Tuesday, April 30, 2013

Democracy - Are you for REAL?

In Singapore and Malaysia, or most ill-democratic countries in the world, opposition parties are fighting on the moral high ground of Democratic principles. 

However, for any political parties that fought on such Democratic principles, they must first TRULY EMBRACE and PRACTICE such Democratic principles themselves. Else it would really be hypocritical for such parties to talk and sing high about Democratic principles while internally, they do not welcome or even scorn at Democratic practices and contests within. 

For a start, political leaders should expect healthy contests from fellow comrades and not try to demonize any challenge to their positions. It is also a good time to gauge on their own support level among party cadres. If you don't get satisfactory vote count, it means that you will have to work harder to gain their support.

In Democracy, there will be healthy contests and definitely, win and lose. It is quite a normal process. But it is unhealthy to treat every leadership challenge as sinister plot of moles or otherwise. Most parties in Singapore install the cadre system to protect themselves from "infiltration" by political opponents. However, the flip side of such cadre system is that it tends to lead to "inbreeding". This is because only the CEC members or just the key leaders of CEC could approve promotion of cadre membership and obviously, as human nature dictates, the CEC members will only approve those who are in support of them. This will ensure uninterrupted support and election of the few individuals into CEC. This is unhealthy as it hinders diversity and promote group thinking within.

In fact, I have always tried to change the present ill-democratic practices and constitutions of the party, to balance the values of democracy vs safeguards of infiltration.The power of appointment of cadre membership should not lie solely on the few CEC members only but rather, the whole Congress of party cadres should have the right to move motions to appoint any members to be cadre members. As long as 50% of the Congress voted in support for such appointment, the promotion of the respective members to cadre status should take effect immediately. 

The other safeguard I have proposed to change is that any MPs of the party should only be sacked or removed by the Congress of cadre members, with the means of calling for Extraordinary Party Congress to decide on such important matters. MPs are key assets of the party and they should not be subjected to the power of the few in the CEC and removed due to politicking. Such safeguard should be installed to prevent unwarranted sacking of MPs by the CEC. If any MPs have made grave mistakes, he or she should be "trial and judged" by the Party Congress of cadre members. He or she should be given the chance to put up defence of such sacking.

On the other hand, we cannot just blush off healthy contests and challenges as "instigation" or attempts of "moles working" just like that. If you are good, you won't be worried about challenges. If you are mediocre, be prepared to lose and step down for better player. That's real Democracy for you.

Goh Meng Seng

Tuesday, April 02, 2013

Think Thrice before buying HDB Resale flat!

Most of us presumed that when we buy our HDB flats, we could well pay off ALL our HDB mortgage loans by using our CPF money. This MAY NOT BE TRUE for those of us who bought our flats from the resale market.

Even some property agents are either confused or unaware of the rules on how much money we could use from CPF to pay for our HDB mortgage loans. Some thought that this only applies to bank loans but not HDB loans. This is false. Most of the time, property agents won't even advise you on such matters even if they know about the rules.
You can only use your CPF to pay for your resale flat up to 100% of the valuation price of your flat at the time of purchase. There after, it will depend on whether you have enough money to set aside for the prevailing minimum sum, then you can use your CPF to pay up to additional 20% of the valuation price of your flat. In total, you could only use your CPF to pay up to 120% of the valuation price of your flat at the time of purchase (before 55 year old).

If you engage in a 30 year mortgage loan for your resale flat, you may find problem in servicing your mortgage even if you have money in your CPF because you won't be allowed to use your CPF to pay. i.e. you will have to service your HDB mortgage loan by cash alone. As a thumb of rule, normally you will face problem in paying your mortgage after 15 years of purchase. Generally speaking, the total amount of money you need to pay for your flat, with compounded interest rate, is about double the amount of the initial loan.

So please THINK THRICE before you decide to buy a RESALE HDB Flat!
The following is taken from an article at this blog.

It basically explains the restrictions and mechanism of CPF limits on usage for mortgage payment:

Property Valuation Limit and CPF Withdrawal Limit

If you depend on financing your home property loan using your CPF OA, do you know that you might be hit with a scenario where you can’t use your OA to pay for your housing many years down the road? (This does not apply to new HDB apartments purchased using a HDB loan)
Here are three terms you need to be aware of:
  • CPF Withdrawal Limit
  • Valuation Limit
  • Available Housing Withdrawal Limit (AHWL)
CPF Withdrawal Limit
This is the maximum amount of CPF that you can use to pay for your housing. It varies from 150% to 120% of the loan amount depending on when you bought the property. From 1st Jan 2008 onwards, the limit is 120%. Note that if you refinance your housing loan, the prevailing CPF withdrawal limit will apply to your new loan.
Depending on the interest rate of the loan, the CPF withdrawal limit is likely to be hit towards the 2nd half or tail end of the loan.
Once this limit is hit, you can’t use any more CPF monies to pay for your housing loan.
Valuation Limit (VL)
This is the lower of:
  • Purchase price of property
  • Valuation of property at time of purchase
Once your CPF withdrawals (for paying the property) reaches the VL, you will not be able to use your CPF to pay for your housing loan unless you have the Avaliable Housing Withdrawal Limit (AHWL).
Obviously, the Valuation Limit will be hit before the CPF withdrawal limit is hit. It can also be reached in the early years of a loan if someone uses spare monies in the OA to pay down the housing loan rapidly.
Avaliable Housing Withdrawal Limit (AHWL)
For those below 55, the AHWL is the balance available after setting aside the Minimum Sum component. Savings in the OA, SA and amounts withdrawn for investment can be used to meet the prevailing Minimum Sum cash component.
While the terms might sound confusing, any potential property owner should definitely try to understand the implications of these limits on their housing loan repayments before they buy any new property (or refinance an existing one).
Not doing so might result in an unpleasant surprise many years down the road, especially if there is not enough free cashflow to be diverted towards the housing loan.


It is always more prudent to go for a BTO or new HDB flat if you are a young couple buying your first flat. This will allow you to accumulate more buying power or prevent you from over-committing yourself. For BTO or new HDB flat mortgage, the Property Valuation Limit and CPF Withdrawal Limit will not be applicable and you could safely use your CPF money to pay all the mortgage for this flat. This will allow you to have certainty in your financial planning.

Goh Meng Seng