Thursday, February 27, 2014

L.A.M. on this entire Singtel and Whatsapp Sh*t

Today's blogpost is brought to you by Douglas who asked, "I'm confused as hell. John, you willing to break down the entire Whatsapp sh*t down for us? Dude you should blog this madness. Everyone is mixing sh*t up and confusing the entire thing."

                                                           Picture from Yahoo! News

If you haven't already heard, SingTel's chief Chua Sock Khoong called for the right to charge WhatsApp and Skype network usage.

So just to set things straight:

  1. Singtel’s chief was speaking at the Mobile World Congress in Barcelona where she made the suggestion that regulators need to allow Telcos to charge over-the-top (OTT) services such as Whatsapp and Skype for using their networks because Telcos are losing revenue from SMS services. In Asia Pacific, revenues for SMS is likely to fall from US$45.8bn in 2013 to US$38Bn in 2018. In Singapore, SMS accounts for 5-10% of a telco's revenue.
  2. Singtel does NOT intend to charge consumers directly. However whether such charges will trickle down in the form of subscription fees to the consumer is a different story altogether. 
  3. The Whatsapp Plan pictured below is not related to this announcement. It was actually introduced a number of months ago and is meant for heavy users of Whatsapp or people without data plans who do not want to incur data charges from using Whatsapp. However, I honestly have no idea why people would pay $6.42 per month for unlimited Whatsapp usage when they can pay $5 for 1GB of data that should be more than enough for Whatsapp, Facebook and whatever app they want.

Picture from

     Douglas also asked whether Singtel can prevent users from accessing Whatsapp and Facebook if these OTT service providers do not pay. 

      Firstly, regulators will need to approve of such charges. Last year, when an Australian carrier, Telstra tried to do this, the  Australian Competition and Consumer Commission ruled it to be anti-competitive. So in short regulators generally frown on this behavior. 
      However, if this is allowed by regulators, the truth is that Singtel and other Telcos CAN deny you access to these services. But there are many alternatives available. If they deny you access to Whatsapp, you can use Wechat or Line or whatever new service becomes available. Or you can jump to a different Telco which doesn't deny you access to Whatsapp. If all else fails, just wait a year and a half and you can bypass Telco networks completely by utilising free WIFI from space!


Saturday, February 22, 2014

L.A.M. On Budget 2014 and How it Really Affects You

Some highlights from yesterday's Budget 2014.

On our Finance Minister's head:
  • The Good: It's as shiny as ever.
  • The Bad: It wasn't shiny enough to keep some of our MPs from sleeping.
  • The Impact: Makes a good cover photo for this blogpost.

On our Economy:
  • The Good: Singapore's economy grew 4.2% in 2013 despite uncertain global outlook.
  • The Bad: This year's growth is forecasted to be slower at 2 - 4%.
  • The Impact: That 10% raise you are asking for? You should have asked for it last year.

On our Budget:
  • The Good: FY2013 is likely to have a budget surplus of $3.9Bn.
  • The Bad: FY 2013's budget surplus is higher than the $2.4 billion surplus in 2012.
  • The Impact: We were taxed harder in 2013 compared to 2012. Those bastards!
  • The Good: FY2014 expected to have an overall budget deficit of $1.2Bn
  • The Impact: That extra tax burden we had last year? We might get back some of it in benefits this year. (Later on, we will learn that most of the benefits go to old people)

On Healthcare:
  • The Good: Medishield Benefits will be enhanced.
  • The Bad: Medishield Premiums will increase.
  • The Impact: Less money in our Medisave because you are expected to live longer. Also healthier people will be subsidising less healthy people even more. Those unhealthy bastards!

  • The Good: Employer's CPF contribution will increase 1% from 16% to 17%.
  • The Bad: The additional 1% will go into Medisave to pay for increased Medishield Premium.
  • The Impact: You know that point about having less Medisave above? Less of a problem now. On the other hand, there is a good chance that prices will go up in general so that employers can pay more CPF

On Property-Cooling Measures:
  • The Good: Too soon to start relaxing them.
  • The Bad: Too soon to start relaxing them.
  • The Impact: Good for buyers, bad for sellers, bad for developers and bad for property agents.

On Education:
  • The Good: Lifelong Endowment Fund topped up by $500m to bring it to $4.6Bn. Kindergarten Assistance Scheme for lower income (Income below $4,800). Extended bursaries for higher education to 2/3 of Singaporean housholds.
  • The Impact: Good for people seeking education. Bad for illiterates. More competition for jobs among degree holders. Also you will now have to queue even earlier for choice kindergartens. That is until more kindergartens are set up.

On National Productivity:
  • The Good: Productivity and Innovation Credit Scheme extended for 3 years. Raised expenditure cap for qualifying activity to 600K from 400K. Support 80% of qualifying costs (capped at $1m) for Infocomm Technology solutions. Subsidised fibre broadplan plans for SMEs and for new in-building infrastructure to facilitate access to broadband.
  • The Impact: Good for SMEs. Facebook status updates will be posted faster for SME employees. Also your favourite restaurant is now more likely to replace some of their waiters with iPads.

On Foreign Workers:
  • The Good: Increased levy from $600 to $700. Lowered Dependency Ratio Ceilings.
  • The Bad: Increased levy from $600 to $700. Lowered Dependency Ratio Ceilings.
  • The Impact: Less foreigners, more expensive operations and HR for smaller companies. But companies are encouraged to make use of various productivity schemes to reduce dependence on foreign labour and increase productivity. Also Tharman asked you to change your mindset about using self-checkout counters at supermarkets to reduce reliance on foreign labour.

On the Pioneer Generation:
  • The Good: Increase Employer's CPF contribution by an additional 1% for workers aged above 50-55 into Medisave Account. More flexible use of Medisave. Annual Medisave top ups of $100-$200. Higher subsidies for Specialist Outpatient Clinic services. $8bn Pioneer Package fund to be set up.
  • The Bad: Workers above 50-55 will also contribute an additional 0.5% into their Ordinary account.
  • The Impact: Finally someone remembered to help their Ah Kong and Ah Ma. Some Filial Piety at last!

On Tax Relief:
  • The Good: Enhance parent and handicapped parent relief by up to $3000. Handicapped dependent reliefs increased by $2000.
  • The Impact: Stay with your parents, get more tax benefits. More benefits if you have handicapped dependents. Good karma begets more tax relief.

On Other Benefits:
  • The Good: GST Vouchers to benefit 1.4m Singaporeans. U-Save vouchers to benefit 800K households. 
  • The Impact: More money and relief, especially if you are poorer or live in cheaper housing.

On the "Sin" Taxes:
  • The Good/Bad: Liquor Tax increased by 25%. Up by $1.20 per litre for Beer, Stout Cider and Perry. And up by $1.75 per litre for other types of liquor
  • Tobacco Tax by 10%. Up by 3.52 cents per stick of cigarette.
  • Betting Duties increase from 25% to 30%.
  • The Impact: Beer, Stout Cider and Perry will cost $1.20 more per liter. Other alcohols will cost $1.75 more per liter. Cigarettes will cost 3.52 cents more per stick. And Gambling will be more expensive/returns will be lower.

Monday, February 17, 2014

L.A.M. on What Is The Best Investment

We are in an age where people are obsessed with money. Walk into any banking hall and you will find RMs trying to sell you the latest investment products while scaring you with inflation numbers and how your savings account only earns 0.125% annually.

Turn on the computer and you will have ads about how to improve your returns with FX derivatives or how you can make lots of money while working from home. The country landscape is littered with showrooms, where housing agents are eager to pounce on you to explain how property is the best investment because it can go no other way but up. 

Inundated by such stimuli, it is little wonder why people are obsessed with making their money work for them.

One of the most common questions I get as a banker/economist/investor is, "What is the best investment I can have right now?". Depending on the flavor of the season, the person's risk profile and return requirements, my answer would range from REITs to bonds to commodities or to property linked stocks.

However, identifying the correct segment is only a third of the story. Apart from that, you also need to identify the correct entry and exit strategy/points. 

The truth is that it takes a lot of training, discipline and luck that get all 3 points right and if you get any of the trinity wrong, you will find yourself sitting on a two legged stool, begging for a not so graceful crash.

The world of financial investments, is a cut throat one and though there is money to be made in the market, it carries a lot of risk as well. When you are making money, more often than not someone else is losing money. When you have made a good investment, someone on the other end must have made a bad one. In this zero sum game with a plethora of players, what is the probability that an average individual can consistently out smart, out wit and out buy/sell institutions with access to data before everyone else, or governments with more resources than anyone else or professional traders who have spent more time and effort than anyone else honing their skills at making money?

This brings me to the topic of comparative advantage. Comparative advantage is an economics terms which refers to the ability of a party to produce a particular good or service at a lower marginal and opportunity cost over another. In very layman terms, it is a fancy way of saying that some people are better at some things than other people.

There are some people, who either by talent, access to information and resources or training will possess a comparative advantage over others in making money from money. While for someone else, their comparative advantage could be in photography, or auditing or whatever skill sets or passion that they possess.

Many times, we are so caught up with the financial capital side of things that we forget about improving yields on human capital. There are many financial instrument out there and the ones you are more likely to have access to, also tend to have low barriers to entry. By No Arbitrage Principle, any possibility of low risk, positive returns are quickly snapped up, leaving behind an equilibrium where no supernormal profits can be made. However, when it comes to human capital, there is only one of you. You are unique, your skill set, your experiences, your talents, your resources and abilities are unique. In terms of barriers to entry, it is extremely high. In terms of supply curve, it is perfectly inelastic. What's left is to increase the market demand for that unique product which is yourself.

                                                            (Picture from Logarchism)

As seen from the curve above, When the supply curve is perfectly inelastic, the only way to increase it's value is to increase the demand for the product. When the demand curve shifts upwards from D1 to D2, the value of the product is increased. Furthermore, as there is a very high barrier to entry (no one can replicate you unless they clone you), the supply curve is likely to remain perfectly inelastic in the long run.

So how do you invest in yourself? Well for starters, identify what is your comparative advantage. What are your strengths, your talents, your passions and your abilities?  How would you go about improving them? Do you need to invest money to attend courses, get a certification, etc? Do you need to invest time to network with the right people or to get more motivated? Finally, are you investing enough in marketing yourself, your talents and your abilities?

The best salesmen, aren't the ones who can market their products well. They are the ones who can market themselves well. When we think of Apple, we think of Steve Jobs but have we really thought about how much time, money and effort, it took for Steve Jobs to improve his presentation skills, to motivate himself and to market himself?

End of the day, everyone of us have a certain comparative advantage and we are not all made out to be traders or investors. If you are good at swimming, why compete with someone else at running? Leave the marathon, join a swimming competition and compete on your own terms. The best investment you can make is on yourself.


If you liked this, you might also like to read:

L.A.M. on Money
L.A.M. on Popularity and Success

Thursday, February 13, 2014

L.A.M. on How Much Does it Cost to Build a HDB Flat

I refer to the Today article which states that a Singapore-listed construction group has won a contract worth $98m to build HDB flats at Vine Grove @ Yishun. The BTO project will involve the construction, completion and maintenance of 5 13-storey blocks and one seven-storey block, comprising 696 residential units in all.

Now this article along with some sleuthing has provided very good fodder for me to determine whether the government is profiting extensively from construction of "government" housing.

Now lets do some simple math:

Costs of Building Construction:                                                                                       $98,000,000.00

Selling and Administration Costs:                                                                                est $2,000,000.00
Housing Rebates: Assume rebates of 15K per unit                                                          $10,440,000.00

Total Costs:                                                                                                                    $110,440,000.00

HDB Revenue:                        
2 Room Flat Type 1 (48 Units, average price of 85.5K)                                                    $4,104,000.00
2 Room Flat Type 2 (132 Units, average price of 106K)                                                 $13,992,000.00
3 Room Flat (192 Units, average price of 180K)                                                             $34,560,000.00
4 Room Flat (324 Units, average price of 285.5K)                                                          $92,502,000.00
Total                                                                                                                               $145,158,000.00

IRAS Revenue( Buyer Stamp Duty):
2 Room Flat Type 1 (48 Units, average price of 85.5K)                                                         $41,040.00
2 Room Flat Type 2 (132 Units, average price of 106K)                                                      $139,920.00
3 Room Flat (192 Units, average price of 180K)                                                                  $345,600.00
4 Room Flat (324 Units, average price of 285.5K)                                                             $1,266,840.00
Total                                                                                                                                   $1,793,400.00

Total Revenue:                                                                                                                $146,961,400.00

Net Income:                                                                                                                       $36,511,400.00
Operating Margin:                                                                                                                         33.06%

Note that the above has not taken into account any land sales costs (which I assume is a left pocket to right pocket arrangement between HDB and SLA). Based on the above, I would say that the margin made by HDB+IRAS isn't exorbitant at 33.06%.

Is HDB making money off Singaporeans? I can't say for certain but it is definitely much higher than Koh Brothers Group which has an profit margin of only 5.39% (based on information from macroaxis.)

However, if we were to take land costs into consideration, then HDB would definitely be making a loss as a similar plot of land in Yishun would cost more than 36 million. So in a sense, Khaw Boon Wan wouldn't be completely wrong if he complained about how HDB is making a loss but the bigger question is whether SLA should be charging HDB so much on land costs, if the land is used for public housing. Similarly, would SLA charge Mindef so much for the large amounts of land they occupy?

PS: The above analysis is based on publicly sourced information. Where information is not available, I have made assumptions such as ignoring land sales costs as well as the selling and administrative expense. If you feel that there is anyway in which the analysis can be improved, please leave a comment below.


If you liked this, click below for more tools:

NRIC Suffix Checker

Property Valuation Tool

When to Sell My Flat Tool

Military Expenditure Simulator

Wednesday, February 12, 2014

Tools: Excel Password Breaker

Ever had an excel file whose password you have forgotten and you needed to change one of the cells that is locked?

Well now you can use an excel to "break" the other excel workbook!


1) Save Password Breaker file into the same folder as the password protected file you intend to break.

If you need to break the password for a protected Workbook,

2a) Open Password Breaker file and type in the name of the file in cell . Please remember to include the correct file extension , i.e. ".xlsx",".xls",".xlsm"

3a)  Click on Break Excel Workbook button. Once password is broken, a message box will appear informing you that the file has been cracked. Save file to continue. Please note that this process takes some time (approximately 5-20min, depending on your  processing ability).

If you need to break the password for a protected Worksheet,

2b) Open Password Breaker file and type in the name of the file in cell and the name of the sheet in cell . Please remember to include the file extension , i.e. ".xlsx",".xls",".xlsm"

3b)  Click on Break Excel Worksheet button. Once password is broken, a message box will appear informing you that the file has been cracked. Save file to continue. Please note that this process takes some time (approximately 5-20min, depending on your  processing ability).

Download link:

Note: This excel runs on macros and requires macros to be enabled. To enable macros view instructions in the link below:

PS: Please do not abuse the purpose of this tool. This tool should only be used to break protected excel workbooks in which you have permission/authority to edit but may have forgotten the password on. Do not use this tool for illegal purposes. Thanks.


If you liked this, you might also like other tools available on my blog:

NRIC Suffix Checker

Property Valuation Tool

When to Sell My Flat Tool

Military Expenditure Simulator

L.A.M. Tools: NRIC Suffix Checker

The NRIC or the National Registration Identity Card is a identity document used in Singapore. There is a prefix (S,T,F, or G) depending on the status of the holder.
  • Singapore citizens and permanent residents born before the year 2000 are assigned the letter "S".
  • Singapore citizens and permanent residents born in and after 2000 are assigned the letter "T".
  • Foreigners holding employment or student passes issued before 2000 are assigned the letter "F".
  • Foreigners holding employment or student passes issued in and after 2000 are assigned the letter "G".
This is followed by a 7 digit serial number assigned to the document holder.

Finally, there is a suffix, a checksum letter calculated based on the prefix and the 7 digit serial number. This is based on an algorithm that is not publicly available, however, you can use the tool below to "calculate" the suffix of any NRIC number.

Do you know?
The first 4 NRIC numbers numerically are

1) S0000001I (Yusof bin Ishak, first President of Singapore, deceased November 1970)

2) S0000002G (first Chief Justice of Singapore Wee Chong Jin, deceased June 2005)
3) S0000003E (first Prime Minister of Singapore Lee Kuan Yew, deceased March 2015), 
4) S0000004C (Kwa Geok Choo, wife of Lee Kuan Yew, deceased October 2010) .


If you liked this, you might also like:

L.A.M. Tools: Excel Password Breaker

L.A.M on Whether Our Military Spending is Too High

Monday, February 10, 2014

L.A.M. on Value of HDB flats at end of 99 year Lease

So I read on Gerald Giam's blog that Khaw Boon Wan, Minister for National Development had confirmed in Parliament that the value of flats will be zero at the end of their 99 year lease. He also indicated that the selection of sites and pace of SERS depended on factors including the site’s redevelopment potential. Implicit in what he said was that SERS is not a scheme intended solely to replace old flats reaching the end of their lease.

To me, this is a very disturbing development because so far, the market has been pricing HDB flats as if it had an infinite lease and the resale price index has increased from 33.6 in 1990 to 201.7 in 2013. (An astounding 5 fold increase).

Since this means that a house becomes a depreciating asset towards the end of the lease, then it begs the question of when is the ideal point to sell a flat. In the graph below, we see that there is a high point for a typical leasehold property where everything literally goes downhill after that.

(Modeled graph based on property 40 years into it's lease with 59 years remaining and based on a very modest future asset appreciation rate of 1.6% p.a.)

So there are 2 forces at work with regards to one's property.

1) Asset appreciation. Due to demand and supply forces (more demand than supply), asset prices (property) have been increasing over the years, leading to asset appreciation. This is the force which causes the value of a resale unit to grow. For the model I created, I assumed that the asset appreciation rate is constant.

2) Lease amortization. As lease on your property counts down to zero, the value of the property decreases. In the model, lease amortization increases as the number of years of lease remaining decreases to zero.

So in order to answer the question, I developed a model where a user can input the details of his flat, such as the lease commencement year, and valuation of property and determine the ideal year to sell his flat. (See download link below)

How to use the file:

Enter the input variables into the following cells
C3: Original Lease. Usually 99 years for HDB flats
C4: Lease Commencement Year. Can be found in title deed
C5: This Year. Which ever year this is.
C8: Value of property based on Valuation (excluding COV)

I have taken the following assumptions:

1) Property appreciation rate based on the weighted average growth rate based on the resale price index with more current years having a higher weightage than earlier years

2) Long Term Bond Yield based on information from Singapore Government 10Y bond historical rates taken from

PS: Although the model is able to determine the ideal year in which to sell your flat, it doesn't mean that you will be able to get a ready buyer on that ideal year. Depending on economic and market conditions, it might be better to plan ahead and time your exit 5-10 years earlier than the ideal year. The model also doesn't fully capture the effects of potential future government policies. This is just an amateur model based on my assumptions, please feel free to comment below if you feel this model can be improved in any way.

For a property valuation tool, see my other blog post:

Saturday, February 8, 2014

L.A.M's Property Valuation Tool

I have been doing abit of house hunting and along the way there were many variables to consider, so I decided to just create a simple valuation tool to help me to decide whether to consider purchasing the property (Download Link Below).

Brief Description:

This tool uses the comparable transactions method with adjustments to valuate a property.

How to use:

1) Select the name of the property in cell A1.

2) Click on Download Comparable Transactions button (macros need to be enabled for this, on how to enable macros see link:

Note: This process will download a list of comparable properties from the URA website. Please note that it will take about 10 seconds. Once complete, the following message below will be shown:

3) Input the input variables of the property you are looking at in the light green cells (Cells B9-D9, F9, B22 and K4 to K9)

4) Based on your inputs and your comparable properties, cell B23 will return a Y or N value to the question of whether you should consider the property.

5) To find your breakeven transaction price, you can click on the Breakeven Price button and the value will be generated.

How it works:

This tool downloads a list of comparable transactions from the URA website and then does adjustments based on the floor size (in sqft), lease remaining (in years), floor category of the unit and other adjustment factors. After this, a market discount is added which is determined by the preset input in cell K6.

Finally, based on a the asking price, a yield is determined. If the yield is higher than your hurdle rate, then  the property is worth the toolkit considers that the unit is worth considering.

PS: This is just an amateur tool, designed by me to valuate properties based on my own assumptions and consideration sets, if you have any feedback or comments on how to improve this tool, feel free to comment in the comment section below. Another point to note, this tool only applies to resale Private/EC properties in Singapore.


For a tool on when is the ideal time to sell your leasehold unit, see my other blogpost:

Sunday, February 2, 2014

L.A.M. Short Story I: A King, A Boy and the Terrible Three Monsters

In a time long ago, in the land of far far away, there was kingdom that was under siege by 3 monsters.

In the Northern Plains, Medusa petrified every assassin who was sent to kill it.

In the East Sea, a Siren viciously drowned and devoured every soldier who ventured into her territory.

And in the West Forest, the last monster was said to be so terrifying that even the most courageous of warriors would flee before he saw the monster's face.

Because of the presence of these 3 monsters, all trade with the kingdom came virtually to a halt, with the only viable trade route to the South of the kingdom, via a mountainous terrain.

Faced with a soon to be starving population, the king looked far and wide and emptied half the Royal Treasury in search of a brave warrior who could defeat the terrible three. Despite his expansive search, there was no such warrior to be found.

Finally, on one unassuming day, a teenage boy came to the king's throne room and explained to the king's court that he had a solution. 

The king looked at the boy in contempt and wondered what possible solution this young mind could conceive that would solve his problems once and for all.

Despite his skepticism, the king listened to the boy and gave him the mandate to search for the 3 warriors who would save the kingdom.

The boy promptly went about the kingdom, looking not in the taverns or the barracks but on the streets where the number of beggars grew with each day.

After a week of searching, the boy had established his hunting party, an unremarkable motley made up of a blind man, a deaf man and a lame man.

The boy sent the blind man to the North to face the terrifying Medusa who could petrify anyone who dared so much as glanced at her eyes. Unfortunately for Medusa, her powers held no sway over the blind man who beheaded her and opened up the trade paths to the North.

Against the Siren, the boy pit the deaf man whose deafness prevented him from falling for the charms of the Siren's song. The Siren sang and sang until her voice grew hoarse but could not hypnotize the deaf man to throw himself on the rocks and drown himself. When the deaf man reached the Siren, he stabbed her in the heart, ending once and for all the threat to the East Sea.

And to the West, the boy pushed the lame man in a wheelbarrow and dropped him off at the edge of the forest just before nightfall. 

As the light of the Sun faded away, the lame man, now alone in the forest was gripped with fear. However unlike the warriors who came before him, he had no ability to flee. Faced with no other choice, he stood vigilant waiting for the unnamed foe who would come to defeat him. 

He waited, his hands clasping firmly on his weapon of choice, a mace. He waited for what seemed to be hours until the rays of the Sun shone through the foliage and it was day again.

It was then that he realized that the last of the three monsters, the most terrifying of the lot is nothing but a myth, a rumour that sprang up when the two other monsters appeared and it took someone who had no ability to flee to dispel it.

And so, the day is saved, thanks to three unremarkable warriors and a boy whom everyone overlooked.

Needless to say, the kingdom prospered and it's citizens lived happily ever after. 

P.S: I'm sure there is a moral in this story somewhere but I'll leave it to the reader to give his/her interpretation in the comment section below.