Thursday, January 27, 2011

All for a strong Singdollar

Jan 28, 2011

ACCORDING to the Monetary Authority of Singapore's (MAS) website, our total official foreign reserves have ballooned by more than 94 per cent from US$116 billion in 2005 to about US$226 billion (S$289 billion) last year.
This may look good to most people, but I see it as a dramatic intervention by MAS to weaken the real value of the Singdollar over a short span of five years by buying up freshly printed money of foreign governments.
I prefer a strong Singdollar. Whenever a foreign government debases its currency, it affects our foreign reserve holding. At best, a large forex reserve gives our government a lot more money and enables our exporters to sell into markets chronically stricken with trade deficits. However, these are not necessarily a good thing.
A realistically strong Singdollar allows better distribution of wealth as it does not dilute the savings and earnings of Singaporeans. It keeps interest rates realistic, higher than the current Singapore Interbank Offered Rate which is near zero, and dampens speculation and over-borrowing. This keeps real inflation down and housing prices affordable. It also encourages saving and spending within one's means.
I suggest MAS sell off some foreign reserves for tangibles such as gold and silver, and allow the Singdollar to strengthen naturally. Stop subsidising the currencies of nations with chronic trade deficits at the expense of the Singdollar.
Our export sectors can benefit from significantly lower imported input costs and still remain internationally competitive.
Yong Jianjun

[First of all, just because the value of the foreign reserves is totalled and valued in US$, doesn't mean that it IS held all and only as US$. Most country hold a basket of foreign currency including gold.
Second, currencies that are considered as foreign reserves are not so easily "debased". The US$ can fall over time, and it has because it has been printing money to finance its debt, but it is still holding its value.
Third, foreign reserves may be used to defend a country's forex rate, but it is not the sole determinant of the strength and stability of the S$.
Fourth, on what basis do you say that our export sectors can benefit significantly from lower import costs and still remain competitive internationally? What figures do you have to support that conclusion? A rising S$ would mean our exports will be less competitive to the EU, China, Malaysia and US. It is for the same reason China is keeping its yuan low and buying US$ and US debt. Is this sustainable? Maybe not. Alternatives? No easy answer.
Finally, buying and holding gold is not the best answer. If it is, every country would only hold gold as reserves. Why don't they?]

Wednesday, January 26, 2011

Economic link to falling fertility rates

Jan 27, 2011

I AGREE with Ms Laurelle He ('Encourage gender equality and the babies will come'; last Saturday). In Sweden, if parents care jointly for the child, they are entitled to 240 days' leave each with parental benefit. Monthly child allowance of 1,050 Swedish kronor (S$205) per child is also paid up to and including the quarter when the child reaches the age of 16.
If Singapore makes a paradigm shift and matches the Swedish family benefits, I am sure Singaporeans could do much better.
Our declining birth rate was largely due to social and economic transformation during the last 50 years, when more women with better education joined the workforce. Materialism and pragmatism have forced child-bearing to take a backseat. The trend seems irreversible due to changing perceptions.
I did a cursory comparison of Singapore's TFR to its gross domestic product (GDP) over the last 60 years, and found our TFR to be inversely proportional to our GDP.Until we change the economic model to be more family-friendly, the falling birth rate may slide further.
Paul Chan

[Wow! Amazing! Stop the press! Economic development is inversely proportional to TFR!

Big Fat hairy Deal.

So? The solution is to reduce economic growth until we have unemployment, poverty, barely enough to eat, no money for entertainment, can't afford TV and sex is our only recreation, then produce more children?

Why don't you do a correlation between infant mortality rate and TFR. Inversely proportional also right? So does that mean we should cut down on post-natal and infant care, increase infant mortality, and so people would produce more children as insurance against losing some of them?

Or do a correlation between education and TFR or education level of women and TFR. The more education you put in a woman the less babies come out right? So? Ban education for women?

The GDP - TFR link is a correlation not causation unless a clear hypothesis as to causation can be tested and proven/disproved.

The problem of the TFR is a complex issue. The question is not should we have strong economic growth or more children. The question should be how do we have more children while sustaining our economic growth.

There does not seem to be any simple solution. Feedback cannot totally be trusted as people use this issue to blackmail the government - give me a flat, a maid, COE/Car, maternity leave, paternity leave, childcare leave, subsidy, priority, medical, career guarantee, etc THEN I will have more babies.

Simplistic answers with meaningless stats are not helpful.]

Saturday, January 22, 2011

'Reason enough to revisit polygamy?'


DR GORDON TAN: 'As a gynaecologist who helps sub-fertile couples conceive, I have seen many couples who put off childbearing as they are busy working to pay off their housing and car loans ('Time for stork-taking on baby issue'; Tuesday). When they duly arrive financially, many husbands lament that even though they are now ready financially and socially for another child, their wives have become biologically too old for childbearing. Could there then be reason enough for us to revisit polygamy?'

[Dr Tan. I hope your wife tonight will ask you who you have in mind as your second wife. :-)

In any case, there are grandmothers who have children for their daughters, albeit via in-vitro fertilisation and other fertility procedures. So why do you automatically choose the polygyny option?

The other option is to use your sperm, your wife's egg (if still viable) or a donor egg, and a surrogate mother (if your wife is unable or unwilling to carry a pregancy).

In future, this might be the way forward. Rich older couples will pay a young woman to carry a pregnancy to term for them in exchange for cash payment, treatment to extract and freeze some of the young woman's eggs, and of course all expenses related to the cost of carrying the pregnancy to term. This will give the young woman some start-up cash for business or other enterprise. Then later when she is older and gets married, she can use her frozen eggs (from when she was younger), to be fertilised with her husband's sperm (or sperm of choice), and pay a younger woman to carry her child to term, for the same benefits.

And the cycle continues.

This solves the problem for the woman of choosing between career and biology. ]

Tuesday, January 18, 2011

Make tax system simpler for rented-out property

Jan 18, 2011

THE Government has introduced progressive tax rates on property tax for owner-occupied properties from this year. Properties that are rented out will continue to be taxed at 10 per cent of the annual value.

The Government should consider extending the progressive tax rate system for rented out properties and remove property income from the income tax returns. There is no need for the same income to be taxed twice - as property tax and income tax - especially as the taxes are based on the market-adjusted annual value of the property.

[Rental income to different people are tax differently. If you have an annual salary of $100,000 and have property bringing in $20,000 annually in rent, you will pay a higher income tax. If you have just one property bringing in just $20,000, but is otherwise unemployed, you pay zero income tax. So you don't pay the same tax for the same property.

For an ex-CEO, you don't seem to be able to see the whole picture.]

The progressive tax rate on rented properties can be made to mirror the revenue that is currently collected by the Government from the income tax levied on the rental income.

[How? It will have to take into account other income. So might as well figure it out by income tax returns.]

As an owner of property that has been rented out, I now find it a hassle to compute the net property income to submit in my income tax returns. I must identify the rental income and expenses that are expended on the property, such as property tax, insurance, repairs, maintenance charges, agency fee and other items.

[Hassle, then don't own property. Don't rent out. Singapore's tax code is already one of the most simplified.]

It is unclear if the owner is allowed to deduct the proportion of the rental that is set aside for furnishing of the property.

[Then find out. You only need to do it once.]

The complexity can be removed when the income tax portion is integrated into the proposed progressive rate on rented out properties. It will also save a lot of work for the Inland Revenue Authority of Singapore in policing the reporting of rental income.

Tan Kin Lian

[And now, how about NO tax?]

Jan 23, 2011
YOUR LETTERS
Adopt fairer tax system for owner-occupiers

The basis of assessment of property tax is the same regardless of whether a property is let, owner-occupied or vacant, while the annual value reflects its monthly gross rent. This is the stand of the Inland Revenue Authority of Singapore (Iras).

The rationale for it is fair when the property generates income and the owner can deduct the property tax paid as expenses against rental incomes in computing his income-tax return.

It remains fair if an owner-occupied property generating no income is exempted.

But it becomes a burden and is unfair when the owner of a wholly owner-occupied property has to pay tax for essentially 'no income'.

The actual tax I have paid over the past six assessment years, for instance, reflects this burden and shows the exponential rise of property tax.

Apart from a substantial rebate in 2009, the rising trend has been fast and furious. For instance, the tax increased by virtually 2.29 times from March 2007 to January last year.

[You neglect to mention that for owner-occupier, property tax is tiered, and progressive concessionary. Whereas for leased out premises, the property tax is a flat 10% with no concession. Secondly, the annual valuation is way under-valued (at least for HDB flats). So if you own & occupy a 3-rm flat, you may well pay no taxes, or minimal property tax.

If the annual value of your flat is $65k or less (monthly rental of about $5.5k which would put it in the landed property category), you'd pay 4%, and if you exceed $65k, the excess of $65k will be taxed at 6%.]

Economic transformation and changing landscapes improve standards of living but do not change the intrinsic values of property where the owners, through no fault of their own and for whatever reasons, choose to live in the same house for many decades.

The rental incomes of their neighbours have nothing to do with this group of owners, as they still live in their homes with no income generated.

The present system is unfair and not 'owner-occupied friendly'.

Iras should isolate unrelated factors like prevailing rental yield, market fluctuation and economic growth, and consider the factor of 'no income' to exempt owner-occupied property.

[If you have no income, you pay no income tax. If you have no property, you pay no property tax. If your property is expensive, then maintaining it is probably also expensive. If you can afford to maintain it, you should be able to afford to pay property tax. If you bought property 20 or more years ago, you are extremely fortunate. Young couple today can't afford the high prices of even HDB flats. The value of your property increasing is not your doing, but the entire neighbourhood and what the authorities did to raise the value of your neighbourhood. That is what the tax is a proxy for. If you are retired and living in a highly desirable location for working people who can benefit more from your strategic location, then it makes sense for you to give up the location so someone else can gain more from it. Perhaps he will commute less, pay less for fuel, spend less time on the road.]

Perhaps a more reasonable approach is to use 'date of purchase' to peg property valuation as the basic quantum.

Paul Chan

[It's not all about you. Or your situation. Or how life has passed you by. Or why you should need special treatment. Or about maintaining your way of life for your convenience. Or what you are used to. It's about redistributing resources for what's best for the nation.

Taxes are a way of redistributing wealth. If you bought your property a long time ago when it was relatively cheap, then you have really made a gain. Compared to your children who today have to fork out 10 times what you paid for a flat half the size of your property or even less, is it fair for the younger generation to pay higher property tax for a small property while you being from an earlier generation who had the opportunity to buy property when it was relatively cheap pay little or no property tax on a huge property?


Taxes are a crude instrument to do that, but it's the best we've got.]

Sunday, January 16, 2011

Young S'poreans keen to hear MM Lee's views

Jan 16, 2011

They are curious to find out what he has to say on issues that concern the young

When Minister Mentor Lee Kuan Yew stepped down as prime minister in 1990, Mr Cheo Ming Shen was just six, so his memory of Singapore's founding leader is hazy at best.

But that did not stop the 27-year-old co-founder of Internet start-up Netccentric from ordering an autographed copy of a new book on Mr Lee. He was among 60 donors who will get a limited edition signed copy of the book, having donated $10,000. Proceeds go to The Straits Times School Pocket Money Fund.

'There is nobody bigger than MM in Singapore,' said Mr Cheo, who has read and owns both volumes of Mr Lee's memoirs. 'He is the equivalent of Nelson Mandela to Singaporeans.'

[Really? LKY was locked up for 27 years for sabotaging govt while fighting racial discrimination? Then on his release, won election to lead the country. And promoted reconciliation between the races? And won the Nobel Peace Prize?

I think comparing LKY to Mandela is an incredible (and wholly inappropriate) compliment to LKY. Not sure if Mandela would feel complimented though.

And most importantly, "he's Nelson Mandela to Singaporeans"? I think 70% of Singaporeans don't know who is Nelson Mandela. And 30% don't know who Lee Kuan Yew is.

This normally would be in the other blog, but my intended comments bumped it here.]

Monday, January 10, 2011

Spare pet owners the 'D' word

Jan 11, 2011

RECENTLY, my dog passed away and I had to deregister it on the Agri-Food and Veterinary Authority website.
On the site, under the given options for reasons for deregistration, the first one is the word "dead" followed by others such as "lost", "stolen" and so on.
We are already feeling very sad over the loss of our dog and it is insensitive to have such a word on the site. Is it possible to change it to something like "passed on"?
This would really go a long way towards helping dog owners get over their grief.
Elizabeth Chiona (Ms)


Latest comments (online)
It's an official form, with factual reasons for the cancellation of a license. Why whould AVA use euphemisms? Instead of "Dead", "Lost" and "Stolen", why not "Moved to the Big Kennel in the Sky", "No Longer at Home, but surely Trying to Find his way back to My Loving Arms" and "Liberated by Less Than Honest Individuals, Current Whereabouts Unknown, but Sorely Missed"? The dog is dead, deal.
Posted by: agooddaytodie at Tue Jan 11 10:32:07 SGT 2011

[I think the online comment was harsh enough. :-) ]

Saturday, January 8, 2011

Works there, why not here?

TODAY
Jan 04, 2011

Letter from Rick Lim Say Kiong

I AM worried. Despite the assortment of pro-family measures dished out by the Government over the years to address Singapore's low fertility rate, it continues to drop further ("S'pore grapples with low birth rate, integration", Dec 31).

While our total population is steadily increasing, we are aware that this is due mostly to the number of transient workers and immigrants who become Permanent Residents (PR). Singaporeans have groused about this massive influx of foreigners. The nub of their complaints is not only with the number, but also the quality, of the immigrants.

We can all agree that we need transient workers for jobs in sectors such as construction, food and beverage, and cleaning. Since these industries have been reluctant to increase wages or improve productivity, foreign labour seems to be the only option at the moment to meet manpower demands. What we need to be concerned about, however, are immigrants not working in these labour-intensive industries.

As a human resource practitioner, I have noticed that the quality of workers applying for and obtaining permanent residence has decreased over the years. In the past, when the Government was espousing the need for foreign talent to work here, start businesses and create jobs for Singaporeans, potential PR applicants had degrees, diplomas or higher-level certificates and/or a wealth of experience.

[Since you are HR practitioner, tell us why the market is not paying more wages to Singaporeans, or why productivity is stagnating. You should be in the know. If the new FW are lower quality, why is your HR practice to hire lower quality FW?]

In the last six years, however, I have noticed that even workers with three O-Level credits are granted PR status once they have worked here for a year or two. Skilled as they may be, do they contribute to our economy by creating jobs or do they take jobs that can be done by locals? If only real foreign talents are given PR to work and stay here, and they do create jobs for the locals, then my guess is that most Singaporeans would not mind their growing numbers.

We need to worry about why we cannot arrest the decline in our fertility rate when pro-fertility measures implemented in other developed countries seem to work. In Australia, the goal is to reach a fertility rate of 2.1. Their current rate is 2.0 - impressive if you compare that to our dismal figure of 1.22 last year.

Australia has flexible working arrangements for employees, dating agencies for singles and a government-run baby bonus scheme for parents - which we also have in Singapore - yet theirs seem to work and ours do not. Why?

[So why don't you tell us why it works in Australia? We don't know why ours don't work. If we knew, don't you think we would have fixed it? Since you know Australia's work, did you dig a little deeper and get an analysis of why it worked there?]

One contributor to the Today online forum puts it aptly with this analogy: When pandas in a forest are not reproducing themselves sufficiently, do you add other bears to the forest (where resources are scarce) and then expect the panda numbers to increase?

[Depends. The bears were introduced to eat berries and salmon. Pandas only eat bamboo. Not very versatile. Impossible to reskill. And if resources (bamboo) are scarce, don't worry. Bears don't eat bamboo.]

When we find that our spaces get more cramped, wages do not increase, modes of public transport are packed, jobs are threatened, housing options are becoming limited and their cost increased, et cetera, it does not take much to realise that these factors will impact our country's fertility rate.

[Bullshit. One of the biggest problems in poor countries are high births among poor people living in cramp conditions, with low stagnating wages, or no jobs, and no housing options. All the points you raise are our government's insidious efforts to make Singaporeans feel poor so that they will produce more babies.

And that was a facetious way of saying, those are excuses, not reasons. Sometimes they are fodder for blackmail. You see it in forum pages: If the govt wants me to have more kids, they should help me get a flat!]


In addition, our long working hours and demanding workloads are the main killers of fertility. Having better maternity benefits, flexible work arrangements and baby bonus schemes are measures that treat only the symptoms of our underlying problems - and until we truly fix these, our fertility rate is likely to continue its decline.

[So to reduce long working hours, and demanding workloads, we need to hire more people, and since there are no more people of the required quality, we need to hire more... FOREIGNERS! Which means that Singapore will get more crowded and housing costs increase and people worry about their jobs, so they DON'T HAVE BABIES!

You haven't really thought through this problem, have you?]