Miscellaneous Musings on the Financial & Economic Crisis

I'm feeling tired.

I work in an investment bank. I also specialise in derivatives. In addition, I am a lawyer.

Put that all together, throw in the financial crisis, and what it really means is that life at work has been hectic for me, for many months. The crazy market conditions have thrown up all sorts of unprecedented fires that need to be put out.

That includes, among other things, legal disputes with defaulting clients who will do anything they can to extricate themselves from a deal gone bad.

I can't give details here, of course. Confidentiality, and all that. But if you read the financial news from around the world, you'll get a sense of what I'm talking about. It's a global phenomenon.

Here's one example that I can discuss, since it's from the other side of the world, and very public, and has nothing to do with me:

President says Ecuador will default on debt
By GONZALO SOLANO – Dec 12, 2008

QUITO, Ecuador (AP) — President Rafael Correa announced Ecuador will not meet a debt payment next week, making good on threats to default on debts his government considers illegitimate.

Correa told a news conference Friday in the city of Guayaquil that Ecuador will not make a $30.6 million interest payment due Monday on $510 million in bonds due in 2012.

"This foreign debt will not continue to be paid," Correa said. Ecuador will offer a restructuring plan to creditors in hopes of avoiding a drawn-out legal battle, he said.

Correa threatened to default on Ecuador's foreign debt before his landslide victory in 2006, and his government has spent heavily on social programs like monthly payments for single mothers, seeds for farmers and building materials for new homeowners.

The still-popular president recently warned that falling oil prices may force his hand on a default. Oil is Ecuador's top source of foreign income, accounting for 40 percent of the national budget.

.... A presidential commission last month recommended that Ecuador default on almost 40 percent of its $10 billion foreign debt, accusing former officials and bankers of profiting irresponsibly from bond deals.

Correa, a leftist U.S.-trained economist, said then that he would seek to halt payment on the loans and hold foreign investment banks and ex-government officials responsible.

What does this mean? Well, in a nutshell, Ecuador doesn't have much money. We know why. Ecuador sells oil, and oil prices have collapsed, so Ecuador is broke. So Ecuador decided not to pay its creditors.

Next, you need to find a reason not to pay. So you set up an official presidential commission and have it recommend that Ecuador should refuse to pay interest on USD $4 billion of its debt. Need some moral justification? Well, just accuse the banks of making irresponsible profits out of these deals. But didn't Ecuador's own government approve of these deals in the first place? Oh. Well then, let's just choose a few government officials and make accusations against them too. Simple as that.

So in the past few months, this is the repeating story of my working life. As mentioned earlier, I'm not involved in the Ecuador matter at all, but I am looking at many cases where the client is broadly just doing the same thing - in other words, anything and everything it can to try to wriggle out of a deal gone bad. That includes employing tactics which are dishonest and unethical, and sometimes frivolous to the point of being baffling.

I spend hours on conference calls and meetings just unravelling and deciphering all this nonsense. Well, on the positive side, I guess this means I still have a job. I think. Haha.

Lots of people must be worried about their jobs right now. Tan Kin Lian had a suggestion on how to save jobs. The suggestion is so simple that I suspected that there must be something wrong with it. This is the problem when I do too much work of the kind of work I do - my mind grows too complicated for its own good.

Okay, let me put it simply. Tan Kin Lian's suggestion is simple. And good. Read it here.

Interpreting Statistics for our Education System

There is plenty of publicly available information about our education system. Interpreting that information, however, is not always easy. Furthermore our media frequently gets it wrong. Here's an example from TODAY:

Stumped by math, science at PSLE But Malays did better at‘A’ levels, statistics show
Tuesday • December 23, 2008

MALAY pupils continued to see a slight dip in performance at the Primary School Leaving Examination (PSLE) — especially in science and math — but showed a marked improvement at the GCE “A” levels as the revised curriculum took effect.

According to the Ministry of Education’s (MOE) annual report card, PSLE science has been a problem subject for Malay pupils, with pass rates going down from a high of 82 per cent in 2000 to 73.6 per cent last year.

It was the same for math, with just 56.8 per cent of Malay pupils passing the PSLE paper last year, compared with 64.6 per cent in 2000.

Chinese pupils had 89.8 per cent passes last year, down from 91.6 per cent in 1999, while Indians saw 74 per cent passes, a marginal fall from 74.7 per cent two years ago.

But Malay pupils made up for the slack at the lower level by registering their best performance in the “A” levels last year — 76.4 per cent getting at least 3A (advanced level) or H2 passes, as well as a pass in General Paper or the new subject, Knowledge and Inquiry — an 11.7 per cent improvement over 2000.

Here, the media is providing a snapshot of how the Malays are performing in the education system. The report says that Malay students continue to do worse and worse in maths and science at the PSLE level, but have shown very good improvement at the A-levels. So the reader's overall impression may be that the Malays aren't doing that well, but they aren't doing that badly either (because they managed to do a lot of "catch-up", by the A-level stage).

This conclusion is flawed. The simple reason is that the report says nothing about the percentage of Malay students who managed to qualify to take the A-levels at all.

If at the PSLE stage, the Malay students are already so far behind the other races, we know that the Malays must form a disproportionately large number of Singaporeans who drop out of school after the PSLE.

At the O-level stage, the gap widens even further. The latest 2007 statistics (available from the MOE) show that while 85.4% of the Chinese students achieved 5 or more O-level passes, only 59.4% of the Malays students managed to do the same.

In other words, once again a disproportionately large number of Malays will not even qualify for the A-levels (or for the polytechnics - see the cut-off points here as a rough guide). Instead many of these Malay students will have to drop out of school, or go to the Institutes of Technical Education.

As for the Malays who do enter junior college and take the A-levels, it is true that they do close the gap somewhat, relative to the other races. However, the majority of Malay students in each primary school cohort don't even get that far.

Letters From Our World-Class Government

Two posts ago, I featured a letter in the TODAY newspaper. The writer, Ee Teck Siew, suggested that when a customer seeks a housing loan, some kind of risk profiling should be done to help the customer determine whether he is able to afford this long-term obligation.

You may or may not agree with this suggestion, but Teck Siew certainly did express his idea clearly enough. His last sentence sums it up: "It is high time a more rigorous regulatory regime, one with a focus on educating consumers, be added to help Singaporeans in their financial decisions."

The Ministry of National Development has now replied. Rather predictably, its response was mostly irrelevant and rather inane:

Monday • December 22, 2008
Letter from Lim Yuin Chien
Deputy Director (Corporate Communications),
Ministry of National Development

In “Risk profiling for homebuyers?”(Dec 17), Mr Ee Teck Siew suggested that the Government and industry associations consider implementing a “fact finding process” to ensure that potential home buyers buy properties they can afford, based on their abilities to service mortgage loans.

Most homebuyers would need to obtain a bank loan upfront. The homebuyers would therefore be subject to credit screening by the banks, which will ensure that the home-buyers can afford the properties they intend to buy. In the credit checks, the banks would typically take into consideration the homebuyer’s income, age and other debt commitments.

Housing and Development Board (HDB) flat buyers taking HDB concessionary loans are required to obtain a HDB Loan Eligibility (HLE) letter before committing to the flat purchase. The HLE letter similarly takes into account the flat buyers’ age, income and other financial commitments to calculate the maximum loan quantum and the expected monthly installments to ensure that the flat buyer is not financially overstretched.

We thank Mr Ee for his feedback.

As I had already explained in my earlier post, it is quite true that the bank will definitely check its customer's credit, before granting him a housing loan. However, as I had also already explained, the bank performs these credit checks for its own benefit, not for the benefit of the customer. Furthermore the bank has no duty to advise the client.

Now if you were going to take a 30-year mortgage to buy a new home, here are some of the issues that you would want to think about first. How many children do you have, or plan to have? Do you expect them to go for higher education, and if so, how much do you plan to save for that? How much are you saving for your own retirement? If you were to become unemployed for six months, would you still be able to meet your mortgage payments?

Do you have aged parents to support? How much money might you need to do that? What are your own career prospects, at least for the foreseeable future? Will you be needing extra capital, to run your own business? How much does your current lifestyle cost to maintain? Does your spouse work, or is yours a single-income family? If the latter is the case, what's the game plan if that sole breadwinner were to lose his job, become ill or die?

You have to think about these kinds of questions, before you decide how much you can afford to borrow. The future can't be predicted with 100% certainty, but that's precisely why you need to do your planning.

These are also the kinds of questions which neither the banks nor the HDB will help you with. Therefore Teck Siew's suggestion was that perhaps some kind of regulatory process could be put in place to help Singaporeans work through such questions.

In its reply, the Ministry failed to address any of the above. It was really a nothing sort of reply. Almost completely meaningless.

Singapore's Very Own Subprime Crisis in the Making?

Some people will accuse me of being alarmist. But that's how I see it right now. It all follows from the data that the URA released last Friday:

ST Dec 20, 2008
10,450 on DPS
Cash-strapped buyers may sell low if they can't get sufficient loans
By Joyce Teo

PRICES in the the already fragile property market could be battered even more from next year if some of the 10,450 homes bought on deferred payment are dumped by cash-strapped buyers.

The danger is that when final payments are due at completion stage, buyers faced with falling values may just sell at fire-sale levels, putting even more pressure on prices.

And a key reason for buyers to dump units is that in today's tight credit markets, risk-averse banks will demand that buyers put in more of their own cash before they will agree to lending the balance.

Take a flat that was bought for $1 million with a deposit of $100,000. The buyer must provide $900,000 on completion but if prices have fallen too far, the bank will not come to the party with a loan for the full amount. So the buyer either dips into his own pocket or cuts his losses and sells - likely into a falling market.

The numbers, revealed for the first time by the Urban Redevelopment Authority (URA) yesterday, are sobering.

Two-thirds of the 10,450 uncompleted homes will come on stream in the next two years - 4,560 in 2009 and 2,540 in 2010.

They were sold from 2005 to this year. That includes a period when many properties were being snapped up by eager buyers with little regard for price.

Deferred payment was introduced during the Asian financial crisis to boost the market, but scrapped late last year. It was blamed for encouraging speculation, as buyers could secure a property for little cash down and then flip it for a profit before a brick had been laid.

Down payments are 10 to 20 per cent with the rest deferred until completion a few years down the track.

To make things worse, the URA said that the 10,450 new homes include sub-sale units. They were likely bought at even higher prices from speculators, who had already flipped the units for a profit.

The figures also show that the homes are spread far and wide - about 4,000 each in the core central and city-fringe areas and the rest in the suburbs.

..... Responding to the news, the Real Estate Developers' Association of Singapore said the figures released by the URA underscored the popularity of the scheme.

It maintained that the scheme was beneficial to the market and reminded buyers that although they can sell their units to other buyers on the market, they cannot easily repudiate sales contracts and return the homes they bought to developers.

Conditions are afoot, for a perfect storm. The general economy is worsening, making would-be property buyers very cautious. The financial crisis has also reportedly caused local banks to scale back on lending (and that includes housing loans). Also, a large number of homes (including non-DPS homes) are scheduled for completion next year and will flood the market simultaneously.

Don't forget the Foreign Factor too. In recent years, rental rates in Singapore have been propped up by the large number of foreigners working and living here. In fact approximately one out of five residents in Singapore is not a citizen. If the unemployment rates go up, many of these foreigners will give up their rented homes and return to their home countries.

And if you look at the stock market's performance in the past 1.5 years, you know that many Singaporeans must have lost a lot of their wealth there.

There we have it - bad economy; unwilling banks; oversupply of new homes; a shrinking tenant population; big-time losses in the stock market ... and the DPS issue.

I can't see how this can work out well. (Unless you're planning to buy a property, of course).

The Risk of Having a Roof Over Your Head

An interesting idea, from the TODAY newspaper:

Risk profiling for home buyers?
Such checks would minimise impact of sudden economic downturn on investors
Wednesday •

December 17, 2008

Letter from Ee Teck Siew

MANY Singaporeans who bought properties during the boom years have since been caught up by the sudden financial turmoil and found themselves in a bind as the property market has taken an about-turn and some banks have frozen lending.

Such investors stand to lose a lot of money should they sell in this declining market. The problem is compounded for “flippers” who are stuck with properties bought under deferred payment schemes, which they had every intention of selling as soon as prices went up. At its worst, economic turmoil can bring about the collapse of the property market, causing severe consequences to the economy at large.

Many people do not consider whether they can truly afford a long-term asset such as property when prices skyrocket, and blindly jump into the market hoping to get a good bargain — either to buy a dream home while it’s available, or to make a windfall by flipping the unit.

As with the financial advisory and insurance industries, maybe it is time that the Government and the relevant industry body implement a fact-finding process for potential home buyers. Under the Financial Advisers Act/Financial Advisers Regulations, the fact-finding process is mandatory before any investment product can be sold. The objective is to ensure consumers buy what they can afford, taking into account their needs and risk profiles.

Buying a property involves substantial financial resources and, for the Average Joe, probably a lifetime of commitment to service the loans. Many could end up enslaved to their properties. They could face significant financial losses when a negative equity situation occurs, in that their outstanding mortgage loans could exceed the market values of their properties.

It is high time a more rigorous regulatory regime, one with a focus on educating consumers, be added to help Singaporeans in their financial decisions.

The law says that before a bank sells you a financial product, the salesperson should ask you many questions to ascertain your risk profile. Based on your risk profile, the salesperson should then recommend a suitable product, and explain to you what that product is all about.

These legal requirements don't apply to all types of financial products. For example, they don't apply to credit cards, fixed deposits or mortgage loans. In the TODAY letter above, the writer suggests that perhaps the law should require banks to profile and advise customers who are seeking a housing loan.

Actually, if you ask a bank for a housing loan, it will definitely study you quite carefully. In fact, the bank will study you much more carefully than if you were asking to buy a Lehman Minibond. That's because where housing loans are concerned, the bank will be giving you its money to buy the house; whereas in the Lehman Minibond scenario, you will be giving the bank your money to buy the Minibond.

How does the bank study you, before granting you a housing loan? Well, it will ask for your salary statements; your income tax assessments; and/or your CPF statements. It will want to know your occupation, and where you work (and it may even make discreet phone calls to find out whether you really work where you claim to work). It may run checks to see if you've ever been made a bankrupt or defaulted on your credit cards. And of course, it will check the market value of the property which you want to buy.

Note that the bank isn't doing all these things for your benefit. It's doing all these things for its own benefit. It certainly isn't under any obligation to provide you with financial advice on whether the housing loan is suitable for you or not.

So when a bank agrees to give you a housing loan, this does not mean that the bank thinks it's good for you to take the loan and buy that house. It only means that the bank thinks that it's good for the bank to lend you the money and earn your interest. There's a difference ... and if you can't see it, you'd better look again.

As my regular readers know, I've recently been doing some house-hunting myself. As part of that process, I've met and discussed with a bank salesperson. Through these discussions, I've learned a few things about how banks assess the credit risk of their mortgage customers.

Here's one thing I learned - if all other checks are satisfactory, this particular local bank will grant its customers a housing loan such that the monthly instalment works out to be not more than 60% of the customer's current monthly salary. For example, if you earn $10,000 a month, then the bank will give you a housing loan such that your monthly repayment instalment works out to be $6,000 or below.

However, for the customer, the more relevant questions remain unanswered. Should you commit yourself to spending 60% of your monthly salary on your mortgage repayments? Is that financially advisable for yourself? That's what the bank won't tell you. You'll have to figure it out for yourself.

The Possibility of the Impossible Wage Increase in Singapore

Last month Mercer Singapore, a consultancy firm, did a survey. It polled 233 firms in Singapore. The survey indicated that wages in Singapore would rise by an average of about 4 per cent next year.

The government's response was quite loud and sarcastic. Here's an ST report (4 Dec 08):

Be realistic about wage increase
By Li Xueying

UNIONISTS and employer group Singapore National Employers Federation (SNEF) have scoffed at a recent survey that shows wages next year will increase by 4.2 per cent.

'It is highly unrealistic,' was how NTUC secretary-general Lim Swee Say put it bluntly on Thursday.

Also questioning the salary projection was SNEF president Stephen Lee who said a study by his federation showed a 'very different picture'.

'Given the sentiments, this 4 over per cent seems to be too high,' he said.

... Mr Bob Tan, chairman of Jurong Engineering, who is also vice-president of SNEF, started the dialogue yesterday with the first question, asking panel members Manpower Minister Minister Gan Kim Yong, Mr Lim and Mr Lee, for their opinion of the projection.

It met with this quip from NTUC president John De Payva: 'The unions sent bouquets of roses to Mercer and thanked them for their optimism.'

(Small note: Minister Lim Swee Say and his friends were speaking in their capacity as unionists ... but in Singapore, you can more or less take that as a government response).

Anyway, I was a little amused by Lim Swee Say's choice of adjective "unrealistic", and the Straits Times' description of Mercer's data as a "projection". Why?

Because the Mercer survey data wasn't a "projection". It was simply survey data. Data isn't "realistic" or "unrealistic". Data is just ... data.

Mercer Singapore wasn't trying to offer its own guess as to how much wages would increase next year. All it did was (1) ask 200+ companies for their expected salary increases in 2009, and (2) calculate the average. That worked out to slightly more than 4%.

Whether companies will indeed actually increase wages by that much remains to be seen. But to say that Mercer Singapore was making a "projection", and that the projection was "highly unrealistic" (when Mercer Singapore was simply doing a survey) doesn't seem, ummm, terribly intelligent on the part of Lim and friends.

On the other hand, Lim can't be all that dumb (I hope). So the essential question is - in these bad times, how would companies be able to afford a relatively generous 4% wage increase?

A rather brutal answer came to my mind. The 4% wage increase would be possible, if firms retrenched more employees now.

Of course, the poor performers would go first. The savings from these job cuts could then be used to partially fund higher wages for the remaining employees in 2009. In fact this way, the top performers might even get quite substantial wage increases:

Carrot for performers
One in 10 bosses invest more in talent, while two-thirds not cutting bonuses, incentives
Tuesday • December 16, 2008
Neo Chai Chin

THE recession is not stopping some bosses from throwing cash at top talent.

While most employers are shrinking or freezing their budgets for salary increases, more than one in 10 — or 13 per cent — are investing more in their high performers, a survey by management consulting firm Hay Group has found.

This targeted allocation of resources is shown in the pay increases Singapore companies are dishing out to their workers. Star performers will see base salaries increase by 60 per cent more than the company’s average this year. This is nearly twice the global average of 33 per cent, but lower than the Asian average of 67 per cent.

So, if the average Singapore employee gets a five per cent increment, the star performer would receive an eight per cent raise.

This is a reflection of the talent crunch in Singapore, said Mr Christian Vo Phuoc, country manager of Singapore for Hay Group’s reward information services.

Companies know they “cannot afford to be complacent and assume their high performers will not have motive or opportunity to leave”, he said.

The Importance of Speaking Up

I don't really want to rehash a topic which I've already blogged about, and which had already attracted more than 100 comments from my readers (I'm referring to the suicide of the ACS student, Tan Wen Yi). However I just saw this ST Forum letter:

ST Dec 5, 2008
Death over CCA: Every child's voice should be heard

I AM writing in response to the article, 'Boy leapt to his death over CCA' (Nov 27).
I was appalled and deeply saddened by his actions. Behind his cheerful disposition, no one had any inkling of the turmoil in his mind.

It was a senseless act that led to a loss of life over such a trivial issue as co-curricular activities (CCA). All he wanted was to pursue his interest and for his wish to be respected. He had said 'he had lost inspiration to run and insisted on the switch'. Although this was what was said, there could have been other underlying reasons.

But all that should have mattered was respecting his wish and giving him the necessary support. Every child has a voice that should be heard and his wishes should be respected. I cannot imagine any troubled child wanting to speak to a stranger over the phone about his problems, when those close to him fail to understand his problems.

I hope no other child will resort to such drastic measures. Instead of waiting for troubled children to seek help, help should be sent to them via regular talks at schools by organisations such as the Ministry of Community Development, Youth and Sports.

Samuel Wittberger

Who is this letter-writer, Mr Wittberger? I had no idea. I googled his name to find out (Google often turns up interesting information that way). I was half-expecting that he might turn out to be a teacher or a youth counsellor.

It turns out that Mr Witterberger is a 12-year-old kid who has just graduated from ACS Junior. Recently he was in the news - something about either being or not being Singapore's top Eurasian PSLE student. However, that's not the point.

My point is that I feel that it's great to see a young chap like Samuel writing to the press to express his view on a matter of public interest. Especially when it's a matter that's so relevant to youths in Singapore.

Too often, too many Singaporeans fail to speak up on important issues, even issues that should concern them directly. They are too stupid; too apathetic; too afraid - we know the usual reasons. But the failure to speak up for what you think is right is ultimately a failure to take a stake in your society and nation ... it's a sign of irresponsibility and immaturity.

Samuel may be only 12, but he demonstrates a different kind of possibility. He sets a good example - if there were many more young Singaporeans like him, then as a society we might yet be saved.

(Interestingly, despite being from ACS Junior, he chose not to go to ACS Independent. Perhaps he wants to do CCAs that actually interest him).

Mr Wang Has A Question

I came quite close to buying a new apartment recently. Construction has already commenced at the site and is expected to complete sometime in 2010.

In the end, I didn't go ahead. I am adopting a wait-&-see approach. I had a few concerns, one of which is discussed in the Straits Times article below. Basically I am a bit worried that the construction company might go bust before the project is completed.

If any of you readers are familiar with the property / construction sector in Singapore, please comment ....

ST Nov 28, 2008
Construction industry woes
Many of the 2,000 firms in DP Info's study have high debt, little cash and weak profitability
By Joyce Teo

THE local construction industry could already be in serious trouble heading into the economic downturn, new data from DP Information Group (DP Info) shows.

Ironically, the seeds of the problem were sown during the recent construction boom as firms snapped up projects using short-term credit to get things moving. As a result, many are heavily reliant on this short-term credit.

And they now face the risk of defaulting on repayments, should banks further tighten credit as times get tougher, the credit and business information firm said.

This finding was based on an analysis of the audited financial results of more than 2,000 construction firms lodged this year.

About three in four have an annual turnover of $10 million or less. The other 24 per cent are over $10 million. Overall, about 6,000 firms make up the construction industry here.

The analysis of the data found that many companies face not just one but multiple financial problems. These include: high levels of debt, low levels of liquidity and weak profitability. All these are all tell-tale signs of pending financial trouble, said DP Info.

Managing director Chen Yew Nah said: 'The research is a warning sign for the construction industry and while it does not mean a large number of firms will fall, it does mean they are vulnerable to collapse if their position deteriorates.'

DP Info's research showed that 45 per cent of the construction firms surveyed rely on short-term loans.

Of these firms, slightly more than half have debt levels that exceed the cash levels they have in the bank. This means that 27 per cent of all construction firms surveyed are likely to face financial difficulties if their short-term credit is denied or if the repayment terms are shortened.

Construction firms also face weak levels of liquidity. Of those surveyed, 45 per cent had less than $100,000 in cash. Of the firms relying on short-term loans, about 59 per cent of them with more than $100,000 in debt have less than $100,000 of cash at the bank.

A third weakness is profitability. About 35 per cent of construction firms reported net losses while 51 per cent have accumulated losses. Many construction firms do not have strong balance sheets in any event, but during the boom in the past two years, they took on more projects using short-term loans, said Ms Chen.

'The high level of dependence on short-term debt and the staggered pattern of receipts mean the construction industry will face difficulties if short-term credit dries up,' she said.

Many financial institutions may be reluctant to renew or extend credit if project sales are slow. If credit lines of constructions firms dry up, they may not be able to pay their sub-contractors or other firms promptly.

'What is needed is a coordinated effort by the Government, the industry and financial institutions to respond to the unique problems faced by the construction industry,' said Ms Chen.

For instance, an industry-specific response is required to ensure that the funds made available by the Government are best used.

The Government recently said it will help make available $2.3 billion worth of loans to help firms ride out the economic slowdown.

'Bankers need to articulate clearly what are the products available to help the sector, for example,' said Ms Chen.

Small construction firms are not likely to default as their debt exposure should not be extensive if their debt is related only to committed construction project works, said Singapore Contractors Association executive director Simon Lee.

Ms Chen said cash flow is emerging as a problem at some construction firms since they are not getting paid on time. 'Once you're in default, you have negative cash flow and are no longer a viable company,' warned Ms Chen.

Some firms have folded because of negative cash flow, even if they still have business to do, she said.

How Top Schools Stay At The Top

One way is the way I had mentioned, two posts ago. I quote myself:

"Top schools often coerce their less-able students into dropping their weakest subjects, even if the student actually wants to carry on with the subject. The school's fear is that the student might score a B or C, thereby dragging down the school's overall percentage of A's."

Of course, I have my skeptical readers. One of them, Lam Chun See, left a comment to suggest that my remark about top schools was just "a lot of speculation". Ironically, just today, the Straits Times Forum published the following letter:

ST Nov 29, 2008
Tuition not the way to success

WHEN I collected my Primary School Leaving Examination (PSLE) results in 1985, I was told I had been selected to attend a Special Assistance Plan (SAP) secondary school. This sudden 'promotion' did my parents proud but it gave me much stress. The moment I started at the SAP school, I fell from being the top girl to being among the top 15. For the first time in my life, I knew I was simply 'not good enough' and was bitterly disappointed with myself.

Since almost everyone ahead of me had tuition of various kinds, I told my parents I needed help too.It was not long before my single-income family began to channel huge amounts towards education investment - tuition for me and my three siblings. One day, the principal of my SAP school in Katong asked to meet my parents concerning my lacklustre grades. He wanted me to drop chemistry and English literature specifically, 'so as not to pull down the school standard'. After my mother pleaded with him tearfully, this humiliating episode ended with more tuition for me and less retirement funds for my food-seller parents. In all, I had tuition in six out of 10 subjects, not because I did badly, but because I was not good enough to achieve the As and Bs the school was furiously churning out ....

Rebecca Wang

Of course, I do not have the statistics to show how common this kind of practice is. I am sure that the schools themselves would not keep such statistics. Their reputation is what they care about .... remember? Why gather hard information about things that are best kept a secret.

Producing many A's is an achievement that a school should be proud of. However, producing many A's by pressuring the B-grade & C-grade students to drop their weak subjects is just window-dressing. It is nothing to be proud about.

It is similar to the structural unemployment issue that Singapore faced, a few years ago. A large number of Singaporeans were unemployed, because they lacked the relevant job skills. Singapore then imported a very large number of foreigners to work here, and granted them PR status or citizenship. On an overall basis, what happened?

Of course, the percentage of unemployed citizens/PRs went down (because of the large number of employed foreigners-turned-citizen-&-PR). And yes, that looks good on paper. But that figure in itself does not tell you whether the government had actually succeeded in helping any of those structurally unemployed Singaporeans to find new jobs or not.

Tan Wen Yi - The CCA Suicide

A tragic report of an apparently happy, healthy 15-year-old teenager suddenly killing himself, in front of his mother.

ST Nov 27, 2008
Boy jumped over CCA
15-year-old wanted a switch but parents tried to dissuade him
By Elena Chong

A 15-YEAR-OLD jumped from the 11th-floor bedroom window of his home - in front of his mother - after a disagreement with his parents over his intention to switch his co-curricular activity (CCA) in school.

Tan Wen Yi had wanted to switch from track-and-field to drama but his parents were against it. Up till then, no one would have thought Wen Yi as a troubled or even self-destructive sort. The Secondary 3 student of Anglo-Chinese School(Independent) was described as cheerful and was well-liked by his classmates and respectful towards his teachers, the Coroner's Court heard yesterday.

A police investigation report presented in court said that on Feb 13 this year, Wen Yi skipped track-and-field training to play football. He was caught by his track teacher and questioned.

He later complained to his classmate that he had been dealt track training sessions four times a week as punishment; he also said he was going to die, but his classmate assumed he was joking.

On their way home in the same bus, Wen Yi was cracking jokes and did not appear depressed.

Staff Sergeant Raymond Chng of the Tanglin Police Division said in his investigation report that Wen Yi's mother received a call from the track teacher that afternoon about her son's ditching his training for football. The teacher, Mr Ng Yeong Joo, 38, who had been told that Wen Yi wanted to switch to drama, told the teen's mother to advise him against it.

That evening, in a talk with his parents in their Stevens Road condo home over the matter, Wen Yi said he had lost his inspiration to run and insisted on the switch.

His parents tried to talk him out of it, but he refused to listen.

He then announced that he had planned to make the switch the following month, 'but I am going to do it now'. He headed for his bedroom, followed by his mother, who sensed something amiss. Before her eyes, he walked up to the window, opened the blinds, climbed onto the ledge, pushed the window open and jumped out. She rushed forward but was too late.

Staff Sgt Chng said that a day before, Wen Yi had sent a classmate a text message in which he said he was going to commit a crime - jump off a building as a 'final feat of rebellion' and let his craziness be known to the world. 'Will you as a friend accompany me on this day?' he had asked.

When he took up track-and- field in 2006, his attendance was irregular, but he blossomed into a medal-winner last year .....

I don't think that the school can be blamed for the suicide itself. Based on what the Straits Times reported, none of the teachers would have seen it coming at all. On the other hand, I wonder whether there is something fundamentally wrong with the way schools run their CCA programmes (or perhaps it's just ACS).

Should a student be punished for missing his CCA? And shouldn't a student be permitted to freely drop a CCA, if he no longer enjoys it?

It's just a CCA, for goodness sakes. Why coerce students into CCAs that they don't want to do? I thought the whole idea of CCAs was to allow students to pursue their interests.

Maybe Wen Yi's problem was that he had "blossomed into a medal winner" last year. Perhaps after that, the school just wouldn't let him leave the track-&-field team. Perhaps Wen Yi's sporting ability was viewed as important for helping the school to win some stupid MOE award for "Best in Sports" or something.

Here's the irony. Top schools often coerce their less-able students into dropping their weakest subjects, even if the student actually wants to carry on with the subject. The school's fear is that the student might score a B or C, thereby dragging down the school's overall percentage of A's.

So that's Singapore, for you. Schools will force you to quit studying what you DO want to study ... and force you to do the CCAs that you DON'T want to do.

PAP Town Councils - What A Fiasco

Nov 18, 2008
FINANCIAL CRISIS
Town councils' exposure: $16m
Another $3m invested in Pinnacle Notes Series 6 could be at risk
By Goh Chin Lian

EIGHT town councils (TC) run by the People's Action Party have about $16 million invested in troubled structured products.

The lion's share of $12 million is from two TCs: Holland-Bukit Panjang ($8 million) and Pasir Ris-Punggol ($4 million).

The products include Minibonds linked to bankrupt US investment bank Lehman Brothers and the now worthless Merrill Lynch Jubilee Series 3 LinkEarner Notes.

Dr Teo Ho Pin, chairman of the Holland-Bukit Panjang TC as well as coordinating chairman for the 14 PAP town councils, disclosed this yesterday.

Earlier in Parliament, Senior Minister of State (National Development) Grace Fu identified the two TCs when she was asked whether a stricter cap on risky investments was needed.

In his statement, Dr Teo defended the TCs' investment strategy, saying the funds are diversified across deposits, securities and other financial products.

Surely there must be some accountability for this. Unlike Temasek and GIC, town councils have no way of pretending that their money is not public money.

This is not the first time I am criticising how the town councils handle public money. You can read this post that I wrote last year: You Give Your Money To Your Town Council So That It Can Play The Stock Market.

Maybe I should change the title of my current post to "You Give Your Money to Your Town Council So That It Can Buy Lehman Minibonds".

The fact that town councils invest your conservancy fees into stocks, shares, bonds and structured products really just goes to show that Singaporeans have been paying way too much in conservancy fees.

What do town councils need so much money for, anyway? As of last year, they had more than $1,000,000,000 of excess cash in their sinking funds! Surely it doesn't cost that much to build a few playgrounds and basketball courts, and to pay some Bangladeshi workers to clear the rubbish and sweep the floor every day.

Note that town councils aren't responsible for maintaining everything in your HDB estate. Organisations like the National Parks Board pay for the maintenance of the parks; while the Land Transport Authority pays for maintaining the roads and bus-stops; the Singapore Sports Council pays for the maintenance of the public swimming pools and sports stadiums etc.

In yesterday's Straits Times, Dr Teo Ho Pin, coordinating chairman for the 14 PAP town councils, is reported to have said that town councils need to build up their sinking fund for long-term improvement works, like replacing lifts every 28 years.

Seems like a poor excuse to me.

Under the Lift Upgrading Programme, the town council pays only a very small fraction of the overall cost. For example, according to the HDB website, on average the town council pays only 7.6% of the cost of upgrading the lift for a 4-room flat in a standard block, or approximately $900.

Holland-Bukit Panjang and Pasir Ris-Punggol lost $12 million. That could have upgraded lifts for more than 13,000 flats. All at one go ... and not over the next 28 years!

Not Exactly A Fair Fight

ST Nov 17, 2008
150 YEARS OF SERVICE
Reinvention delivers success to SingPost
New technology and fresh ideas have helped it stay on top
By Grace Chua

SINGAPORE'S flagship postal service marks its 150th year as an independent organisation this year, but the grand old dame has more than just longevity to celebrate.

Last year, Singapore Post (SingPost) won the prestigious World Mail Award for the quality of its mail services, in which at least 98per cent of mail posted is delivered by the next day.

It pipped seven other postal services, including those from the United States, Britain, Germany and Spain, for the award.

I thought this was quite funny. Considering that it takes at most 2 hours to drive from one end of Singapore to the other end, it seems practically impossible for Singapore to lose this kind of competition to the likes of the United States or Britain.

The UFOs Have Landed!

In the Straits Times today, the stunning headline news was that for the first time since God knows when, Singapore's labour chief actually spoke up for the workers.

Yes, instead of telling the workers to accept pay cuts or that they were obsolete and should go retrain themselves properly, he actually rebuked the organisation that laid them off:

ST Nov 14, 2008
DBS slammed for layoffs
By Sue-Ann Chia

LABOUR chief Lim Swee Say on Friday slammed DBS Bank for failing to consult its staff union on retrenching its workers or exploring other cost-cutting measures first.

'We are disappointed by the sudden decision,' he told The Straits Times when asked for his views on the DBS layoffs.

'There was no prior consultation with the DBS Staff Union. There was no exploration with the union on other cost reduction alternatives,' he said in an email reply on Friday.

Mr Lim, an advisor to the DBS staff union, said this lack of communication has weakened the trust between the bank's management and union.

Not mincing his words, he added: 'It is regretable because trust takes a long time to build but a short time to destroy.'

His criticism came on day 2 of DBS' retrenchment exercise, a move that has drawn flak from the public as being pre-emptive rather than reactive.

Mr Lim laid it on, saying: 'Perception on the ground is that DBS has decided on retrenchment as the first resort. Ground reaction is critical and highly negative.'

DBS is laying off 900 workers, with slightly more than half coming from Singapore and the rest from its Hong Kong office.

DBS CEO Richard Stanley must be feeling all panicky and nervous now. After all, this is Singapore you know.

The labour chief who just rebuked Richard also happens to be a minister from the ruling party headed by the Prime Minister who is married to the woman who runs the investment holding company that is the majority shareholder in the bank where CEO Richard Stanley is, after all, just an employee.

If Lim, Lee and Ho are all on the same page on this issue, then Richard's buttocks might soon get spanked behind closed doors ....

But of course it is possible that Lim, Lee and Ho are not exactly on the same page. Lim may just be feeling a little offended, because he, despite being the Secretary-General of NTUC and an advisor to the DBS staff union, wasn't consulted at all, before DBS retrenched a few hundred of its employees.

But can you really blame Richard? I mean, everyone knows that employee trade unions in Singapore are supposed to be docile, subservient and useless. How the heck was Richard to know that before retrenching the workers, he was supposed to consult the bank union ....

Damage Control Exercise for DBS

ST Nov 12, 2008
DBS overhauls sales tactics
Customers will be asked tough questions before investing, says chairman
By Ignatius Low

SINGAPORE'S largest bank is making big changes to the way it sells investments to customers, as it continues to battle criticism over losses suffered by those who put money into its High Notes 5 product.

DBS Bank plans to ask more detailed questions about a customer's background and how he got the money he is investing. And it will turn away those who are not suitable for a product, even if they insist on buying it.

The bank has drawn flak for arranging and selling structured products that have been rendered worthless by the collapse of American investment bank Lehman Brothers.

Some customers claim that the risks were not explained to them.

All of the above is good stuff. But it fails to address the essence of the problem. And the essence of the problem is the way that the sales staff (not just in DBS, but in other banks too) are rewarded and remunerated.

They are rewarded and remunerated for selling financial products. The more they sell, the better. And if they don't meet the sales quota, they are sacked. Simple as that.

Naturally, the salesperson focuses more on closing the sale, than on whether the product is suitable for a particular client.

It's a little like running a school. The school may have a nice-sounding mission statement which says that it aims to cultivate good character, moral values and all-round development in its students. But if the principal assesses and appraises the teachers mainly by counting the number of A1s that each teacher's students produce, then academic grades will be what the teachers focus on.

Are there any alternative methods, for rewarding the sales staff in banks? Sure. The alternatives aren't new ideas either. Many financial advisory firms use them.

For example, DBS sales staff can be rewarded based on the total amount of investments that their clients continue to maintain with DBS, through that individual salesperson, over the years. This incentivises the salesperson to build a long-term relationship with the client, instead of just trying to close a quick sale and get the commission. This also means that the salesperson will be more careful not to sell inappropriate products which have a higher chance of triggering a dispute with the client later.

Another alternative is to ensure that the percentage of commission/recognition that a salesperson gets for selling a product, does not vary from product to product, but is tied instead to the amount actually invested by the client. Since the salesperson would have no personal vested interest to sell, say, Product A over Product B, he would focus instead of recommending whichever product (A or B) he genuinely thinks is most suitable for a particular client.

The Little Kiddies And Their Beauty Sleep

Back in 2006, there was a public discussion on whether primary schools should start their day a little later, for example at 8:00 am or 8:30 am, so that kids could get more sleep. (Thanks to my trusty old blog, I actually recall such things).

As far as I know, that discussion never went anywhere. Parents and teachers said a lot about it; a few doctors chirped up about the importance of adequate rest; some principals were interviewed for their opinions; and a few eccentric people even talked about the necessity of the hardship of getting up early as an essential character-building tool. But in the end most primary schools continued to start at the traditional time 7:30 am.

Back to the future. Recently my wife and I attended the orientation programme of my son's primary school (he begins Primary One next year). We learned that while the school officially started at 7:30 am, all the kids were to be in school by 7:10 am sharp.

Why? Because all the kids were to attend a daily 20-minute reading programme, before school officially began. On Mondays, Wednesdays and Fridays, they would read books in English. On Tuesdays and Thursdays they would read books in Mandarin. In addition, the weaker students would be identified. Parent volunteers, pre-screened for their own language competencies, would be around every day, to help the weaker kids with their reading.

So it seems that not only are schools not starting later, some schools are starting earlier.

Personally I don't mind, because our home is quite close to the school and it won't be too difficult to get the kid there on time. The kid probably won't mind either, because he is very fond of reading.

However, it does make me wonder a little about our education system. The Singapore government likes to say that it has high standards, but are the standards high because the system is really good? Or because the students these days are just working harder and harder and harder.

20 minutes per day works out to about seven or eight extra hours per month. This particular school has just managed to create an extra full day, out of the monthly calendar.

Along the same lines, one notes that private tuition centres blossom everywhere in Singapore. Evidently, the formal education system in itself is perceived as inadequate for our students' needs. A high percentage of them look outside their schools, for the additional help they need.

The next time our Education Minister says that Singapore produces so many excellent students because of its world-class education system, perhaps someone should suggest to him an alternative explanation. Singapore produces so many excellent students because of its world-class tuition classes.

And Then Suddenly The Tide Came In ...

An update on Singapore's casino projects:

ST Nov 8, 2008
Sands gives reassurance
By Lim Wei Chean

THE top suit behind troubled casino operator Las Vegas Sands met the Singapore authorities this week, and yesterday gave a fresh commitment to completing the Marina Bay integrated resort (IR).

Mr Sheldon Adelson, chairman and chief executive officer of Las Vegas Sands, said: 'In the light of recent turmoil in the global markets, I felt the need to personally reaffirm our commitment to the success of Marina Bay Sands. I am pleased to say that the Singapore Government's support of our project remains strong.'

The statement from Las Vegas Sands did not specify whom Mr Adelson had met.

But the consensus among analysts is that if the project were in trouble, the Government would intervene ....

Yes, I think so too. The government has pinned so many of its hopes on the IR projects that it surely wouldn't allow the projects to fail. But it sure would be interesting if we knew what was being discussed behind closed doors. My guess is that in the ultimate worst-case scenario, Temasek Holdings would appear as the gallant white knight, perform its national service and pump in money to save the struggling project.

Even if the Sands project does go ahead successfully and completes on time, one major difficulty is that the tourism and gaming industries are "good times" industries. In bad times, people save their money for the essentials. Holidays and casinos are not essentials.

Which means that if the world heads into a really bad economic patch in the next few years, the IR projects can do little to help Singapore. Few tourists would come and even fewer tourists would gamble.

Sands' reassurances over the future of the Marina IR follows fresh doubts raised by its auditors about the company's ability to continue operating.

In a regulatory filing on Thursday to the United States Securities and Exchange Commission, PricewaterhouseCoopers said the casino operator, which has US$8.8 billion (S$13 billion) in long-term debt at the end of June, would not be able to meet lenders' requirements unless it cuts spending on developments, boosts earnings at its casinos on the Las Vegas strip and raises more capital.

It was also said to be relooking projects under way in Las Vegas, Pennsylvania, Macau and Singapore.

Las Vegas gaming analyst Bill Eadington said the company has lost over 90 per cent of its stock value in 13 months. Flying that close to bottom, the very existence of the company is in question, not just one of its developments, he added.

And that is scary. Especially because of the extent to which the company has borrowed from our three local banks (see below). They would be very badly hit, if the project were to fail.

The Singapore authorities have so far declined to say more. When contacted, the Singapore Tourism Board would only refer to its earlier comment that it was 'in talks' to 'facilitate the success' of the development.

Singapore's banks, OCBC, UOB and DBS, which have significant exposure as lead arrangers for the project, remained optimistic.

About half of the $5.4 billion credit facility for Marina Bay Sands has already been drawn upon, according to UOB Kay Hian's latest report.

OCBC chief executive officer David Conner said the loan is 'ring-fenced' with no exposure to the company's projects in Las Vegas or Macau.

In this context, "ring-fencing" probably means what it usually means, in the context of project finance. That is, the financing is structured such that the lenders are to get repaid out of the cash flows generated by the project (when it's up and running). The cash flows go nowhere else, until the lenders are repaid, and the lenders can look nowhere else except to those cash flows, to get their money back.

This means, of course, that it is essential for the project to succeed in getting up and running. If the project stalls halfway, then the banks would lose big money.

The Legal Complications of Oral Sex

ST journalist Elena Chong has been covering the crime beat for many years. When I was still a DPP (and that was quite some time ago), she was already an old hand at it. We often had little chats outside the courtroom on the latest 'hot' cases.

For such an experienced journalist, she wrote a rather bad article:

ST Nov 7, 2008
Charged for oral sex
By Elena Chong

A MAN was charged in court on Friday with three charges of having oral sex with his Indonesian maid.

Ahmad Dapon, 53, allegedly engaged in oral sex with the 31-year-old woman in his flat on three occasions between April and May last year.

He is represented by Mr Subhas Anandan.

If convicted, he faces a jail term of up to 10 years and a fine.

The case has been fixed for a pre-trial conference on Nov 25.

Oral or unnatural sex is an offence in Singapore, punishable with a life sentence, or up to ten years jail and/or a fine.

The words in bold are not accurate. They used to be accurate. However, the Penal Code was extensively amended in 2007, and many of Singapore's criminal laws were changed.

Oral sex is no longer an offence in Singapore, unless it is non-consensual or it is between two male persons. Also the penalty is no longer the life sentence, or up to 10 years jail, and/or fine.

So the true picture of Ahmad Dapon's case is more likely to be one of the following scenarios:

(1) Ahmad is charged for non-consensual oral sex with his maid, and under the new section 376. Thus what he faces is actually up to 20 years imprisonment, and fine (no caning, because he's over the age limit);

(2) Ahmad was charged for oral sex under the Penal Code before it was revised (that is, he was charged under the old law) and for some reason the charge against Ahmad has not been amended.

Scenario 2 leaves the DPP, the judge and the defence lawyer with assorted technical questions to sort out. Like, whether you can charge someone for an offence which was an offence at the time he allegedly did it, but has ceased to be an offence by the time the case goes to court; or whether you should amend the charge to the new offence (meaning that you may have to prove certain additional elements - eg the maid's non-consent).

Anyway, here's the point. The ST shouldn't have published this sentence "Oral or unnatural sex is an offence in Singapore, punishable with a life sentence, or up to ten years jail and/or a fine". Because it simply isn't correct. It stopped being correct sometime late last year.

It's OKAY, folks. All you consenting husbands and wives out there, carry on having fun. Consenting girlfriends and boyfriends too.

Errr, I mean consenting girlfriend with consenting boyfriend; or consenting girlfriend with consenting girlfriend; but not boyfriend with boyfriend, whether consenting or not. That's just how the law goes.

It's Quite Easy To Be On The Front Page & Not Notice It

Apparently, the TODAY newspaper quoted me on its front page, a few days ago. I only saw it myself today - a little bird told me.

And before anyone asks, no, the man with the headgear is not a refugee banker, he's actually Archbishop Nicholas Chia.

They are refugee bankers
Professionals seek to swap Wall Street for Shenton Way
Monday • November 3, 2008
Lin Yanqin

LOST your job at Lehman Brothers? Turfed out in London’s financial crisis? You could always try for a job in Singapore.

And, recruitment firms and headhunters report, this is just what an increasing number of one-time high-flyers from Wall Street and the City of London are thinking.

They say they are seeing a huge rise in the numbers of banking and finance professionals from the United States, Europe and Australia sending in their details — in the hope of getting work here or elsewhere in Asia.

Mr Tim Hird, managing director of Robert Half Singapore, which specialises in recruitment for the finance sector, said that over the last six months, the firm has seen a 300-per-cent increase in resumes. The numbers shot up after the firm launched a website last month dedicated to facilitating recruitment from overseas.

“The Wall Street crisis has definitely attracted more financial professionals from the US to Singapore and Asia,” he said. “In fact, the current economic crisis presents an opportunity for both recruiters and job seekers.”

Companies here are taking this opportunity to recruit financial talent that has been laid off, while candidates are more willing to accept job opportunities that open up to them, he said.

One example is given by blogger Mr Wang, who claims to work in the banking sector. He wrote on his website last month about interviewing a lawyer who worked at the now-collapsed Lehman Brothers investment bank.

“The candidate has seven years of working experience more than me. That makes him very senior. His stated expected salary, however, was quite low (lower than mine). I sensed a little desperation. He’s very eager to grab his wife and kids and get out of London (now populated with unemployed ex-bank employees) and come out to Asia as soon as possible,” Mr Wang wrote.

Ms Andrea Ross, director of recruitment firm Robert Walters Singapore, said that resumes have been flowing in from the UK over the last few months — from candidates who have already been retrenched and from people who fear that they might be.

“We are not seeing as many CVs coming from the US, possibly due to them having to pay taxes both in the US and Singapore. Hence, it does not necessarily work out to be that cost-effective for them as it is for someone coming out from the UK,” she added.

For the rest of the article, click here.

Church versus State on a Matter of Life & Death

ST Nov 3, 2008
Euthanasia is immoral
Catholic Church condemns practice and urges doctors to reject it as it 'violates medical ethics'.
By Lim Wei Chean

THE head of Singapore's Catholic Church yesterday publicly condemned euthanasia, a topic that has grabbed headlines in recent weeks as the Government considers changes to the laws that govern dying.

Archbishop Nicholas Chia wrote a letter on mercy killings that was read out during Sunday services at the country's 30-plus Catholic churches.

In it, he underlined the Church's views on death, describing euthanasia as 'immoral' and also calling on doctors to reject the practice.

'One cannot choose death and ask to be killed. When they do this, they are not only
committing the crime of suicide, but also compounding it by making another person a partner in a crime,' he wrote.

Health Minister Khaw Boon Wan discussed the issue of euthanasia last month after it was raised in the press.

The Government has not proposed legalising the practice, but has broached the idea of making changes to the Advance Medical Directive, or living will. The document instructs doctors not to artificially prolong the life of a terminally-ill patient with machines. The changes would make it easier for Singaporeans to turn down that care.

Opponents say that is one step on the slippery slope to euthanasia, which the Catholic Church has long considered taboo alongside other controversial practices like abortion.

Archbishop Chia condemned mercy killings in his letter, which was read out All Souls' Day, the annual day of remembering the dead.

This would be rather interesting to watch. My own view? The Catholics can do whatever they like among themselves, but they should leave the non-Catholics out of it.

Of course, in reality, the Catholics will probably seek to block the passing of any new law in Singapore that makes euthanasia more possible for people in general (not just Catholics).

I wonder how many Catholics we have, among our Members of Parliament.

Money for a Kidney and a Life

A few months ago, I wrote several posts about the possible legalisation of human organ trading. Here's one of my posts.

My view was that it was feasible to legalise such activities. I felt that the organ donors should be entitled to receive payment. I also felt that the payment amount should be fixed by law (and not allowed to operate as a free market), and could be periodically reviewed and revised.

The Singapore government has now announced that it will proceed substantially on those lines.

ST Nov 1, 2008
Kidney law to change
By Salma Khalik

FROM early next year, the law will be changed to allow compensation for live kidney donors.

The amount should not be so large that it's seen as inducement, said Health Minister Khaw Boon Wan when he announced it yesterday.

Both the World Health Organisation and countries like the United States say it is ethical to compensate donors, so they do not suffer for their act of altruism.

Mr Khaw said the amount of compensation is not 'hard wired' into legislations of countries such as the US, Britain and Australia that allow it. Singapore will follow suit.

He hinted that the sum will be at least five figures, and possibly six. The actual amount of just compensation will be left to a committee, which will be set up to look into this.

In the recent organ trading case involving former retail magnate Tang Wee sung, the indonesian donor was to have received $23,700 for his kidney, from the $300,000 Mr Tang paid the agent.

That case sparked a debate on whether it is ethical to pay someone for an organ. Yesterday, Mr Khaw repeated that it is not ethical to do so.

But he added, 'The ethical community, including the World Health Organisation, has clarified that it is ethical to compensate, so long as the compensation amount is not so big as to induce.'

Khaw says that it is not ethical to "pay" someone for an organ. However, he also says that it's ethical to "compensate" someone for an organ ... so long as the amount is "not so big as to induce".

So he tries to change the packaging, but the substance is still the same. "Pay", "compensate", whatever you call it, it's still money. Whether the amount is big enough or not big enough, to "induce", well, those are all highly subjective considerations.

To me, the biggest consideration is the need to save human lives.

The Foreigner's Guide to Getting A Subsidised University Education in Singapore

Found this in my inbox too. The writer requested for anonymity, hence I'll just call him Mr Chia:

"Hi Mr Wang,

A very good morning to you. I understand that you have stopped blogging on sociopolitical issues but there are some burning questions to ask which I don't really understand. I am aware of your busy schedule so I shall keep my questions short.

I am currently a student in one of the local universities. I was shocked to hear that foreign students who are not scholars are currently being granted the tuition grant at the same rate as Singaporean students. This came from a conversation between myself and a few foreign friends so I daren't say it is applicable to all.

Furthermore, the only obligation they are required to serve is that of working in Singapore for 3 years upon graduation. Isn't that ironic as Singaporean males have to serve National Service and continue with this liability upon graduation and etc.

I guess you know my point. I wish to clarify about the differences between being a Singaporean Citizen, a PR as well as a pure foreigner. What are the differences in terms of benefits (as well as the liabilities)?

These questions are fuelled from a conversation between myself and a few friends of mine who are high fliers from top schools too. Amongst them are scholars who don't think they'd be staying in Singapore upon graduation."

Nothing new here, so I won't say very much. The "same tuition grant, as long as you work 3 years in Singapore" rule has been around for ages. However, in bad economic times (and those are the kind of times we're currently heading into), a new ironic twist emerges.

The fresh grads (Singaporean as well as foreign) will all start looking for jobs in Singapore at the same time. There won't be enough jobs to go around. But the foreign grads will be forced to stick around and keep looking, because of the 3-year rule.

Finally their finances will be pushed to the breaking point, and they will appeal to the government: "Please exempt me from this rule, because I've tried my best for so long, and I still can't get a job here in Singapore. I want to go home to China / India / Malaysia / Vietnam".

Then the Singapore government will say, "Oh very well, I release you from this obligation." So the foreign chap packs up his bags and leaves Singapore for good.

The silver lining in his cloud is still very silver. In other words, the foreign student still gets a pretty good deal. After all, for 3 or 4 years, his university education was heavily subsidised by Singaporean taxpayers. After he gets his degree, he just packs up and leaves .... with the blessing of the Singapore government. Wowee.

When discussing such issues, some naive Singaporean will chirp out, "Oh, but this happens everywhere. For example, Harvard University would also give out bond-free scholarships to foreigners."

Yes, silly, but Harvard University doesn't make the American taxpayer pay for that. Harvard comes up with its money.

Little Ironies of Life in Singapore

From the Straits Times:

ST Oct 26, 2008
Investors flock to 3rd rally
By Gracia Chiang

Well-educated, English-speaking investors flocked to Speakers' Corner yesterday to make their frustrations heard.

For the third week in a row, about 500 investors gathered in Hong Lim Park eager to find out how they can seek redress for Lehman-linked financial products they claim were mis-sold to them.

Organised by former chief executive officer of insurer NTUC Income Tan Kin Lian, the rally was intended for those who had sunk their money into such products to band together and exchange suggestions ...

One year ago, if you had done a survey among those 500 Singaporeans and asked them, "Do you think that Singapore should allow public protests?", what do you think they would have said?

I believe that many of them would have gasped in horror and said, "Nooooo, certainly not! Rallies are dangerous and will lead to violence and bloodshed. The PAP is right to make them illegal."

The Astrologer Plays Ball

It must be fun being a politician. You can make rather meaningless statements and the media will report them quite seriously, as if you really knew what you were talking about.

MM Lee predicts a turnaround from the recession in as little as three to five years
October 25, 2008

THE current economic slowdown could last three to five years — if the banking system does not malfunction. This is the assessment given by Minister Mentor Lee Kuan Yew at the Singapore Human Capital Summit on Friday.

MM Lee was speaking at a dialogue with summit participants facilitated by Insead’s Dean of Executive Education, Professor Narayan Pant.

“Nobody can say how long or how deep this recession will be,” said MM Lee. “... My own guess is, if the banking system does not malfunction, then in three, four or five years, the world economy will be restored.

If the banking system malfunctions, then I don’t know. It would be a very difficult process.”

What on earth does MM Lee mean by a "malfunction" in the banking system?

The bankruptcy of banks? Huge leaps in LIBOR? A global liquidity crisis? Governments stepping in to guarantee bank deposits? The death of financial engineering? Widespread retrenchments and redundancies in the banking industry?

All of the above have already happened. But from the way that MM Lee spoke, he doesn't seem to regard these events as constituting a "malfunction", LOL.

Which only leaves us to wonder what exactly MM Lee means by "malfunction". A mystery hedge word. I bet MM Lee himself doesn't know, haha. You are always right, if you just can't be wrong.

Wheeee!

The diagram illustrates the performance of the Straits Times Index over the past 5 years. The spectacular dive over the past 5 months takes us back to the levels last seen about 5 years ago.

The same things are happening to just about every stock market in the world. So much for diversification, LOL.

At some point in time, equities must become cheap enough to constitute a very good buy. As usual, the million-dollar question is - when?

Methinks, not any time so soon. I'm going to sit on my cash and come out to look around again - next year.

Students And Their Career Choices

Daphne Maia sees a problem with the Singapore education system. She thinks that our students lack career guidance and therefore often end up choosing courses for which they neither have aptitude nor interest.

While it's a good idea to have some kind of formal career guidance, I can see one difficulty. Teachers in Singapore are precisely that - teachers - and the majority of them don't know the working world, outside of the school environment. Thus they don't come with a wealth of career experience to share with their students (apart from a career in teaching).

My (mildly radical) suggestion is that schools heavily beef up their CCA programmes, and offer (1) a wider range of activities, and (2) more support and resources for each activity. The idea is to give students more room to explore their individual interests over a number of years.

This exploration is experiential - the student will actually do things, develop skills and have fun along the way. Through this process, the student gains some self-knowledge on the type of activities and environments (and by extension, the type of future career) that might appeal to him. Such self-knowledge, I believe, would go much deeper than what a student would most likely get out of a 30-minute, one-off session with a career counselor.

Many CCAs would not have a direct viable equivalent in the working world. Nevertheless the personal insights may be valuable. For example, as a student, my friend Adrian Tan joined the debating team and took part in many competitions. This eventually led him to choose a career as a litigation lawyer, where he makes a living by making arguments in court.

Another friend of mine (who shall not be named, because her current job is hush-hush) was the chairman / president type in school. She led various student committees in her secondary school, JC and university days. Now she holds a policy-making job within a certain government ministry, where she no doubt continues to lead her committees in her usual firm, no-nonsense style.

Some other examples. Joining a science club may help a student see whether R&D work would interest him. Joining the National Cadet Corps may help him to see whether a military career is a plausible option at all. Writing for a school publication may spark off an interest in journalism.

An art club may provide opportunities for students to test their interest in design-related jobs. Students involved in fund-raising projects may try their hand at marketing. The IT club allows students to see whether information technology appeals so much to them that they might one day pursue a career in it. And so on.

All of the above assumes that the student participates earnestly enough in his chosen CCAs, to gain such insights. It also assumes that the school allocates enough resources for the CCA activities to be carried out with some depth.

I end this post, by showing you an interesting student project - here it is. As NTU is not providing any financial support for this CCA, you might wish to make a donation to the students who are running it.

Reflections on a Job Interview

I interviewed someone yesterday. He's a lawyer in London. Until recently, he was employed by Lehman Brothers. Or maybe he officially still is, but I think his salary no longer arrives.

The candidate has seven years of working experience more than me. That makes him very senior. His stated expected salary, however, was quite low (lower than mine). I sensed a little desperation. He's very eager to grab his wife and kids and get out of London (now populated with unemployed ex-bank employees) and come out to Asia as soon as possible.

Hmmm. This is going to be a trend. It will go on for years. During the good times, financial institutions in Singapore and Hong Kong were short of finance professionals. Due to the market shortage, their salaries climbed high (mine included). Now, however, a huge number of well-qualified banking professionals in London, New York and elsewhere have become unemployed and are flooding the market.

Many will aim to come to Asia. I guess the overall median salaries will have to go down. They probably have already started going down.

Good thing I specialise in various Asian jurisdictions. That gives me some insulation. You will hardly find any banking lawyers in London or New York, who are familar with the banking-related laws in countries such as Thailand, Korea, Malaysia or China. My Asian experience is what keeps me relevant (relatively speaking).

Your Money in Singapore And One Cool Cat

Just yesterday I was calling DBS in Hong Kong, trying to find out how to open a new savings account there and transfer some money over. The silly lady on the phone asked me why I wanted to do this, since I am already a DBS customer in Singapore and am neither working or living in Hong Kong.

"Because the HK government guarantees all bank deposits in Hong Kong, and the Singapore government doesn't," I replied. Doesn't she read the newspapers?

However, today's news is that the Singapore government has also decided to guarantee all deposits, in any currency, placed with banks in Singapore. Therefore you won't have to perform any of those $20,000 tricks which I discussed in my earlier post here.

Side note: Now that the government has given such a guarantee, does the Singapore Deposit Insurance Corporation still have a reason to exist? Yes, because the government's guarantee is only up to 31 Dec 2010. However, till then it does seem that the SDIC has no practical significance and will fade away into obscurity.