Holding’s strong point.  We also understand that your husband’s government is also not strong on transparency. Nevertheless,  on no condition must you disclose it to anybody irrespective of your relation with the person.  In particular do not discuss this with that horrible fellow Vikram Nair who has spread bad words about Nigerian financial schemes in your country.
Thank you and God Bless.

Best Regards, MR DAN AGABE.

What is the Point of Our Government?


I read the news today that Rebecca Loh, the woman who pushed her disabled nine-year-old son out of a window, would plead guilty to culpable homicide not amounting to murder. Though she was diagnosed as suffering from post-schizophrenic depression at the time and has a history of schizophrenic illness, IMH still judged her fit to stand.

We need answers to the following questions:


  1. Why was Rebecca left to fend for herself with a nine-year old son who suffered from osteoporosis and numerous other debilitating conditions? The report says that she did not intend to kill her son only wanted him injured so that he would be taken to a home.
  2. Was there a social worker assigned to her case by MSF?
  3. As she had a history of schizophrenia and police had been called to her mother’s flat on several occasions when she had beaten and strangled her mother, why was the child not put on an “At Risk” register as in other countries like the UK? She had also been arrested for threatening a stall holder with a chopper in 2011.
  4. What help did the Ministry of Social and Family Development (MSF) provide? Rebecca should have been entitled to close to $1000 a month from Public Assistance as her mother was earning below $1700 a month. Perhaps because she lived with her mother MSF deemed her ineligible for assistance? When foreigners write about our Government being stingy they assume that the levels of assistance they promise to provide are in fact provided. However they are not aware that this is frequently not the case. Our bureaucracy seems especially skilled at denying those in need the help to which they are entitled
  5. Why do we not provide Special Assistants to disabled children like Rebecca’s son so that they are able to attend school? Again this would be the case in most first world countries. Her son’s disabilities were physical not mental.

Unfortunately the questions will not be answered now that Rebecca has pleaded guilty. In other advanced countries there would be outcries against the social workers and the Ministry responsible for letting this happen. The role of MSF and the social workers (if any) has not been examined. An incident like this would also normally lead to changes in policy to ensure that this does not happen again. There would be a public inquiry. Yet this has been quietly brushed under the carpet.

Lee Kuan Yew after all is well known to be a supporter of eugenics and his philosophy is embodied in such policies as providing financial incentives to poor women and single mother “who keep their families small” with free family planning through the HOPE scheme..

 Recently we have been working to help another woman in a similar situation to Rebecca Loh. I first met Madam S while conducting block visits with my volunteers in Radin Mas. Since the 1980s she has been the sole carer and provider for her son who suffered severe brain injuries as the result of a hit-and-run car accident. Her son was seven when he was injured but now is in his mid-thirties. As a result of his injuries he has a range of disabilities, both physical and mental, is an epileptic and unable to work.

The driver of the vehicle was never caught and it is not clear what compensation Madam S received, if any, from the special fund set up by insurers to compensate the victims of hit-and-run accidents. Madam S has been unable to work for years as she has to look after her son full-time and is in any case too old to work now.

At the time I first met her she seemed quite cheerful despite her sad story and  hard life challenges. She asked to have a photo taken with me and I gave her my contact details to get a copy of that photo. A few days ago  she phoned me to say that her situation had deteriorated and she was feeling quite desperate. She was particularly concerned that had no money to buy food or new clothes for Hari Raya.   She had been suffering from asthma attacks which really needed hospitalization but this was a luxury she could not afford as she had full-time care of her son.

When I saw her she seemed in a very bad way and far from the happy smiling woman of the first photo. I asked her whether she was getting help from CDC and she said no. I pointed out that she should be getting around $800 a month from Public Assistance She has been to see her MP but he does not seem to have been able to help her. She has also approached MUIS but said that MUIS were unable to give her much help.

This is where our team of volunteers and members came in aided by the power of the internet where we put out a call for help. .Thanks to our great team of volunteers and public response, we were able to put Madam S. in touch with a lovely woman called Zarina who runs a charity called 3R Sincerely and Giving. I will quote from her Facebook post:

“Just for info, I’m the admin from 3R Sincerely & Giving. We are just a small outfit currently assisting needy family and adopting few families with long-term need. We are self funding as such we won’t be able to extend large monetary to any one family. At most we can give her $200 per month till more permanent solution is found. We also do a monthly visits to our adopted family more like a befriender programme. Sometimes, we rope in their neighbors to keep an eye on them and beep us if there’s a need.

 Admittedly, we are rather stretch as we have only a small team doing the errands and currently very involve in our Ramadan Charity Drive.”

 Zarina has already been to see her and has given her some NTUC vouchers and a set of baju kurung for Hari Raya. Some of our volunteers, though not by any means well off, have also made personal donations. They will follow up with MUIS to see what help she is getting.

As for me, I will pick up her case to see why she is not getting Public Assistance.  I will follow up on that with CDC and the Family Service Centre. I understand that CDC stopped helping her some time ago and Madam S. has shown me a letter from CDC over a year ago promising to look into her case.  Till now nothing has been done. If this is correct, then that is absolutely unacceptable but unfortunately I frequently see these cases where people fall through the  cracks and paperwork gets lost.  I have been helping an elderly gentleman again in Radin Mas in a wheel chair to liaise with AIC in order to get him a mobility scooter.  After a few months when there had been no progress I chased them up and it turned out they had lost his contact details. They asked me to go and visit him and tell him they were trying to contact him. Often those who are most in need are worn down by the paperwork and the necessity of chasing people up by phone. If they are carers as Madam S is then visits to these offices are almost impossible.

Towards a  longer term solution I will try to establish whether Madam S did receive compensation from the insurance fund for her son’s accident and if not whether it is still possible to apply.

The charity is now also working with her to try to persuade her to let them clear out her living space and give it a lick of paint.

 So even if our Government, which runs a surplus of over $30 billion a year, is unwilling to help its own citizens, it is good to know  that people like Zarina  and our volunteers, with hearts of gold,  are prepared to step in and help even though the resources at their disposal are modest.

It would be too easy to contrast this case with Rebecca Loh, who appears to have had no resources or charity network to call upon,because Rebecca’s case is one of mental illness, schizophrenia. As such I have been told by  charities that they would not have worked with her as they are not professionally trained. This make it even more unbelievable that Rebecca was deemed fit to take care of her son, day in day out without any respite.

We need to ask what is the purpose of Government?  Why do we elect one that wriggles out of even the most basic responsibilities to care for its people? Why does the Government need excess assets of $400 billion and to force us to save so much through CPF? As the Government runs a real Budget surplus of $30 billion a year why can in not afford to help the citizens who fall through the cracks?

More importantly as it is our money can we not afford to help these citizens. I would like to make it clear here that form an economist’s point of view I am not a big fan of the Nanny State or the Welfare State model.   Even the Swedes are no longer fans of the Scandinavian model , putting back their retirement age at which they can draw their generous pensions. So I am not suggesting we use this surplus to fund a full welfare state and a dependency culture. If I could sum up my  philosophy it would be that I believe in less STATE and more WELFARE, rather than a welfare state. My reading of the Government’s figures shows that we can afford to be more generous with welfare neither needing to raise taxes or cut  spending elsewhere.

Certainly on an individual and small group level this case above shows that Singaporeans are caring generous and  compassionate. How strange then that our government so poorly reflects the citizens on the ground being heartless,  stingy and  uncaring.

I dedicate this article to all the volunteers in charities or individually who devote themselves to helping in our communities and catching those in need before they slip through the cracks.  Thank you. You make a difference.




A message from Han Hui Hui.

In June 2014, the enhanced benefits for MediShield Life were announced.

It was stated that there will be substantial increases in benefits for MediShield Life that will cover all Singaporeans for large hospital bills.

At a time when Singapore is ranked as the most expensive place to live in the world, where Singaporeans yet continue to receive the lowest wages among the high-income countries, CPF is akin to an additional tax on our income.

On 7 June 2014, Singapore had its first CPF protest against the increase of the minimum sum as an estimated only 1 in 8 Singaporeans who reach age 55 were able to meet the CPF Minimum Sum and MediSave Minimum Sum entirely in cash from their CPF accounts.

There is no transparency and accountability towards how the government is using our CPF monies or the returns derived from CPF funds, all these despite MPs calling for higher rates, improvements to our CPF system practically every year.

From a cash flow perspective, the Government is still not spending a single cent on healthcare because MediSave contributions in a year continue to exceed all withdrawals including government healthcare spending.

Being a Singaporean, I’m concerned about my future and have decided to invite all political parties that took part in GE2011 to hear their views regarding my concerns.

As such, this event aims to highlight the inadequate measures in place to protect the healthcare needs of Singaporeans.

Event details:

Date:                                     Saturday 12 July 2014
Time:                                     4.00pm – 6.00pm
Venue:                                   Hong Lim Park – Speaker’s Corner


Time                                      Speaker
4.00pm – 4.15pm             Mr. Tan Kin Lian, former presidential candidate
4.15pm – 4.30pm             A political party
4.30pm – 4.45pm             RP Secretary-General Kenneth Jeyaretnam
4.45pm – 5.00pm             SDP Treasurer Chong Wai Fung
5.00pm – 5.15pm             Mr. Vincent Wijeysingha
5.15pm – 5.30pm             Mr. Leong Sze Hian
5.30pm – 5.45pm             Ms. Han Hui Hui
5.45pm – 6.00pm             Mr. Roy Ngerng
6.00pm – 6.30pm             Questions & Answers

To find out more about the event, you can go to the Facebook event page at


Han Hui Hui

Is the Government Going Bust?

I was quite shaken by my trip  to Parliament yesterday to watch the CPF “debate” .  There wasn’t really any debate at all. Our Finance Minister, Tharman made a speech that was full of  irrelevancies and gaffes and what he did admit to worried me considerably.  I sat in the spectators gallery where it was noticeable that the MIW were MIA . Thank goodness that Eugene Tan is there to remind the Speaker and Deputy Speaker how parliament works. Even some WP MPs  were missing and came in an hour after the debate had started.  No one picked up on anything that Tharman said and he was  given an easy ride for his monologues. This is why I have put “debate” in quotation marks.

Plenty of questions were asked about CPF such as.

  • Whether members could be given an early warning as they approached 55 that their money would be locked up and could no longer be used for housing?
  • Could special consideration be given to allowing those with balances below the Minimum Sum to use part of it to service their housing loans?
  • What is the average amount used for housing as a percentage of CPF Ordinary Accounts of members aged 55 and above?
  • How many Singaporeans who turn 55 are inactive members?

But these were all questions about the mechanism of the  system and accepting it as PAP presented it.  No one asked the questions uppermost in our minds at the moment: Why does the Government need to hang on to our money at 55 if it is making such colossal surpluses amounting to some $30-35 billion a year?

Why does it keep increasing the Minimum Sum?

Is GIC losing money?

And all of this leads the people to wonder, “is GIC is even possibly insolvent?”

The closest that any  questions came to  touching on the issues we all want answered were asked by Gerald Giam and Low Thia Kiang and I congratulate them for asking. Gerald Giam asked how many years in the last 20 years GIC had been unable to pay the interest on the Special Singapore Government Secutities (SSGS), what were the returns on GIC’s portfolio after accounting for interest in each of the last 20 years and what extraordinary measures were taken if that was the case.  All good questions.

When Low Thia Kiang’s turn came he said that as CPF members’ balances were substantial at $300 billion why were CPF members’ balances not separated and managed separately from GIC. An eminently sensible question.

I will restate here  what Tharman said yesterday as a reminder of the convoluted and opaque route by which our CPF monies are invested.  All CPF members’ balances are deposited with the MAS. They are then used to buy SSGS that are matched to the interest rates that CPF pays on Ordinary and Special Accounts. The money from the SSGS is then managed by GIC together with the Government’s other assets.

I found Tharman’s answers to Low’s and Giam’s questions to be evasive and even nonsensical but with the advantage of observing from the gallery I could spot that he also made some revealing and worrying admissions.

These are some of the assertions and answers that Tharman made that set off alarm bells in the minds of anyone who knows anything about how the investment process should work and about transparency. For example,  If I was an investor doing due diligence I would run a million miles rather than invest my funds in GIC.

Tharman said :CPF is an absolutely safe investment since it invests in securities issued by the Singapore Government, one of the few countries left in the world that is still rated AAA

AAA rated! That is an interesting admission.  You may remember that after I visited his CPF forum Hri Kumar went to his  Facebook page and denied that he had ever said that CPF was a AAA investment.   Let’s ignore Kumar as an ignoramus because, according to Tharman,  CPF is safe because it lends to the Government. which is AAA rated.

However the Government then takes our CPF money and pools it with the Government’s net assets. The total is then managed by GIC. GIC is able to take a lot more risk than CPF would be able to as a stand-alone entity because it has the government’s net assets to act as a buffer.

The level of security would depend on the size of the buffer and the riskiness of the assets. In the financial crisis of 2007-2008, having a large buffer of subprime mortgages which had to default before they lost money, did not help the holders of AAA rated Collateralized Mortgage Obligations. The downtown in the housing market was so severe that even the AAA rated securities ended up worthless.

In the same way if we lend our money to the Government and it then uses it to invest or speculate in risky assets then this could happen to our CPF.   It is  like depositing your money with what you thought was a very conservative, low risk financial institution and then discovering that the conservative low risk institution you chose was in fact giving your money to a high risk player to gamble with.

But it is not even  like that for us Singaporeans is it.? As a private investor  you would have  a choice at least over where you put your money and  how much risk you wanted.  You could move it around if you were not happy with where it was invested. Most importantly you could demand absolute transparency, a full explanation of the risk profile and investment rationale and methodology of the fund managers. if you even suspected smoke and mirrors or just did not like the manager’s face you would be free to go somewhere else with your pension fund.

Some might say that you can diversify your risk through the CPF Investment Scheme. You have the option of investing up to $60,000 of your CPF money in a number of options including unit trusts and shares.  However, as the investment is made through CPF,  your money is  still at risk if CPF becomes insolvent.

In 2008 highly rated banks and institutions almost went bust and had to be rescued by governments worldwide because they had used their depositors’ money to invest in highly risky assets. Citibank, UBS, Bank of America, RBS, Lloyds, and AIG are just some of the institutions that had to be rescued by their countries’ taxpayers.

Please note that AIG used to be rated AAA while the others were either AA or AA+.  These institutions were investing in or guaranteeing supposedly AAA financial instruments (like sub-prime collaterized mortgage obligations) that ended up worthless. Temasek and/or GIC had significant stakes in some of these institutions.

Can you see why I am worried?

Tharman said that our CPF assets can be put into a larger porfolio that takes more risk because the Government’s net assets act as a buffer. How big a buffer do the Government’s net assets represent before we are at risk of losing our CPF money if GIC squanders the funds it is given through poor investments?  I will not go into detail here and will publish my calculations as a separate note.  However if the Statement of the Government’s Assets and Liabilities issued every year as part of the Budget is accurate and includes Temasek as well,  then there may not be any buffer left.

Can you see why I am worried?

In fact the Government will already need to dig into the cash reserves it holds with MAS or force Temasek to sell assets in order to pay back CPF holders.  If GIC loses money then the Government will have to raise taxes or print money.

Can you see why I am worried?

If Temasek’s assets are not included  in the Statement (which would surely be a breach of the Constitution since both Temasek and MAS are Government-owned corporations just like GIC) then there may be a buffer of up to 30% of total assets within GIC before the Government has to make up the shortfall from other sources. This is still not reassuring as a downturn in global markets of the severity of 2008 could easily cause equity, bond and real estate values to decline by 30%.  The Government has a large net cash reserve of some $140 billion but it would need to keep a large part of this with the MAS to fund their operations. MAS is not allowed under the Constitution to lend money to the Government which would amount to printing money.

Can you see why I am worried?

Tharman made some comment about GIC’s higher returns benefiting all of us. Really? What benefit do Singaporeans get if GIC is able to achieve higher returns than the Government pays on CPF by taking more risk? We have yet to receive any benefit from enduring years of austerity and low rates of return on our forced savings. The so-called Net Investment Returns Contribution is a scam since it does not represent actual spending but only a shuffling of money from one account to another. This is the question that Hari Kumar dodged at his forum and condescendingly said “we’re dealing with the real world here”. What real world is that, Mr. Kumar? One in which the PAP government continually pulls the wool over the eyes of its citizens.

So despite Tharman’s reassurances we can say that our CPF is only AAA because the Government (which means Singaporean taxpayers) are guaranteeing it.  This explains why the Government keeps on harping on the need for taxes to rise.

Can you see why I am worried?



What is the Real Surplus?

mysteryIt appears that our Budget Cash Surplus has fallen off a cliff.  The Budget Cash Surplus for FY2012,  which was shown as  $36.1 billion a year ago, is now stated as  $25.3 billion in the latest Monthly Digest of Statistics (MDS). I am indebted to  Leong Sze Hian,  who published an article in TRS  yesterday pointing out this discrepancy as this gives me an opportunity to explain the figures.

So although it looks as though $11 billion has gone missing or disappeared, I believe that  there is in fact a simple reason for it.

I think the explanation for the discrepancy is that the figure of $36.1 billion represents the General Government Cash Surplus (GGCS) whereas the figure of $25.3 billion represents the simple  Government  Cash Surplus (GCS).

The GGCS and the GCS are normally calculated differently. GCS surpluses normally only  include the equity share of profits of state-owned companies and statutory boards  if there is a dividend paid to the Government. Whereas the GGCS figure includes all the profits of government-owned  companies. ( I say normally because as usual our PAP Minister of Finance has not provided any explanation or definitions. Still, I believe this explains the discrepancy.)

If we look at the  Yearbook of Statistics (YOS) 2013, the GGCS for FY2011 is stated as $31.9 billion while the GCS is stated at  $27.4 billion, a difference of $4.5 billion.

Though this probably explains the difference it does not excuse the PAP Government’s lack of transparency in not publishing a full definition of the different accounting categories. It also does not explain why the use of different measures and revisions to these figures are so frequent. The General Government Cash Surplus is the figure that should be used to determine how much the Government is saving and what it can afford to redistribute back to the citizens in the form of lower taxes and more generous spending on health, education and income support measures. In my view investment in our people, their health and education  undoubtedly has much higher returns than the returns  that GIC  earns on its overseas investments.

I find it inexcusable that the General Government Cash Surplus  is not published as part of the Budget process. The public is entitled to know what resources  are available so that they can judge what the PAP are withholding from them and ask why.  We should not have to find out years later from obscure statistical publications like the YOS or the MDS what the Government’s true fiscal position is.

Instead of a clear set of accounts presented to our people in an easy to understand format we have the charade of the Budget process where the Finance Minister pretends that he is running a balanced budget or even a deficit.  In particular as I pointed out at Hri Kumar’s forum this is the question you may all remember watching him dodge  the Govt makes presentations that show contributions from Temasek and GIC, in the form of the Net Investment Returns Contributions (NIRC), being used to finance actual spending. I maintain this is not the case . In  fact the NIRC  are just being moved around , by a stroke of the pen or pressing of a computer key, from one account to another.

As an example, the Pioneer Generation Package is widely trumpeted as being $8 billion. Did you not  hear me ask Hri Kumar at the forum why have you got that figure when actual spending is only $240 million this year? By comparison, we pledged over $5 billion in loan commitments to the IMF to support the citizens of Europe.

Recently the  Government announced $4 billion of spending over five years in the form of subsidies to keep Medishield Life premiums affordable. The Government says that as a result of the subsidies premium rises will be small, at least,  for a transitional period of two years,  even though benefits are now more generous. But  this is not actual spending. Premiums did not need to rise anyway because the Medishield fund is still in massive surplus.  In the US the recently enacted Affordable Care Act means that your health insurer has to give you a refund if it is not spending at least 80% of the money it takes in premiums. Why do we not have that kind of ruling or condition here?

Everyone in the PAP, from the PM down to Hari Kumar, keeps saying that taxes will have to go up if we have any more spending. The Government uses this as a justification for why they cannot return your CPF to you at 55 (apart from a derisory $5,000) if you have below the Minimum Sum. You may squander it or lose it and you will have to pick up the tab because the Government has no resources and is running a deficit.

So, what is the truth? Is the Government running out of money or is it running a massive surplus?  As I said in “Sherlock Holmes and the Case of the Missing (Or Merely Hidden) Reserves” there are three possibilities:

  1.  The PAP Government genuinely believes that Singaporeans are not entitled to benefit from the austerity they have endured for so long or to share in the fruits of foreign worker-driven economic growth. They probably think of Singapore like the UK Premier League, which is the undisputed top league in world soccer, but one in which very few English players now play at the top-level. Just like the owners of Premier League clubs, who can bring in as many foreign players as they like, the PAP feel that they owe no duty to Singaporeans. Instead they feel their electorate is a global one who are attracted by Singapore’s low taxes (for the wealthy), cheap unskilled labour (no minimum wage) and the fact they do not have to worry about having to do NS or pay CPF.

  2. There has been mismanagement of the reserves and the money simply is not there or has been squandered through poor investments. Countries like Greece (which we indirectly shored up with our generous $5 billion loan commitment to the IMF) have been found to have published fraudulent national accounts. Yet surely this could never happen in Singapore.
  3. Fraud.

One would like to think that the first possibility is the correct one. However the longer the PAP Government fails to be transparent about the size of the surplus and to provide a believable justification for why it needs to hang on to our CPF money, the more the suspicion will grow that there is something to possibilities two and three.

Mr President, Please clarify. Who straightens out the wheel breaking the butterfly?

images (5)

On June 13th,  The Economist published  an opinion piece on Singapore, about blogger Roy Ngern and LHL which they entitled Butterfly on a Wheel, adding more controversy to the PR fiasco otherwise known as LHL’s defamation suit.

Butterfly on a wheel carries a similar  meaning to the phrase, “using a sledge-hammer to crack a nut”. That phrase accurately sums up  the PAP’s system of knuckleduster politics and rule through control and fear and non accountability. More crucially it sums up a view that the PAP sees dissent to their policies or differences of opinion on the normally self levelling and democratising cyber-sphere as a nut that needs smashing.

Originally they attempted to tip the balance by forming an Internet Brigade but then law suits and defamation came into play. The law suits as tools of control are why we talk about Rule BY Law  to emphasis that it is not the Rule OF Law which is the one necessary for democracy to function.

In Singapore we have already established that public bodies cannot sue individuals through such cases as that of Han Hui Hui. No doubt this is why LHL sued Roy in his personal capacity as a private citizen but whatever the reason, it is an incontrovertible fact that the law suit is private and personal.

It is therefore follows that any PR fiasco or disrepute attaching to the PAP or the office of the PM because of LHL’s law suit is as a result of that individual’s private actions. With all due respect I suggest that LHL should have  given more serious consideration to his high public profile, position as a public servant and more respect for the office he represents  before commencing personal litigation.

To be fair to LHL, The Economist did make some blunders in their article.  In this paragraph they say,

“He is now jobless, sacked for engaging in conduct “incompatible with the values and standards” the hospital expects of its employees. This is but one of Mr Ngerng’s travails. He is being sued for defamation by Singapore’s prime minister, Lee Hsien Loong. He might face financial ruin.”

Later in the piece they say, “Even many Singaporeans who think Mr Ngerng is wrong have some sympathy for him and feel the prime minister is bullying him.

The emphasis in bold is mine. To be correct the Economist should have said, he is being sued for defamation by LHL and they could have added, who is also Singapore’s PM and as such a very wealthy individual and Roy might face financial ruin. Further references in the article  should have been to LHL not The PM.

You can read the economist’s article here to judge for yourself how much LHL’s suit is negatively affecting global opinions of Singapore. Link.

What happened after that article was published is extraordinary. LHL in his official capacity as the PM directed a civil servant, his Official Press Secretary  no less, and caused that person to use State resources and time and tax payer money to write a letter  regarding the personal business of LHL as a private individual.

Of course there is always a danger of the private bleeding into the public. People will see overlaps that don’t exist and this will create confusion in everyone from the Singaporean on the street to writers for the Economist.  You can understand that confusion. LHL is suing Roy but because he is also the PM and the son of ex PM LKY known for his lawsuits, it is seen as bullying. The responsibility for that lies wholly with the man wearing  both hats.

I presume it is precisely because  this kind of situation is  a minefield that The Ministerial Code was drawn up, to provide guidance for ministers including the Prime Minister. The code aims to hold Ministers up to certain standards and sets out rules of obligation that Ministers must abide by.  Judge for yourself.

“This Code of Conduct for Ministers sets out the “rules of obligation” that all Ministers are to abide by in order to uphold these standards.”

I have produced  section 4.3 of  the code here so that again, you can judge for yourself, whether the Prime Minster has failed to abide by his rules of obligation.

“4.3 A Minister must not direct or request a civil servant to do anything or perform any function that may conflict with the Singapore Civil Service’s core values of incorruptibility, impartiality, integrity and honesty.

He should respect the duty of civil servants to remain neutral in all political matters and matters of public controversy.”

Now let us look at the letter that the PM directed his civil servant to write.

“SIR – I refer to the article “A butterfly on a wheel” (June 13th). You referred to an “alleged ‘serious libel’” by Roy Ngerng. This is not an allegation. Mr Ngerng has publicly admitted accusing Lee Hsien Loong, the prime minister, of criminal misappropriation of pension funds, falsely and completely without foundation. After promising to apologise and to remove the post, Mr Ngerng did the opposite; he actively disseminated the libel further. This was a grave and deliberate defamation, whether it occurred online or in the traditional media being immaterial.

What is at stake is not any short-term positive or negative impact on the government, but the sort of public debate Singapore should have. When someone makes false and malicious personal allegations that impugn a person’s character or integrity, the victim has the right to vindicate his reputation, whether he is an ordinary citizen or the prime minister. The internet should not be exempt from the laws of defamation. It is perfectly possible to have a free and vigorous debate without defaming anyone, as occurs often in Singapore.

Chang Li Lin

Press secretary to the Prime Minister


I want you to note in particular that the Press Secretary signs as, “Chang Li LinPress secretary to the Prime Minister,
Singapore”. She  is not defending LHL as an individual whom she feels has been wronged in the Economist and is maybe coincidentally a friend of hers. If that were the case she would sign it “Ms Chang Li Lin.”

So what could or should have been done to correct the Economist’s confusion? The only appropriate and correct action would have been for LHL’s lawyers to defend his case to that media if they felt their client had been misrepresented as a bully.

Let’s look at the money flow. LHL has instructed the lawyer Napier and Drew and is paying them from his own (albeit considerable) pocket. Any money they win for him will go back to his pocket.  He may give it to charity but he sure as heck won’t be giving it back to the taxpayer  by reimbursing his Press secretary or his office for the use of those resources.

If the PM’s office feels it has been draggged into this and its reputation damaged then they possibly could have written a very short request for clarification thus:
Dear Sir,
I write on behalf of the office of the PM and I refer to the article “A butterfly on a wheel” (June 13th).  The law suit you refer to  is not connected to the office of the PM. The defamation action in question is being taken out by LHL in his personal capacity. If you wish to know more about his reasons please ask him directly or speak to his lawyer…. Press secretary etc etc.

Now I am NOT a lawyer  but I do think the PM’s office or any individual public or private should have included the following in any letter.

“As the allegations have not yet been found in a Court of law that whole matter is sub-judice”

As you can plainly see, our Press secretary refers to what Roy’s defence still calls alleged defamation, as “malicious”. The whole letter is sub-judice and IMHO that part more than the rest.

The consequences for a minister of a breach are clear. Again the code tells us that” Breach of any of these “rules of obligation” may expose the Minister to removal from office”.

By now you are getting tired but stay with me a little longer.

How do we determine if there has been a breach? Who would investigate? Is this a breach of mis-use of State resources which is corruption or is it a breach of impartiality?

The code says, ” This Code does not have the force of law and therefore any issue concerning the compliance or non-compliance with it is not subject to review by any court or tribunal.

 The Code is silent on how it is to be enforced. Does enforcement rest with the Prime Minister and if so, it is not clear from the Constitution how breaches by the Prime Minister would be dealt with. The onus for investigating breaches would appear to lie with the President though this needs clarification. In matters involving corruption the President has the power under the Constitution to concur with the Director of CPIB’s decision to authorise an investigation even if the Prime Minister refuses to give his consent. However the CPIB comes under the PMO so it is not independent.

The following action needs to be taken.

  • Roy’s lawyer needs to write to the Economist pointing out that the Press secretary’s letter is sub judice and asking them to take it down. (If they do not do this then they should not complain later.)
  • I and everyone else would then need to erase any copies of that letter in order not to prejudice Roy’s chances of a fair hearing.
  • LHL’s lawyer needs to write to the Economist either defending their client or alternatively explaining that the previous  letter was a mistake and possibly sub judice.
  • A letter needs to written to the President asking him to clarify jurisdiction
  • A letter needs to be written to the Director of the CPIB asking the same
  • A letter needs to be written to the PM asking him to clarify the Ministerial Code
  • For the sake of our Nation we need a fully independent CPIB distanced from the PM.

Finally as for that drivel propaganda in the letter about” free and  vigorous debate”  we have all seen the video of the grassroots man attempting to physically manhandle the 76 yr old retired teacher away from the microphone.

Did Lee Hsien Loong breach the Ministerial Code of Conduct?

lee hsien loongI made the following posts on Facebook at midnight on Friday. I have now decided to put the posts up on my blog to answer some online comments

I am seriously concerned that the PM has breached the Ministerial Code of Conduct by using his Official Press Secretary to write a letter to the Economist newspaper defending the PM’s private defamation suit against the blogger Roy Ngerng. This states:

“4.3 A Minister must not direct or request a civil servant to do anything or perform any function that may conflict with the Singapore Civil Service’s core values of incorruptibility, impartiality, integrity and honesty.

He should respect the duty of civil servants to remain neutral in all political matters and matters of public controversy.”

Neutral? This is quite apart from the fact of whether it is right for the PM to use a civil servant paid by the taxpayer to assist him in his private capacity and not his official one.

He is suing Roy as a private individual and yet he uses a state employee, paid by you the tax payer, to write to the foreign press defending his personal matter. I believe the principle has been established that State Institutions cannot sue a private individual so why can a state employee be put to work on it. Is the Press Secretary working for us, who put the government in place as public servants, or is the Press Secretary working for LHL in a private capacity. It needs clarifying.

I pointed out the uncanny parallels with the alleged misconduct that led to the blogger Roy’s sacking from Tan Tock Seng Hospital:

I have had another thought. If the PM used his Private secretary to write to the Economist on his personal matters was this also a misuse of office resources, computer etc such as got Roy fired?

 The posts have already attracted a lot of online comments. Some of the commentators have defended Lee Hsien Loong’s actions in getting his Press Secretary to write since, they say, Roy Ngerng’s defamation brought the Prime Minister’s Office (PMO) into disrepute.

However I would disagree. The defamation was against the person and not the office. Lee Hsien Loong is suing Roy for damage to his personal reputation not to the reputation of the PMO. If he succeeds in his action for damages the money will not go to the PMO but to Mr Lee personally. The proper person to have written to the Economist should have been Lee Hsien Loong’s lawyer, and not his Press Secretary who is paid by the taxpayer.

Who has responsibility for determining if there has been a breach of the Code and what sanctions should apply?

The preamble to the Ministerial Code of Conduct makes clear that any breaches of the Code are to be treated extremely

This Code of Conduct for Ministers sets out the “rules of obligation” that all Ministers are to abide by in order to uphold these standards. Breach of any of these “rules of obligation” may expose the Minister to removal from office.

 However the Code goes on to say that:

This Code does not have the force of law and therefore any issue concerning the compliance or non-compliance with it is not subject to review by any court or tribunal.

 The Code is silent on how it is to be enforced. While responsibility for Ministers’ observance of the Code would appear to rest with the Prime Minister, it is not clear from the Constitution how breaches by the Prime Minister would be dealt with. The onus for investigating breaches would appear to lie with the President though this needs clarification. In matters involving corruption the President has the power under the Constitution to concur with the Director of CPIB’s decision to authorise an investigation even if the Prime Minister refuses to give his consent. However the CPIB comes under the PMO so it is not independent. The President does not have the power on his own to initiate investigations.

In this instance a request should be made to the President asking him whether he has jurisdiction in this matter?  If he does not who does? If he does, then he should investigate whether Lee Hsien Loong has breached the Code and make his findings public. Surely Lee Hsien Loong would not be able to continue in office if he was found to have committed a serious breach of the Code?

Hri Kumar’s and the PAP’s Unconstructive Politics.


On 18 June Hri Kumar, MP for Bishan-Toa Payoh GRC and Senior Counsel, put up a post on his Facebook page presenting me in a false and wholly negative light in an attempt to damage my credibility and both my personal and professional integrity.  Although he failed on all counts. He titled this  post “Disruptive Politics” and ended his post with the words “Singapore is our home – we must come together to build it, not destroy it”,

This harping on the theme of  Destructive and Constructive may ring a bell with  Singaporeans. It echoes the words used to smear the late JBJ  in a so-called letter of condolence. to my brother and I except that ‘demolish’ these day is  replaced with “destroy”.  In that letter the PM claimed that JBJ’s intentions were “to demolish the PAP and our system of government” which didn’t help to build up a “constructive opposition” .  Put aside the fact that the PAP of the Lee’ family seems to have some kind of grudge and vendetta and think about that allegation.  If the PAP’s system of government is to rubber stamp laws and policies with no real debate and to manage our taxpayer’s money with no real transparency and accountability then maybe it is a system that should be demolished.  Demolished to make room for a better system. You will also note how they throw the same accusations at Catherine Lim. In the PAP’ system any intellectually honest person who may want to join the conversation is branded as  being disruptive.


The opposite of constructive is actually unconstructive (not disruptive) and its simplest meaning is ‘unhelpful’ or “providing no assistance”Those of you who watched the video of Hri Kumar at the forum dodging a simple question from me will agree there could be no better definition of his behaviour.  Unhelpful. Providing no assistance.

Anyone who saw how his khaki manhandled that 76 yr old retired teacher in an attempt  to remove her physically from the conversation will see how disruptive he is.

I found the MP’s midnight post on Facebook and manner of writing to be histrionic and his content less than convincing. It was a strange way to behave. If Mr Kumar feels I have represented his arguments falsely then he needs to sue me for defamation in open court not go back and harp on the old Lee obsessions with using knuckle duster tactics on voices of dissent.

For my part I am not going to bring myself down to his level or use his behaviour, as a model.  There is nothing constructive about arguing in a, ‘he said/I said’ manner.

To stoop to name-calling is not behaviour worthy of a Member of Parliament either. But no matter, I feel very strongly that the more the PAP resort to calling me a ‘liar’ the closer I must have got to the truth.

Hri Kumar deals with several points where he says I have misquoted him. I never claimed to be giving a verbatim report. Mr Kumar was showcasing PAP policy and I dealt in general with the arguments advanced by the PAP at the forum. These arguments therefore also apply to Hri Kumar unless he operates an independent and separate micro-economy exclusively in Thompson-Toa Payoh.

There is nothing to rebut there as Hri Kumar fails to tell us what he did actually say.  to take but one example. Nobody is impressed by the SC’s argument that the never said “Singaporeans are “lightly taxed” but instead said “Singaporeans pay lower taxes”, and uses this as a reason to call me dishonest.

I stand firmly by my 8 (intellectually) dishonest things and furthermore  feel it is a vital component of the CPF debate.
To take another response,  I touched on CPF’s safe AAA rating. Hri Kumar announced in bold, “ I did not say that.”  So what did he say? He doesn’t tell us. What are the citizens to conclude? That CPF is not AAA rated and safe?

Repeatedly saying, I did not say that without further elucidation is the most unconstructive method  of presenting an argument that I have ever seen. People all over Singapore are wondering what he is insinuating.

Hri Kumar’s lack of response and the government’s response in general have been so unconstructive as to rattle citizens already suspicious of government’s motives in holding back their money.

Enough. The people have had their fill of this mixture of half truths, oversimplifications, falsehoods, disinformation and propaganda.

They do not want the minimum sum to be raised and they are not swallowing the government’s rationale for raising it.

In fact they do not see why the government needs to keep any of their money beyond 55. This is not a question of taxpayers having to foot the bill because people are living longer. The CPF is purely self-funded. What right does the government have to keep our money because some of us are living longer? What next?  The government takes all our salaries and gives us a weekly allowance based on some criteria like how likely we are to use it wisely.

Is it so surprising that the citizens would take that leap and begin to wonder if their money is just not there anymore?

The whole rationale for the PAP regime is prudent financial management. The citizens are beginning to lose trust in that claim.  They are losing trust in the PAP and its system of government. The people have every right to demand to know where their money is, how it is being used, where it is ending up and how much of it remains in the coffers.  An elected government has a duty and an obligation to be transparent over fiduciary management and to explain that in a manner that is accessible, easy to understand and demonstrable.

 There is a video of the forum that shows me asking questions about the Budget figures put up on a slide that Hri Kumar presented as part of the Forum.  It is clear that Hri Kumar avoids answering my question. He dodges it with the flippant remark that I should put up my own figures. I was an attendee at Hri Kumar’s forum not he an attendee at mine. The figures being questioned were those being presented by Hri Kumar on a slide on behalf of the government. If he were an intern of mine and was unable to answer a question on his own slide, in his own presentation, then I would be extremely concerned. Mr Kumar is a public servant.

Mr Kumar and his government, as with all governments, Must comply with their transparency obligations. Openness and transparency can only strengthen people’s trust in government. He has failed in his duty.

It is of great concern that Hri Kumar is attempting to paint genuine resident participation in the forum/farce as some kind of plot by organised agitators.   This suggests the PAP are still blind to their predicament.  It is clearly audible in the video that Hri Kumar refers to “my friends”. On his Facebook post he again refers to “we allowed him and his supporters in”. This is simply not true. I have irrefutable evidence and witnesses to say that I attended on my own. Those angry people at the forum were all unknown to me. If the PAP truly believe that all dissent at that forum was pre-organised by me in some kind of conspiracy or possible Marxist plot then they are in serious trouble indeed.

There was only one person really known to me. besides Ariffin who invited me and  this was Abdul Malik. Malik was previously with PKMS and SDP and had hit the headlines when he was arrested for online threats against the PAP and then later applied to become a member of the PAP. If anyone deserves the moniker “Disruptive”it is he and his invitation was personally condoned by Hri Kumar.

No Party members attended. No friends of mine attended. I attended not as a party member but independently, in my capacity as a Singaporean at the age when I would like to withdraw my CPF funds and therefore deeply interested in this topic.  It is common wherever I go that complete strangers will come up and want to shake my hand as was the case with the line of charming retired nurses. This seems to have unnerved Hri Kumar.

I feel sorry for Mr Kumar but he must accept that the CPF Minimum Sum is a national issue. Kumar and the political party that he represents need to understand that this objection to the raising of the Minimum Sum is not some secret conspiracy but a genuine and spontaneous public outcry.    I can understand that the PAP are rattled that the aims of civil society and political society are starting to intersect and that they may be dealing with a mass movement. People at that forum were very angry indeed and wanted their questions to be answered not brushed aside.


images (3)

The PM can be as unconstructive as he wishes and sue as many bloggers as he chooses but he will not be able to stop people asking the questions.  He has stepped into a media death spiral and if he is not careful he will find himself replaying a pivotal scene from the movie Spartacus. Already Singaporeans en masse have stepped forward to say, “I am Roy”,  just as the slaves stepped forward to say, ” I am Spartacus.” They have donated over S$100,000 to aid Roy to defend the PM’s defamation suit against him.

I am grounded in reality, economics and numbers. I am on record as saying that Roy got his assumptions and figures wrong. I have criticised Chris Balding for double counting and other mistakes.  They make leaps for which there is no evidence. However I am still an absolute supporter of Roy  because the crux of the matter is that we will all benefit from the answers. Coming from the world of finance and investment, I know only too well the risks that lack of transparency brings.

Like all of us I merely want to see a fairer and better Singapore, a free and dynamic Singapore and a Singapore that delivers prosperity to all not just a chosen few  and I believe this can be achieved in an entirely constructive manner. Hri Kumar titled his post “Disruptive Politics” as though asking questions is disruptive. In a robust democracy the voices of ordinary people are not seen as disruptive but as a signpost to a better way for all. It is wholly unconstructive to suppress dissent and wholly constructive to hold the government to account.

The PAP MUST open up the books to scrutiny. In the end it is a political question not an economic one and it will ultimately be decided at the next election.




Calming the flames. A light hearted response to Hri Kumar’s Facebook post.


Coffee Table

(Warning the following article contains satire. If you have experienced difficulty in the past digesting satire and parody then please consult a doctor before proceeding)

The debate seems to be getting a tad emotional, so I have responded with this light-hearted and comical piece which I hope will cool things down a little. Please enjoy. It is a parody of Hri Kumar’s Facebook post where he got a bit excited about my report on the CPF forum.  Let’s chill people and stick to the substantive issues.

“Mr Kenneth Jeyaretnam leader of The Reform Party who attended my forum that somebody else invited him to, has reported the following  in The Online Citizen.

Quote: “When I sat down in that room I looked at the enormous glass coffee table and thought, “Finally some transparency from the PAP.”

Mr Jeyaretnam is a liar.  That did not happen in the forum.  No coffee table or anyone or anything present provided Mr Jeyaretnam or any other attendee with any required transparency at any time. Opacity was the whole point of the forum and Mr Jeyaretnam lacks all credibility in  suggesting otherwise.

The coffee table was not there to provide any transparency from the PAP, by the PAP or with the PAP.  Any transparency it provided was purely coincidental and entirely unconnected to our policy of obfuscating the facts and replacing them with our belief system.

Mr Jeyaretnam is trying to destroy our nation by perverting our firmly held  beliefs in quadruped furniture as supports for empty coffee cups, disposable chop sticks and old tissues.

To suggest that the coffee table could provide the answer to how much is in the reserves or provide answers to gaps in the budget presentation or information on the returns of Temasek and GIC  is not a constructive method for conducting an accessorial-furniture-interface dialogue.

If we wanted to have an accessorial-furniture-interface dialogue I would go about it like this. I would start an Event page on Facebook,  open to all so that  Mr Jeyaretnam could be invited  to the Event by someone else and I would comment on that public page that non-residents were welcome to accept the invitation. Then for the avoidance of doubt, as the host, I would post on my own page that I was happy non-residents were also signing up.

If it were later discovered that Mr Jeyaretnam, who is a well-known glass coffee table provocateur, had followed these steps,   I would then publicly denounce Mr Jeyaretnam for  “Inviting Himself”.  I would smear him with the suggestion that his only intention in attending was to destroy the unique position that glass furniture holds in our robust democracy. But we are not having that dialogue so of course I won’t do anything like that.

Mr Jeyaretnam’s allegation that the coffee table provided transparency is very serious indeed

Mr Jeyaretnam’s allegation that the coffee table provided transparency is very serious indeed. It is as destructive as those people in other countries who take old furniture and up-cycle it into something useful and attractive. In fact as my video recording will demonstrate two people in that group roundly shouted at Mr Jeyaretnam in turns, entirely demolishing his arguments with their unsubstantiated stories of how much tax they had to pay to overseas for similar furniture products.

Nor did the PAP stuff that forum with PAP supporting furniture, whether a table of glass, plastic or that stuff that Ikea uses,  as Mr Jeyaretnam has so evilly insinuated.  Mr Jeyaretnam lacks all integrity and credibility.   That coffee table was a bona- fide resident of Thompson-Toa Payoh.  As such it was there of its own accord in its personal capacity.  It was a non-partisan coffee table, not even an activist coffee table or a civil society coffee table. It had NOT been put there in advance or polished up by any member of  Thompson-Toa Payoh CC.

It wasn’t me, it was Mr Jeyaretnam who stuffed that forum with supporting furniture.  In fact everyone there who questioned my presentation or disagreed with me or smiled at Mr Jeyaretnam instead of me or wanted to shake his hand not mine, was a personal friend of Mr Jeyaretnam and just pretending to be a resident.  It was ‘fixed’. There is no other reason they would have demanded the return of their CPF.

As it is my experience that many of you are childlike or otherwise “daft”, I will summarise.-“Mr Jeyaretnam was the only person at the forum seeking transparency not the coffee table.”

8 (Intellectually) Dishonest Things About Hri Kumar’s Honest Conversation

Screen Shot 2014-06-15 at 23.00.02Hri Kumar: “Any change to the CPF system would mean taking from one group and giving to another.”

Why is this Dishonest? This is the usual PAP trick of presenting their system as the most efficient one drawn up by technocrats and pretending there is no                  alternative. The variation they sometimes present is that there is an alternative but that it would cost significantly more.

If you want the technical jargon, the PAP is dumbing down a basic concept from neoclassical economics, the notion of Pareto optimality. Pareto optimality                        states that you cannot make one group of people better off without making another group worse off. Makes sense! Except Pareto optimality does not hold in                  an economy where there are unemployed resources or excessive government saving such as we have in Singapore.

Hri Kumar: “This is not about politics but about devising the best system in the interests of all Singaporeans

 Why is this dishonest? How can anything involving decisions that affect everybody and in particular the distribution of income not be political?  Again this                   is the old trick of pretending that they are technocrats with the best economic model not politicians whose loyalty to the survival of their Party the PAP is                             greater than their loyalty to the people.

Hri Kumar: “Letting us withdraw our CPF at 55 would lead us inevitably to squander our money (either at the casinos or on trips to Batam!). If this happened then other taxpayers would have to pick up the tab for supporting them.”

Why is this Dishonest?  Because I prefer to squander my money in Bintan. Seriously,  there is NO EVIDENCE to support the claim that most people would               not be able to manage their savings responsibly.

Most pension systems, particularly those praised by the Mercer Global Pension Index Report, such as Denmark, the Netherlands, Australia, and the UK allow                  beneficiaries to take some or all of the pension as a lump sum on reaching retirement age, or often at age 55 irrespective of the total value of pension assets.

Rather than squandering, the Global Entrepreneurship Monitor found that people in the age group 55-65 are more likely to start a new business in a high tech                  field than other age groups. So not allowing those reaching 55 to take part of their CPF in cash could be holding back the whole economy’s productive potential.

It does not necessarily follow that people squandering their CPF payouts would outweigh those investing them productively for better returns than CPF                               provides.

Hri Kumar: If there is greater welfare spending by the government then this would require higher taxes. (According to his analysis of our Budget there are no additional resources available because the PAP government is already spending as much as or more than it earns in terms of revenues after including the Net Investment Returns Contribution (NIRC) from Temasek, GIC and MAS.)

Why is this Dishonest? The Finance Minister’s way of presenting the Budget does not follow the IMF best practice framework. It does not include                                     investment income, realised and unrealised gains and losses on investments, and revenue from land sales. It allows only the NIRC, which is not transparent                       but supposedly represents up to 50% of the income from past reserves.

Despite much fanfare about how the NIRC of some $7-8 billion a year benefit Singaporeans, they are not actually spent on us, or only a small fraction of it is.                    The NIRC in fact go straight back into the reserves because the Finance Minister creates new funds. Last year the Finance Minister announced an $8 billion                         Pioneer Generation Package with a great deal of publicity about how he was helping our senior citizens. Yet as I said at the forum and have said previously, this                 is entirely bogus. It in fact amounts to smoke and mirrors.   Out of that supposed $8 billion only $240 million was seen in actual spending this year on the                           Pioneer Generation.

Reserves against spending in future years, which may or not happen, should not be included in current spending.
In fact, as I was quick to point out to Hri Kumar, the true surplus is some $30 billion a year or more, or enough to finance spending on the equivalent of four                     Pioneer Generation Packages in one year instead of being spread over twenty! (See video of my exchange with Hri Kumar on this subject and note the way he                      dodged the question. He said I could publish my figures on my website, dismissing them as not being reality. The joke is “my figures” were his figures.  I was                      taking them from the government’s own Monthly Digest of Statistics).

Hri Kumar Singaporeans are lightly taxed and get a better deal from their government compared to citizens of other countries with more generous welfare systems

Why is this dishonest? I argued that when we compared how those on median incomes in the UK, Europe and the US were taxed compared to the value of                   benefits received the citizens of those countries got a much better deal than Singaporeans on median incomes.

I was shouted down by several people who appeared to have been planted in the audience who claimed to have lived abroad and been highly taxed. I pointed                     out to one young man that as he was probably a high earner and without dependents when he lived in the UK he would have been more highly taxed than in                       Singapore. However if he had been a median to low-income earner with children he would have received substantial financial support that would have made                      him  a big net gainer from the tax and benefit system particularly when the value of free healthcare and education was included. This would be true for all the                    European countries. While he would receive less in benefits in the USA he would pay less tax.

In addition Singaporeans pay far higher prices for cars and many utility services as well as overpaying for leasehold property as a result of the government’s                       control over housing supply The PAP have also used rapid population growth as a tool to create an artificial housing bubb

In most advanced democratic countries, including the US, it is only the top 40% of the income distribution, and often only the top 20%, who pay more in tax                      than  the value of the benefits they receive. To claim otherwise is another dishonest PAP tactic.

Hri Kumar: The returns paid by the CPF to account holders compare favourably with those achieved by pension schemes in other countries.

Why is this Dishonest?  The Ordinary Account only pays 2.5% p.a. though the first $20,000 earns an additional 1%.

The bulk of CPF balances will be held in the Ordinary Account as only money from this account can be used for property purchases.

Most developed country pension funds have comfortably beaten this target over the last ten years, even though it includes the financial crisis of 2008. Many                      funds have achieved double-digit returns over this period. Also the interest rate differential between the USD and SGD has been very small or even negative                      over the last five years, meaning that the costs of hedging foreign currency returns back into SGD has been small.

So it is dishonest to say that the costs of hedging mean that SGD returns will necessarily be lower, at least for the last five years. Which leads to the next                                dishonesty.

Hri Kumar: Your CPF funds are absolutely safe because you are lending to the Government, which has a solid AAA rating. This justifies the low returns.

Why is this Dishonest? If the government is lending the money to GIC then your money is only as safe as the assets that GIC invests in. The PAP                                       government is using your money in the same way that banks used long-term capital before the financial crisis of 2008: to invest in risky assets. GIC would have                 to pay considerably more than 2.5 to 4% if it wanted to borrow directly from the market for such long periods (thirty to fifty years) and with no liquidity. You                   are not able to sell the funds locked up in your CPF like you would a securitized financial instrument. Currently the total assets of Singapore, including                                 Temasek, GIC, MAS and revenue from land sales are shown as around $800 billion in the Statement of Assets and Liabilities while borrowings are over $400                    billion. If markets were to fall by 50% there would be insufficient assets left to repay the borrowings.

The PAP government may say that there is no risk of default because your CPF account is in SGD. However this just means that you the taxpayer are                                        guaranteeing repayment of your own CPF money. The government could of course just print money and repay you but that would mean currency                                            depreciation, which would of course devalue your CPF savings

Singaporeans should not be fooled into thinking that their CPF is secure just because they are lending to the government. What is particularly dishonest is the                  huge conflict of interest between the government compelling you to lend it your money, using it to invest to make higher returns than it has to pay you and not                  passing those higher returns on to you. That is why we need to force CPF to compete directly with private sector pension managers, not in the half-hearted                        way that the CPF Investment Scheme works at present.

We should also probably merge CPF with GIC and pass its returns directly to account holders. This would be my preferred solution if it proves impossible to                       privatize GIC and distribute shares to Singaporeans.

Hri Kumar: HDB owners have achieved far higher returns from the appreciation in HDB prices than they could have achieved by investing in the stock market

Why is this Dishonest? Obviously for Singaporeans as a whole the HDB housing stock is not liquid so any attempt by HDB owners to cash in those returns                   en masse will just lead to a housing price collapse. The HDB price bubble has been driven, firstly, by the government’s control over land and its monopoly of                     housing supply. Secondly, by the PAP government’s deliberate policy of population increase, which underpins their whole economic model and will never cease               as long as the PAP remain in power. And lastly, by forcing people to save far more than they need and making property the principal asset class they can invest                 in.

But HDB is only 99-year leasehold, as I and several residents pointed out during the discussion session. I have warned repeatedly about the irrational way that                 HDB flats are currently priced which takes little account of the time to expiration of the lease. At some point, probably when the government finds it no longer                 profitable to do Selective Enbloc Redevelopment Schemes (SERS), Singaporeans will wake up to the fact that their leases will be worthless at expiry. There will               then be an HDB price collapse, particularly if there is a population growth slowdown.

We need honest alternatives and full transparency not this web of half-truths and lies to convince Singaporeans that a system that serves the ruling PAP elite is in their best interests.

My Opening Remarks on Defamation and Tyeisha’s Reading of RP’s Statement on CPF at the Return Our CPF Rally


My Opening Remarks before Reform Party’ s Statement on Truth, Transparency and CPF at Hong Lim Park on 7 June 2014

Good Afternoon Singaporeans!

I would like to begin by thanking the organisers of today’s event. It is great to see so many people from different backgrounds coming together in pursuit of a common objective.

We have an ex-Presidential candidate, several former candidates from political parties, civil society, human rights lawyers, and last, but not least, our brave young activists Roy Ngerng and Han Hui Hui.

In solidarity with these young activists, and especially Hui Hui, on whose slim 22-year-old shoulders the burden of organising this event has fallen, I have asked a member of our Youth Wing to deliver a short statement on CPF. But before I hand over to Tyeisha I would  like to say a few words about defamation.

As most of you will be aware, I have had up close and personal experience of defamation suits and the devastating effect they can have.

The latest round has already had a chilling effect.

To illustrate, we have been trying to get our new flyer printed for months now. I have lost count of the number of printers we have approached but the standard response has been that they are too scared to take on the job because they are worried about getting into trouble.

I will read out  one email the Chairman received from a printer he approached to do the job. The printer’s response was:

Sorry, my boss just told me that we are unable to accept this job), just to be safe not to be involved in any lawsuit.

She went on to say, in brackets:

(Well, since LHL like to anyhow sue people).

 However I’m not going to let them stop me from pursuing transparency. I will not let the threat of defamation suits prevent me from finding out the truth. If this government refuses to provide answers to our questions then its time to change the government!

So on that note I’ m going to hand over to  Tyeisha, a brave young woman just a few months short of her 17th birthday!

But before I do I will just mention that we have a walkabout tomorrow in the PM’s constituency at Ang Mo Kio. We are meeting at Block 127 at 10am. I hope many of you will be able to join us.


Thank you!

Temasek fails to persuade over connection with rise in CPF minimum sum

Ho Ching

In an extraordinary turn of events the State Times published a letter in its Forum page yesterday from Temasek Holdings. It seems that last Saturday ST published an article (“Ways to improve CPF”) which quoted an unnamed person as saying he suspected the Central Provident Fund Minimum Sum was raised “because Temasek or GIC lost money overseas”. ( See more at:

Temasek wrote their letter in response to that comment and presumably to deny that rumour. I say it is extraordinary because not only does it fail to prove that CPF monies do not help to finance, even indirectly, the government’s injections of capital into Temasek,  but a large part of the letter is  simply a setting out of current government CPF policy and an explanation of the PAP’s stated reasons for increasing the minimum sum. You know, the one about increased life expectancy blah blah.

The letter was written for Temasek by

Stephen Forshaw

Managing Director Strategic & Public Affairs


If you want to know more about Mr Forshaw here is the blurb from an interview he gave to – a site about Asian media and marketing.

Stephen Forshaw is the managing director of corporate affairs at one of Asia’s most powerful investment firms, Temasek Holdings. He is also managing director of Temasek’s operations in Australia and New Zealand, and president of the Institute of Public Relations of Singapore.

In this interview with Mumbrella Asia’s editor Robin Hicks, Forshaw – who was comms chief for Singapore Airlines and Microsoft before joining Temasek – talks about how corporate communications is changing, how brands should respond to disaster, and why he’s a big admirer of Shell.

” A big admirer of Shell?”  You should be panicking by now.

So now we have an Expat explaining our own government’s  CPF policy  to us. Who made him spokesperson for CPF and for the PAP? As he works for Temasek but is being paid to spell out the PAP’s justification for raising the minimum sum in CPF he only adds weight to the argument that the two (CPF and Temasek) are co-mingled. What will we have next? The Head of Standard Chartered ( in which Temask has a 20% stake) writing to ST to explain to us Singaporeans why women will have to start doing National Service? Or the head of Sheng Shiong writing  to tell us why GST is being raised?

So does Forshaw actually dispel the fear that the minimum sum has been raised because Temasek has lost money and the government needs to get the money from somewhere else?  No. This is what he does say.

“As for Temasek’s performance, we have more than doubled our portfolio value since 2002, excluding any net new capital.

As of our last reporting date of March 31 last year, returns to Temasek for newer investments made since 2002, when we started investing directly in a growing Asia, have exceeded returns since 2002 for older investments made prior to 2002.”

So, that’s as clear as mud. It seems Temasek are saying that positions put on since 2002 have done better in the 11 or so years up to 31 March 2013 than those before 2002 but again doesn’t say whether this is from 1974 up to 2002 or  for example, 1992- 2002.

Is the  date 2002 significant?  Well it could be that 2002 has been chosen for this division of performance into pre and post 2002  because it is the  year Mrs PM took over as head of Temasek. (I’ve said before that it is hugely embarrassing and a conflict of interest to have the PM’s wife head up our sovereign wealth fund.)

But I believe 2002 was chosen because that date was during the post-9/11 recession and at the lowest point for the markets before the  Great Recession of 2008) so of course anything after that is likely to look good, by comparison

Temasek doesn’t provide a link to the balance sheets or any other data. Critically for me or anyone wanting to study their performance, Forshaw doesn’t provide information on the valuation criteria that Temasek uses. I am particularly interested  in their unlisted positions. Again it comes down to transparency and public listing would achieve that.

Still this divide into older badly performing stock and the better performance post 2002 is worrying. If I ran a fund in which all the longer term positions were performing worse than the newer ones, I would expect my investors to be concerned. Consistency is everything.

Of course it begs the question of why aren’t the poorer, older performers culled? Or is there another explanation for recent out performance such as recession recovery or another more sinister explanation or even a bubble waiting to burst.

Actually I have already provided an answer for part of this previously when I highlighted the Olam takeover scandal. That kind of manoeuver allowed Temasek to put the complete purchase on the books as a profit because they had owned shares before what is widely believed to have been a leak in the takeover process, that pushed the share price up enormously. Other Assets such as Changi Airport were transferred to Temasek for a 10th of their true market value. Instant profit.

Go back to the quote again and see that Forshaw tells us “As for Temasek’s performance, we have more than doubled our portfolio value since 2002, excluding any net new capital.

Let’s look at that “new capital“. That is money that the government injects into Temasek from time to time.  The government is able to inject money or assets into Temasek because of the  constant stream of new investment it receives from CPF. So Temasek is getting CPF money indirectly. Temasek’s answer to the public via the ST forum is economical with the truth to say the least.  CPF may be invested elsewhere and not directly into Temasek or vice -versa but it all comes from the same pot which is government capital or surpluses.  As the CPF monies are available for the government to invest elsewhere, it frees up capital to inject into Temasek.

Let’s look at that doubling of the portfolio value since 2002. The S&P 500, the Hang Seng and most global stick indices have doubled over the same period since the low of 2002. So in other words if you had been investing in an index Fund and gone on holiday since 2002 you would have done as well as Temasek. Had Temasek done nothing in that time, the simple fact of the market rising would have created the same doubling over that period. Bravo!

Temasek Holdings writes that it is not investing or managing CPF money. This is simply sophistry. It is half a lie and wholly economical with the truth.   Money that the government receives from CPF savings goes to GIC and the profits that GIC earns investing  those funds  swells government surpluses enabling the government to  inject more capital into Temasek. Furthermore Temasek’s own internal rates of return that it is supposed to earn on new  investment will no doubt be related to CPF interest rates. Like everything else we have no disclosure on this but trust me, this is how it is done.

The question is unanswered. Why is the Central Provident Fund Minimum Sum being raised ?

CPF-Why We Must Keep Up the Pressure

Today the Roy vs PM defamation saga continues as the PM turns down Roy’s offer of $5,000 in damages as derisory. Roy has now joined a small circle of bloggers who have received that letter from one of Singapore’s busy defamation lawyers. Like his fellow bloggers before him, Alex and Vincent, he apologised and retracted his article. Which is a pity  – and I’ll come on to that later.

For myself, I know only too well the terrible impact of defamation suits and the associated stress. I grew up with the effects of it and it is safe to say it coloured the rest of my life. My father was almost destroyed by it, my mother was.
I have never received any letter for any blog article I’ve written (not least because they are true and without malice) But I’ve had three related incidents, which I will briefly recount.

  1. I wrote a letter about the PAP’s use of defamation suits as a tool to silence critics, which was published in the WSJ. A civil servant, paid by you the taxpayer, wrote a letter to WSJ refuting me on behalf of the PAP but unfortunately got his facts wrong. That I was correct and MICA wrong was pointed out by bloggers here and by Subra a lecturer in law. Despite the letter from our government, WSJ didn’t remove or edit my letter and left it up online and I also left it up here on my blog where it can still be seen.
  2. TRE asked my permission to remove the word ‘cronies’ from an article of mine they wanted to publish. It wasn’t even cronyism just cronies which can simply mean group of friends but I didn’t have any strong feelings about it either way. For me it’s always been the economic truth that matters not the emotional content of the language and removing or changing the odd word is fine if it doesn’t change my meaning.
  3. Both TRE and TOC through individual editors had a waiver from me, which gave them permission to publish my articles in whole anytime they wanted.  TOC published an article of mine called, “Where Have Our Reserves Gone?”  The subject of that article is obvious and it can be found on the blog . A few days later I was surprised to see that the story had disappeared. I phoned the editor who gave me an incredible tale that involved a lawyer form Temasek calling an editor from TOC and advising him that they would be taking action for defamation against me so TOC had pulled it.I was angry that I hadn’t been consulted and that the story had been removed without giving me a chance to defend myself. Mostly I was angry at the suggestion that I could be sued for defamation as everything I had written in that article was true. I would have welcomed that letter alleging defamation from Temasek’s lawyer. If order to sue me Temasek would need to prove in Court that they had been defamed. In order to do that they would need to produce the missing figures and yes, even the full amount of the reserves.  What a fantastic opportunity that would be! TOC couldn’t substantiate their story such as with the the name of the editor or the lawyer. Later those tales of Remy dining with Shanmugam who asked him to remove a defamatory article by a foreign journalist emerged and so it became plausible that a voice in an ear had got my non-defamatory article removed.

These examples show how actual defamation suits, the fear of defamation and even the mere whisper of defamation control bloggers and alternative news sources without  requiring the letter from the lawyer.

I cannot blame Roy for his decision to retract and apologise and offer damages.  However (probably selfishly) I feel it is extremely unfortunate that he apologised so quickly.  I felt he had at least an arguable case that he was not accusing the PM of personally misappropriating funds but arguing that the way CPF funds are invested is opaque.

He could have offered to replace the term ‘syphoning off ‘with ‘invested in’ or ‘re-invested’. CHC haven’t been found guilty of misappropriating funds and claim to have invested them, however bizarrely, for the church’s good so until that jury is out (and they are presumed innocent meanwhile) I don’t see why that is a damaging comparison.

I for one would have liked to see this in Court. I had been thinking of launching a Court action myself but unfortunately the Locus Standii ruling on the IMF case has successfully halted that kind of action.  But a defamation Suit against Roy in open court would have finally given us Singaporeans some clarification on the following.

  • How the government is actually investing our CPF funds
  • Where it is going.
  • What the real returns are.
  • Why there are discrepancies between the Statements of Assets and Liabilities and the government’s claimed returns.

By forcing Roy to take down related posts, which made no personal allegations, the PM is scaring off other bloggers and activists from asking legitimate questions about the transparency or lack thereof of the government’s management and about the real returns of Temasek and GIC.

If the temperature of debate was already below freezing, the PM’s actions have reduced it to absolute zero. Yesterday we had Bertha Henson saying that we must not disrespect our leaders when they engage in debate.  She is wrong.  In any case there’s no debate with our leaders who only understand the monologue. But democracy needs more than a Dialogue.
Leaders in a democracy are required to be open and transparent and fully accountable. As public figures they must expect to be held up to scrutiny and their actions questioned.  They must also expect to be lampooned and called names and to be victims of hyperbole.
Of course they should not be accused of misappropriating money from CPF when there is no evidence of this and it is a very serious charge, which raises questions about the integrity of the individuals concerned. But if they’re not transparent what do they expect?

It is very unfortunate indeed that this has turned into a media circus. We started with defamation and freedom of expression, moved on to strong arm tactics and bullying and now we’re at, Roy is poor the PM is rich , what damage has the PM suffered and what exactly does derisory mean? (I work every week with homeless stateless, physically and mentally challenged Singaporeans. $5,000 will buy 4 mobility scooters!)

In all this circus I hope we won’t allow the trapeze artists to distract us from the elephant on the ground.  I am afraid to say there are still plenty of reasons to be concerned about the lack of information provided on the performance of Temasek and GIC.

As citizens we are entitled to receive answers to one simple question. Why, if the government’s annual Statement of Assets and Liabilities is correct, are the returns from GIC so low? I repeat what I’ve stated before, that there are three options:


  1. The Statement of Assets and Liabilities is incorrect and that there are hidden assets which are not show on the balance sheet
  2. The funds invested in GIC have been mismanaged and returns have been extremely low.
  3. There has been fraud.

In so doing I was making no allegations and pointing no fingers, merely listing different possibilities. Of course even if it was a question of 2 above, and returns had been low due to poor management , then this would call into question the competency of those who had been appointed to run GIC. As the PM is the chairman of GIC he would ultimately be responsible for those returns.

In addition his wife is CEO of Temasek, which I have called a glaring conflict of interest.  I have questioned implicit government subsidies to Temasek including the transfer of assets at way below their real value, including SingTel, Singapore Airlines, DBS Bank, and Changi Airport Group, which was transferred at $3 billion.  The PAP government refuses to disclose what the remuneration of the top management of Temasek is. However if it is linked to Temasek’s returns, and those returns have been artificially boosted through government subsidies or dubious accounting practices, then that would be serious cause for concern.

I have asked these questions in a number of articles on my blog but so far have not been sued for defamation.  Again, If I was sued I would not apologise but would defend my position in court. As part of my defence I would ask the government to produce evidence to disprove what I had said.

All of us who manage money whether for a Charity, a Political party, client monies or the citizens who elected us, have a duty not just to protect the money but to protect our own integrity by following best financial procedures. The best defence against allegations of impropriety or even being asked questions about the money is to keep very clear records and to be completely open and transparent. The PM has an easy solution to questions over his government’s management of our money and that is to provide us with the figures and to answer the questions that have been put to him. Let him silence Roy with facts and figures if he can, rather than with a Lawyer’s letter.

It is disingenuous of Shanmugam to claim that criticism of the government needs to be backed up with facts. The PAP government does not want to reveal the information we are seeking. How are we supposed to know the facts when we have no freedom of information rights and have a government that makes every effort to hide the facts from the citizens or to deliberately misrepresent or distort them so as to present a deceptively flattering picture?

Meanwhile we must not stop asking questions. Back in 2009 I added the strap line to the RP website, “Transparency + Accountability = Democracy.”  Nowadays I might say, “ Transparency + Accountability proves Integrity.”  It is high time that we all had the courage to stand up to the PM and demand that he throw open the books for inspection.





Should the PM Resign?

dogshowlRecently a petition has been circulated online calling on the PM to resign over the remarks he made at a community event in AMK.

The particularly offensive lines were, “Singaporeans, new arrivals,  people who are on permanent  residence here, people who are on employment pass here, all participating in one big Singapore family…So we feel that this is a place which is special, which belongs to all of us and where we all celebrate one another’s festivals and happy events together.”  

These lines  seemed to imply that Singapore belonged to everyone living here, including expat bankers, tax dodging billionaires, even abused cheap foreign labour, rather than to the citizens whose menfolk have to give up a considerable portion of their lifetime earnings to save the PAP the cost of employing a professional army and police force. 

I and the Reform team will be visiting AMK this Saturday  so if you were angered  by these words we hope you are able to come and join us.

Strangely in this last week I have been astonished to meet two stateless people here in Singapore. By the PM’s definition Singapore belongs to them as they have been living here longer than the state has existed. It is surely special when everyone else can belong but if you are of minority descent, you can be stateless.

While at one level his remarks might appear innocuous and merely aimed at fostering goodwill between Singaporeans and our huge expat population, on another they are a kind of Freudian slip giving a clue to how the PAP really think about ordinary Singaporeans. It seems I have a psychic channel into their heads or at the least the PM’s speech writer because I had warned people about his mindset only last week. As I said in my article of 2 May, “When Immigration Stops Being The Elephant in The Room”,

“To the PAP, Singaporeans have no value in themselves. The only value is in the real estate and then only because of Singapore’s strategic position. The PAP’s ideal is to dispense with citizens altogether and just have a disenfranchised global population who come to Singapore to work and then go home or get deported without ever being a burden on State services.”

There’s a speech writer out there who needs firing. Where has he been living. or is he just another Foreign Talent oblivious to the feeling on the ground.

The petition is aiming for  100,000 signatures or roughly 5% of the electorate calling on the PM to resign and hold fresh elections. Unfortunately even with that number it would have no weight given our Constitution and system of government.

Recall petitions are widely used at the state level in the US to force elected officials to resign and submit themselves to fresh elections. The most famous example of their use was in 2003 in California where an unpopular Governor, Gray Davis, was forced to resign and submit to a recall election. He lost and was replaced by Arnold Schwarzenegger.

 I agree wholeheartedly with the idea that the people should be able to recall elected officials and force them to submit to fresh elections. This should be part of a wider extension of democracy, which is becoming ever easier as nearly everyone is online. As in the US, petitions to repeal or initiate legislation should be possible as well as recalls.

In fact as leader of the Reform Party I penned a call  (see link) for a constitutional amendment to allow the holding of a referendum on the  unpopular Population White Paper in a press release of February 10th last year:

I quote from that release:

The Reform Party therefore calls for a constitutional amendment to mandate the holding of a referendum if, say, 5% of the electorate signed a petition calling for it.  This could be similar to the practice in many US states. In California this allows the people to initiate laws or to repeal unpopular ones as well as the right to approve constitutional amendments.

Further debate would be needed. Recalls should probably require a much higher percentage of the electorate to be successful. In California it was 12% . Some US states require there to be allegations of misconduct which can be challenged legally before there can be a recall petition. It is unlikely therefore that they would be successful here where our courts have ruled that the citizens cannot challenge the legality of government actions unless they can prove they have suffered special damage, in the case of my action to have the IMF loan commitment declared unconstitutional.

So without any mechanism the petition is just another flight of fantasy and will have as much effect on the PAP and PM Lee as dogs howling at the moon. How can we have such advanced democratic machinery when we lack even the fundamental building blocks of a functioning democracy?  Singaporeans may be rightly angry with the PM but there is a massive  disconnect that prevents that anger  on the ground from bringing about change.

One of the causes is  the mistaken but still potent fear that people have, particularly older voters, that their vote is not secret. MARUAH estimated that about 10% of Singaporeans in the last election feared that their vote was not secret. I firmly believe that the government cannot find out how you voted. However that does not stop the PAP from playing on those fears and threatening the withholding of state resources such as HDB upgrading if the voters in a particular constituency vote against them. The surprising thing is that the PAP continue to use the same threats today as they used to illegally sway the election at Cheng San in 1997 though they have diminishing power to scare the electorate. It is for this reason that I have repeatedly called for Singaporeans to be given the freehold of their HDBs and for government control over the economy to be reduced through the privatization of Temasek and GIC.

Secondly there is the whole system of GRCs that was put in place. I have written on this subject many times before. The deliberate creation of ever larger GRCs together with the raising of election deposits to levels where only the elite could stand for election acted as a significant deterrent to having all seats contested or bringing in new blood and new ideas.

In fact in 2001 the PAP were returned to power on Nomination Day before elections were even held. while in 2006 they gained nearly half the seats unopposed. Even in 2011, where elections took place in all but one the GRC ( thank you Ng Teck Siong), the system magnified the winner-takes-all nature of the First-Past-The-Post (FPTP) method of election to such an extent that again the PAP ended up with over 90% of the seats though they got only 60% of the vote.

The major symptom of this disconnect is that people will just put up with so much.  Austerity, a lack of universal health care and free education, no true property ownership, a government which year after year makes massive surpluses but refuses to account for its performance or to share them with the people.  All this seems to come from being brainwashed by a PAP-controlled media  and education system, as well as the pressure to conform during NS, into believing mistakenly that Singaporeans are much better off than citizens of other freer countries. My father told them to wake up from their slumbers and cast off their chains. But even if they were to do that the means to translate that into more representation in Parliament and a change of government have been deliberately weakened.

So the writers of this petition are kidding themselves if they think the PAP will introduce any form of direct democracy. They have gerrymandered and manipulated the electoral process to thwart the peoples’ will. They have disenfranchised us to such an extent that the PM really believes his constituency is some kind of global expatriate rather than the people of Singapore. He prefers the company of CEOs of MNCs and global pundits to Singaporeans even though it appears he finds it difficult to string an intelligent sentence together if he is not being cosseted by his well-paid PR minders.

Forget recalls!  I would like to see a petition penned by all the alternative parties in a rare sign of solidarity. That would get some signatures. Lets start with some of the most basic requirements for democracy:

  • A free media. This can only be brought about through the repeal of the Newspapers and Printing Presses Act and the Broadcasting Act. This would encompass the scrapping of the recent regulations by MDA to bring online news sites under its control.
  • The removal of the Elections Department from the PMO and the establishment of an independent Elections Commission
  • The reduction in GRC size to no bigger than three with at least half the constituencies being single-member once again.
  • An end to persecution and harassment of Opposition parties and individuals through inequitable restrictions on campaigning and fund raising as well as the use of defamation laws to silence dissent

Without pushing for these basic reforms first, a call for the PM to resign and hold fresh elections is just a fruitless and frivolous exercise.

Some have criticised the petition as disrespectful to the PM. But how can we respect him when his mandate has never properly been tested? He got into Parliament on a walkover in 1991. Until 2006 his GRC was not contested. Then the WP sent a team of Young Guns there but did very little campaigning. In 2011 he only had to face a last-minute scratch team of youngsters from the Reform Party. His is the only remaining six-member GRC.  If he wants our respect he should abolish the restrictions on free and fair elections. In addition he should come out and contest an election in an SMC.

Unfortunately there is no chance that the PAP will ever willingly abolish the restrictions that tilt the playing field so much in their favour.  The PM can and will continue to laugh at us from behind the walls of his GRC while  impressing foreign pundits and MNCs  that he has found a new economic model to disenfranchise his citizens in favour of a new global elite. Until Singaporeans wake up from their suicidal resignation, the dogs will continue howling at the moon.

When immigration stops being the elephant in the room and becomes the great white shark in your parliament.

Elephant-in-the-roomOn April 23 the Straits Times (ST) hosted a roundtable to sit around and discuss a survey of people’s perceptions of key policies, three years after the 2011 General Election. The panelists were the usual PAP-approved pundits.  A safe group carefully selected to be more interested in the con than the conversation.

One of this panel was Eugene Tan, who is now seeking a second term in that affront to parliamentary sovereignty the NMP position. Even though I would never be invited and my alternative model is never represented in the media or in forums, I noted that my ideas are very much NOT non-ideas.  I have seen them enter the mainstream of Singaporean political thinking to such an extent that on this occasion Eugene Tan could not avoid paraphrasing me. He even used  a title and the ideas from an article I wrote a few years back.  This is what Eugene Tan said:

I had some issues with how immigration came out in the survey, the issue was ranked rather lowly in terms of the different concerns. I look at immigration as the mother of all issues in our political landscape. You can trace all the different complaints about transport, housing, cost of living, national identity very much to immigration. So I think like in 2011 GE, immigration is a dog that didn’t bark in the survey.

 Immigration is the elephant in the room, it will be very much in the hearts and minds of voters and candidates in the next GE.”

My article, published in December 2011, was entitled “Immigration is the Elephant in the Room”.   I was prompted to write it because of an article I saw  in the ST on rising inequality in Singapore. While two economists in that article rightly brought up the subject of stagnation in real incomes for the majority and absolute decline for those in the bottom 20%, they could not bring themselves to mention the main cause. The main cause of rising inequality which I highlighted – is the fact that the PAP government implemented an open-door foreign worker policy with no minimum wage or protections for Singaporean workers.  Here’s a quote from that article which you have probably all forgotten by now.

However they fail to mention the elephant in the room, which is immigration policy or the lack thereof. Undoubtedly the government’s determination to allow our wages to be determined by those in the poorest economies in Asia has played a major part in depressing real wages, particularly for the lower-skilled workers. Not only was there very little restriction on foreign labour, and no restriction at all for those earning more than $2,500 a month, but there appears to have been lax enforcement of what rules there were and ample loopholes. This has been demonstrated by a recent case where an employer was jailed for putting phantom Singaporean workers on his payroll to allow him to bring in more foreign Work Permit holders.

 Whether we have a minimum wage, or a cap on foreign labour (which amounts to the same thing), this is The Elephant in The Room whose emissions are causing the inequality. Unfortunately, we risk the Elephant turning into a Raging Bull if the xenophobic ranting in cyberspace is anything to go by. What we need now, and urgently, is some serious and open and reasoned debate on the future of Singapore.”

Not only does Eugene seem to be channeling me in this recent discussion but my predictions about the raging Bull make it seem as though I had a time machine.

Since I wrote that article the Elephant in the Room has indeed metamorphosed into the Raging Bull. Witness the current declarations of war ( metaphorical) over the Philippines Independence Day Celebrations.  Sadly kicking those weaker than you is not an appropriate way for Singaporeans to vent their anger with the PAP government’s policies. Not only is it not appropriate it is also plays into the PAP’s hands as it allows the government to paint those  people as xenophobes and continue to divide and rule. Fanning the flames of anger and hatred will probably ensure more seats for the PAP in the next GE.

Raging BullSomeone posted a marvelous quote on the Facebook tribute page for my late father recently. ” If your Dream starts to fade,wake up!”   Well the 10% of the elites in Singapore are fully awake and benefitting just as the  bottom 20% are fully awake and unable to dream due to suffering  but when will everyone else wake up?. Will they wait for that fading dream to become a full-blown nightmare?

The problem is simple. The PAP government knows only one economic model. That model which I first pointed out and which these days is explained back to me by taxi drivers is this. It is a sausage making machine.  You feed in additional inputs of labour at one end of the sausage machine to produce additional units of output, or GDP, at the other. In between there is no rise in underlying productivity. Despite a Budget devoted to productivity in 2010 and Tharman’s promise to raise productivity growth to 2-3% per annum and real incomes by 30% by 2020,the facts show that productivity growth was -2% in 2011 and 0% in 2012. That’s a clear sign for you. Wake up!

A Nobel Prize-winning economist Paul Krugman exposed this same model in the 1990s when he debunked the Asian economic miracle and that led to the downfall of the Soviet Union in 1990. This is a basic model of economic development that has been around since 1954 when Arthur Lewis first propounded it (“Economic Development with Unlimited Supplies of Labour”). Sooner or later this model just runs out of steam or collapses because there is no innovation. The PAP have just put off  the day of reckoning by opening the floodgates to cheaper and cheaper labour supplies from the developing countries of Asia.

Eugene Tan seems to be saying that the PAP have only to solve the Immigration issue to win back the voters.  I wonder if that is true? But even if that was the easy solution to another 50 years of PAP rule, it is not that simple. Firstly, I don’t think PAP can abandon their model. It would remove their raison d’être. Not only that, but it would lead to a severe economic slump at least in the short-term.  The answer is surely to change the economic model by putting a better one in place and that would mean removing or fatally wounding the PAP government.

The unfettered population issue is not just about crowding on the SMRT. Everything in Singapore, from ceaseless construction activity to inflating property prices, is dependent on continued population growth. That growth through immigration depresses wages and increases returns on investment. Without continued population inflows, the whole fake bubble of inflated values for HDB leaseholds will collapse. It will no longer be economically viable to regularly tear down old HDB blocks to put bigger and taller ones in a smaller area of space. The illusion of ever rising prosperity for HDB owners will be destroyed. Already Khaw Boon Wan is warning you that SERS will only happen where it is profitable for the government.

The real reason you need to wake up dear readers is this. To the PAP, Singaporeans have no value in themselves. The only value is in the real estate and then only because of Singapore’s strategic position. The PAP’s ideal is to dispense with citizens altogether and just have a disenfranchised global population who come to Singapore to work and then go home or get deported without ever being a burden on State services.

The PAP government is the principal owner of land and capital. By transferring resources from us the workers to themselves, facilitated by the role of immigration in depressing wages and pushing up land prices, that wealth stays out of our hands. Make no mistake, in the last 50 years that wealth could have been used to develop a strong middle, each generation better off than the one before, free universal education, joined up health care, a professional paid army, benefits for the most needy.
Instead our sick are housed in tents like the wounded in a war zone and that wealth disappears abroad into unaccountable entities controlled by Temasek and GIC. Every year Tharman makes the pretence that part of the returns is recycled back to us but as I have exposed in 2012, this is an accounting sham (see “Smoke and Mirrors in the Government’s Accounts“)

Any attempt by Singaporeans to gain any information about the true level of assets and investment returns,  as well as the remuneration of the PM’s wife and relatives who work for these entities, is met with the arrogant and contemptuous rebuff that the disclosure of such information is not in the public interest.I should know having taken the government to court in an effort to get them to live up to their obligations of due process and accountability.

Great WhiteSo immigration is not the elephant in the room everyone is trying not to mention.  It is  the doomed policy of a Great White Shark. The shark is a dangerous, efficient but fairly primitive organism that can only survive if it continues to keep moving and water flowing over its gills. If it stays still it drowns.  In the same way the PAP must continue to keep our population growing rapidly as it is the only way they know to create growth. This leads to the myth that  somehow the laws of Economics don’t apply to the PAP and that they alone have invented an economic miracle.

The only miracle here is that so many blindly believe in this myth that the PAP have fabricated.  I’ll end with an uplifting quote from the song Mac the Knife in the Threepenny Opera by Kurt and Weil.

“Oh the shark babe has such pretty teeth, dear. And he shows them pearly white.”  




A Fresh Round of Wayang about Competition?



StarhubSingapore Monopoly Then and NowSetWidth360-Singtel-logoToday the Infocomm Development Authority  (IDA) announced that they were looking to increase competition in the mobile sector by expanding the role of Mobile Virtual Network Operators (MVNO).

To those who are not familiar with the jargon of the mobile industry, MVNOs, as the name suggests, do not operate their own networks but instead lease spectrum from other operators and piggy-back on their networks. They then attract customers by offering slightly cheaper price plans than the main operators. They are wholly dependent on the main operators for maintenance of the network.  Service standards are thus usually considerably worse. The main operators will prioritize their own customers in the event of any breakdown.  It can sometimes take weeks to get services restored as I discovered to my cost when using a MVNO for my broadband service in the UK many years ago.

At present there are up to six small MVNOs in Singapore mainly serving foreign workers with a collective market share of less than 1%. Virgin, the UK company controlled by Richard Branson, tried to enter the market as a MVNO in 2001 but quickly gave up, presumably because it was unable to get attractive terms for its leased spectrum.

This may have had something to do with the fact that all the mobile companies, like all the telecoms companies and indeed most of the large corporations serving the domestic market, are controlled by the government through the octopus-like tentacles of Temasek.

As I have long argued, extensive domestic monopolies and cartels, the majority of which lead back to the government, mean that Singaporeans pay more for many goods and services than citizens of other countries and often suffer from a lack of innovation. This is particularly true in mobiles. Mobile plans in Singapore require you to buy a mobile separately. Mobile operators in other countries often offer handsets and include the cost of this in the price plans.  Surprisingly Singaporeans often pay more for their plans without a handset than residents of the UK and the US do for mobile plans that include a new handset.

We also lag behind in innovation. While Singapore may not look bad in a comparison of international broadband speeds we have to consider that we are just a city and a fair comparison would be with speeds in the major cities. The actual broadband speeds, in my experience of Starhub’s network, were nothing like the advertised ones, because it was shared with many users. While SingTel is now rolling out  plans with advertised speeds of up to 500 Mbps, this compares with speeds in major US  cities offered by Google and others of up to 1,000Mbps. And the major US mobile operators rolled 4G networks a long time before Singapore. I also read today that the regulator had to intervene to stop the state-owned mobile companies from charging their customers for what should be a free upgrade to the 4G network. 4G was rolled out in the UK last year so we are lagging behind.

This is what I wrote back in December 2011,  in ” Another Round of Monopoly Anyone” when there was the last round of wayang over competition:

In Parliament on Monday the Government announced changes to the Telecommunications Act designed to give them powers to require a telecoms company, or Telco, to divest its assets and business to a separate entity should it be found to be engaging in anti-competitive behaviour. Also the government now has the power to take over any network or services if it is in the National or public interest to do so.

 According to the Minister for Information, Communications and the Arts, Dr. Yaacob Ibrahim, the Government is committed to ensuring fair competition ‘because ultimately we believe that this will drive prices to an affordable level for all Singaporeans’. This sounds suspiciously similar to what I have always said. Namely, that competition is as vital in business as it is in politics. In particular I was sceptical not so far back, of the Worker’s Party plans for  nationalising the transport industry when I felt that competition (with a strong neutral regulator ) would always be in the best interests of the consumer. My caveat was that I always point out that what we think of as privatised here in Singapore is not really that privatised.

Are these proposed changes to the Telecommunications Act anything other than a public relations charade designed to give the appearance of opening up the domestic economy to more competition?  In fact they do nothing to reduce the power of government-owned or controlled cartels which dominate many of the key consumer sectors of the economy?

 Who, after all, is the ultimate owner of the three Telcos operating in Singapore? SingTel, though listed, is majority-owned by Temasek. As is Starhub, in which Temasek has an interest, either directly or indirectly, of about 57%. Even the third player, M1, has Keppel Telecoms (an 80% owned subsidiary of Keppel Corporation in which Temasek holds 22%) and SPH Multimedia (part of Mediacorp) as holders of a third of its shares. The Malaysian state Telco, Axiata, owns a further 20%. In any case, a large number of the directors and senior managers at all three Telcos are either MPs, or have a Civil Service or GLC background. Since the Government clearly controls the telecoms industry already, the need for extra powers to nationalize it in the public interest would appear to be unnecessary.

 Without the sale of Temasek’s stakes in at least one of the dominant mobile operators (SingTel or Starhub) here to the private sector, it is difficult to see how we are going to get a more competitive environment, and thus lower costs and greater innovation. Monopolists’ desire to protect their previous investments is going to be a big factor inhibiting their take up of new technologies. Fiddling at the edges with weak players, like MVNOs, who will remain dependent on the regulator to ensure they get treated fairly, is not going to change that.

We are moving globally to a world where quantum leaps in technology and productivity are reducing marginal costs to zero in many industries.  While this might seem a natural recipe for monopoly,  technology is changing so rapidly in many industries that the state capitalist model that Singapore espouses risks being left trailing in the dust. Our state-owned companies may try to hold back innovation and restrict consumer choice at the PAP’s behest to make sure they control the free flow of information and continue to reap monopoly profits. However technology will invariably find a work-around.

One example is the fight unfolding at the moment in the US where a tiny start-up, Aereo, whose business model allows consumers to by-pass the established networks and cable companies and watch TV over the internet, is being challenged in the Supreme Court by the same companies.

I have long advocated a radical dismantling of the state capitalist model and a strengthening of competition regulation if we are to encourage innovation. Mobile telecoms is just one area where government monopoly does not serve consumers’ interests nor our ability to compete globally in new technology industries.

An Familiar Tale of An Ordinary Singaporean and His Problems with An Unsympathetic HDB Bureaucracy

Screen Shot 2014-04-21 at 22.11.27Recently someone posted to my timeline on Facebook an account of another person who claimed to have received unsympathetic treatment from HDB. I have inserted a screenshot of the Facebook post above. The post received nearly 5,000 likes very quickly. After reading about it I invited Mr S to come and see me at the Reform Party office. He came down to see me yesterday afternoon accompanied by a neighbour, Mina, who has been assisting him in his  brush with the HDB and CPF bureaucracy.

I will summarise his case briefly. Mr S was forced to sell his HDB flat in May 2012 because of debt problems.  He is married with three children, two girls aged 19 and 16 and a young boy. Since he sold his HDB flat he has been living with his sister and her husband in their four-room flat. However his sister’s family now need the space back. Very sadly Mr S has recently been diagnosed with late-stage cancer and is no longer able to work. Previously he had his own business but I understand it was closed down due to insolvency. He is currently receiving $1,000 a month from ComCare, which is insufficient to cover his and his family’s needs.

However, despite his lack of liquid assets or income, Mr S has over $200,000 tied up in his CPF Ordinary and Special Accounts.  He applied for a BTO three-room flat last year and was successful in getting one. He put down a $1,000 deposit, which did not come from his CPF savings. Unfortunately the new flat will not be available till 2017 . He needs to find new accommodation immediately. He returned to HDB in November 2013 and requested to be put on the HDB subsidised rental scheme, as he cannot afford to rent a property on the open market. Mr S claims that the HDB rental officer told him that he could not be placed in the scheme, as he had already been successful in applying to buy a new flat. He then went and cancelled his application and forfeited his $1,000 deposit.  However, after cancelling his application, he was told that he was ineligible as he had sold his former HDB flat less than 30 months before and furthermore his level of CPF savings was too high. HDB are denying that they gave him this advice and that they told him from the outset that he would not qualify for a rental flat.

Mr S had ended up in the Uniquely Singaporean trap of having substantial savings in his CPF but being unable to use any of it. As the PAP government has broken its promises and unilaterally and repeatedly tightened the rules on withdrawal, introducing first the Minimum Sum Scheme and now replacing that with CPF Life, it really looked as though Mr S and his family would end up homeless. The letter from HDB, which I reproduce here (with the names redacted), seemed to suggest that it was an acceptable solution for Mr S to send all his children to India while he and his wife rented a room.


IMG_0026Mr S and Mina told me that HDB was advised that Mr S was of the seriousness of his medical condition and that his life expectancy had been reduced. Therefore I find it staggering that none of the staff could advise him that there was a simple solution to his problem. CPF allows those who have a medical condition that significantly shortens their lifespan or who are permanently unable to work to withdraw their CPF savings provided they leave the Medisave Minimum Sum in their account. Mr S obviously qualifies. Since CPF and HDB are so closely connected it seems inconceivable that the staff are so poorly trained as to be unaware of this fact. Perhaps they are incentivized only to sell flats and not trained to give appropriate financial advice. Or they are told not to tell customers of this scheme as it might encourage Singaporeans to contract a terminal illness just so they can withdraw their CPF savings early? That would be exactly  the PAP government’s way of thinking. I recall the PM in his National Day Speech 2013, advising Singaporeans that the best way to keep medical expenses down was just to stay healthy.

Anyway I am pleased that I was able to point out there was a fairly easy solution to Mr S’s problem though sadly there is no miracle cure for the poor man’s illness. Tomorrow I will assist him in filling in the online application for early withdrawal.  I will also go with him to see his MP in Jurong GRC at the next MPS and to HDB in order to try to get his deposit back. Mr S also wrote to PM Lee on his Facebook page and was contacted by an individual who took down the details. That was two days ago and he has yet to receive a response.




In PM Lee’s Coalition “Naive” is the new “Daft”.

PMLeeMany readers will have seen PM Lee’s  recent “Lunch with the Financial Times” interview. That interview was no doubt aimed at a UK or global audience but actually it is vitally important for us Singaporeans, giving us a rare opportunity to see our PM perform without the protection of PAP control.  Here in Singapore we are unable to see or hear anything about or by the PM  that hasn’t been scripted beforehand or edited afterwards.  The PAP has total control over our  media corporations through the management shares and the rights this gives them to appoint directors or in fact over the hiring and dismissal of any member of staff of a media company.   These rights are enshrined in the Newspapers Printing and Presses Act and not some  speculation on my part.  Check the Act out here.

So how does our PM perform away from the cosy protections of a media controlled by his own government?  The answer, for all to see in black and white, is not very well.  His interview is  best summed up by a comment left on the, “In Memory of JBJ” Facebook page. “what a lame duck interview” .

I hadn’t been expecting any great insights but even so I was surprised by what seemed to be random thoughts or coffee shop musings more bluntly referred to as mind fa**ts.  He was overwhelmingly unimpressive and I was surprised that there is no sign of him being a pundit like his dad.  Maybe he was trying to be “his own man” in which case I recommend that he immediately start trying to be someone else instead.

This pathetic interview is the perfect illustration of why having no competition in government has been bad for Singapore.

There were multiple gaffes but it was the one where the PM seemed to admit the possibility of a change of government in Singapore and even the PAP going into coalition that caused them to rush around in panic later. This is the passage in question:

So can he envisage a day when the PAP is not running Singapore? “It could well happen,” he replies mildly. “I don’t know how it will work but it could happen.” A little later, he hints that the PAP is beginning to consider the possibility of one day forming a coalition government. “It may not be one team in, one team out, it may be more complicated – you’re getting used to more complicated than that in Britain now.”

 It seems abundantly clear to any ordinary reader that when the PM talks about things becoming “more complicated” in Singapore and then says “you’re getting used to more complicated than that in Britain now” that he must be referring to the fact that the UK has a coalition government.

However this interpretation resulted in some hurried backtracking on Facebook, presumably when he realised he might have given the impression that Singapore might progress one day to something more resembling a democracy. To quote his loyal States Times:

“PM Lee sought to clarify that what he meant was that he could imagine a situation in the future where the PAP is not dominant, but that he had no idea how that would work, “or whether it could be made to work at all”.

“To think that instead of PAP dominance we will have a stable two party system is naïve,” he wrote.

“Just look at the UK today – even there the two party system is no longer what it was. A coalition govt for Singapore was not on my mind.”

It is always a bad sign when your PM needs to clarify in his own newspaper and then again on his Facebook pageDespite his attempts to correct the situation and warn that Singapore would descend into chaos if we ever had a functioning democracy, the PM unwittingly provided the best argument in democracy’ s favour. It is because of the lack of competition in the political arena that we have a situation where the PM is clearly not able to think fast enough to avoid being caught out by even the mildest of questioning by an independent journalist.

This is particularly true when he has to face the novel experience of not being able to subsequently re-edit what he says. Typically even with all his clarifications, the PM was not able to produce a single argument why political competition would be bad for Singapore, just alarmist hints for consumption by a domestic audience fed misleading facts about gridlock in Western democracies.   I note here that the new term of denigration for his voters is ‘naive’. Previously we were “lesser mortals” and then “daft” . Our people quite rightly angry got angry with being called names by their leaders and turned daft back on them so it seems that naive is the term du jour.

As I said in a Reuters interview in 2010,

“Firstly, do not be afraid. You have a right to exercise, to have a say, in how your country is run,” Jeyaretnam told Reuters in an interview at his apartment…

“Singapore is not going to collapse. Competition in politics is as necessary as it is in economics to ensure efficiency.”

 Instead 50 years of repressive measures to prevent the development of an alternative government have left us with is a clear demonstration that where the Darwinian  laws of competition are not allowed to operate survival of the weakest triumphs. Lame duck is a good enough term but Dodos are what the PAP are actually turning themselves into.   The PM is as environmentally ill-adapted to the bracing world of competition outside Singapore as the Dodo was when new predators invaded its sheltered Mauritian environment in the seventeenth century. The longer the PAP continues to resist the development of political competition, the further Singapore will fall behind the advanced democracies in terms of creativity and innovation. dodo


Meanwhile our people are trapped in this authoritarian state. If our people are naive then they are naive only because the PAP controls all sources of information, blocks transparency, provide no accountability and  keeps them in a childlike state of dependency.

CPF and HDB: 10 Real Dirty Tricks.

housing bubble

Roy Ngerng of  Heart Truths, today published an article to expose the raw deal Singaporeans get from HDB and CPF. He makes many valid points, most of which I have made before on  Unfortunately in his overeagerness to convict the PAP of fraud he makes an elementary error and simply gets it quite wrong. Whilst the error does not invalidate the fundamental point about the raw deal it does allow the PAP IB Brigade to seize on it and draw us away from valid criticisms.

Roy’s fundamental error also distracts from the fact that CPF amounts to a regressive tax on lower-income Singaporeans and that the government uses its control over land to ensure that we overpay for a wasting asset which should belong to us rather than them, once we’ve paid for it.  This is the real dirty trick.

What are Roy’s mistakes?

He makes the point that CPF requires us to pay interest on any withdrawals we make from our accounts both when used to purchase housing and also to service the loans. This is in addition to the normal interest we have to pay on any housing loans that we take out.  So far so correct.

To digress a little: Having to pay interest on our own money is itself unusual. If this were a private savings scheme or pension fund then of course it would be up to us to decide how much money we wished to save. However this is a mandatory scheme. Despite the fiction fed to foreign think tanks that Singapore has a laisser-faire economy this mandatory scheme is in fact a stealth tax on our citizens.

This interest only becomes payable when we sell the HDB unit.  Roy’s error (whether intentional or not) is in saying that this interest is lost to the government.  It is in fact interest that is paid to ourselves and it is not true that we lose it.  The accumulated interest remains in our account and can subsequently be withdrawn for new property purchases though interest will again be payable on the fresh withdrawal unless we have reached an age and have enough in our accounts to withdraw our money without having to pay it back.

It is true though that the government makes it difficult for us to withdraw what should be “our” money. It should be unnecessary if Temasek and GIC are making the returns they claim.That in itself means we should be asking the government why it is so desperate to hang on to our money if its funds are making so much?

It is also difficult to understand why we have to pay interest to ourselves on money we withdraw. From the government’s point of view making us pay back our borrowed CPF contributions is plugging a loophole that Singaporeans could use to withdraw most of their CPF. One way they could do this is by purchasing a property and then immediately selling it. But the government does not have to pay interest on those borrowed contributions so why should we have to pay ourselves back for borrowing our own money?

Another error that Roy makes is to say that it was WP’s Mr Giam who suddenly discovered the hidden scandal of HDB’s 99-year leases. In fact giving HDB leaseholders the freehold of their units was part of the Reform Party manifesto in GE 2011. Before that I believe my late father advocated a similar policy in Parliament.  “The Problem with HDB Part 2” on my blog was concerned with the fact that HDB flats would be worthless when the lease expired. To quote:

“However there has been a fundamental mispricing in the HDB market in which decreasing time to expiry of the lease has not been taken into account.  HDB properties can be taken back by a future government at the expiry of the lease for no compensation. Yet properties with sixty years or less to expiry trade at very similar prices to new flats with ninety-nine year leases in the resale market. This is completely different from how leaseholds on private property are valued in Singapore. This is also completely different to how leaseholds are valued in any other country in my experience.

 The buyers have been sold the fiction that an asset that has to be handed back to the government in at most ninety-nine years, and in many cases much less, will somehow ignore the laws of economics and keep on appreciating forever. Let me repeat that there has been a fundamental mispricing in the HDB market.

 Singaporeans have been told by PAP ministers and in particular LKY over and over again never to sell their HDB properties, as they can only go up in value. No government that I am aware of has made such an explicit promise and it can only be characterized as highly irresponsible.  If a financial investment had been promoted in this way by a broker or corporation without any mention of the risks and investors had subsequently lost money, the buyers would be entitled to compensation.”

 So here are the hard truths (or hard questions) about CPF and HDB which I first wrote about some three years ago.  Some of these hard truths Roy has covered but all of them have been written extensively about before by me (see links below):

dirty tricks

  1.       Why do we still need a compulsory savings scheme if Temasek and GIC are doing as well as they claim?  The PAP claim that Temasek is self-funded yet the government continues to inject assets (like Changi Airport Group) for free into Temasek. Even this capital injection is vastly undervalued allowing Temasek to use the valuation surplus to conceal that the majority of its investments like its panic rescue of Olam do not meet its internal rate of return hurdles.
  2.       Why has the PAP repeatedly broken its promises to allow Singaporeans to withdraw their CPF in full? First we were supposed to be able to withdraw it in full at 55 then this was postponed. Now we have to buy an annuity through CPF Life, which is a bad deal for Singaporeans as the government can alter the payout every year if it has done badly, or if life expectancy changes. In effect Singaporeans have written a free put to GIC. We do not directly share in its returns if it does well but have to bear the losses if the value of its assets falls below that necessary to repay CPF holders.
  3.       CPF is a tax since it pays holders well below what they could earn in the market for investments that were locked in for similar durations and only could be withdrawn under limited circumstances. This tax was significantly higher in the past when global interest rates were higher but still provides a big “endowment effect” which boosts GIC’s returns.
  4.       Furthermore CPF is a regressive tax since it is capped at an income level of $85,000 per annum The top earners in Singapore pay vastly less of their income in CPF than do those on low incomes. Even though they also get less Employer contributions it is likely that much of the Employer contributions are borne by the employees themselves in the form of lower wages.
  5.       CPF is not paid by expat workers and the hypothetical market value of a $ of CPF contributions is significantly less than a $ of disposable income. This gives foreign workers an unfair advantage over Singaporeans and allows them to undercut Singaporeans in the labour market.
  6.       Why is it necessary for there to be a PAP monopoly over the supply of housing? This, combined with mass immigration inflows, results in Singaporeans massively overpaying for 99-year leasehold housing of inferior quality.
  7.       I discussed above the mania that seemed to afflict Singaporeans because of irresponsible promises by LKY and the PAP that HDB was an asset that would constantly go up in value. I pointed out that the SERS scheme, in which Singaporean swap their old flats for new smaller ones with a fresh lease in much higher-density estates had encouraged this illusion. To quote again from my previous article, “The problem is that there is a fundamental conflict of interest between the government’s roles as provider of supposedly low-cost housing for the masses and as monopoly owner of at least 80% of the land in Singapore. This is why the PAP government has had a vested interest in pumping air into the housing bubble.  Until now they have been happy to maintain the fiction that the length of the leasehold does not affect HDB valuations. This is because with the deliberate creation of huge excess demand for housing the HDB finds it profitable to acquire existing HDB blocks from their owners and pay them compensation which is close to the price of new BTO flats. That is because they can vastly increase the density of housing on that area by doubling or tripling the size of blocks and building them closer together.”
  8.       However, as I explained above and Khaw Boon Wan admitted in his Parliamentary answer to Mr Giam’s question, the viability of the SERS scheme depends upon the redevelopment potential of the site. In other words, as long as redevelopment continues to be profitable for HDB which in turn is dependent upon other factors like continued population inflows and high economic growth rates.
  9.       KBW stated for the record that if SERS does not make economic sense then the government will allow the leases to expire meaning that HDB owners will get nothing. At some point (certainly when the majority of estates have less than fifty years to run but probably much earlier) the factors that have inflated the HDB bubble will go into reverse. Singaporeans can expect a big fall in HDB prices particularly for older estates where the lease has fewer years to run.  This is a ticking time bomb which could have serious adverse consequences for all Singaporeans leaving the majority who are financially naïve or too trusting of the PAP government with negative equity.
  10. We do not need to make unsubstantiated accusations of fraud , as Roy does, to demonstrate that Singaporeans are getting a bad deal from allowing the PAP to have control over housing and our savings.   Owning the freehold of our properties and the freedom to decide how to save are essential elements in creating a property-owning democracy.  A property owning class is the basis for a strong middle class and the government ownership of land and housing is the single biggest obstacle to the creation of a strong middle in Singapore.  That is why you see such a disparity between the 10% of plutocrats at the top and the 87% of the rest who have the pleasure of the government as their landlord. With a strong middle HDB housing could return to its original function as social housing for the truly needy and provide a valauble safety net.

Sadly every article I write seems to end the same way. So here I go again! Until we start standing up for our rights we will continue to get the kind of raw deal that citizens of any democratic country would see through and not tolerate.


An Open Letter to the Chairman of the Securities Industry Council

18A Smith Street




 25 March 2014


J Y M Pillay


Securities Industry Council

25th Storey, MAS Building
10 Shenton Way
Singapore 079117


Dear Sir,

I am writing to you in your capacity as the Chairman of the body responsible for seeing that market participants adhere to the provisions of the Singapore Code on Take-overs and Mergers (“the Take-over Code”).

There has been overwhelming public interest in seeking an explanation for the unusual price movements and trading volumes in Olam International Limited (“Olam”) from 4 February 2014 to 13 March 2014 when the stock was suspended immediately prior to the takeover announcement the next day. During this period Olam’s stock rose just under 40% without any announcement. By comparison its peers in the same sector, Wilmar and Noble Group, rose 11.2% and 12.6% over the same period. The STI index only rose by some 2.3% over the same period. Average daily trading volumes in Olam more than tripled in the month prior to the announcement. While volumes also rose in the other two stocks the increase was much smaller. Moreover the rise in the share prices of Noble and Wilmar and increase in volume is likely to have been driven by index rebalancing and quantitative trading as a direct result of the rise in Olam’s share price.

The Stock Exchange (SGX) put out an announcement on 17 March 2014. This drew attention to the obligations of the Offeror and Offeree companies under the Take-over Code to monitor trading activity in their stocks and make an announcement “if there appears to be a leak of information on the possible offer which is material.

The announcement went on to say:

Under SGX’s listing rules, listed companies may temporarily withhold material information relating to a matter under negotiation. However, companies should make an immediate announcement of the yet-to-be disclosed material information or call an immediate trading halt if market activities suggest that the requirement of strictest confidentiality is no longer satisfied.

 From 3 March 2014, listed companies are also required to notify SGX on a confidential basis if they are in discussions which are likely to lead to a takeover. We do not discuss our dealings with regards to individual companies including notifications as required under the listing rules. If there are possible breaches of rules or requirements, we will investigate and take appropriate action.”

SGX refused to disclose whether Olam or Temasek had notified them of take-over discussions on 3 March when the new rules came into force. The rest of their announcement was devoted to an extraordinary explanation of why Olam’s share price movement had not been unusual and boilerplate language about SGX’s commitment to maintain the highest standards.

This failed to convince most market participants and independent observers that there was still not a case to answer of breach of the Take-over Code and SGX rules as demonstrated by this Wall Street Journal article on the same day:

“Even after all those upgrades, the consensus target was only 1.68 Singapore dollars (US$1.33), according to FactSet, just a single Singapore cent higher than at the start of the year and far below the S$2 the stock hit just before the deal was announced. Back in November 2012, before Mr. [Carson]  Block’s accusations, analysts had a consensus of S$2.33. The stock then plunged to S$1.40, not reaching that consensus price, ever. Temasek’s buyout bid is priced at S$2.23. Nobody said explaining markets is easy, but this begs another look.”

Similarly, in a March 16th article, Bloomberg Business Week quoted Mr. Sachin Shah, a special situations and merger arbitrage strategist at New York based Albert Fried and Co, on his concerns that “there’s been leakage in the deal process”.

It may be your Council’s view that only foreign short sellers have suffered actual loss as a result of the movement in Olam’s share price prior to the bid announcement. However many Singaporean small shareholders lost out as well either because they were short the stock or because they sold out too early.

Reform Party therefore believes that in order to maintain the integrity of our public markets you are obliged to conduct an independent investigation as to whether there have been breaches of Articles 2 and 3 of the Take-over Code, dealing with Secrecy before Announcements and Timing and Contents of Announcements respectively.

SGX cannot be said to be independent of the Offeror in this case, as Temasek indirectly owns at least 23% of SGX through SEL (even though they may be precluded from voting their stake).

Similarly the SIC also contains at least nine members who have potential conflicts of interest arising from their employment with government-linked companies or with companies where a former Minister is Chairmen of the Advisory Board. In addition one of the members is a currently serving MP from the ruling party. I am also concerned that the other members of the SIC drawn from the legal profession may be partners of firms where a substantial portion of the revenue comes from government, statutory boards or government-related companies.

In view of the potential conflicts of interest it is Reform Party’s view that any investigation should be conducted by an entity with no ties to the government. The investigation should take evidence from those affected and its conclusions should be made public as soon as possible. If there is evidence that suggests insider trading then this should be passed to the AG as soon as possible with a view to potential prosecution of those suspected to be responsible. Any breach of the Take-over Code should be subject to sanctions.

 Reform Party believes that swift and decisive action on your part will prove that we have a robust regulatory regime and that we do more than pay lip service to the rules. This will boost confidence in our stock exchange and Singapore globally as a transparent and investor-friendly trading centre.



Kenneth Jeyaretnam

Secretary General

Temasek Loses the Plot

LostLast week I pointed out * that it made no sense for Temasek to pay a huge premium for Olam’s equity when Olam’s short-term debt refinancing was likely to be problematical, to say the least.  Lenders would likely have become increasingly nervous about extending more credit and rolling over existing facilities without a convincing strategy to achieve positive free cash flow and worries over the transparency of Olam’s accounts,

If Temasek saw long-term value in Olam,  the moment at which lenders would no longer extend credit  would have been the ideal moment to step in. They could then have offered to buy the debt at a substantial discount to face value, taking control of the company in that way.  Instead of waiting for Olam’s credit problems to become unmanageable and swooping in to get our citizens a bargain,  Temasek has in effect bailed out the foreign lenders. By doing so they are providing them with the reassurance of state ownership, even if not a direct guarantee.

For those of you who are sentimental about our sovereign wealth fund stepping in to save a Singaporean company from going under and believe it is worth the cost, I should point out that all of Olam’s production and most of its employment is overseas in places like Nigeria. Originally headquartered in London, it only moved to Singapore in 1995 and the CEO himself is a relatively new citizen.

On Monday Moodys, the US credit-rating agency called Temasek’s inexplicably generous offer for Olam “credit negative” **

This is what Moodys had to say about the Olam acquisition:

“Bringing a new company under the Singapore umbrella negatively pressures portfolio liquidity. Furthermore, Olam’s dividend yield in 2013 of 2% is well below Temasek’s overall dividend income yield of about 3% in the year to March 2013.

 In terms of currency, 65% of Temasek’s investments are in Singapore dollars. The high concentration of investment in Singapore-listed companies and the large size of each shareholding reduce portfolio liquidity. This feature is markedly different from the typical, more broadly spread sovereign wealth funds that can adjust their holdings rapidly without moving markets or requiring placements or trade buyers to effect disposals.

 It is highly unusual for investment companies to seek full control of a business.

If you want to know how a Sovereign Wealth Fund should be run for the benefit of its citizens,then look at Norway.  The Norwegian Sovereign Wealth Fund takes stakes of 1% or less in the equity of most of the companies it invests in and has a maximum stake size of 5%.  Some might object that a significantly concentrated portfolio leads to significantly higher returns. However the concomitant of higher concentration is significantly higher risk.

The Moodys report also highlighted the relatively weak state of Olam’s finances:

“Olam’s credit profile is relatively weak with gross debt of SGD9.1 billion and a reported last-12-months EBITDA of SGD1.2 billion as of 31 December 2013. Now with Temasek firmly in the picture, Olam will benefit from the financing halo effect, although Temasek does not guarantee the debts of its operating subsidiaries.”

Singaporeans should be very worried by this acquisition. It casts doubt on the  investment competence of  Temasek’s management.  However if this acquisition is worrying,  an investment company that acts in complete contradiction to its stated strategy is even more worrying. In a recent Reuters article about Temasek and Ho Ching’s new strategy,  “Temasek’s pivot to private investment heralds billion-dollar listed asset sales,  Temasek was described as cutting back on big stakes in publicly listed firms and putting more emphasis on private equity.

To quote from the article:

Under the guiding hand of chief executive Ho Ching, the wife of Singapore’s prime minister, the $170 billion state investor is morphing into a leaner form. The firm’s returns have often lagged its own internal metric in recent years due to its focus on big stocks.

Which goes on to say:

“Now they’re allocating capital in smaller chunks to these publicly listed firms, so that they are no longer a significant stakeholder in the company,” said Melvyn Teo, a professor of finance at Singapore Management University who has observed Temasek’s strategy closely over the years.

So lets just recap here.

  • Temasek invests the citizens’ money for the citizens’ benefit
  • Temasek is morphing  into a leaner form
  • Temasek is no longer going to take significant stakeholder positions
  • Temasek aims to raise its returns relative to an internal metric
  • Temasek is shifting its focus towards stakes in smaller companies and private equity investments

I fail to understand how Temasek’s takeover of Olam fulfills any of these aims.

So is Temasek fit for purpose and is our money safe? I am not convinced.This complete contradiction provides yet more evidence that the management of Temasek do not know what they are doing. Far from investing for the long-term (which again is almost certainly being used as a way of justifying ex-post any number of poor short-term investment decisions), in making the offer for Olam in such haste and overpaying they appear to be reacting to short-term pressures (possible bankruptcy?)

It has been suggested that Olam was on the verge of collapse and Temasek were trying to shore up the banking system. But that hardly makes sense as Olam’s debts of $9 billion are not that significant in relation to  total deposits in our  banking system.

It may be that Temasek are deliberately paying far too much for Olam because they want to mark their existing shareholding to the offer price and book the  resultant goodwill on their balance sheet as profit. It is ironic that this is exactly the tactic that Carson Block accused Olam of using to artificially boost their profit. By keeping Olam listed with negligible free float they may be able to  claim further mark to market profits by pushing up the share price. That is why we had Nomura coming out with a recommendation yesterday ( that investors hold on to their shares because they are likely to rise further.)

It is no coincidence that the Lead Nonexecutive Director of Olam  happens to be the Chairman of Nomura Singapore. The Securities Industry Council (SIC) need to look at whether parties allied to Temasek but outside the “Concert Parties” (as defined in the offer document) were involved in pushing up the share price. Given the conflicts of interest that the members of the SIC have, an independent investigation is unlikely to happen.

Another worrying sign is the fact that both Josephine Teo and Inderjit Singh spoke  in Parliament (“Govt spending needs won’t drive GIC, Temasek investments”) in an obviously choreographed performance to deliver the message that Temasek and GIC must not be put under pressure to deliver short-term returns to meet spending demands.  Josephine Teo said that “GIC and Temasek “must continue to invest with the aim of achieving good, risk-adjusted returns over the long term”.  As Keynes said about returns over the long-term, “In the long run we are all dead”.

If the returns are as the managers of Temasek and GIC claim they are, then why does the PAP give the impression that its idea of the long term will be well past the lifespan of any Singaporean alive today or even their grandchildren? Why are Singaporeans willing to put up with this nonsense. We need proper accountability and transparency now and this can only be achieved by listing Temasek and GIC and distributing shares to Singaporeans?

Temasek claims a track record of 17% p.a. annualised. I hope I have shown my readers over the last three years that the track record quoted  was only achieved because when Temasek was set up the government transferred its shareholdings to Temasek for close to zero consideration. When these companies (SIA and SingTel are two prominent examples) were later floated, Temasek claimed the revaluation gain as part of its returns. This blatant padding of Temasek’s real track record would not have passed muster with an independent regulator if Temasek were a private sector investment company marketing funds to the public.

This practice still continues. A case in point is the  injection of Changi Airport Group into Temasek in 2009 at a book value of around $3 billion or less when the real value of the airport is probably upwards of $16 billion or so (see my article “Has Temasek Found A Cure for Balding?”).

As I first said in an interview*** in 2010 (which was quoted all over the world), if Temasek were a private company, heads would have rolled by now. That was in 2010 but the situation has not improved.  The irrational investment decisions, the contradictions of policies announced just days before and inability to stick to an investment strategy, coupled with the lack of transparency and use of dubious accounting to artificially boost returns would all raise red flags with investors. I can tell you that if I were a private investor I would not be putting my own money into this company.

Ho Ching

*Questions for the Prime Minister’s Wife on Temasek’s Olam Acquisition

**Temasek Unit’s Offer for Olam Is Credit Negative, Moody’s Says


SGX denies wrongdoing and possibility of insider trading in Olam takeover.


In my blog yesterday I wrote about the inexplicably high offer that Temasek had made to buy out Olam, a Singaporean commodities firm hemorrhaging cash and burdened by debt repayments falling due.  As this offer was inexplicably generous and the timing irrational I feared that at least US$2.1 billion that belongs to the citizens of Singapore was being squandered  recklessly and that Temasek was trying to mask its real performance by increasing the proportion of  private companies in its portfolio.

I also said that in the period before the deal was announced, it appeared that Olam and Temasek had breached the Singapore Takeover Code which is regulated by  the Singapore Securities Industry Council.

Yesterday I said “ (the code) places very clear obligations on both the offeror and offeree companies to keep any offer discussions secret. In the event of an unusual movement in the share price of the offeree company or an increase in turnover they are required to make an immediate announcement as to the possibility of an offer.” 

I believed there had been a breach of the Code because I saw “unusual movement” in Olam’s market price that to me looked like absolute evidence of failure to protect the secrecy of the deal process.  That is not to say there was a deliberate leak or intention to commit the offence of insider trading but more that, with so many players involved, leaks do happen and that is why SGX and Temasek need to be vigilant. Temasek must have seen the increase in volume and upward movement and  should have made an  immediate announcement.   Trading in the stock should have been suspended earlier by SGX so as not to penalise the minority shareholders and to give everyone  a fair chance. Not to make that announcement was  a breach of the Takeover Code and has allowed those with prior knowledge of the Olam deal to profit unlawfully.

Temasek eventually made the official announcement of an offer to buy all the remaining shares in highly leveraged and cashflow negative Olam,  on March 14th.  However in the month preceding that offer being made, Olam’s shares rose by 35%, with no good news announcement to explain that rise and no similar rise being seen in its peers or the market itself.  The Straits Times Index only rose by 2.3 % in that period, for example. Once the official offer announcement was made the preceding 35% rise in Olam’s price looked like evidence that the cat had got out of the bag early.

I am not the only person who noted this. In a March 16th article Bloomberg Business Week quoted Mr. Sachin Shah, a special situations and merger arbitrage strategist at New York based Albert Fried and Co, on his concerns that “there’s been leakage in the deal process”.

there’s been leakage in the deal process

In fact you wouldn’t need to be an expert in M&A activity as I am or an analyst specializing in this area like Mr. Shah, to have serious concerns over “deal leakage”. Any reasonable observer would reach the same conclusion and apparently many of the minor shareholders who sold early in the process are already crying foul.


I seem to have hit a nerve with my article because today SGX has published an astoundingly defensive statement that not only fails to rebut my concern that a breach had occurred but even seems to give evidence to support it.

Naturally, I stand by yesterday’s blog when I stated that the movement in Olam’s share price was “unusual” by the definition of the takeover code and the failure to make an earlier announcement had been a breach.

Here is what SGX said in reply:

“Market commentaries noted that in the six weeks from 3 Feb 2014, Olam’s share price increased 34.8%, higher than those of its peers such as Wilmar International which rose 11.2% and Noble Group which rose 12.6% over the same period. During the period, the Straits Times Index rose 2.3%. Such comparisons should be conducted with care as the financials and outlook of individual companies may differ even if they are within the same industry. While we do not prescribe a view of value or pricing of stocks, we note that of the 13 analysts who issued reports on Olam in February 2014, seven raised their target price by an average of 10.4% with the highest increase being 21.4%. The 13 analysts had target prices of $1.50 to $2.00 for Olam. In the case of Wilmar, eight analysts raised their target price by an average of 2.6% with the highest increase being 4.8%.  For Noble, one analyst raised the target price in February. Trading in these three stocks were within the price ranges set out in the research reports, suggesting they were trading within the general market view of these stocks with Olam shares reflecting a more positive market view.”

The so called clarification by SGX fails to answer the question as to why Olam rose so much more than its peers pre-announcement. A 34.8% rise was three times more than the average of 10.4% by which analysts raised their price target for the stock.

SGX quotes the rise for peers Noble and Wilmar but the statistics for Noble and Wimar only back up my assertion that Olam’s rise was unusual. The rises for those two companies were much smaller and completely in line with the general movement in the MSCI agricultural commodities index over the same period. In any case the large movement in Olam would have the effect of pulling up its peers due to technical activity driven by index rebalancing and quantitative trading.

Nothing that SGX has said above allays my suspicions that there had been “leakage” and that failure by Temasek to respond with an immediate announcement broke the Takeover Code with consequences that regulation is supposed to prevent. A defensive and unclear statement by SGX is not sufficient in the light of the failings being exposed.  There are a large number of investors who sold the shares in ignorance of an impending deal who will need to be compensated and there may be other investors who bought the  same shares, in the same month, in full  knowledge of the imminent takeover.

So, not only has the Code had been breached but the Stock Exchange also needs to conduct a convincing investigation into possible insider trading. If evidence  is found that anyone with prior knowledge of the deal profited from that knowledge, then prosecutions MUST follow. Unless SGX and other authorities responsible for regulating the market act and act swiftly, investor confidence could be fatally damaged.  Singapore’s reputation as a financial centre will be indelibly tarnished.


However who is going to conduct such an inquiry?  SGX is itself not sufficiently independent since SEL, a Temasek holding company, controls 23% of SGX (and a further percentage could be held by nominees).  The chairman of SGX, Chew Choon Seng, is also the chairman of the Tourist Promotion Board and the former CEO of SIA. It thus has a clear conflict of interest making its statement of little value and  SGX clearly cannot investigate itself on suspicions of insider trading or violations of the Code by either or both parties.

How about the Securities Industry Council responsible for the Takeover Code?  Similarly the composition of the Securities Industry Council needs to be proven to be independent.   What we do know is that Lee Kuan Yew’s son and our Prime Minister’s brother sits on the Board of SGX and Lee Kuan Yew’s daughter–in–law and the Prime Minister’s wife, heads Temasek.  At least 7 members of the Securities Industry Council are connected with the Government or Government Linked Companies.

I therefore urge SGX, SIC and the government to appoint  an independent body to investigate this The investigation will need to come from outside Singapore as an investigation of accusations of possible misconduct by a Government-owned company is likely to face difficulties in finding individuals who do not have a conflict of interest given Temasek and the PAP government’s pervasive control over the economy and given that members of the same family are in key positions at Temasek, in the government and at SGX.

Meanwhile I repeat my offer to assist naturally extends to any aggrieved investors.

Questions for the Prime Minister’s Wife on Temasek’s Olam Acquisition

Olam Share Price

Olam Share Price

My suspicions were raised yesterday by the news that Temasek has put up $2.1 billion dollars to buy out any remaining shares they do not already own in Singaporean commodities trading firm Olam International Limited (“Olam”).  The offer was inexplicably generous. Though Temasek is only offering 12% above the stock’s last traded price, the offer is in fact  a staggering 55% above where the shares had been trading on February 4th  2014.

Why would Temasek be willing to pay such a high price for Olam no matter what the cost to its stakeholders, the citizens of Singapore? Naturally, at that 55% premium it can expect to get the vast majority of the shares except for those held by the founding shareholder and the company’s management, who have agreed not to tender their shares beyond a set percentage.  It would also seem that upon acquisition Temasek intends to take Olam private which means it would become unlisted. Unlisted holdings within an already secretive Temasek are bad news for Singaporean citizens.  Being unlisted allows a firm to hide a weak balance sheet or even catastrophic losses without the pressure of Singaporean public scrutiny and without the need to publicly report quarterly and annual earnings.

As you all know I am at the forefront of demanding greater transparency from Temasek. One of the reasons I have campaigned for Temasek to be listed publicly is so that we CAN apply public scrutiny and have complete transparency over its reported earnings. At the very least Temasek should produce the level of detail and transparency in its annual reports that Norway’s sovereign wealth fund does, allowing the figures to be scrutinized by Parliament.

My concern is that Olam is part of a movement by the government led by the Prime Minister and Temasek led by the Prime Minister’s wife, towards further secrecy. In the past few years I have been highlighting discrepancies and black holes in our government’s accounting procedures and simultaneously raised serious doubts over Temasek’s published rates of return. In the two years since Chip Goodyear suddenly left, Temasek has increased the percentage of private firms in its portfolio by 22%. As of March 2013 a very significant 27% of Temasek’s portfolio was in privately listed companies whose accounts are invisible to us. That percentage of private companies
may be even greater by the time the next reports come out around July.

The move towards private companies and accompanying secrecy may not matter if those companies are profitable but what better way for Temasek to hide its losses in a company they have made a bad bet on than by acquiring more than 90%, taking it private and burying it?  Is this in fact what they’ve done with Olam?  Did Temasek in fact, put up billions of our dollars in what amounts to a face saving exercise or to inflict financial pain on anyone who dares criticise them?

On the face of it Olam does not present as a good bet at a 55% or even a 12% premium. Olam’ has had a turbulent stretch recently after its weak balance sheet and its accounting practices came under the scrutiny of Carson Block and his research firm and short-seller Muddy Waters (“MW”) in November 2012.

carson blockFor those of you who don’t know MW they were behind the exposure of the Canadian-listed Sino-Forest Corp for misrepresenting its timber assets. Sino-Forest subsequently filed for bankruptcy in 2012.

In November 2012, Carson Block labelled Olam another “Enron”, described its equity as worthless and its accounting as highly questionable and announced that he was shorting it.  MW pointed out that Olam was burning up cash. Even on the company’s own figures it would not have been able to generate sufficient cash to meet the large debt repayments falling due over the next couple of years.

Enron, I’m sure you all remember, was a US energy-trading company with creative accounting whose apparent profitability relied on revaluing assets using dubious financial models. At the same time its cash flow was consistently negative and it was only managed to survive as a going concern on the generosity and gullibility (or venality) of its bankers. When it collapsed in 2001, as a result of the recession, there was a huge scandal and most of the top management ended up with long prison terms.

I have told you before that Temasek have an unerring ability to find the only banana skin in the room and promptly slip up on it (see “Chesapeake Energy and Temasek: A Tale of Two CEOs and Shareholder Democracy”) So my readers will not be surprised to learn that Temasek were the biggest shareholder in Olam, apart from the founders of the company, at the time that MW came forward with its negative assessment.

Olam’s stock dropped 20% on MW’s announcement and hit a three-year low in December 2012. In fact the company may have collapsed if Temasek had not come to Olam’s rescue within days of the MW announcement by agreeing to buy a US$750 million debt issue with warrants. This move may also have relieved the company’s debt refinancing issues temporarily and been a precondition for the banks to roll over short-term maturing debt. However the rapidity with which Olam turned to Temasek for assistance and the high cost of the new debt indicates that the MW hypothesis that Olam had been in danger of collapse was probably correct.

In addition Mr Verghese, the CEO of Olam and a true son of Singapore even though he is a new citizen, threatened to sue Carson Block and MW for defamation. There are some things we do so well in Singapore and using defamations suits to silence criticism is certainly one of them. Mr Verghese, reported to be politically well connected in Singapore, actually started proceedings, with Olam as the plaintiff, in the Singapore courts. However he decided to drop the suit after realizing that Olam would be unlikely to be able to enforce any judgement obtained in a Singapore court against a US company with no assets in Singapore. Furthermore the suit was not helping the stock price or Olam’s credibility.

Returning to the subject of why Temasek chose to make an offer to the shareholders at this time, I would quote Carson Block’s comments: “The Singapore sovereign wealth fund’s timing is interesting given that Olam has $1.2 billion of debt maturing this year and is still burning cash, and that the stock has inexplicably outperformed in the past month.”

As I described above Olam has continued to hemorrhage money. As of June last year, Olam already had long-term debt of S$5.9 billion compared with S$4.3 billion at the end of June 2012.  Temasek’s bail out via Olam’s Convertible Bond and Warrant issue was only a stopgap replacing cheap debt with expensive debt. Olam continued to be over-leveraged.

More importantly by February of this year Olam still faced an enormous re-financing problem with billions of dollars of debt falling due in the short-term without any positive free cash flow to draw on.
Even with the lifeline provided by Temasek through new lending, Olam would likely have been unable to continue as a going concern just as Carson Block of MW had predicted.

Given the circumstances, the timing of Temasek’s offer is peculiar and I am afraid inexplicable.  So is the offer’s huge premium to where the stock was trading in early February. Even if Temasek genuinely sees future value in Olam as a global commodities trader and producer they have a fiduciary obligation to their shareholders the citizens of Singapore not to overpay.  The rational strategy would have been to buy the debt of Olam at a big discount to face value and then take control of the company by forcing a restructuring, wiping out the equity holders in the process. To make an irrationally generous offer for a failing company with public money is rewarding foreign shareholders at the cost of the Singaporean taxpayer and CPF holder. Temasek has a case to answer here and questions need to be asked.

Some analysts have argued that the massive premium was justified because of a turnaround in fundamentals for the company. They point to rising agricultural commodity prices as well as better capital spending discipline by Olam. However it is hard to see that this is the case. Olam last month posted a 12.5 percent drop in second-quarter profit on weaker sales and commodity prices. While Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) rose slightly over the previous half-year, cashflow from operations continued to be strongly negative and debt continued to rise.

Undoubtedly the company had addressed some of the concerns raised by Block’s report but I don’t see this as anything approaching a turnaround. It certainly does not explain a 55% rise in the share price in one month. The MSCI agricultural commodities index only rose by 13% over the same period.

In fact I would go so far as to say that Olam and Temasek might have breached the Singapore Takeover Code.  This mirrors the UK Takeover Code and places very clear obligations on both the offeror and offeree companies to keep any offer discussions secret. In the event of an unusual movement in the share price of the offeree company or an increase in turnover they are required to make an immediate announcement as to the possibility of an offer. The movement in Olam’s share price was clearly unusual and should have led to an announcement much earlier. The stock exchange also needs to conduct a convincing investigation of possible insider trading and if evidence is found prosecute those responsible. If any MPs, NCMPs or NMPs wish to raise this issue as well as the broader question as to why Temasek chose to pay so much for Olam, then I am more than happy to assist them.

This episode only seems to demonstrate that the managers of Temasek and in particular the CEO, the PM’s wife, do not seem to feel under any capital discipline or fiduciary obligation to achieve the best returns for their stakeholders, the citizens of Singapore. Singaporeans should rightfully be angry that money can be so gratuitously and unnecessarily squandered in this manner. Foreign shareholders and lenders have not only been let off the hook but rewarded generously.  This seems to be for no other reason than to administer a painful lesson to those who would expose the mistakes made by Temasek’s investment managers. The irony is that the virtually unlimited resources of our sovereign wealth funds that enable their managers to do this have only been built up through our sacrifice.

Value destruction on this scale is only possible because of our willingness to allow the PAP government to get away with not giving us the true picture of our public finances. Instead we meekly submit to conditions of austerity that are totally unnecessary. The next time we are told by the government that taxes will have to rise to finance greater social spending, or that we have to queue in tents at SGH like some Third World war zone, we should remember what our refusal to stand up for our rights is really costing us.

The PM Burdens Every Generation of Singaporeans with His Outmoded Economic Ideas

PMLeeIn a Facebook post on Wednesday night, the PM made another statement of breathtaking economic illiteracy. He said, “Singapore must never fall into the same hole as some countries which spend more than they can earn,” Perhaps it is the fact that he studied Mathematics rather than Economics that has led him to make such a fallacious statement.  As every first-year student of Economics learns, while one country may be able to increase its savings as long as other countries are willing to go into deficit, if all countries simultaneously tried to increase their savings and run current account surpluses, the result would be a catastrophic slump. This is what caused the Great Depression and fiscal austerity has unnecessarily prolonged the Great Recession since 2009.

However I suspect his motivation is political rather than economic. As the head of Singapore’s elite he has a vested interest in stopping spending on the bottom 80% of the population if it might conceivably lead to a rise in taxes for him and his cronies down the road.

But such fears are unfounded. Singapore is in no danger of spending more than it earns for the forseeable future. We run a current account surplus (which represents our external saving or forgone consumption) of around 20% of GDP year after year.  This is already attracting attention internationally from the US and the IMF because of the drag it exerts on world growth.

Singapore has no external debt and while the PAP rip off CPF holders by forcing them to lend money to the government at below-market rates of return, all CPF debt is owned by Singaporeans. So if we were to spend more than we earn we would be borrowing from ourselves. However we are very far away from this ever happening. In fact the rate at which government reserves are accumulating, at least on paper, is accelerating.

As I wrote about in Budget 2014: A Very Generous Amount of Wool Pulled over Your Eyes, the PAP government is hiding a surplus of around $30 billion a year from its citizens. Over the last six years to 2012 the cumulative surplus amounted to $187 billion, even with the poor returns the government has been able to achieve with our captive CPF money.  Even the Pioneer Generation Package, which the PM said MPs from both sides of the House had paid tribute to for its generosity, only represents $260 million of current spending and not the $8 billion headline number, which is unlikely ever to be spent. Why then, for goodness’ sake, is the PM talking about taxes having to rise? To quote the PM, “We are alright for the next few years. Beyond that, we must think about raising more revenues.” 

One might suspect he has taken leave of his senses. On present trends, using the figures the government reports to IMF, the cumulative surplus to 2020 is likely to be in the region of $250 billion.  So either he is mad, mendacious or we should be afraid, very afraid, that our vaunted reserves are not all they are cracked up to be.  Government secrecy can be used to hide a multitude of sins.

I wrote about this in “Where have our reserves gone”, “Sherlock Holmes and the Case of the Missing (or Merely Hidden) Reserves“, and “An Unappetizing Picture.” It is one of the classic signs of an autocracy that the government treats the people as children, who cannot be trusted to make decisions for themselves. The Finance Minister’s Budget presentation is certainly like a nursery story for children.  It serves to cover their political motives in not wanting Singaporeans to realise how badly they are being short-changed.

However I will reserve further discussion of the contradictions in the PM’s statement to another time. Here I just wanted to make one simple point. If the PM and the PAP were serious about not burdening future generations then why not give HDB owners the freehold of their apartments once they have paid off their thirty-five year loans?  As everyone knows, HDB leases are only for ninety-nine years, which means that future generations will have to start the process of paying for a home all over again because the property will revert to the government at the end of the lease.

In his National Day Rally Speech in 2011,  the PM said “The way we have done it which I think has been successful has been to give people assets, especially an HDB flat;”. As usual the PM is being economical with the truth, as in an actuality the HDB purchase price should be amortized over the life of the lease. At the end of the lease the asset will be worth zero and our descendants will inherit nothing.

If Singaporeans collectively own the freehold of our HDB properties then we can manage the estates ourselves and make our own decisions about upgrading and redevelopment. The full rise in the value of the land will accrete to us rather than a large part being siphoned off by the government. If the majority of us can never aspire to owning (a share of) freehold property, then we can never become a true democracy, because we will always be dependent on the government.  Just as at Cheng San in 1997, the PAP government will continue to try and use Singaporeans’ insecurity over property ownership to ensure that they stay in power. This cannot be to the long-term good of our country


Madame L from Pioneer Generation Package to Cardboard Collecting Pittance


With Budget 2014 fresh in our minds I thought that now would be a good time to update my readers on the case of Madam L. You can read the previous blog entries from September last year, if you are not familiar with the case or need to refresh your memory. (“Homeless in Singapore’s Island Paradise” and “Homeless with a Handcart against Singapore’s Grand Prix”).

Mdm L has been homeless for 2 years, sleeping on the streets and turned away by everyone until she came to me for help.  So, I was not her first choice! But she had always been a supporter of JBJ so she came to me.  She has been living in the street on around $8:00 she earns a day, on days when she is well enough to push her trolley around collecting cardboard.

Despite repeated calls to the Social Service Office in the months following our first meetings, dealing with her case we seemed to have hit a brick wall. Despite Madam L being homeless and destitute it seemed impossible to unlock the aid to which according to the ComCare website she was entitled. ComCare promises $450 a month Public Assistance to those unable to work and without any other means of support. Madam L does have children but is estranged. In any case I went to visit her son and they have several children of their own to support and are in the low-income bracket.

The refusal of the authorities concerned to give her the support that she was promised is typical of the way our government operates. At Budget time our Finance Minister always waxes eloquent about the support given to the poor and needy in Singapore and the myriad schemes that are available but the situation on the ground doesn’t bear the fruit being promised.

Who can forget our PM’s comment at Davos”If you’re poor in Singapore, it’s no fun, but I think you’re less badly off than in any other country in the world, including in the US”. This breathtaking falsehood, fed to foreign journalists, politicians and academics, has unfortunately been swallowed without any independent corroboration by Nobel Prize winners like Stiglitz. This is Stiglitz’s original article and my rebuttal, which the NY Times declined to carry.

Anyway there is some good(ish) news to report. Mdm L has now been granted an allowance of $300 a month from Comcare for a period of six months. I feel this is a measure of some small success.  It wasn’t really hard to take her around to the various agencies and to keep phoning and pushing the various parties who should be assisting her.  All she needed was some guidance, hand holding and someone to unravel the bureaucracy for her.

She was adamant at all times that she didn’t want charity despite the many offers we received from readers because she lives in fear of being “put away “. She was also offered a shared room soon after I took up the case on her behalf but the proposed room-mate was unsuitable.  However, I believe that once she does have a room of her own she will be in need of your generosity to furnish that room and provide her with a buffer to pay the rent so that she can ease back into a home situation with less stress.

The aim is still to see Mdm L suitably housed. She also needs medical care. I will make sure to review with ComCare before the end of the six-month period and to pursue her other needs.  Mdm L and I are due to visit HDB together next week. I hope that the evidence of offers of support and donations and the Comcare allowance will persuade HDB to find her a room, this time.  I am still questioning HDB over the action they took in evicting her in the first place.

Before I finish just wanted to say a word about the much hyped Pioneer Generation Package. How does that help Madam L and the thousands like her who were never formally employed and thus do not have any CPF funds?  So many like her are from the Pioneer Generation and yet are reduced to collecting cardboard and hawking tissues.

In any case the Pioneer Generation Package and its hyped $9 billion cost is a fraud. As I pointed out in Budget 2014: A Very Generous Amount of Wool Pulled over Your Eyes, the actual projected cost is more like $400 million a year of actual spending. And the actual overall cash cost is likely to be considerably less.  The Finance Minister provides no breakdown of the estimated cost of the different elements. However 40% to 60% off Medishield Life premiums is not a cash cost when the Medishield fund is still massively in surplus. The government may recoup the cost by raising premiums for the rest of Singaporeans. In any case Madam L and many like her are not enrolled in Medishield and could not afford the premiums anyway.  The same is true with the Medisave top-ups, where only a tiny fraction of the fund is withdrawn each year. Madam L has no Medisave anyway. Finally the Disability Assistance Scheme will doubtless be as difficult to access as Public Assistance has been for Madam L.

We will be having a meeting at the Reform Party office at 18A Smith Street in Chinatown  this Monday evening from 7pm to coordinate donations and help for Madam L. All are welcome.

Mdm L was born in 1948. She is truly one of our Pioneering Generation. She wants what is her due, just a room of her own and she surely deserves that. Is that so much to ask?

Please watch the short video interview with Madam L above



Budget 2014: A Very Generous Amount of Wool Pulled over Your Eyes.

woolovereyesMinister Khaw Boon Wan has called Budget 2014 “very generous …by any measure” so naturally, I want to see how it holds up by my measure but because the budget contains information black holes and inexplicable discrepancies measuring it is almost impossible.  This leads me to believe that Minister Khaw Boon Wan is singing a tune without the benefit of the sheet music. No wonder his song strikes a discord with the ordinary citizen.

First let’s remind ourselves of Budget 2013 which I analysed in an article entitled “How To Make A Surplus Disappear without Anyone Noticing”.  This is what I said:

“There is an accepted format for the layout of budgets prescribed by the IMF. Last year I asked why the Budget could not be set out in the format prescribed by the IMF. In July 2012 I wrote an open letter to Christine Lagarde (see here) asking this question in more detail and that latter was published by the Huffington Post.  I said there that :

 The foreword to the IMF manual sets out an analytical framework for budgets and states that one of the aims of the framework is to provide an early warning system as to when things start to go wrong.”

 And also:

“Specifically lacking in  Budget 2013 are the figures for  net interest earned and investment gains or losses on financial assets and liabilities. It also does not include a value for the state’s land holdings or for receipts from land sales.

The only information available to us is the Statement of Assets and Liabilities [of Singapore which the Finance Minister is required to publish every year]that is more than a year out of date. This barely helps us gain some picture of the true state of the government’s financial position and the size of our net assets particularly as it comes without any explanatory footnotes or an explanation as to what accounting policy is followed.

 As the stocks of financial assets and liabilities are more than twelve times the flows represented by revenues and expenditures any losses in the former can easily dwarf any surpluses in the latter.  We see no reason not to have full transparency, as secrecy can only be conducive to lack of accountability, even to mismanagement and potential corruption.”

I have read through this year’s Budget Speech and my first thought was, Yipee!  I don’t have to do any work I can republish the piece I wrote last year.  Seriously, nothing has changed and that is not a good thing. The Budget presentation continues to be a joke, using a format that does not follow the guidelines prescribed by the IMF described in the Government Financial Statistics Manual 2001.

I wonder why our Finance Minister was appointed head of a key committee of the IMF when he does not even follow IMF procedure.  Presumably this has got something to do with the speed and willingness with which the PAP committed to giving away $5 billion of our money (more than 60% of the money promised to our Pioneer Generation!) without bothering with democratic niceties like Presidential or Parliamentary approval.

Christine Lagarde, the head of the IMF, must be pleased with the way our courts have moved so swiftly and efficiently to prevent us from challenging the legality of the government’s actions by saying we do not have locus standi.

I have been pointing out the lack of transparency and the use of smoke and mirrors in the government’s accounts since the Reform Party’s critique of Budget 2012, which was repeated with Budget 2013. I also wrote open letters to the Finance Minister asking him why the Budget was not presented in the format prescribed by the IMF. I have also written an open letter to Christine Lagarde about the discrepancies in the government’s accounts and their failure to provide a full picture of the government’s finances. In particular I highlighted the failure to provide figures for net investment income, capital receipts and revenue from land sales. This was republished in Huffington Post.

In “Where have all our reserves gone?”, “Sherlock Holmes and the Case of the Missing Reserves” and “An Unappetizing Picture”,  published in September 2012, I highlighted the fact that the then Statement of Assets and Liabilities (SAL)  rang further alarm bells as forensic analysis suggested that the returns achieved by GIC would have had to have been much lower than the quoted returns in order to reconcile the stated figure for total net assets with Temasek’s assets and estimated revenues from land sales:

“It is only by reducing the rate of return on assets to 5.2% that one gets to a theoretical total assets level of roughly $720 billion which is close to the figure for total assets shown in the government’s SAL…

However, when one adds in Temasek’s assets and the likely revenue from land sales, returns appear to have been much worse. I calculated what would be the theoretical rate of return on assets to equal the total assets shown in the government’s balance sheet at 31 March 2011 minus Temasek assets of $180 billion and estimated revenues from land sales of $100 billion. It is only when the return on assets is reduced to a shocking 2.5% in S$ terms while keeping the rate the government pays on its debt to CPF holders at 3.5% that we are able to reconcile our theoretical calculations with what is shown in the government’s balance sheet.”

 This was of course a theoretical exercise and, in the absence of any light from the Finance Minister on this black hole, the real picture could be better than laid out above or conceivably much worse. We have no way of knowing. I have not had a chance to bring my analysis up to date with this year’s SAL but I am confident my conclusions there would be unaltered.

Even if the government is barred from spending past reserves without Presidential approval, which in any case can be overridden by a two-thirds vote of Parliament, surely Parliament and the people are entitled to know the true reserve position and how well the government has performed that year in managing them. Nations like Norway, which also have substantial Sovereign Wealth funds, have adopted full transparency and present the results to their Parliament each year.  We should be doing this.

This year the Finance Minister has become even braver in his determination to mislead Singaporeans as to the true state of the government’s finances. Perhaps he is emboldened by his victory in court allowing the PAP to proceed unchecked.  Particularly as the Opposition in Parliament are unlikely to ask any tough questions and will certainly vote for the Budget.

So let’s look at how he misleads us this time over the disturbing question of our abnormally large surplus. The difference between the estimated surplus for 2013 of $2.4 billion, according to the PAP’s format, and the revised surplus for 2013 of nearly $4 billion announced in Budget 2014 is already embarrassingly large. That figure pales into insignificance when compared with a likely government surplus of nearly $30 billion (extrapolated from the six months’ figures shown in the Monthly Digest of Statistics for January 2014. ) And the government surplus is likely to be considerably narrower than the general government surplus, which includes the results of Temasek and other GLCs and statutory boards not under the GIC and MAS umbrella.

However I cannot say for certain what the figures are as the government has started to make it more difficult to find out what the true surplus is.  This may be because many other commentators are now starting to follow my lead, albeit somewhat timidly, and point out that the surplus is vastly larger than the Finance Minister would have us believe.

The problem is that the Yearbook of Statistics used to contain details of the general government surplus in addition to the government surplus but now the format has been changed so it merely presents the surplus in the format the Finance Minister uses, which as we know not only contains no useful information but is deliberately misleading.  The Statistics Department has even started restricting online access to anything but the current issue of the Monthly Digest of Statistics (MDS), which only has six months worth of data on last year’s government surplus. Back issues have disappeared. Fortunately the Finance Minister is still obliged under the Constitution to publish the annual Statement of Assets and Liabilities, though this is completely opaque as it is unaccompanied by any explanatory footnotes and is in any case a year out of date. What first world country swims against the global tide towards more openness and transparency by going backwards and trying to restrict its citizens’ access to information?

In Budget 2013 the Finance Minister used his usual trick of transferring the entire Net Investment Returns Contribution (which is meant to provide resources for current spending) straight back to the reserves by allocating most of it to Top-ups to Endowments and Trust Funds (which do not represent current spending). I wrote about this accounting trick  previously in Smoke and Mirrors in the Government’s Accounts. This is what I said then:


  • The setting up of funds  appears to be a way of bringing the Overall Budget Balance close to zero and mirroring almost exactly the Net Investment Returns Contribution. $7 billion  set aside for new funds in 2012 and $7 billion in net investment returns contributions.  This is despite the fact that monies appropriated to these funds may not be spent for many years, if at all. Again this deviates from the IMF framework, which would require that these appropriations show up as part of net acquisition of financial assets. ( see and for details of how our accounts fail to follow IMF accepted procedure)
  • The $41 billion in the funds’ assets is a sum of money conveniently removed from the direct control of Parliament. In other words the Finance Minister  has unfettered control over their budgets and disbursements.
  • The legislation requires that these funds produce annual reports and accounts that the Finance Minister is supposed to submit to Parliament. However a preliminary inspection of Hansard uncovered no evidence that this had ever happened. [I later discovered that while some of the funds have been audited by the Auditor-General others, such as the National Productivity Fund and the Bus Services Enhancement Fund, do not even appear in the SAL. More on this soon]
  • These funds appear to be a way of injecting capital into the statutory corporations (mainly Temasek, GIC and MAS) almost exactly mirroring the outflow from the Net Investment Returns Contributions (NIRCs). However I have not been able to discover any information as to how these funds are invested. In the Statement of Assets and Liabilities their assets are pooled with the rest of the government’s assets.  If it is indeed the case that these monies have ended up being invested in Temasek or GIC then this would seem to violate Article 7(A) of the Financial Procedures Act.
  • Finally and most seriously, if these funds are invested in Temasek or GIC, then they may be being used as a way of alleviating the stress these funds are under as a result of poor performance. In particular they ensure that cash outflow is minimal which might otherwise put pressure on the funds to sell some of their investments. If these are illiquid then there could be a considerable drop in their price. While I would hesitate before saying that there is any mismarking or overvaluation of assets we do know from the government’s own balance sheet that the performance of the sovereign wealth funds appears to have been extremely poor.

In this year’s Budget the Finance Minister pulls off the same feat by using this years NIRC to fund the whole of the Pioneer Generation Package of $8 billion. In actuality annual spending, on the Finance Minister’s own figures, is likely to only be around $400 million. If history is any guide, the PAP government will, through its customary stinginess as exhibited in the way the surplus invariably turns out to be higher than expected, likely considerably underspend the amount budgeted.

I will return shortly to discuss the other aspects of the Budget, which pale into insignificance beside the signal fact of how badly Singaporeans are being short-changed by this PAP government. I cannot understand the gushing praise that seems to have come in from many pundits and commentators from civil society and elsewhere.

If we look at the Statement of Assets and Liabilities and the MDS, government net assets have grown by some $100 billion over the three years 2010-2013.  Why is that level of continued accumulation of assets necessary and why is the Finance Minister making such efforts to hide the true fiscal situation from the people, even by resorting to subterfuges that would not be permitted if Singapore’s accounts had to be audited like a corporation’s? After all the PAP often pride themselves on claiming to manage Singapore like a corporation. Yet if Singapore were Apple, for example, corporate activists would be demanding the return of a sizable portion of its cash pile to shareholders in the absence of compelling reasons from the management for keeping it. Singaporeans should be demanding answers and, if none are forthcoming, voting to change this country’s management.

Singaporeans have lived too long in completely unnecessary austerity. To cite just one example, while your government has quietly accumulated another $100 billion, you have been forced to wait in tents for medical treatment at government hospitals. These are service standards that would shame a third world country and in any advanced democracy would lead to the government being voted out. There is no justification for such penny-pinching when the stock of the government’s financial assets keeps growing. It is time we awakened to our rights as citizen shareholders and force the PAP government to either return part or all of the surplus to us or else make the case as to why they should be allowed to keep it. Are the returns they can achieve from holding on to our money so much better than we can achieve by entrusting it to private managers or investing it ourselves?  Does the PAP need the money to invest in some new invention that will miraculously transform our lives? I doubt it.

 Finally you may by now be able to guess my answer to Khaw Boon Wan’s contention that this is a very generous Budget. My answer is that this Budget is not only not generous, it is quite breathtaking in the audacity with which it attempts to fool Singaporeans. Singaporeans, it is your money. You may think you are  a free people but so long as you work to provide cash for a government which feels no pressure to live up to basic standards of accountability and transparency then you are actually enslaved.

An Open Letter to the Minister of Finance

Tharman20 February 2014

An Open Letter to the Minister for Finance

Mr. Tharman Shanmuguratnam
Ministry of Finance
100 High Street
#10-01 The Treasury
Singapore 179434

Dear Minister,

You recently called in the Auditor-General to audit the accounts of Aljunied- Hougang – Punggol East Town Council (AHPETC) because the auditor’s reports raised serious questions about the reliability and accuracy of the town council’s financial and accounting systems. The report raised equally serious concerns over alleged discrepancies in the accounts of the former PAP-run Aljunied Town Council. At issue is the sum of 1.12 million dollars, which the former Aljunied Town Council had recorded as a receivable  due from the Citizens Consultative Committees for improvement projects and whose validity has now been denied by both the Ministry for National Development (MND) and HDB.

I would remind you that the Reform Party, in its budget analysis for 2012 and 2013 and my open letters to you and to Christine Lagarde, has repeatedly raised serious questions about discrepancies and missing information in the way you present the Budget and the picture therein of the government’s finances.  In particular the Statement of Assets and Liabilities does not match with the total returns that Temasek and GRC claim to have earned since inception and the revenues earned from the sale of land.

We have repeatedly asked you for an explanation for these discrepancies and to supply the missing information. I therefore have great sympathy with my colleagues in the Workers Party who say that they have been unable to get data from government bodies for an item in the accounts run by the former PAP town council.

My experience has also been that lack of transparency and freedom of information makes obtaining critical data an impossibility.

May I remind you that the Auditor-General’s report for the financial year 2011/2012 given to the President and publicly available since July 2012 contained an item under the heading Ministry of Finance, “Presidents concurrence not obtained for promissory note issued.”  

 In short your Ministry had been found to have breached the Constitution and unlawfully granted a loan using taxpayers’ money to the International Development Association, the soft lending arm of the World Bank without obtaining the President’s approval as required under Article 144. The promissory note had to be returned and reissued in order for your Ministry to comply with the law. We were not informed what had happened to the monies the IDA had already drawn down. A junior civil servant was blamed and your ministry promised to put new procedures in place. I would ask you to let our taxpayers know what those new procedures and checks and balances are so that we can have confidence that the controls in your Ministry are sufficiently robust, reliable and accurate.
I believe your recent address to Parliament on 21 January 2014 when introducing a motion for increasing Singapore’s capital contribution to the IBRD (International Bank for Reconstruction and Development) raises further cause for concern over the reliability of your Ministry’s accounting treatments.

In Parliament you describe an accounting treatment for the above IBRD capital contribution which if correct renders  the treatment that you argued in court last year,  applied to Singapore’s loan commitment to the IMF false.  (in Civil Appeal No. 154 of 2012 (Jeyaretnam Kenneth Andrew.)

In court I argued that the IMF loan commitment was a liability and therefore caught by Article 144(1) of the Constitution and you argued at that time, that it was an asset and therefore not caught by 144(1). The judges accepted your version that it was an asset and therefore 144(1) did not apply and I lost my case.

I am writing to you to ask you to explain how you could now give a description in Parliament for a similar scenario, where Singapore is agreeing to provide callable capital to the IBRD on demand, explaining that this represents a liability not an asset.

The two bilateral pledge agreements are in fact very similar structures and therefore you cannot at the same time argue that one is accounted for as an asset and the other as a liability.

If I may refresh your memory the Hansard record for the IBRD motion records you as stating:

“The remaining 94% (of Singapore’s subscription), known as callable capital, will not be drawn by the IBRD except in extreme circumstances, when it cannot meet its obligations on borrowings or guarantees.  To date, the IBRD has never had to call on the callable capital.  It is an AAA-rated institution with a sound balance sheet for over 50 years.  Nevertheless, the full increase in Singapore’s subscription to IBRD’s capital will be charged to the Consolidated Fund, as the callable capital represents an increase in the Government’s financial liabilities. “

I thank you for pointing out to our people that no matter what impeccable history a AAA rated institution has, there can be no categorical case for stating that the callable capital will NOT be in fact called upon. In fact as you will be aware supranational financial institutions, such as the IBRD and the IMF, are awarded their AAA rating and quasi-sovereign status precisely because their member countries, including Singapore, guarantee to bail them out.

I refer you instead to the sentence in italics in which you agree with my previous arguments that a callable capital subscription of this nature represents an increase in the financial liabilities of the Government. In lay terms callable capital is callable- however unlikely- and therefore must be written down in our balance sheets in the Liabilities column not the Assets column.

At the time when it is finally called upon it then swops sides and becomes an asset though you have chosen to write down its value to zero. We are agreed on this – that an actual loan or called upon capital commitment must be listed as an asset. Our subscriptions to the IBRD give Singapore voting rights and allow us to influence policy and thus qualify as assets. I agree that until such time as our commitment is called upon it should be defined as a liability.

This is in fact exactly what I argued in court re the IMF.  You argued the opposite.

Your different explanations on two separate occasions now make you vulnerable to accusations of contradicting yourself or even knowingly misleading the court by presenting two opposing descriptions for the same thing. The only way you can avoid such accusations would be to argue that a loan commitment to the IMF is qualitatively different from a callable capital subscription to the IBRD. However nonsensical that argument would be.
Nonsensical maybe but it does not surprise me that Hansard shows that in the very next sentence you do indeed bravely attempt to defend the indefensible, namely to argue a distinction between the callable capital of the IBRD and that of the IMF. You do this by saying the IBRD subscriptions are ‘unlike’ our loan commitments to the IMF.  It is deeply significant that this reference to the IMF loan commitment is missing from your Ministry’s Press release. And it can only be found by scrutinizing Hansard.  Presumably you would not wish to widely publicize this explanation, not only because it is bunkum but also because it contradicts your previous statements in court and in Parliament.

Let us look at your exact words to Parliament and our people:

“Our subscriptions to the IBRD are hence unlike MAS’ subscriptions to the IMF’s capital, or what is called the “IMF quota subscriptions”, or its loans to the IMF, which are neither expenditures nor liabilities, but assets that remain part of our Official Foreign Reserves.”

In fact Minister you are being economical with the truth and attempting to mislead the people by lumping the commitment to make a loan to the IMF with the loan itself or with an increase in Singapore’s capital subscriptions to the IMF. Here are the three descriptions that you use to describe financial resources provided to the IMF that you run together in the above sentence:

1.”MAS’s subscriptions to the IMF’s capital”

2. “IMF quota subscriptions”

3. “Loans to the IMF.” 

No. 1  is a contingent liability until it is called then it becomes an asset.  

No. 2 is a different way of describing  No. 1

Once they are made, actual loans to the IMF (No. 3) are treated for accounting purposes as assets (though in line with US Budget practice a reserve should be taken against the risk of loss and the fact that they may never be repaid) but so long as the IMF loan commitment remains undrawn it represents a contingent liability for the government, whether when it is drawn it represents a loan or becomes an increase in Singapore’s capital subscription to the IMF.

This can be further demonstrated by examining your answer to a Parliamentary question on 12 May 2012:

“5   These are however temporary resources, provided to the IMF in advance of the expected increase in its permanent capital subscriptions (or quota subscriptions) that will be decided in early 2014.  Participating in the current round of bilateral contributions to the IMF will in effect bring forward part or all of Singapore’s likely share of the increase in the IMF’s capital base in 2014. [my italics]

 6   Singapore’s US$4 billion contingent line of credit to the IMF means that Singapore is expected to lend the funds when the IMF considers necessary.”

Your argument in court that the IMF loan commitment is an asset is furthermore contradicted by MAS’s own accounts for 2012-13. The accounts show our republic’s obligations to the IMF under Commitments, which includes other contingent liabilities such as capital expenditures, leases and a guarantee to Singapore Deposit Insurance Corporation in the amount of $20 billion.

Even you must be aware that a commitment to lend money to the IMF carries risks, however negligible you want the people of Singapore to think these are.

As the Finance Minister and head of the International Financial and Monetary Committee of the IMF, who regularly meets with the US Treasury Secretary, you will know that the US treats commitments to the IMF as contingent liabilities requiring approval by Congress (see here). Furthermore as required under the US Federal Credit Reform Act of 1990 loans made by the US Government are scored to reflect the degree of subsidy or risk of loss. In 2009 the US Congress appropriated US$5 billion to cover the risk of loss on the US commitment to the IMF.

Would you not agree that the government should establish a similar reserve in respect both of our subscriptions (whether called or not) and our loans (whether made or commitments)?

If the IMF loan commitment increases the financial liabilities of the Government  (including within the Government the assets and liabilities of the MAS as defined by Article 142 of the Constitution) then you have clearly breached Article 144(1). This follows from former AG Chan Sek Kheong’s opinion in 1998 that “transactions captured by Article 144(1) are those that, logically, increase the financial liability of the Government.

 There can therefore be no doubt that our loan commitment to the IMF should have received Parliamentary and Presidential approval. It further follows that by representing a liability as an asset to the Appeal Court you led the Court to rule that it was an asset and to dismiss my appeal.

Whilst you may use sophistry and a constitution re-written by the PAP government to be so vague as to be unfit for purpose and hoodwink our people – it will not pass on a global stage. Already our republic’s banking secrecy laws are bringing us under increasing pressure to comply with global money laundering regulations. We have become known as a haven for dirty money. Our love of accepting ultra rich individuals and large institutions that take advantage of our low tax regime and preferential treatment for non-citizens is also under fire.

As the budget is due to be presented tomorrow, I would hope recent events will persuade you to set out Budget 2014 in an internationally accepted and transparent format as prescribed by IMF and not the deceptive and incomplete format that your Ministry presented in 2013 and in previous years.

Yours faithfully,

Kenneth Jeyaretnam

Secretary General

Indonesia Reopens old Wounds


Recently Indonesia has taken the decision to name a warship after one of the marines who bombed MacDonald House on 10 March 1965 during the period of armed confrontation (known by the Indonesian word konfrontasi) between Malaysia (of which Singapore was then a part) and Indonesia.  For those who were not around and do not know the history the state of Singapore did not actually exist then.

I was born in 1959 and would then still have been a colonial subject of Her Majesty the Queen though at the time of the bombing this would have become Malaysian citizenship. I have a personal connection to that tragedy besides the geographic one. My mother,  Margaret Jeyaretnam who had come over to the Straits Settlement in 1955 to marry my father later became one of the first citizens of the new republic of Singapore.  She also became one of the first lawyers of newly independent Singapore . In fact she was senior to my father who was in the Government Legal Service at the time. She also later set up the Samaritans of Singapore as well as being Registrar of the Anglican Diocese of Singapore and Malaysia. In 1965  she was working for the law firm of Donaldson and Burkinshaw who were  situated at MacDonald House.

MacDonald House

Looking at that building today  it is hard to believe that it was the first modern office building with central air conditioning in Malaysia and our early version of a sky scraper. Presumably the reason why it was targeted.

I was only six at the time of the bomb blast. I remember being pleased at first, because my mother came home early from work that day. She then described how there had been a loud bang, that the whole building shook and that she was evacuated via the fire escape. I still remember how upset she was over the people who were killed and particularly over the death of the lift operator, a young Malay boy, whom she said always smiled and said hello to her every morning. It was a very real tragedy and very close to home.

This is a grossly insensitive act by Indonesia. The most simplistic comparison is with the Japanese PM’s decision to visit the Yasukuni shrine but in fact those were uniformed soldiers who were waging a war, which is not to downplay the war crimes committed by the Japanese against civilians and POWs.

In the case of   Osman Haji Mohamed Ali and Harun Said, the men in question may have been following orders but they committed a terrorist act that led to several civilian deaths and injuries.  In order to carry out the atrocity they had to take off their uniforms and wear civilian clothes . This is what enabled  Malaysia to hang them rather than treat them as  soldiers and POWs entitled to the protections of the Geneva Convention, which Indonesia clearly feels they were.    All of us globally have to take a hard line against terrorism. Sometimes it is hard to tell where war ends and terrorism begins but in that case I think  the line was quite clear because there wasn’t actually a war on at the time.

It is curious that the Indonesian government should choose  right now to bring an unpleasant episode between our two countries to the fore. A conspiracy theorist might think that the Indonesians are giving the PAP a helping hand, for motives unknown, to rally Singaporean support behind the government as the defenders of Singapore’s sovereignty.  LKY always traded very heavily on  external threats, the ‘danger at the gate’  theory keeping his citizens in permanent fear of imminent war.  With his health in such a grave condition and a  recent order for the electoral register to be revised,  the conspiracists who often maintain that LKY has already passed away will say that this is a manufactured fear to bolster PAP’s  standing.

Conspiracist theorists are not known for rational thought.  I am grateful to my readers for suggesting more rational  motivations.  What is more likely is that the old wounds being opened here are the criticisms over the Haze coming from Indonesia.  Indonesia is also about to go into Presidential elections so this kind of sabre rattling plays well for them at home.

What I find both unnecessary and unhelpful is that right on cue some of the Opposition parties  have taken this opportunity to call for the slashing of defence expenditures.  Bizarre! For the record, I believe that Singapore can easily INCREASE its defence spending AND  its spending on Health Care and  other safety nets. We need to increase our spending on defence not because of  Indonesia’s action but because  we will be better off with a professional army. Two years of National service is simply not long enough to train a really professional army. At the same time we should gradually reduce National service.

So far the Indonesian government shows no sign of backing down which is unfortunate for relations between our two countries but hopefully this is a blip and we can achieve a diplomatic solution.


Get every new post delivered to your Inbox.

Join 1,083 other followers

%d bloggers like this: