Thursday, June 30, 2011

Singapore transportation planning is data driven by business analytics

Singapore is small and densely populated and in this tiny island with 5 millions of people, 8.9 millions travel demands compete for very limited number of roads, taxis, trains, buses and private cars every day. By 2020, Land Transport Authority (LTA) expects the demand to increase to 14.3 million per day.  This huge extra demand cannot simply be satisfied by equal increase in travel resources given the available land size of the country.  Better planning and optimization of available resources is extremely important. [1]

For data driven policy making and planning, the data is already there. Each commuter in Singapore has a contactless smart card to pay for the public transportation fares. Each user tabs in and also out with this card when he takes a public bus or train. And every tab-in and tab-outs are recorded with details such as location and time. So the data showing the busy routes, busy times, bottle necks, etc. is there. But processing it into knowledge then informed decision is not straightforward. Just the sheer volume is a huge burden. Currently LTA captures 12 million records on public transport each day! This translates into 14 Terra bytes of more data each day! [1] How can they make convert this huge data to knowledge and then to decisions? Enter the world of Business Analytics.

Business Analytics (BA) “refers to the skills, technologies, applications and practices for continuous iterative exploration and investigation of past business performance to gain insight and drive business planning. Business analytics focuses on developing new insights and understanding of business performance based on data and statistical methods. “[2]

Singapore MRT Train

LTA has recently implemented a business analytics system named Planet (short for Planning for Land Transport Network).  Planet allows LTA to have insight into the usage patterns of public transportation system and enables data driven policy and planning decisions.

This Business Analytics system cost 10 million to LTA and developed by Teradata, a vendor specializing in data warehousing and analytic applications.

Some useful information rendered out from this system[3]:
MRT is most crowded between 8 am to 8:20 am and 6 pm to 6:30 pm in weekdays.
By 9 am in a weekday, crowd on MRT trains drops to 44 per cent of peak load.
Bu stops at Somerset MRT station on Somerset Road and Toa Payoh Swimming complex are the busiest ones.
Woodlands, Tampines and Yishun MRT stations are the busiest stations to top up ez-link cards.

[1] - Transportation Innovation 
[2] – Wikipedia Business Analytics
[3] – The best times to travel on public transport - Business DL, The Strait Times

Tuesday, June 28, 2011

BBQ Stingray and Cereal Butter Prawn

What to eat in Singapore? While you are here you can try many food by I suggest you to try bbq stingray and cereal prawn, two of my most favorite dishes in Singapore. These dishes are unfortunately highly under advertised and many people passes through Singapore without even knowing that a dish like this exists. Do not be one of them.

Cereal Butter Prawn is prepared by using prawn (bigger the better, if shells are peeled more better :)), butter, chili padi and of course cereal, Nestle Original Nestum. Big, grey tiger prawns are the best to prepare the dish. Here there is a blog article which explains how to cook it.

Where you can eat the cereal butter prawn in Singapore? I prefer Maggie Thai & Chinese Restaurant in Lian Seah Street (near Bugis Junction) and Wing Seong Fatty's (Albert) Restaurant just behind Sim Lim Square. They peel the shell which is the way I like.

Cereal Butter Prawn

Many people are not aware of it but stingrays are edible. In Singapore, stingray is barbecued over charcoal, and served with a very spicy sambal sauce. Generally, the most prized parts of the stingray are the wings, the "cheek" (the area surrounding the eyes), and the liver. The rest of the ray has no use as food because it is too rubbery.

Where you can eat BBQ Stingray in Singapore? Smith Street in Chinatown had a stall named Boon Tat Restaurant, they cook it quite good. It is probably still there but I have not been there for a long time. They cook well but a little bit spicy. Recently, I have tried BBQ Stingray in Serangoon Gardens food court. It was also very delicious. I used to eat it in the famous Old Airport Road food court. There is a stall there, second row from road side which cooks well and also is generous in size. I tries several stalls in Bedok area but an disappointed up to now. But I did not give up, I will find a good one.

Do not forget to turn the other side and eat the meat there. I did not know BBQ Stingray bottom side has meat so I wasted it until a Singaporean friend showed me how to eat stingray properly.
BBQ Stingray

Sunday, June 26, 2011

Small Condo flats called shoe boxes

Small studio and one-bedroom condominium apartments below 500 square feet (around 46 square meters) are called shoe-box flats and they are recently very popular in Singapore. Just 3 years ago in 2008, there were only 300 units sold, last year this number hit 1,900 and it is increasing. Although the country is land scarce, these units are surprisingly new for Singapore. As lives of single well earning executives does not require a lot of place, there is a demand for these units.

Think about a single working man in his 20s. All he needs is a couch, TV, washing machine, small sink and a bed to be comfortable. A shoe-box can easily host all of these. It is more important to have a private place for himself then the size of the unit he is living in. Guests? For his key guests he probably does not need another bed anyway :) Joking apart, in this century young people tend to stay single for years if not decades. Even if they marry, they tend to delay having kids so they do not need a lot of space and demand for these flats will increase more and more.

In Singapore savings by giving up each room can be more than 12,000 SGD per year, a lot of money by just giving up a space you rarely use or barely need. So demand for these units is not-suprisingly high due to property prices and rents. As square foot price of the private flat goes to sky, about 1,000+ SGD for even so called mass market flats, every meter square you can give up will save a huge amount of money on mortgage. Smaller loan means lower default risk, earlier debt-free life. Smaller portion of your wealth in a single unit means less eggs on the same basket.

And last but not the least, a private home address is a part of Singapore dream (to be exact it is 20 per cent of Singapore dream), and these units allow many Singaporeans to realize this dream within their means.

As National Development Minister recently mentioned, many apartments in crowded large cities are shoe-boxes. By 2014, long needed numbers of shoe-boxes will enter the market and completed units will increase from 1,100 to 3,800.

Many industry analysts and developers are questioning whether people know what they are going into. But as the previous Minister, Khaw Boon Wan also does not want to second guess the market an think these units add to diversity of housing options here. I think developers are afraid that these units will decrease the total price of units and rental yields but the price decrease in this super high prices time is not a bad thing, at least for many who needs a housing unit for its basic purpose, as a shelter.

Saturday, June 25, 2011

Will HDB resale flat prices fall?

Last month we have looked at the supply and demand situation and wrote an article named HDB resale flat prices are set to fall. Last 10 years, the market conditions were pushing the prices up: very low supply of new HDB flats, large number of PR approvals and very low interest rates on mortgages. Now the conditions are slowly turning against the prices: number of PRs approved is declining, there will be increase on new HDB completions and interest rates will go up.

But things will not change overnight and there is room for supply crunch since absorbing the huge number of newly PRs and first time home buyers who cannot get a new HDB flat due to long queue will take several years.

But recently, average Cash Over Valuation (COV) paid by by HDB resale flat buyers has increased again after declining to 20,000 SGD range:

"CASH premiums paid by home buyers in the second quarter have shot up to about a median of $31,000 after taking a breather in the first quarter where median COV was $21,000.

Analysts say tight demand has sustained the pressure on prices, but noted that volume of sales have come down in June. Some have attributed it to the 'Khaw' effect - where uncertainty has beset the market since National Development Minister Khaw Boon Wan took over the ministry."

COV is cash a buyer pays over the valuation of HDB and since it needs to be paid by cash, it greatly effects  affordability of the flat and shows the demand versus supply. A lot of potential private property buyers are now waiting in the sidelines to understand what will be the private market look like, especially after Khaw Boon Wan openly shared his worries about private property prices. If these people wait, it means their HDB flats will not be available for the resale market.

Other than uncertainty, people are also forced to stay in their HDB flats with the record record high public private house price gap:
"THE price gap between mass market private homes and HDB flats has widened to a new record - making it harder than ever for aspiring HDB upgraders to buy a private home.
This is according to a new report by Goldman Sachs, which said that the price difference between 99-year leasehold homes in the suburban areas and five-room HDB flats grew to about $490 per sq ft (psf) in the first quarter of the year."
Significant supply of resale HDB comes from Singaporeans who upgrade to a private housing when their minimum occupation period of 5 years expire. These people are called HDB upgraders. If these people cannot upgrade, then they will continue in their HDB flats and it will not be available for the resale market.

According to The Ministry of Development blog second timers form the largest portion of the demand for HDB resale units, 34%. First timers (23%) and PRs (20%) follow them. First timers go to HDB resale market because many cannot secure a new flat due to over-subscription and some are not eligible because they earn more than 8000 SGD per month. Increased number of BTO completions and an increase in eligibility ceiling to 10,000 SGD per month will probably draw a good portion of this demand out of HDB resale market.

For now, supply may shrank much more than the demand causing a COV hike. According to The Straits Timesa article above, resale flats brokered by DWG and PropNex fell from 664 and 434 in May to 516 and 142 this month to date.

Friday, June 24, 2011

Maid in Singapore

Back in 2006, a friend of mine told me a very annoying experience his British friend had during an Fatherhood Orientation Course. Here father-to-be's were asked a question by their instructor: How many of you will give a day off to your maid? He naturally(!) raised hand without thinking and soon realized that in that group of 20 something men, he was the only one raising his hand. No hand was raised when the question was repeated as "twice a month". Second hand next to him went up only when instructor asked the question as "OK what about once a month?"

You may think that there is no excuse to not give a day off to a maid per week (and I agree that). Even if she is looking after a sick and old person. And what is very practical in Hong Kong and Taiwan (both of these countries have a day of per week for maids) should not be impractical in Singapore. But still, only 50 percent of maid employers give their maids a day of per month and according to The Straits Times article, only 12 per cent give their maids weekly day off.

Many employers in Singapore simply imprison their maids without any day off or communication with the outside world. And many think if they give a day off to their maids, they will go and find a bad company:

<<"The slew of social problems that will result from a weekly day off is unthinkable," said one woman in a letter to Singapore's Straits Times. Her defense of employers who essentially quarantine maids indoors might be satirical genius. But it's probably not.

"Do they not rest in the course of their work every day? … Are maids really that overworked? The many maids congregating and chatting away happily at my condominium on weekdays present a different picture."

Worse yet, she writes, "my previous maid met her boyfriend on her day off and even while we were at work."

A social life? The horror.>> Source : One day off for maids? Too much for Singapore

Although there are always bad apples to abuse their employer's goodwill, these people cannot be shown as an excuse to imprison a large number of woman in houses:

"If a domestic worker becomes pregnant or falls into bad company, an employer is at liberty to sack her" said Ms Noorashikin Abdul Rahman (TWC2 vice-president). "Denying a worker a legitimate right because of possible future misdeeds is not just right". Source : The Straits Times

Many employers may not even give a day off per month but please note that majority of the Singapore households do not employ a maid at all. The number of households here with a maid are 20 percent of the total households:

"As of last year, there were about 201,000 maids working in Singapore. This works out to about one in six families here having a maid." Source : Consider law to give maids a day off every week: Halimah

Currently, Singapore is debating whether giving a day off per week should be mandatory by law, but market forces are already making their adjustments toward that point. Horrific stories of imprisoned maids and worse conditions compared to Hong Kong and Taiwan are making their ways deep into Philippines and Indonesia. This already made Singapore the last choice for maids and it has become difficult to find a maid, let alone find a good one in Singapore. Soon, so less will come to Singapore that without law, employers of these maids will need to offer better terms to get a maid anyway.

World Tobacco Invasion: Battle of Singapore

When I have first come to Singapore, I have been shocked by the price of a package of cigarette in the country. It was nearly 3 times the money I was paying for the same package in my country. I was smoking 3 packages per week which would cost me in Singapore about 1,800 Singapore Dollars per year! As an ultra-money conscious person, this price difference achieved what all others methods I have tried could not achieve: I have stopped smoking. But price is probably not a big deterrent for many out there who continues to smoke despite numerous attempts here to decrease the number of smokers.

Other than the high taxes, Singapore is fighting against smoking hard in many fronts: the cigarette packages have graphic images of horrors of smoking;  there are fewer places every year to light up in public and more public campaigns against smoking but smoking habit is hard to defeat:

“The most recent figures from the National Health Survey conducted last year indicate an alarming increase in the percentage of Singaporeans smoking cigarettes. 14.3% of adults are now smokers compared with 12.6% in 2004. Even more concerning is the prevalence of smoking amongst young Singaporeans aged 18 to 29 which has jumped up to 16.3% from 12.3% in 2004 – this represents a 33% increase in just six years. The Health Sciences Authority has also revealed that almost 7,000 under-18s were caught smoking last year, higher than in previous years. These statistics suggest that deaths caused by tobacco smoke in Singapore (already over 2,500 every year) and the economic and social costs of  smoking may increase in the coming years.”

Source: Tobacco Free Singapore
Actually, the very real health threat and probability of a painful death should be the single factor to keep someone away from smoking. Unfortunately, it is not. Young people live with an unrealistic, unconscious belief: they believe they are immortals. Believe me, everybody on the surface seems to know that they are, like all lived and died before them, subject to sickness and death, in the case of smoking, a painful death. But actually no young human being (except a few) really knows this simple fact. So old people painfully dying in the hands of lung cancer (which was virtually none existing before cigarette was invented)  or graphic images on the cigarette package have little effect on them.  “All those bad things happened or can happen to others, not to me.” Believe or not, this is the universally excepted belief among young people.

 In the Bloomberg article, Siegel: Cigarette Warnings Say Too Much there are scientific evidences presented to support this fact:

“What these studies remind us is that most smokers smoke even though they already know cigarettes pose a grave health risk. By the time they’ve bought a pack of cigarettes, it’s already too late to persuade them not to have one. A warning label, no matter how graphic, is no match for the addiction. It may be just the kind of stress-producer that gives them the urge for another cigarette.

Young people, especially adolescents, are undeterred by health warnings because they tend to discount the future consequences of smoking. Many surveys have verified what is fairly obvious: In making decisions regarding their health, young people weigh future effects very little. To the contrary, the risk of danger helps lure many adolescents to experiment with cigarettes in the first place.

A further indication that the warning labels might have a minimal effect on smoking rates is that cigarette maker Philip Morris not only supports them but even negotiated and promoted the legislation that imposed them in the first place.”

I agree with the article when they say a better approach is proposed in Australia. In Australia by July 2012, cigarette producers will be forced to “use plain, olive-green packages, with only the brand name written in a small, plain font. No logos, no colour”. You can see a photo of sample packages below.  Olive green is selected because the researchers found that this colour is the least attractive package colour to smokers:


“British American Tobacco Australia (Bata), whose brands include Winfield, Dunhill and Benson & Hedges, claimed that the plan would infringe international trademark and intellectual property laws.
A Bata spokesman, Scott McIntyre, said: "The government could end up wasting millions of taxpayer dollars in legal fees trying to defend their decision, let alone the potential to pay billions to the tobacco industry for taking away our intellectual property."

But Ms Roxon said the government believed it was on very strong legal ground. Although smoking rates have almost halved over the past two decades, tobacco-related diseases still claim 15,000 lives in Australia every year, and cost the country about A$31.5bn (£20.3bn).The pared-down cigarette packs will feature lurid images showing the potential health impacts of smoking, with close-ups of rotting gums, blind eyes and sickly children.

Ian Olver, chief executive of Cancer Council Australia, said the move had "the potential to be one of the most significant public health measures in recent history". A spokesman for the Australian Council on Smoking and Health said: "This is a historic day for tobacco control globally. The tobacco industry's ferocious opposition to plain packaging shows that they know how effective it will be. They also know that once Australia has shown the way, other countries will follow."

Singapore is now actually debating more stringent measures against smoking: a gradual ban which basically prohibits the sale of tobacco to those born after 2000. You can read details from the tobacco free Singapore web site:

“As noted in the editorial, unlike an outright ban, the proposed measure would not encroach on the habits of existing smokers – instead it would prevent tobacco companies from recruiting new smokers. As well as offering support for the proposed measure, the editorial raised two questions …”

Wednesday, June 22, 2011

Singapore property buying: You need to look at all scenarios

There was an article published recently in named “Residential Property: Why are investors still buying?” This article is a very one to look at the rationale of buying expensive properties and also demonstrates how investors can be as short sighted as the short term speculators.  This is important because policy makers as well as economist tend to think if someone is not a flipper, he is a sound investor. But an investor is still a speculator and although his risk factor is lower than a short term property speculator, he may still be deceived by a long term distortion in the market and can perceive it as a norm without evaluating all possible scenarios before investing.

In the article there is an example given which involves a 1.02 million Singapore Dollars property transaction at Blue Horizon in West Coast Crescent. After paying 408,000 Singapore Dollars in cash (the writer serves to high net worth individuals) 25 years 60 percent loan translates into 2,040 SGD per month which is lower than the rental yield of 3,800 SGD per month the property generates. So the investor pockets a 7.3% cash-on-cash return which is 10 times higher than placing the 408,000 SGD in a fixed deposit income.

Nowhere in the article the writer considers the most realistic future scenario: current unrealistic and artificial low interest rates goes up and current ultra-high rents go down! (he tells us that the interest rate hike will be probably due to better economy in which rents will be higher). But we are in the year of 2 extremes now:

1) Current interest rates are not low, they are ultra-low! They will significantly go up in the near future; FED just cannot print more money to buy US debt.

2) Rents are not high, rents are currently ultra-high since there is a rental supply crunch and there was a fast foreign intake last few years. Rents will have pressure from large number of completed units of 2012-2015 periods (most will be rented out with the logic described above) and reduced number of foreign influx.

Current interest rates are lower than normal and rents are higher than normal. One just should not assume this is norm or a relatively unusual situation and it will continue like this in the near future. One should definitely not think this will be the situation in the next 25 years and he/she will have positive cash flow for years.

“People think they can afford an expensive flat with a reasonably cheap mortgage. Their dreams will burst and the flat will become unaffordable when the interest rate rises." The professor has a point. Variations in interest rates can mask or magnify structural affordability, which is measured by the Median Multiple. This is because interest rates are subject to fluctuation, while buyers and sellers do not renegotiate sales prices after the deal is concluded.”

Singapore Dollar Swap Offer Rate (SOR), a popular benchmark used for home loans hover around 0.2 per cent today but it was at more than 3 per cent just 5 years ago! A rise to normal (even without considering a sharp rise to higher rates from normal) can convert the positive cash flow to a negative one even the rents stay in this level.

Current ultra-low SOR rates translate into just 2,823 SGD per month for 35 years, 1 million SGD loan. If rates go back to 2006 levels of 4 per cent the payment rises to 4,300 SGD monthly![1]  In fact rates can go up further since current ultra-low rates due to USA money printing machine will most probably result in ultra-high rates in the near future.  Combine this with rental decreases, one can find him easily in red for years.

This mind set of perceiving current ultra unusual environment as a norm is very worrying. The Monetary Authority of Singapore (MAS) also seems worried about this unrealistic expectations of property investors (interest rates will stay low and rents cannot go down) so it wants home buyers to take a reality check before going into years long loan payments:

“A residential property loan is a long term financial commitment. The current low global interest rate environment will not continue indefinitely” the central bank warned yesterday. [1]

In june 22 2011, MAS has proposed that financial institutions (FIs) to provide a Fact Sheet, in a standardised format, when marketing residential property loans to consumers.  MAS invited feedback on its proposal, which was published in a consultation paper today.[2]

“Specifically, MAS proposes that the Fact Sheet contain the following information:
a)  tenor of loan, loan amount, lock-in period (if applicable), and whether the FI has the right to vary the interest rate;
b)  Monthly and annual repayment amounts;
c)  Monthly instalments at different interest rate levels and past trends in the benchmark rate of the loan;
d)  Fees payable; and
e) links to Money SENSE-Association of Banks in Singapore (ABS) and CPF websites which guide consumers to online resources for information relevant to their home loan decisions.”[2]

But you should be the first one who does these reality checks even if your bank or property agent does not do it for you. 2008 financial crisis made it very obvious that as long as they get their commissions, specialists do not bother to look at or make you aware of all possible scenarios, especially these scenarios involves loss for you and can prevent sales (and commission they earn). I do not think they are different now, there is no reason for them to behave different.

[1] The Straits Times, MAS wants home loan facts spelt out
[2] MAS Consults on Residential Property Loans Fact Sheet

Tuesday, June 21, 2011

Greece Debt Crisis and Bankruptcy have effects on Asia - Part 2

First part: Greece Debt Crisis and Bankruptcy have effects on Asia - Part 1.
Q: How would Greece bankruptcy effect us in Asia?

A: There are a lot of horror stories in circulation in the economic news about immediate effect of a Greek debt restructuring (a nicer way to say bankruptcy). In fact most of them are circulated by the investors to create a "to big to fail" environment to be bailed out.

Greece bankruptcy will start what is becoming highly inevitable earlier: Sovereign Debt Crisis of The West. Instead of solving the root causes of the problems, The US and European governments reacted the financial crisis of the first 10 years of 2000s by transferring losses to public whenever a private financial institution got itself in trouble.

Asia over relies on US and Europe as consumers to consume their products. Asian countries production capacity is in a state that resources are allocated based on Western over consumption. This is a typical result of credit fueled over consumption: resource in Asia (and in anywhere else in the world are misallocated). Mix of Asian products are not completely consumable by its citizens. So any problem in US and Europe will translate into trouble in Asia. But it may also well be a chance. It would be very painful at the beginning but the pain can force Asian nations to start to upgrade their inter-Asian trade and infrastructure instead of parking all the savings in US.

But there is a very immediate and damaging effect of a potential Greece default : European banks which has heavily leveraged on Greek debt will see a large chunk of their capital melt and they will have to pull money from everywhere, including Singapore, back to home. This has potential to dry-up cheap credit fueling all sorts of asset bubbles in Singapore, particularly the property bubble. 

Singapore Employment outlook and Salary Guide 2011

Kelly Services releases a comprehensive reference guide on the salary trends, job titles and employment outlook across industries in Singapore. According to Kelly Services “the aim of the Employment and Outlook Salary Guide is to provide an insight to the latest salary ranges for various positions across industries in Singapore through a compilation of salaries and job titles.” Salary guides from 2006 to 2011 can be downloaded in pdf format from their web site.

The guide is divided into industries:  “Accounting & Finance”, “Banking & Finance”, “Call Centre”, “Engineering & Technical”, “Healthcare & Life Sciences”, “Human Resources”, “Information Technology”, “Legal”, “Office Support, Procurement, Supply Chain & Logistics” and “Sales Marketing & Advertising.
The salary ranges in Kelly Salary Guide are indicative of actual transactions between employers and employees and represent a reflection of the marketplace. The ranges are based on a monthly basis. They are also dependent on the type of organization: SME, Mid-Tier or MNC. Also note that in the guide salary ranges are not inclusive of variable factors such as allowances, expense claims, bonuses and CPF contribution.

Let's look at some highlights from the guide:

According to Kelly, prospects for IT professionals in Singapore are very good especially in Financial IT sector because banks are expected to hire more while there is a IT talent shortage. The market can become more favorable for potential employees since foreign talent intake may slow down. Financial IT in Singapore pays far better than non Financial IT so talent shortage is a good opportunity for IT professionals to jump to financial IT sector.

In Accounting and Finance, there is an active demand for mid-level positions such as Senior Accountant but Finance Manager but Senior Accounting positions within Commerce and Industry have been slow to rebound.

For Banking & Finance, outlook is also good since Singapore is playing to number 1 spot for Private Banking and Wealth Management. For engineers, outlook is always the same, where companies are cautious to hire staff and when they do, they tend to hire contract or temporary base.

Monday, June 20, 2011

Greece Debt Crisis and Bankruptcy have effects on Asia - Part 1

Here in Singapore we are a little far away from Europe so people do not follow Greece Debt Crisis a lot. In fact this is a very serious issue which will greatly effect us and global markets. A Greece bankruptcy will trigger a debt crisis which can be followed by Portugal, Spain, Ireland and Brussel debt crisis. Europe is a very large customer of Singapore produced goods so if Europe falls into crisis, we will directly feel the pain.

So what is happening? Will Greece bankrupt? How did they come to this point?

Q: How did Greece fell into debt crisis?

A: When Greece entered EU, she suddenly found itself among group of rich relatives, particularly Germany. Guys who were lending financially sound Germany offered the same interest rates to Greece (probably thinking that Germany would help Greece when Greece cannot pay). And as expected financially unsound Greece abused this new situation: Greece borrowed heavily in the last decade to fund ever negative government budget and current account deficits.

These two paragraph below summarizes what has happened in Greece in the last decade:
Over the past decade, Greece borrowed heavily in international capital markets to fund government budget and current account deficits. The reliance on financing from international capital markets left Greece highly vulnerable to shifts in investor confidence. Investors became jittery in October 2009, when the newly elected Greek government revised the estimate of the government budget deficit for 2009 from 6.7% of gross domestic product (GDP) to 12.7% of GDP. In April 2010, Eurostat, the European Union (EU)’s statistical agency, estimated Greece’s deficit to be even higher, at 13.6% of GDP. Investors have become increasingly nervous about Greece’s ability to repay its maturing debt obligations, estimated at €54 billion ($72.1 billion) for 2010. On April 23, 2010, the Greek government requested financial assistance from other European countries and the International Monetary Fund (IMF) to help cover its maturing debt obligations. This report analyses the Greek debt crisis and implications for the United States.
The debt crisis has both domestic and international causes. Domestically, analysts point to high government spending, weak revenue collection, and structural rigidities in Greece’s economy. Internationally, observers argue that Greece’s access to capital at low interest rates after adopting the euro and weak enforcement of EU rules concerning debt and deficit ceilings facilitated Greece’s ability to accumulate high levels of external debt.
Greece’s Debt Crisis: Overview, Policy Responses, and Implications

Q: But why Greece needs to borrow heavily?

A: Welcome to the root cause of Greece debt crisis. Think of Greece everything opposite of Singapore in the context of economy. The network of economic activities are highly corrupted in Greece: its citizens and companies do not pay tax and nothing happens to them when they do not pay tax! So they have low state income in the first place (just an example: 1 third of the doctors in Greece pays less tax then construction workers). People are not hard working, they retire early, earn a lot of money for producing nearly nothing and nearly all economic activities involving government also involves bribe. An example: All parents in Greece buy private tuition for their kids since they well know that in Greek schools teacher teaches nothing useful but teachers are relatively paid high and if their unionized wage increase request is not accepted, they strike (Strike is a national sport in Greece).

If you earn less but spend a lot, you borrow to fund your spending and repeat this again and again, you will bankrupt. This is true for individuals, companies as well as countries.

Notice: Greece tends blame The Ottoman Empire on the practice corruption. Ottomans occupied Greece for decades until Greek Independence and according to Greeks they have inherited the corrupt practices from them. They are partially right to look at the history but it is not The Ottomans, it is Roman Empire. The Ottomans also inherited their corrupt practices from Roman Empire after they have ended it. Actually, highly established corrupt economic practices of Roman Empire can still be seen in 3 modern day countries occupying its land now: Greece, Turkey and Italy.

Q: So is it all Greece's fault?

If your brother-in-law spends more than he earns again and again and goes broke, it is his fault. But if every time he needs money, you risk your money and financial stability by borrowing him a lot of money with the unrealistic expectation of getting it back or your father will step in and bail your brother-in-law if he cannot pay, it is also your fault. This is not only Greece's fault. The lenders who opened this reckless spending nation credits are equally responsible for the crisis.

Q: Will Greece bankrupt?

A: It is now pretty obvious that Greece will bankrupt.

Q: So what is all the fuss about Greece?

A: All the fuss in the market is on when and how Greece will default. As usual, investors who had wrong bets and lend money to Greece do not want to pay for their mistakes. Instead, again as usual, they want to be bailed out. They want IMF and EU taxpayers (read this as Germany and German taxpayers) borrow money to Greece so that the bankruptcy is delayed until end 2012. If they can achieve this, Greece will pay them their money and they can exit their wrong bet. Typical banana republic economic practices adapted by the west for the last decade: "Tail we win, heads you lose". They plan to offload debt to taxpayers and yet again profit from trade.

Part 2: Greece Debt Crisis and Bankruptcy have effects on Asia - Part 2

Greece bankruptcy and markets

John Authers from Financial Times recently wrote a foolish article named “Little for it but to suffer Greeks’ democratic pain”. The article yet again shows how disconnected the economists from the facts and biased by the benefit of a small but powerful group of investors which they call "markets".

John Authers wrote:

“When the will of the market collides with the will of the people, there is nothing for it but to accept the pain. That was the story of the implosion after the Lehman Brothers bankruptcy nearly three years ago and it appears likely to be the story of the Greek fiscal crisis now.

After Lehman, there was initial shock and uncertainty – but the collapse of stock, commodity and currency markets did not happen for a few weeks. That was when elected politicians were forced to choose between the demands of voters and markets, and went with the voters.”

In fact, free markets rarely collide with the will of the people. Mr. Authers confuses markets with the financial institutions which dive from one wrong bet to another! In the Lehman case and in this Greece case, what collides is not markets and the people, what collides is the “free” market and financial elite who does same mistakes again and again but refuses to accept the pains of their own mistakes. What he calls “market” are these investors. The real market forces actually requires Greece to bankrupt in order to impose fair pain on all parties who did wrong again and again as it happened in Lehman case. Greece community with its corrupted politicians, bureaucrats, money sucking public sector, tax evading, over spending but less working masses,  over paid retirees did everything to bankrupt. And they will bankrupt. The question is not if, it is when and how. And maybe they should bankrupt now in order to replace the current corrupted network of economic activities earlier.

If Greece will bankrupt what is all this noise in the financial news? Well investors who have stupidly lended money to Greece wants Greece to bankrupt later so they can exit by IMF and EU money. These banks and institutions had ignored the risks (why to think about risk when you are always rescued by tax payer’s money) and given money to Greece and they should lose money. This is what should happen in a free market and market forces as well as people through democracy are mandating this. If Greece does not bankrupt now, they can borrow from IMF and EU and pay to them and they can again exit a wrong bet without any pain.

Greece with its people will pay for it anyway: either with bankruptcy or with long austerity measures to prevent bankruptcy. Bankruptcy now may be more painful but more healthy for Greece. They have a functioning side of the economy and a non-functioning side of the economy.  If they do not bankrupt then they will rescue the non-functioning part of their economy and greatly damage the functioning part. And of course if they do not bankrupt now they will rescue the long time non functioning side of world economy but continue to damage the functioning side of the world economy.

John Authers concludes his article by advising investors to accept the pain because there is no good alternative to democracy. Well I have a good and a better news for you and your "market" Mr. Authers. There is a good alternative for your investors: Banana Republic! There you can make taxpayers to take the pain while well connected avoids it. And better news is that it is already being implemented by Western politicians and bureaucrats. The economic philosophy of the banana republic "too buddy to fail" is well accepted in US (but name is changed to too big to fail) and national sport of the banana republics, money printing is eagerly adapted by FED (although renamed Quantitative Easing).

Sunday, June 19, 2011

Singapore studio rent

Flat rents are very expensive in Singapore, especially in the central locations. And reducing the burden of rent has 3 only ways: rent as less square feet as you can, rent as far from city center as you can, rent an HDB instead of a condominium unit if you can. Studio rent in Singapore is a good choice for mostly young, single local professionals or expats working and living here in Singapore. This group of people do not need a larger place more than a 1 bedroom flat and prefer to be in a more central location/near work and can sacrifice on size.

Currently rental prices are very high even for these units. This will probably change soon since the army of flats which are purchased in the recent boom of 2009-2011 will be completed and many of them will be available for rent (or the unit from which their owner will move). And if you can, it is better to rent an HDB then private in terms of convenience (more amenities around HDBs) and price. But if you chose to rent a private studio unit or 1 bedroom flats, you have plenty of options.

First the high end: Professionals working in Central Business District (CDB) such as Raffles Place, Tanjong Pagar can look at projects like International PlazaIcon or The Sail @ Marina Bay. Currently 1+1 flats (1 bedroom and a living room) are advertised around 4,000 SGD per month in Icon and around 4,500 SGD per month in The Sails. Newly completed One Shenton in District 01, at the heart of Business District has 1 bedroom flats offered from 3,800 SGD per month. These flats are not small either, they are 581 sqft (54 sqm).

Leonie Studio is a 32-storey condominium with  located at the prime residential area at Leonie Hill, directly behind Orchard Cineleisure and Ngee Ann City mall. It is within walk distance to Somerset MRT Station and Orchard MRT Station. In my opinion it is a better alternative to CDB ones since life in CDB dies in the night while this one is just next to Orchard Road. Only disadvantage is the upcoming construction of Twin Peaks residences but still this is a problem if a unit is looking to that side. Rents for 1+1 units in this development is around 4,000 SGD per month based on asking prices (there is always room for negotiation in Singapore).

Let's go to mid range. Check out our article Cheap serviced apartments / studios in Singapore for units above 2,000 but below 4,000 SGD per month.

Liang Seah Place is an interesting alternative worth to check, especially for those working in Suntec City or on the green line (including CDB). It is composed of studio to 2+1 units in a restored building very near to Bugis MRT Station and Suntec City. Studio units here starts for 2,000 SGD per month and the prices differ between 2,000 to 3,900 SGD per month depending on the unit size.

Liang Seah Place (you can see a tower of Suntec City behind)

iDeal Home advertises several studio units (as well as room rentals) in this web site. They have units like Dalvey Road Studio for 2,850 SGD per month as well as People Park Complex units going for 1,900 SGD per month.

Notice : If you are looking for cheap short term rentals rooms and apartments in Singapore, you can check out our article here.

Saturday, June 18, 2011

Buddhism in a nutshell

"Do good, avoid evil, and purify the mind." said The Buddha. Do the good (Dana), avoid evil (Sila) and purify the mind (Bhavana).


Dana means to giving or generosity. You do not need to give something material to practice Dana. An encouraging word, a warm smile, a small but useful tip can be enough to practice generosity. But you should give without any expectation. The idea here is to be able to let something you have to go.

Dana is not done to become a flower child, it is done to cultivate the perfection of giving:

1) Dana, giving without expectation, hesitation or regret is a confrontation against the strong "self" and "my" illusion. By letting go the things we have, we practice letting the self go.

2) Dana creates positive karma and helps the sentient being to reborn again in higher planes of being. Planes under this are full of too much suffering to purify mind and reach the Nirvana.


Sila is overall (principles of) ethical behavior in Buddhism. The Buddha warned us to avoid these 5 precepts:

1 - Killing
2 - Stealing
3 - Adultery
4 - Consuming toxic material (alcohol or drugs)/toxic thoughts (anger, jealousy, etc ...)
5 - Lying

5 precepts are not commands. These are things which harms us or others, creates negative karma and avoids us to purify the mind. One who wants to purify the mind needs to stay away from them.


Bhavana is the spiritual cultivation in Buddhism. It is what we call Buddhist Meditation (there was not a exact word corresponding to meditation in classical languages of The Buddha's time). Dana and Sila proects the sentient being from lower planes of Samsara but Bhavana helps to release it from Samsara. The most fundamental error Westerners have about meditation is that they think the Buddhist meditation is a concentration practice.In fact, concentration is a form of "attachment" and the opposite of the goal of the Buddhist goal of Nirvana. Buddhist meditation practice is not concentration, it is "letting go". Nirvana is achieved by losing things on the way not gaining things. Nirvana is achieved when one is able to let this world go.

Friday, June 17, 2011

Singapore Work Holiday Visa

If you are soon-to-be or have just graduated and you would like to have work experience in Singapore, newly introduced Singapore Working Holiday Pass (WHP) is for you.

WHP is a working holiday visa is a travel permit which allows travellers to undertake employment in the country issuing the visa for the purpose of supplementing their travel funds.Most working holiday visas are offered under reciprocal agreements between certain countries, to encourage travel and cultural exchange between their citizens.[1]

Work Holiday Pass applicant must be a university undergraduates and graduates between 17 and 30 years old. Students who have gained admission to the university but have not commenced their studies may also apply. Not all universities are accepted though, applicant's  university must be in Australia, France, Germany

Hong Kong, Japan, New Zealand, United Kingdom or United States. And not surprisingly, applicants must prove that they can financially support themselves while they stay in Singapore. They will be requested to prove that they have sufficient funds to travel to and from Singapore and can pay for normal living costs while in Singapore.

If you have all these criteria full filled, you can apply for the Work Holiday Pass to work in Singapore for up to six months.

You can have more information on this pass from Contact Singapore. The visa is issued by Ministry of Manpower (MOM) and you can have more information from Work Holiday Programme page.

[1] - Work Holiday Visa

Tuesday, June 14, 2011

Singapore new residential property sales of 1H 2011 fall by half

According to The Straits Times, new home sales in Singapore in the first half of 2011 fell almost 50% compared to the first half sales of 2010. In the first six months of 2011, 3796 new homes with total transaction price of 5.1 billion SGD are sold while in the first 6 months of 2010, home new sales numbers were 7,189 with the total transaction price tag of 12.3 billion SGD. [1]

"Not only has there been a plunge in the number of new private homes sold, but the total value of sales has also more than halved, according to a new report by property consultancy CB Richard Ellis (CBRE).

Experts attribute this to weaker market sentiment this year, as well as the cooling measures in January, which were the strictest seen in the past few years."
Source : New home sales plunge by half

According to another The Straits Times article, "new private home sales fell 13 per cent to 1,575 units last month."[2]

In my opinion, although sales numbers fall, it is early to talk about price falls. This is because the developers had great 2 years in 2009 and 2010 and they have holding power. Also the effects of super low interest rates on the supply side is mostly ignored. Yes, super low interest rates increases demand by making prices "normally" unaffordable "look" affordable. But it probably enables developers to finance their operations with cheap debt instead of selling units with discounted prices and gives them more holding power. This is the reason although there are thousands of unsold new homes in their portfolio (obvious sign of unaffordable prices) they do not feel urge to reduce prices. An interest rate hike and persistent low sales volumes may trigger them to discount but it is early to talk about both of these.

[1] - Sales Down
[2] - New private home sales fall 13%

Related Article:

Sunday, June 12, 2011

Chinese Property Bubble is different

If you look at the Chinese Property market, to many experts it looks like a very serious bubble. Prices in cities like Beijing, Shanghai or Hong Kong are unsustainable. For Jim Rogers, legendary investor based in Asia (Singapore), there is no question that there is a bubble in Chinese property market:

"For me there is no question, there is a property bubble in the urban coastal real-estate of China. But that is not China, that is not the whole economy, it is much much broader than that. Yes, you will gonna see that Chinese real-estate speculators will go broke, I assure you of that."

Won't it have a massive effect on greater Chinese economy?

"There will be problems and you will see that real-estate speculators will go broke. But that is not the Chinese economy. In America you could buy 5 houses without a job and then banks got these mortgages and turns them into something more magic. That is not happening in China. You cannot even buy a single house without a job in China."

In fact Jim Rogers is just touching the main difference between the US Property Bubble and Chinese Property Bubble. Let me put it in a more direct way: The main difference of "property" for US people and Asian people is that in US property is seen as a device to consume (get credit against it) while in Asia property is seen as a device to save! Most houses in China are bought by cash or relatively low loan to value ratios. But I do not agree with Rogers on the bubble burst effect on broader Chinese economy. There are some problems ahead which can cause more pain than he things. Many Chinese would serve higher mortgage rates when the rates goes up. This will make them even spend less on other goods and services. Combine this with the declined demand from west for Chinese goods in the future due to their own financial problems, then GDP would be greatly effected.

Saturday, June 11, 2011

Current problems of US cannot be fixed without a crises says Jim Rogers

At the age of five he started to sell peanuts for profits. Later he became a hedge funds pioneer and commodities trader.  In December 2007, he shifted much of his money and his family out of US to Asia[1]. Jim Rogers now lives among us in Singapore. He claimed that he moved because now is a ground-breaking time for investment potential in Asian markets:[2]

"If you were smart in 1807 you moved to London, if you were smart in 1907 you moved to New York City, and if you are smart in 2007 you move to Asia,"[3]

Jim Rogers has a lot to say about the future of US and when he talks we should listen to this legendary investor carefully. In an interview with Wall Street Journal's Simon Constable this week, Jim Rogers talks about solution to  the U.S. debt crisis, why he's shorting U.S. tech companies, why the stimulus package was a bad idea, and the looming energy crisis.

"SC - Debt ceiling is reached, there is no more money left for stimulus and FED told us that there is nothing more it can do about it. How will we deal with this?

JR - Well, I hope somebody will wake up and say we have made a lot of mistakes in the last 40 years and we have got to do something about it. If your brother-in-law spends all his money over and over again, somebody tells him "OK brother-in-law. You need to shape up. Facts are facts, you are broke deal with it. " We need to shake up and deal with the fact that we are broke.

Jim Roger does not see any way to avoid the next crisis. He says that "we (US) need to cut the spending with an axe. With a chainsaw. We are in trouble. Somebody has to understand that.". And then he continues:

"No country in history got itself into this kind of situation and has gotten out it without a crisis or semi-crisis. The only way to get attention of Washington is to have a crisis or let's hope just a semi-crisis. Then they will be thrown out by the elections and hopefully we will start with new people who can deal with the crisis."

"You have seen what happened in 2008. We had a little crisis. It did not get anybody's attention. They have bailed out their friends in Wall Street. They did not deal with the problem. And then they have started to spend more and more money. They did not deal with the crisis. They have tried to push it to the next elections."

Simon Constable asks Jim Rogers was the Keynesian financial stimulus was a good idea. Jim Roger's replies:

"Absolutely the wrong thing to do. Totally wrong thing to do. Japanese are trying to do this for the past 20 years, not letting anybody to go bankrupt. You remember the term "zombie banks" or "zombie companies". 20 years later Japanese stock market is down 80 percent below where it was 20 years ago. It did not work in Japan and it will not work here. It will make things worse."

But some politicians will tell us that we need to spend more, it did not work because we did not spend enough. Just like the ones in casino.

"We have already quadrupled our debt to guarantee the companies like Fannie Mae. We cannot quadruple our debt again. We cannot print any more money. The world does not have enough trees for Bernanke to print more money. The market will not take it any longer."

Rogers think more regulation is a nightmare and driving business out of US. Some people may think that we could avoid the financial crisis if we had more regulations. But Jim Rogers think differently:

"We had the regulations. FED is supposed to look at the banks and supposed to make sure they are doing what they are supposed to do. Regulations are there we just need confident regulators. If they haven't bailed out the Long-Term Capital Management, Lehman Brother's was still in business today. They would lose a lot of money, fire incompetent people and they would not go into the mess which bankrupted them in 2008."

Jim Roger's does not think the bankers has got the message. "The bankers did not get the message out because they are bailed out whenever they have a problem. When they are in trouble they start to cry "save me", "save me". "Save me Dr. Greenspan, save me Dr. Bernanke, save me somebody". And they will be saved."

How will we get out of this? Jim Rogers says "let them bankrupt. If in 1998 for instance, when Long-Term Capital played out everybody has gotten burned, if in 2001 everybody have gotten burned if you have let the market work. The problem is Washington will never let the market work. They want to bail out everyone instead of market wipe out the excess."

[1] - BBC HARDtalk - Jim Rogers
[2] - Jim Rogers
[3] - Jim Rogers on commodities and currencies