Archive for March, 2012

Lubricatio​n for the Singapore meritocrac​y

March 31, 2012

What is your first impression if you were told that someone who scored two A1s and one A2 for his ‘A’ levels was awarded the president’s scholarship? This person thus sat for only three papers instead of the usual four and still didn’t score A1 for all three papers and yet was awarded the president’s scholarship.

This is no fiction. This person is none other than PM Lee who scored A1s for pure and applied mathematics and A2 for physics for his 1969 Cambridge ‘A’ level examinations [1]. Coincidentally, when PM Lee finished his secondary schooling, the first junior colleges were created and he got into the first batch of the first junior college [1]. Coincidentally too, as PM Lee was serving NS, the SAF scholarship was created and he became one of the first recipients of that prestigious scholarship [1]. In his 14 years with the SAF, PM Lee worked for only 7 years and got promoted to BG [1]. The remainder of the time he was attending this course and that [1].

That is meritocracy in Singapore.

[1] Constructing Singapore: elitism, ethnicity and the nation-building project, Michael D. Barr and Zlatko Skrbis, pages 76 to 79


My tale of two cities

March 30, 2012

The 18 Mar 2012 article “My tale of two cities” by Straits Times copyeditor Joel Cooper is a sincere expression of his preference of Singapore over Hong Kong as a place to live and work.

Mr Cooper brushed aside his British friend’s comments on Singapore as second hand tales of those who have never been to the island or who have never ventured further than Orchard Road. Yet, he felt reasonably clear of what Hong Kong is like from watching Batman. He also confirmed his dislike for Hong Kong as a place to stay from what seemed like a short vacation trip there. His characterisation of Hong Kong as a Gotham like city makes you wonder if he had ventured out to Hong Kong’s many islands for hiking and adventure. Mr Cooper visited Hong Kong looking for reasons not to like staying in Hong Kong. Perhaps he saw what he wanted to see and if he had wanted to see something else, he would have seen those too. He sees a sharp contrast between an orderly Singapore and a Hong Kong where aunties lunge and jab at each other over a seat. But Singapore has no lack of ugly scenes every day [1] including some famous road rage cases.

Mr Cooper even justifies his choice by citing the 2008 HSBC survey which showed Singapore as the best place to relocate compared to fifth placed Hong Kong. You wonder why he didn’t refer to the more recent 2011 HSBC survey [2] which shows Singapore and Hong Kong occupying the top two positions respectively and separated by a measly 0.01 point (Singapore scored 0.49 while Hong Kong scored 0.48). Mr Cooper might find it disturbing that the Economist’s World’s Most Liveable Cities 2011, Mercer’s Quality of Living Survey 2011 and Monocle’s Most Livable Cities index 2011 didn’t put Singapore tops in their list. What should he do? Move to the top city shown by Economist, Mercer or Monocle?

[1] Ugly Singapore scenes


S’pore is 3rd-riches​t country: Forbes

March 30, 2012

Using the latest IMF data, Forbes found Singapore to be the third richest country in the world [1].

While Forbes made use of IMF’s 2010 data, IMF’s 2011 data shows pretty much the same thing, that Singapore has the world’s third highest per capita GDP adjusted for purchasing power parity (PPP). But when it comes to nominal (unadjusted for purchasing power parity) per capita GDP, Singapore’s position falls to No. 11. Singapore’s US$ 50,714 nominal per capita GDP gets bumped up to US$ 59,937 when adjusted for purchasing power parity. That’s because Singapore’s price level is deemed to be 0.85 times that of the US’. Singaporeans only need to pay US$ 0.85 for the equivalent of US$ 1 worth of goods in Singapore.

Countries 2011 per capita GDP nominal (US$) Countries 2011 per capita GDP PPP (US$) Countries 2011 price level compared to US’
Luxembourg 122,272 Qatar 102,891 Taiwan Province of China 0.57
Qatar 97,967 Luxembourg 84,829 Hong Kong SAR 0.70
Norway 96,591 Singapore 59,937 Brunei Darussalam 0.74
Switzerland 84,983 Norway 53,376 Korea, Republic of 0.75
Australia 66,984 Brunei Darussalam 49,518 Bahamas, The 0.75
United Arab Emirates 66,625 Hong Kong SAR 49,342 Czech Republic 0.81
Denmark 63,003 United Arab Emirates 48,598 Oman 0.83
Sweden 61,098 United States 48,147 Saudi Arabia 0.83
Netherlands 51,410 Switzerland 43,509 Singapore 0.85
Canada 51,147 Netherlands 42,331 Bahrain 0.86
Singapore 50,714 Austria 41,805 Malta 0.86
Austria 50,504 Australia 40,836 Slovenia 0.89
Finland 50,090 Kuwait 40,740 Qatar 0.95
Ireland 48,517 Sweden 40,614 Portugal 0.98
United States 48,147 Canada 40,458 North America 0.99
Belgium 48,110 North America 39,640 United States 1.00
Kuwait 46,461 Ireland 39,508 Greece 1.01
Japan 45,774 Iceland 38,080 Israel 1.04
Germany 44,556 Germany 37,936 Cyprus 1.08
France 44,401 Taiwan Province of China 37,932 Spain 1.09
Iceland 43,226 Denmark 37,742 United Kingdom 1.10
United Kingdom 39,604 Belgium 37,677 Iceland 1.14
North America 39,407 Finland 36,723 Kuwait 1.14
New Zealand 38,227 United Kingdom 35,974 Germany 1.17
Italy 37,046 France 35,049 Austria 1.21
Brunei Darussalam 36,521 Japan 34,362 Netherlands 1.21
Hong Kong SAR 34,393 Korea, Republic of 31,754 Ireland 1.23
Spain 33,298 Israel 31,005 Italy 1.23
Israel 32,298 Bahamas, The 30,962 Canada 1.26
Cyprus 31,435 Spain 30,622 France 1.27
Greece 27,875 Italy 30,166 Belgium 1.28
Slovenia 25,939 Slovenia 29,179 Japan 1.33
Korea, Republic of 23,749 Cyprus 29,100 Finland 1.36
Bahrain 23,410 New Zealand 27,967 New Zealand 1.37
Bahamas, The 23,175 Greece 27,624 United Arab Emirates 1.37
Portugal 22,699 Bahrain 27,368 Luxembourg 1.44
Malta 22,058 Oman 26,272 Sweden 1.50
Oman 21,681 Czech Republic 25,934 Australia 1.64
Taiwan Province of China 21,592 Malta 25,783 Denmark 1.67
Czech Republic 20,925 Saudi Arabia 24,057 Norway 1.81
Saudi Arabia 19,890 Portugal 23,204 Switzerland 1.95

The table below is the result of Mercer’s cost of living survey 2011. It shows Singapore to be much more costly than New York, one of the most expensive cities in the United States. This suggests that Singapore’s price level is higher than that of the United States’, not lower as IMF has assumed.

Rank City Country

The table below lists the 50 most expensive cities in the world according to the 2011 ECA cost of living survey. Again, Singapore is listed as being more expensive than Manhattan New York which again suggests that Singapore’s price level is higher than that of the United States’, not lower as IMF has assumed.

2011 rank Location Country
1 Tokyo Japan
2 Oslo Norway
3 Nagoya Japan
4 Stavanger Norway
5 Yokohama Japan
6 Zurich Switzerland
7 Luanda Angola
8 Geneva Switzerland
9 Kobe Japan
10 Bern Switzerland
11 Basel Switzerland
12 Copenhagen Denmark
13 Helsinki Finland
14 Moscow Russia
15 Caracas Venezuela
16 Sydney Australia
17 Stockholm Sweden
18 Canberra Australia
19 Libreville Gabon
20 Paris France
21 Brisbane Australia
22 Seoul Korea Republic
23 Rio de Janeiro Brazil
24 Kinshasa Democratic Republic of the Congo
25 Melbourne Australia
26 Perth Australia
27 Sao Paulo Brazil
28 Adelaide Australia
29 Tel Aviv Israel
30 Gothenburg Sweden
31 Abuja Nigeria
32 Brasilia Brazil
33 Jerusalem Israel
34 Vienna Austria
35 Berlin Germany
36 Singapore Singapore
37 Vancouver Canada
38 St Petersburg Russia
39 Brussels Belgium
40 Ottawa Canada
41 Dakar Senegal
42 Toronto Canada
43 Rome Italy
44 Manhattan NY United States of America
45 Hong Kong Hong Kong
46 Beijing China
47 Shanghai China
48 Strasbourg France
49 Baku Azerbaijan
50 Montreal Canada

The Economist Intelligence Unit’s Worldwide Cost of Living 2011 index below shows pretty much the same thing. Singapore is the tenth most expensive city in the world with a cost of living index of 137 that is higher than New York’s 100. Again, it suggests that Singapore’s price level is higher than that of United States’, not lower as IMF has assumed.

Rank City Country EIU index
1 Tokyo Japan 161
2 Oslo Norway 156
3 Osaka Kobe Japan 153
4 Paris France 150
5 Zurich Switzerland 148
6 Sydney Australia 143
7 Melbourne Australia 141
8 Frankfurt Germany 140
9 Geneva Switzerland 138
10 Singapore Singapore 137
New York United States 100

There is reason to suspect that the IMF’s estimate of Singapore’s purchasing power parity is off compared to surveys done by Mercer, ECA and the Economist. IMF relies on the World Bank’s International Comparison Programme (ICP) for its purchasing power parity estimates. The last round of ICP was the ICP 2005 released in 2008. The on going ICP 2011 may be released in a year or two. Seems like the ICP is updated once every six years or so and may not be always up to date when used to estimate purchasing power parity. This may be alright for most countries but may not be alright for Singapore which resorts to growth at all costs. Slowness in recognising rising costs associated with growth-at-all-costs may result in our GDP numbers looking better than they really are.

Nevertheless, even when we consider nominal per capita GDP, Singapore is head and shoulders above many other countries. There are two possible explanations: (1) a city with little or no agrarian sector tends to have a higher per capita GDP than a larger country with a more sizeable agrarian sector, (2) Singaporeans work longer hours.

PricewaterhouseCoopers’ Global city GDP rankings 2008-2025 below gets it right by comparing cities with cities. Singapore’s per capita GDP is much less impressive when compared to other First World cities.

City 2008 GDP ($bn PPP) Population (millions) per capita GDP ($000 PPP)
San Francisco/Oakland 301 3.5 86.5
Washington DC 375 4.4 85.5
Boston 363 4.5 80.5
Seattle 235 3.1 75.5
New York 1,406 19.2 73.3
Philadelphia 388 5.5 70.1
Dallas/Fort Worth 338 4.9 69.5
Atlanta 304 4.6 66.4
London 565 8.6 65.8
Houston 297 4.5 65.8
Chicago 574 9.1 63.3
Los Angeles 792 12.6 62.9
Detroit 253 4.1 61.1
Paris 564 9.9 56.9
Miami 292 5.7 51.6
Sydney 213 4.4 48.9
Singapore 215 4.5 47.9
Toronto 253 5.3 47.7
Hong Kong 320 7.3 44.0
Tokyo 1,479 35.8 41.3
Madrid 230 5.6 40.8
Osaka/Kobe 417 11.3 36.9
Moscow 321 10.5 30.7
Seoul 291 9.8 29.7
Buenos Aires 362 12.9 28.0
Mexico City 390 19.2 20.4
Sao Paulo 388 19.1 20.3
Rio de Janeiro 201 11.9 16.9
Shanghai 233 15.2 15.3
Mumbai (Bombay) 209 19.4 10.8

The table below lists OECD countries by number of hours worked per person per year. All the OECD countries work shorter hours compared to Singapore’s 2,307 hours [2].

Country Annual number of hours actually worked per person
Australia  1,686.00
Austria  1,587.00
Belgium  1,551.00
Canada  1,702.00
Chile  2,068.00
Czech Republic  1,947.00
Estonia  1,879.00
Finland  1,697.00
Germany  1,419.00
Greece  2,109.00
Hungary  1,961.00
Iceland  1,697.00
Ireland  1,664.00
Italy  1,778.00
Japan  1,733.00
Korea, Republic of  2,193.00
Luxembourg  1,616.00
Mexico  1,866.00
Netherlands  1,377.00
New Zealand  1,758.00
Norway  1,414.00
Poland  1,939.00
Portugal  1,714.00
Russian Federation  1,976.00
Slovakia  1,786.00
Slovenia  1,664.00
Spain  1,663.00
Sweden  1,624.00
Turkey  1,877.00
United Kingdom  1,647.00
United States  1,778.00

Finally, Singapore’s 2010 indigenous per capita GDP of SGD 46,092 [3] is significantly lower than the corresponding 2010 per capita GDP of SGD 59,813. Therefore, if we set aside foreign firms and foreigners in Singapore, our per capita GDP becomes much lower.

Thus, our third placing is doubtful given the doubtful purchasing power parity estimates. In all likelihood, our position should be much lower and this brings us back to reality. The story that Singaporeans are richer on average than the Swiss or the Germans is too good to be true.

[1] Straits Times, 26 Feb 2012, S’pore is 3rd-richest country: Forbes

Singapore is the third-richest country in the world, ranking behind only Qatar and Luxembourg, according to Forbes magazine.

Using the most recent International Monetary Fund data available, Forbes said Singapore ‘thrives as a technology, manufacturing and finance hub with a GDP (PPP)per capita of nearly US$56,700 (S$71,200)’.

This compares with a per capita gross domestic product (GDP), adjusted for purchasing power (PPP), of more than US$88,000 for the world’s richest nation, Qatar. The Persian Gulf emirate of 1.7 million people taps the world’s third-largest reserves of natural gas for its wealth, some of which it is pouring into the construction of all air-conditioned stadiums for the 2022 World Cup.

Coming in second, with slightly more than US$81,000, was Luxembourg. The tiny Grand Duchy, bordered by Belgium, France and Germany, has only a half-million people, but scores as a financial hub with banking secrecy laws that makes it a tax haven, Forbes said.

The magazine said it compiled its rich list by examining the GDP of 182 countries, adjusted for PPP, which is preferred by economists when doing international comparisons. It says this takes into account the relative cost of living and inflation rates. This is mostly from 2010 figures, but a 2009 estimate in Singapore’s case.

But Forbes quotes associate professor of economics Gian Luca Clementi, of New York University’s Leonard N. Stern School of Business, as saying that ‘the numbers must be taken with a grain of salt’.

Many issues, including how the quality of goods varies from country to country, can make any GDP comparisons misleading, he said.

The top 10 list includes fifth-ranked Brunei, the United States at No. 7, and eighth-placed Hong Kong.


[3] Yearbook of Statistics Singapore 2011, page 82

Use $1.1 billion bus package to buy back SBS

March 18, 2012

Dear Mr Tharman,

I refer to paragraph 109 of your Budget 2012 round up speech [1] on the $1.1 billion government package to buy and operate 550 new buses.

A check on the SGX website on 17 Mar 2012 showed that SBS shares last transacted at $1.71. Since there are currently 308,629,766 SBS shares issued [2], the current SBS market capitalisation stands at $528 million. The $820 million to be used to cover operating costs of the 550 new buses over the next 10 years [1] is more than enough to buy back all SBS shares. This will be made easier considering that the government indirectly owns 18.4% of SBS shares [3]. The shares that needs to be bought back amount to 81.6% of $528 million = $431 million. By spending $431 million, the government will be able to buy back SBS entirely with $389 million to spare.

The government intends to spend $82 million a year over the next ten years to cover operating costs of the 550 new buses. After buying back SBS, the government can only spare $38.9 million a year over the next ten years. There is thus a shortfall of $43.1 million a year over the next ten years. But SBS has been making an average profit of $46 million a year since 2003 [4]. SBS Transit’s yearly profits will thus be more than sufficient to cover the shortfall. In so doing, the government will be able to buy back SBS entirely without having to spend a single cent more than it currently plans to.


109. The $1.1 billion package is expected to cover the losses on the 550 buses – in other words, the additional costs net of revenues. Of the $1.1 billion package, $280 million is budgeted for the purchase of the 550 buses over the next five years, and $820 million to cover the net operating costs over the 10 years. This is based on the best estimates currently. However, we will be monitoring and scrutinising the PTOs? actual costs for both the purchase and running of the buses. Should their losses turn out to be lower than expected, the Government funding will be reduced correspondingly. So one way or another, there are no profits to be made from the 550 buses.

[2] SBS Transit Full Year Financial Statements for Year ended 31 Dec 2011, page 4, item 7

As at 31 December 2011, the total number of issued shares was 308,629,766 (31 December 2010: 308,106,016).

[3] Analysing shareholdings in SBS Transit

Since Comfort Delgro and DBS Nominees own SBS Transit shares, we need to analyse their shareholdings as well.

Shareholdings in SBS Transit No. shares %
Comfort Delgro Corporation Limited 231,680,012 75.1%
BNP Paribas Securities Services Singapore 14,044,000 4.6%
DBS Nominees Pte Ltd 5,096,200 1.7%

Shareholdings in Comfort Delgro No. shares %
DBS Nominees 421,736,382 20.2%
Citibank Nomenees Singapore Ptd Ltd 308,495,870 14.8%
Singapore Labour Foundation 252,616,594 12.1%
DBSN Services Pte Ltd 226,382,923 10.8%

DBS Group Holdings wholly owns DBS Bank which in turn wholly owns DBS Nominees Pte Ltd, DBSN Services Pte Ltd, DB Nominees (S) Pte Ltd and DBS Vickers Securities (S) Pte Ltd. To resolve the circular ownership involving DBS Group Holdings and its subsidiaries, we allocate DBS subsidiaries’ shareholding in DBS Group to the other non-subsidiary shareholders of DBS Group.

Shareholdings in DBS Group Holdings No. shares % Adjusted %
Citibank Nominees Singapore Pte Ltd 440,943,672 19.1% 26.1%
DBS Nominees Pte Ltd 369,754,143 16.0%
Maju Holdings Pte Ltd 351,745,560 15.2% 20.8%
Temasek Holdings (Pte) Ltd 278,510,692 12.1% 16.5%
DBSN Services Pte Ltd 226,712,057 9.8%
HSBC (Singapore) Nominees Pte Ltd 151,803,972 6.6% 9.0%
United Overseas Bank Nominees Pte Ltd 67,257,494 2.9% 4.0%
Raffl es Nominees (Pte) Ltd 42,083,138 1.8% 2.5%
DB Nominees (S) Pte Ltd 16,636,028 0.7%
Lee Pineapple Company Pte Ltd 12,900,000 0.6% 0.8%
Merrill Lynch (Singapore) Pte Ltd 10,804,560 0.5% 0.6%
BNP Paribas Securities Services Singapore Branch 10,174,815 0.4% 0.6%
Lee Foundation 9,122,187 0.4% 0.5%
BNP Paribas Nominees Singapore Pte Ltd 6,584,665 0.3% 0.4%
DBS Vickers Securities (S) Pte Ltd 5,974,249 0.3%

With that adjustment, Maju Holdings effectively owns 20.8% of DBS Holdings instead of 15.2%. Temasek Holdings effectively owns 16.5% of DBS Holdings instead of 12.1%.


  • Singapore Labour Foundation shareholding of SBS shares = 12.1% of 231,680,012 = 28,010,113 shares
  • Maju Holdings shareholding of SBS shares = 20.8% of (20.2% + 10.8%) of 231,680,012 + 20.8% of 5,096,200 = 16,010,368 shares
  • Temasek Holdings shareholding of SBS shares = 16.5% of (20.2% + 10.8%) of 231,680,012 + 16.5% of 5,096,200 = 12,677,941 shares
  • Total government shareholding of SBS shares = 18.4%
  • Shareholdings in SBS Transit (indirect) No. shares %
    Singapore Labour Foundation 28,010,113 9.1%
    Maju Holdings Pte Ltd 16,010,368 5.2%
    Temasek Holdings (Pte) Ltd 12,677,941 4.1%
    Total 56,698,422 18.4%

    NB: Singapore Labour Foundation is a statutory board of Ministry of Manpower ( Maju Holdings is wholly owned by Temasek Holdings which in turn is wholly owned by Ministry of Finance.

    [4] SBS Transit profit attributable to shareholders from 2003 to 2011 obtained from SBS Transit annual reports

    Year Profits ($’000)
    2011 36,676
    2010 54,278
    2009 54,612
    2008 40,580
    2007 50,022
    2006 56,133
    2005 51,536
    2004 49,041
    2003 19,015
    Average 45,780

    Edusave Character Award … It’s right

    March 16, 2012

    Dear Straits Times,

    I refer to the 15 Mar 2012 letter by Mr Daniel Chan.

    Mr Chan applauds the education ministry for doing the right thing in giving cash to students for demonstrating exemplary values. His reason is that in real life, good workers are rewarded with salary increments, frequent buyers get discounts, law breakers are fined, people who spend more are taxed more and that children should learn all these as early as possible.

    When Wall Street bankers get paid millions for concocting toxic financial products, are they being rewarded for demonstrating exemplary values? Or are they merely being rewarded for bringing profit to the company?

    When buyers buy more frequently, are they demonstrating exemplary values? The shopkeeper who gives the frequent buyer discounts does so in return for more business and more profits. He is offering bait in return for fish. Recognising exemplary value is the last thing in his mind.

    When consumers consume more, are they demonstrating negative values? No, consumption is one of the four pillars of GDP. It is the basis to our market economy.

    When people spend more, are they necessarily demonstrating negative values? Is the MOE demonstrating negative values by spending more in the new Edusave Character Award?

    Mr Chan seems to be confused between what people do for personal gains and what they do out of kindness and compassion. He can’t seem to differentiate transaction from exemplary value. Students can learn the realities of transactions early, but they should not be poisoned with the idea that mercenary transactions equate exemplary values.

    Mr Chan also refers to society’s willingness to pay a premium for talent. Is that really so? Ministerial salaries have been recommended by a committee. Does the committee represent what society at large is willing to pay our ministers? If we are really so confident about the premium we have set for ourselves, just add one question to our next census: “What premium are you willing to pay for ministerial ‘talents’?”

    He earns $850 and owns a two-room flat

    March 16, 2012

    Dear Straits Times,

    I refer to the 9 Mar 2012 article “He earns $850 and owns a two-room flat” [1].

    It was reported that Mr Charlie is an odd job labourer and that his monthly HDB instalment of $83 will be paid out of his CPF [1]. Paragraph 4.27 of Budget Speech 2007 tells us that odd job workers do not receive CPF [2]. How can Charlie, the odd job labourer who is not supposed to receive CPF get the CPF to pay for his monthly HDB instalments?

    We leave aside that question and assume that Mr Charlie is a regularly employed odd job labourer who receives regular CPF contributions from his employer and that he will continue to stay employed for the next thirty years.

    Mr Charlie’s monthly instalment of $83 over 30 years corresponds to a starting loan amount of between $20,500 and $20,700 [3]. For simplicity, let’s assume Mr Charlie’s starting loan amount is $20,500. We can do some simple calculations as follows:

    S/No Item Amount
    1 Price of HDB after discount [1] $59,220
    2 Loan amount [3] (can be worked out too) $20,500
    3 Deduction from CPF savings ( (1) – (2) ) $38,720
    4 CPF savings [1] $40,000
    5 Remaining CPF ( (4) – (3) ) $1,280

    Thus, like most households, Mr Charlie’s CPF has been almost wiped out after the flat purchase. We therefore need to also examine whether Mr Charlie will have sufficient CPF for retirement at the end of 30 years. In doing so, we must take into account Mr Charlie’s wish to pass on his flat to his children [1]. Since Mr Charlie doesn’t wish to sell his flat, pledging his property towards his CPF minimum sum won’t be appropriate since he will not monetise his flat for retirement money. He would therefore have to accumulate his CPF minimum sum in cash for retirement over the next thirty years.

    The table below shows that by taking into account his salary increase over the next thirty years, the Workfare and CPF he will receive with interest, Mr Charlie won’t be able to meet the CPF minimum sum of $120,000 (2003 prices) or the Medisave minimum sum of $25,000 (2003 prices) in cash thirty years down the road.

    Age Monthly salary [4] Workfare (credited into CPF per year) [5] Ordinary account (monthly) [6] Medisave (monthly) [6] Special account (monthly) [6] Ordinary account balance Medisave account balance Special account balance Ordinary + special account balance Medisave Minimum sum [7] CPF minimum sum [7]
    33 $850 $0 $95.93 $54.43 $46.64 $1,180 $679 $1,913 $3,772 $32,000 $131,000
    34 $865 $0 $97.66 $55.41 $47.48 $2,411 $1,398 $2,582 $6,391 $32,832 $134,406
    35 $881 $707 $99.41 $56.41 $48.33 $4,418 $2,158 $3,289 $9,865 $33,686 $137,901
    36 $897 $707 $101.20 $57.42 $49.20 $6,498 $2,961 $4,034 $13,494 $34,561 $141,486
    37 $913 $707 $103.03 $58.46 $50.09 $8,653 $3,809 $4,821 $17,282 $35,460 $145,165
    38 $929 $707 $104.88 $59.51 $50.99 $10,884 $4,704 $5,650 $21,238 $36,382 $148,939
    39 $946 $707 $106.77 $60.58 $51.91 $13,194 $5,648 $6,524 $25,366 $37,328 $152,811
    40 $963 $707 $108.69 $61.67 $52.84 $15,585 $6,644 $7,444 $29,673 $38,298 $156,784
    41 $980 $707 $110.65 $62.78 $53.79 $18,060 $7,693 $8,414 $34,167 $39,294 $160,861
    42 $998 $707 $112.64 $63.91 $54.76 $20,622 $8,798 $9,434 $38,854 $40,316 $165,043
    43 $1,016 $750 $114.67 $65.06 $55.75 $23,317 $9,962 $10,507 $43,785 $41,364 $169,334
    44 $1,034 $750 $116.73 $66.23 $56.75 $26,104 $11,187 $11,635 $48,926 $42,440 $173,737
    45 $1,053 $1,000 $118.83 $67.42 $57.77 $29,243 $12,476 $12,822 $54,541 $43,543 $178,254
    46 $1,072 $1,000 $120.97 $68.64 $58.81 $32,487 $13,832 $14,069 $60,387 $44,675 $182,889
    47 $1,091 $1,000 $123.15 $69.87 $59.87 $35,839 $15,257 $15,378 $66,474 $45,837 $187,644
    48 $1,111 $1,000 $125.36 $71.13 $60.95 $39,302 $16,755 $16,754 $72,811 $47,028 $192,523
    49 $1,131 $1,000 $127.62 $72.41 $62.05 $42,879 $18,329 $18,199 $79,407 $48,251 $197,528
    50 $1,151 $1,000 $129.92 $73.71 $63.16 $46,574 $19,982 $19,715 $86,271 $49,506 $202,664
    51 $1,172 $1,000 $132.26 $75.04 $64.30 $50,390 $21,718 $21,306 $93,414 $50,793 $207,933
    52 $1,193 $1,000 $134.64 $76.39 $65.46 $54,331 $23,540 $22,975 $100,846 $52,113 $213,339
    53 $1,214 $714 $137.06 $77.77 $66.64 $58,107 $25,452 $24,726 $108,285 $53,468 $218,886
    54 $1,236 $714 $139.53 $79.17 $67.84 $62,008 $27,458 $26,562 $116,027 $54,859 $224,577
    55 $1,259 $1,071 $142.04 $80.59 $69.06 $66,403 $29,562 $28,486 $124,451 $56,285 $230,416
    56 $1,281 $1,071 $144.60 $82.04 $70.30 $70,939 $31,768 $30,503 $133,210 $57,748 $236,407
    57 $1,304 $1,071 $147.20 $83.52 $71.57 $75,621 $34,081 $32,616 $142,318 $59,250 $242,554
    58 $1,328 $1,071 $149.85 $85.02 $72.85 $80,453 $36,506 $34,830 $151,788 $60,790 $248,860
    59 $1,352 $1,071 $152.54 $86.55 $74.17 $85,438 $39,046 $37,148 $161,632 $62,371 $255,330
    60 $1,376 $1,428 $155.29 $88.11 $75.50 $90,948 $41,707 $39,577 $172,232 $63,992 $261,969
    61 $1,401 $857 $158.09 $89.70 $76.86 $96,044 $44,495 $42,119 $182,658 $65,656 $268,780
    62 $1,426 $857 $160.93 $91.31 $78.24 $101,303 $47,415 $44,780 $193,498 $67,363 $275,769
    63 $1,452 $857 $163.83 $92.95 $79.65 $106,729 $50,471 $47,565 $204,766 $69,115 $282,939

    At the age of 63, Mr Charlie would have accumulated $204,766 in his CPF retirement account in cash compared to the projected CPF minimum sum of $282,939 then. He would have $50,471 in his Medisave account compared to the projected $69,115 Medisave minimum sum then. So even if Mr Charlie doesn’t touch his Medisave or doesn’t draw from his CPF to pay for his children’s education over the next thirty years, he will still not be able to accumulate the minimum sum in cash around the time when he retires.

    Like so many other Singaporeans, Mr Charlie can ‘afford’ a flat but cannot afford to retire. If Mr Charlie is eventually compelled to sell his flat to fund his retirement thirty years down the road, it only goes to show that while he can afford to ‘buy’ a flat, he can’t afford to keep it. Wouldn’t that show that he can’t actually afford one to begin with?

    [1] Straits Times, 9 Mar 2012, “He earns $850 and owns a two-room flat”
    CAN a Singaporean who earns $850 a month afford to buy a Housing Board flat? Mr Mohammad Charlie Jasni says yes. The odd-job labourer earns that amount, and he and his family will be moving into a new two-room HDB flat in Punggol by the end of the year. He had successfully balloted for the 45sq m build-to-order unit in August 2009. It cost $99,220, but because he earns less than $5,000 a month, he qualifies for a government housing grant that gives him $40,000 to offset the flat’s price. This means he has $59,220 left to pay, which he will do using his Central Provident Fund (CPF) savings. He and his wife already have about $40,000 in their CPF accounts, and this will grow as he continues to work. Based on HDB’s calculations, he needs to pay a monthly housing instalment of $83 over 30 years. ‘By paying the $83 out of my CPF, it means I have that little more for daily expenses,’ said Mr Charlie, 33.

    But he does not regret buying the unit. He hopes to pass the flat – or a bigger one should they ever upgrade – to his children.

    [2] Budget Speech 2007, Helping Informal Workers,

    4.25 There is another group whom we want to encourage to join the CPF system and to benefit from the WIS. These are the informal workers who do odd jobs on an ad-hoc basis. Their employers do not pay their CPF, either because they cannot afford to do so, or because the workers prefer to take their entire wages in cash.

    4.26 For purposes of the WIS scheme, we will treat informal workers just like the self-employed. Informal workers will receive WIS benefits if they work and contribute to their Medisave. They must pay Medisave at the same rate as the self-employed, and they will receive the same Workfare benefits as the self-employed, in other words, two-thirds of what regular employees receive, but all paid into their Medisave accounts.

    4.27 We want, however, to caution employers who avoid paying CPF for their workers. Under the CPF Act, so long as a worker works regularly for any employer, that employer is liable to pay their CPF. As we institutionalise Workfare, MOM and CPFB will step up enforcement to ensure that payment for CPF is complied with.
    [3] Obtaining the starting HDB loan amount

    We can make use of HDB’s “Enquiry on Monthly Instalment” at, key in a loan amount of between $20,500 to $20,700, repayment period of 30 years and 2.6% interest rate to obtain a monthly instalment of $83 as shown below:

    [4] Estimating salary increase

    We can obtain from Ministry of Manpower’s Manpower Research and Statistics Department’s Jan 2012 publication “Employment Situation 2011”, statistical appendix A1, Table 1 the gross monthly income of the median wage worker and the 20th percentile worker since 2001:

    Year Median income without employer CPF 20th percentile income without employer CPF
    2001 $2,000 $1,200
    2002 $2,000 $1,192
    2003 $2,000 $1,192
    2004 $2,000 $1,170
    2005 n.a. n.a.
    2006 $2,072 $1,100
    2007 $2,167 $1,200
    2008 $2,492 $1,300
    2009 $2,500 $1,300
    2010 $2,588 $1,400
    2011 $2,708 $1,500
    Annualised increase 3.1% 2.3%

    Assuming Mr Charlie is the 0th percentile income worker, a simple ratio proportioning would yield an annualised 1.8% increase in his gross wage.

    [5] Estimating Workfare

    The amount of Workfare Mr Charlie will get over the next thirty years is complicated by the fact that there is a difference in the Workfare payout between employees and self-employed:

    Normally, odd job labourers are treated as self-employed as they are required to pay to their own Medisave to qualify for Workfare:

    23. I am an odd job labourer. Can I qualify for WIS?

    Yes, if you have been engaged in regular work for at least 3 months in a six month period or six months in the calendar year, as well as meet the other criteria.

    You can register with CPF Board to pay your Medisave liability and receive WIS into your Medisave account.

    On the other hand, Mr Charlie’s regular receipt of CPF means he is like an employee instead. We shall assume Mr Charlie is an employee who will receive higher Workfare payouts than if he were self-employed.

    [6] Obtaining monthly CPF contributions

    Assuming Mr Charlie is a permanently employed odd job labourer, we can use the CPF contribution calculator:, to obtain Mr Charlie’s monthly CPF top up as $178.93, $54.43 and $46.64 for the Ordinary Account, Medisave Account and Special Account respectively. But because $83 is used to service the HDB loan, Mr Charlie’s Ordinary Account top up is only $95.93 each month.

    [7] Estimating CPF minimum sum

    The CPF minimum sum and the Medisave minimum sum has been set at $120,000 (2003 prices) and $25,000 (2003 prices) respectively and so must be adjusted for inflation every year. We can obtain the CPI from Average inflation since 1980 is 2.6% per year which is a conservative figure compared to inflation in recent years.

    Tharman gives assurance on CPF retirement savings

    March 13, 2012

    Dear DPM Tharman,

    I refer to the assurance you gave in parliament on our CPF retirement savings [1].

    You said most younger CPF members in the lower half by income will have a retirement income comparable to the average in OECD countries. The table below was constructed using data from OECD’s “Pensions at a Glance 2011” and “Pensions at a Glance Asia Pacific 2011”. It shows that the retirement income for an average Singaporean earner is lower than those of his counterparts in all but one of the OECD countries listed. So how can our retirement income be comparable to the average of OECD countries? Referring to the table again, the retirement income for the average earner in OECD34 is US$20,061 (PPP) compared to the retirement income of US$6,375 (PPP) for Singapore’s average earner.

    Country average earning replacement ratio [2] average earning (US$ PPP) [3] average earner retirement income (US$ PPP)
    Luxembourg 87.4 $53,300 $46,584
    Netherlands 88.1 $51,700 $45,548
    Austria 76.6 $45,600 $34,930
    Denmark 79.7 $43,800 $34,909
    Iceland 96.9 $34,100 $33,043
    Greece 95.7 $34,100 $32,634
    Switzerland 57.9 $47,500 $27,503
    Norway 53.1 $50,700 $26,922
    Spain 81.2 $32,100 $26,065
    Finland 57.8 $40,400 $23,351
    Sweden 58.4 $39,900 $23,302
    Israel 69.6 $31,300 $21,785
    Germany 42.0 $50,600 $21,252
    Italy 64.5 $32,800 $21,156
    OECD34 57.5 $34,900 $20,061
    Australia 47.3 $40,900 $19,346
    Belgium 42.0 $45,600 $19,152
    France 49.1 $37,200 $18,265
    Korea 42.1 $42,600 $17,935
    United Kingdom 31.9 $53,100 $16,939
    United States 39.4 $40,300 $15,878
    Slovenia 62.4 $25,100 $15,662
    Canada 44.4 $34,800 $15,451
    Hong Kong 34.1 $45,000 $15,345
    Japan 34.5 $42,700 $14,732
    Hungary 75.8 $18,300 $13,871
    Portugal 53.9 $25,100 $13,529
    Turkey 64.5 $20,600 $13,287
    Ireland 29.0 $43,400 $12,586
    New Zealand 38.7 $31,300 $12,113
    Poland 59.0 $18,300 $10,797
    Czech Republic 50.2 $20,000 $10,040
    Slovak Republic 57.5 $16,200 $9,315
    Estonia 48.0 $18,100 $8,688
    Chile 44.9 $15,900 $7,139
    Singapore 12.7 $50,200 $6,375
    India 65.2 $9,600 $6,259
    China 77.9 $7,600 $5,920
    Malaysia 30.4 $14,400 $4,378
    Thailand 50.0 $7,600 $3,800
    Mexico 30.9 $10,200 $3,152
    Philippines 80.9 $3,600 $2,912
    Sri Lanka 48.5 $4,500 $2,183
    Pakistan 69.6 $2,800 $1,949
    Vietnam 67.4 $2,800 $1,887
    Indonesia 14.1 $2,400 $338

    Although the percentage of CPF members meeting the minimum sum rose from 36% in 2007 to 45% in 2011, the reasons for this, as suggested by the CPF [4], were the increase in employers’ CPF contribution rate in 2007 and reduction in CPF withdrawal limit to 40% in 2009 and then to 30% in 2010. Employers’ CPF contribution rate is susceptible to downward revision in times of economic crisis while reductions in CPF withdrawal limits are one time boosts that will only recur up till 2013 when the withdrawal limit goes to 0%. Our strive towards having more CPF members meet the minimum sum cannot be based on the occasional improvement in employers’ CPF contribution rates or one time boosts.

    You are optimistic that 70 to 80 percent of those who start work today will attain the minimum sum by the time they retire. That is provided those who start work today don’t get retrenched in the next 40 years or so, don’t become under employed in the later years of their working lives, no further upward revision to the minimum sum of $120,000 (2003 dollars), CPF interest rate can keep up with inflation and so on. But economic crises and retrenchments that go along with it are becoming more common place nowadays, employer bias against older workers is an entrenched culture, history has shown that the CPF minimum sum keeps getting revised upwards and inflation nowadays is even higher than CPF Special Account’s 4% interest rate.

    Most Singaporeans, no matter how poor they are, prefer to pass on their homes to their children rather than sell it back to the government [5] which is why the take up rate for Lease Buyback is so low. So for most people, the appropriate retirement fund is the cash component of the minimum sum which is less than half the minimum sum.

    [1] Straits Times, 6 Mar 2012, “Tharman gives assurance on CPF retirement savings”

    DEPUTY Prime Minister Tharman Shanmugaratnam yesterday reassured MPs concerned about whether people have enough retirement savings, citing figures to show the Central Provident Fund (CPF) system meets the basic retirement needs of low to lower-middle income Singaporeans.

    But two-thirds of those aged 65 and above receive family support and do not need to tap these schemes. As for younger CPF members in the lower half by income, most will have enough cash in their CPF accounts for a retirement income comparable to the average in Organisation for Economic Cooperation and Development countries.

    On concerns that younger workers would not meet the rising Minimum Sum, Mr Tharman said the percentage of active CPF members who do rose from 36 per cent in 2007 to 45 per cent last year.

    About 70 to 80 per cent of those starting work today should attain the current Minimum Sum level in cash by the time they retire, even after withdrawals for a home. Younger low-wage workers would also get ‘major boosts’ to their retirement savings through Workfare Income Supplement payouts and various housing grants. ‘So our CPF system with current contribution rates is broadly appropriate for most of the younger generation of Singaporeans,’ he said.

    [2] Replacement ratios for OECD countries obtained from OECD’s “Pensions at a Glance 2011”, Page 119, “Gross pension replacement rates by earnings”. Replacement ratios for Asia Pacific economies obtained from OECD’s “Pensions at a Glance Asia Pacific 2011”, Page 31, “Gross replacement rates by earnings”.

    [3] Average earnings for OECD countries obtained from OECD’s “Pensions at a Glance 2011”, Page 169, “Average earnings and points of the earnings distribution, 2008”. Average earnings for Asia Pacific economies obtained from OECD’s “Pensions at a Glance Asia Pacific 2011”, Page 24, “Average annual earnings”.

    [4] CPF, Feb 2011, CPF Trends Minimum Sum Scheme,

    This downward trend was reversed in 2009. This could be due mainly to the changes in the withdrawal rule. Between 1 January 2009 and 31 December 2009, members who reached the age of 55 could only withdraw 40% (previously 50%) of their Special and Ordinary Account balances, as well as any balance after setting aside the CPF Minimum Sum and the Medisave Required Amount. The withdrawal percentage was further reduced to 30% in 2010. The increase in the employers’ CPF contribution rate in 2007 might also have contributed towards the increase in proportion of members meeting the required MS at age 55.

    [5] Straits Times, 9 Mar 2012, “He earns $850 and owns a two-room flat”

    He (Mr Mohammad Charlie Jasni) hopes to pass the flat – or a bigger one should they ever upgrade – to his children.

    Protracted debate over the price of water

    March 11, 2012

    Dear Dr Balakrishnan,

    Your claim that the government is under-recovering the costs of providing water and used water services [1] is not representative of the overall truth. Besides highlighting PUB’s operating loss in 2010, why didn’t you point out PUB’s nine consecutive years of operating profit from 2001 to 2009? PUB’s operating profits were $47.5m, $70.7m, $225.1m, $274.8m, $173.6m, $146.1m, $107.6m, $57.7m and $154.0m from 2009 to 2001 respectively compared to a $71.9m loss in 2010 [2]. Therefore, the government has not been under-recovering the cost of water provision as far as the past ten years is concerned. So even though PUB obtains a grant from the government [3], that grant is on top of PUB’s operating profits for most of the past ten years of its operations.

    [1] Straits Times, 7 Mar 2012, Protracted debate over the price of water

    ‘There is no double charging for used water services. Indeed, with the current charges, the Government is under-recovering the costs of providing water and used water services,’ Dr Balakrishnan told the House.

    Pointing to PUB’s latest annual report, he noted that total revenue collected from water charges was about $1.2 billion in financial year 2010, compared with $1.34 billion in total expenses it needed to run the water system.

    [2] PUB Annual Report 2010/2011, Pages 64/65

    [3] Straits Times, 7 Mar 2012, Protracted debate over the price of water

    In response, Dr Balakrishnan explained how the national water authority PUB does not overcharge for water. In fact, it requires a grant from the Government to pay for a water system that costs $1.3 billion a year to run, he said.

    The pot calling the kettle black

    March 10, 2012

    It’s heartening to read that our PM has only claimed discretion to the timing with which to call for a by-election, not discretion to whether or not to call for a by-election [1]. This differs distinctly from the proposition made by MP Hri Kumar who said that it is entirely up to the prime minister to decide whether to fill a vacant seat through general election or through by-election [2].

    If the main purpose of Article 49 is to say there is no need for a by-election, just wait till the next general election, then we wouldn’t need Article 49 for even without Article 49, a vacant seat would be filled by the next general election. That kind of Article 49 wouldn’t deserve a place in the constitution. Article 49 should necessarily state the additional step that must take place in the event that a seat becomes vacant. That additional step shouldn’t be the usual step which is the general election but should be something over and above the general election which we all know is the by-election. Therefore, Article 49 essentially calls for a by-election, not ask to wait for the next general election.

    PM Lee also stressed the constitution’s political philosophy of electing political parties to govern the country rather than electing individuals to become MPs [3]. But he missed out the important constitutional philosophy of having elected MPs vote for bills in parliament. It is the MPs’ vote for bills that legitimises those bills. The government of the day cannot unilaterally decide bills without the consent of the MPs who in turn are deciding on behalf of their constituents. MPs therefore serve an important constitutional role of holding the government of the day accountable. To deny the people of their MPs is to deny their constitutional right of having someone in parliament to vote for their interests.

    PM Lee also pushed the blame for the current situation in Hougang to the Workers’ Party by saying that the latter caused it by expelling Mr Yaw [4]. If PM Lee blames the Workers’ Party for expelling Mr Yaw, does he therefore think that the blameless thing to do is to keep Mr Yaw? That would be uncharacteristic of PM Lee considering his response to the last minute dropping of Steve Tan during the last general election [5].

    Back then, PM Lee said that as awkward as it were, they just had to go through with the last-minute change and explain to people that something has come up. PM Lee also said he was glad that Steve Tan decided to drop out of the contest in the interest of PAP. Although the two cases are slightly different, the basic issue is the same, rumours leading to a candidate / politician being dropped. If PM Lee supported dropping Steve Tan during the last election and was happy with it, there is no reason why he wouldn’t be similarly happy and supportive of dropping Mr Yaw if placed in the Worker Party’s shoes. Isn’t this another case of the pot calling the kettle black?

    [1] Straits Times, 10 Mar 2012, ‘Voters back parties, not individual MPs’

    ‘Article 49 of the Constitution states that when a seat falls vacant, it shall be filled by-election. In an SMC, a seat falls vacant when the MP vacates his office, for example when he is expelled from his political party, resigns his seat, or passes away. The timing of the by-election is at the discretion of the prime minister. The prime minister is not obliged to call a by-election within any fixed time frame.’

    [2] Today, 29 Feb 2012, We should le PM do his job

    Contrary to what he wrote, Article 49 of the Constitution does not say that an election shall be “called” to fill a vacant seat. It simply prescribes that the vacant seat “shall be filled by election”.

    Whether it is a general election or a by-election, and more importantly, when that election is to be called, is entirely at the discretion of the Prime Minister. There is no obligation to call an immediate by-election.

    [3] Straits Times, 10 Mar 2012, ‘Voters back parties, not individual MPs’

    ‘The Constitution therefore reflects a political philosophy that emphasises stable government, and the view that in elections voters are primarily choosing between political parties to be given the mandate to govern the country, rather than between individual candidates to become MPs.’

    [4] Straits Times, 10 Mar 2012, Timing of by-election is for the PM to decide

    She also wanted to know if he does not agree that there is ‘an under-representation of the Hougang voters in this House’.

    He replied: ‘I do not know that. If that is an issue, I would have thought it is something which the Workers’ Party would have considered before deciding to expel Mr Yaw Shin Leong.’

    The Constitution is clear on how by-elections are called and it has been debated in the House, he noted.

    ‘So if we are in this situation today, it is because the Workers’ Party has caused this situation to happen knowing the consequences.’

    [5] Straits Times, 28 Apr 2011, PM explains why Steve Tan dropped out

    He said that the party and Mr Tan could have ‘pretended there was no problem and just carried on’.

    ‘But Steve Tan is honourable, we are (as well), and we decided that awkward as it is, we just had to go through with this and made the last-minute change and explain to people: I’m sorry, something has come up…we have had to make a change.’

    Separately, Labour chief Lim Swee Say said Mr Tan was put up as a candidate ‘based on our knowledge of his track records over the last 10 years’.

    On Mr Tan’s decision to drop out of the contest, he said: ‘I’m glad he took the decision before the GE. I suppose he came to the decision in the interest of the party, in the interest of the voters. I take consolation that we have responsible people who put the bigger voter interest ahead of personal interest.’

    Help resolve contradict​ion

    March 8, 2012

    Dear Dr Balakrishnan and Mr Lui Tuck Yew,

    I seek you kind assistance to help resolve what seems to be a contradiction. Dr Balakrishnan, you said lowering rentals won’t lead to lower hawker food prices because hawkers are people making a living who will charge what the market will bear [1]. Mr Lui, you said placing taxi COE under the small car category is a concession to keep taxi rentals low [2].

    If we apply Dr Balakrishnan’s logic on Mr Lui’s case, taxi companies are also run by people making a living who would also charge what the market will bear regardless of COE concession. That will go against Mr Lui’s claim that a COE concession helps keep taxi rentals low.

    If we apply Mr Lui’s logic on Dr Balakrishnan’s case, lowering rents is a concession to hawkers that will keep hawker food prices low. That will go against Dr Balakrishnan’s claim that lowering rents won’t lower hawker food prices.

    Or are you saying that hawkers and taxi company CEOs are essentially different breeds of people? Hawkers are passionless capitalists who would charge what the market would bear rather than pass on concessions to customers while taxi company CEOs are compassionate socialists who would not charge what the market would bear but would pass on concessions to customers?

    Thank you

    Ng Kok Lim

    [1] Straits Times, 7 Mar 2012, In brief (LOWER RENTS MAY NOT WORK)

    ‘I don’t believe that simply lowering rentals itself will necessarily lead to lower prices charged by hawkers because at the end of the day, they are people making a living and they will also try to charge what the market will bear.’

    [2] Straits Times, 8 Mar 2012, In brief (No change to give some COE advantage)

    Mr Giam also asked why taxi COEs come under Category A – for small cars – and not Category B, which is for cars above 1,600cc.
    Allowing bids for taxi COEs to fall under Category A is ‘a concession that is given in order for (taxi) rentals to be kept low’, said Mr Lui.