A rebuttal to PAP MP Ong Seh Hong on cultural diversity in ancient China

Dear Dr Ong,
 
I refer to your comments in parliament as reported by Straits Times on 13 Mar 2010.
 
You pointed out the cosmopolitan atmosphere in the Tang dynasty capital of Chang An and the foreignness of one of China’s greatest poets, Li Bai to illustrate the importance of an open-door policy and of tolerance to a nation’s prosperity and the flourishing of its culture and economic development.
 
However, as cosmopolitan as Chang An was, it is doubtful that one third of its inhabitants was foreign like in the case of Singapore.  So quoting the example of Chang An doesn’t justify the situation in Singapore where the percentage of foreigners is amazingly high.  Also, while Li Bai’s place of birth lies in modern day Kyrgyzstan (rather than Kazakhstan), it was actually found within Chinese territory during the Tang dynasty.  What’s more, Li Bai’s family originated from even closer within China.  So quoting Li Bai’s place of birth also doesn’t justify a pro-foreigner stance since Li Bai wasn’t foreign born as far as the Tang dynasty is concerned.
 
While the Silk Road is a good example of the need to remain open to trade, it is not a good example to justify mass immigrations since the Silk Road was essentially a trade route, not a mass migration route.
 
You also pointed out the examples of the Ming and the Qing dynasties which ended up poorer for shutting up their doors.  But those are examples that point to the danger of rejecting trade that has little if anything to do with cultural diversity or renaissance.
 
The most powerful example of how mass immigration changed a nation’s destiny is probably that of the Roman Empire which was subjected to mass immigrations towards the end of its five century dominion.  The great numbers of Goth immigrants proved too great for the Romans to handle and when they finally rebelled, it marked the end of the once mighty Roman Empire.
 
We don’t have to look far back into history to understand how important immigrants are to a nation’s success.  Modern day examples abound such as those of South Korea, Taiwan, Japan and Western Europe which show that prosperity and cultural efflorescence can take place without mass immigrations.
 
 
Thank you
 
 
Ng Kok Lim

A rebuttal to Tharman’s claims that Singapore’s economic growth benefits all citizens

Dear Mr Tharman,
 
I refer to your Budget speech as reported by Straits Times on 6 Mar 2010.
 
You highlighted the impressive growth in Singaporeans’ incomes from 2005 to 2008.  But the explosion in HDB and property prices from 2006 to 2009 is even more impressive.  Thus, Singaporeans who bought their first homes during this bubbly period would have found their income growth more than wiped out by the spike in property prices. 

While their income growth is measured in terms of hundreds of dollars, the extra burden they have to pay for inflated property prices is measured in terms of hundreds of thousands of dollars.  It will take perhaps 20 years for the extra income to pay for the extra increase in housing prices.  Any Singaporean caught in this situation would rather have given up the income increase in exchange for a reversion to old property prices.
 
Thus, while you happily trumpet the 20% growth in median income over the last decade, do not forget the concomittant increase of nearly 30% in our property prices as well.  Furthermore, your use of resident unemployment rate obfuscates the real matter of concern which is that of Singaporean unemployment rate.
 
You said it was necessary for businesses to obtain more workers in the second half of the decade so that they could expand quickly to take advantage of the favourable external environment.  However, why didn’t the government adopt the productivity initiatives it is taking now in the first half of the decade so that by the time the favourable second half of the decade came, businesses could expand just as quickly albeit with much less workers?
 
Even if we were to contend that there is a need to obtain more workers, where is the evidence of the plans to accommodate those extra workers?  The frantic building of more infrastructure, more accommodation and sudden rule changes appear knee jerk in reaction to the sudden massive influx with no evidence of forward, methodical planning.  MM Lee’s proud assertion of a forward looking government is sadly missing.
 
You said it is important for us to capture significant opportunities that do not come every year.  That makes us look like primitive hunter gatherers who make the best of whatever comes our way but who have yet to discover agriculture and animal husbandry as the means to secure a steadier supply of food.
 
Therefore, despite your claim that our strategy is not wrong headed, many things have indeed gone wrong with our strategy which necessitates the changes we are embarking on now.
 
You said we needed those workers to build properties, flats, MRTs, and to serve as nurses and bus drivers.  But had we embarked on the productivity ethos much earlier, we may not have needed so many workers as we have now and consequently we may not have needed to build that many properties, flats, MRTs or have so many nurses and bus drivers as we are having now.
 
You said Singapore cannot grow slowly to reduce inequality.  But the issue at hand isn’t about growing slowly but how we grow.  Clearly, our tectonic shift towards productivity growth isn’t about slow growth.  Yet it is fundamentally different from growth by simply adding more people.  The question really is which method is more desirable and will reduce inequality more?  It seems that our primitive pursuit of growth at all costs hasn’t been the wisest of strategies and that we have not been doing what is best to reduce inequality.
 
 
Thank you
 
 
Ng Kok Lim

‘Not realistic’ for GIC to avoid making any losses?

Dear Mrs Lim,
 
I refer to your comments in parliament as reported by Straits Times on 10 Mar 2010.
 
Your said it is not realistic to avoid losses on every investment (that GIC makes).  But that is not the issue at hand.  The issue is the magnitude of those losses versus the supposed talent that GIC has.  What value are we getting from these so-called talents for the millions they are paid versus the billions they have lost?  How much worse would a school boy fare throwing darts to pick investment alternatives?
 
You said the GIC will not be judged on individual deals but on overall performance.  But individual deals do affect overall performance.  If we don’t improve on individual deals, especially the spectacularly bad ones, it means we are not getting the best overall performance we should be getting.  The stakes in the financial market are ever higher now and a lot more devastating too.  The Barings Bank is one good example of how individual bad deals can bring down an entire financial institution with centuries of history behind it.  Surely we would not want individual bad deals to wipe out our nation’s golden goose?
 
We cannot accept the so-called creditable returns by GIC and Temasek over the long term without the means to actually verify them thoroughly given the lack of detailed information concerning their investments.  This is perhaps the reason why we are left to criticise individual spectacular losses given their ascertainableness.
 
Mr Singh’s suggestion that it is timely for the GIC and Temasek adopt a more conservative mandate should not be construed to mean an immediate, knee-jerk reaction to the recent downturn but a timely reminder that their role is to protect the nation’s golden goose and not to endanger it regardless of what courses of action they might undertake at the moment.
 
 
Thank you
 
 
Ng Kok Lim

Why Lee Kuan Yew is not the father of modern Singapore

Dear Mr Sam Tan (MP for Tanjong Pagar GRC),
 
I refer to your comments in parliament as reported by Straits Times on 5 Mar 2010.
 
You quoted Mr Otto Fong as saying that Lee Kuan Yew is the father of modern Singapore and that Singaporeans are his children. 

MM Lee has referred to Singaporeans as descendents of peasants and as (working animals) whose spurs are not stuck deep enough in the hide.  Contrast this with what MM has to say about his eldest son: considerable intelligence; as good as his generation of leaders. 

The stark contrast clearly shows that MM doesn’t treat us like his children, neither should we treat him as our father.  We have no such father who belittles us as though we are mere workers and slaves.
 
Throughout our formative years as a new nation, it was Goh Keng Swee who steered our economy under the guidance of Dr Albert Winsemius. 

With or without Lee Kuan Yew, Singapore would have succeeded given the strength of its people, the strong foundations laid by the British and the good steering of Dr Goh and Dr Winsemius.  It would be difficult to credit someone as our founding father for merely sitting on the throne.
 
While Otto has wisened up to the truth that his future rests with himself, there is no evidence that he has come to terms with his difficult youth and childhood. 

Particularly, does he still blame his father Mr Fong Swee Suan and MM Lee for the difficulties he had while growing up?  If so, what exactly should he blame his father and MM Lee for?
 
In the case of his father, the only thing Otto can blame is the fact that his father lost, not his father’s convictions and determination.  He needs to understand that no one should be blamed for having tried and lost, only for not trying.
 
In the case of MM Lee, Otto needs to understand that his father and countless others were arrested without trial and incarcerated for extremely long periods of time despite the lack of irrefutable proof that they were communists as MM had made them out to be. 

If there is anything Otto should blame, it would be the fundamentally wrong and grossly unfair treatment of the losers in the political battle for Singapore.
 
 
 
Thank you
 
 
Ng Kok Lim

Mah’s story is also Singapore’s story?

Dear Madam Low,
 
I refer to your Straits Times letter dated 8 Mar 2010.
 
I understand your empathy for Mr Mah since both of you grew up in very overcrowded conditions.  However, you need to understand that the improvement in each family’s living conditions over the years is not just a matter of studying hard and working hard but more importantly of diminishing family sizes encouraged in no small part by our “stop at two” policy.
 
The supposed Singapore story of studying hard and working hard to pull ourselves out of poverty is no different from the stories in other East Asian societies. 

Studying hard is not the sole premise of Singaporeans, it is the premise of East Asians in general.  Furthermore, Mr Mah’s success is fundamentally different from those of Bill Gates and Steve Jobs since Mr Mah merely took over the reins of an already successful organisation whereas Bill Gates and Steve Jobs created something out of nothing. 

In other words, it really didn’t matter whether we had Mr Mah or not, his existence as far as the HDB or Singapore is concerned, is non-essential.  Bill Gates and Steve Jobs on the other hand are essential without which there would have been no Microsoft or Apple respectively.  Therefore, Mr Mah’s story is far from Singapore’s story since the former created nothing as far as the latter is concerned.  Mr Mah builds flats that are smaller, far from the city centre that took longer to build and are a lot more expensive.  His ’success’ turned out to be the sorrow and nightmare for many Singaporeans.
 
It is not enough to remind the younger generation of where we come from.  It is more important to let them understand that in an increasingly competitive world, it is not enough to simply ace one’s exams just so as to win a privileged seat to rot in.  Being in a privileged position calls for a sense of duty to fellow Singaporeans, to create something for the benefit of all.
 
So while you give thanks to Singapore for living in a maisonette today, think about who you would thank if you were to start all over again by drawing today’s starting salary and paying today’s price for a maisonette.  I can guarantee you, your tears will be no less than those you shed for Mr Mah last Saturday which you have no one else but Mr Mah to thank for.
 
 
Thank you
 
 
Ng Kok Lim

Ng Kok Lim debunks Mah Bow Tan’s “myths” about HDB flats

Dear Mr Mah,

I refer to your comments in parliament as reported by Straits Times on 6 Mar 2010.

There are not enough HDB flats to meet demand

You said it is a myth that there are not enough HDB flats to meet demand because the 13,500 flats built last year and the 12,000 flats to be built this year add up to be more than the approximately 23,000 flats in either Clementi or Jurong East.  However, the 23,000 flats in either Clementi or Jurong East do not represent the demand for new flats.  Ms Chua Mui Hoong reported in her Straits Times commentary on 11 Feb 2010 that there is a potential demand for 95,600 flats over and above those who have already clinched their flats or will be buying other properties.  This demand for 95,600 flats far outstrips your supply of either 13,500 or 12,000 flats.  Hence, it is not a myth but a truth that there aren’t enough flats to satisfy demand.

You said that the massive oversubscription of new flats is misleading because many applicants eventually reject the flats they were invited to buy.  While it is true that applicants who reject flats available to them do not want those flats, it doesn’t mean that they don’t want a flat at the end of the day.  They still want a flat and so they still constitute part of the demand for flats.  Hence, the massive oversubscripton of new flats is indeed a reflection of the massive demand for new flats.

You said that only 6% of complaint cases from first time buyers are geniune.  However, some of the examples you reportedly gave on 8 Oct 2009 were in themselves dubious.  Your case study of Mr C rejecting flats facing the mosque may be unreasonable to you and the HDB but may not be unreasonable to Singaporeans who wish for a more quiet place.

HDB flats are unaffordable

You said there is the CPF housing grant of $30,000 or $40,000 and an additional grant of up to $40,000 for low income families.  However, these grants are not even enough to make up for the more than $100,000 increase in flat prices across Singapore over the last three years.  You said that the government disbursed more than $330 million in housing grants to more than 20,000 families.  But a nominal increase of just $40,000 in the price of new flats multiplied by the 13,500 flats sold last year would have seen government coffers swell by $540 million.  That easily beats the government grants that have been disbursed.  Rapidly increasing flat prices have swelled government coffers a lot more than the grants that has been disbursed.

You said that our house price to household income ratio of 5.8 is low compared to London’s 7.1 and Hong Kong’s 19.8.  However, the ratio for London was calculated omitting the 15% Londoners living in cheap rental flats while the ratio for Hong Kong was based on expensive Hong Kong Island alone which excluded Kowloon and the New Territories where the bulk of Hong Kongers actually stay.  Hence, the ratios you quoted are flawed and unfairly skewed towards more expensive accomodation in those cities.  Furthermore, the choice of highly expensive London and Hong Kong as comparison targets also serves to show just how expensive Singapore has become.

You said our monthly mortgage payment to household income ratio of 22% is lower than the affordability benchmark of 30% to 35%.  But the international affordability benchmark is in essence an unaffordability benchmark that marks the level of absolute unaffordability much like the poverty benchmark of $1 per day marks the level of absolute poverty.  Just as an income of $2 per day which lies above the poverty benchmark does not imply that there is no poverty, similarly, a ratio of 22% which falls below the affordability benchmark of 30% doesn’t imply that housing is therefore affordable.  Furthermore, it is misrepresentative to base our affordability ratio on new flats only since the 13,500 new flats last year is only a fraction of the 37,205 resale transactions registered last year.

Your case study of Mr and Mrs S does not represent the average 4-room flat applicant which according to the HDB’s reply to the Straits Times on 12 Sept 2009, has a household income of $3,800 paying a monthly mortgage of $955 for a flat priced at $265,000.  If we assume an average of four persons living in the household each requiring a monthly sustenance of $500 at a minimum, the family’s total basic monthly expenditure would add up to $2,955 leaving only $805 for all other purposes and for retirement funds for both parents.  Is the measely sum of $805 sufficient for retirement and for all other purposes?

PRs push up prices

You said that PRs do not push up prices since they do not pay very high COVs.  But that is not how PRs contribute to high prices.  By simply taking up units, be it flats or private properties, PRs absorb the supply of available housing leaving less for Singaporeans.  When supply is less, price goes up naturally.

Private property owners push up prices

You said that private owners do not push up HDB prices since they are involved in only 11 out of 58 resale transactions exceeding $70,000 in COV.  But that is like looking at the tip of the iceberg and concluding that the iceberg is not very big.  Beyond those 11 resale transactions are countless other transactions involving private property owners.  Collectively, they soak up supply leaving less to be competed for by the rest.  Greater competition for a dwindling supply naturally leads to prices being pushed up.

Thank you

Ng Kok Lim

Ng Kok Lim rebuts Halimah Yacob’s assertion that Singapore workers can afford more

Dear Madam Halimah,
 
I refer to your comments in parliament as reported by Straits Times on 4 Mar 2010.
 
Despite the ‘puzzling’ decrease in Singapore’s gross wages from 2006 to 2009 as you have pointed out, the ball part figure is largely correct so the picture of relative income vis-a-vis other countries is still valid.  Adopting the government’s hourly wage estimate of $14 an hour instead of $10.85 an hour would merely boost Singapore’s gross hourly wage from 32.7% that of New York’s to 42.2% that of New York’s.  Are we that much more proud that our gross hourly wage is 42.2% that of New York’s instead of 32.7%?  Or should we be asking ourselves why our gross hourly wage is not even half that of New York’s?
 
You said professionals, managers and executives accounted for only 9% of the workforce in the UBS figures whereas they actually make up 52% of Singapore’s workforce.  But most of the first world cities ahead of us in the list also have large percentages of professionals, managers and executives in their workforces so any disadvantage that we suffer due to percentage discrepancies would likely be suffered by them as well.  So this does not explain why our gross hourly wage is not even half that of New York’s.  Hence, your assertion of significant underestimation due to flawed assumptions does not hold water.
 
You said the UBS comparisons omitted CPF payments which can amount to 20% of our income and can be used to pay for our homes.  But Singaporeans have no social security to depend on and must pay for our medical and retirement needs out of our own pockets.  It’s the same whether we use 20% of our income to pay for homes and use the rest of our disposable income to pay for medical and retirement needs or in the case of the Western nations, use 20% of their income to pay for medical and retirement needs and use the rest of their disposable income to pay for homes.  There is no difference, so again, this is a non-issue.
 
Finally, you argue that expensive Western goods like steak and frozen pizza are not part of the average Singaporean’s expenditure and so should not count towards the calculation of price levels.  Going by your logic, it would be all the more better if Singaporeans can afford to buy only the cheapest of goods.  If we can’t even afford the same quality goods that people in Western nations enjoy, how can we profess to have achieved the same standard of living as they have?  So it makes sense comparing ourselves against the Western nations on how well we can afford the same basket of goods.
 
Hence, despite the issues you have brought up, the study’s conclusion is fundamentally sound and that the UBS figures do reflect the actual situation to a high degree.
 
 
Thank you
 
 
Ng Kok Lim

No empirical evidence to suggest that public housing in Singapore is affordable by any standard

Dear Prof Yu and Prof Tu,

I refer to the commentary you wrote for Straits Times that was published on 27 Feb 2010.

Dominance of public housing in Singapore

You first pointed out that the HDB is the dominant housing provider in Singapore, accounting for 82% of the population’s homes.  This in turn makes Singapore unique compared to other cities where normally, private housing dominates instead.

What you could have also pointed out is the passing of the Land Acquisition Act in 1966 which allowed the government to buy land as cheaply as $1 in the name of national development.  The forcible acquisition of land at dirt cheap prices is normally referred to as expropriation in other countries and is normally illegal too.

Furthermore in Hong Kong, when mortgages of public flats are fully paid for, the flats can be traded in the open market and are classified as private instead.  If we were to adopt this definition, more than half of our flats would have been classified as private already.

Public home ownership in Singapore is for 99 years only

You next pointed out that only Singapore has significant home ownership when it comes to public housing.  But you omitted to say that public home ownership in Singapore is for 99 years only which is comparable to long tenure or even perpetual rental contracts in other countries.

We are compared to expensive Hong Kong and London but not Sydney. While your study began with the comparison of four cities, Sydney was dropped when it came to actually comparing housing price to income ratio, leaving only notoriously expensive Hong Kong and London to be compared with Singapore.  If affordable housing in Singapore can only be established in comparison with the most expensive cities in the world, doesn’t it say something about how expensive Singapore really is?

Wrong to consider expensive Hong Kong Island only

Your figures show that Hong Kong’s housing price to income ratio is almost four times those of Singapore’s.  But the calculated ratio of 19.8 for Hong Kong is ridiculously high and dubious.

Using only the figures provided in Table 2 of your commentary, we can work out Hong Kong’s median housing price to be HK$ 74,593.93 per square metre which matches very closely with the average per square metre price of private residential units in Hong Kong Island as given on Page 7 of “Housing in Figures 2009″, a source quoted in your commentary.

However, we know that Hong Kong doesn’t comprise of Hong Kong Island only and that the latter is much more expensive than Kowloon and the New Territories.  Considering the housing prices in Hong Kong Island only is like considering the housing prices in Bukit Merah, Toa Payoh and Marine Parade only while ignoring those in Woodlands and Jurong West.  You’d invariably end up with a distorted pricing picture.  In fact, the same source you quoted showed housing prices in Kowloon and New Territories to be 71% and 54% that of Hong Kong Island respectively.

Furthermore, the same source also shows that housing on Hong Kong Island forms only 10% of all housing which makes it all the more distortionary if we were to base housing prices on Hong Kong Island only.  In other words, your supposed median housing price for Hong Kong is more like the price of the top 10% of housing in Hong Kong.

Wrong to compare Singapore’s public housing to Hong Kong’s private housing

Next, we need to consider the fact that the median housing in Singapore is actually public housing so when we compare with Hong Kong, we cannot ignore Hong Kong’s public housing.  The median housing price cannot be based on private housing only.  Since 55% of all housing in Hong Kong is private, the median price of housing in Hong Kong ought to correspond quite closely with the cheapest forms of private housing in Hong Kong.  That would have more than halved the ratio you worked out for Hong Kong to less than 9.9 easily.

Still, there is no denying that housing price to household income ratio is higher for Hong Kong than for Singapore.  This can easily be reconciled with the the fact that Hong Kong’s liveable space per person is less than half that of ours as shown in Table 2 of your commentary.  Thus, Hong Kong’s higher housing price is due to they being more overcrowded than us.  The lesson we must glean from this is that the more we choose to overcrowd ourselves, the more expensive our housing will become.

Public housing omitted for Greater London Area

Similarly, you have omitted to take public housing into account which makes up 23% of all housing in Greater London Area.  In order for an apple to apple comparison, we need to apply Singapore’s situation to London and consider what happens when the 23% of Londoners staying in rental housing are forced to buy their houses using their retirement money and leaving them with little or no money for retirement much like what is happening in Singapore.  These 23% public housing would automatically be counted for in the computation of housing prices and will significantly reduce London’s median housing price.

Is Singapore housing much affordable?

Hence, contrary to what you claim, there is no empirical evidence that housing in Singapore is very much affordable by any standard.  Since the empirical evidence you provided is highly flawed, the only standard by which Singapore can be ajudged to be affordable is one that is twisted and that which omits all but the most expensive cities.  Therefore, it is not true that Singapore has achieved a lower housing to income ratio.  If interpreted correctly, your figures do not reveal that our housing system delivers affordable housing to the majority of Singaporeans.

Thank you

Ng Kok Lim

New measures won’t help market bloom

I refer to the letter by Mr Jayaraman dated 23 Feb 2010.
 
He described the current market as being in a state of depression since 1997 as though 1997 represents the year of normalcy we should benchmark ourselves against.  But 1997 is no ordinary year.  It is the year when over-exuberance boiled over and led to the bursting of the property bubble.  It is a dangerous level we should take extra caution not to go near without the corresponding bolster from a stronger economic fundamental.  With this perspective in mind, the years following 1997 were not years of depression but years when property prices reverted to normalcy.  Of late, property prices have started to threaten to roar out of control again.
 
While some mass market condos bought in 1997 still cannot break even today, the solution is not to push the prices of all property units to the level of 1997.  That would be akin to asking everyone to pay $50 for a bowl of noodles just because one person happened to be suckered into paying $50 for his bowl of noodles.
 
The fact that prices of new condos are higher than older ones reflects the natural preference of consumers for the new over the old.
 
While speculation may not be unduly high now, the severe imbalance between supply and demand means that any small amount of speculation is ill tolerated.
 
Contrary to what Mr Jayaraman is insinuating, prices have shot up unreasonably high in a year of economic recession and contraction, not healthy, growing economy.
 
Buyers don’t begrudge paying more for better locations and better views.  But the sharp, unrelenting climb in property prices over the last three years is more than any ordinary citizen can tolerate.
 
 
Thank you
 
 
Ng Kok Lim

HDB sticking with build-to-order scheme

Dear Mr Mah,

I refer to the comments you made in parliament as reported by Straits Times on 23 Feb 2010.
You said that the BTO scheme reduces uncertainty for flat buyers because they are now in a good position to plan for when they will get their flats.  On the other hand, the BTO scheme also means that flat buyers cannot get their flats as quickly as their circumstances require.

You said HDB took five years to clear what was at one point 31,000 unsold flats in the 1990s.  That could be due to flats being built at undesirable locations.  In addition, we must be careful with what we mean by “waste of public money”.  We must acknowledge that the flats were ultimately sold and not left unoccupied so there is no waste of public money as far as building the flats is concerned.  The only real loss would be the interest losses due to the five year delay in the receipt of mortgage payments from occupants.  So it’s not so much a waste of public money but a delay in HDB receiving money from occupants.

You said in the mid-1990s, there were 150,000 applicants and the waiting time was six, seven years which seems to suggest that the waiting time for the old system was much longer than the current 3.5 years for BTO.  However, we were building flats for 150,000 applicants then compared to 12,000 flats we are building this year.  Can HDB build 150,000 BTO flats in 3.5 years?  Chances are, it will take the HDB seven, eight years also.
So please don’t portray the BTO like the magic bullet that it isn’t.

Thank you

Ng Kok Lim

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