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"E-book" by AK

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Staying objective and being approximately right.

Saturday, September 5, 2015

I keep telling people that AK is non-partisan. AK does not support political parties. AK supports policies that make sense.

Unfortunately, often people let emotions get the better of them and their minds get clouded. Human beings are rational creatures, supposedly. So, don't squander the gift of rationality. Be logical.

Although what I am going to share now might give rise to some people calling AK "pro-establishment" to put it nicely, I am really only being objective.

This happened on Facebook earlier:

Doolson Kool The town councils collectively lost millions in Lehman Brothers bonds but all was hush hush. So much talk about scrutiny and integrity. 

Assi AK Being objective, losing money in bad investments shows a lack of investment savvy. There is no civil or criminal liability. 

Doolson Kool I'm not sure if you are responding to me. However, it looks like we are on a different frequency here. I'm referring to the hush hush about TC's loss while PAP is screaming bloody scrutiny and integrity at WP. PAP's silence over the investment loss is deafening.

Assi AK Yes, it was in response to your comment. PAP TC lost money on Lemon Bros. It was a bad investment decision. Nothing else to say but if people want to scrutinise, they could. However, I doubt they could say much more than the fact that it was a bad investment. It is not an issue of integrity.

Doolson Kool In my opinion, it is an issue of integrity because PAP demands scrutiny of others but when the shit hits the fan in PAP's own backyard, they choose to remain silent. The silence is deafening.

Assi AK You must see what kind of shit it is. Some, you scrutinise. Some, don't bother. Doctor also wants to examine your stools only when he suspects you are seriously ill. Otherwise, why bother?

We need to be clear minded in personal finance and investments. We don't have perfect knowledge and can only make the best estimates. It is the same with many other things in life.

Like what Warren Buffett said before, it is about being approximately right.

However, when we are not clear minded, when we are irrational, then, our chances of being approximately right will be much lower.

This is about issues and not about politics. I support policies and not political parties.

Now, now, where is that cooking pot I borrowed from SMOL? Ah, here it is. Cover my head with it and, ok, can start throwing rotten eggs at me now.

Related post:
"Voted for WP in the last election..."
Once we have understood the system, we would be able to make informed decisions and even offer constructive criticism. If we haven't made the effort, we really don't know what we are criticising or, worse, condemning.


Julian Chan said...

Singaporeans r deem to be rational population. However some ppl deliberately choose not to, for reasons known only to themselves.... Truly support ur views....

unluckid said...

hi AK,

I think the issue is that the money invested was using taxpayers money, and that there should be some sort of accountability involved, especially when the monies were invested without prior knowledge or approval from the residents. WP's case, on the other hand, despite a lot of finger pointing and accusations, have seen no proof from the other side as to what is a reasonable amount of profit, concrete proof that their 'friends' benefited. Side note, if their MA's fees are higher, but the S&CC paid by the residents are lower, and yet they are able to turn a profit (latest audit figures, is there a problem there? Since we know that the economy of scale is non-existent for the town council.

AK71 said...

Hi Julian,

I think if we are rational, it is hard not to see the picture for what it is. I think, deep down, Doolson Kool knows it too and I see that he has deleted his comments on FB.

I am not speaking up in favour or against any party here. I hope people can see that I am simply stating facts and being rational.

AK71 said...

Hi unluckid,

I agree that the level of communication at all levels of government with the public should be improved. They can and must do better. This applies to town councils too, whether they are run by the PAP or opposition parties like the WP.

As for the AHPETC case, I am not legally trained and can only rely on the presiding judge's comment when he rejected MND's application to allow for independent accountants to look into AHPETC's books.

"If AHPETC were a managing corporation ... I have no doubt that AHPETC or its officers will be exposed to the possibility of civil liability ... or in an extreme scenario, criminal liability. I can only say it is a travesty for AHPETC to have ignored their duties and obligations imposed on them by the Town Council Act and Town Council Financial Rules." Justice Quentin Loh

Like what Lim Swee Say said, it might not be illegal but if something is wrong, it is wrong. It is not an issue of legality but one of obligation.

Like I said, I am not supporting any party per se. I am interested in the issues.

Howard said...

AK, psychologically, people tend to ask for more, question for more, want for more.

When they cannot be satisfied, they rebel, venture into the unknown, in hope for more, in everything.

More than often, people do not realise how fortunate they are, having a house, a car, three warm meals and a few cups of Starbucks a day.

It is this psychological nature that gave birth to politics.

Politics is a game of comparison.

Politics is also the recipe for disaster, creating failed states throughout history.

The only truth is Einstein's theory of relativity, at least until proven wrong.

Everything else is just psychology, no absolute right or wrong.

So think carefully when one votes.

Signing off in a drunk state...

Julian Chan said...

Well said AK.
I am in general non-partisan as well.... I support only the party who aims to be as right as possible. Not becos this party does not want to be perfect but rather the world is not perfect. Thus, we can only make sure we r as perfect as possible while knowing our limits (by imposing laws to guard ourselves against ourselves).
Communications and sound reasoning of policies must be conveyed to Singaporeans more effectively. Sound policies can be easily misrepresented by some with ulterior motives when not every Singaporean will take time to read the entire policies..... Most of us r guilty of this.... I remembered in the last year's national day rally, PM Lee was talking about communicating of policies and that it's very difficult for the layperson to understand. Even his MP, Ministers may not be able to know all thes policies at their fingertips, I believe he himself do not profess to remember everything too...

AK71 said...

Hi Howard,

Was the comment written in a state of drunken stupor? Then, I look forward to another comment from you when you are sober. Should be an even better read. ;p

Thanks very much for the reminder to vote carefully. ;)

AK71 said...

Hi Julian,

Well, however difficult the task might be, it is the government's job to communicate their good intentions and what any changes to policies affecting the people might do for them. If they wish to stay behind the country's steering wheel for the next 50 years, they better pull up their socks.

Like I said in my open letter to the Prime Minister last June: "Knowledge gives everyone power while the lack of knowledge gives some amongst us power... Constant wide reaching education done well is the most important measure to take and will empower our people."

AK71 said...

The constant call by Roy and his friends for handouts of $300 or $500 a month to the elderly and the retirees is mind boggling. I see many asking "Where is the money going to come from?" and "Who is going to pay for this?". Good on you, Singaporeans!

Then, the call by some for the implementation of a minimum wage in Singapore sounds very attractive on the face of it but those of us who have studied Economics would know that it is really not that good an idea. There are people who seem bent to bend the rules of Economics.

The way to ensure low income workers get better jobs with better pay is to upgrade their skills so that employers are willing to pay them higher salaries because they create more value for the business. The PAP got this right.

For those who might be attracted to the idea of a minimum wage policy, think again:

"Wages are the price for labor. They are the compensation workers require for their time and efforts. As with any price, regulatory controls—whether a price ceiling or a price floor—distort the market, creating either a shortage or a surplus.

...businesses cannot spend more on wages than they earn in revenue. And of course, not every type of labor is the same—some jobs simply aren’t worth paying someone $X an hour to complete.

The result: Fewer jobs and permanent unemployment for those unable to produce more than $X worth of goods for their employers. Hardly a means to help the working class.

Despite the good intentions of its modern-day propagators, minimum wage is a questionable policy that should raise eyebrows for anyone concerned with the plight of the poor.
- Nicholas Freiling

unluckid said...

Hi AK,

For the AHPETC issue, I still think that PAP has to give concrete proof and comparison to show that WP has done wrong, unsubstantiated claims and finger pointing are easy but doesn't showcase the issue.

As for minimum wages, WP proposed $1250, while SDP proposed $1232. How are these figures different from the minimum level of the Progressive Wage Model of $1000 and $1200 legislated by the PAP? Furthermore, minimum wage is basically a calculation of the minimum amount of money someone has to make in order to survive in Singapore. Give the lack of a sufficient social support net, is legislating such a low minimum wage (which I have to say again, is not much different from that already legislated) really too difficult to help the people? Lastly, how many jobs are paying less than $1250 in today's Singapore? I would say maybe elderly cleaners, or petrol kiosk workers? These are not easy jobs. No one would think of working these jobs just to mooch off the low minimum wages offered. Do these people, working such tough jobs, not deserve a basic living wage for them to survive?

AK71 said...

Hi unluckid,

Like I said, I am not legally trained and I have to rely on a judge's statement and apparently there wasn't anything illegal at AHPETC because of the Town Council Act. However, if AHPETC was a corporation, then, action could have been taken against them. To me, a statement like this from the judiciary tells me plenty.

As for the minimum wages proposed by opposition parties, thanks for providing the precise figures. Since you feel that they are no different from the Progressive Wage Model (PWM) which is in place, why bother proposing a minimum wage policy at all? I am confused.

I remember my time performing HR duties many years ago and an employee of the company told me that he couldn't survive on the salary that the company was paying him. I reflected this to the boss of the company and you know what the boss said?

"We pay people according to what they are worth. We don't pay people according to what they need."

This is Economics 101.

This is something I constantly blog about in one way or another. For example, The very first step to becoming richer. This was written in 2012. It is one of the things I believe in.

This is what PWM does. It has been described as Singapore's minimum wage policy but it is also about helping workers to earn wages that are commensurate with their skills, productivity and experience. It is not just a blanket, unquestioning minimum wage policy which I am against.

However, we have to be compassionate to those who genuinely need help. Instead of a blanket minimum wage policy, targeted help should be given to those who genuinely have trouble catching up. This is also something I have blogged about before.

Sillyinvestor said...


wo... Talking about politics...

Actually I read up a bit about the whole saga... My view is:

It is a fact that the the rate charged by FMS is the highest by some 15 % as compare to the next TC, whether there is excessive, or a justifiable "no one dare to take, so I take" premium, I have no comment.

Is having half of Net profits in paid as salary grossly excessive?

I tried looking up listed company, Lee metals which is generous in paying in employees, also paid more than half of NP in 2014. So it is not without predecessor.

I also read Silvia open letter and MND appendixes, to be fair to both sides...

That the is a open tender and there is no bidder ... is a strange occurrence in corporate Singapore.

But the amount of lapses in the accounting is really scarily high...

I mean, you could be inexperience managing a TC, but are all your accountants sleeping??

I have my own thoughts about the whole saga, but I shall leave readers to connect the dots...

AK71 said...

I think it is interesting to look at things from a business owner's POV. This is from my FB wall:

PAP has done a good job in controlling the influx the FTs. I run a business myself, and my business as well as my business associates are affected by the government's quota policy. We are forced to employ singaporeans first. We even try to make an appeal to the MP to retain our foreign worker, but was rejected. The system has kept a record of the number of workers in each company, so they do not have to enforce anything or check cos it automatically rejects application once you hit the quota. Many businesses are badly hit and many of my friend's businesses have to scale down or close shop. You see this happening everywhere. Not that we do not place singaporeans first, in this day and age singaporeans have become very picky and we have problems engaging locals. You pay them high, they stay for 3 montths and job hop after we spent a lot of time and effort in training. Paying way to high to retain only hurts the business further. We are now trying hard to remodel our business to align with the government's efforts to improve productivity, but some labor intensive businesses will have difficulties to remodel so they close shop. I can see the efforts by the government to keep FTs numbers low, and I used to not like FTs myself, but i feel people need to be more open minded and receptive. They are not really displacing locals, but many locals are too pampered. And this is the reality which most people will not understand. Government is also working hard to also drive the businesses to improve productivity by providing subsidies and incentive schemes. 用心良苦 but i personally feel it is our mindset we need to change. Globalization is the key to growth and is here to stay. We need stay adaptable to change, competitive and continue to help businesses to grow to create jobs then singapore can continue to thrive.

AK71 said...

Hi Mike,

I keep telling people that WP should just admit that they have made a big boo-boo, apologise sincerely and suggest how they could make amends. Don't keep denying any wrong doing. I find that irksome.

Personally, I accept that people make mistakes and would even give them benefit of the doubt although, as you have put it, "the amount of lapses in the accounting is really scarily high".

I have always believed that having a credible alternative to the PAP in government is important. I believe in having appropriate and adequate insurance in life. Remember? ;p

However, till today, I am still waiting for this alternative to manifest itself.

Sillyinvestor said...

HI Ak,

Referring to your facebook post on POV from business...

This is what bothers me.

I find the whole news reporting of the whole election "irksome" as you put in. The issues raised are really "refrying of cold fried rice", and the tactics of WP while effective and the least vulnerable by "claiming credits by the work done by others"... We check them, therefore they are responsive... clever tagline and emotive too... But... I think singaporean deserve better than that...

No one talk about the real future of Singapore anymore, it is too heavily leaned to the left, the discussion. Not that it is not important...

We used to take the easy way out of cheap labour to grow... Now that people are up in arms... and the cost - benefits is no longer in favour... what alternatives are there???

Seriously, in the 90s, there is the building of financial hub...

In the 2000s we have the IRs to stimulate jobs and also add vibrancy to the hospitality sector

Where is the future growth?

Help is rendered to SMEs, productivity drive is coming to its fifth year, but there is no results, while US recovered, singapore sputtered...

Is there a plan B to a failed productivity drive?

How to have the quality mid- term growth of 3-5% ??

Of course, I do not think we will go to the dogs... soon..

But not advancing is akin to relative stepping backwards...

Are we able to balance leaning left and having populist measures without hamstring economic growth??

Have not read anything about it... all about vague vision of future, children... etc... SIanz... The TV debate... sigh.... even more sianz

AK71 said...

Hi Mike,

I share your sentiments and concerns. I also feel that we are leaning more to the left and I don't think this is what LKY would have wanted.

You know what is my biggest fear?

My biggest fear is that Singapore would go the way of Japan. The Japanese had plenty of savings from an economic boom after WWII and as the economy went down a slippery slope, they lost two decades despite many attempts at spending to stimulate the economy.

The way I look at it, Singapore has avoided going down the same slippery slope because we are more "flexible" in accepting foreigners and we have been constantly re-inventing ourselves, like you have observed. In fact, by end of this year, the Japanese could allow IRs to be built in Japan as a way to revitalise the economy.

Singapore is venturing into unchartered territories in the next 50 years. Whatever experience is out there from the developed countries isn't going to provide a viable model for us to emulate. We would have to find out own way.

Solace said...

Hi AK,

I would comment on the Economics and Business areas. I would not be commenting on the politics side as i feel this is a very grey area to me. We do not find saints in politics.

I do have some concern about Singapore Economy, Industry and Businesses heading into the post LKY era. This is indeed uncharted area.

In many annual reports i read in 2014 and 2015, many companies has stressed the cost of doing business and the increased restrictions on foreign workers hiring. This has impact on many companies which i has a stake in, e.g Kingwan, Yongnam, Hospitality stocks to name a few.

I also have a feeling that some NMCs too might feel doing business in Singapore might not be as profitable as before, they might scale down and worse shift away.

Basically, SG might face a labor and productivity crunch. Effects to boast innovation and entrepreneurship by supporting SMEs and Start-ups might prove difficult. I myself has worked in 2 SME/start up before that performed badly. One of them has closed down since.

Already many are predicting that STI will grow at a much slower pace compared to last 30 years. GIC has also released statement saying that returns will be slower in the next decade.

I personally feel that the policy makers might have clamped down on the wrong segment of the labor market, like Low skilled foreign workers who filled the jobs that Singaporeans don't want to do. That labor crunch is weighting down on industry to grow and take on new orders.

The way I see it, the policy makers might has been better if they spend more efforts to calibrate the number of mid-skill white collars in the labor markets which compete directly with local workforce. This has been a sore point with the electorates. Perhaps a more selective of the talents we really need is necessary.

To be fair, getting this right is no simple matter.

AK71 said...

Hi Solace,

I should be sleeping but I am reading reports on election rallies and the promises made by all the different parties. I guess I really shouldn't bother but I am trying to find a hint of what each party has in store for Singapore if they should form the next government. I think even the PAP is not sure apart from continuing with the status quo and leaning more to the left, as Mike has put it.

Whenever people say that they could simply invest in the STI ETF, citing X% returns per year in the past 10, 20 or more years, I would cringe. I agree that it is unlikely that we would have the same kind of returns and more of the investment returns would probably be in the form of dividends which is not a bad thing, of course. We won't be seeing the kind of spectacular growth like in the early days.

I certainly hope that the next government, whoever forms it, would have a better grasp of labour issues. I agree that in certain industries, it is harder to be less labour intensive and more time is needed in the drive to improve productivity for them. Crossing fingers.

Solace said...

Thanks for replying :)

Yes, you are right, we should be sleeping now haha.

Goodnight AK!

unluckid said...

Hi AK,

My point is, when we look at the minimum wage levels proposed, we see that they are not very different from what has already been implemented on two of the lowest paying industries in Singapore. Most other jobs pay higher than that, so why the resistance to implement a very low minimum wage level? Such a legislated wage level would also enable the govt to better target those in need, ie those who are earning below this wage level due to various reasons.

AK71 said...

Hi unluckid,

I was discussing this with a friend who is an Economist and he says that in certain industries, implementing a minimum wage makes sense. He shared this with me:
"An example of a monopsony occurs when there is one major employer and many workers seeking to gain employment. If there is only one main employer of labour, then they have market power in setting wages and choosing how many workers to employ."

Intuitively, I am against a blanket minimum wage policy as I am afraid that it could lead to job loss. This was Economics 101 to me.

After talking to my friend who is more current in his knowledge of Economics, I accept the argument that in some industries, implementation of a minimum wage is necessary.

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