HDB and COE: the right comparison?

National Development Minister Lawrence Wong might have been on to something when he compared HDB flats to cars, in that there is a clear distinction when it comes to ownership between the ownership of a chattel (the physical car) and the right to use it in certain ways.

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Read the news coverage of Mr Wong’s comments here.

In car ownership, the ownership of the physical car is separate from the ownership of the right to use that car on the road (the COE). One can buy a physical car and not own a COE. You can use it on a private race track, park it on property you have rights to, or dangle it over your establishment entrance.

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For however long it lasts. Photo: Tripadvisor

You can look at it, get in and out, even drive it around (private places, or abroad) if it can move, you can will or sell it to whomever you wish and they will then have the right to do all those things. You can scrap it, or keep it as a rusting hulk of metal. These are your rights as an owner of a car, in perpetuity. That is ownership of a chattel.

This aspect of car ownership value depreciates not because of the passage of time, but because of the condition of the item. The ending value, far, far into the future, is probably whatever a few hundred kilos of steel is worth.

Then you also own (hopefully) a COE. It lasts for 10 years when it is new. The COE gives you the right to use your Singapore-registered car on Singapore’s roads (as long as you also fulfil your other legal obligations for public driving). It is tagged permanently to a physical vehicle.

This aspect of ownership depreciates because of time, and nothing else. The ending value is zero. You could make money selling your COE/car combination if market forces change, but if I told you that this was an appreciating asset, you would slap me and say that I am stupiak.

A HDB flat is half-and-half. It is, in one payment, the right to take limited-time possession of a space hanging in the air that is made accessible and useable by a physical building. You own the physical item, but only as long as the intangible item (the lease) lasts. If you ever return it to the HDB, you only need to return it with bare walls. The value of your flat could appreciate over the short-medium term, given the right conditions, and you could sell it for a profit with the right purchase/sale timing. But the end value after 99 years is zero.

So when Mr Wong says that we own a HDB flat, he is correct in that we own the right to the dwelling. We do not, however, own any physical thing in perpetuity. This is unlike, say 38 Oxley Road, which is freehold. If LKY’s house crumbles to dust, the land itself is still valuable after 100 years. Its owners (whoever wins the battle of the siblings, perhaps?), will be able to use it or build on it or sell it. They own the physical land, and not just the right to exploit the land.

Leasehold for property is a great policy to make Singapore a place for social mobility, and to prevent a rentier class from forming (ergo the state becomes the rentier). I personally support it. But when Mr Wong says “There is a high likelihood that over a period of time, if the economy does well, if incomes rise, then property values will appreciate together with the fundamentals of the economy, and your stake in the nation – your home – can also appreciate in value.” He is only telling us half the story.

A HDB flat – actually ANY leasehold property – is a depreciating asset. It may not depreciate in a straight line, and it may not even depreciate every financial year, but it is ultimately a depreciating asset. The implication, and what Mr Wong never mentions explicitly, is that we need to plan to sell. We need to have an entry AND exit strategy for our HDB flats.

In Mr Wong’s words, in order for “our homes [to] be an important and valuable asset that we can use as a retirement nest egg”, we need to do the following:

1) buy a property that is larger/more valuable than what we will need in retirement so that we can downgrade (this is inevitable if we want to unlock the value of the “nest egg”)
2) sell it at the right price during the right market conditions (but no guarantee of profit)
3) take as cheap a loan as practicable and pay it off as quickly as possible (interest payments eat into any profits you may make); if you pay 3 per cent interest on 80 per cent of a property for 30 years and the property is sold 30 years later at DOUBLE the original price, YOU STILL LOST MONEY, and you haven’t even counted inflation yet (of course, you have to compare this to the cost of renting).

A HDB flat is an asset with a long lifespan. It gives you more time to cash out. You can argue if it is or isn’t ownership all day long (it is ownership, but not an ownership of land in the way you own a car), but please don’t tell me that a HDB flat is an appreciating asset. Or else you will look stupiak.

 

 

P.S.: I was tiring of the word “nest egg”, which is used to describe money saved for the future. That was until I discovered the second meaning of “nest egg”, a real or artificial egg left in a nest to induce hens to lay eggs there, which sounds terribly apt for what is happening right now.


Photo by chuttersnap on Unsplash

 

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How we raised 6 kids on more than $3,000 a month

There’s been some debate around the family that is raising seven kids on less than $3,000 a month. It’s irresponsible. It’s fantastic. They’re leeching off society. They’re building Singapore’s future. Respect. Rage.

I guess my story is something like that, and I’m a little more comfortable sharing about it now that we are moving to Finland for the next few years. My wife and I have six children, and I’m somewhat the sole breadwinner. Our kids qualify for the MOE Financial Assistance Scheme (free books, uniforms, transport and after-school care subsidy, most school activities free) but that’s a matter of mathematics: the threshold for qualification is a per-capita income of $690. That’s $5520 for our family of eight. My monthly salary is below that threshold and I earn enough to pay the other bills.

Singapore is a lot more “welfare” than most people think, if you know how to navigate the system. The PAP is mostly true to its promise that no Singaporean will want, but that is contingent on knowledge and the willingness to access that aid. At that per-capita income level we also qualify for rather heavy subsidies for pre-school childcare, plus various perks from community groups and programmes.

I employ my wife under one of the businesses I control – her job description is to take care of our children. It’s a real job, and far more work than I ever do. I pay her an exploitatively small salary and CPF (think FDW), and as a working mother she qualifies for all the attendant benefits. She is a professional stay-at-home-mum, and a very good one. We do not want to employ a helper.

(Finland treats stay-at-home parents as contributors to society, and pays them a benefit of several hundred Euros a month; Singapore sees non-working parents as a socio-economic liability. More on that some other day).

My wife and I have no expectations of financial support from our kids when we are older. I have no intention of ever stopping work, and we have a property we can downsize from. We have some other long-term investments. We are well-insured. My parents sometimes give us support. Friends too. We have enough to show generosity to others.

Are we leeching on society? Yes we are, right now. Even if we paid for our school fees and kids’ transport and uniforms and childcare we would STILL be leeching on society. Education is subsidised for all citizens. Healthcare is subsidised for all citizens. For most of us with children, the direct taxes we pay are far lower than the subsidies we access every year. Consider education:

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Government Recurrent Expenditure on Education Per Student (I can’t embed the HTML with my free WordPress account)

Even if you are a well-off, you can send your kid to an anchor operator childcare and get $300 a month basic subsidy. You can get treatment in a C class ward or the polyclinic and enjoy hefty subsidies.

In return, my children will serve NS (where applicable), pay taxes when they work here, and make money for their employers, which will produce even more tax. They will spend money to live, which will fill GST coffers. They will contribute to CPF, which the G will (at least in part) take and invest into NIRC (and more reserves). That’s 20 years from now, when you will need someone to pay taxes to fund your retirement. Maybe mine, but I don’t intend to retire.

If you want to be calculative, think of it as paying a short-term cost for a long-term investment for the nation. But really, these children are our people, our citizens. We owe it to all our citizens to provide an environment where they can develop to their full potential. It is a sensible financial decision, as well as a sensible moral decision.

 


Featured image from Pexels.

Low key Middle Ground upper management

It was the opportunity of a lifetime – the chance to work on a solidly-funded news portal with one of Singapore’s most seasoned journalists. How could I pass it up? All I needed was to pull together the seasoned journalist, the news portal and the financial resources to keep the publication viable.

I met Bertha when she had just started up Breakfast Network and was looking for writers. A mutual friend suggested that I could contribute as a volunteer and I was happy to, since I had been blogging on socio-political issues for a while. Bertha was happy to give me a shot and that was the start of a wonderful year where I received my first lawyer’s letter threatening to sue the site for defamation, marked my inaugural participation in a G press conference as a member of the media and watched a whole drama with the MDA unfold. I was keen to sign up to MDA’s demands, but that was a corporate call in the end.

When Breakfast Network was finally closed down, going back to blogging didn’t seem to be quite enough for me. My work in a small PR agency kept me busy and paid the bills for my burgeoning family, but what could have been at Breakfast Network always nagged at me. It was a job left incomplete; an opportunity not seized; a risk not taken.

I spent the next year following up with Bertha, and through her, found the resources to get a newsroom and a small company up and running. As with a new company I had no illusions: nothing would go according to plan, so I detailed a year-long blueprint so that there would be a plan that nothing could go according to. We tried to reconstitute the wonderful ex-Breakfast Network team and offer them something more substantial.

Why, though, would I step away from 12 years of agency life and my stable and growing public relations firm (disclosure: I’m still on the board) to go into the tough, saturated market of publishing, especially in Singapore, where even the incumbents have trouble doing profitable business? Did I really hope to be able to run a sustainable business?

Management scion Peter Drucker said that “there is only one valid definition of a business purpose: to create a customer”. And that is what I hope to achieve at The Middle Ground as publisher. I want to gather readers around our way of doing the news and in so doing, influence the way society thinks. It is long-term thinking; it is something for the next generation, something that doesn’t pander to short term results like mere traffic and clicks but that builds fundamental values.

This is the country and the world I hope to leave to my children – one with citizens who are discerning of the news and of the flow of information (a REAL smart nation), who know the difference between fluff and subject expertise, who can handle both sides of an argument, who respect intellectual property and who are intelligent enough not to get offended or alarmed by satirical articles.

I want this industry to adapt and thrive because we all need it to, and am happy to be one of what I hope are many other news publications and magazines that can chart a new way forward in the digital age and beyond.

And that is why I am trying to fill this gap, even as our team works to fill the digital pages in The Middle Ground. Thank you, dear reader, for reading and for engaging with us. You are our Middle Ground and it is you whom we hope to serve and foster.

Taxi-Taxi@SG: if you hate LTA’s app, maybe it’s you?

I’ve been there before, standing at the side of the road in the rain watching busy cabs go by, grumbling about how these lazy drivers all go into hiding at the first sign of precipitation. I swear out loud at that ****** **** who popped out 200m down the road and STOLE my fricking taxi, how dare he: I will find you; I will kill you. I try crossing to the other side to try my luck… and then all the cabs start appearing on the side of the road I just left. I curse a random deity. It’s their fault, it’s someone else’s fault – it’s not my fault.

I vacillate between booking a cab and not booking one, battling the inner scrooge wanting to save $2.50 or $4, but still desperate to get my ride. I start to make bookings on GrabTaxi, Comfort and EasyTaxi SIMULTANEOUSLY, proving that I am indeed a douchebag planning to cancel on some poor driver.

Three minutes later I flag down a taxi with a green light, jump in and leave all my bookings to hang. Let them rot – I’ve got what I came for. That’s what the surcharge is for, no? No risk, no return. Muahahahaaaa….

I want it all. I want it now.

And maybe that’s the story behind why we hate LTA’s new, FREE app Taxi-Taxi@SG. We wanted to book taxis, not flag them down. Consider, however, that there are may be some people who do want to flag taxis down: the struggling student, the low-income elderly who need to take a taxi for medical appointments, me when I’m not in a rush. Think of the taxi drivers who are sick of commuters who don’t show up for bookings, wasting their time and money. They just want to see where the general demand is and don’t want to commit to a booking that may end in a no-show.

Nevermind that there are so many applications for this big data that LTA is putting into our hands – think of how the API could be used to enhance bookings by booking apps.

If we wanted bookings, we’d have gone to someone else’s app – LTA isn’t in the business of snatching market share from other companies. It’s not out to generate revenue through taxi bookings (although we all know how ELSE it generates revenue). But forget about that – if the app doesn’t do what I want it to, it sucks.

Because in the world of Singapore taxis, we have no qualms about throwing others under the bus (pardon the pun) if we don’t get what we want, when we want it.

Starbucks vs Koi Cafe: the difficult customer test

If you ever wondered why nobody wants to be in the service industry, look no further than the Straits Times. Two cafes were in the news in the last two days for customer-related incidents that occurred at their outlets. But whichever way you want to pin the blame you have to admit one thing – it takes something special to do a service job well (and many service staff don’t have it).

Long hours, meagre pay and some physically challenging work are only there to whet the service worker’s appetite for the icing on the cake – difficult customers. And armed with the almighty Internet, where it is easy to tell a one-sided story and fool the feckless masses, difficult customers have found one more way to bully people on the front lines.

Case 1: Koi Cafe (read the case file here)

If you read the description of the event, the customer actually confessed to taking the trouble to go all the way back to the Koi Cafe outlet AFTER she had gotten her drink elsewhere so that she could engage in verbal fisticuffs with the staff once more. Probably for sport. Probably to get material for a good Facebook/STOMP post. Probably so that I have something to write on my blog (thanks!).

It is, of course, no excuse for the staff member to call her names (fail), but this is the typical “difficult customer” – the person who makes your pay package completely worthwhile (to your boss, so that he/she doesn’t have to deal with these people). For the employee, however, this is simply another opportunity to get fired from a thankless, dead-end job, which “Rachel” successfully accomplished.

She’ll probably get another crappy job next week elsewhere unless she goes to…

Case 2: Starbucks (read the case file here)

Annoying students who hog tables and buy one small drink to last for 5-6 hours are the bane of paying customers in land-scarce Singapore. They are also a bane to business owners, but how many are brave enough to admit it? I personally take offence at people who let their coffee go cold – it is simply not in good taste. The worst kinds of people leave their table for 30 minutes and get all offended that the manager helped them to keep their stuff safe.

This time, however, the fickle Internet decided to bite back, and “Huixin Yap”‘s Facebook profile has suddenly become… very private. Starbucks did not reprimand their staff and gave a nice, vague reply befitting a large, profitable corporation.

Service is good here. And all the entitled twats have gone somewhere else.

Service is good here. And all the entitled twats have gone somewhere else.

I, for my part, took a longer than usual walk after lunch, bought a latte at Starbucks Citylink Mall, left a tip in the tip box (which I normally never do – shame) and praised the staff for their… service excellence.

Conclusion: it is better to buy from and work at Starbucks than Koi Cafe.

That Lying Beggar Auntie

by Daniel Yap

So there is finally a newspaper report about her scams. Wanbao followed up on a lead through STOMP and discovered that this auntie makes over a thousand dollars a night begging, lying and scamming. She has asked me for $500 before, but then I uncovered her scam over 45 minutes once I bought her tea.

She cries, lies, and makes more money on one weekend than you do in a month. Photo linked from STOMP http://goo.gl/6RIqLZ

I first met her in front of Red Dot Building in Tanjong Pagar on a weekday afternoon, maybe in 2012. She was sobbing and crying to a bunch of young office workers as I walked past on an errand. On the way back I saw she was still there sobbing by the pavement and stopped to try and help. She said she was hungry and I offered to take her to Maxwell Market to buy food. She declined. I offered to buy her tar pao food from Maxwell. She then claimed that her leg hurt and she wanted to rest there, and that I should just give her $5 instead so that she could go buy food later when she felt better.

She claimed to live in Ghim Moh and was only here in Chinatown (Tanjong Pagar actually, but I shan’t quibble) to meet someone who owed her money but who refused to return it. She said her children had abandoned her and that she had lived a “good life” but had been “taken advantage of”. She said that she worked at some big local company (I forget which) as a secretary but that she had been cheated of all her savings. She even invoked the name of some church she had attended and that was how she knew the person who owed her money, she said. She gave the impression that this was a temporary situation.

I was heading back to the office so just gave her the $5 and wished her well.

In 2013, I saw her again in Holland V (where I live), which didn’t raise alarm bells for me because she said she lived in Ghim Moh. She was sobbing along the pavement again and I came up to her to ask what had happened about that loan, and why was she begging still. When she realised that I had given her money before, her eyes lit up. I thought it was because of familiarity, but now I realise she saw me as easy prey.

This explained what she said next.

Her momentary flash of recognition quickly faded into sobbing again as she poured out a tale of how she had been a guarantor for a church friend’s son, but that both son and friend had defaulted and that she was left in the lurch. (In retrospect, I now realise how foolish a notion this is – that a penniless old woman could act as guarantor for a loan). The bank was after her. SHE ASKED ME FOR A $500 “LOAN”.

I don’t know why, but I still had a soft spot for her and I knew that I would never see the money again, but I wanted to do my due diligence and help her sort out a better solution to the “grave injustice” that had been done to her. I offered to buy her tea at the HV market and tried to uncover her story and talk to the players to reach a better outcome. Oh, how it unravelled from there.

She would make fake calls on her phone without actually dialling numbers, and furnished me with names and contacts that didn’t exist. She declined to say which bank the alleged loan was from. Nothing existed. I declined to give her $500.

She then proceeded to chide me for leaving her to suffer and die. I told her to go away, and she eventually did.

A friend of mine who worked at a market food stall (we were having tea at the market) then came up to me and told me about this woman. She knows about this old woman with the crocodile tears and the bag full of lies. She, and other stall operators, have seen her frequently begging and scamming in HV. She is not poor at all, my friend explained. She could be seen walking into the 7-11 or other shops nearby to change her small notes into 50s, and would change $400 or $500 at a time (the retail assistants would tell her, as they bought drinks from my friend’s stall). She made over $1,000 at each outing. Maybe more. The news reports say that she deposits the cash into a bank account, which I suspect contains more cash than some people’s CPF accounts.

The next time I saw her in HV, I asked her loudly who else she was planning to lie to today. She gave me a dirty, irritated look, seeing how I was blowing her cover and revealing the scam that she was running. If I see her doing this nonsense again, I think I will call the police and get them involved. It’s all on record now.

I’m glad the press has blown the cover on this woman’s disgusting antics. We have genuinely poor people working hard to make ends meet, and here is some greedy, rich scammer beggar sucking up money that should be going to properly-governed charities, like the now-renewed NKF, or to the folks at the rental flats nearby.

And for the rest of us – don’t be taken for a ride like I was.

 

P1 registration fix is long overdue

My wife and I just registered our son in Henry Park Primary School, which is within 2km of our home. It was a school that I was an ex-student of and, fortuitously, it was also near where we lived (I’ve lived in this area since I was a child). Even at this early stage of registration, the news reports had confirmed that a ballot was required.

The P1 Registration is broken – it flies in the face of meritocracy and is a tear in the fabric of our society. ST’s Sandra Davie has summarised the possible solutions in her piece last week, more comprehensively than I have hoped:

1) Eradicate Phases 2A1, 2A2 and 2B. No more fair-weather alumni and “volunteers” looking for favours.

2) The problem of the clustered “good schools” in wealthy neighbourhoods can be solved by uprooting them and placing them in HDB towns. It is time to tear apart these bastions of misperceived achievement. Alternatively, those who live nearby can be given priority over alumni (though I think this will not work).

Primary Schools are part of our meritocratic education system. They do not need to build a deep individual “culture”. Our society only stands to lose if certain primary schools come out tops in the “reputation” and “school culture” race. Primary education should be the level playing field every meritocratic society needs. Yet now it is a minefield of entitlement.

MOE has yet to make good on its boast that “every school is a good school”. The G’s failure to properly address the elitism still rampant in primary schools makes Heng Swee Keat look like a liar. The institutional way of trying to fix problems with “tweaks” falters in the face of a deep-rooted problem such as this – one reinforced by the basest kinds of kiasuism and one-upmanship. The tuition addiction continues to blight our children’s progress.

It seems that nobody in the ministry has the guts or fortitude to deal decisively with the problem at hand.

My wife (who is not Singaporean) marvelled at some of the literature that nearby primary schools were handing out – how even schools with nearly no accolades to boast about made desperate attempts to list their achievements, as if clutching to a fig leaf in shame, ironically entrenching their positions. How well-regarded schools likewise put their achievements on display, goading “lesser” schools and the ignorant public to play, and lose, the ranking game with them.

Our son’s pre-school teacher gave the most damning advice of all – when we asked her why they were teaching Primary One syllabus at preschool, she matter-of-factly replied that “teachers in primary school don’t have time to help your child keep up. If he falls behind, that will be the end.”

If that is truly the case, then it is the end for all of us.