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The Government Does Not Make Money From The ERP Increase. So Says Lim Swee Say.

Lim Swee Say claims that the government will not make any money from the ERP increase.

ST June 23, 2008
Govt doesn't make money from ERP
THE CashCard reader in labour chief Lim Swee Say's car beeps four to six times a day. This is because he passes through that many Electronic Road Pricing (ERP) gantries along busy city roads to get to and from work.

He was driving home the point that ERP exists solely to control road congestion and not to enrich government coffers or raise the cost of living for Singaporeans.

Mr Lim was responding to a question at a dialogue on why the Government was raising ERP rates by as much as $2 and adding five new gantries from July7 in a climate of rising inflation.

The new gantries along the banks of the Singapore River bring the total number of gantries islandwide to 65.

Mr Lim said Transport Minister Raymond Lim had told Parliament previously the Government does not make any money from the ERP increase.

The reason: It will collect $70 million a year from the ERP increase, but will lose $110 million due to the 15 per cent reduction in road tax from next month.

That is, in fact, a net loss of $40 million, he said.

This reminds me of what happened in early 2007. The government was discussing its plans to raise GST from 5% to 7% in July 2007.

Back then, the Finance Minister had said that even with the GST increase, the government would suffer a $700,000,000 budget deficit. In other words, the government estimated that even with the GST increase, it would collect $700,000,000 less than what it actually needed, to run the country.

Many Singaporeans were thus persuaded that the GST increase was a necessary evil.

But what happened next?

One year later, it was revealed in Parliament that the government did not have any budget deficit for the 2007/2008 financial year. Quite the opposite - it had a huge budget surplus of $6.45 billion dollars.

In other words, the government had collected $6.45 billion dollars more in taxes than what it actually needed to run the country. The people got suckered again.

For more details, refer to my old post here.

So when Lim Swee Say tells you that the government won't make any money from the ERP increase (and will in fact suffer a $40 million loss), take it with a pinch of salt. Or maybe three big tablespoons of it.

The last time round, our Finance Minister missed his Budget estimate by $7,100,000,000. In percentage terms, what makes you think Swee Say will do any better?
Gadis Bispak Imut

The Government Missed By $7,150,000,000. Just Another Honest Mistake.

The Straits Times reported a shocking piece of news yesterday. The article itself did not really highlight the point, but tucked it away somewhere near the end of the article (see bold text below).

ST Feb 26, 2008
BUDGET DEBATE
Rising costs, price hikes top concerns of MPs
They back strategies to keep inflation in check but say individuals and businesses need help to cope
By Lydia Lim

RISING costs and their impact on people's ability to make ends meet dominated the start of this year's parliamentary debate on the Government's Budget.

Many of the 19 MPs who spoke during the five-hour session praised the Budget for being forward-looking and generous, but 13 also voiced concern over a slew of recent price hikes.

MPs from the People's Action Party, Mr Inderjit Singh and Mr Michael Palmer, recited a litany of these increases in the past year alone.

Taking last December as an example, Mr Palmer said: 'The price of luncheon meat went up from $1 to $3, taxi fares went up, school bus fares went up and even the opposition's Potong Pasir Town Council added to the list with an increase in its service and conservancy charges.'

MPs said that businesses have been hard hit by steep hikes in office rents, and asked for tax reliefs to help them cope.

For individuals, Mr Palmer suggested that part of the Budget surplus of $6.45 billion be used to set up a contingency fund to help low-income families should inflation worsen.

Mr Singh, who chairs the Government Parliamentary Committee for Finance and Trade and Industry, urged a review of the Government's avowed strategy to grow the economy as fast as possible in good years. This had contributed to the current situation of overheating and high prices, he said.

'The 'grow-at-all-costs' policy, with the cost increases triggered or allowed by the Government, have worsened the income divide,' he said.

At the same time, MPs threw their support behind the Government's five strategies to keep inflation in check.

These include allowing a gradual appreciation of the Singapore dollar to rein in imported inflation, and growing the economy so that wages for most workers go up by more than costs.

Nominated MP Cham Hui Fong of the National Trades Union Congress pointed out that last year had indeed been a good year for workers.

Those in the unionised sector enjoyed the highest bonuses since 1990 and the lowest retrenchment rate since 1994, she said.

But fellow NMP Eunice Olsen stressed that in tackling inflation, 'preaching' to Singaporeans to buy cheaper house brands was not a solution, as many people were already buying the lowest-priced options available.

Four MPs - Workers' Party chief Low Thia Khiang, NMPs Gautam Banerjee and Ms Olsen, and Mr Singh - took issue with the wide gap between the Government's projected $0.7 billion deficit and the actual $6.45 billion surplus.

This showed that the Government's 'Budget marksmanship' had worsened, said Ms Olsen.

The four MPs also questioned whether the Government had been hasty in raising the Goods and Services Tax (GST) from 5 per cent to 7 per cent last July, since it did not really need the revenue it generated.

Both Mr Low and Mr Banerjee asked for the GST to be restored to 5 per cent.

But Senior Parliamentary Secretary for the Environment and Water Resources Amy Khor warned against assuming that the economy would prosper and produce a surplus every year.

She said: 'The Finance Minister has been judicious in balancing competing priorities and seeking to invest in the medium- and long-term future, while dealing with the immediate concerns of citizens.'

More than 20 MPs are expected to speak when the debate resumes today.

So early last year, the Government had projected a budget deficit of $0.7 billion. This means that according to the Government's own estimates, in 2007 it would collect $0.7 billion (via taxes etc) less than what it would actually need to spend.

It turns out that the Government scored a massive miss. In 2007, instead of collecting $0.7 billion less than it needed, the Government collected $6.45 billion more than it needed. From who?

You, the people. Of course.

Among other things, it becomes quite evident that the GST need not have been raised in July last year.

In his Budget Speech 2008, the Finance Minister is very quick to try to explain away last year's massive miscalculation:

"We started the year expecting a growth rate of 4.5% to 6.5%, which was also in line with market forecasts. With actual growth at 7.7%, Corporate and Personal Income Taxes came in some $1.0 billion higher than projected. GST revenues also exceeded our projection by about $1.2 billion, mostly from higher consumption.

GST collection arising from the 2 percentage point hike in July is estimated at about $1.4 billion in total, which now just matches the size of the GST Offset Package and Workfare Income Supplement tranches that were distributed in FY2007.

However, the largest boost to revenues came from the exceptionally buoyant property market last year. Prices of private residential units rose by over 30%, much higher than industry forecasts of around 10% to 15% at the beginning of the year. The volume of property transactions went up by over 60%. Stamp duties consequently rose to an unprecedented $3.8 billion, $2.3 billion higher than expected. Other property related revenues were around $1.1 billion above projections. These were large gains, out of the ordinary, and which we cannot expect to see very often.

The overall budget surplus of $6.4 billion was therefore the result of a strong economy and property market."

What is he saying? That the three biggest reasons that the Government collected so much more extra money from the people are:

(1) the property market performed unexpectedly well, leading to a unexpectedly large increase in property-related tax collection;

(2) Singaporeans and companies made an unexpectedly large amount of money, learning to an unexpectedly large increase in income tax collection;

(3) Singaporeans spent an unexpectedly large amount of money, leading to an unexpectedly large increase in GST collection.

By this time, you will conclude that the Singapore government is unexpectedly stupid at managing its own money and making its own financial estimates.

Either that, or you are a very kind person, and always willing to give the benefit of the doubt, and you will say that indeed, the property boom and rapid economic growth in 2007 could not reasonably have been foreseen.

But wait, I have more to say.

Click here for the Government's revenue estimates. You'll see that the Government gets its money by collecting nine different classes of tax, namely:

B10. Income Tax
B20. Assets Taxes
B30. Customs and Excise Taxes
B40. Motor Vehicles Taxes
B50. GST
B60. Betting Taxes
B70. Stamp Duty
B80. Selective Consumption Taxes
B90. Other Taxes

Tharman has told you that in 2007, the Government collected much more money than projected, for B10, B50 and B70.

But there's something interesting which Tharman conveniently didn't tell you. The Government had over-collected money, not just for B10, B50 and B70. But for every single category of taxes, from B10 to B90.

Now how could the Government be so completely off the mark?

Personally, I see two possible explanations:

(1) The Singapore government is unexpectedly stupid at managing its own money and making its financial estimates.

(2) In early 2007, it was the deliberate intention of the Singapore government to make low projections for its revenue, so that it could publicly claim that there would be a budget deficit of $0.7 billion. Therefore more Singaporeans would be willing to believe that the 2% GST hike in July 2007 was necessary.

Which explanation do you prefer?
Gadis Bispak Imut

Suddenly, The Singapore Media Discovers That Gays Are Human Beings After All

A vaguely amusing article from Today:

Banks and the pool of pink talent
Wednesday • January 30, 2008
By Neo Chai Chin

AMERICAN investment bank Lehman Brothers is planning an unusual initiative in Singapore, Financial Times reported recently. It is specifically targeting gay and lesbians who aspire to be bankers. This follows the success of a presentation and buffet dinner for 50 gay students in Hong Kong.

Today has learnt that the banking giant is not alone. Global banks around Asia are breaking new ground to attract and retain the best and brightest. Increasingly, their hiring and diversity policies are taking into account the homosexual community, which makes up as a significant part of the talent pool.

At UBS Singapore, for example, benefits including health insurance are extended to a staff's "significant other", defined as "a person who has cohabited with an employee for a continuous period of 12 months". The couple does not need to be married, and sexual orientation is not an issue.

Money is a factor in the competition for talent, but keeping up with social changes is also important.

"This is why our benefits policy is designed to be as flexible and inclusive as possible," said Ms Leona Tan, UBS Singapore's diversity advisor.

Merrill Lynch, on its part, has four professional networks in the Asia-Pacific region for its staff, one of which is the Lesbian, Gay, Bisexual and Transgender network, set up last April. The other networks are for women, young professionals and parents. The firm even has an annual diversity week, when it hosts speakers, events and conferences for the various networks.

"Our efforts in the area of diversity are about how we can create the most effective and inclusive environment, one in which we value diversity rather than simply tolerate it," said Mr Roman Matla, spokesperson for the bank's diversity and inclusion team.

I suppose this article is useful for public education purposes in Singapore. On the other hand, I could not help finding it somewhat funny.

The article suggests that by taking gay people into account in their HR policies, foreign banks are doing something really unusual and innovative – “breaking new ground”.

Actually, this is nothing new at all. Practically all US and European banks have global HR policies recognizing the rights of their gay employees worldwide. Such policies would have been in existence for many years.

For example, my current employer has a HR policy which promotes fair and equal treatment of all employees. Among other things, the policy says that no employee is to be discriminated against on the basis of his race, nationality, age, religion, gender, marital status, disability or sexual orientation.

As a matter of fact, this isn’t even unique to banks. You see it across different industries, among a wide range of global MNCs. Here are a few examples, from the world’s best-known corporate names:

Microsoft: “It is our policy to recruit and hire applicants for employment opportunities based solely on the qualifications. We do not unlawfully discriminate on the basis of race, color, sex, sexual orientation, religion, national origin, marital status, age, or disability in any of our recruitment, hiring, training or promotion practices.”

British Airways: “British Airways offers an inclusive environment to all of our employees, whether gay, lesbian, bisexual or transgender. British Airways has for many years included sexual orientation in its the diversity policy.”

Deutsche Bank AG: “We think of Diversity in its broadest sense, embracing all of those differences that make up the exciting, challenging world in which we live. These include age, culture, ethnicity, gender, nationality, personality type, physical ability, religion, sexual orientation, and work style."

General Electric: “GE's commitment to the Gay, Lesbian, Bisexual, and Transgender communities is supported by the GLBT Forum, as well as our offering of benefits for domestic partners.”

BP: “Our code of conduct, distributed to all BP employees, states that the company will not discriminate against anyone on the basis of race, gender, age, disability, sexual orientation and identity.”

Nike: “Nike works closely with Stonewall, Britain’s leading gay equality organization, and other members of the program, to improve the working environment for our lesbian, gay and bisexual employees.”

Nokia: “Among those rights that Nokia views as fundamental and universal are: freedom from any discrimination based on race, creed, color, nationality, ethnic origin, age, religion, gender, gender reassignment, sexual orientation ....”

If the above surprises you, it’s only because you live in Singapore. “Gasp!” you say. “How could all these respectable companies openly employ criminals?!”

Well, yes, the Dark Ages still prevail in Singapore. However, most other developed countries moved on long ago. They already discovered that gays are human beings too, you see.
Gadis Bispak Imut

Perhaps the Minister is a Little Confused

Either that, or he is engaging in obfuscatory political doublespeak:

ST Nov 13, 2007
Inflation could hit 5% early next year, then taper off
By Li Xueying

AS CONSUMER prices continue to rise, inflation in Singapore will likely surge to 4 or 5 per cent in the first quarter of next year.

But it should taper off by the second half of the year to 'more normal conditions', said Trade and Industry Minister Lim Hng Kiang yesterday.

The average rate for next year should be around 3 per cent.

Fuelled mainly by rising global oil and food prices, inflation recorded a 13-year high of 2.9 per cent in August. It is expected to dip to 2.7 per cent in the last quarter, Mr Lim told Parliament.

Citigroup economist Chua Hak Bin said that the 5 per cent rate predicted would be a 'historic high' in the 25 years since 1983. The previous high was in July 1991, when it hit 4 per cent.

Most economies, including Singapore's size up inflation by tracking the Consumer Price Index, or CPI. The CPI measures the cost of a basket of goods and services consumed by most households.

Yesterday, Mr Lim cautioned against 'interpreting a rise in the headline CPI as necessarily reflecting an increase in the cost of living'.

It depends on the individual household's spending. 'Switching to cheaper products can reduce the cost of living despite a rise in the CPI,' he added.

But of course a rise in the CPI reflects an increase in the cost of living. After all, the CPI is meant to track the cost of living. If the CPI does not track the cost of living, then what would you want it for?

As for individual households switching to cheaper products, well, in fact, they have to. That’s the effect of inflation - your dollar has less purchasing power. Therefore with the same amount of dollars, you can only buy cheaper products.

Minister Lim must be confusing “cost of living” with “standard of living”. Cost of living means the cost of maintaining a certain standard of living. In turn, standard of living refers to the quality and quantity of goods and services generally available to a certain class of people (for example, average Singaporeans).

Instead of saying that “switching to cheaper products can reduce the cost of living”, Minister Lim would have been more accurate to say, “switching to cheaper products can lower the standard of living”. For example, instead of living in a 5-room HDB flat, you can live in a 1-room HDB flat (a cheaper product). Instead of having chicken rice and vegetables for lunch, you can just eat plain porridge (a cheaper product).

Living in a 1-room HDB flat and eating plain porridge constitutes a lower standard of living. So yes, by switching to cheaper products, you can lower your standard of living. And a lower standard of living does cost less to maintain.

In summary, what is Minister Lim's advice to you? To deal with inflation, lower your standard of living.

Wow, and for telling you that, he even gets a world-class ministerial salary. I bet inflation doesn't bother him much.
Gadis Bispak Imut

Hopping As a Survival Strategy (And I Don't Just Mean Frogs)

For the past five years or so, headhunters have been calling me quite regularly.

Typically, they begin by introducing themselves and their search firm. They then ask if this is a convenient time to talk (they know that you might be in your office area with your boss or colleagues nearby).

If convenient, they say that they have an interesting job opportunity and could they please have a minute to tell you about it.

Next comes a quick rundown on the JD ("job description") - the role, the responsibilities, the required experience, the reporting line and so on.

At this stage, they won't reveal their client's name, but they will give a general description - for example, "one of the biggest UK banks" - which, coupled with the JD, is often enough for you to make a good guess.

If you say you're not interested, they'll ask you why. If your reason is not particularly compelling, they'll persuade you to reconsider.

If your reason is compelling, and furthermore conveyed in a firm, no-nonsense tone, they will say,''Okay, fine then. But do you happen to know anyone else who might be suitable for the role?".

Here you have a choice. Either you can curtly say, 'No, I do not' and hang up, or you can try to be helpful. I always opt to be helpful. If I know of people whom I think could be suitable and interested, I pass their names on to the headhunter.

It is a good idea to be nice to headhunters, because you never know when you might want or need their help in finding a new job.

Just last Friday I had lunch with a headhunter. We have lunch every few months or so.

We have known each other from uni days, so we are also old friends. However, I shall be frank - if I were not currently in the banking sector, and he were not currently a banking headhunter, we would not have bothered to keep in touch with each other.

As usual, our lunchtime conversation was mostly me telling him what I know about who works where now doing what kind of work, and him telling me which kind of banks are interested in hiring what kind of people in the foreseeable future.

It is important for me to get regular updates on such market conditions. If there are really significantly superior opportunities elsewhere, it would be foolish not to try for them.

By "superior opportunities", I don't mean just money (although that is definitely very important) but the total package of all relevant factors. For example, these factors would include the opportunity to learn new skills, join a top brand name, move up the management ladder, join a place with better working culture, and so on.

Contrary to what Minister Lim Swee Say recently said, job-hopping is neither necessarily greedy nor necessarily short-sighted. In fact, it is the far-sighted people who would regularly review their career plans, options and strategies.

Many parts of the banking industry have done very well in the past few years. However, some parts of the banking industry have been doing very badly in the past few months. That's all thanks to the US subprime crisis, and the spillover effects.

As a result, a significant number of very high-flying banking professionals overseas have suddenly lost their jobs. They include no less than Chuck Prince and Stan O'Neal, the now ex-Chief Executives of Citigroup and Merrill Lynch respectively.

And of course, many others lower down the food chain.

So the question is how long the subprime crisis will last; how bad the spillover effects will be; and how severely Asia will be affected.

And whether, say, sometime in 2008, banking professionals in Singapore specialising in certain types of banking work (CDOs; structured finance; credit derivatives; debt capital markets; perhaps even IPO work) will also start losing their jobs or suffering drastic pay cuts.

Of course I hope the answer is no, but at this point in time, well, who can say for sure. So I'm looking ahead, getting news from my headhunter friend, finding out the trends in the banks' hiring plans for 2008.

If I suddenly have to move, at least I have a few backup ideas and I have got some sense of which areas still have demand and where I can quickly try to move to. In other words, I won't be caught off-guard and wrong-footed.

Unlike 2WO Henry Minjoot.

Gadis Bispak Imut

Realities of the Working World

ST Nov 7, 2007
Labour chief calls job-hopping, poaching short-sighted
By Marcel Lee Pereira

NO SOONER had Mr Kalaichellvan Krishna been crowned the service 'superstar' of the restaurant sector than new job offers began trickling in.

Minutes after the 26-year-old, who works for the Jack's Place steakhouse chain, was given the SuperStar Award at the Excellent Service Award (Exsa) ceremony held at the Raffles City Convention Centre yesterday, the poachers pounced.

They offered him jobs at other restaurants and hotels, but he turned them down politely.

His reason? His first loyalty is to his customers.

'They know me. Without them, I couldn't have won this award,' said Mr Kalaichellvan, an assistant manager at the chain's West Coast Recreation Centre outlet.

This business of loyalty and poaching of staff is something that concerns many employers these days.

The red-hot job market - figures announced last week put the jobless rate at 1.7 per cent, a 10-year low - is causing a scramble for talent and pushing up wages, and some companies are finding it hard to hold on to workers like Mr Kalaichellvan.

The problem is serious enough that Minister Lim Swee Say, from the Prime Minister's Office, who gave out awards to 10 winners in different sectors yesterday, touched on it during his speech at the ceremony.

Warning that the labour market is set to get tighter as major events such as the Formula One race come to Singapore, the labour chief urged service staff not to job-hop, and told employers to refrain from poaching.

'For workers to job-hop for a few dollars more during good times is a very short-sighted move, because the journey towards excellence is a long one,' he said

……… Turning to employers, he said: 'Every time we give out the awards, when the superstars appear in the newspapers, many employers will want to take a short cut and go after the winners, ask them what is their pay now, offer another 20 per cent.

'I think it's a very short-sighted move on the part of employers, and I hope that the Exsa superstars today, no matter how hard your competitors try to poach you, say no to them,' he added, to applause.

Isn’t this ironic? Minister Lim Swee Say tells you that it is very short-sighted to change jobs for the sake of earning more money. But for years and years, the PAP has been saying that if we don’t pay our ministers the world’s highest ministerial salaries (and give them further increases after that), then they’re all going to run away to join the oh-so-lucrative private sector.

If PAP ministers can’t be expected to serve out of a sense of loyalty to the nation, why would we expect people like Mr Kalaichellvan to serve out of a sense of loyalty to a steak restaurant.

But what do I know. Maybe loyalty to restaurants gets you further than loyalty to the nation these days. See how the Singapore Armed Forces discarded this old soldier (and he isn’t even that old):

ST Nov 6, 2007
Warrant officer asked to retire 5 years earlier

I WAS a regular serviceman in the Singapore Armed Forces (SAF). I served a total of 32 years, comprising full-time national service, reservist and regular service, from 1974-2006.

I was one of more than 200 regular servicemen and women in the Army who were notified in May last year that we would be given Special Early Transition. Some of the reasons cited included difficulty in offering us 'suitable jobs' in the long run, restructuring and possible 'stagnation'. We were given only six months to transit.

Having attained the rank of a warrant officer in 2001, it meant that I was able to serve till the compulsory retirement age (CRA) of 55. I transitted last November after just turning 50, five years short of the CRA.

The Control of Personnel Centre announced that we were not under-performers. I was still PES 'B' and I received my performance bonuses annually without fail. I had also met all other requirements, i.e., Individual Physical Proficiency Tests, Annual Trainfire Programme, Body Mass Index, and Annual Proficiency Knowledge Test.

I also did not have any discipline or medical problems. The latter meant that I was still combat fit and still deployable. There are some who have not conformed to one or more of these requirements and yet are still serving in the organisation.

Till today, I am still somewhat in a state of depression at how the organisation had overlooked all my years of loyal and dedicated service.

The SAF Management Philosophy states:

'The SAF is concerned with the well-being of its people and their families, the SAF values its people, looks after them and their families so that they can give wholehearted attention to their assigned duties.'

The Defence Minister himself said last year:

'Every soldier is precious to us. Every national serviceman, every operationally ready national serviceman, every regular who serves with us is a precious and valuable person.'

The organisation failed to honour its word to allow me and many others to serve till the CRA of 55. I have a wife and two young children still attending school.

Second Warrant Officer (Retired)
Henry Minjoot

“Special Early Transition”, ha. Sounds more like “Extended Notice Period” to me.

Dear Henry, I am sorry for you. There is an important lesson to learn here, and this is it – Singapore doesn’t really care about you. You have to care about you. And your family.

Next time – if there’s a next time – keep your eyes wide open for a good job opportunity. And as soon as it comes along, hop. Make it an IPPT gold-star award-winning Standing Broad Jump.

Regardless of what Lim Swee Say has got to say.
Gadis Bispak Imut

Chaos in the Financial Markets

Here is an email from one of my readers, Slawek Rogulski:

Hello Mr Wang,

You are no doubt aware of the world financial situation, especially that of the US with the sub-prime mortgages and other exotic instruments starting to lose their value. In your opinion what if any impact on Singapore will this have? Have any funds here had to close or at least temporarily halt withdrawals? And how sound are the local banks? I would appreciate your comments on these issues. Thank you. Regards,

Yes, I am very aware of the current world financial situation. However, for two reasons, I will not comment specifically on the US subprime mortgage situation.

1. There is already an abundance of articles and commentaries in the news and media about the US subprime mortgage situation.

2. No one knows what's going to happen next anyway. That includes Mr Wang.

Me, I'm getting at least 4 jokes per day by email, about Goldman Sachs, Bear Stearns or hedge funds in general. But if you really want to read some serious, and excellent articles on this topic by an anonymous blogger, click here.

Trust that man, he's very good. At the same time, being anonymous, he doesn't have to tailor his commentary to suit any particular vested interest, which he would have to do if he were a known person employed by, say, certain investment banks or hedge funds right now.

As for myself, over the past two months, I've heavily dumped my own fund investments worldwide in the past two months and I'm very long on cash right now. It's been a brilliant bull run, I've made my money over the past two years and I'm out. The party's over, and it sure was fun!

I'm not going bottom fishing yet, because I think we're still a long way from bottom. It is frankly not just about US subprime - it is the market doing a major repricing of credit risk everywhere that credit risk appears. In other words, not just CDOs, but debt in general, and equities too.

Now I'm going to work on my Plan B and Plan C. What shall Mr Wang do, if in three or six months time, his own job (in credit derivatives) vanishes? Poof. Magic, just like a Bear Stearns hedge fund.

Sigh, I may have to become a lawyer again.

Gadis Bispak Imut

Salaries in Singapore

I found, through Tomorrow, an interesting blog that's all about salaries in Singapore. Here it is - Salary.sg.

There are lots of interesting posts on that blog, including this nifty one which allows you to benchmark your own annual income (or anyone else's) against the general population of taxpayers in Singapore. Anyone tried typing in PM Lee Hsien Loong's annual income yet? Heheh.

The post featured on Tomorrow was this one - Median Income By Age Group. It tells you the median gross monthly salary of managers (the generalists) and professionals (the specialists), by different age groups. To get a more complete picture, you would want to plow through the original MOM report, but Salary.Sg's graph does give a quick, convenient snapshot.
Gadis Bispak Imut

So Is Life Rosy or Not?

One of my readers, Mr Han, requested that I comment on the following letter which was published in the Straits Times:

ST Forum, June 4, 2007
Future not so rosy for working-class S'poreans

MANY Singaporeans must be celebrating at the moment, with the buoyant economy, high employment, higher salaries and, for private home owners, skyrocketing property prices and 'en bloc' frenzy.

However, is the current state of the economy and future as rosy as it appears for most working-class Singaporeans?

According to data published in a report on the wealthiest cities in the world by PricewaterhouseCoopers (PWC) on March 11, Singapore ranks 36th out of 70 cities based on gross domestic product (GDP) in 2005.

A look at the rankings will reveal that, apart from Singapore, all the cities in the bottom half are in Second and Third World countries.
Singapore's GDP of US$129 billion (S$197 billion) pales beside other Asian cities such as Tokyo (US$1.19 trillion), Hong Kong (US$244 billion), Seoul (US$218 billion) and Shanghai (US$139 billion). In fact, we are only slightly ahead of Mumbai (US$123 billion).

These rankings are arrived at by using purchasing-power-parity exchange rates.
However, unlike Singapore, our Asian counterparts in Hong Kong seem to have more to look forward to. The projections for city wealth in the year 2020 show that Hong Kong is likely to rise to 14th position, while Singapore is likely to decline to 40th.
The study (taking into consideration deduction of taxes and social-security contributions) reveals that net salaries in Asian cities such as Tokyo, Dubai, Seoul and Taipei will surpass Singapore.
However, these sobering statistics apply only to the average Singaporean citizen. The top bracket of earners in professions such as medicine, law, banking and, of course, within the ranks of the Government, will earn as much, if not more, than some of their counterparts worldwide.
What do these figures tell Singaporeans? We can conclude that even though we pay a relatively low rate of personal income tax, the net amount of wages we take home leaves us in the bottom half of the 70 cities in the PWC report.

Edmund Khoo Kim Hock

I'm no economist, but this letter doesn't strike me as being particularly well-reasoned. In fact, it reminds me of Edmund Khoo's other recent letter to the Straits Times.

The same difficulty arises here - Edmund seem to form his conclusion first, and then only formulate arguments in favour of it. In the process, he loses objectivity and mangles the facts. Next time, try analysing the facts first, BEFORE forming a conclusion.

Here's one big mistake that Edmund makes:

Singapore's GDP of US$129 billion (S$197 billion) pales beside other Asian cities such as Tokyo (US$1.19 trillion), Hong Kong (US$244 billion), Seoul (US$218 billion) and Shanghai (US$139 billion). In fact, we are only slightly ahead of Mumbai (US$123 billion).

GDP can be used as an indicator of various things. However, if the intention is to use GDP as an indicator of the average citizen's standard of living (and that's clearly Edmund's intention), the least we could do is look at GDP on a per capita basis. That is, take the GDP and divide it by the size of the population.

That's because GDP is basically a measure of how big an economy is. A big city with a large population could have a GDP much higher than a small city with a small population. But on a per capita basis, we would realise that the average person in the big city isn't necessarily any richer, and in fact could be much poorer, than the average person in the small city.

The report that Edmund cites is based on a comparison of cities and GDP. In this report, Singapore is ranked 36th out of 151 cities , approximately in the same range as cities just as Shanghai (32nd), Melbourne (33rd), Mumbai (37th) and Rome (38th).

However, Shanghai and Mumbai are MUCH more populous than Singapore; while Melbourne has a slightly smaller population than Singapore; while Rome has a much smaller population than Singapore. If you go by a per capita approach, you'd probably see that the relative rankings of these cities would change quite a lot.

Now, if you compare countries based on GDP on a per capita basis, Singapore fares much better than 36th out of 151. Wikipedia tells us that Singapore would be ranked 25th out of 182 countries.

Of course, countries like Denmark, Sweden and Finland still rank far above us (8th, 10th and 12th). This is despite the fact that like Singapore, these countries are quite small, and not well-endowed with natural resources.

According to MM Lee Kuan Yew, the governments of these countries are even "mediocre", and therefore their ministers deserve to be paid much, much less than Singapore's PAP leaders.

An entirely believable claim, as long as you choose to disregard the facts.

Gadis Bispak Imut

A Worried Mother

Another email from a reader:

" .... I have yet to read your opinion on stay-at-home mums who are aspiring to return to career later. This is exactly my situation. My husband and I migrated to Singapore and now are PRs. After working for a couple of years as professional officer in a stat board, I decided to quit to take care my son full time, since we do not have relatives to help us take care of the baby. We're also hesitant to rely on maids or childcare, and intend to provide the best conditions for breastfeeding and care, with me staying at home.

However I felt that it may be difficult for me to return to workforce when my son is 3 years old. Employers would question the gap in my resume, and "taking a break for family" is just not acceptable here in Singapore.

What are your thoughts about that?"

Personally I wouldn't be too worried.

When you take an extended break from work and then try to get a job again, the difficulty is that your skills may be a little out-of-date. You may be somewhat out of touch with industry trends and developments.

However this is a challenge faced by anyone who has taken an extended break from work. For that matter, similar challenges face those people who are crossing from one industry to another.

So the problem is not unique to women who have taken some time off to be full-time mothers. It may simply mean that you have to accept a lower salary than if you had not stopped work at all (which is fair, because if you had not stopped work at all, you would be more experienced and have more up-to-date skills).

In fact, if a job candidate had a gap in her resume, one of the best explanations reasons would be "I decided to stop work for two years, to look after my little baby." Everyone was a kid, and everyone has a mother, so at some level, we can all relate to that.

What really frightens employers are candidates who can't or won't disclose any reason for a protracted gap in their resume. Were they in prison? Did they have some mental breakdown or illness? Etc.

Incidentally, some employers are definitely more family-friendly than others. So it is good to do your homework. UBS, for example, is well-known for its flexible HR policies. Employees are welcome to propose their own working arrangements, to best accommodate their family needs. For example, you can propose to work a 4-day week; or to work 2 days from home; or whatever else.
Gadis Bispak Imut

Crazy Bull

Stock markets all around the world have been climbing like rockets. That includes the US, Europe, Japan, China, India, Korea, Australia, Malaysia, Singapore ... The list goes on. One wonders when the bubble will burst again (the last times it popped were in February 2007 and May 2006).

But the thing is - in most countries, the stock market's performance looks genuinely well-supported by fundamentals. It's not just investors' euphoria. Here's an example, from Singapore:

May 7, 2007
S'pore corporate gains jump 25% to $2.7b
Only four of the firms turning in first-quarter results suffer losses

By Arthur Poon

SINGAPORE'S listed companies have turned in a scorching set of first-quarter results, with total profits surging 25.2 per cent to $2.7 billion.

As rampaging bulls take the local stock market to fresh record highs with relentless repetition, these companies' bottom lines proclaim this is no market whim.

The big profit winners include banks, marine firms, property developers and trusts.

Among the 64 listed firms that had posted results up to last Friday evening, for the three months ended March 31, more than half of them, or 37, reported improved profits.

Another 17 recorded lower profits while one firm moved from red ink to black. Another five companies reported earnings similar to those posted in the previous corresponding period. Only four firms posted losses.

Gadis Bispak Imut

Tomorrow's Model

In response to my previous post, a reader wrote:

Any comments on the legal industry in general and why you have chosen to leave the legal industry?

I enjoyed my previous job, and I like my ex-colleagues (a few of them, including my ex-boss, even read this blog from time to time). I left for reasons which I think they respect and understand very well: (a) new learning opportunities, and (b) better remuneration prospects. They wish me well, and so do I. And that’s that.

My father, who has retired, is always a little alarmed to hear that I’m changing jobs again. He belongs (obviously) to an older generation. For more than three decades, he worked for the same company. I don’t think it ever seriously crossed his mind to change jobs.

Times are different now. My current organization gives out “long service” awards for employees who reach the five-year mark – in other words, five years of service is already considered long. Another anecdote - during my recent induction course, each new employee received his security access pass, which had a five-year validity period. Someone quipped, “Wow, this bank sure is optimistic.”

Employee loyalty is dead, because employer loyalty is dead. This is the reality of the modern working world. People are just digits, and departments are just little square boxes, on a corporate organisation chart. Tomorrow, the organization chart could change - because of a merger or acquisition; or an outsourcing of jobs into India; or a restructuring exercise to cut costs. And some employees will just have to go.

So the modern employee must learn to take care of himself. Employability is more important than employment. You have a personal responsibility to keep your own skills and knowledge relevant. If a better opportunity comes along, take it if an objective, hard-headed analysis tells you that you should.

In my opinion, there is a common mistake that many people make when planning their careers - they rely on yesterday’s model of the world. In fact, they should rely on today’s model of the world, or better still, tomorrow’s model. Of course, no one can predict the future with 100% accuracy. However, because the world is changing so quickly, yesterday’s model, even if true today, will almost certainly be wrong by tomorrow.

I left the legal industry for my new job, because I felt that this was the strategically optimal move for me. Of course, yesterday’s model of the world would suggest that I’m making a bad move. After all, in yesterday’s model, Singaporeans who can should always strive to be doctors, lawyers or PSC scholars, shouldn't they?

However, in a possible tomorrow’s model, Singapore will be flooded by hordes of doctors from India, and doctors' salaries will be dampened. The noble aspects of the profession will become increasingly obscured by the profit-driven, commercial aspects, as Singapore strives to become a regional medical hub.

Meanwhile, PSC scholarships may become viewed as career traps for the bright but unwary. Outstanding young people may become tied down to a little red dot, even though they are so talented that the whole world could have been their oyster.

As for lawyers in private practice, they may continue working harder and worker to help the investment banks make more money. Their personal lives suffer, and yet in the end, they may end up earning considerably less than the investment bankers themselves.

Some would say that I am wrong. Others would say that my model of tomorrow has already happened today. What do you think?

Gadis Bispak Imut

On Maids & Ministers

An excerpt, from the earlier CNN article:

Singapore ministers set for million-dollar pay hike

..... The opposition also argues that a million-dollar pay hike is unwarranted for leaders of a country that has no legal minimum wage and where 20 percent of the population earns an average monthly salary of S$1,500 ($991).
But Lee Kuan Yew -- modern Singapore's first prime minister, who is still the leading voice in his son's cabinet -- will have none of it.

"The cure to all this talk is really a good dose of incompetent government," Lee senior told the Straits Times on Thursday, adding that it is "absurd" for Singaporeans to quarrel about ministerial pay and warned that Singapore would suffer it the government could not pay competitive salaries.

"Your security will be at risk and our women will become maids in other people's countries," he said.

Some very startling leaps in logic there, from Lee Kuan Yew. But let's humour the man. For the sake of discussion, let's assume that we can indeed ascertain the quality of our PAP ministers, by comparing the economic status of maids and Singaporeans.

For starters, we will revisit an old post of Mr Wang's, from June 2005. Back then, the Straits Times reported that the bottom 20% of wage earners in Singapore earn less than $1,200 a month. Mr Wang had then proceeded to compare the earning power of such Singaporeans, to the earning power of foreign domestic workers in Singapore:

Let's take a moment to think about the earning power of (1) Singapore's poorer citizens and (2) Singapore's foreign maids.

Let's say Madam Jin Pai Mia is a 55-year-old spinster belonging to the Low-Income Singaporean category. She works as a cleaner in a commercial office building and earns $900 a month.

Madam Jin takes the MRT to and from work every day. That's about $1.50 x 2 x 24 days = $72 a month. She pays about $60 for her water and electricity bills at home. She eats three meals a day, each costing an average of $3.00. That's $3.00 x 3 meals x 30 days = $270 a month on food. Let's say Madam Jin falls sick once in a while and needs to see the doctor. We'll put it at $20 a month. She rents a flat from the HDB. Let's say it's $250 a month (I don't know how much it costs - it's just my guesstimate).

That's $672 on basic stuff like transportation, water, electricity, food, medical care and accommodation. After deducting $672 from Madam Jin's monthly salary of $900, she's left with $228.

Now, a foreign domestic maid gets about $300 a month. However, the maid does not need to spend money on public transport to get to work each day. Her employer pays the electricity and water bills and provides three meals a day. The maid's accommodation is essentially free. If the maid falls ill, the employer is, by law, responsible for her medical expenses.

So when the maid gets $300 a month, the maid really earns $300 a month.

However, when Madam Jin gets $900, she's really earning just $228 a month.

The basic idea is quite simple. Although foreign maids get low salaries in Singapore, their employer covers almost all their necessary expenses - food, accommodation, utilities, medical care etc. When you factor all that in, you will see that the average foreign maid's earnings are quite comparable to the earnings of the average Singaporean in the bottom 20% .

Thus, we can say that one in five Singaporeans is no better off than a foreign maid. If we use Lee Kuan Yew's suggested methodology, we would begin to develop strong suspicions that our PAP ministers are not very competent, after all.

However, the relevant statistic - that the bottom 20% of wage earners in Singapore earn less than $1,200 a month - is an old one, from 2005. Perhaps things have improved since then? After all, our PAP ministers can't be that incompetent, can they?

Alas. According to this Straits Times report in 2007, things seem to have only become worse. Not only has the average income of the bottom 20% of Singaporeans not risen, the average income of the bottom 30% has actually fallen.

Now, if we should once again adopt Mr Lee's methodology, we cannot help but be struck by the aptness of his words. All these years, our ministers have already been receiving the world's highest ministerial salaries. Yet all these years, Singaporeans seem to have indeed been suffering from a "strong dose of incompetent government".

Gadis Bispak Imut

Globalisation At Work

Just started work at my new organisation (a bank). I learned something quite interesting during the orientation programme.

The HR department has a special service to help foreign employees in Singapore process their PR applications. However, that HR service has been outsourced to the global processing centre in Mumbai.

In other words, the administrative work of getting PR status for foreign employees in Singapore is now being handled by people in India.

We learn a few interesting things here. Firstly, this bank employs so many foreigners in Singapore that it's worth the trouble of setting up special support and administrative services for them.

Secondly, so many of the foreign employees end up applying for PR status that the HR department finds it cost-efficient to set up a special service to help them do it.

Thirdly, outsourcing has become so extensive that even such a highly local process as PR applications in Singapore has been outsourced to India. In other words, the bank does not hire any secretary, clerk or admin officer in Singapore to do the necessary paperwork. It's cheaper to get someone in India to do it.
Gadis Bispak Imut

One for Mr Wang's Files

Not much to say about this topic that I haven't already said before. I'm just preserving the excerpt below, from a STAR article, for my own records:

NS Rumblings on the Rise
By Seah Chiang Nee
17 March 2007

...... With Singaporeans facing growing competition from foreign workers, however, national service has become a strain when bosses pass them over in favour of permanent residents (PRs) because of their “cumbersome” reservist duties.

Singaporean employers who have gone through it are generally more ready to employ reservists, but foreign companies often feel no such responsibility.

They often turn away locals who are still doing reservist duty, preferring to hire foreigners or PRs, who are free of the obligation.

An average of 30,000 foreigners (2006: 57,000) and PRs are accepted every year, and they are not required to serve military service.

This anomaly is causing rumblings among NS men who feel – quite rightly – that the system reduces their ability to compete in the workplace.

Recently, a fresh Singaporean 26-year-old graduate related his interview at a foreign-owned fabrication plant here.

The first question the Taiwanese manager asked him was: “I see you are a Singaporean. Do you need to go back to serve NS every year?”

When he replied that he had to report back for in-camp training every year, the manager reacted negatively, observing that reservists who failed fitness tests would need to train until they passed.

He also mentioned frequent absence of employees who had to attend occasional military meetings, which disrupted workflow.

“If every Singaporean needs to do all this, then I’d rather not hire you all then. Every year you all have to take long periods of absence for NS and no work is done,” he added.

The Singaporean didn’t get the job.

“Singaporean males are going to suffer from this influx of foreign talents. We don’t have an even ground to compete on!” he complained.

The government appealed to employers not to discriminate against reservists, but it in many cases, it has fallen on deaf ears.

The logic of appeals borders on the absurd, remarked a blogger.

“Why should a business entity which has to earn a profit for shareholders support an obligation imposed on Singaporean males?”

Gadis Bispak Imut

On Life, Work & Study

ST March 15, 2007
Kids, it's your life, so plan for it
Kai-Alexander Schlevogt

OPEN houses showcase not only the host but also his guests. University fairs therefore are a crystal ball on the nation's future.

Two student archetypes dominate: the specialist and the existentialist. Members of the first category know exactly what they want. Without taking note of anything else, these youngsters dash to the business faculty's booth. They ask the delighted officer to admit them to a BBA in accountancy and extra courses in derivatives.

In contrast, the existentialist, clueless about his future, wanders around until some staff member grabs him. To appear less awkward, he mumbles a supposedly intelligent question, such as: 'What exactly is business?'

Both approaches to career planning are problematic in view of the national objective to raise innovativeness and job satisfaction. They lead either to premature closure or endless drifting. It is therefore imperative for students to take corrective measures at an early stage. They need to be supported by those who have a stake in their future, including parents, politicians and educators.

Students should start with the end and reason backwards to what needs to be done now. They need to plan their lives, not only their careers.

An effective approach is to write an imaginary newspaper article to be published on their 100th birthday, outlining their legacy. Instead of striving for specific titles ('I want to become prime minister'), they should develop a broad and noble purpose that makes them feel passionate and will outlast them. On their life journey, they need to step back often and assess their progress.

Even with broad aspirations in place, students should strike a balance between specialisation and openness. If they choose the wrong slot at an early stage, job satisfaction will plummet.

I recommend building a portfolio of options. When some roads to the destination become blocked, there will be alternative routes. So even if a student is passionate about accounting, he may consider studying other subjects first and specialise later.

Such flexibility contrasts with the early pragmatism of many Asian parents. They want their children to become bankers because of the high earning potential.

Oh, what a coincidence. It so happens that Mr Wang is just about to become an investment banker. This is quite a big change for Mr Wang. For the first time in his career, Mr Wang will not be working as a lawyer.

Yet the change is not as big as it may appear. You see, Mr Wang is currently an investment banking lawyer. So now he's going to cross over the legal side, into the business side. From investment banking lawyer, to investment banker. There will be many new things to learn, but it won't be completely alien territory.

Kai-Alexander, in his article, talks about building a portfolio of options. In my opinion, this is good advice. Keeping your options open is a good strategy because the future is constantly in flux. Ideally you should position yourself such that the possibility of taking alternative routes stays open to you.

My best single piece of advice for young Singaporeans is that you must never stop learning. It sounds cliched and you've heard it many times before, but it's true.

Personally, I review and update my resume every six months, even when I have no intention of changing jobs at all. I do this to check on my learning progress. If after any six-month period I have nothing new to add into my resume, then I know I am in danger of stagnating.

Bear in mind most people spend the greatest part of their life working. How terrible must it feel to drag yourself to work every day, longing for the evening when you can pursue hobbies with great enthusiasm? It is far better to use one's energies on the job. Money will not pour in by itself if you do not work for it.

Second, students should think about how they can rise above the noise level by acquiring distinctive competencies. Take a consulting firm like McKinsey & Co, the ultimate dream for many graduates. Every year, thousands of students with similar academic qualifications apply, but only a few are chosen.

Recruiters look for what is truly special about an applicant's life story. The educational system rewards examination performance, but students need to step out of this narrow box to succeed in life.

How about founding a pioneering company while studying? Why not learn at least five world languages? These objectives seem a tall order given academic pressures. But smart multi-tasking can help to alleviate the workload.

For example, more students should study and work abroad. Instead of defaulting to the United States, they may want to consider Europe, which is winning the soft power contest and offers more diversity. By going abroad, they can pick up a foreign language as easily as an infant acquires his mother tongue.

The key point here is "acquiring distinctive competencies". I've seen the resumes, and I know the track records, of some young outstanding Singaporeans. Indeed it's not just about grades - it's also about the distinctive competencies.

The problem with the strategy of "acquiring distinctive competencies" is that in the context of prevailiing Singapore culture, it may degenerate into a "pick the best CCA" strategy - for example, the one that looks most pleasing on a scholarship application form.

The word "distinctive" is likely to be forgotten, in the drive to "acquire distinctive competencies". One example is how large numbers of Singaporean parents used to (or still do) foist piano lessons on their children. This is fine, if the children happen to have an interest in music. It is not fine if the children have no such interest or aptitude, and hate having to take their piano exams. It just becomes a shameful waste of time and effort.

People start to develop truly distinctive competencies when they are permitted to be individuals, and to pursue their own interests. See my earlier post, about respecting your own unique strengths.
Gadis Bispak Imut

On Being Here, and Not Being Here

Vincent is a final-year student at NUS. He's doing a research project on "socio-political blogging". Sounds like a really fun piece of homework.

Anyway, he recently sent me a long list of interview questions. A few questions related to foreign talent, globalisation and the job market in Singapore. One question he had - how was I personally affected.

Well, the truth is, I haven't been adversely affected. If anything, I have benefited.

My job scope is Asia ex-Japan. I'm physically based in Singapore, but I work on projects and transactions across Asia - for instance, Korea, Taiwan, Thailand, Hong Kong and Malaysia. Jobs like mine exist because the government has, for a long time, been encouraging big corporations to set up their regional HQs in Singapore.

In a sense, I don't even have to be in Singapore. I could be anywhere. Most of my work is done through emails and conference calls anyway - with people in half a dozen different countries.

Globalisation means that my economic fortunes are not tied exclusively, or even primarily, to the economic fortunes of Singapore. It would be more accurate to say that they are tied to the economic fortunes of Asia as a whole. This diversifies my risks (a good thing). In any given year, Singapore could sink, but I could still have a bumper year if a few big Asian markets like China, India and Korea do well.

The foreign talent policy hasn't hurt me either. I just happen to be working in an area where the relevant skills are scarce worldwide - and not easily replaceable, say, by a large pool of cheap labour from China or India. I do have foreign "competitors" from places like London and Hong Kong, but I think I can hold my own (anyway, they definitely lack the competitive advantage of being cheap).

So the general themes of my blogging don't necessarily reflect my personal life. I am writing for a wider audience, I am concerned about broader issues for Singaporeans. That's what this blog is about, anyway. It's not so much about me.

Every now and then, when I criticise some policy or new development in Singapore, I get some un-intelligent reader commenting, "Oh, if you are so unhappy with Singapore, why don't you emigrate then." How inane. I'm quite happy here, thank you very much. With a little good luck here and there, I've figured out ways to live my life it roughly along the lines of what I'd like it to be.

That doesn't mean that things are perfect for everyone else on this island - far from it. Some people are really hurting. You just have to open your eyes, to see.
Gadis Bispak Imut