In Parliament today (13 May), NCMP Lina Chiam asked about the Primary One registration which gives priorities to “active community leaders”.

She posed the following questions to MOE in Parliament:

To ask the Minister for Education:

(a) whether only those serving in People’s Association and its affiliated committees and organisations are considered as active community leaders for the purpose of prioritising their children for Primary One Registration and, if so, why; and

(b) whether he will consider expanding the definition of active community leadership.

Instead, Senior Minister of State for Education Indranee Rajah answered that the priority system for children going through Primary One registration is not linked to the government.

Replying to NCMP Lina Chiam, Ms Indranee explained that Phase 2B of the P1 Registration Framework is open to children of active community leaders.

In particular, Phase 2B said [Link]:

Phase 2B
(a) For a child whose parent has joined the primary school as a parent volunteer and has given at least 40 hours of voluntary service to the school.

(b) For a child whose parent is a member endorsed by the church/clan directly connected with the primary school

(c) For a child whose parent is endorsed as an active community leader

Ms Indranee said that community leaders who get priority include those serving the Residents’ Committee (RC), Neighbourhood Committee (NC), Citizen’s Consultative Committee (CCC), Community Club Management Committee (CCMC) and the Community Development Council (CDC).

She added that in addition, Phase 2B is also open to the children of parent volunteers and endorsed members of churches or clans that are directly connected with the school.

She said the commitment and support from these various stakeholders help to build stronger bonds between the school and the community.

She further clarified that not all who are involved in grassroots associations get priority. Those who do not get priority include the People’s Association’s Youth Executive Committees and Women’s Executive Committees.

Ms Indranee said that priority is given to active community leaders and defined the eligibility based on objective view of community service, and not along party lines.

However, Ms Indranee’s comment seems to run contrary to what Mr Lee Kuan Yew, former Minister Mentor had said about all the affiliated organizations under the People’s Association (PA).

RCs, CCCs (citizens’ consultative committees), and CCs (community clubs) etc are all grassroots organizations that come under the purview of PA, a statutory board funded by taxpayers’ money, tasked to take care of all the grassroots activities in Singapore.

The relationship between PA and PAP is a close one. PA’s chairman is none other than the PM himself, who is also the Secretary-General of PAP.

Mr Lee Kuan Yew once said in a dialogue that the PRCs have been sending teams of officials to study Singapore for years. To illustrate a lesson the Chinese learnt, Lee Kuan Yew said:

“They discover that the People’s Action Party (PAP) has only a small office in Bedok. But everywhere they go, they see the PAP – in the RCs, CCCs and CCs.”

And typically, most of the important positions in the various grassroots organizations are helmed by PAP members themselves.

So, how can Ms Indranee said P1 registration priority is given to PA’s community leaders not based along party lines?

TR Emeritus

*Article first appeared on www.TREmeritus.com

A cyber battle has erupted following the shooting of a Taiwanese fishing boat by the Philippine coast guards, paralyzing the websites of both countries' presidents, as well as those of Taiwan's Ministry of National Defense (MND), Ministry of Economic Affairs and Coast Guard Administration (CGA).

Taiwanese fisherman Hung Shih-cheng (洪石成) was killed on May 9 when the boat he was aboard was fired on by a Philippine Bureau of Fisheries and Aquatic Resources (BFAR) vessel, sparking fury in Taiwan. Hackers launched a cyberattack on the Philippine presidential website the next day.

The action was returned in kind, with several Taiwanese government websites taken down.

The Taiwan presidential website was hacked twice but was restored after several hours and no information was taken, said Presidential Office spokeswoman Garfie Li (李佳霏).

Investigations traced the first hacker's IP address to the Philippines, while the second attacker used a Singaporean IP as a disguise, said Li.

CGA Bolsters Fishing Boat Protection

The CGA announced that it has dispatched additional vessels to protect Taiwanese fishing boats operating in the Bashi Channel. All are prepared for combat should another encounter with Philippine vessels turn violent.

The vessels are larger and equipped with heavier fire power than those of the Philippines, said Coast Guard squad leader Ou Man-wei (敖曼偉), assuring the public that the CGA will do everything necessary to protect Taiwanese fishermen and prevent future fishing conflicts.

All civilized countries have agreed that the coast guard should be a country's first line of defense, and that the Navy is its second line, said MND spokesman Luo Shao-he. “The Navy supports the CGA, its primary purpose being to protect local fishermen.”

President Offers Condolences to Fisherman's Family

President Ma Ying-jeou visited the dead fisherman's family in Siaoliouciou (小琉球) yesterday, vowing to make Manila apologize and provide compensation for the senseless murder.

Ma on Saturday said he was unable to accept the Philippine government's refusal to apologize and demanded those responsible for the killing be arrested and punished. He also demanded that the Philippines issue a formal apology to Hung's family within 72 hours.

“The BFAR's act of brutality should not be pardoned, it was an illegal execution,” said Ma after Manila, which offered its “sympathy,” refused to apologize.

The Philippines' top envoy in Taiwan, Antonio Basilio (白熙禮), later offered an apology and extended his condolences to Hung's family after being summoned by the Ministry of Foreign Affairs over the incident.

Ma shook hands and embraced Hung's widow and son, promising that the government will not give up on the issue easily.

Hung's daughter asked Ma to ensure that Taiwanese fishermen can operate in a safe fishing environment, and that an efficient emergency channel be created for emergency rescues. She called the rescue procedure in her father's situation complicated and time-consuming, and said it squandered any chance to save his life.

“I have already asked responsible departments to simplify the reporting procedure,” Ma said, noting that Taiwan fishermen may call 118 to report emergencies.

The government has activated emergency rescue systems on Taiwanese waters and surrounding border areas, Ma added.

*Article first appeared on http://www.chinapost.com.tw/taiwan/national/national-news/2013/05/13/378474/Philippine-hackers.htm

Morbid anti-suicide pledges are flooding the internet in China according to a BBC report, written in the hope that they will prevent authorities from falsely ruling their death as suicide should they die in suspicious circumstances. “Even if I have no car, no house, no lover, no money for food, and even if I have Aids, I will not commit suicide or fall off a building voluntarily,” was one typical post. The trend is interpreted as a serious lack of trust that many place in public institutions, ranging from the police to the courts.

The Financial Times (FT) report on the death of American engineer Shane Todd may suffer a loss of trust too if the Singapore Police Force (SPF)’s challenge stands up to scrutiny. At stake is the London-based newspaper’s accounting of the latest version of Todd’s last actions alive: “Mr Todd, 6ft tall and nearly 200 pounds in weight, fashioned a noose from a computer bag strap, hung it over his bathroom door, closed and locked the door. He put the noose around his neck, stood on a chair and jumped off.”

The version allegedly told earlier by SPF to Todd’s parents: “police said their son had drilled holes in the bathroom wall, affixed bolts, wrapped the strap through a pulley and over the door.” The key difference between the two stories is that no Rube Goldberg configuration of drilled holes and pulley system was evident at the site of the crime scene when inspected by the parents.

The SPF is miffed because FT made no attempts to confirm with them whether the police gave different versions of the story. But it stopped short of presenting it’s version of Todd’s demise. An official autopsy report submitted by the SPF had ruled the death to be “asphyxia by hanging”. The fine distinction is that self induced asphyxiation is suicide, asphyxiation by a third party would be tantamount to murder.

The SPF is entrusting the coroner’s enquiry starting today to establish the final story.  There are no provisions for an appeal. If the decision is controversial, a serious lack of trust will be imputed on the system.

Meanwhile, there’s no rush to post an anti-suicide pledge on your Facebook account. Kishore Mahbubani is saying that any objective investigation will show that the Singapore police is at least as competent, if not more competent, than the FBI. The same fella who said that poverty has been eradicated in Singapore.

Tattler

* The writer blogs at http://singaporedesk.blogspot.com/

In 2002, when he was Health Minister, Lim Hng Kiang imposed a rule that barred parents who had admitted to Class A ward to deliver their baby from downgrading should the baby subsequently need extended stay requiring ICU. Apparently, many parents were doing that as they faced a hefty bill if they continued in the Class A ward.

One day, a Malaysian couple found themselves in this predicament and Lim in a rare display of benevolence, waived the rules and allowed the downgrade to KK Hospital.

It turned out that the baby required prolonged stay and treatment due to severe complications. The bill (unsubsidised) ran up to $300k and the couple - as you and I would - had difficulty paying.

Recounting this case, Lim subsequently said he regretted allowing the downgrade and should have let the baby and parents stay on in Class A ward. 

Hospitals' mission as we know it is to save lives. As a Health Minister, for Lim to make that statement betrays the callous attitude that many has come to associate with PAP.

Lim was also Manpower Minister presiding over the influx of cheap foreign labour and decline of productivity. 

With such an abysmal track record, why is he still in the cabinet?

The Alternative View

[Source: https://www.facebook.com/photo.php?fbid=520674211327249&set=a.3602206407...

Mrs Lina Chiam, NCMP

Response to Ministerial Statement on MND Town Councils Review

Speech in Parliament

13 May 2013

Madam Speaker / Mr Deputy Speaker,

MPs and Town Councillors are public servants. In Section 21 of the Penal Code, a public servant is defined as an “officer whose duty it is, as such officer, to take, receive, keep or expend any property, on behalf of Government”. Their status was the same before and after the Town Councils Act was passed in 1988. Through that Act, HDB merely divested its powers in the management and maintenance of their estates to the individual Town Councils.

The Town Councils Act might have been enacted to give the elected MPs as much latitude as possible to run the Town Councils within broad and general rules. But they are still fully subject to the Penal Code as public servants.

Singaporeans therefore find some key points in the AIM transaction puzzling. The Review before us has not satisfied the questions in their minds: -

- How can a two-dollar company, with no staff, be deemed to have an established track record in providing IT services to Town Councils? The fact that AIM was awarded the tender seems to have hinged solely on their past working experience with the PAP Town Councils.

- How can the Review report say that there was no conflict of interest in the AIM transaction, simply because ‘no one made money’? I am not sure if any lawyer will be satisfied with how ‘conflict of interest’ is defined here.

Even if Town Councils are understood to be political, as provided for by the Town Councils Act, it does not mean that we can just forget about the concerns of residents over governance and due diligence.

What ever happened to the mantra that we must strive to observe best practices in public transactions? The Review report does not mention anything about best practices. 

So if the Review concludes that the AIM transaction is in compliance with the Town Councils Act, then the Act is not well drafted. The Act must be revised to better address public concern over conflict-of-interest issues and criteria for the award of tenders.

The Review Team recommended a strategic review of TCs in their current form. One question that has been posed is – should Town Councils revert to centralised control under HDB, as in the pre-1988 situation?

When the Town Councils Act was passed in 1988, it was said that the Government wanted to make life harder for Opposition MPs in running their constituencies. Nevertheless, Potong Pasir Town Council, the only Opposition-held town council then, took up the challenge. We worked hard to run the town. I believe we did a good job, and I believe we earned the trust of our residents throughout 27 years.

But a lot of unfair obstacles were thrown at the Potong Pasir Town Council.

To obtain CIPC funds, we had to seek the endorsement of the Advisor of the Residents’ Committees, who had always been the PAP’s candidate for the constituency. Indeed, no Opposition politician has ever been allowed to become the Advisor of the RCs, even when that politician is the sitting MP for that constituency.

When it was under the Opposition, Potong Pasir did not obtain a single cent from the CIPC fund or any HDB-related funding. The sole exception was funding for improving barrier-free accessibility, granted in 2010. That was, after all, a nation-wide exercise for wheel-chair bound residents.

Recently, Potong Pasir obtained $5 million from MND for the Neighbourhood Renewal Programe, or NRP. I am happy for the residents of Potong Pasir, but I would have hoped that the residents be more informed and involved in the planning of the NRP exercise to decide what they really want for their estate. After all residents have a stake in their estate. While physical structures and beautifications can be bought with money, the ‘software’ of community ties and interactions can never be bought.

All Town Councils, whether they are held by the PAP or not, should be able to benefit from community improvement grants from the HDB. Residents are all tax-payers and deserve equal treatment.

Advisers to the RCs cannot be given the power to endorse community improvement projects or otherwise. Why should the sitting MP, who is democratically elected by the people, be at the mercy of the RC Adviser? MND has got to change this.

MND started publishing the Town Council Management Report in 2010 as a form of a report card on their town councils’ performance in estate management. 

The Opposition-held constituencies of Potong Pasir and Hougang were always ranked lowly. The residents however, are happy with our management of the Town Council.

The evaluation process for the purpose of the TCMR must be led by investigators independent of the MND and HDB, to avoid biasness in the reporting and branding of the performance of Town Councils.

Town Councils should retain its current powers to manage estates, and MND should not have central control over them – for example, when implementing ad-hoc policies at any time, without debate in Parliament.

In conclusion, my question to the Minister is this – is the Government willing to improve the framework for running the Town Councils in the best interests of Singaporeans? Whether they live in a PAP- or an Opposition-held Town Council, they all pay taxes.

Going forward, I urge the MND to review the best practices that Town Councillors must adopt for the running of their Town Councils, as public servants.

Thank you.

By MP for Hougang SMC, Png Eng Huat
[Delivered in Parliament on 13 May 2013]

The MND Town Council Review has left many questions unanswered despite providing a lot of background information on the AIM transaction. While the report has concluded that the sale of the Town Council Management System (TCMS) to a PAP-owned company was nothing more than a business deal, the intentions behind the AIM transaction were not thoroughly scrutinized and explained.

The MND Review also did not look into the possibility that some of the decisions made in the AIM transaction could be politically motivated since MND has acknowledged that Town Councils, by virtue of their leadership, are politicized already.

While the AIM transaction is deemed legal and permissible under the law, the rationale behind the sale of the Intellectual Property (IP) rights to the TCMS to a PAP-owned company and the provision of the Termination Clause in the contract remains unclear and unconvincing in the review. Today I wish to speak on these 2 issues.

Termination Clause
The MND review has not fully addressed how public interest is being served when a vital piece of software for town management, developed at a combined cost of $23.8 million (page 15), was offloaded to a PAP-owned company for $140,000 with an unusual Termination Clause made in favour of the new owner.

The Termination Clause reads:
“The Contractor may in its absolute discretion terminate his services during the contract by giving three (3) months prior notice in writing to the Town Council. However, in the event that there are material changes to the membership of the Town Council or there are material changes to the scope and duties of the Town Council, including but not limited to changes to its present boundaries the Contractor may give a month’s notice in writing, if he wishes to terminate the services during the contract period.”

I find it hard to comprehend that after selling the TCMS to a vendor, the PAP Town Councils also found it imperative to give the same vendor absolute discretion to terminate its services which are vital to the operations of their own towns. How are the interests of the residents protected in such an arrangement?

And what are ‘material changes’ and why it is so important that if such changes were to happen, AIM could just give a month’s notice to terminate its services to any town council.

In the official explanation of the Termination Clause, the PAP Town Council has failed to fully address the meaning of ‘material changes.’ Nonetheless, the PAP Town Councils felt that the provision of such a one-sided Termination clause was ‘fair and reasonable as the vendor would have priced its bid on the basis of the existing TC and Town boundaries. However, should this change materially, the vendor could end up providing services to a TC comprising a much larger area and a larger population of residents, but is held to do so at the same fixed price since a key feature of the contract was that there should be no price change to the TCs even for extensions. The TCs felt that this would be unfair to the prospective vendors, and a clause explicitly addressing such changes would reduce the business risk to the vendor. This would help fetch a better tender price for the TCs’ old software.’

While the above explanation may sound logical, I will explain to this House, point by point, why the provision of the Termination Clause is ill-conceived and makes absolutely no sense at all.

First, there will always be changes made to the size and population of a town because of Build-to-Order (BTO) flats, Selective En bloc Redevelopment (SER) Scheme, private developments and the constant redrawing of our electoral boundaries. Is it then prudent to allow AIM or any new owner of the TCMS to simply walk away from this critical contract citing ‘material changes’ and leaving an entire town in a lurch? How is public interest protected with such a one-sided Termination Clause?

Second, in its original contract, AIM proposed a Lease-Back payment schedule that did not take into consideration the size and population of a town council. All the 14 PAP Town Councils, regardless of their size and population, were required to pay an equal amount of $785 per TC per month as lease-back payment for the use of the TCMS. Thus, it does not matter if you are running a small GRC like Moulmein-Kallang or a big GRC like Ang Mo Kio, each town council pays AIM the same amount of subscription fee. So was AIM concerned about the size and population of a town when pricing the TCMS subscription fee? The answer is obvious. And if AIM is not even worried about such business risk, why would the 14 PAP Town Councils lose sleep over this and want AIM to address such risk? After all, the PAP Town Councils had assessed that AIM is ‘a company with an established track record in TCs and IT services’ and they had confidence the company would deliver on its commitments.

Third, the above explanation of the Termination Clause sounds even more ludicrous when one finds out that there is a clause in the same contract that allows for variation and AIM would be paid in accordance to a method of calculation based on industry practice. In short, AIM is covered if ‘material changes’ in size and population of a town council were to happen for whatever reason. So why was there a need to give AIM the absolute discretion to cite ‘material changes’ to terminate its services to a town council when ‘material changes’ were already covered under the Variation Clause? Can the Minister explain this anomaly?

The provision of this one-sided Termination Clause in the AIM transaction makes no sense because the interests of the residents were not protected at all. Our towns are always in a constant flux of change due to the dynamics of our public and private housing schemes and the redrawing of our electoral boundaries. Residents should not be made to suffer unnecessarily as a result of such ‘material changes’.

The one-sided Termination Clause has caused so much confusion that even the Minister is confused as he has said earlier that the letter of 10 June 2011 sent by the Interim Secretary of the Aljunied-Hougang Town Council was a request to terminate the use of the TCMS. On the contrary, the letter was a request to continue the use of the software of the software till 31 Aug 2011. The Aljunied-Hougang Town Council has no power to initiate any termination based on ‘material changes’. AIM was the one which was given the power to terminate and did exercise it 12 days later on 22 June 2011 according to its own timeline. The question is why PAP Town Councils allowed town councils to be powerless and at the mercy of AIM?

Sale of Intellectual Property Rights
The review report has also concluded that the AIM transaction complied with the Town Council Act and Financial Rules. However, there is a misplaced trust that the sale of the IP of the software to a PAP-owned company was done in the best interests of the residents.

Would any member in this House want to spend $23.8m of your residents’ money to develop a vital piece of software and then offload the IP to a third party knowing very well that future developments and upgrades of the system may depend on the use of the original IP rights?

The risks of system obsolescence are common problems faced by people or companies who depend a lot on the use of IT in their operations. Thus everything from software to hardware can be rendered obsolete in a short space of time but the IP will not. The knowledge system that went into developing the IP for the $23.8 million TCMS is valuable and critical. The TCMS may have zero book value but its real operational value is immeasurable. Right at this moment as we debate in this parliament, the TCMS is keeping almost the entire Singapore humming along, processing payments, managing arrears, handling residents’ feedback and facilities bookings, keeping the financial in check, keeping the communications flowing, and more. The rights to the use of the TCMS must remain open to a town council no matter what or when ‘material changes’ take place.

In the interest of the public, can the Minister state who will own the IP rights to the $17.6 million 3rd generation TCMS that is currently being developed by NEC Asia Pacific? Will AIM be holding any IP rights, direct or derivative, to the new system that is being developed and funded with town council money?

The official explanation of the sale of the TCMS to AIM was to consolidate the IP rights under a single entity for ease of management, future development, and securing extensions of the NCS contract at no extra cost to the PAP Town Councils until such time when the current system is replaced.

As AIM outsourced its IT services to other vendors, it is basically playing the role of a project manager and project managers do not need to own the IP rights to the project they managed especially when those projects are vital to the operation of our towns and developed with public money.

It also appears incredulous that the 14 PAP Town Councils would need an external company, who is technically a competitor of NCS, to help them negotiate and secure extensions of the NCS contract at no extra cost to the PAP Town Councils even though the town councils have a longstanding working relationship with NCS going back to 2003 when they first awarded the multi-million project to the IT company.

How hard it is for the PAP Town Councils to secure extensions of the NCS contract at no extra cost on goodwill? Did the PAP Town Councils try to approach NCS directly?

Conclusion
The relationship between the PAP Town Councils and AIM is an uneasy one. It was reported that AIM was set up by the PAP in 1991 to specifically support PAP MPs in the running of their TCs and estates. The company does not seek to make profit from its work done for the PAP Town Councils and only charges management fee based on cost-recovery. Thus, any transaction done between the PAP Town Councils and AIM has very little business consideration, mostly political I presumed.

The MND Review has stated that ‘given the political character of the town council’s leadership and the political implications attached to the management of the town council, it is inevitable that the town council function is carried out in a competitive politicised context.’

The AIM transaction had all the trappings of a high stake political game where the interests of the residents are of the least concern. So how should MND classify the sale of the TCMS to AIM and the provision of the one-sided Termination Clause in this review, business or political?

Finally, I believe whatever that was written in black and white in the AIM transaction has been reviewed by the committee but whatever intention that was written in the hearts of the people that were involved in this transaction will remain hidden for their conscience and makers to judge.

AFP News

Samsung Electronics said Monday it had successfully tested super-fast fifth-generation (5G) wireless technology that would eventually allow users to download an entire movie in one second.

The South Korean giant said the test had witnessed data transmission of more than one gigabyte per second over a distance of two kilometres.

The new technology, which will not be ready for the commercial market before 2020 at the earliest, would offer transmitting speeds "up to several hundred times faster" than existing 4G networks, it said in a statement.

That will permit users to "transmit massive data files including high quality digital movies practically without limitation", it said.

"As a result, subscribers will be able to enjoy a wide range of services such as 3D movies and games, real-time streaming of ultra high-definition (UHD) content, and remote medical services," it added.

Samsung said it had found a way to harness millimeter-wave bands which have proved to be a sticking point for the mobile industry to date.

The test used 64 antenna elements, which the tech titan said overcame the issue of "unfavourable propagation characteristics" that have prevented data travelling across long distances using the bands.

One of the most wired countries on earth, South Korea already has around 20 million 4G users.

“Senior Minister of State for Education Indranee Rajah said the priority system for children going through Primary One registration is not linked to the government.” –TODAY, 13 May 2013.

The Senior Minister was responding to a suggestion by Non-constituency Member of Parliament (NCMP), Lina Chiam, to abolish the primary school registration priority scheme for community leaders which she says is linked with the government.

Ms Indranee added that community leaders who get priority include those serving the Residents’ Committee, Neighbourhood Committee, Citizen’s Consultative Committee, Community Club Management Committee and the Community Development Council.

Ms Indranee’s statement that this is not linked to the government is a curious one for several reasons.

All the organisations she mentioned fall under the purview of the People’s Association (PA). You can view them here on the PA website. The PA, in turn, falls under the purview of the Ministry for Culture, Community and Youth (MCCY), as mentioned here in the Straits Times in December 2012:

“THE board of management of the People’s Association (PA) has been reappointed for another three-year term, with Mr Lawrence Wong replacing Mr Chan Chun Sing following the restructuring of their ministries last month.

“Mr Wong is the Acting Minister for Culture, Community and Youth, whose ministry oversees the organisation tasked to promote racial harmony and social cohesion in Singapore.”

The Board of the PA includes 5 ministers (including PM Lee as its chairman), one former minister as its advisor, and one current PAP MP. It is therefore hard to believe that the scheme which gives priority to community leaders of the PA’s grassroots organisations is not linked to the government.

To further confuse the matter, former Prime Minister Lee Kuan Yew made statements which confirm the relationship between the PA and the Government and the PAP.

“I make no apologies that the PAP is the Government and the Government is the PAP,” Lee said in 1982.

In December 2009, Lee confirmed the relationship between the ruling PAP and the grassroots, when he spoke of how the Chinese had been studying Singapore, as reported by the Straits Times here:

“They discover that the People’s Action Party (PAP) has only a small office in Bedok. But everywhere they go, they see the PAP – in the RCs (residents’ committees), CCCs (citizens’ consultative committees), and the CCs (community clubs).”

So, to put it simply:

The PAP – which “is the Government” – permeates the grassroots organisations which fall under the PA. The PA has five ministers, including PM Lee Hsien Loong as chairman of its Board. The PA, in turn, falls under the MCCY. The MCCY is a ministry under the government.

Maybe Ms Indranee would like to explain how the priority scheme for community leaders of the grassroots organisations is not thus linked to the government.

Andrew Loh

*Article first appeared on http://andrewlohhp.wordpress.com/2013/05/13/indranees-curious-claims/

National Development Minister Khaw Boon Wan said in Parliament on Monday that his ministry gives “the same latitude” to all political parties in town council transactions with political affiliates.

It did not interfere when such transactions happened in town councils run by opposition parties like Workers’ Party (WP) and Singapore People’s Party (SPP), he said.

He was speaking at the end of a debate on a ministerial statement on town councils, sparked by a controversial sale and leaseback of software from PAP town councils to PAP-owned company Action Information Management, an issue first raised by the WP.

Earlier in the debate, WP MP Pritam Singh noted that the Town Council Act did not prohibit transactions between town councils and party affiliates, and suggested that laws be put in place to ban transactions with political party-owned companies.

Ms Sylvia Lim, chairman of Aljunied-Hougang-Punggol East Town Council (AHPETC) also questioned why MND had used the appointment of FM Solutions and Services (FMSS) as an example of such a transaction, when responding to media queries earlier this month.

Delivering a fierce rebuttal to WP MPs, Mr Khaw said if such transactions were to be banned, then his ministry would also have to ban transactions with companies owned by former party members and party supporters – as is the case with FMSS.

He spoke in detail about the circumstances surrounding the appointment of FMSS by the WP. The company was formed by former Hougang Town Council employee Ms How Weng Fan and her husband

Mr Danny Loh, a long-time contractor of services to that town council.

He said the couple are WP supporters who acted as assentor and proposer for the WP’s team of candidates for Ang Mo Kio GRC in the 2006 general election.

Mr Khaw also noted that FMSS was awarded several contracts by AHTC. “When we talk about public interest, how would Ms Sylvia Lim characterise the FMSS transactions?... Would she take the position that contracts given to close party associates be prohibited?” he asked.

Meanwhile, Non-Constituency MP Mrs Lina Chiam of the Singapore People’s Party (SPP) was appointed Potong Pasir Town Council secretary in 2010 and paid a monthly salary, he said.

Mr Khaw said his ministry did not interfere in any of these transactions as it applies the “same fair consistent approach applied to all political parties, whether PAP, WP or SPP.”

Sylvia Lim
MP for Aljunied GRC

13 May 2013

Parlimentary Speech

This debate has been triggered by the controversy surrounding the sale of town council management software (TCMS) by 14 Town Councils managed by the People’s Action Party (PAP) to Action Information Management Pte Ltd (AIM) in 2011 prior to the General Elections.

I would like to thank the Prime Minister for acknowledging the public interest in this matter and for ordering the Ministry of National Development (MND) to investigate and to do a broader based review of the nature of Town Councils (TCs). I would also like to record thanks to the Ministry officials for their efforts.

Where do we stand today, after the review? MND’s findings cleared the AIM transaction but highlighted areas for strategic review of TCs. It seems, however, that members of the public who have been tracking this issue are still asking critical questions, and many are not convinced that the 14 PAP TCs acted in the public interest when they sold the TCMS to AIM.

It is necessary to debate this matter calmly and clearly, to enable the public to understand the issues more fully and realize what is at stake. That was why I re-filed an adjournment motion last week. The government’s subsequent decision to enable the matter to be debated under Standing Order 44 is belated, but it is the correct thing to do.

WP’s and AHPETC’s Basic Position on MND’s findings

Let me first summarise how the Workers’ Party and Aljunied-Hougang-Punggol East Town Council (AHPETC) view the MND findings before elaborating. I shall thereafter make recommendations for the review.

First, we do not agree with the findings regarding the AIM transaction that public funds were safeguarded and residents’ interests had not been compromised.

From our reading of the documents available to us, there were aspects of tender suggesting it failed to follow the spirit of what an open tender should be. Further, the terms of the sale of the most critical town management IT system had unnecessarily endangered public welfare, particularly the relinquishing of ownership to AIM with the one-month termination clause. MND fell short in not admonishing the PAP TCs for risking disruption to the public in the name of politics. MND also did not take cognizance of the wastage of public funds incurred when such terminations required replacement systems to be set up. In addition, the one-year sale and leaseback was clearly an underestimate of the time needed to re-develop a new TCMS; the fact that the one year happened to straddle GE 2011 suggests that whatever “good faith” the TCs had in the sale to AIM, there were political objectives in crippling any new TC leadership of a different political affiliation, hence endangering the public in the process.

Second, as regards the MND’s recommendations for a review of TCs, we find that while they will improve continuity of services during a handover of TC management, the recommendations do not go far enough to prevent wastages of public funds. MND should entrench principles to recognize the public nature of assets being handled by TCs which should be safeguarded for public benefit, regardless of party politics.

Genesis: Why TC issues were raised by WP and AHTC in December 2012

Before I go further, I should at the onset state WP’s position concerning town management and why we brought the AIM sale to public knowledge in December last year.

WP MPs are committed to being politically accountable to voters for town management under the current regime. Whatever else is done in other countries, the responsibility for town management has been legislated to the MPs under the Town Councils Act. We accept this responsibility and have pledged during elections to manage towns entrusted to us to the best of our ability. We intend to continue keeping this promise.

We raised the sale to AIM after the MND released its banding of town councils under the revised TC Management Review framework in Dec 2012. Contrary to what some PAP members have charged, it was not raised as an excuse for non-performance, nor are we asking anybody to wait 24 or 30 months or 5 years for us to perform. AHTC was actually ranked well and comparably by MND in the areas of cleanliness, maintenance and lift breakdowns – the critical functions residents care most about. The main point which required public explanation was that the new indicator of “Corporate Governance” was graded as “pending”, as our auditors took much longer to complete their work. This was due to the need to reconcile accounts being kept under two different IT systems with differing nomenclature.

We do not believe that the AIM sale served the public interest, and the public deserved to know about this and assess it for themselves. We find it unacceptable for any TC to relinquish control over critical TC assets developed with public funds to third parties, who can cut the TC off from using the assets to service residents. In our view, the PAP TCs had unjustifiably risked a disruption to public services and that this should not be allowed to recur. I am relieved to read that the MND recognized the need to preserve continuity of public services as a paramount priority. The question is: why did the PAP TCs not recognize the risk of service disruption when selling the TCMS to AIM?

AIM Transaction

Let me now go into some detail about our misgivings concerning the AIM transaction.

Reasons for the sale

The reasons given by the PAP TCs for the sale of software and the intellectual property (IP) raise more questions than answers.

They told MND (MND report paras 17 to 19) that having the software rights reside in a single entity was better than having the vendor deal with 14 TCs which would be “cumbersome and inefficient”. But surely this can be easily overcome, since the PAP TCs have a Co-ordinating Chairman who can co-ordinate to ensure the proper authorisations? The TCMS was developed with $23.8 million of TC operating funds (MND report para 13); surely there is reason to retain ownership and control over it for the residents in the 82 electoral wards then under their charge? Much ado is being made in the report that the second generation (2G) TCMS was “almost obsolete and had limited value” (MND report para 19), but does this mean it is of limited value to the TCs using it now? If the system ceased to function without replacement, TC operations would grind to a halt! Another incomprehensible justification is the saving of $8,000 for the 14 TCs that arose from the sale (MND report para 26(a)). The $8,000 saving is the difference between the $140,000 paid by AIM and the sums paid by the TCs back to AIM during the one year leaseback. This total “saving” of $8,000 shared among 14 TCs amounts to about $571 per TC. Is saving $571 significant enough reason for a TC to sell a system?

Tender Terms

It was emphasized in the MND report that the choice of AIM was made after an open tender (MND report para 20, 21). Was it an open tender in substance?

The tender was advertised and 5 companies picked up the documents. However, a closer look at the Conditions of Contract will reveal that the specifications required each of the directors of the tendering company to have “adequate experience with the operations and functions of a Town Council”. I wonder how many companies in the software business in Singapore can say that all their directors have TC experience – perhaps only AIM?

The tender period was advertised as 14 days (MND report para 20), shorter than the minimum period of 3 weeks for local tenders required under the TC Financial Rule 74(6). It was then extended by another week to give 3 weeks. Why the initial period advertised was one week less than the minimum was not explained at all in the MND report.

In addition, one of the companies which picked up the tender forms had told the media that there was insufficient information in the tender documents to make a decision whether to tender (The New Paper, 5 Jan 2013, page 6).

Risk assessment of AIM

The PAP TCs told MND that one of the key reasons for selling the software to AIM was that AIM agreed to bear the risk of any price increases by NCS in maintaining the software, even after the original contract with NCS expired (MND report para 25(b)). We have not been able to find this exact clause in our documents. However, even assuming so, on what objective basis did the PAP TCs assess that it was safe to entrust this risk of cost increases to a company with a paid-up capital of $2? Who will pay in the event of a cost increase? What about the risk of AIM being wound up?

The PAP TCs highlighted AIM’s “track record”, but based on the tender documents we have seen, AIM listed only one prior project, also a sale and leaseback. When AIM was asked to fill in a table indicating the identities of their key technical and professional staff, a line was drawn across the table with only one word typed in: “Outsourced”.

Duration and timing of sale and leaseback

MND noted (para 5) that the TCs “underestimated the complexity of the task of developing the new generation TCMS software”. We find this quite puzzling, since the TCs had experience in developing the 1st and 2nd generation TCMS and should have known that one year was too short. Now, as MND has noted, 2 extensions were required after that (para 5), and a fresh tender was only called this year in 2013. Was there any re-development work from 2011 to now?

The timing of the sale to commence a few months before the General Elections in 2011 also calls for explanation. Was it a pure coincidence? Or was there simply a need to sell the software quickly, so that termination can be effected if political seats were lost? Let me now turn to the termination clause.

Termination clause

The reasons given by the PAP TCs for the one-month termination clause (MND report, para 3(e)) are plainly unconvincing.

First, no attempt was made to explain why a material change in membership of TC should allow unilateral termination by the contractor with one month’s notice. It is unfortunate that MND did not seem to query this, as this is the crux of the exchange between the PAP and WP. Could it be that there is simply no good reason to give?

Some attempt was made to explain why termination may be fair in the case of a change in boundaries: it was said that the contractor might be faced with a much larger town than anticipated, but be held to a fixed price to his detriment (MND report para 3(e)). I am not sure why there was this worry. At that time, the TCMS was being developed for the whole of Singapore except 2 SMCs viz. Potong Pasir and Hougang. In addition, the contract itself already provided for a variation in price based on the number of property units!

The real sting of the termination clause lay in its one-month notice period. Is a one-month termination reasonable for a critical IT system? It is quite clear that time is needed to develop a system of this complexity – in the PAP’s own estimation, 18 to 24 months. Did the PAP TCs not realize that this aspect of the AIM transaction endangered the continuity of public services? Or perhaps that was the intention in the case of a change in political leadership?

It was fortunate indeed that the WP could use the IT system in place in Hougang TC and upscale it within a much-abridged time to cater for a town of GRC magnitude. What if a constituency was won by a political party not running any TC, or by an independent candidate? Or is the continuity of public services not important to the PAP once they lose a constituency?

Wastage of Public Funds

No finding has been made about the wastage of public funds caused by the need to replace IT systems due to a change in political leadership. Once a system has been developed with TC funds, the residents have a beneficial interest in it, since they contribute to TC funds via Service and Conservancy Charges. Why should they pay again, for a replacement system, just because the town council management has changed hands? Even those who live in private estates have asked me about the wastage, since TCs are also funded by government grants that they, as taxpayers, contribute to. MND has made a finding that there was no loss of public funds caused by the AIM transaction, but what about the wastage of public funds which the transaction brings about? Residents and taxpayers pay twice for political intrigue – how is that justifiable?

Nature of TCs and AHPETC

Let me now move to the nature of Town Councils and the recommendations for strategic review.

Town Councils provide essential public services to HDB dwellers via public funding. As custodians of public funds, all MPs must act in the best interests of residents, regardless of which political party they support. At the same time, TCs unavoidably have some political elements. The manner and quality of town management is one factor in a voter’s choice of MP, and MPs wish to do well in town management in order to get re-elected. However, it does not mean that MPs can allow TC assets to be endangered or cut off from TC use for political reasons.

Let me at this juncture share some essential facts about AHPETC and correct some misconceptions.

The IT system in use in AHPETC belongs to the TC and will be there for use even if there were to be a change in political leadership. There are no equivalent termination clauses unlike the AIM transaction. In fact, I understand that Potong Pasir TC is still using the IT system developed before the change in political leadership in 2011.

I also take strong issue with a misleading release by MND on our Managing Agent, FM Solutions and Services Pte Ltd. The Straits Times of 7 May 2013 reported that “MND gave examples of how politics and town councils sometimes mix” which included, in our case, the former General Manager of Hougang TC and her husband setting up a company to provide town management services to AHTC. We find this insinuation mischievous, as neither she, nor her husband, nor any of the directors and shareholders of the company, are WP members. They were hired based on their experience in property management, professional skills and track record in running Hougang TC. What is MND implying? The Minister should explain.

Recommendations for TC review

I now come to the final part of my speech – our key recommendations for the review of Town Councils.

First, restrictions should be in place in the TC Act to prohibit the sale of critical assets / systems still needed for TC’s operations to third parties. On no account should TCs relinquish control over the use of the assets, which should survive any change in political leadership. The most critical system would be the IT system for town management. Ownership of the town management software system and its intellectual property rights should reside with the Town Council.

Second, town management systems which serve several constituencies should be configured to be easily segregable at low cost in event of boundary change or leadership change. This should be ensured for the 3G TCMS.

Third, another important IT system which should be safeguarded for continuity is the telemonitoring system (TMS), which monitors lift breakdowns and lift rescue. All TCs are currently using the TMS from the same provider, and at the minimum, the existing termination period of 3 months is too short and should be reviewed.

Fourth, important service contracts such as those for Managing Agent and Essential Maintenance and Services Unit (commonly called EMSU) should provide for a longer termination period to allow for a fresh tender to be called, if necessary, after a handover.

Finally, unilateral terminations by contractors of essential contracts due to a change in political leadership should be disallowed. Should there be a need to put in place another contractor due to business considerations, a mutual discharge can be agreed between the TC and the contractor.

We are ready to provide further input if needed.

Conclusion

We believe that the sale of the TCMS by the PAP TCs, whatever its other ancillary benefits, was to enable AIM to cut off any non-PAP TC from using the TCMS at short notice, crippling the TC. By doing so, they acted in their party political interest and jeopardised the public interest, using a critical asset developed with public funds.

In this light, I cannot help but recall the Parliamentary debate in 1988 when the Town Council Bill was first presented for the Second Reading. At that debate, the then First Deputy Prime Minister Goh Chok Tong justified the introduction of Town Councils as providing political stabilisers to the political system. He said there was a need to protect the public by ensuring that political parties which aspired to be government should first prove that they could run a Town Council for a constituency. He said: “If a new party finds itself unexpectedly in government, it would be like an aspiring pilot taking over an SIA jumbo jet in mid-air before he has flown solo in a Cessna. This cannot be in the interest of passengers in the jumbo… TCs are the Cessnas of our political system”. He also highlighted that some PAP MPs had expressed a fear that opposition MPs could win “some seats, prove themselves” (able to run the Town Councils) and thereafter “fan out to other constituencies in subsequent elections” (Hansard, 28 June 1988).

Is this what this whole AIM episode is about – ensuring that the passengers in the Cessnas have bumpy rides or even crash land? Does the government even care about the passengers in the Cessnas, or are they simply collateral damage in a bigger political game?

Ms Ho Yeow Sun will resume her role as executive director after the Commissioner of Charities (COC) lifted the suspension of her duties ahead of the August deadline, with immediate effect.

“I am very thankful to Jesus that I can resume my executive duties at such a crucial time for City Harvest Church,” said Ms Ho, 43, who is married to church founder Kong Hee.

“I am truly glad that I have been fully vindicated.”

According to a report in The Straits times, Ms Ho also added that she was grateful to members for standing by their leaders after she was suspended along with eight other church leaders, including Kong, for alleged misconduct and mismanagement in the administration of the church which the COC uncovered in a probe

While the Commissioner moved to expel the eight from office last month, he decided to allow Ms Ho to continue to play a key role in the church.

Her duties include overseeing various departments of the church’s full-time staff and ministry volunteers.

Kong said both he and his wife “have always believed there to be absolutely no basis for the suspension orders that were imposed” on Ms Ho, and “we are happy that the COC now appears to share this view”.

Church member Eric Kong, 33, a business development manager, said: “We are still waiting for legal proceedings to run their course and this will take some time, so having her back in this much-needed time for the day-to-day running of the church, to help make important decisions, to carry out the mission of the church as its co-founder, is really helpful.”

Members have gathered for about two hours every week night since last week to pray for their leadership at the YWCA Fort Canning Lodge at Dhoby Ghaut, ahead of a criminal trial involving six of their leaders.

The six, including Kong, are charged with embezzling more than $50 million of church funds. Their trial begins tomorrow.

If you require proof Khaw Boon Wan is no gentleman, read how he addressed Ms Sylvia Lim in his closing remarks of the MND Review “debate”:

“This is self-righteous and – pardon me for saying so – arrogant. Many of us in this House have been serving Singapore for decades, long before she entered this House.  Please, don’t behave as if you’re the only patriot in this House.”

It kind of sets you thinking. Firstly, the oldest man in the House already said Singapore is not yet a nation – patriots are normally associated with nationhood. Then there’s this definition of a patriot as a person who loves, supports, and defends his or her country and its interests with devotion. But how can anyone honestly do that when our country has been raped beyond recognition by members in the House who have sold it out to foreign interests, and diluted the national core to a fraction of its original composition? Even the kids of the future generation are not spared the ravaging pillage and plunder of the rapacious horde.

It was only in April 2013 that we learnt there was once a dastardly system of awarding sites in Housing Board estates to private pre-school operators based solely on the highest bid. Everybody cheered the announced intention to halt this inflationary practice. And there was the welcomed news that families with a gross monthly household income not exceeding $2,000 could actually enjoy subsidised fees as low $10 a month.

Then everybody’s jaws dropped. A mother of two revealed that kindergarten and childcare fees at 22 PAP community Foundation (PCF) centres in Sembawang GRC have announced hikes of not 5, 10 or 15, but TWENTY percent from January 2014. And this is how Acting Minister for Culture, Community and Youth (also PCF Executive  Committee Chairman) Lawrence Wong justified it: “But the average fees will still be way below market and that’s how we have maintained our fees.” Leopards never change their spots.  Like the Khaw Boon Wan practice with public housing prices, rates can be de-linked and re-linked to private sector numbers at their political convenience.

Thomas Paine once wrote: “These are the times that try men’s souls: The summer soldier and the sunshine patriot will, in this crisis, shrink from the service of his country; but he that stands by it now, deserves the love and thanks of man and woman.” The patriots, who are still standing bravely in spite of all odds, deserve better.

Tattler

* The writer blogs at http://singaporedesk.blogspot.com/

AHPETC / WP’s RESPONSE TO COMPARISONS ON MANAGING AGENT RATES

We refer to the comparisons of Managing Agent (MA) rates cited by Minister Khaw Boon Wan in Parliament on 13 May 2013 during the debate on Town Councils, which were published in various media today.

We are not privy to how the government derived the unit rates, even for Aljunied and Aljunied-Hougang, which differ from our own documents and calculations.  We set out below the agreed MA rates for public perusal.

Comparison between Aljunied TC’s MA rates under PAP and Aljunied-Hougang TC’s MA rates under WP

For the year FY 2011, Aljunied TC was managed by PAP’s MA, CPG Facilities Mgt Pte Ltd (CPG), until August 2011 when they handed over to Aljunied-Hougang TC’s MA, FM Solutions and Services Pte Ltd (FMSS).  Due to the urgency and public interest in working on the handover after the General Election in May 2011, a tender was waived for a one-year contract to FMSS, as we note was also done in Potong Pasir TC for their MA.  The fees charged by FMSS for this one year was the total of two components: for Aljunied, the same rates contracted by CPG for 2011 were used and prorated according to the new electoral boundaries (to include Kaki Bukit Division and exclude the Division now known as Ang Mo Kio-Hougang); for Hougang, which directly hired staff without an MA, the staff costs were included.

FMSS’s Fees (August 2011 to July 2012) = CPG’s rates for ATC (2011) + Hougang SMC TC staff cost

For FY 2012, a tender was called for MA Services for 3 years, and FMSS was the only tenderer.  The MA rate for residential units was $7.01 for 2012, which was about 4% above the rate which CPG had contracted to provide to Aljunied for the same year had they continued as MA.

Table 1 – Comparison Table for MA Rate (Residential Units)

In addition, we note that the Project Management Fees of FMSS compared favourably with other Managing Agents as follows:-

Table 2 – Comparison Table for Project Management Fees

The rates charged by FMSS for AHTC also included the following which were not provided under the previous administration for Aljunied Town:

(a)    Costing for a significant increase in the number of lifts due to the Lift Upgrading Programme, which would increase the lift testing fees the MA was required to bear in accordance with industry practice.

(b)   FMSS had contracted to run 5 offices, not just the 3 managed by the former administration.  The additional 2 offices are in Hougang SMC and a new office at Kaki Bukit Division to serve residents whose profile included the elderly.  An additional collection point for service and conservancy charges was also provided at Serangoon Division.

(c)    Certain services which used to be contracted out such as IT administration and maintenance was provided by the MA, resulting in savings.

(d)   Additional technical staff to improve service delivery.

The MA rates for the 2^nd and 3^rd year built in reasonable increases for inflation and staff wages.

Tampines TC’s MA rate for 2012

According to the Minister, Tampines TC’s MA rate for 2012 is $4.99 per property unit.  We understand that there was a change in MA from 2011 to 2012, meaning that it was the first year in Tampines for the incumbent MA, CPG.  Coincidentally, CPG was incumbent in Aljunied TC until 2011, and its unit rate tendered in FY 2010 for Aljunied had been $6.51 (according to the government’s tables).  We do not wish to speculate why a MA would tender in 2012 at a lower rate for MA services than in 2010, given the rising costs.  However, we note that as early as at 2007, another MA, EM Services, had tendered at $5.75 per residential unit for Pasir Ris-Punggol Town.

Table 3 – Tampines TC’s MA rate

We can only surmise that the Tampines TC’s MA rate of $4.99 in 2012 which was chosen for comparison was an outlier.

Audit of Award to FMSS

As mentioned in Parliament yesterday, AHTC had commissioned a special audit to evaluate the award of the MA contract to FMSS in 2012.  The audit covered compliance and good governance practices, and noted the steps taken in due diligence to ensure value for money for the Town Council.

SYLVIA LIM
CHAIRMAN
ALJUNIED-HOUGANG-PUNGGOL EAST TOWN COUNCIL AND THE WORKERS’ PARTY

14 May 2013

Since I wrote “PM, this can’t be right? 5.9% GDP but 0.4% wage increase?”, I’ve read something that illustrates that it’s the distribution of GDP growth that matters, not GDP growth by itself. Hopefully someone who reads this blog and has personal access to PM will forward to him this extract from an Economistblog:

To see how the distribution of growth affects incomes, imagine a country of just ten people, with one earning $1,000 a month, another earning $2,000 a month, and so on up to the tenth, who earns $10,000 a month. Between them, these ten people earn $55,000 a month. Now suppose that in a year the economy grows by a modest 1.8%, so that there is an extra $1,000 to go around each month.

If the richest person captures all that growth, it will give him a 10% pay boost. But he will hardly feel it, because he is already rich, and the average pay rise across the entire population would be just 1%. But if the poorest resident got all the extra money, his income would double. That would make a huge difference to his life—and the average pay rise in our little country would be a whopping 10%, far higher than the meagre overall growth rate.

In general, the more of the $1,000 that goes to those on lower incomes, the bigger the average pay rise it causes, and the more impact it has. (Emphasis is mine)

What has happened here is that between 2000 and 2011, the earners of the median wage (those only getting 0.4% real wage increases) have not been getting most of the average 5.9% GDP growth. It went to those above the median wage: hence the ever rising COE prices and private property prices. The latter, meant that under Minister Mah HDB prices (remember the land cost) went up affecting the median wage earners, and the poor.

It also meant that increasing GDP via FT inflows was not in effective helping the median wage earner. The benefits of GDP growth went to the above median earners.

Finally what it means is that S’pore can have slower growth that benefits the poorer and median wage S’porean: provided the distribution of GDP growth is tilted towards the below median and median earners, away from the above median earners. Pigs would fly first.

Related post: http://atans1.wordpress.com/2012/08/13/inflation-why-the-misleading-picture-minister-media/

Cynical Investor

*Article first appeared on www.atans1.wordpress.com

- CNA/fa 

In a recent survey, 70% of respondents polled that they had difficulty saving up enough money in their CPF. 

In another survey, most Singaporeans were also found out to be unable to meet the minimum sum.

Ever wondered why this is so? Read on.

Housing Mortgage Loan

A large proportion of the CPF contribution is used to finance housing mortgage loans for HDB flats. Assuming a couple buys a 5 room HDB flat, costing them a  $300,000 loan, and as a result, their monthly instalment is $1202. Also assuming both are working and both earn median wage of $3404 a month, of which 35% CPF contribution would be $1190. Assuming they pay equal share, about $600 each will be set aside to foot the mortgage loan, leaving only $590 of contribution.

Now, here is where the hypocrisy comes in;  The government likes to tout that most people don’t have to pay a Single Dollar of cash for their HDB. Sounds great right? But no. The mortgage loan is paid through CPF, the account which earns 2.5% of interest, as opposed to cash. As a result, you are forgoing about 50% of your savings guaranteed with 2.5% interest rates , when you can pay cash out of your regular wages and forgo a 0.1% interest rate on your regular bank deposits. As a result of paying through CPF, you lose 2.4% of interest per annum.

And over 30 years, your savings could potentially be 100% higher, without paying for the mortgage loan through CPF.

Also, If you read my article on “The Hypocrisy of HDB Prices”, even if we do not factor out the land costs, simply by reducing housing lease from 99 years to 33 years, one can bring the price of a HDB down such that couples can afford to buy it in one single downpayment , hence avoiding the need to pay loans, with interests, out of CPF. Also according to my article,  land prices, which are mainly profits for the government, account to up to 2/3s of the cost of HDB flats.

Because you pay interest on your Housing Loan, you end up paying $175,000 more for a  $300,000 5 room HDB. Had this loan interest been factored out, the minimum sum could easily have been met.

As a result, you pay the government back with what the government owes you; The government borrows your earnings in CPF, but you return 50% of it in your housing loan. Because land prices form 2/3 of the HDB costs, the government also stands to reclaw back 2/3s of the 50% as profits from its land prices. As a result, the government reduces its debt to you by 37%.

Paltry Interest Rates

A lot of people take issue with the paltry interest rates that CPF provides, 2.5% and 4.0% for a weighted average of 3.05%, plus additional 1% on the first $60,000, which adds 0.405% assuming Singaporeans meet the minimum sum of $148,000. This is 1% less than inflation rates, and Singaporeans have to watch their savings shrink as time passes by.

The CPF are invested in Special Singapore Government Securities (SSGS), which are bonds issued by the government in return for CPF money. The bonds are sold to GIC and Temasek for them to invest in Foreign Markets, so that they can return the money with interest.

It has been reported , the GIC and Temasek have been making 6.9% and 17% 20 year annualised rate of return.

Clever ones may ask, so why can’t The Government give us a 6.9 to 17% interest on the CPF then?

The short answer is, it can’t afford to, because of more hypocrisy.

Let me explain:

GIC and Temasek Losing Money due to Inflation

The GIC’s  20 year annualised rate of return is 6.9%, yes, but that 20 years has been over a period where Singapore, and its associated GIC investment funds, experienced periods of rapid growth. It is akin to taking the population of a bacterial colony over its Exponential growth phase, and then calculating the annualised growth from there; you would arrive at a very high figure.

The same goes for Temasek. Its 17% yield since inception people may dispute, but that is perfectly logical, because it grew from an initial capital fund of $500 million. Part of the reason for its growth spurt was in 2002, where it began expansive divestment in Asian Markets from 2002-2008.

However, given it grew 400x to today’s figure of $198 billion in 30 years doesn’t mean it will grow another 400x in another 30 years to $80 trillion.

Calculating the returns over a 20 year annualised period hence gives an artificially inflated growth figure.

Unfortunately though for both companies, as the fund increases in size, growth rates have slowed, typical for a bacterial colony in stationary phase. And as a result, the 5 year annualised rate of return for GIC was 3.4%

http://leongszehian.com/?p=3536 , in US$ (note, not SingDollars) , while the 5 year Total Shareholder returns of Temasek Holdings was 3%. (in SGD).

According to Leong Sze Hian, because of the depreciation of the USD, the gains of GIC has been eroded to -0.4%. 

So as a result, the total gains of Temasek and GIC are around $4.8 billion. As a proportion of the $500 billion reserves between them, this is 1%.

However, as a result of inflation, which was 4.5% in the last  5 years, the value of the reserves under GIC and Temasek has depreciated by $22.5 billion. A net REAL loss of $17.7 billion.

Hence,  GIC and Temasek have been losing money due to inflation these past 5 years, so do you think the investment returns are in a position to guarantee CPF interest? No. It has to find another source of income:

The Government’s Need to Top up the Reserves using Surplus Generated from its Budget

In FY 2012, the government reported a budget surplus of $3.8 billion. However, accounting for land sales and surplus investment returns from the reserves, not included in  NIRC, this amounts to $36 billion, as per IMF DOS standards:

http://www.ifaq.gov.sg/mof/apps/fcd_faqmain.aspx#FAQ_1548

Over the long term, according to IMF , the government has been raking in $270 billion of budget surplus since 1990 to 2010.

http://www.baldingsworld.com/2012/09/18/the-imf-re-re-statement-of-singaporean-public-finances/

The NIRC (Net Investment Returns Contribution), which is based on the 20 year annualised rate of return, of $7.7 billion, was also contributed. A $10.4 billion has been withdrawn in 2011. This constitutes a draw of $18.1 billion to the reserves.

Complemented by the $17.7 billion REAL losses by GIC and Temasek, to maintain the absolute size, plus inflation, it has to top up about $35.8 billion,  per year. Just about in ballpark of the $36 billion budget surplus it has been running.*

Also, According to Leong Sze Hian, the total debt due to CPF in 2011 was $207.5 billion. At a 3.5% interest rate, an additional $7.1 billion is due.

* I know that the CPF interest and withdraw figures are 2011 figures, the GIC and Temasek losses, 5 year annualised average figures, and the $36 billion surplus, a 2012 figure. The figures were not meant to tally in any way. They are just to provide figures so as to explain how the government can maintain its reserves, assuming current figures.

Constant Economic Growth Supports CPF Interest Rates

Now you  understand why the government has to chase economic growth at all costs, despite the dissent about population growth and influx of foreigners. This is so to increase its tax revenue so that the budget surplus can foot the difference between the CPF interest/withdrawals and the real losses of GIC and Temasek.

Interestingly, the targets of 3.5% economic growth from now till 2030 more or less matches the 3.4% weighted average of the CPF interest rates. Coincidence?

This is almost akin to a ponzi scheme, where more revenue has to be sucked out of the next batch of investors (the people), through tax revenue and land sales, to pay the interest on investments (CPF) of the previous generation.

However, such a ponzi scheme is perfectly legitimate, we should not blame the government, BUT only on the grounds that economic growth can be maintained to pay for the interest. Otherwise, the CPF scheme will fall apart, and Singapore will be in anarchy.

In other words, Singaporean might not be able to enjoy their retirement savings if companies fail to meet their 2.5% productivity growth targets over the long term.  Expect the population growth to double to  2% p.a  or more them, and 8 million or more population in 2030.

The CPF Minimum Sum and The Reserves

As you have probably noticed from the way the government conducts itself over the media, the reserves are of a vital importance to their agenda, and under no circumstances, do they want its size nor equity value to shrink. According to them, a reduction in the size of the reserves undermines the investor confidence in the financial security of Singapore’s economy, and makes us less strategically able to meet crises in the future.

That means, that not only do they not want you to enjoy a higher rate of CPF interest (cos that would cause them to lose money over the long term), but they also do not want you to withdraw your CPF excessively so that the size of the reserves are reduced in the immediate term. For example, if all 700,000 or so seniors turning/above 55 withdrew all their savings, and assuming they all had the minimum sum , the reserves would lose $108 billion, or 12%. How’s that for a bombshell in investor confidence?

By mandating that you can only withdraw your savings in excess of the minimum sum as monthly instalments, they are in fact controlling the amount of liabilities they have to pay out each year, so that they can meet the deficit using the budget surplus. This is akin to paying hire purchase, so that your salary can meet the instalments when you buy a car, so that the size of your current savings (assets) won’t have to be reduced , as compared to paying for it in a single lump sum.

Unfortunately for the government, CPF members tend to withdraw some of their savings when they turn 55. In 2007, this was $2.4 billion. By 2011, this has been reduced down to $1.9 billion, despite the number of members increasing from 204,000 to 227,000.  According to the same article by Leong Sze Hian, the total amount withdrawn has dwindled from $18.9 billion in 2001, to $10.4 billion in 2011. I highly suspect that this is too, due to the fact that people turning 55 withdrew $8 billion less in 2011 than in 2001. And as a result of the withdrawals falling by $8 billion, it can be fully accounted for by the budget surplus.

Time For a Pension Scheme?

Provident Funds like the CPF are a rarity in developed countries. The majority adopts a “Pension Fund”,  where retirement pensions are paid for by taxpayers.  Even though this has result in bad debt situations in the US and Europe, if a pension scheme is appropriately managed, it can be sustainable, as per Switzerland and the Scandinavian Countries.

Our old age support ratio now is 6:1.

Instead of setting aside 35% of our income, and promising 3.5% rate of return, we could simply set aside 5.8% of income, as tax, and pay it so that the current elderly generation can enjoy a pension equivalent to 35% of income.

Even as our population ages and our old age support ratio is reduced to 2:1 in 2030, we only have to set aside 17.5% of income as  tax, so that the current elderly generation can enjoy a pension equivalent to 35% of income.

The result is that you contribute 35% of your income as tax, which would have otherwise gone to the government anyway as CPF contribution, to settle the retirement of the current generation, and then, have the next generation contribute 35% of their income towards your retirement. The net result is still the same. You give money away as tax, but you enjoy pension benefits later on, equivalent to ‘saving’.

The pros over CPF are, that your payout increases at the rate of wage inflation, which is 1.1% higher than the 3.5% under CPF, and that there is essentially no risk. When a recession happens, wages may shrink, but payouts can be reduced as well. Under CPF, if GIC and Temasek lose money, then our CPF savings are wiped out.  During the 2009 financial crisis, GIC and Temasek lost about a quarter of their reserves, whereas wage growth still remained positive throughout this period.

Abel Tan

TRS editorial staff

During the coroner’s inquiry into the death of American researcher, Dr Shane Todd, yesterday (13 May), his girlfriend, Shirley Sarmiento, a Filipino nurse working at a local hospital told the court that Dr Todd hated his job after he was transferred to the gallium nitride (GaN) research group in the Institute of Microelectronics (IME).

They met each other through an e-dating website called OkCupid not long after they had arrived in Singapore. This was in late 2010. She said that they would see each other almost every weekend.

According to Ms Sarmiento, Dr Todd said he was depressed over his work.

She revealed that Dr Todd had complained to her that he was working in “a dishonest environment”, and “one of his bosses had stolen his team’s idea”.

But he did not give many details into how the idea was stolen, according to his girlfriend.

He was also not happy because most of his teammates were PRCs who spoke to one another in Mandarin, a language he did not understand, she recalled him saying.

Mr Lendrum, an accountant and a friend of Dr Todd said, “Shane also informed me that his team members were not working as hard as he was and that they were not meeting his standards.”

In March last year, Dr Todd told his girlfriend that he wanted to quit, but delayed his departure until he collected his performance bonus.

Ms Sarmiento recalled that, weeks before his death, Dr Todd was “behaving coldly” towards her. Whenever she brought up the topic of him leaving Singapore, he would fall silent.

She said, “He just said that he could not fully explain what he was going through.”

In the final weeks of his life, Ms Sarmiento also noticed that Dr Todd’s hands shook more than usual. In the last few days, his hands shook so much that he would drop things, she said.

Another expatriate friend also testified in court, said, “The twitching was more pronounced in 2012. In my opinion, he was anxious and under pressure.”

The last time she saw Dr Todd alive was the Monday morning of Jun 18 last year, after she spent the weekend at his apartment near Chinatown. When he failed to reply to her messages over the following weekend, she went there around 6pm on the evening of Jun 24.

His apartment door was not locked. She entered the apartment and found him hanging from the toilet door, and screamed. His neighbor Michael Goodwin, alerted by the woman screaming, asked their neighbors to call the police.

Dr Todd’s parents have alleged that he was murdered because of his work at IME, which they said had links to a Chinese firm, Huawei, seen by the US as a security threat.

TR Emeritus

*Article first appeared on www.TREmeritus.com

We examine the Ministry of National Development's oft-delayed, long-awaited review of the transaction between the People's Action Party's 14 town councils and Action Information Management, published on 3 May 2013 (PDF link), in light of the parliament sitting on 13 May 2013.

Whatever happens on Monday—a dramatic showdown headed by a bold opposition, a comedy of missed chances authored by an underperforming opposition, or a grotesque self-interested bipartisan agreement to sweep all embarrassing issues under the carpet—the ruling party and the establishment press will declare the sitting a fitting closure to a contentious debate, and call for the citizenry to lay aside their misgivings, move on, and to reinvest their blind trust in a to-be-reformed town council system.

We present this post so our readers can see for themselves on Monday whether Monday's debate is the real thing, a clown show, or pure political kabuki.

A reader asked me what I thought were the most critical issues Singapore is facing at the moment and what my vision for Singapore was.

I personally feel that in general we are doing well so far but here are some of the major problems we need to work on...

1) Improving social mobility for the poor
It is comforting to know that many poor people still have a roof over their heads. According to The Straits Times report this year, eight out of 10 low-income households own their own homes. Deputy Prime Minister Tharman Shanmugaratnam said "there's no other country that comes close to it". 

However, helping the poor move upwards is still a challenge.

The Singapore Department of Statistics’ latest report on “Key Household Income Trends, 2012”revealed that income gap was widening in Singapore with the bottom 10 per cent saw real average earnings from work per household member decrease by 1.2 per cent, while the top 10 per cent experienced a 5.1 per cent increase per household member. 

For me, I personally believe strongly in Franklin D. Roosevelt's quote "The test of our progress is not whether we add more to the abundance of those who have much it is whether we provide enough for those who have little."

Thus, even as we move forward and continue to experience high GDP growth, I hope that social mobility can be improved for the poor so that they can also enjoy these fruits. What is the point of high GDP growth if it is all concentrated at the top?
 

Credits: Gerald Giam's blog

One of the ways to improve social mobility is to improve our education system. I have highlighted some flaws in our current system about how it can possibly create an 'entrenched elite'

In 2010, Minister Mentor Lee Kuan Yew shared some glaring statistics. More than half of students studying in top schools like Raffles Institution, Anglo-Chinese School (Independent) and Nanyang Girls’ High had fathers who were degree holders. In contrast, the percentage at Chai Chee Secondary School, a neighbourhood school, was only 13.1 percent and this was the highest percentage amongst four schools where data was obtained.

I feel that a large proportion of our poor are the elderly. An IPS report in 2010 showed that ONE in FIVE elderly do not have sufficient for a living. it breaks my heart to see them have to work even at such an old age. I really hope that the government can give more subsidy to the elderly people as they were the ones who helped built Singapore to where it is today. They devoted a huge part of their lives in bringing up the next generation and helping to create our nation and they deserve to enjoy the fruits of our economic growth.

2) Pressure on the middle class + high cost of living

As Roy pointed out, our wages have not increased even with economic growth. However, inflation has also been rising.

The prices of HDB are now very high and so is the cost of living. A lot of newly weds are worried about whether they would be able to afford a house.

This problem is made worse by the influx of foreigners. As Former Director of Internal Secu­rity Department (1971-74) Yoong Siew Wah wrote, “Singapore has 30,000 P-METs who have been unemployed for quite a long time, and we now have Chinese and Indian immigrants competing … for the limited employment opportunities”.

Many unemployed P-METs end up working as taxi drivers, property agents, insurance agents or tuition teachers.

I also believe that the influx of cheaper-to-hire foreigners also contribute to income inequality by putting downward pressure on wages. 

Our next step is to think of how we can increase wages to keep up with inflation or reduce the cost of living to help Singaporeans cope.

3) Reducing dependency on foreigner

In 2011, Goh Chok Tong said that Singapore has to make changes to the way it grows its economy as the model of relying on cheap and plentiful foreign workers to boost output. He felt that it was not sustainable.

However from reading the Population White Paper, I felt that the Singapore government seems to believe that the introduction of foreigners will definitely help our economy and is the solution to everything.

However in my personal opinion, I strongly believe that immigration is not some magic pill. Instead, perhaps we can focus on grooming local talents as making use of the Elderly and former-ex convicts as labour instead of discriminating them.

I myself am a firm supporter of the Yellow Ribbon Project. I believe no one is perfect and thus, they should all be given second chances. A good example of this would be how Benny Se Teo set up Eighteen Chefs and provided a platform for youth-at-risk to contribute to the economy and upgrade their skills.

4) Improving Transport

COE prices are very high. I personally believe that private transport is a want not a need. Thus, to encourage people to use public transport, we have to first make public transport good.

Yet in Singapore, trains take a long time to come (here in Hong Kong, it is 3 minutes at max). Our trains also have regular breakdowns despite being younger than other trains in other countries. Fare is also expensive and there is no subsidy for the disabled, or polytechnic students and university students, who do not have an income.

Given our high population now, trains really really really have to be more frequent. I live in the Little India and every morning at 8am when I take the train, I always have to wait for about two trains before I can get in. I face the same problem at Jurong East Station.

In contrast in Hong Kong, even with a higher population density, I am able to take the first train no matter what.

Photo credit: Singapore Mind

5) Transition to a more civil society 

I keep emphasizing this because I see a situation whereby leaders are not very in touch with the common Singaporean. I feel that a strong civil society can help to bridge this gap but the government does not seem receptive to criticism. 

It is not really their fault either. Some of our  current leaders were born into rich families and went to elite institutions. They have not mixed with the other social groups and hence have little understanding of them beyond theoretical knowledge.

Another reason why they should pay attention to our voices is because they serve the people. And if they do not know what people really want or how they think, how can they really serve them?

As I would quote Roosevelt again "Let us never forget that government is ourselves and not an alien power over us. The ultimate rulers of our democracy are not a President and senators and congressmen and government officials, but the voters of this country."

Furthermore, our needs have evolved. Now that we are more or less stabilized, there is no excuse to continue to withhold civil rights from our people such as rights to assembly and freedom of press.

As I am passionate about equity issues, I have been involved in grassroots for the past few years and tried to organize some events for the poor. I also use Creatives For Causes to help charities promote themselves and attract more donors and volunteers.

So far, I am grateful to some organizations like NVPC and NYC for supporting my initiatives. NVPC also helped to publicize CFC through their publication SALT,

One person cannot make a huge major difference but it doesn't mean we should stop. For things to change, we all really have to work together and hopefully the government can also work with us by listening to our needs and not blocking it out or dismissing it. =)

What kind of Singapore do you want to see?

ABOUT THE AUTHOR:

Jeraldine Phneah, 22, is a prominent socio-political blogger and founder of nonprofit organization, Creatives For Causes.

As a rationalist, Jeraldine highly discourages personal attacks against any party and instead, promotes constructive criticism that targets policies, stimulates debate and helps everyone find a better solution.

Her vision is for Singapore to evolve into a strong and successful civil society where active citizens and the government can collaborate to improve society.

Facebook: www.facebook.com/jeraldinephneah.page

Blog: www.jeraldine-phneah.blogspot.com