Friday, July 4, 2014

On S.R. Nathan's 90th Birthday.

So, yesterday was former President S.R. Nathan's 90th birthday. Our Prime Minister, Lee Hsien Loong gave a good tribute to Former President S R Nathan, highlighting his role as a "tree planter", building up young nascent organizations into mature institutions like NTUC, SID, MFA, etc.

Although, people are generally divided in their opinions over whether S R Nathan had been one of our better presidents, one thing we can be certain about is that S.R. Nathan is a national hero.

Wait, a minute. Some of you might be re-reading that last sentence and wondering, since when was S.R. Nathan a national hero?

If you are one of these people then I guess it's story time...

On 31 January 1974, four men armed with submachine guns and explosives attacked the Shell oil refinery complex on Pulau Bukom. The half of these men were from the Japanese Red Army (JRA) and half were from the Popular Front for the Liberation of Palestine (PFLP). They planned to disrupt the oil supply from Singapore to other countries, especially South Vietnam.

 At the beginning of their operation, the terrorists' boat ran aground on a coral reef. They managed to reach the shore of Bukom after convincing an unsuspecting boatman to tow them towards the island. As they headed towards a gate of an oil tank installation, they fired shots at two passing vehicles although no one was injured. A sentry at a security post managed to escape and raise the alarm.

The terrorists were able to detonate 3 of the 12 explosives they were carrying, but they caused little damage. To escape, they then hijacked the ferryboat Laju at the Bukom jetty and held 5 crew members hostage. This led to a chase and Laju was quickly surrounded by navy gunboats and marine police boats at the Eastern Anchorage.

So this is where S.R. Nathan's role comes in.

Back then, S.R. Nathan was the Director of Security and Intelligence Division at MINDEF and he led a 13 men party consisting of 4 commandos from the SAF and 8 other government officials. Following a few days of intense negotiations, during which 2 hostages managed to escape by jumping overboard in the middle of the night, the negotiation party managed to convince the terrorists to release the remaining 3 crew members in exchange for a party of "guarantors" for their safe passage to the Middle East

S.R. Nathan was among the party of  "guarantors". Essentially, he volunteered to take the place of a hostage so that the hostage could go free.

On the night of 7 February. The group was transferred from Laju to the Marine Police Headquarters and then to Paya Lebar Airport where the terrorists surrendered their weapons. After they freed the remaining three hostages, the four terrorists left Singapore on 8 February at 1:25 am,

Accompanied by Nathan’s team on a specially arranged Japan Airlines flight to Kuwait. After reaching Kuwait, the 13-men party flew back and reached Singapore on the following day.

Now, how many people can claim that their president once risked his life to save a hostage. If you aren't impressed by this, I don't know what will.

On the day before Independence Day, let's also remember the 13-men party who risked their lives to save the hostages in the Laju Ferry Incident.


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Wednesday, July 2, 2014

On CDL Chief Calling on Gov't To Ease Property Curbs

For the second time in five months, the executive chairman of Hong Leong Group Singapore and City Development Limited (CDL), Kwek Leng Beng, has called on the government to review property restriction measures here

He told the press on Tuesday that “foreigners were choosing to plough their investment dollars into countries like Britain, Australia and the US over Singapore, while Singaporeans have been investing abroad.”

Image from theonlinecitizen

Now, anyone who has an iota of common sense will know that advice from a property developer to the government to remove curbs on property speculation is prone to bias.

Kwek Leng Beng goes on to state that, “We are losing these investments to other countries even though these foreign properties have a higher risk profile,” Mr Kwek told The Straits Times. “It is unlikely these investment dollars will return to Singapore.”

Although there is probably some truth to Kwek Leng Beng's statement, the bigger question is whether foreign investment in property is desirable for the country.

Yes, investments in properties create jobs and contributes heavily to the GDP. If party A buys a Condo from the developer at $1M and sells it to party B for $2M within 1 year, the GDP for the economy increases by $3M. After factoring for agent commissions, lawyer's conveyance fees, the contribution to the GDP is slightly higher. Add to that the various taxes, stamp duties and fees which contributes to the government's coffers, it is easy to see how attracting foreign investments in property can be a lucrative business.  After all 3 out of the 10 richest persons in Singapore have their source of wealth derived from property, with the top 2 having their wealth derived almost entirely from property

However, the jobs created in this industry are few and the technological advancements, even fewer. This is exacerbated when it is just the same property exchanging hands, multiple times without any new product or services created for the society.

Despite all these, foreign investments in property might do more harm than good to a society with scarce land space and an increasingly densely populated population. Encouraging property speculation results in runaway property prices that prices out many locals from home ownership. Although, Singapore has managed this well by providing government housing through the HDB, the very high difference in land sales prices between land earmarked for HDB development and land earmarked for private property development gives the government a lot of incentive to prefer one type of land sales over the other. Furthermore, it discourages upwardly mobile locals from owning private property, leading them to compete with "less upwardly mobile" locals for government property.

Instead of encouraging foreign investments in property, we should encourage foreign investments in businesses which creates jobs, technological advancements and products and services which benefits the society at large.

Compared to US, where none of the top 10 richest persons derive their richest from property, we can see a very glaring difference between the 2 countries. This is one reason why despite strong push from the government, a solid infrastructure network and a highly intelligent workforce, we do not have breakthrough entrepreneurial companies like Facebook or Google incubated on this island. After all, who wants to take the risk of entrepreneurship when rents are sky high and you can easily make a lot of money as a property agent. Why would any foreign investor, invest in a local start-up when investing in property gives much better yield?

To add insult to injury, our tech entrepreneurs, Sim Wong Hoo and Tan Min Liang. have to run off to California to find angel investors willing to invest what would later become the world renown companies, Creative and Razer.

End of the day, we do want foreign investments in Singapore. We want foreign investments in business that creates jobs for Singaporeans. We want foreign investments in technology to create technological advancements in Singapore. We want foreign investments in arts, culture and sports to make Singapore a vibrant city. But we do not want a repeat of the Tulips mania by having foreign investors exchange overly priced property around like a game of musical chairs.

Back in the 70s, Dr. Goh Keng Swee laid the foundation stones for Singapore's economy by promoting foreign direct investments by multi national companies to Jurong Industrial Estate and not by building thousands of condos for foreigners to invest in, because he knew that this was the kind of investment that would lead to Singaporeans developing more skills, create jobs and improve standards of living. Let's move away from speculative property investments and direct foreign investments to projects that will have better positive externalities for the society.


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 Property Valuation Tool