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The lie behind “Not the W word, pls…We’re Singaporeans!”

Mention welfare spending, one will be accused being a “champagne socialist” or a communist dangerous to the nation. But the PAP elites do not mouth the plainly idiotic platitude of their die-hard supporters. Theirs came straight out of the best political minds money can buy: “You want welfare….look at the debt crisis in Europe!”

That redistribution policies cause social welfare systems to fall into a debt-ridden death spiral is another of the PAP’s insidious doubletalk.  But that is not what ails Europe or rather just a part of it since only the 4 weakest out of 18 Euro members got into difficulties. The primary cause of the debt crisis is the Euro single currency’s deeply flawed fiscal and monetary framework and the equally flawed response to the crisis. Do not just take the writer’s word for it; read up on Nobel Price Laureates Paul Krugman, Joseph Stiglitz and others. (A brief outline of the Euro debt crisis in the appendix).The PAP’s doubletalk is really meant to scare off Singaporeans on social spending.

Don’t mention equitable and welfare

Singapore is pervasive of measures the PAP imposed to control the political narrative, mislead the voters and to exclude differing perspectives and solutions to economic, political and social issues. The fear is of course, that large segments of the electorate begin to vote for alternatives much more supportive of them than of the wealthy and the government elites. Indeed their interests have been steadily diverging and many wonder if familiarity with the same government is too much a price to be paid especially when their own stake in the economy is shrinking. That interest may even go as far as preferring higher taxes on the top 1-5% if it dawned upon them that the financially regressive regime of capped CPF contributions, surcharges and high GLC-induced costs favoured the wealthy.

And what are the alternatives much more supportive for the wider electorate than those that provide a more equitable outcome for them.  These would be redistributive welfare policies that lessen inequality and equitable economic policies that do not require huge influx of foreigner workers, the suppression of savings and the relentless extraction of non-tax revenues for the government. Of course in polite conversation in Michelin-starred restaurants or over a bottle of Romanee Conti, these politics cannot be mentioned by name, they are just that “kind” or that “sort” of politics.

Why the elites don’t like Welfare

But not for the PAP and their fellow-travellers in the civil service, the executive elites and the wealthy. Why not, especially “that kind of politics” did not erode the enduring strength of the Nordic countries and most members of the European Union but imagine

–          Proper wages that are not suppressed by cheap foreign labour and which raises wage share of GDP from the current abysmal 42% to the OECD average of 59%. The wealthy want that to reduce their investment returns, business owners their profits and the GLCs their returns given to the government via Temasek?

–          Higher tax for the top 1% – the wealthy and the elites will scream bloody murder. The government will chip in to say low taxes for the rich / cronies / job creators (multiple choice here) will bring prosperity for all … oops for themselves and the foreigner workers.

–          GDP growth more in line with the long term growth potential of 3.5% make do with less foreign workers and better returns on CPF and savings – the elites can see their gravy train from growth maximisation coming to an end.

“That kind of politics” also meant the government have to cope with that terrible deed – compromise. How many F-15s for how many hospital beds? Better still how much money go into defence, vanity projects and minister,s’ pay instead of social spending before the huddled masses get really pissed off? Essentially, “that kind of politics” requires the ministers for a change to actually work hard for their salaries rather than perpetually taking the easy and expedient option such as passing financial burdens to citizens and attempting to buy off the pioneer generation.

Democracy is all about voters making informed decisions from unfettered access to political choice and alternatives, uncluttered by relentless one-sided propaganda and free from repressive measures. The suppression of “that kind of politics” directly results in poor social spending and unequal economic outcomes for voters. The wealthy to whom the highly remunerated ministers and civil servants belong, only want a fig leaf democracy that keeps the rest in their place. The battle for welfare and equitable society is the battle for real democracy.


Chris K

* Chris K holds a senior position in a global financial centre bigger than Singapore. He writes mostly on economic and financial matters to highlight misconceptions of economic policy in Singapore.

* * * * * * * * *

Accumulation of wealth at the top up to a point and we are well past that point, is not conducive. Afterall how much can a few wealthy spend since they have everything they wanted. Money in the hands of the poor and the middle class increases consumption which drives GDP and there are are more poor and middle class than the top 1-5%. Why has there been such a tepid global demand in the past few years? Look no further than accumulation of wealth at the top tier.  It is again a PAP induced fallacy to say that social welfare is just sucking up money – no, that money has to be spent and as such go back into the economy.


The Euro single currency project was driven far more by political imperatives than economic ones. The economists have warned that there cannot be monetary union without fiscal union which provides for pooling of national budgets. However, fiscal union cannot proceed without political union, a step too far for every Euro member. In the absence of fiscal union, the members signed up to a set of fixed fiscal targets such as limiting deficit to GDP ratio to no more than 3%, a particularly idiotic requirement from a purely economics perspective. The target is too high when the economic growth is strong, too low when growth is weak. In a continent size economic region, uneven growth and economic development persists. The absence of fiscal union meant financial assistance cannot flow seamlessly from surplus countries to deficit ones. Germans in Bavaria do not mind if Bavaria’s financial resources went to assist Hamburg in the north, it is still the same country but they certainly do not want the monies going to Spain for example. All it takes is a large external shock, the Global Finance Crisis, to expose the flaws. The contraction of liquidity combined with a sharp fall in tax revenues caused significant problems for the weaker members in servicing their debt.  But the response is equally flawed. The surplus countries led by Germany imposed fiscal consolidation as the only means to resolve the problem. Locked into a system of fixed fiscal targets and fixed monetary values, this meant savage cost cutting by the deficit countries in everything from salaries to social welfare. The result is a debt deflation spiral that causes a collapse in economic growth. Ultimately the Euro crisis is about national politics not pulling together to achieve a common European good.


GE: 3rd Tea Leaves Reading (Part 2 of 2)

With Hecklegate more or less simmering down but renewed discussions on the next GE, it’s time to dust off the teacup and reach for the tea leaves. Part 2 of our 3rd reading of the next GE discusses Strategies.

Instead of analyzing various strategic options for PAP or the Opposition, after some thought and at the risk of over-simplification, I have distilled it to just the defining, overarching strategy for each side. You decide if it makes sense.

Strategy defined in the GE context
There are many ways to define ‘strategy’.

The most common is Chandler’s (1962): “Strategy is the determination of the basic long-term goals”. Another, Mintzberg’s (1979): ”consistent patterns of streams of organizational decisions to deal with the environment.” Yet another, Learned et al (1965): “the pattern of objectives, purposes or goals and major policies and plans for achieving these goals.”

For our purpose, we use Porter’s (1985), “The search for a favorable competitive position”, i.e. the focus is on a specific way to win the GE. But given the Singapore’s reality, ‘win’ may be defined differently by the 2 sides, PAP and the Oppostiion.
PAP’s Strategy
…has to be informed by PAP’s GE goal. PM Lee says clearly, “Whether we can…maintain that position of…dominance in that system over a long term, that depends on Singaporeans and also on how well we acquit ourselves and establish ourselves in our own right”. (Chatham House Dialogue, 28 Mar 14)

Hence, PAP’s goal of “winning” is “dominance,” no less. Going by the PAP parliamentary presence since 1959, dominance in their Sec-Gen’s mind means a 2/3 majority, no less.

Here’s the strategy that I think will best make it for PAP. No ‘internal split’ within the PAP. All it takes is to re-package itself into 2 wings but contest as a single party.

The ‘same’ current half-century governing PAP with its laser-focused GDP-growth-at-all-cost track record is one wing.

A ‘new’ second, sizeable wing (perhaps, 30% of its GE candidates), overtly marketed to voters as PAP’s response to the demands of SG’s new political reality. This latter group needs to be led by a current heavyweight minister who has shown himself or is perceived to be more in-tune with and to expressly represent the middle electorate’s cries over overcrowding, housing, transport, healthcare etc issues.

In effect, while the first wing plays up the familiar to its own receptive audience, the second wing basically hijacks ALL the known discontent that would have to be otherwise taken up in parliament by an Opposition.

In critical essence, such a strategy would help the PAP win over the dithering middle ground of fence-sitters, marginal supporters and mal-informed-but-stirring voters – where the real battle is being fought.

Ridiculous, unthinkable? Well, think again on two counts.

The Singapore voter, ever the kia-su, kia-si one, after 50 unbroken years of brainwashing led by PAP’s key hatchet-wielding headman, their formidable party machinery and the MSM, can but be easily swayed. PAP can also count on the voter being daft – to fall for their repackaging trickery.

PAP has shown they will do anything not overtly illegal to stay in power. Who can forget the pre-GE 2011 outright lie, ‘we are sorry, we’ll do better’, aimed to sway voters, once achieved albeit with the lowest 60.1% win, they sweep aside their ‘sorry, do better’ bull by pushing thro’ the Population White Paper 15 months later – despite strong ground reservations and objections?

A second ‘sorry’ can work no more. But ‘repackaging’ just might. PAP can spin their 2-wing formation as being responsive to changing times, their reinvention. So, think again!

The Opposition’s Counter Strategy
With such an apparently compelling strategic initiative, how can the Opposition respond? Any concerted attempt will be hobbled by their weakest link, a lack of unity; Indian chiefs all, reluctant to subsume their personal glories in the national interest.

Regardless, what then is considered a ‘win’ for the Opposition? With PAP’s continued parliamentary dominance looming, the better bet is to promote a “win” for ALL Singaporeans. The counter-strategy will then be to strike PAP where it matters to unsure voters who may grudgingly acquiesce to the PAP – but in a changed configuration. i.e. force a doctrinal rethink, not just a repackaging.

How then to execute the counter-strategy?

Well, with resources lacking for any fancy, elaborate electioneering footwork, the Opposition need to send their best team to contest at PM Lee’s GRC. Why?

Simply put, they must cobble together the best team to give Lee Hsien Loong the proverbial ‘bloody nose’, if not to actually win Teck Ghee GRC. Toppling or shaking his Sec-Generalship will force the PAP to re-organize itself out of the long shadow of a Sec-Gen who has the unenviable luggage of his bloodline heritage to protect or, at least, not to suffer disesteem.

What suicide squad cannot do, a strongest possible Opposition team can deal Sec-Gen Lee a humiliating paper-thin majority, if not actually vote him out. The Opposition will then be handing PAP members a just cause to question how a marginal GE winner can continue as Sec-Gen when, for e.g., Tharman has a clear, stronger majority.

Either way, PAP can no longer be the same insular, arrogant, hubristic piece of (pardon my French!) shit that it has become, along with their insane GDP-growth-at-all-cost-centred policies. Once that is underway, the civil service, the meritoguanxi-commercial leeching scaffoldings, the PA, CCs, CCCs & RCs apparatus will then stand a better chance of repenting and reforming as rightly nation-serving instead of tax-payer-funded but PAP-servient organs.

Are we doomed for another electoral term with a dominant but repackaged 2-wing PAP? Is that it?

Your thoughts?


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ACRES CEO – already changed by PAP?

Looking at the ACRES website (acres.org.sg), Louis Ng, CEO, has undoubtedly achieved some interesting and commendable work for animals. Founding and directing an organization with a budget exceeding $700k/year (2013) is no mean feat.

ACRES’ mission ‘to create a caring and socially responsible society where animals are treated as sentient beings’ has resulted in 2764 animals ‘rescued’ since Aug 2009. (sentient = conscious, experiencing sensation or feeling)

Even more admirable, Louis pays himself only $2860/month. Likewise, ACRES’ audited and detailed accounts are accessible to all stakeholders without any encumbrances whatsoever. Each employee’s 2013 salary is clearly stated and, at $37,180/- gross per month, he appears to run a lean ship.

So, kudos to his work and leadership @ ACRES.

Reasons behind the PAP membership

Now, why decide to become a PAP member, instead of continuing his animal ‘sentient-fare’ cause exclusively and independently after giving much of his youth to?

Overtly, his reason is he has ‘seen that things can change when we work from within (and) there is a track record… working with the PAP and its ministers for over five years.’ (Channelnewsasia)

So, what does he hope to achieve as a ‘PAPer’?

Ostentatiously, ‘while animal welfare is his pet project, he is keen to make an impact in more ways, such as breaking youth from less fortunate families out of the poverty cycle… to empower them.’ (Channelnewsasia)

And PAP? What’s in it for them to appear so happy to land Louis’ membership that the full MSM proporganda arsenal (Today, CNA, ST) went to town with singing his decision to enter politics, joining PAP instead of WP?

Just as ostentatiously, shoot-from-the-hip, boy-scout, newbie minister Tan Chuan-Jin explains, ‘We have many members and volunteers who come from different backgrounds, and that diversity is valuable as we see how best to help our community.’ He has asked Mr Ng to join the PAP ‘to help with the outreach on the various fronts’, after seeing… projects such as those in Chong Pang and Project ADORE, a programme to rehome mongrels with families living in Housing and Development Board flats.’

Possibly, the boy-scout in him is ‘keen to introduce some of these initiatives here in Marine Parade GRC, where we have quite a number of people who love their pets… Louis cares a great deal for the community… His achievement with ACRES has been very impressive. He has also brought that passion to bear in the work on the ground.’

The impressive roll-out can only suggest that the PAP want, nay, need the biggest mileage from the exercise.

Achieve change, really?

PAP ministers always emphasize ad nauseum the need to discuss ‘trade-offs’. So, in that same spirit, let’s look at the possible quid pro quo for both parties in the transaction.

What does Louis hope to get trading in his independence at ACRES?

Given his enviable ACRES track record, why the need to join PAP to try to ‘make an impact in more ways, such as breaking youth from less fortunate families out of the poverty cycle’?

Perhaps, the clue lies in his own words. ‘I’m keen on also working on projects focusing on bringing back the kampong spirit and helping to break the poverty cycle in the less fortunate families.’

Whereas Louis describes his ACRES work as being ‘passionate’ and ‘dedicated’, he can only marshal a weak ‘keen’ when it comes to ‘rekindling kampong spirit and empowering youths. I guess, in that sense, Louis fits to a T PAP’s defining qualifications for their MPs – overwhelming passion and dedication to fulltime commercial employment/business with part-time ‘keen’ interest MPing. With $16k/month excluding bonuses, who isn’t ‘keen’? But passionate and dedicated? Nah!

So, why still join? Here, one hopes Minister Tan does not shoot off his ‘vile, total disgrace’ pronouncement on yours truly for a cynical probability. 4-room HDB flats priced at nearly 10x Louis’ annual salary is a daunting challenge especially with a wife and 8-month old little princess in tow. Hence, when $16k as a ‘keen’ MP beckons as quid pro quo, I’d take it, wouldn’t you?

Anyway, ‘what’s wrong with collecting more money?’ Besides, Louis will only be following PM Lee’s admonishment to be ‘good-hearted, (and) not shy away from being hard-headed.’

And what of PAP’s aim for all its labour and laudings with this new catch?

No elaboration required. Just another attempt to mislead daft citizens with mere tokenism vs the real deal. The real deal of acting on what citizens have already been clamouring for that PAP members are not conveying – ReturnOurCPF! Lower HDB pricing! More hospital beds! More welfare instead of kueh lapis! Lower costs of living! Lower ministerial salaries! Pause the insane foreigner influx! Etc.

Parting observations

3 salient ones.

1. Only a card-carrying member, but unconfirmed MP-Candidate Louis appears to already play the game…’Regardless of which town council … calls (ACRES), we will still respond … If (opposition members) want to volunteer at our rescue centre, we’ll be open to it. We’re not going to say no just because I’m with the PAP’… The partisan game.

Is it not worrying that a not-yet-elected MP, member Louis already thinks in partisan terms? ACRES survives mainly on public and private donations, hence why even offer that sound bite as CEO?

He unwittingly concedes that the PAP system (PA, CCC, Grassroots Org etc) are all partisan organizations serving the PAP while using non-party resources and money. It also indicates that even before he hopes to effect ‘change from within’, his thought processes are already ‘changed’ to reflect his PAP membership.

But why should it be a surprise? Raymond Lim & Vivian Balakrishnan quit Roundtable (a non-partisan civic group) to be PAP members. What have they to show for – if not their PAP true colours instead of independence of party thought?

2. Here’s a suggestion, Louis, rekindle the same passion to start your own HECTARES to Help Empower Castoff Teens And Recalcitrants Entrench Success. I’ll be your first volunteer.

3. Finally, should you become MP through the GRC door, may I humbly suggest that you set aside your highfulatin, unquantifiable ‘kampong spirit & youth empower’ goals to instead work on getting the tangible, quantifiable goal of making your party (if they in fact win the next GE) come clean with  detailed accounts of the CPF, GIC, Temasek.  Likewise, MOM’s employment figures. Perhaps, your passion/dedication-inspired ACRES CEO salary may also be something that ministers who claim equally a passion and dedication to serve the nation can learn from – to change.

When you have succeeded even modestly with those changes that really matter to citizens, then give me a call. Change we Must. Be part of how to end PAP’s dominance, not perpetuate it. Good luck!


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I’d like to believe that so long as one is not yet six-feet under, change, or for some, redemption remains possible. Particularly so for Kishore Mahbubani, Singapore’s only listed Prospect Magazine ‘Thinker’. With his impressive public service record and having rubbed shoulders with headline-makers, now pushing 66 in a week he must have his ‘Gee, is this it or is there more to my legacy?’ moments.

His lavish praises aside, in all 9 ideas, there is nary a critical word about what the current PAP government has done wrong. Does Kishore’s complete absence of any disquiet over his bosses’ mistakes (housing, transport, healthcare, foreigners etc) imply that he thinks this government is as close to perfecto as we can ask for? Is that possible?

Or perhaps with his idea #9 (ending at #10 soon?), is Kishore dipping his toes into something more consequential than just pompous ideas? Consequential as in telling it like it is to his political masters, albeit cryptically? Nonetheless, his ‘Big Ideas’ continue to be even BIGGER on self-censoring and analytical dishonesty.

Yes, Criticize…But Cryptically
Reading Kishore’s “To future-proof the country, build a wise citizenry”, (http://www.straitstimes.com/news/opinion/invitation/story/future-proof-the-country-build-wise-citizenry-20141011), Ngiam TongDow’s penetrating observation comes to mind; that no matter how much someone wants to tell his boss off, he will hesitate when he thinks of his million-dollar salary. Even if he wants to do it, his wife will stop him.”

But Mr Thinker-cum-Author might have just found a way to practise (one hopes) his newfound religion of telling his bosses off without losing his million$ job, or his wife. After 10 months, he appears to reach for the ‘cryptic’ pen to perform that task.

Kishore observes, “If the powerful American Constitution and its systems of checks and balances have failed to prevent dysfunctional governance in the US, we in Singapore should take heed and look for even stronger ways and means of preventing dysfunctional governance.” True, Kishore goes on to highlight a ‘populist’ government as dysfunctional. But consider his ‘solution’, ‘the best way to disarm a seductive politician is to show data and arguments that will demonstrate the folly of marching down the populist path.’

Is Kishore gingerly hinting that PAP’s PGP & other related programmes are obviously populist, vote-buying exercises since verifiable criticisms and feedback show that their implementation and gamut of benefits appear more ‘wayang’ than truly ‘sayang’ voters? His discerning readers can surely see through how ground realities contradict PAP’s dismal ‘data and arguments’.
Next, curiously Kishore chooses the recent Swiss minimum wage (CHF4000/S$5340) referendum when the knife-edge, more widely-reported Scottish independence vote would illustrate his point even better; that ‘the top-down approaches that worked well in the early years of Singapore’s governance will not work when dealing with a well-educated population.’ Pro-independence leaders exaggerated the ‘populist’ benefits of independence for all Scots if freed from under London’s colossal economic and financial shadow.

Whereas the Swiss e.g. with its jaw-dropping S$5340 minimum wage figure serves to open up wounds still festering from Goh Chok Tong’s unfulfilled promise of ‘Swiss living standard’. Also, fresh in voters’ minds is how torturous the fight was just to get the unSwiss-S$1000/month for many PAP’s strongest blue-collar supporters.

So, a cryptic message here for Loong and gang?

Read further how Kishore strings his words, ‘…vote themselves a pay raise…They actually voted against giving themselves an increase in minimum wage.’ Again, words that effectively remind Singaporeans how their PAP had ‘actually voted themselves pay raises’ – not once, not twice but more times in their PAP-controlled parliaments that they themselves can remember.

Another cryptic message between the lines?

Then, Back to Self-Censorship & Lack of Honesty
Kishore’s Idea #9 overt goal is ‘to suggest one major stabilizer we can build in Singapore to handle political shocks’.

The stabilizer he proposes to ‘future-proof Singapore (is) by creating a treasure trove of well-researched and well-reasoned policy papers on all the major challenges that Singapore will be facing in the next 50 years’. Here is where Kishore suffers from censorship sores. To reach for the future, one must get the past right first.

Hello, Mr Thinker, why omit the need for our past to be told by other than the victors? Are the victors’ narrative less ‘self-serving’ as that of the vanquished? As dean of Lee Kuan Yew School of Public Policy, toeing only the self-serving interest ways of his school’s namesake is a great disservice to Singaporeans whose tax money goes into his salary and school’s operations.

Nothing cryptic here, just simple self-censorship.

Finally, the earlier assertion that Kishore boldly makes, ‘the best way to disarm a seductive politician is to show data and arguments that will demonstrate the folly of marching down the populist path.’
Here, he displays the same lack of honesty in analysis as noted in https://2econdsight.wordpress.com/2014/09/15/the-art-of-compromise-kishore-compromises-himself/. Kishore proposes that the ‘data and arguments’ needed in countering a wayward government be ‘done by government agencies…(and)…by non-government organisations’.

My Big question is, ‘Why does Kishore think that citizens, already schooled by ‘an education system that is the envy of other countries in the world’, cannot perform their own research and discovery of the ‘data and arguments’? Why, O why, does he not speak up for our right to accurate, adequate (where data is security sensitive) and apt data when sought?

What has this government got to hide, is hiding from citizens with their non-answers and no accountability? How does Singapore’s only world-recognized Thinker’s complete silence on citizens’ access to data jive with his ‘rising concern…that Singapore’s future will be challenging’? Can Kishore really ‘think’?

It’s impossible that he is ignorant on this need. So, he’s plainly dishonest in his analysis.

Some will not agree with my nascent view that Kishore is not change-proof. An ex-President Scholar and author of many books, Kishore’s salary and his Mrs may just be in the way of his plain-speaking. Hence, a cryptic approach.

Notice he omits highlighting ‘civic leadership’ as a ‘stabilizer’ in the same breath as he does ‘civil service and the judiciary’. That’s a tacit admission that he and his snug gang of ‘civic leaders’ are not up to their role helping to steer Singapore. Additionally, the text, ‘The writer has been hailed by British current affairs magazine Prospect as one of this year’s top 50 world thinkers’ that we highlighted as needlessly self-aggrandizing, is no more. Now, it’s just a plainer ‘writer is Dean of LKY School of Public Policy etc’. So, change is possible after all?Free

Let’s keep plugging at it until real and permanent change dawns on our civic leaders. We need all hands on deck to achieve the Change we Must, to end PAP’s dominance…for a more equitable Singapore.

2cents blogs @2econdsight.wordpress.com


The Govt’s doubletalk on CPF rates of return

Readers of tremeritus.com will be familiar with ‘Chris K’s’ contributions. His more than 30-year experience working for European banks in asset & risk management offers a perspective that was lacking if not absent before he decided to do more than comment at TRE. Most who have read his opinion pieces have benefited.

I met Chris via TRE back in Feb 2014. I think Chris’ thoughts deserve a wider audience looking for better clarity and understanding of matters and concepts financial – in layman’s terms. So I asked if he’d like to use this blog to share his thoughts which, I think and hope, visitors will find interesting and educational.

I have combined his original 2-parter into one.

US$ and S$ Returns
The first obfuscation is the rates of return earned by Temasek and GIC. Although Temasek reports its returns in S$, GIC reported in US$, having ceased reporting in S$ in 2010. The government said US$ rates of return are easier to compare against international benchmarks.  Any reasonable person would ask why should US$ matter to a Singaporean saving and spending in S$.  The real reason may be to obfuscate the abysmal rate of return in S$ because the exchange rate policy mandated to the MAS by the government causes GIC’s returns to depreciate by 1.5% pa over the past 20 years.  It cannot be certain that the government will not find yet another reason to revert back to S$ reporting especially the US$ appears to have embarked on sustained strength against S$.

Real Rates and Nominal Rates
Nominal Rates are rates of return generated from investments. The interest rates one received from one’s bank deposits, CPF account, dividend from stocks, interest from bonds etc are nominal rates.

Real Rates are Nominal Rates minus the inflation rate. Real rates are calculated to determine if the nominal rates are enough to offset inflation and are far more important than nominal rates especially investing over long periods of time like a CPF account. Ultimately, it is not simply how much money one has in the future but how much that money can buy.

When the Govt talks about Real Rates
This is when the government want to show how “good” CPF rates are compared to GIC’s returns. Usually they will refer to the US$ Real Rate of Return – low enough to make CPF rates look “good”. But notice they said nothing about S$ Real Rate of Return which is so low citizens will question GIC’s competency or worst, why GIC invests all of CPF monies overseas at the risk of currency losses .

When the Govt talks about Nominal Rates
This is when the government is not comparing CPF rates, which allow them to point to GIC’s nominal rate of returns usually over a sufficiently long period of time like 10 or 20 years to show how “good” GIC’s historical returns were.

The other occasions when the government talks about Nominal Rates is when they talk about CPF rates alone. Notice that Mr. Tharman, the Finance Minister hardly mention CPF rates and inflation rates in the same statement, i.e. he hardly mention CPF’s real rate of return.  That is because mentioning inflation rates would undermine his constant assertion that CPF rates are “fair”. This obfuscation is so effective that many have been smoked into believing one has to accept such low real rates of return for a “risk free” long term investment.

Minimum Sum up 6.2%pa but inflation up 3%pa?
The government explained it as citizens demanding a higher standard of living. But what is not said is that even if one does not need a higher standard, one is forced pay for it anyway. This is mostly due to what is called the hedonic pricing – a product’s price increases not only because the price of materials used has increased due to inflation but also the product contains quality improvements which may be real, aesthetic  or both. Be a cheapo and buy an Iphone 1 nowadays or makan at no-aircon hawker center along Orchard Road. Essentially higher prices are unavoidable but hedonic pricing is not factored into official inflation. This is the reason people feel the cost of living is much higher than reported by the official inflation rate.

In this follow-up to the government’s CPF doubletalk on rates of return, the writer looks at the mother of all doubletalk; Ministers asserting that CPF principal and interest are guaranteed and as such retirement savings are “risk free”. Let us begin by doing away with the most obvious bits.

Guarantee and Risk Free
From previous articles and comments by the writer and others, it is well known by now the government guarantee to CPF is a contradiction since the government’s guarantee is based on its tax raising powers and it is the citizens who ultimately guarantee their own investment in CPF with their taxes and the net assets in the SG reserves which are derived from unspent taxes, excess returns from investing CPF funds and land sales revenues.

Next, even the safest instrument, the government bond, contains risk. The term “risk free” does not exist outside the theoretical context of the “risk free rate” which uses the government bond yield as an approximation to calculate risk-adjusted returns of comparative investments. The ministers’ use of the term suggests they are either deliberately obfuscating or they do not fully understand the context. The writer does not recall any other government claiming their bonds are “risk free”.

Low Risk Today, High Risk Tomorrow
SG government bonds certainly have low risk to default but a low risk instrument has a low rate of return which exposes savings to other risks. Let us look at annual CPF rates in comparison to the annual rate of increase in the Minimum Sum, which the government has said, is needed to keep pace with the rise in inflation and standard of living which impose cost increases not captured by the inflation rate.

The red numbers show the excess rise in costs over CPF rates due to inflation and standard of living. Clearly, the interest delivered by low risk government bonds to CPF cannot keep up with rising costs. Essentially being invested in low risk instruments exposed savers to different kinds of risks which may be invisible until 20-40 years later, illustrated in the flow chart below

Next, let us compare the 20 year average rate of return from low risk CPF to that of a higher risk model portfolio which assumes CPF monies are invested equally in US equities (S&P500 Index), European equities (EuroStoxx Index) and global bonds (JPM Global Bond Index). Returns in the model portfolio are adjusted to S$ to account for currency risks and are net of taxes. The performance data for the model portfolio over the past 30 years in the table and comparison of the 20 year average rate of return in the chart.

No. of Annual Losses No. of Annual Gains Worst consecutive losses Best consecutive gains Worst Annual Loss Best Annual Gains
7 years 23 years 2 years 5 years -26.1% +41.6%

The excess returns of the model portfolio over CPF in red numbers represent the opportunity cost of a lifetime of receiving interest from safe, low risk government bonds. By avoiding investment risk, a low return portfolio is at risk to inflation during working life and especially in retirement when a retiree has little or no means to derive extra income to offset inflation. This is the reason virtually nobody passively invests only in government bonds throughout a lifetime and one should accept risk when one is working to avoid risks in retirement. Even the ultra-conservative $1.5t GPIF of Japan, all of 76 staff headed by a CIO paid just $200,000 per annum, do not invest entirely in government bonds.

Tharman: “It (CPF) protected members from risk.”
It sounded reassuring and altruistic when Mr. Tharman said this in Parliament on 8 July 2014. Perhaps it is but think deeper. The long run reward of accepting higher investment risks is well known. By legally coercing CPF funds to be invested in SSGS, the government has effectively monopolised the historical long run reward of investing in risk assets and captured the excess returns into the net assets of the SG reserves. In effect, this is a highly regressive hidden tax or an astronomical surcharge on savings. Conversely, it means that CPF members are prevented from benefiting from the same historical long run reward, consigning members to low risk low returns which exposes them to other risks as explained above and worse, in retirement when it is difficult to generate additional income.

So next time, if someone insists CPF is “risk free”, the reply should be “free from what risks?”

Chris K

* Chris K holds a senior position in a global financial centre bigger than Singapore. He writes mostly on economic and financial matters to highlight misconceptions of economic policy in Singapore.


Hecklegate: A Just Cause in Grave Need of Judicious Leadership

‘Hecklegate’ (credit to Daniel Yap) appears to outdo PM Lee’s NDR speech in terms of commentaries. Even more interesting are as many detractors as supporters of the protagonists are voicing their 2 cents in social media, quite unlike social media going to town with the NDR speech mainly as target practice.

Why so?
One, where it involves ‘special needs children’, it looks good to brandish one’s credentials to stake a stand.
Two, Hecklegate provides the fitting excuse the Oppo parties and other anti-PAP individuals need to justify why the Roy & HuiHui show just doesn’t do it in their scheme of things.
Armchair Critics Aplenty
Let’s distil the key points that many armchair YouTube-cum-MSM witnesses have said with such certainty.

– No better place to start than the mainstream media.
Heckling is ‘interrupting (someone) by shouting annoying or rude comments or questions’ (Merriam-Webster). Editors relied on their rookie reporters to report but ‘heckle’ was the editors’ word choice – for reasons best known to themselves.

Yes, the Roy & HuiHui march was noisy. But watch the different videos circulating, where was the heckling?

– The PAP Ministers
Manpower Minister Tan Chuan-Jin: “I am ap­palled. We now heckle special needs children? Vile. Total and absolute disgrace.”

Tan’s behaviour and remark best represent the PAP’s default mode in matters political – quick to judge and damning in self-righteous denunciation when the anti-PAP side gets bad press but deafeningly silence when one of their own falters. Tsk tsk.

To readers suitably impressed with Tan, please connect the 2 dots; Philippines Independence Day Celebration & Hecklegate. Tan was the minister who first shot at his own fellow citizens from the first sign of citizens’ objections – without thinking through the patriotic angles. Our newbie minister used choice words on us, didn’t he? But foreigners cheating citizens of jobs with their fake degrees are exempt. No accomplished ministers since 1965, let alone a newbie with zero to show for, ever labelled fellow citizens (not political foes) as ‘bigots’ and, now, ‘vile and absolute disgrace’.

A true leader in the making, or a dangerous self-righteous narcissist more suited for the priesthood?

– Opposition-linked Critics

As observed, Roy & HuiHui duly obliged them with an excuse they were itching to use to distance themselves and not lose the middle ground whence the votes, the real fight for political power resides.

– Mr Brown’s
…29 Sep posting suggests that Brownie cross-checked his ‘Hecklegate’ info source with only a posting by an unverified ‘YMCA volunteer’ at Proms. Perhaps his parental protective instincts for his autistic child reflexively kicked in pronto. Understandably so.

My Photo

But rushing in, he did himself and Singaporeans little favour in not weighing more evidence as Shah Salimat did in sg.news.yahoo.com/comment–various-accounts-of-cpf-protest–heckling–tell-a-different-story-103­557790.html


‘Elementary, my dear Watson.’
Here’s one observation that appears to have been completely overlooked. Check out this or any other video showing protestors marching past where the stage was < https://www.youtube.com/watch?v=6HKpNvzt33c&feature=youtu.be&gt;.

Notice 3 things;
One, the protestors walked a fair 10m (?) distance, from the stage, near the pillars supporting the sunshade. Shouting, unless in constant unison, would be ineffectual given the distance.

Two, during the first marchpast, the stage was bare, devoid of any children.

Three, HuiHui and Roy held a mike each, in her right and his left hand. No loud hailers blared directly at the children preparing to perform. You got it! The noise that the duo made was amplified via speakers a good 40-50m away from the stage. Indeed, the YMCA emcee’s voice was much louder as his speakers were nearer with one facing stage-ward.

So, whose voices from which microphones were more likely to alarm the kids, if in fact they were alarmed as alleged?

NParks claimed the kids were ‘traumatized’. Strange then, that no one finds it necessary to medically-certify their traumatized condition. Strange too, that Teo Ser Luck didn’t think it serious enough not to halt his selfie routine with his happy, happy face. Or, yeah, maybe grab a mike to influence the tone of the encounter there and then. S$mil leadership, anyone?

An On-site Eyewitness’ View
To analyse better, start from what happened before the actual events.

– When I first read HuiHui’s 26 Sep appeal at TRE < http://www.tremeritus.com/2014/09/26/pap-grassroots-plan-to-distupt-cpf-protest-on-sathurday/>, my red flags instinctively shot up. She wrote about ‘PAP grassroots…5000 people coming…4 grassroots leaders came out and negotiated with me…event was supposed to be on Sat 10 am…when I asked for the event organizer to come out, they refused and demanded…’ and then, in contradiction to her earlier stated time, ‘their event will start at 4 pm’.

Sorry, young lady, this old hand believes for such serious matters, one must ‘verify, verify, verify’ one’s info before presenting it for public consumption. But her language shows up her combative stance camouflaging a plea for that illusive bigger audience size.

I was happy to learn then that TRE editor was ‘calling Leong now to find out what’s going on’. And happier still his action showed up HuiHui’s appeal to be ulterior motive-written more than fact-based < http://www.tremeritus.com/2014/09/26/2-major-events-clashing-at-hong-lim-park-on-27-sep/&gt;.

– Next, her videoed encounter with NParks director. Sure, she showed her gumption but, in doing so, humiliated the civil servants doing their jobs, professionalism wanting notwithstanding. Which would advance her cause; winning civil servants over to her side (for future considerations whilst gaining respect from new audiences) or continue to feed the frenzy of her loyal protestors?

– The marchpast ended, the speeches began, I moved around to feel the ground. Many young volunteers watched the performances with their charges sitting beside; mostly physically infirm, elderly or Down Syndrome children/adults. Probably (hey, Mr Brown), no autistic kids, going by YMCA own info < http://www.ymca.org.sg/Web/main.aspx?ID=,df37fa6f-e5c9-40a9-ba3b-780b781fb751>

– I hung around the funfair-like stands offering games, airbrush tattooing etc. Of course, I had to support their efforts, rewarding myself with free popcorn (salted, not sweet).

– Speaking to a 40ish gentleman in his wheel chair, he said that instead of accepting YMCA’s invite, he preferred to join the protest. He declined my offer of popcorn.

– Then I stationed myself (on my bicycle) at the tent that was allegedly set up to block the protagonists’ stage performance. Amongst other observations, my most vivid images were the fierce, gangster-like Roy’s facial expressions, bulging veins in his neck as he shouted into the mike, the militant tone, words HuiHui uttered, the amateurish coordination in their free-flow speaking-cum-singing-cum-chanting ‘speeches’. Call me shallow, but sorry, The Rolling Stones can grace the stage in their jeans and tees, looking darn classy. But Roy et al on stage looked like a raggedy, ratty, rowdy bunch of disorganized rebels – albeit rebels with a just cause.

– The sad part for me, keen on the Change we Must and keener to end PAP’s dominance, is that the audience remains the same die-hard anti-PAP clique mostly males in their >50’s. How will the middle ground, middle-class fence-sitters, marginal status quo supporters and the ignorant/mal-informed be ever persuaded to attend, never mind won over by this team of dedicated warriors?

The thought that struck me there and then on reaching HLPark was how the unexpected YMCA Proms and ReturnOurCPF events presented a Godsend opportunity for the Roy & HuiHui cause – one they cluelessly squandered.

Look, it wasn’t ‘the other side’ that was in control of the turn of events. YMCA had a fixed programme, a contractual obligation to their corporate sponsors, volunteers and beneficiaries. The last thing they wanted was to start a skirmish with political overtones either way.

Therefore, the impetus of the ReturnOurCPF was HuiHui’s/Roy’s to direct. If there was a more senior leader, perhaps he was resting with arms alternately folded or akimbo on a bench but inactive to lead the happenings.

What’s missed big time? The protagonists could have instructed every marcher to halt in front of the stage, sit down, watch and cheer the performances. Then, after 2 or 3 performances, went around shaking hands with as many attendees as possible with smiling faces and high fives. Aren’t these the ‘new’ audience to win over to your cause?

Once done, continue with their planned speeches. Will that not be heaping burning coals on Teo Ser Luck’s and PAP’s heads?

Instead of Hecklegate, how will the headlines look the next day?

Sadder still is how the same foolhardy approach continues post-fiasco.

Claims of ‘We had a groundbreaking protest and march yesterday but a few thousands Singaporeans turned up’ and ‘the volunteers and attendees to the YMCA’s event were also listening intently to our speeches’ encapsulate their dumbass, make-believe approach.

Here’s the actual crowd size for you; I first counted 50, estimated a 50-strong cluster, counted the number of clusters then multiplied that number by 50. Doing so 3 times Saturday, I could only count 20 clusters or 1000 attendees max. Perhaps another 200 +/- came and went between 1700 to 1830 hours. And my slow cycle-cum-circling the field told me that Proms invitees overwhelmingly ignored the shouting that counted for speeches. Not even weak applause or nodding heads originated from them.

‘Groundbreaking…a few thousands Singaporeans’? –  You are imitating the misleading modus operandi of the Straits Times, the very enemy you abhor?

Saddest of all are the allegations and innuendoes of YMCA colluding with PAP. Any simple analysis will show that Proms has been a non-political event all these years. Why alienate more voters?

Continue on this trajectory and hurt not only your cause but also those who want the Change we Must. PAP will milk dry this and new ones waiting to happen, linking Roy et al to the Opposition to turn middle ground voters to stay with the devil they know than the rowdy troublemakers they see.

Roy & HuiHui, I admire your dedication and support fully your cause. But time to THINK & CHANGE – which is my key intention for the forthright views here.

Your Cause so Just deserves a Leadership as Judicious.