Saturday, June 12, 2010

Speaker's Corner, 12 June

Here are some photos:
http://www.facebook.com/album.php?aid=21972&id=123982840948318&ref=mf

Lasting values

MR Tan Kin Lian,

Singapore’s ‘worship’ for “pragmatism” is as much an “idol”. In my own analysis, “pragmatism” is only a good tool, but a grave guiding values system. It gave Singapore a jump-start in national survival; but we need lasting values to build Singapore into a nation with its own soul. The years of preaching “pragmatism” now produce the unique Singapore phenomenon we witness in public and private arena.


Cashew Nut.


Growth in millionaire club

Dear Mr. Tan
The Straits Times front page has an article that showed Singapore to have the largest increase in millionaire households last year. I am somewhat disturbed by this article. Was it written to give an impression that our economic progress is the best in the world? I do not see any improvement in my circumstances and for my friends around me. Was this to prepare for the general election?

My reply
I tried to understand how the statistics was compiled and how it should be interpreted.

It showed the number of households that have an assets more than 1 million dollars (USD). This could be due to the sharp increase in property price last year, which is good for owners of multiple properties, but make no difference to those who own only one property for own occupation. Furthermore, I think that the study measures the value of assets and do not take away the liability (i.e. loans to purchase property).

The growth rate of millionaires was 35% in Singapore, but for China and Indonesia, the growth was 31% and 21% respectively. The report does not measure that proportion of the population that can be classifed as millionaires - but the growth in the numbers of these rich households during 2008.

In one respect, it probaly reflects the widening disparity in income in these countries. For each person to be rich, there must be 100 people that has to be relatively poorer.

The report does convey the impression that the economy is doing well, when in reality, more people are suffering from the high cost of living - driven by high property and asset prices.

Nelson Mandela

I watched the opening concert of the World Cup. I was moved by the public respect that the crowd had for Nelson Mandela or "Madiba". I saw the video clip of his speech when he was elected President. He pledged to spent the remaining years of his life "not as a prophet" but "in the service of the people".

He was prepared to step down from office on completing his term to become a private citizen. This allowed new leaders to be elected democratically, who can adapt the national policy to suit the changing needs of the people. Although South Africa may be economically poorer than Singapore, the people seemed to be quite happy and proud of their country.

I hope that, one day, Singapore will have great leaders like Madiba.

Tan Kin Lian

Security - role of government and business

The Mnistry of Home Affairs has said that security should not be left to the Government and that businesses should also play their part. They were referring to the recent incident of lax security at the MRT depot in Changi.

I agree. However, it is important for the Government to spend more money on security and that it should be supplemented by business entities. The Government cannot leave this matter to the business entities as there is no clarity on the level of security that is needed and businesses are more focused on their bottom line.

It is important for the Government to put in sufficient funds and effort to ensure a hgih standard of security, law and order, and ask business to play their part to supplement the government's efforts. Our standard of security and many other aspects of public life has dropped during the past decade, due to the policy of cutting cost and leaving things "to the market".  We should be prepared to increase our pubic budget  in line with the increase in the population.

Tan Kin Lian

Countdown to 2 million visitors (2)

My earlier estimate was that the unique visitors to my blog will reach 2 million by 30 June 2010. This target is likely to be achieved a few days earlier.

City Harvest Church

Title: Minister Shanmugam said that investigation on City Harvest Church when “a complaint was received”. What about the thousands of complaints that were made against structured products?


I refer to the report made on 12 June 2010 on Today newspaper by Alicia Wong. It was reported that Minister Mr Shanmugam said "One shouldn't look at this (City Harvest Church investigation) from the perspective of churches or mega-churches. The way this has been approached is, a complaint was received - a complaint about how funds were used - and the Commissioner of Charities (COC) called in CAD (Commercial Affairs Department)."


It is laudable that government would start an investigation upon “a complaint was received”. The government should use the same resolve on the investigation of structured products.


The government should investigate the financial institutions that are responsible for the issuing and distribution of structured notes (such as Minibond, Pinnacle Notes, High Note etc).


There where thousands of written complaints, as compared to only “a complaint” in the case of City Harvest Church. There are many who are still not satisfied even when partial compensation is made. I hope the government would extend the same assertion to investigate the issuers and distributors of these structured products. In fact its effect is even more far reaching than City Harvest Church or Ri Ci Hospital’s issues. It affects the banking institution and the thrust of banking system at large.


Straits Times should provide coverage of the individuals who are behind these financial products.


In the case of Abbot Min Yi and Pastor Kong Hee, there was extensive coverage of their personal life and works prior to conclusion of the investigation. We have not seen any coverage of the individuals who are behind these structured products who brought anxiety and pain to many Singaporeans.


Cashew Nut






Benefit Illustration

A benefit illustration has to be given for each life insurance policy that is recommended to a consumer. More than 100,000 life insurance policies are sold each year. The number of benefit illustrations given out must be at least two times of the number of policies sold. This makes the benefit illustration to be widely used.

Many people criticised the benefit illustration to be too complicated. As a result, consumers do not bother to read or understand them. It is the duty of the insurance adviser to explain the content of the benefit illustration, but most advisers do not do this duty. This is evidenced by the large number of insurance buyers who do not understand the key features of the policy and the key points in the benefit illustration.

There are only two important points that the insurance buyer should be aware:

a) distribution cost
b) effect of deduction

These two key figures determine whether the insurance buyer is paying too much for the insurance or getting too little back as investment return.

If consumers know what to look for, and how to interpret these figures, they can avoid paying thousands of dollars away unncessarily. These key points are explained in my book, Practical Guide on Financial Planning, which can be bought online here for only $12. The book also contained advice on how to identify and avoid bad financial products.