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Reply to “a final rejoinder on justifications for water price increase”

March 10, 2017

I refer to the 8 Mar 2017 Online Citizen commentary “A final rejoinder on justifications for water price increase”.

Bullshit 1: Lost debate, just declare opponent’s logic faulty

Prof Ng claimed that most of the points I made earlier were clearly faulty on logic and economics. But if that were true, then shouldn’t it be very easy for Prof Ng to clearly pin point what exactly were wrong with those arguments? Yet, half the time we find Prof Ng conveniently sidestepping arguments by claiming they were irrelevant or making half baked generalisations without substantiations or simply restating arguments without actually addressing counter arguments.

Bullshit 2: No more shouting about 30% inflation

Prof Ng’s original argument was that since general inflation is 30%, water should also be inflated 30%. When I pointed out that more than half of our water experienced little or no inflation having been fixed at 3 cents per 1,000 gallons since over 50 years ago, which leads to an average water inflation of about 15% only, not 30%, he brushed that off as irrelevant. This was what he wrote exactly:

“When I use ‘inflation’, I refer to the increase in the general price level, as consistent with general usage, not to the increase in the costs of water supply alone as calculated by Colin. I will thus ignore his figure of 15% as not relevant to my point.”

Thus, Prof Ng did not actually address my argument but merely brushed it off as irrelevant so I maintained my stand that Prof Ng was wrong to insist that the half of our water that experienced little or no inflation be inflated 30% as well.

Prof Ng has now completely changed his story in his latest reply. From saying 3 cents per 1,000 gallons is irrelevant to general price level, he is now saying it is irrelevant to determining long run marginal cost. It seems that Prof Ng has capitulated on this original argument and no longer insists on 30% inflation anymore. How is it possible that someone whose reasoning is ‘clearly faulty’ can succeed in forcing Prof Ng to capitulate on his arguments?

Bullshit 3: Long run marginal costing turns out to be rough estimate only

Prof Ng continues to insist that long run marginal costing is the efficient way to price water even though it was pointed out to him earlier that the market equilibrium price cannot depend on marginal cost alone but must require demand curve information too which has been totally lacking in the water debate thus far.

Prof Ng has finally let the cat out of the bag and admitted that he merely ‘roughly estimated’ and made some ‘reasonable projection’ to arrive at the demand situation. That is exactly as expected. How can there be a price demand curve for water when Singaporeans have been paying fixed water price all this while? Long run marginal cost is useless without the price demand curve for water. Any talk about using long run marginal cost to determine the market efficient water price without the price demand curve can only be bullshit. Isn’t it scary the entire nation has been suckered into putting their faith in a water price that turns out to be based on rough estimates only?

Bullshit 4: Water demand not inelastic well beyond 0.5% level of water consumption

Prof Ng claims that water demand is not inelastic well beyond 0.5% level of water consumption. That may not be true.

According to a study by Yale and Harvard researchers (Managing water demand: Price vs. Non-Price Conservation Programs by Sheila M. Olmstead and Robert N. Stavins), price elasticity of US residential water ranges from -0.3 to -0.4. This means that a 10% increase in marginal price of water only lowers water demand by 3% to 4%.

In another study (Residential price elasticity of demand for water – comparing Cyprus with other countries), researchers obtained average price elasticity of water for various cities / countries as follows: Melbourne -0.08, Sydney -0.09, a Cyprus city -0.05, Denmark -0.52, Finland -0.41, Turin Italy -0.52, TWM Netherlands -0.36.

Thus, in all these cases, water demand is indeed price inelastic.

More importantly, Prof Ng is completely silent on the argument that the increase in consumer surplus brought about by a shift in the demand curve to the right or up is spurious to say the least when applied to water demand. If this argument is clearly faulty, why can’t Prof Ng simply demolish it?

Bullshit 5: Only focused on water infrastructure

Prof Ng is only focused on water infrastructure but the government shouldn’t similarly adopt this silo view of our economy but should instead take a holistic view and appraise all infrastructure investments against future gains from industries and businesses.

If the government is confident that future gains from industries and businesses outweigh all infrastructural commitments by more than GIC annual returns, then by all means carry on. There is no need to increase water price since future gains will more than pay for these investments. But if the government isn’t confident about future gains, it shouldn’t drag the people along and force them to pay for their folly.

Bullshit 6: Corruption allegation

Prof Ng claims that the statement “extra money gained by the government goes into their pockets and disappears into government reserves only to reappear as losses in government investments” constitutes a serious allegation of corruption. That is a silly accusation. The government makes huge budget surpluses all the time which goes into government reserves and on to government investment vehicles. This happens all the time and is common knowledge, so what’s there to allege?

Bullshit 7: Larger population substantially reduces per capita costs of goods like defence

Prof Ng continues to harp on his mistaken view that a larger population substantially reduces per capita costs of goods like defence when it has already been pointed out to him that the effect may not be as significant since it is only applicable to capital costs but not necessarily to running costs. In the desalination example he gave, I provided evidence to show that capital costs is only 30% of total costs so the cost spreading effect would be much greatly reduced. For example, if our population doubles, the cost of desalination will not halve. Only the 30% cost is halved to 15% so the final price is reduced from 100% to 85%. So instead of a 50% reduction in desalination price, we only get 15% reduction, a vast difference indeed.

Bullshit 8: Higher flat price largely paid by immigrants

Prof Ng claims that higher price of flats and land is largely paid for by new immigrants and that existing Singaporeans are not made worse off. That is not true. PRs only purchase about 20% of HDB resale flats which means that Singaporeans buy the remaining 80% so an increase in flat price is largely paid for by Singaporeans, not immigrants.

PERMANENT residents (PRs) may buy one in five, or 20 per cent, of HDB resale flats today
[Straits Times: PRs, foreigners form 12% of HDB dwellers, 19 Feb 2010]

The new figures released by Mr Khaw looked at the 2,162 HDB resale transactions closed last month. They showed that a fifth of buyers were permanent residents (PRs), 8 per cent were private property owners and about a quarter – 23 per cent – were newly married couples, or first-timers.
[Straits Times, “Who the resale HDB flat buyers are”, 26 Jun 2011]

The PR numbers are in fact not insignificant – it was reported last year that they accounted for 20 per cent of all resale transactions in 2010.
[Sunday Times, Avoid Feast and Famine in Housing, 4 Nov 2012]

Bullshit 9: Turning a blind eye to increased indebtedness of future generations

Prof Ng says that although non-owners are worse off when property prices increase, their parents will be better off. But that doesn’t answer the point I made earlier about the fact that families with many children (say three or more) may end up worse off than before as the combined losses by the many non-owner children in future housing purchases outweigh the present gains by their parents. In other words, the parents’ gains will be more than paid for by their children in the future. Property gains by one generation gets passed down as debts for the next generation.

Furthermore, parents’ gains are on paper only for unless parents can bunk in with their children or have more than one property or migrate to a cheaper country, they will have to continue to stay in their house and cannot realise their paper gain. Downgrading depends on parents having a large enough flat to begin with and may not reap much cash considering that proceeds have to go back to CPF first.

Bullshit 10: Pursuance of efficient water pricing through rough estimations

Prof Ng has the cheek to highlight pursuance of efficient policies in water pricing when his own water pricing turns out to be based on rough estimates only. How can Singapore be truly efficient in water pricing using Prof Ng’s rough estimated water pricing?

Reply to more justifications for water price increase

March 8, 2017

I refer to the 4 Mar 2017 Online Citizen letter “More on justifications for water price increase”.

Bullshit 1: Can’t refute, so call it irrelevant

Prof Ng could give no reply to the fact that more than half of the water we consume experienced little or no inflation having been fixed at 3 cents per 1000 gallons all this while. Since half of our water experienced little or no inflation, Prof Ng has no basis to compare it with 30% general inflation and insist that this water should be inflated 30% as well. What Prof Ng cannot refute, he calls it irrelevant. That’s all he can do.

Bullshit 2: Government says save water means water is underpriced

Prof Ng says that when the government asks people to save water it means water is underpriced. But that could be due to water being, according to Minister Chan Chun Sing, a so-called existential issue needed for our survival rather than it being underpriced. Surely under pricing is not a matter of existence or survival is it?

Bullshit 3: Water revenues not enough for infrastructure investment

Much of the infrastructure investment is to support future population and industry growth. The proper appraisal for these infrastructure investments should be the incremental revenue from future industries and businesses less cost of these additional infrastructure investments weighed against an appropriate cost of capital such as GIC 6.1% nominal returns (, in USD). Infrastructure investment can only make sense if it can yield more than 6.1% annual returns. If it can, then there is no need to increase water prices. If it cannot, then it is better to park the money with GIC and earn 6.1% instead.

Bullshit 4: Economics

Long run marginal costing has one problem – where is the demand curve? Long run marginal cost alone is insufficient. Without the demand curve, there is no way of working out the equilibrium market efficient price.

The government can plan for the quantity demanded in future just as it planned for the quantity demanded today. But quantity demanded doesn’t constitute the demand curve. There is no price information on consumers’ willingness to spend on water. The current water price is a dictated price which is not necessarily the price consumers are willing to pay at the current quantity demanded. Since water demand is highly inelastic, in the worst case scenario where water demand is perfectly inelastic, it would be impossible to determine exactly what price consumers are willing to pay for the present quantity demanded.

As long run marginal costing has been in place since 1997 (, it can be assumed that the current pricing is already at the current long run marginal cost. So when water planners move Singapore from the current long run marginal cost to the next long run marginal cost through intensive infrastructure investment, it should be accompanied by a rightward shift of the demand curve through population and industry increases. This rightward shift of the demand curve will lead to higher demand curves which will lead to an increase in the willingness of existing consumers to pay for water.

Consumer surplus is calculated based on the area between the demand curve and the price line. So when the demand curve shifts right or up, there is an increase in consumer surplus for existing consumers. This implies that existing consumers now derive more benefit from the fact that there are now more consumers, greater quantity of water supplied and higher price to pay for water. But that’s not how normal consumers feel. When population increases, water supply is increased and people pay more for water, the average consumer doesn’t feel happier about it nor derive more benefit from it.

This should show how nebulous the consumer surplus concept is when applied to water demand. Since market efficiency and long run marginal costing cannot be separated from the concept of consumer surplus which is nebulous when applied to water demand, the whole long run marginal cost way of determining water price is seriously flawed.

Bullshit 5: Government will lessen increases in other areas

Prof Ng claims that the additional money that government makes from supplying water will lessen increases in taxes, charges and prices of other things. That again may not necessarily be true. The extra money that the government gains can simply go into their pockets and disappear into government reserves only to reappear as losses in government investments.

Bullshit 6: More roti prata

Prof Ng continues to adhere to his roti prata style of heads he wins, tails you lose argument that European cities not only have higher water prices, they also under price water according to long term marginal costs. But as mentioned earlier, long term marginal costing has serious flaws when applied to water pricing. Also, do European cities have 50% fresh water capped at 3 cents per 1,000 gallons? Why not compare with Asian cities?

Prof Ng also mentions that only 1% of water consumed is for drinking. Is Prof Ng suggesting that water is not an existential problem as Minister Chan Chun Sing insisted since we can get more than enough drinking water from our own reservoirs? Or perhaps both Prof Ng and Minister Chan think that flushing the toilet is also an existential problem?

Bullshit 7: Buries his head in investment costs only

Prof Ng continues to ignore the high running costs of desalination and chooses instead to bury his head in capital investment only. According to Hyflux (Hyflux named preferred bidder for Tuas II desalination plant, Singapore, 7 Mar 2011, page 8), the amortised capital cost of the desalination plant is only 30% of operating costs. No details are given on the number of years of amortisation but by considering a longer time period, the share of capital cost may be even lower. Hence, Prof Ng’s focus on spreading capital costs over a larger population can only apply to at most 30% of desalination costs only.

Again, Prof Ng brushes off high running costs as irrelevant. As the exchanges continue, more and more of Prof Ng’s answers become condensed into one word – irrelevant, rather than effective rebuttals.

Bullshit 8: Higher prices benefit Singaporeans

Prof Ng claims that higher prices due to more people fighting for limited resources will accrue mostly to Singaporeans and the government and is only bad for non asset holders.

Correction Prof Ng, since the government owns most of the land in Singapore, higher prices will accrue mostly to the government rather than to the people. Secondly, the children of Singaporeans are non asset holders so this is bad for our children. Our gain will be their loss so there will be no net gain for Singaporean families with many children. Thirdly, there is a sizeable population of foreigners, PRs or otherwise, who also benefit from higher prices. Many of them have sold their houses back to Singaporeans at much higher prices and emigrated to the West, taking their gains (our losses) with them. So it is hard to say that Singaporeans (not including the government) has benefitted.

Prof Ng says that higher population leads to lower per head costs of defence and other goods. Is the per head cost of housing lower now due to higher population? Between 1991 and 2015, non-landed private residential price index rose from 42.8 to 137.4 while population increased from 3.1 million to 5.6 million. Per head price increased from 13.8 per million to 24.5 per million, it didn’t decrease.

Reply to Prof Ng’s reply

March 2, 2017

I refer to the 2 Mar 2017 Online Citizen letter “A reply to “False justifications for water price increase””.

Bullshit 1: 30% hike cannot even catch up with inflation

Prof Ng said that general inflation since 2000 has exceeded 30%. However, according to MAS core inflation index (, core inflation increase since 2000 is 29.959%. It hasn’t exceeded 30%.

More importantly, the price of raw water from Malaysia has remained at 3 cents per 1,000 gallons all this while and hasn’t been subjected to inflation. Since Singapore gets half its water from Malaysia (Straits Times, Singapore’s water success has H2O expert worried, 21 Mar 2016) and more from our local reservoirs, more than half of our water has not been subjected to inflationary pressures. Setting aside the low cost involved in treating fresh water, the average inflation that can be applied to our water should only be about ½ × 30% + ½ × 0% = 15%. Thus, Prof Ng is wrong to say that the announced 30% water fee hike cannot even catch up with inflation. It is about double the average water cost inflation.

Bullshit 2: Singapore water price compares favourably to other countries

Prof Ng likes to compare Singapore water price to those of European cities. But even amongst European cities, there are some with reasonably low water bills relative to their incomes (

City Annual water bill as percentage of median income
Dublin 1.3%
Stockholm 1.5%
Rome 1.7%
Madrid 2.2%
Luxembourg 2.5%
Helsinki 2.8%
London 2.9%
Paris 2.9%

Prof Ng selectively chooses Beijing as a comparator for Asian cities which he conveniently brushes off with the comment that he dares not drink straight from a Beijing tap. But the same can be said of Singapore; almost every household boils water to drink or installs expensive water filters.

Japan, South Korea, Taiwan and Hong Kong have cheaper water than us that isn’t inferior in quality.

Bullshit 3: Often hear about water saving on radio

Prof Ng claims that he often hears about water saving on radio but not saving of other things and asks why. The reason is that our radio stations are government owned and broadcast what the government wants the people to hear.

Bullshit 4: Water prices do not adequately reflect costs

Prof Ng claims that our water prices do not adequately reflect costs. If that’s the case, then PUB should be suffering immense losses year after year. But no, PUB has been making positive net operating income and positive net income before grants all the way till 2013 and 2009 respectively.

Bullshit 5: Price goods at the highest cost source

Prof Ng says that water should be priced at the higher costs of producing NEWater and desalination even for raw water obtained from Malaysia for economic efficiency. But it is precisely a monopoly that prices goods way above costs which results in a dead weight loss for society that leads to economic inefficiency. So on the contrary, for economic efficiency, water should be priced near its weighted average cost of production.

Prof Ng claims that any extra money made by the government in producing water can be used to offset spending in other areas and lower taxes in those areas. But what we are seeing is a near simultaneous increase in the price of everything. Car park, electricity, conservancy and now water charges have all gone up. Tell us Prof Ng, what is going to go down? For all we know, all these increases are just being used to shore up investment losses by our government.

Bullshit 6: Most cities under price water causing wastage

Prof Ng likes to cite high water prices in European cities but yet claim that many cities under price water causing wastage. If so many European cities are charging high water prices, then surely there should also be many cities that are not under pricing water? Prof Ng flips arguments like flipping roti prata. Whichever way he flips, his logic is always, heads he wins, tails you lose.

Bullshit 7: Population increase does not lead to lower water costs

Prof Ng disagrees with the notion that population increase has led to water price increase. He can only make sense of this notion in a simple dichotomy of Singapore being fully supplied with cheap Malaysian water versus Singapore requiring expensive water over and above that supplied from Malaysia. The truth is more than that.

Let’s say the cost of purifying Malaysian raw water is $1 per litre while the cost of producing NEWater and desalinated water is $10 per litre. Let’s say at first we were producing 9 litres from Malaysian raw water and 1 litre of NEWater and desalinated water. The weighted average cost of producing water would be 0.9 × $1 + 0.1 × $10 = $1.90 per litre.

Let’s say due to population growth, on top of consuming 9 litres from Malaysian raw water, we now also consume 9 litres of NEWater + desalinated water. The weighted average cost of water is now 0.5 × $1 + 0.5 × $10 = $5.50 per litre. So the average cost of water has indeed increased as a result of population increase.

Let’s say in the long run, population exploded and on top of the 9 litres of Malaysian raw water, we consume 27 litres of NEWater + desalinated water. The weighted average cost of water will become 0.25 × $1 + 0.75 × $10 = $7.75 per litre, which is an increase again.

Bullshit 8: Larger population lowers cost of desalination

Prof Ng claims that a larger population helps lower the cost of investment for desalination. But that’s only for fixed costs, not running costs. The main cost of desalination is the cost of electricity and every extra litre of desalinated water will use an extra amount of electricity.

Bullshit 9: We are economically better off with larger population

Prof Ng says that we are economically better off with a larger population because immigrants cannot take away assets owned by existing people without adequate payment. But the issues involved are much more than that. As more people fight for the same amount of limited resources, prices go up for all. Also, the law of diminishing returns will ensure that as more and more people crowd onto this island, the benefit from the extra people will become lesser and lesser until it actually begins to detract from rather than add to the well being of the society.

The leaders of this country must recognise the optimum level at which Singapore can perform and not force our country to go far into diminishing returns.

March 2, 2017

I refer to the 1 Mar 2017 Channel News Asia article “water must be priced in full to reflect its true scarcity, says Masagos”.

Mr Masagos was reported to have said that water must be fully priced. Except for the last few years, the government has been making money selling water to the people since day one. In that sense water has not only been fully priced all this while, it has been overpriced.

Mr Masagos claims that we subsidise housing. But a brand new ‘subsidised’ HDB flat can cost half a million dollars, a price that can buy you a condominium in many Western cities. The same can be said of healthcare and tertiary education. The government’s concept of subsidy means handsome profits for themselves.

How can Mr Masagos claim that water is of strategic and national security importance but not housing, healthcare or education? Without an educated workforce, can Singapore achieve the high income and prosperity it enjoys today? Without housing, can a slum filled Singapore be as safe and secure as it is today?

Mr Masagos claims that consumers must feel the price of water the moment he or she turns on the tap. Then by all means penalise households or companies with high water usage. Don’t punish everyone with a 30% increase that affects even those who are thrifty with water.

Mr Masagos claims that water should be priced at the long run marginal cost. But the long run marginal cost is the cost in the future, not the cost now. If we expect HDB flats to cost $1 million each in the long run, do we price them at $1 million each today?

Mr Masagos says that costs have gone up. But so too have revenues, which Mr Masagos conveniently omits saying.

The three desalination plants that will be built in the next three years are meant to serve population growth. Excessive population growth is the mother of all problems. It shouldn’t just be the people who must feel the pinch of water price to cut down water usage. The government should also feel the pinch of the people’s reactions to population growth problems to cut down on population growth.

Mr Masagos gives no details about the $0.78 per m3 desalination price in 2005 and the $1.08 per m3 desalination price at Marina East. For all we know, the difference could be due to higher land costs that are factored into the desalination price.

Mr Masagos says we are a water stressed nation. But water stress is not merely a function of water scarcity; it is also a function of overpopulation. The more we overpopulate tiny Singapore with limited water resources, the more we stress ourselves with water.

False justifications for water price increase

February 28, 2017

I refer to the 25 Feb 2017 Channel News Asia report “Raise water prices by as much as 100% to reflect production cost: Economist”.

Water price hasn’t increased for 19 years

• Professor Ng said that water prices have not been raised since 2000 – nearly two decades ago.
• But the price of raw water bought from Malaysia has also remained at three cents per 1,000 gallons since 1961 and hasn’t been raised for 56 years already.
• Why does Prof Ng begrudge 19 years without increase in treated water price but forget that the government has been profiting for the past 56 years with no increase in raw water price from Malaysia?

Operating cost increase

• Prof Ng claimed that the cost of operating Singapore’s water system has more than doubled from S$0.5 billion in 2000 to S$1.3 billion in 2015.
• But according to PUB’s 2016 and 2011 annual reports, the revenue from operating Singapore’s water system has also more than doubled from S$0.55 billion in 2001 to S$1.2 billion in 2015.
• The net income loss in 2015 is only about $69 million. If we divide $69 million by Singapore’s 2015 population of 5.535 million, we obtain $12.5 per person per year or roughly $1 per person per month.
• So if the argument is simply to make up for increased costs, then approximately an extra $1 per person per month should suffice.
• However, the increase of 30% on an existing annual revenue of S$1.2 billion will amount to an extra $360 million per year or $360 / 5.535 = $65 per person per year or $5.4 per person per month.
• The government will thus be collecting 5 times as much as is needed to cover revenue shortfall.
• Hence, the argument that this is about cost recovery is not valid. It is not merely about cost recovery but making 5 times that amount of money instead.

Comparison with other cities

• Prof Ng said that Singapore’s water price is not high compared to other Asian cities when income level is factored in whereas water price in European cities are much higher than Singapore’s.
• It is strange that Prof Ng factors in income when comparing with other Asian countries but does not factor in income when comparing with European cities.
• European cities having much higher wages than Singapore should end up with water prices that aren’t as high too with income factored in.

Should increase 10 years ago

• Prof Ng said water prices should have been increased 10, 5 years ago.
• 10 years ago is 2007. But according to PUB’s 2016 annual report, PUB registered positive net income before grants in the years 2007, 2008 and 2009. There is therefore no justification for water price to be increased 10 years ago in 2007.

Net operating income ($ m) Net income before grants ($ m)
2015 -$38 -$69
2014 -$11 -$57
2013 $5 -$45
2012 $26 -$36
2011 $0 $82
2010 $12 -$72
2009 $114 $48
2008 $134 $71
2007 $133 $225
2006 $268 $275
2005 $138 $174
2004 $49 $146
2003 $20 $108
2002 $48 $58
2001 $119 $154

• Negative net income started to occur since year 2010 when our population was about 5 million.
• Since then, population growth has depleted our water supply, necessitating ever more expensive means of water production including desalination and NEWater.
• Of Singapore’s four water taps, two are expensive. They are not the panacea they are touted to be to solve our water problems.
• Thus, Prof Ng’s claim that on the basis of economics, water price should have increased many years ago is false. It is because the government is unable to grow the economy without growing the population that we end up with the need to employ ever more expensive ways of producing water for ever more people. Is the government’s inability an economic problem or a government problem?

High interest payments

• From the table above, it can be seen that PUB’s net operating income has been quite healthy over the years. But net income before grants has been unhealthy since 2010. The difference is in borrowing costs or interest payments.
• The following are the pertinent information to consider from PUB’s annual report 2016:

Balance sheet 31/3/2016 31/3/2015
Current assets – cash ($ m) $831 $780
Current assets – other investments ($ m) $91
Current liabilities – borrowings ($ m) $250 $100
Non-current liabilities – finance lease payables ($ m) $489 $513
Non-current liabilities – borrowings ($ m) $1,400 $1,650

• Looking at PUB’s balance sheets above, there has been an increase in short term borrowings by $150 million ($250 m – $100 m) between the start and end of FY2015 while accumulated cash has increased.
• Question is, why increase borrowings by $150 million when PUB has cash or cash equivalent of $780 million at the start of 2015?
• More likely than not, interest from cash will be lower than interest from borrowings. In that case, PUB should not have increased short term borrowings by $150 million but should have taken the funds from its existing cash pile. In fact, it should have retired the entire $250 million short term borrowings with the cash it has.

Long term bonds

• The table below shows various long term bonds issued by PUB at various times.

Interest (%) Issue date Maturity date As of 31/3/2016
2.42 15/12/2009 15/12/2016 $250 m
3.9 31/8/2006 31/8/2018 $400 m
3.52 26/10/2005 26/10/2020 $300 m
3.012 12/7/2010 12/7/2022 $400 m
3.62 12/10/2007 12/10/2027 $300 m

• As an example, on 12 July 2010, PUB issued a $400 million bond which forced PUB to pay 3.012 % interest to bond holders every year for the next twelve years.
• But according to PUB’s 2011 financial report, PUB was sitting on a cash reserve of $400 million on 31 March 2010.
• Why didn’t PUB use the $400 million cash to pay for whatever that it needed to pay for either in part or in full instead of issuing a $400 million bond and incurring 3.012 % interest in turn?
• In fact, by the end of the fiscal year on 31 Mar 2011, PUB’s cash reserves swelled to $1,056 million. In other words, the $400 million bond issued in FY2010 did nothing but add to their cash reserves.
• They were so good at generating cash then; it didn’t make sense for them to issue bonds.


• It isn’t just the price of treated water that hasn’t increased for nearly two decades. The price of raw water from Malaysia hasn’t increased for more than five decades already.
• The proposed 30% increase is 5 times the amount needed to cover costs
• Price of water in European cities is not as high as depicted by the government if high European wages are also factored in.
• There is no reason to increase water price 10 years ago because 10 years ago, the government was making money, not losing money from supplying water.
• This whole issue of water price increase essentially stemmed from over population which depleted our water supply and necessitated more expensive means of water production
• PUB’s net operating income is largely sound all this while except for the last two years.
• PUB’s negative net income before grants is largely due to high interest payments due to the large volume of long term bonds it has issued. At least some of these bonds issued appears to be unnecessary and could have been funded using the cash stockpile that it has.
• PUB’s main problem isn’t economics, it’s financial management. Without sound financial management, any price increase will not be enough.

Digital innovation can come from exam focused education

January 21, 2017

Singapore’s economic troubles, exacerbated by globalisation, automation and China’s aggressive investment in Malaysia have made our political champion scream for an education system that can mould an innovative culture geared towards the digital revolution. Our current education system is deemed to be overly exam focused and to involve little more than memorisation and regurgitation of ten year series exam question answers than critical thinking. This, the champion argues, stymies the futures of the great majority of our people.

The starting point of the argument is the future of our economy – one that thrives on innovation and succeeds in the digital arena. USA, South Korea, Japan, Taiwan and perhaps China are the best examples of these champions of digital innovation having produced digital champions like Microsoft, Apple Computers, Google, Samsung, Asustek, Huawei and so on.

Putting aside USA, when we look at South Korea, Japan, Taiwan and China and ask ourselves what kind of education systems they have, the answer is invariably the same. South Korea, Japan, Taiwan and China have education systems that are just as exam focused if not more so. The suicide rates of students in these countries are much higher than ours. The fact that these economies can thrive on digital innovation despite having exam focused education systems seriously challenges the notion that an exam focused education system is preventing us from becoming an innovation driven economy.

So what is the key? From the beginning, South Korea, Taiwan and China were like Singapore. We made all kinds of goods cheaply for the USA and the West. But over time, South Korean, Taiwanese and the Chinese governments worked closely with their local firms and created global conglomerates out of them. This is the critical aspect that has been missing from Singapore.

Today, a top Singaporean engineering graduate from NUS and NTU has no place to go except to work for foreign conglomerates. There is no Singapore Samsung for him or her to plug into to contribute towards the next Singapore Samsung Galaxy.

We had Creative Technologies, Mr Sim Wong Hoo was our poster boy. But Mr Sim turned out to be no Steve Jobs and Creative fell into oblivion. One wonders if things could have turned out differently had Mr Sim had more government support like the chaebols in Korea.

Samsung has demonstrated that success in the digital economy need not come from a man like Steve Jobs who can think out of the box. Success can also come from a workforce moulded by an exam focused education system and supported by a nurturing government.

Commentary on 2016 US presidential election

November 9, 2016

It is a pity that Hillary couldn’t make history by becoming US’ first woman president. The online support I came across for Hillary in the lead up to the US presidential elections had been overwhelming. The attitudes of most Singaporeans towards Hillary and Trump had been as clear as day and night.

Hillary represented pedigree, much like PAP does in Singapore. Trump represented the maverick outcast, a social malign that has similarly dogged Chee Soon Juan. Clearly, Trump would never have been given a chance in Singapore.

There are of course important differences. Dr Chee is learned, gentlemanly, knows his stuff and reasons well whereas Trump doesn’t know what he is talking about or at least that is the impression I am given of him.

But the association is still valid because even though Dr Chee’s public image has greatly improved of late, the maverick impression that the public has of him has more or less stuck through the years.

When the US people became fed up with their government, they changed their government. When the UK people became fed up with the immigration that came with the EU they voted out of EU. I am not sure if Singaporeans are fed up with the government yet refuse to change the government or they are sincerely happy with the way our government is.

While the US presidential election never affected me much, I was silently hoping for a Trump win amidst the deafening cacophony of ringside cheers for Hillary.

Don’t get me wrong, I don’t support groping and if it can be proved in court that Trump groped all those women then he deserve to pay the price and Trump’s vice president might end up becoming the president while Trump goes to jail.

But my basic premise is this. It really doesn’t matter who the US president is, US will be great just the same. If Apple’s Iphone batteries are going to explode in the air, they are going to explode regardless if Hillary or Trump is in charge. Microsoft, Google, Facebook will continue to churn out their billion dollar businesses regardless of Hillary or Trump. Amidst the clamor that Trump will run down the US economy, this is a good opportunity to show that he won’t or more appropriately he can’t. The democratic institutions of America which may lead to gridlock and so on will ensure that Trump will not have Mao Tse Tung’s dictatorial powers to run down the country. While The US president is the symbol and focal point of US power and prosperity, he or she is not the basis of US power or prosperity.

If Belgium can operate for about a year without a government, you can be rest assured that in the context of Western societies, good or bad governments doesn’t really matter because the engine that drives their economies doesn’t come from the government.

The Democrats have had two terms, it’s about time power wheeled back to the Republicans so the balance power is always maintained.

Reply to Theodore Shawcross’s “Why do people hate Singapore?”

June 26, 2016

I refer to Theodore Shawcross’s Quora answers to “Why do people hate Singapore?”

1) Freedom of speech and racial harmony

Theodore claimed that giving up freedom of speech is a price that Singaporeans must pay for racial harmony. That is falsehood.

Singapore was already a paradise for multiracial harmony (Chinese, Malay and Indian) long since colonial times. Evidences can be found at

Mixed communities have lived together harmoniously in Singapore for over a hundred years before the PAP government came along. Yet throughout our colonial years of multiracial harmony, there was never the need to trade off our freedom of speech. Colonial era Staits Times was so much freer than it is today. Colonial era Chinese papers spoke for the Chinese educated masses unlike today.

Conclusion: Singapore’s racial harmony is carried forth from colonial times, not forged by the PAP government. There was no need to trade off freedom of speech for racial harmony during colonial times, there is no need now.

2) Hate crime

Theodore claimed that everyone in England has a friend who has a racial conflict story to tell and therefore UK is riddled with hate crime even though he himself has never experienced it.

For someone who claims to be an economist, Theodore’s claim is too unscientific. If every other person that Theodore knows have heard ghost stories, does that mean Theodore would believe in ghosts too?

There are so many conflicts between Caucasians and locals in public places captured on Youtube. Perhaps Theodore should view them and conclude the same about Singapore too?

3) Cost of living

Theodore claims that social spending must increase but that means increasing tax but that is a no, no since Singapore is attractive because of low taxes.

That is like saying nothing at all or nothing useful. Theodore is wrong because the Singapore government can increase spending without increasing taxes because it has billions of dollars of budget surplus to spare almost every year. We are not even talking about dipping into the reserves, just the billions of dollars of budget surplus every year that the government doesn’t use but puts away in the already bloated reserves.

Theordore claims that what keeps our economy strong also keeps our cost of living high so for the sake of our economy, cost of living has to be kept high. He also claims that cost of living in a metropolitan city must necessarily be high and cited New York, London, Tokyo, Sydney for comparison.

According to the Economist Worldwide Cost of Living Survey 2016, all the cities Theodore cited are cheaper than Singapore. There are many other cities listed in the survey that are economically as strong as Singapore but that have much lower in cost of living such as Taipei, Luxembourg, Melbourne, Sydney, Frankfurt, Vancouver, Berlin, Stockholm, Hamburg, Munich and so on.

Conclusion: There are so many cities in this world that are as competitive as Singapore but with much lower cost of living. Hence the notion that a better economy must necessitate higher cost of living is therefore not true. Ultimately, it is human ingenuity that drives the economy, not cost of living. Human ingenuity cannot thrive when cost of living is exorbitant.

4) Western capital cities are filthy and public transport fail all the time

Theodore claims that most capital cities except Tokyo and Sydney are filthy and that their transport systems fail all the time.

Firstly, Sydney is not the capital city of Australia. Canberra is. Secondly, Theodore unfairly limits his comparison to capital cities when all cities can be compared for cleanliness. The fact that Theodore recognizes the cleanliness of Japanese and Australian cities shows that the cleanliness in Singapore is really not so big deal after all. There are so many other clean and beautiful cities like those in Switzerland and Germany, they have to be or they would not attract so many tourists year after year.

It’s plain exaggeration to say that Western public transport fail all the time. Singapore public transport cannot compare to those in Switzerland and Germany. This is despite the fact that Singapore’s public transport infrastructure is so much newer than those in Western cities. Because of lower population densities and the prevalence of car or bicycle use, public transport failure is comparatively less disruptive in Western cities than in Singapore.

5) Affordable public housing and cheap eat outs

Theodore says that our public housing is affordable and that he can eat at a food court in Singapore for SGD $10 whereas he has to pay SGD $50 for a proper meal in London.

In the first place, Singapore public housing, especially those in the open market, can be more expensive than private housing in Western cities. There are many Singaporeans who have sold their flats and bought houses with gardens to live in Western cities. So housing is clearly much more affordable in Western cities instead.

There is a website that tells Theodore where to eat for less than 5 British pounds which is approximately SGD $10. So no excuses for Theodore for not getting cheap meals in London unless his main intent is to unfairly compare a London restaurant with a Singapore food court.

6) Car costs and traffic jams

Theodore reasons that low car costs in Western cities are associated with traffic jams. He cites his own example of having to face the traffic jam on I-80 everyday in his one hour drive from home to Stanford.

But the same can be said about Singapore. Every morning and evening, expressways like PIE will be jammed. I once passed through two gantries along CTE only to end up in a jam just the same.

Conclusion: It is not true that high car costs automatically means little or no traffic jam. We have high car costs plus traffic jams often contributed by incessant road works or pruning of trees.

7) Freedom of expression

Theodore points to calling an Indian or Malay by the colour of their skin as the kind of freedom of speech that we should not want. He thinks that Lee Kuan Yew quit Malaysia to retain racial equality. He says that violence is just one step away from racially or religiously offensive remarks which only the law can protect us against.

While Indians or Malays are not referred to by the colour of their skin, they are called names like apu neh neh which some Indians take offense to (although I have seen a video explanation of why apu neh neh isn’t offensive).

Lee Kuan Yew didn’t quit Malaysia, we were kicked out of Malaysia because Lee Kuan Yew grew too ambitious and wanted to be prime minister of the whole of Malaysia.

Theodore is actually shooting himself in the foot. Going by his argument that the law can protect us against racist or religious offenses, there should therefore be no need for speech control to protect what is already and can only be protected by the law.

8) Singapore housing is affordable

Theodore claims that Singapore is the only country that has kept housing affordable in the capital city relative to suburban areas. He then contradicts himself by saying that Singapore’s suburban area is Malaysia where houses are cheap and affordable. If Malaysian (Singapore suburban) housing is cheap and affordable compared to Singapore, wouldn’t that imply that Singapore housing is expensive and unaffordable compared to Malaysia (Singapore suburban)? Thus, Theodore provides the evidence to prove himself wrong.

Most surveys such as the Global Property Guide rank Singapore amongst the most expensive cities in the world in property prices. So Theodore can only fool himself in saying Singapore housing is affordable.

9) The rest

Theodore blames people’s hate of Singapore on Hollywood. But Singapore is hardly ever mentioned by Hollywood so much so that our mention in Pirates of the Caribbean was already sensational enough for us. Theodore blames Singaporeans for ignorance when his entire essay is chock full of ignorance. Theodore describes young people as pain in the ass who needs to grow up. No Theodore, not all young people are pain in ass. You are not pain in the ass, you are just plain ass.

Theodore claims he is proud to stay and contribute to our economy and to create jobs for Singaporeans. But at the beginning of his essay, he said he moved to Singapore for economic reasons because jobs are here, not to create jobs. In the same token, if for some reasons Singapore falters, you can be rest assured that Theodore will move on to greener pastures for the same selfish economic reasons that he himself has confessed to.

10) Conclusion

Falsehoods, half truths and weak analyses that are sometimes self contradictory are the common themes that run throughout Theodore’s essay. It reflects deep seated ignorance and weak intellectual ability on the author. It brings shame to Stanford and other world class universities Theodore is associated with.

More to Chiams setting the record straight

May 5, 2016

I refer to the 5 May 2016 article “The Chiams Set the Record Straight”.

Chiam See Tong’s supposed setting the record straight is mainly against Dr Wong Wee Nam and Bryan Lim, both peripheral figures not central to the debate between Chiam See Tong and Chee Soon Juan.

If Chiam See Tong really wants to set the record straight, then he must tackle head on SDP’s full, factual and coherent presentation of the events surrounding his departure from SDP available online

To merely poke at peripheral figures who may have added their own personal interpretations to the events surrounding these two central SDP figures without demolishing the central body of evidence presented by the SDP suggests that Chiam is merely grasping at straws.

Chiam’s claim that Chee Soon Juan has the habit of issuing deadlines for offers to both Chiam himself and the WP is something that will require verification from both SDP and WP. As far as WP is concerned, they probably can’t be bothered to add to the dirty laundry being washed in public.

But if that’s true then it probably points to a minor irritating personality issue that may be okay to some but not to others.

What’s most important is that all the allegations that PAP has been making all these years about Dr Chee are nothing but hogwash.

Rebutting Mr Sagar on All Singapore Stuff

May 1, 2016

I refer to the reply by Mr Sagar Gandhi to Mr Shirwin Eu’s wife’s comments.

High election costs isn’t the only way to exclude candidates looking for wealth. Lowering the MP allowance is another way. If the MP allowance is only $3,000 a month which is close to median income, then no one can blame election candidates for going after wealth.

There are so many ways to become famous. Most famous of which is the Famous Amos way. It is far cheaper and more effective too. So it’s hardly convincing for Mr Sagar to say that someone is going after fame by contesting in elections when there are so many other easier and more effective ways to become famous.

It is unfair for Mr Sagar to say that one who is truly worthy and deserving can easily obtain $13,500 a month because it implies that anyone who cannot obtain $13,500 a month is unworthy and undeserving. But $13,500 is way above Singapore median income. Mr Sagar is essentially saying that only the rich in Singapore are worthy and deserving enough to contest in elections. Ordinary folks earning less than $13,500 are unworthy. That is a terrible attitude to have. There are so many worthy individuals who are earning so much less than $13,500. We have a phD blogger who now drives a taxi. Dr Chee is a phD too but is reduced to doing odd jobs here and there.

Mr Sagar cannot compare the networking in Singapore with the networking in America. America is a free country. If there is a giant you want to fight against, there will be another giant who is willing to back you. Here in Singapore, all the networking eventually traces to PAP. If you’re against the PAP, then sadly, the network will be against you, not for you.

Mr Sagar should not blame Uber for high COEs. COEs have been high for many years already whereas Uber is only a recent phenomenon in Singapore. In fact, COEs have come down a bit from the highs a few years ago. Wouldn’t it be the other way around instead? That with Uber’s entrance comes lower COEs? I’m not suggesting anything but it shows how silly it can be to associate COEs with Uber when there are so many other factors to consider.

Instead of eagerly asking Shirwin for solutions, Mr Sagar should pause for a while and ask himself instead, for a relative unknown like Shirwin, even if his solution is gold or platinum standard, would Mr Sagar or the elites governing this country be able to recognise it?

By his statement “Would that not have been a better response than the desire to achieve wealth and fame when requesting to be voted into public office?”, Mr Sagar has already falsely accused Mr Shirwin of seeking wealth and fame. Mr Sagar urges Shirwin to improve his arguments when in fact it is Mr Sagar who should improve his. Mr Sagar should not be so silly as to think that making false accusations is the same as making an argument.