Thursday, June 07, 2018

TOTD: Mis-selling of Dangerous High Risk Financial Bonds to Retail Investors

Thought of the Day - Mis-selling of Dangerous High Risk Financial Bonds to Retail Investors

Just a couple of weeks ago, news broke out on Hyflux defaulting on its interest payment to the perpetual bonds it had sold to investors, which include retail investors.

Most Singaporeans do not understand what is a perpetual bond. For normal bonds, be it government or private company's bonds, they will have an expiry date. It basically means that when you buy these bonds, it promises to pay you an interest every year and at the end of 10 or 20 years, or any number of years dictated on the bond as a contract, it promises to pay you back the amount stated on the bond.

For example, there could be a $100K coupon bond which promises to pay you 5% of $100K each year for 20 years and at the end of the 20 years, it will repay you the 100K stated on bond. You may not pay $100K for the bond because it depends on the interest rates of the market. You may pay higher than $100K if the current interest rate is lower than 5%. Or you may pay lower than $100K for this bond if the current interest rate is higher than 5%. i.e. the price of this bond is inversely related to current interest rate.

Technically speaking, you can trade on these bonds. You can buy or sell these bonds before the maturity of the bonds.

What is perpetual bond then? It basically means that the company will be selling you these bonds and it promises to pay you the coupon rate, eg 5% every year but it will go on forever and it will not repay the principal amount of these bonds. i.e. it will be borrowing these money from you or other investors perpetually... FOREVER.

You can only "cash out" from these bonds by selling to other people who are willing to buy it.

The pricing of such bonds are more complex as the longer the bond maturity is, the higher risk it involves. And now, when technically speaking the maturity is infinity, aka no maturity, then the risk is extremely high.

This is why Perpetual Bonds are NOT MEANT for retail investors but more for institutional or professional investors. MAS, as the regulator of the financial market, should not even allow such perpetual bonds to be sold to retail investors!

But we now know, MAS has actually closed both eyes on such issue. Now that Hyflux has defaulted on the interest payment on its perpetual bonds, these bonds have basically become JUNK bonds in the market with little value left. The retail investors would suffer huge losses in such situation.

Ironically, Termasek Holdings under Ho Ching, has planned to sell perpetual bonds to retail investors, putting up such slogan on "supplementing CPF" earnings!

First of all, it is totally inappropriate to sell perpetual bonds to retail investors.

Secondly, how could a Sovereign Wealth Fund issue such a bond?

Last but not least, 4.5% may look comparatively attractive to the 2.5% or 4% given by CPF, but the amount of risk in perpetual bonds are very much higher! Normally, such bonds are sold at a discount to institution investors but it seems that it is more lucrative to sell to inexperience retail investors at higher price or at its principal value because they do not understand the risks they are taking!

Considering the Prime Lending Rate is at 5% now, the interest for Perpetual Bond should be higher than this rate because, it is basically a loan for forever which will involve greater risk!

Termasek Holdings, as our Sovereign Wealth Fund, is actually taking advantage of Singaporeans, by borrowing from them below Prime Rate with indefinite maturity! Try asking any banks to lend to you $100K FOREVER at prime rate and see what you get from them!

Truly, I must warn all Singaporeans not to be taken advantage by our very own Sovereign Wealth Fund. I do not know why they need to raise funds through perpetual bonds when they are already handling so much funds up to the hundreds of billions but with the opaque manner in which they run their business, the risk is even higher than one could imagine.

Risk arises when there is uncertainty with lack of transparency and information. Please do not be fooled by such "good investment opportunity" sales talk. Else, you may end up like those Minibonds victims, die liao also don't know why and MAS will just brush you aside.

Goh Meng Seng

Tuesday, June 05, 2018

Comprehensive Set of Policy Options for HDB-CPF Mess

The HDB-CPF time bomb will blow up in 10-15 years time with a sudden surge of HDB flats passing their 40 year-lease mark. My estimate is that about 50% or more of HDB flats would have less than 60 years to their expiry by 2035.

As I have mentioned, the HDB problem cannot be tackled without tackling the CPF policies. They are like twin babies right now and the problem is magnified with such linkage between these two entities.

The following are the gist of the time bomb:

1) Inadequacy of Retirement financing due to over-consumption of Housing effected by the devious link between HDB and CPF.

2) PAP has misled a few generations of Singaporeans into believing that they could use their HDB flats for retirement by "monetizing it" and treating it as "pure asset" instead of consumption item. Nothing with an expiry date could be considered as a long term perpetual asset which one could depend on decades later in life.  Due to ageing population, there will be higher supply of old HDB flats than demand of these flats which are above 30, 40 or 50 years old. The financial regulations and illogical HDB rules restrictions have aggravated the situation.

3) Ageing population will result in potential oversupply of HDB flats in the long term if it is not kept in check. This is especially so when young couples are "forced" to buy BTO or HDB flats with longer lease while the HDB restrictions basically prevent them from buying old HDB flats with shorter lease left.

4) HDB rules also restrict Singaporeans from buying smaller and cheaper BTOs if their income level is high. These artificial rules will implicitly create over consumption of housing. 

5) The valuation system that HDB used has an inherent upward bias when it doesn't include the balance of lease as key consideration. This will create a market with pricing but without demand.

6) The massive problem of having huge number of HDB flats expiring their 99 year lease all within 5 to 10 years time will have to be dealt with careful planning decades in advance. PAP's refusal of initiating Enbloc for old flats will create an even bigger problem later.

The set of solutions are as follow:

A) De-link CPF from HDB or property purchase and Lowering of Employee's CPF contribution

CPF should be kept strictly as a fund catering for retirement. For a good financial planning, 20% of income should be saved for retirement. It means that while CPF could be de-linked from HDB purchases, Singaporeans could lower their Employee's CPF contribution from 20% to 3% while the Employer's CPF contribution shall remain at 17%.

Singaporeans should decide what to do with the excess cash as a result in the lower CPF contribution. They could use it for renting a flat, save it up, invest it in business or other financial products or use it to buy a property (HDB or otherwise) and pay the mortgage.

Such radical policy change will correct the past PAP's mistake in deliberately and artificially channeling Singaporeans' money into buying HDB flats, using more than what they should use of CPF money in paying the down payment and mortgage, resulting in over consumption of housing at the expense of retirement funding. Such problem will only surface decades later as more and more Singaporeans in my generations will realize.

Such social engineering to create an illusion of wealth and property ownership is extremely harmful to the Nation as a whole.

B) Dismantling of Restrictive HDB Rules of Social Engineering Manipulations. 

There are many HDB rules which are the results of social engineering attempts, should be removed. Rules that dictates high income level cannot buy smaller flats should be totally abolished. Housing consumption should depend on needs, not on income level. Whatever subsidies the government wanted to give should depend on income level and not HDB flat size. Thus, there is absolutely no reason why Singaporeans should be prevented from buying flats according to their needs.

Rules that dictate singles could only buy HDB flats after they are 35 year old should also be abolished. Such rules are based on "family-centric" reasoning but these rules are too restrictive and not helpful for singles to seek independence in living before they look for their lifetime partners. It also excludes people from other segments of the society to seek independence and privacy for their housing needs. As far as the government is concerned, each and every citizen will only enjoy grants or subsidies once, regardless of their age or whether they bought their flat before or after their marriage.

Rules that dictate young couples cannot buy HDB flats with short lease left should be abolished as well. If HDB flats are treated as a consumption goods, there is absolutely no reason for such rules to exist. Shorter lease, old HDB flats may cost much lesser and with the grants given by the government, young people could well afford to buy their first CHEAP old HDB flat to start their marriage life earlier. This will also encourage them to have children earlier with lower expenditures on housing.

Liberalization of the HDB rules will enhance market efficiency and liquidity, especially for the resale market of old HDB flats which have less than 60 years lease.

C) Re-configuration of Financial Rules and Valuation Methodology

At the moment, there is really an abnormality in the financial rules. For car purchase financing, although the COE restrict the car life span to 10 years, banks and financial institutes are still allowed to finance buyers for up to 7 years of mortgage. However, for some strange reasons, HDB flats with 60 years lease left will face a drastic drop in financial options and the purchase of flats with 20 years left, could not be financed at all!

If we just treat HDB flats simply as a consumption goods, there is no reason why there is a discrepancy in financial treatments by the banks and finance companies.

For owners of HDB flats with less than 60 years lease, they could not "monetize" or sell their flats mainly because of mismatch valuations of their HDB flats as well as liquidity problem due to such financial rules.

Re-configuration of the financing rules of old HDB flats based on the fact that it is just a consumption good like car, washing machine or any hire purchase items would allow adequate liquidity to flow into the resale market of these old flats. Of course, this must be accompanied by a revamped property valuation system which will give a more realistic valuation of old HDB flats based on the leasehold factor. It is just an old car. The older a car is, the lesser its valuation is.

Sellers of HDB flats should not be asked to repay back all the "lost CPF interests" due to their use of CPF funds to finance their HDB flats when they were young. Else, those elderly people who decided to sell their HDB flats to supplement their retirement financing will find it totally meaningless in their attempt to "monetize" their old HDB flats.

D) Kick Start a Redevelopment Plan for old HDB estates 

In anticipation of the impact of an ageing population with ageing HDB flats and estates, the government should start planning for the Redevelopment of these old HDB estates in stages. Instead of limiting SERS to 4% of total HDB stock of flats, there is an urgent need to kick start a Total Redevelopment Plan for ageing HDB estates.

This will of course involve enbloc of HDB flats in phases.

Although it is going to be an expensive ever-lasting process but it is a necessity to pre-empt a total chaos and collapse of the whole HDB resale market.

As the ageing population would mean that some land acquired via enbloc can be released for private development use while the resulting higher pricing of the redeveloped flats would make older flats with less than 60 or 50 years lease more attractive. This will create a new equilibrium which will effect a more efficient use of land and housing stock.

Redevelopment of old HDB estates will have to be carried out in phases, most probably stretching over 20 to 30 years time frame for one estate. Such staggered redevelopment plan will prevent a sudden chaotic situation whereby the whole old HDB estates with lots of HDB flats expiring within a short span of time resulting in a sudden shock shortage of housing stock to provide for those who are going to give back their HDB flats to the government.

It is totally irresponsible for PAP government to say that they will only redevelop 4% of HDB flats via SERS while just waiting to take back all other HDB flats from Singaporeans when their lease expired. Such method may save the government lots of money but it will create a great turbulence to the whole resale market for HDB.


The above outline of the combined policies needed to address the HDB-CPF Axis of Evil Problems will not prevent some Singaporeans from losing great amount of money from their misguided belief in PAP's Asset Enhancement Scam, especially so when they use lots of money to buy from the HDB resale market.

However, at the very least, we could achieve the objective to create a viable resale market demand for their old HDB flats which have less than 60 years lease left. This is done through liberalizing rules on HDB flats purchase, expanding the potential pool of buyers of these old HDB flats to singles and young couples with viable financing plan achieved by re-configuring of financial rules and valuation system based on rational reasoning.

While some Singaporeans will have to suffer a huge and painful cost  of greatly depreciated old HDB flats, the government should also bear the big bulk of the cost in creating this whole mess via a rational staggered enbloc redevelopment of those old HDB estates.

This is a very painful lesson for all Singaporeans that property transactions and speculations on your only residential home are simply a Zero Sum Game eventually.  Anyone's gain will be somebody's loss.

Goh Meng Seng

Monday, June 04, 2018

Solutions to HDB-CPF Mess MUST Address These Issues

Solutions to HDB-CPF Mess must address the following few issues:

1) Provide stability to the HDB resale market, preventing big crash or huge hike in prices.

2) Solve the inadequacy problem of CPF for retirement due to HDB purchase

3) Solve the insolvency problem of old HDB flats above 40 or 50 years old.

4) Guard against oversupply of HDB flats in the long run

5) Tackle the potential problems of massive expiry of 99 year lease in less than 60 years time.

6) The system of Valuation of HDB Flats has to have realistic reflection of leasehold terms of flats.

7) Cater to the needs of an ageing population with changing social-housing reconfiguration.

8) Choice and options for Singaporeans should be widen.

9) Re-calibrating social mindset and financial system to treat HDB as public housing, a consumption good instead of investment good.

This list may not be exhaustive but the Core of problems which need immediate solutions to address the short-mid-long term needs of the Nation.

Goh Meng Seng

TOTD: Lessons for Civil Servants from Malaysia GE14

Thought of the Day - Lessons for Civil Servants from Malaysia GE14

Many top and middle management civil servants in Malaysia as well as Singapore are pro the ruling parties in their respective countries and they think that by doing so, they could get promotion faster or at least keep their iron rice bowls fortified.

Some will go the extra mile to side the ruling parties or even risk breaking the law to demonstrate their boot licking skills.

They have forgotten that as civil servants, regardless of their political stance or preferences, they are required to maintain neutrality in their capacity as public servants. Tax payers paid their salaries, not ruling parties.

We have witnessed in Malaysia, a lot of upright civil servants were forced to leave or even persecuted for carrying out their duties diligently and they could finally cleared their names. On the other hand, those civil servants who are too biased in their ways are getting sacked or even face potential lawsuits against their bad deeds.

Singapore civil servants, especially those top civil servants should bear in mind that they should maintain neutrality at all times else the karmic results we are witnessing in Malaysia now may fall upon them one day if PAP lose its power.

Just today, I heard another case that a man was warned that he should not write any anti-PAP government postings on social media else they, the police, will prosecute him! That’s outright unconstitutional and against the right of freedom of expression! It really makes Singapore sound more like a total communist dictatorship!

This is not the first time I heard about such threats imposed by the police or ISD agents in disguise. They have forgotten that their duties are to the country, not to the ruling party.

Time has changed and it is regrettable that such old tactic of intimidation is still used by these people.

They will have to pray hard that PAP will stay in power forever.

Goh Meng Seng

TOTD: The High Speed Rail

Thought of the Day - The High Speed Rail

Some people ask me what do I think of Tun Mahathir cancelling the High Speed Rail project

Well first of all, we must understand that with such high price tag, it is bound to lose money for a long time to come if it was to be built, especially when it needs to compete with the current air flights between KL and Singapore.

Secondly, although most of the rail and stations were situated in Malaysia, Singapore will benefit most from its construction. This is basically why PAP Government is willing to foot half of the cost of constructing the HSR.

PAP will benefit from the shot up in land prices around Jurong area and it will make it easier for Singapore to attract Talents from Malaysia to come and work in Singapore.

However, it is obvious that PAP Government is facing grave cash flow problem despite of its boast of having huge reserves. Huge mega projects like HSR, Tuas Mega port, T5 @ Changi Airport, New Thomson MRT line etc... are creating an obvious pressure on the government finances, so much so that PAP is planning to raise taxes as well as borrowing to fund all these.

Why would all these multi billion dollars projects come all at once, at the expense of Singaporeans in terms of higher taxes?

Thus in my view, Tun Mahathir had made a timely wise decision to call off the HSR. Of course he did it for the consideration of his country's financial position but indirectly, he will also help Singapore to pause and think whether such mega project is really necessary for the time being.

Going for an expensive HSR which is destined to lose money will only serve the ego of PAP but will bleed us in the long run.

A medium speed rail may be more practical, cost effective and sustainable in the long run.

As for penalty, I would say that in consideration of Malaysia being our closest neighbor and it is struggling with the financial situation in the aftermath of GE14, its current financial and overall stability will also be our Core interests as well. Apart from being a gesture to rebuild our relationship with the new administration, it is also in our interest to see a stable and smooth transition of Powers in Malaysia. We will not be spared if Malaysia face a financial crisis.

Thus, in the spirit of maintaining the legality of contract and rule of law, I would suggest Singapore to impose only a token of fees for the breaking of contractual obligations by the new Malaysian administration.

Goh Meng Seng

Wednesday, May 23, 2018

The FATAL Mistake of PAP

The FATAL Mistake of PAP

Well, the Fatal Mistake fell upon Singaporeans while PAP made use of such manipulation of CPF-HDB financing to boast its own political capital built upon the great cost on Singaporeans' retirement financial adequacy as well as future generations of Singaporeans' housing needs.

Many people do not understand why I call Asset Enhancement Scheme as an outright scam. Let me explain in simple terms.

If someone forced you to put 50% or 40% of your salary into his safe keeping, promising you a miserable return of 2.5% per annum but tells you that you could use a big bulk of it to purchase only a precious stone from him and nothing else. He claims that it will increase in value forever, 10 times, 15 times, 20 times...

Else, you will have to wait until you are 55 years old before you can take back your money... then, it increases to 65 years old and then, he says, you cannot take out whole lump sum but only bit by bit....

What would you do? Of course you will use whatever amount of money you can get from these money you kept with him to buy this supposed precious stone!

Then, he inflated the price of this precious stone artificially because he is the monopoly supplier of these stones, under the slogan of "enhancing the value of the stones"... in fact, made you pay money to "upgrade" the stone with beautiful boxes.

However, right from the start, this guy knows that these stones could only last 99 years and by then, it will be zero value and under the contract, he could take the stones back from these buyers.

What about the promise of "Asset Enhancement"? What about the Empty rhetoric that these stones will rise in value FOREVER?

Anyone with a good mind would conclude that this is a scam. The contract drafted by that guy has specifically said that the stones will expire and have to be returned to him but yet, he is telling everyone that it is an asset to them and it will rise in value forever!

Now, this is just the beginning of the problem. If it is just a bit of money lost to a scam, that's not a big issue. But in the case of CPF-HDB, a few generations of Singaporeans' retirement financing is at stake!

It is a deliberate scam whereby money, your money, is deliberately channeled into a dead end with only one outlet available. i.e. buying HDB flat (later on private property but that is another issue). It is just like an irrigation of water. PAP had made use of your money, to make its HDB 80% ownership successful and claim credits for it. But it is in fact, a manipulation of your money which results in over-consumption of HDB public housing.

The fundamental Fatal Mistake made here is that in its zeal to get Singaporeans buying its HDB flats which continues to be inflated in prices as compared to 1970s and 1980s, PAP government has encroached into the core CPF funds meant for Singaporeans' retirement.

A prudent financial plan for retirement would require a person to save at least 20% of his or her income for retirement at anyone time. With prudent investment return about 5%-8% above inflation rate, it would provide a decent retirement for everyone.

A balanced financial plan would mean that a person should only spend 20% of his or her income on housing. This would mean that 40% of his or her income would be set aside for retirement as well as housing. 60% would be available for daily consumption.

However, PAP has screwed it up with its manipulation of the CPF which supposedly acts as function of retirement saving but they have mixed it up with housing financing, apart from other usage.

Only 11% of a person's salary are kept as fixed savings for retirement... inclusive of Medisave for healthcare. To make it worse, the returns for this 11% of savings is just 4%. Hardly meet the requirement of 5%-8% above inflation rate.

Thus, it is not surprisingly at all that most Singaporeans will not be able to afford a comfortable retirement just depending on the CPF savings.

The "solution" that PAP gave initially, is that HDB "is an asset" which Singaporeans could "monetize" for retirement. This was what MBT said during GE 2011 when I questioned PAP rigorously on the principles of having high HDB prices which created insufficient CPF savings for retirement.

I was hoping he would take up my challenge of an open debate on HDB-CPF back then because I would have hantum him with the basic fact that HDB is a 99 leasehold PUBLIC HOUSING which Singaporeans do not have a say on whether they could enbloc their flats. This is basically because, in legality, Singaporeans as HDB dwellers, do not own the land which their flats sit on! They have no legal rights over the land and cannot make any decisions on what to do with it, unlike private property owners.

And if HDB flat is an entity with an expiry date while PAP government apparently is not interested to do SERS for all HDB flats, then how could it be an "Asset" at all in the first place?

HDB flat is a Consumption good, not an Investment good. Period. It is totally misleading, dishonest and irresponsible for PAP to tell Singaporeans that their HDB is some sort of super investment which will rise in value forever!

And if HDB is a consumption good, it is totally unreliable to depend on it for retirement financing at all! Well, first of all, the value of HDB is destined to drop when its lease is running out!

I am explaining the CORE problems of the HDB-CPF axis before providing any viable solutions. It is basically a bad policy of funds manipulation which has gone wrong, resulting in bad financial planning for 80% of Singaporeans.

I am angry at PAP for its reckless and imprudent policy manipulations with total disregard of Singaporeans' welfare and prudent financial planning.

It is a foregone conclusion that most Singaporeans who have paid inflated prices for their HDB flats will suffer when they eventually find that there are insufficient funds in CPF for their retirement. You will see more elderly people pushing carts, washing dishes and cleaning tables in the years to come.

What made me extremely upset is despite of the obvious enslavement scheme of a 30 year mortgage for buying a HDB flat, MBT and PAP back then still blew their trumpets that HDB is still "AFFORDABLE"! Over-spending on mortgage of HDB, resulting in insufficient retirement saving in CPF and sometimes, with additional cash payment to finance a 30 year mortgage but yet, PAP is still blowing the trumpet of "Affordability"?! That's the most irresponsible remarks and political statement made by MBT and PAP.

Wait for my subsequent postings here... I shall touch on what are needed to correct this horrible HDB-CPF axis of evil.

Goh Meng Seng

Wednesday, May 02, 2018

TOTD- No Quick Simple Fix for Asset Enhancement Scam

Thought of the Day - No Quick Simple Fix for Asset Enhancement Scam

There are quite a number of people trying to offer quick fixes to the HDB Time Bomb without understanding ALL the problems and BAD impact created by the Asset Enhancement Scam which ultimately linked HDB to CPF, retirement financing.

It is a complex problem which involves multiple dimensions with complex tensions and competing needs. PAP's mistake in its Asset Enhancement Scam has pushed every Singaporeans in HDB towards a narrow dead end which entangles everything in a massive mess.

The fundamental problem of Asset Enhancement Scam is that PAP had changed Singaporeans' mindset and perception towards public housing, HDB. Instead of viewing HDB as a pure consumption commodity which serves as a mere safe roof over our heads, PAP had evoked the Greed factor by treating such basic needs of housing into some Grand Scam of treating it as an "Investment Asset" and releasing huge liquidity of FORCED retirement savings from CPF into HDB.

This created a "self-fulfilling prophecy" that your HDB will increase in price and value which was merely a short term phenomenon rather than a REAL high quality long term investment return. The excess liquidity forcefully released via CPF has created inflationary impact on HDB prices that created that delusion.

Furthermore, it has also transformed our CPF retirement financing model from "Self-sufficiency" towards "Cross-Generation Funding" via the inflation of HDB prices which CPF funds were poured into. i.e. our children, grand children and future generations will be the ones who will suffer and indirectly become the ones who financed the retirement finances of the older generations/our generation due to higher HDB prices!

However, such inflationary path of HDB cannot be sustainable due to the very nature that IT IS STILL PUBLIC Housing in essence and HDB dwellers DO NOT OWN the land at all. The eventual ZERO valuation of HDB flats while they approach their end of lease is INEVITABLE.

This will create a great silver tsunami that would overwhelm Singaporeans.

They must face the reality that PAP has scammed and fooled them into believing something that will never work nor come true.

I will provide a multi-prone approach solution to this mess in time to come. But this will come with a cost to most Singaporeans and please remember, such second best solution will have huge cost and PAP should be made responsible to it politically.

Goh Meng Seng

Tuesday, May 01, 2018

People's Power Party Labour Day Message

People's Power Party Labour Day Message

First and foremost, our deepest condolences to the family of Pte Dave Lee Han Xuan who had died of heat injury. PPP takes a serious view on such death of our NS men as they are all underpaid service men without proper insurance coverage by their direct employer, SAF.

We have heard of constant boast of the SAF on how advance their medical service is, especially in dealing with common problem of heat stroke among our soldiers, but yet, we are still losing a good soldier like Pte Dave Lee. Such Death is really one too many and it shouldn't happen in the first place if proper protocols are observed. We urge the authorities to hold an independent inquiry into this incident with external audit on the processes and protocols.

Work place safety seems to be neglected in many other places as well, including GLCs. The recent case of technician bringing PSA to court for exposing him to cancer causing substance asbestos resulting him to develop lung cancer is one fine example. We would not speculate how the court will make their judgement on this case but the fact that PSA had brought its defence based on technicality (of 15 years legal claim time frame) instead of admitting its management neglect and make good of its mistake, is a glaring display of irresponsible corporate culture and management. We condemn such irresponsible management culture which disregard work safety practice that put our workers at great health risk. It is totally unacceptable for a Government Linked Company to attempt brushing its corporate responsibility towards its workers' health safety aside via mere legal technicality.

For all workers in Singapore, we only want to earn our money in a safe environment and return to our home safely to enjoy the fruits of our labour. On top of that, we want to protect the value of the money we had earned but it seems that PAP government has been creaming off our hard earn money through increasing prices of electricity, water tariff, gas, etc. Inflation is the number one enemy to workers and inflating prices on basic necessities is the most damaging to our workers.

To add salt to injury, PAP government has announced that they will be increasing GST from 7% to 9% in the near future! We do not see the need for PAP government to increase GST when it continues to enjoy hefty surplus throughout the years. We do not even see the need for PAP to have GST at all when they are creaming off the returns of our CPF money which was invested in the two Sovereign Wealth Funds; they reportedly earn huge returns more than 4% but we are only given 2.5% to 4% for our CPF savings!

PPP would also urge financial prudence to many Singaporeans who are pouring huge money into their HDB purchases. Whenever there are reports of record high transactions of HDB flats in the resale market, we are very worried. Contrary to what PAP has been propagating throughout the decades, HDB is largely a consumption item rather than an "investment nest" which will help you to fund your retirement. The mis-selling of Asset Enhancement Scheme is politically motivated but financially misleading to all Singaporeans. Any increase in HDB price should NOT be celebrated but be feared as INFLATION on our consumption. The truth is, you will be paying more "property tax" on your HDB if the prices in the resale market continued to increase! But ultimately, our HDB flats will be ZERO in value when its lease expired and there will be little chance of SERS.

We would urge Singaporeans not to be misled by PAP's propaganda into treating your only home as some "great investment" for retirement. Paying huge amount of money, up to million dollars will only increase the cost of your consumption of housing and will not make you rich at all.

While PAP had always boasted about how well our GDP has grown, we would urge all Singaporeans to do a reality check of your salary increase in comparison with GDP growth rates. If there is a shortfall, it would mean that all these talks of good economic growth are quite meaningless.

Last but not least, we wish all Singaporeans a Happy Labour Day.

People's Power Party Singapore

Friday, April 13, 2018

TOTD: HDB-CPF axis Time Bomb, the glaring failure of PAP and WP LTK

Thought of the Day - HDB-CPF axis Time Bomb, the glaring failure of PAP and WP LTK

I have said, the Asset Enhancement Scheme is actually the biggest self serving scam of PAP to hoodwink Singaporeans into believing only PAP government could guarantee their HDB flats could increase in value forever, defying the basic logic and economic/financial principles. LKY even boasted about PAP ability to make your HDB rise in value of 10,15 or even 20 times.

The most problematic with HDB is that it is linked to your retirement fund CPF. IF HDB is going to depreciate towards ZERO value, then whatever CPF money you put into it, will be totally wiped off. Your retirement plan will be hurt!

One of my initial resolve in joining opposition politics is to fight PAP against its Asset Enhancement Scam, which is extremely difficult because like any scam, it feeds on people’s greed. Most people are short sighted and didn’t see the full picture while only focus on their short term gain. They didn’t realize that HDB Price inflation may let them gain in short term, but whatever gain they get, is at the expense of their children’s future, as well as many future generations to come.

This greed which Asset Enhancement scam built upon, burnt like fire in the 1990s and even into 2000s. It was a perfect scam that helped PAP to hold on to absolute monopoly of power for three decades.

When I joined WP, on a few occasions. I had raised this issue to LTK and said that this is the most important issue we need to raise. He brushed it off saying that what’s wrong with Asset Enhancement Scheme? It is good what!

Needless to say, I was completely disappointed that the leader of the opposition party which has one of the two seats in parliament, couldn’t see through such a scam.

I tried to explain why this AES is wrong but it just couldn’t get through him. Apparently, the lack of a good Economic training is the key weakness of LTK.

After I left WP with disappointment, NSP approached me to join them. This time round, I didn’t bother to try to explain why AES is bad. I just threw the issue out during the GE and challenged MBT on his Monetizing HDB for retirement concept.

I found out later, apparently this so call brilliant idea was created by a respected professor teaching sociology in NUS. Deep down, I guess it is totally bad idea to have a sociologist to meddle with Economic policies after all.

And I believe LTK didn’t believe AES is bad basically because it was backed by such academia.

Goh Meng Seng

TOTD: HDB Circular Contradictions

Thought of the Day - Circular Contradictions

We have heard about Circular Argument but this is the first time I have heard about people going in Circular Contradictions!

This actually comes from the Chief of HDB. It is good that she has talked about people should pay according to the lease remaining in a resale HDB flat but she still insists that HDB could be monetized as an asset for retirement!

One of the key method of monetizing HDB for retirement is to downgrade to smaller flats. But wait! If people follow her advice on paying much lesser to flats that are old, the. How would the retirees selling their old flats for good money in order to downgrade to a smaller flat, the new studio apartment but yet have excess money to get out from the deal to finance their retirement?

Besides, most people would have PLEDGED their flat to HDB and I guess there would be very little money left for them to cash out from the downgrading, if there is any at all!

And studio apartment isn’t that cheap at all! For 30 years lease, HDB made you pay $60k to $80k depending on locations but if you calculate prorated according to lease, it means this one room studio apartment actually cost $180k to $240k for 90 years! Please remember, it is just a studio apartment!

So if you can sell your three room or four room flat at $250k, if you could actually sell it off in the first place when the lease left is merely 60 years or less, half of it goes to CPF due to the pledge, at least $60k goes to the new studio apartment, in the end, after netting transaction cost, you get $50k or $60k after all that trouble but how long could this last for retirement?

The other option is even more kind of a joke instead of real option. Selling back the lease to HDB. How much would HDB pay? Definitely much lesser and most probably ended up with a couple of hundred dollars per month.

To rent out their flats? The truth is, PAP doesn’t value your privacy at all. And when the grey tsunami waves set into motion, I don’t know whether there is high rental market to make money from when you start to have lots of supply of rental flats from both HDB and private apartments.

Of course, those staying in three room HDB may have to sleep in living room in order to get enough rent to live on ...

The whole problem started when PAP sold Singaporeans the FALSEHOID and FAKE dream that Asset Enhancement Scam could do wonders and make your HDB rise in price forever. That’s why people are throwing huge amount of their CPF into this scam. Now they are stuck.

With graying population, who will buy old HDB flats with dwindling lease? The situation will be worse when many baby boomers who have stupidly believe in PAP Asset Enhancement scam, try to sell off their old HDB flats to cash out for retirement because they have very little left in their CPF after paying a great deal for their current HDB flats.

There will be oversupply of resale HDB flats with very small demand... who would buy after hearing the confirmation from PAP that these flats will have zero value after lease expired and now, these flats have less than 60 years and they would not be able to sell them off for retirement?

The price for these flats will face a spiral downward price pressure and in fact, most of them will have problem selling.

It is an amazing Circular Contradictions which the HDB Chief tries very hard to sell. She is just like that sociologist, who only look on the overly simplistic micro level instead of looking at the macro level of possible market conditions.

Don’t ever allow sociologists to meddle in Economics policies again. We will end up with never ending Circular Sufferings.

Goh Meng Seng

Thursday, April 05, 2018

TOTD: Greatest Falsehood and Fake News from PAP ...

Thought of the Day - Greatest Falsehood and Fake News from PAP ...

FORGET about Operation Coldstore or Operation Spectrum. Singaporeans are just pragmatically selfish and self serving. They won’t be bothered about what injustice had happened to a few tens, hundreds or even thousands of people as long as these don’t affect them directly. We are cultivated to be reaped off of any sense of Social Justice but only taught to focus on our own short term selfish well being.

That’s the harsh reality of being a Singaporean.

The biggest, greatest Falsehood and Fake News that were cooked up by PAP Government is Asset Enhancement Scheme and HDB for retirement financing.

What they have done were just a tiny bit of Enbloc with some upgrading which were politically motivated as pork barrel politicking and in the end, Singaporeans were made to believe that their HDB will be “Enhanced” and thus increase in prices forever! It serves only their agenda of prolonging their monopoly of power without telling the HARD TRUTH that such disastrous scheme will only make them “feel rich” at the expense of their future generations who will be paying for higher HDB prices!

They have messed up the HDB system so badly that there is no way of reversing the bad scam without causing Huge pain to a few generations of Singaporeans.

In the end, Singaporeans were told that not all of their HDB will enjoy enbloc... in fact MAJORITY 96% of HDB won’t enjoy enbloc and their HDB flats will turn to zero value when their lease is up! Did they tell Singaporeans about this critical information back in 1990s when they keep harping on Asset Enhancement Scheme? Half Truth told is no Truth but selective Falsehood!

Singaporeans are fooled in believing in the scam of Asset Enhancement Scheme which is nothing more than making you pay MORE for your HDB flats WILLINGLY, justifying higher and higher prices for New HDB flats through the hedging of prices via the BS OF “market subsidy”, which is not a subsidy at all but effectively just a discount.

At the same time, such fooling scam gave PAP the votes from those who were fooled by them!

Politically speaking, it was the most wonderful "perfect" scam in which you made the voters suffer by paying higher price for the HDB flats the PAP government’s selling but yet, they feel so happy paying higher price and gave PAP votes to maintain their monopoly of power!

But just like any scam, it cannot last forever because it is not sustainable at all. People were made to use up all their retirement fund CPF to buy HDB which doesn’t guarantee forever higher return, not even good as an investment. The time must come when people realize that they have neither the necessary CPF for financing their retirement despite of having the highest rate of contribution in the world, nor the dream or possibility of getting good price for their old HDB flat to finance their retirement.

The situation will get worse and peak when my generation starts to reach 60 years old, which is only 12 years away. At present, the situation is just starting to show the stupidity of the whole scam. For the next two decades, we will see slow collapse of the CPF-HDB scam and by the third decade, most probably the whole system will collapse which most HDB will cross their 40 and 50th year and there is a rapid decline in their prices.

A few generations of Singaporeans will suddenly wake up to the fact that they have been fooled and their hard earned CPF is totally wiped off by the Asset Enhancement scam which was promoted by PAP 30-40 years ago!

2011 was the critical year which we might have the slightest hope of saving the situation but that window of opportunity has lapsed. PAP will NEVER admit their deliberate mistake made in their own interests of self preservation instead of a long term vision for the good and well being of Singaporeans. Many Singaporeans will live to regret for their foolishness in believing in such a big scam and Falsehood propagated by PAP simply because they are blinded by their own greed.

Goh Meng Seng