A nation run by scholars

Two senior persons, a company director and a businessman, expressed a similar view. They are concerned that Singapore is now run by scholars who do not have experience about the business environment and try to solve the problems by writing papers.

The handling of the mini-bond crisis is an example. Although the initial response of the authority was appropriate, the subsequent events (especially after the Hong Kong settlement) needed a new response. But, the scholars were not able to handle this type of situation.

There were incidences of cheating in motor insurance claims. The situation is getting worse over the years. Reports made to the authority were not followed up or investigated, but were pushed aside. The insurance companies were asked to solve this problem, but they do not have the regulatory power.

Many foreign workers reported that they had to pay a large sum of money (USD 9,000) to get a permit to work in Singapore. There were a suspicion that a large part of this money goes to the pocket of the employer who held the work permits.
A minister was reported to have said that as the payment was made in a foreign country, it falls outside the jurisdiction of Singapore. Surely, an investigation can be done in Singapore to see if the employer had received some payments?

This lack of practical experience applies not only to the senior levels of the civil service, but higher up in the chain of command. We have to move away from writing papers to the real issues faced by the people in Singapore.

Tan Kin Lian

Jeddah - shopping during Ramadan

The shopping mall next to the hotel opened in the afternoon. I went into the supermarket to buy a few drinks and snacks. There was no staff at the checkout counters. Some customers, who had done their shopping, were waiting at the counter.

I learned that the counters were closed for 15 minutes, while the staff went for their prayers. They returned back later, and it became busy again. The customer told me that this would happen three times each day (even outside of Ramadan).

Opponent of US health reform yield fear weapon

Read this report.

* Fear motivates people more than facts
* Study shows people will seek facts to support beliefs
* Positive emotional appeals can counter the effect

Jeddah during Ramadan

I am now in Jeddah, Saudi Arabia. It is the month of Ramandan. The city is quiet and many business activities are scaled down. The fitness center in the hotel opens only at 9.30 am. The hotel coffee house is closed. Breakfast has to be taken through room service.

Regular update of bank deposit rates

A FISCA volunteer updates the bank interest rate on a regular basis. The latest update is shown here. I hope that you find it useful.

Asset share of your life insurance policy

The Monetary Authority of Singapore has stated that insurance companies are required to compute the asset share for each cohort of participating policies and that the insurer needs to have a "governance framework" to ensure that the bonuses are distributed fairly to policyholders. They also declared that the law has stated that all the assets in the participating funds belong to the policyholders and that there is no "orphaned money".

This approach has a fundamental weakness. It is possible for the insurer to under-declare the bonus or to pay less than a fair value to the policyholder of a terminated policy, and to accumulate the "surplus" (although known as the "estate" or "orphaned money") in the life insurance fund. This has been the practice over the past decades, prior to the introduction of the concept of "asset share".

The MAS approach relies on a "governance framework" involving the appointed actuary and the board of directors, who are made responsible for the "fair treatment of policyholders". There is no independent party representing the interest of the policyholders in this arrangement. Some people refer to this arrangement as appointing the fox to guard the hen house.

The regulator in Malaysia has adopted the concept of "asset share" in a simple and fair way. The key elements are:

a) The asset share has to be computed for each policy, taking the actual premium and investment income and deducting the actual expenses, based on the actual experience of the policy.
b) The insurer is free to declare the bonus in any appropriate manner, to ensure its future solvency.
c) The asset share has to be paid to the policyholder on the termination of the policy after a certain number of years, and on maturity.

I hope that MAS will adopt the approach used in Malaysia. It can be done quite easily and will produce fair results that do not rely on the honesty of the "governance framework".

Tan Kin Lian

Whistleblower tells of America's hidden nightmare for its sick poor

Read this story. This is what happens when companies chase for profits at the expense of service to the people. This is why President Obama wants to reform the health care system. There is a similar situation with the financial services industry.

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