Thursday, October 23, 2008

DBS May Compensate Some High Notes 5 Investor

This is a written response to Straits Times Article Help for Minibond Investors. Hong Leong Finance, Maybank and DBS may offer full compensation for vulnerable customers. This is first posted here by Daniel Tan on Facebook.

Dear DBS High Notes 5 Investor,

Beware! This sounds too good to be true. Could banks be attempting to destroy our will to fight and break down our unity? Remember it is unity that brought us together so far. It is unity that gives us strength. Without unity, we are nothing.

The vulnerable group (aged 55 and above, non-English educated) is the leading pack for compensation claims. This has 2 effects:

Firstly, this is a psychological attack on our compassion. The very same compassion that have driven us onward and together for fair compensation. We are in this together to push the financial institutions to provide a decent compensation for our losses, that was resulted from their alleged mis-representation. It is an attack to make us loose our will to fight.

Remember that if mis-representation is proved in court, the contract which you have signed is voided. Consequently, the financial instistution is not only required to pay you 100% of your compensation, but also the interest (most probably at the fixed deposit rate) that represents the opportunity cost you had lost. If banks take the position that they wish to compensate the group of vulnerable investors because of mis-selling, then mis-selling must have occurred to the general population who bought these investment products as well.

To date, no numbers and timelines have been released. DBS claims it will compensate, but it has not released any figure publicly that it will compensate 10%, 30%, 50% or 70% of your losses. It has also not said that if DBS will compensate immediately or via a small installment over a fixed period starting in 1 year´s time. How can any of us here reasonably judge that DBS has indeed given a compensation deal that is fair and rightful in our hearts in face of such opaque dealing?

Secondly, those outside the favoured category may get a lower percentage of compensation than the vulnerable pack, resulting in double injustice for the unfavoured people. Everybody is equally affected by the alleged mis-representation. A younger person who speaks English and is highly-educated is not necessary financially-sophisticated to handle investment schemes.

Would you expect a medical doctor to understand the same investment prospectus that have confused so many people? Do you think doctors study investment analysis and finance theories at medical school? Don´t let the fight for rightful compensation become a class struggle between the educated and the less educated. Such class struggle is counter-productive to our objectives! A 65-year-old lowly educated old lady is just as susceptible as the doctor.

Confidentiality may be used as a tool to continue the divide-and-conquer strategy to quell our fighting spirit and enhance the sense of helplessness among DBS High Notes 5 investors. By only giving in to the demands of the vulnerable group, this may lead to division of our group unity. DBS had said that it expected compensation to be in the range of S$70-80M, yet it has not actually hand out the compensation monies or release details of the compensation payment schemes.Confidentiality is barrier to verify DBS´ promise.

Moreover, the S$70-80M pay-out is not necessary limited to DBS High Notes 5 Investors from Singapore. This includes compensation for DBS High Notes 5 Investors from Hongkong too. Singapore and Hongkong investors had bought a total of S$360M of DBS High Notes 5. This represents an average of 25% compensation per investor, which suggests that most investors are entitled to much less than 25% of their original capital.

Banks have so far left many investors unhappy with the complaint process. The responsiveness of each bank and the independence of the complaint process still remains questionable. It is only after many weeks of immerse public pressure on MAS and DBS, then DBS has given in and is now considering compensation. However, It is not possible that while the banks have changed their mind on compensation policies, the bankers would have changed their heart for the better too. A leopard does not change its spots overnight.

An insider claimed that many relationship managers have been told to stop force-selling investment products. Even if the relationship managers hit their monthly quota, they will not get their due bonus too. I sincerely believe this is the result of the investigation petition that had been submitted to MAS. I also believe the same petition is responsible for reversal in position on compensation to DBS High Notes 5 Investors. But more must be done.

Hence, I stress collective group unity must be maintained until all pay-out schemes for each DBS High Notes 5 Investor have been finalised. I hope many of the High Notes 5 Investors, through this crisis, have discovered many good people and many good friends. In times of hardship, it is only such ties that we can truly depend on. A friend in need is a friend indeed. We must remain united till DBS has provided us a solution that satisfy all of us.

Unity is strength. Without unity, we are nothing.





Best regards
Daniel Tan

Wednesday, October 22, 2008

Foreign Workers in Singapore: Integrating or Segregating Them

THE RECENT saga over the housing of foreign workers in land-scarce Singapore has forced its citizens to take stock of what it means to live in multicultural harmony. Singaporeans generally appreciate the economic contribution of this transient workforce who are a cheap, but critical source of odd job labour that most Singaporeans themselves shun. Moreover, with a current 577,000 foreign workers – mainly in the construction and manufacturing sectors – and 180,000 foreign domestic maids, there can be no doubt that Singaporeans have to learn to live with these guest workers in their midst.

As such, the question is not over whether to tighten the control over the number entering Singapore but how best to manage their presence in the already densely-populated city-state. In this respect, the discussion has polarized Singaporeans into two camps – those calling for integration and those for segregation.

Although integration – giving them access to common spaces in Singapore – is possibly the more morally defensible doctrine of the two, it is segregation – the situation in which interaction between the host population and guest workers is kept to the minimal – that is the more likely option to prevail.

The Integration Arguments

Aside from the obvious fact that the notion of segregation is anathema to Singapore’s multicultural policy, the case for Singaporeans to be more accommodating to foreign workers has by and large been anchored by the economic logic. Singaporeans are repeatedly reminded of their critical contribution to the good life in Singapore – not only do they perform the 3D jobs (dirty, dangerous and difficult) that most Singaporeans shirk from, they do so at very low wages that keeps Singapore’s economy flexible and competitive, attracting business investments that in turn keeps Singapore’s unemployment rate in check.

Appeals on humanitarian grounds have also highlighted the invaluable contributions of foreign workers to Singapore’s thriving economy despite remaining marginalized and vulnerable to exploitation. In this respect, as beneficiaries of the fruits of their labour and sacrifice, Singaporeans have an ethical obligation to share their common spaces with foreign workers.

Moreover, many others also point to the irony that Singapore’s meteoric rise from a sleepy fishing village to a thriving port city was built on the blood, sweat and tears of our immigrant forefathers, a significant number of whom came as penniless labourers with hopes of a better life for their dependents and themselves. They eventually sank their roots in Singapore soil and their descendents now form the core of the Singapore heartbeat. Hence Singaporeans intolerant of the foreign workers’ presence have obviously forgotten their migrant roots, the argument goes.

The Segregation Reality

While the integration rhetoric makes for stirring speeches and inspiring national narratives, it is not likely to win over many from the segregation camp. This is because it does not address the deeper issue at hand – the good life enjoyed by Singaporeans is premised to a large degree on the unequal treatment of the foreign worker community.

An obstacle to the genuine integration of foreign workers lies in Singapore’s utilitarian immigration policy that evaluates a foreigner’s worth based on his usefulness for business. Consequently, foreign workers satisfy this criterion by accepting low wages and skeletal rights to keep business operation costs competitive. They are thus allowed to enter the country to work.

However, this also means that from the get-go, they do not enter on an equal footing. This is because the very provisions that qualify them in the first place are the very same ones that undermine their odds for sustaining the level of affluence that will allow them to interact with the majority of Singaporeans as equals. As a result, policy dictates that their presence be regarded as temporary in anticipation of the challenges to integrating them fully into Singapore society.

Following from this, it is arguably a tall order to expect the relationship between Singaporeans and the foreign worker community to be anything deeper than that between a consumer and service provider respectively, to be terminated once the business transaction is completed. To alter this relationship will in turn undermine the very economic grounds on which they are allowed to enter our shores to begin with. Hence, from a cost-benefit analysis standpoint, it does not make sense for both parties to invest in forging any enduring and meaningful relationships.

Shared values and economic policy

In sum, the integrationists cannot depend on humanitarian rhetoric alone to win over those who advocate segregation. This is because the problem does not lie in the lack of compassion among Singaporeans for the underprivileged – the consistently generous donations of Singaporeans to various charities bear testament to this.

Rather, the deeper issue that needs to be addressed is the grim reality that the affluence Singaporeans enjoy today is to no small degree indebted to the unequal treatment of the low and unskilled temporary workforce. Acknowledging this inequality not only requires Singaporeans to take a long hard look at their shared values, the logical course of action that follows may entail Singaporeans to compromise the material comforts they are already accustomed to.

Put differently, Singaporeans have been handsomely rewarded for closing a blind eye to the inequality built into their country’s policy towards foreign labour. If advocates of integration are serious about advancing their cause in a more convincing manner, they will have to wean the nation’s economy away from this reliance on cheap labour in a manner that will not undermine the good life which is regarded by many Singaporeans as their birthright.

Monday, October 20, 2008

An Overseas Singaporean Student Union

The Annual General Meeting (AGM) of the UK Singapore Students´ Council (UKSSC) took place last Sunday (19 Oct 2008) at the Singapore High Commission in London. The UKSSC is the highest representative body that represents the interests of Singaporean students studying at universities in the UK.

Although the UKSSC was formed under the auspices of Contact Singapore as an information dissemination mechanism to the Singapore Societies at each UK university, it is also a Singaporean student union. It serves as an umbrella organisation that includes 24 Singaporean Student Associations and 16 special interest and alumni groups such as the Temesak Society, the Hwachong Alumni and the Victorian Alumni.

Having been involved in the Imperial College Union and the United Nations Youth and Student Association for the past 3 years, I realised that my interest in campaigning for general student welfare, the Millenium Development Goals and UN Reform have shifted towards defending the interest of fellow Singaporeans over the years.

This was further reinforced by my experience of defending Singapore and ASEAN at various Model United Nations conferences in Europe and Asia. My accumulated experience led to my decision to run for the Treasurer Position of the UKSSC Secretariat.

Although the UKSSC was formed under the auspices of Contact Singapore as an information dissemination mechanism to the Singapore Societies at each UK university, it is also a Singaporean student union. It serves as an umbrella organisation that includes 24 Singaporean Student Associations and 16 other alumni groups such as the Hwachong Alumni and the Victorian Alumni.

Due to manpower constraint and skewed distribution of Singaporean students all over the UK, the UKSSC faces a geographic divide which segregates the UKSSC into 3 regional directorates: London-Oxbridge, the Midlands and Scotland. Each directorate functions independent of each other, but plays an important role in coordinating the various Singapore Student Associations in each region. This was especially emphasised by Nicholas Foo, the outgoing Regional Director for the Midlands.


Nicholas Foo stressed that the UKSSC plays an important role in supporting new university-based Singapore Student Associations and this should not be overlooked. He further added that the efforts of each directorate to facilitate communication and promote interest of the UKSSC and the individual student groups varied, which fails to present a cohesive picture on the relevance of the UKSSC to the general Singaporean student community in the UK.

The UKSSCĹ› top-down approach in communicating to Singaporean student community in the UK faces a substantial challenge. While there has been no competing interest between the UKSSC and the university-based Singapore Student Associations on assisting fellow Singaporean students in seeking jobs in the UK and Singapore, there are competing interests in the arena of social events. While student gatherings, parties and dinners organised by local Singaporean student groups are generally well-publicised and well-attended, the UKSSC found it difficult to get its own plans off the ground because of a lack of support from the local Singaporean student groups.

The type of social events that the UKSSC can organise and promote falls within a very narrow scope, given the dinner parties, dinner-and-dance (eg. Singapore Night organised by the Hwachong Alumni) , ski trips and sporting events (eg. Nottingham Games organised by the Nottingham University Malaysian & Singaporean Society) have already been taken up by the various student interest groups.

Successful UKSSC events so far include the Confluence 2006, Confluence 2007 and the Student Network Forum. These events were held in Singapore and they serve the career interest of the Singaporean student community in the UK, yet they do not have any impact on the Singaporean students´ day-to-day life in the UK.

Clearly, the long-term relevance of the UKSSC to the general Singaporean student community lies in promoting the strategic interest of the Singaporean student community, and not competing with the university-based Singaporean student associations to organise social events in the UK.

Strategic interest is divided into the following categories:
(1) Immigration;
(2) Employment;
(3) Civil Rights;
(4) Welfare

(1) is provided for through the International Student Office of each UK university. While the International Student Office provides an advisory role in applying for UK Student Visa or a UK Work Permit, it does not provide feedback to the UK Home Office on the ease of application and the applicant´s experience.

From 25 November 2008 onwards, the UK Border Agency will require Singaporean students in the UK to have a biometric ID Card. This adds an additional £100 to the visa cost. The International Student Office does not have any vested interest to lobby the UK government to lower the fees, while this will affect new waves of Singaporean students coming to the UK for further studies every year while existing students have to pay £100 for the biometric ID card. The UKSSC is well-positioned to advocate for lower biometric ID card fees via the National Union of Students and the University of London Union.

(2) is well provided for through the Career Advisory Service and the International Student Office of each university. Yet at the same time, Contact Singapore , the Overseas Singaporean Unit and various corporations would advertise recruitment events and workshops with the UKSSC and the individual Singaporean student groups. However, in lesser well-known and smaller univerisites, the Career Advisory Service would be ill-equipped to advise overseas Singaporean students. This is where UKSSC can fill in the stop gap to assist Singaporean students in their career development.

(3) may seem to be an alien concept to Singaporeans. It is hardly surprising since the Singapore government has yet to ratify the International Covenant on Economic, Social and Cultural Rights and the International Covenant on Civil and Political Rights. However, the Singaporean student community is residing in the UK and therefore is entitled to these rights in the UK.

In 2007, the UK Parliament almost passed a terrorism bill that requires all foreign students studying science and engineering to report their daily movements to their individual universities. This is draconian and adds on hassle to our daily lives as a student. If not for the united student opposition from the National Union of Students (NUS), Labour Students and Tories Students, this bill would have been in effect today and affect many Singaporeans studying science and engineering in the UK.

This example highlights the importance of having a student union that represents foreign students´ interests and the UKSSC is in fact such a student union. It is well-positioned to advocate for civil rights of Singaporean students should the need arises. The UKSSC could potentially work with the UK Singapore Student´s Law Society to monitor the UK Parliament should the violation of Singaporean students´ civil rights take place through discriminatory policy-making.

(4) is typically provided through the university student union or NUS. The University of London Union (ULU) provides free legal aid to all University of London students. This service is especially useful if the student would like to understand rental contracts in greater details and negotiate with the landlord on the various terms and conditions. It is also applicable in situations when students may need to go to Small Claims Court to make a case. However, due to the geographic distribution of the UKSSC constitutents, It is not practical to provide free legal aid to Singaporean student community.

Legal aid has demonstrated that empowerment of students is a very pragmatic form of student welfare. Empowerment can also take place through dissemination of essential information with regards to the cost of living. For example, the liberalised electricity market in the UK may have the potential of providing consumers with cheap electricity through competition, yet the downside lies with information asymmetry at the consumer level. Often, the electricity & gas retail vendor provides a series of rate and payment packages but these prices are useless if you cannot tell which numbers are applicable for the type of electricity usage meter you are using. Also, should the prices of electricity & gas goes up, the UKSSC can join in other student unions in condemning the price hikes.

Opportunities for the traditional form of welfare still exists. Typically, the university has a hardship fund that helps to tide a student through difficult times. Being an overseas student, Singaporeans are not entitled to social security benefits in the UK and the hardship fund should the need arises. The UKSSC could be potentially be acting as trustee and administrator of a hardship fund that targets the Singapore student community. The fund could provide a short-term loan with a one-off bursary to tide over a difficult period should the need arises.

Despite my grand vision, I actually did not the win the election. The Treasurer position is still open. People opposed my vision because they felt that I was not of the same ideology with the President. Some mentioned that because of my idealogical difference with the President, I might make things difficult for him given my lobbyist and activist background. I strive to be a world-class leader, and not being able to put aside idealogical differences in the name of the common good is a sign of an inferior leader and third-class politics.

The whole idea of having a single-ideological UKSSC secretariat is irrational because the secretariat is responsible for policy-making affecting Singaporeans. Different idealogies exihibit different sensitivity to different issues and concerns, thus a multi-idealogical secretariat would be able to capture a wide variety of issues that are relevant to overseas Singaporean students.

Overseas Singaporeans studying abroad tend to shun away from lobbyist and parliamentary politics. Some feared that I would turn the UKSSC into a partisan organisation, when all I really want to do is to promote and defend the interest of fellow Singaporeans in the UK. There is no taboo in being non-partisan and political simultaneously.I cannot be partisan because the political parties in the UK represent British interest. I will run for Treasurer again at the next Ordinary General Meeting (OGM). I don´t think overseas Singaporean students still constitute a lost cause.

Thursday, October 16, 2008

The Economic Case for Promiscuity

It's true: AIDS is nature's awful retribution for our tolerance of immoderate and socially irresponsible sexual behavior. The epidemic is the price of our permissive attitudes toward monogamy, chastity, and other forms of sexual conservatism.

You've read elsewhere about the sin of promiscuity. Let me tell you about the sin of self-restraint.

Suppose you walk into a bar and find four potential sex partners. Two are highly promiscuous; the others venture out only once a year. The promiscuous ones are, of course, more likely to be HIV-positive. That gives you a 50-50 chance of finding a relatively safe match.

But suppose all once-a-year revelers could be transformed into twice-a-year revelers. Then, on any given night, you'd run into twice as many of them. Those two promiscuous bar patrons would be outnumbered by four of their more cautious rivals. Your odds of a relatively safe match just went up from 50-50 to four out of six.

That's why increased activity by sexual conservatives can slow down the rate of infection and reduce the prevalence of AIDS. In fact, according to Professor Michael Kremer of MIT's economics department, the spread of AIDS in England could plausibly be retarded if everyone with fewer than about 2.25 partners per year were to take additional partners more frequently. That covers three-quarters of British heterosexuals between the ages of 18 and 45.

If multiple partnerships save lives, then monogamy can be deadly. Imagine a country where almost all women are monogamous, while all men demand two female partners per year. Under those conditions, a few prostitutes end up servicing all the men. Before long, the prostitutes are infected; they pass the disease to the men; and the men bring it home to their monogamous wives. But if each of those monogamous wives was willing to take on one extramarital partner, the market for prostitution would die out, and the virus, unable to spread fast enough to maintain itself, might die out along with it.

Or consider Joan, who attended a party where she ought to have met the charming and healthy Martin. Unfortunately Fate, through its agents at the Centers for Disease Control, intervened. The morning of the party, Martin ran across one of those CDC-sponsored subway ads touting the virtues of abstinence. Chastened, he decided to stay home. In Martin's absence, Joan hooked up with the equally charming but considerably less prudent Maxwell--and Joan got AIDS. Abstinence can be even deadlier than monogamy.

If those subway ads are more effective against the cautious Martins than against the reckless Maxwells, then they are a threat to the hapless Joans. This is especially so when they displace Calvin Klein ads, which might have put Martin in a more socially beneficent mood.

You might object that even if Martin had dallied with Joan, he would only have freed Maxwell to prey on another equally innocent victim. To this there are two replies. First, we don't know that Maxwell would have found another partner: Without Joan, he might have struck out that night. Second, reducing the rate of HIV transmission is in any event not the only social goal worth pursuing: If it were, we'd outlaw sex entirely. What we really want is to minimize the number of infections resulting from any given number of sexual encounters; the flip side of this observation is that it is desirable to maximize the number of (consensual) sexual encounters leading up to any given number of infections. Even if Martin had failed to deny Maxwell a conquest that evening, and thus failed to slow the epidemic, he could at least have made someone happy.

To an economist, it's clear why people with limited sexual pasts choose to supply too little sex in the present: Their services are underpriced. If sexual conservatives could effectively advertise their histories, HIV-conscious suitors would compete to lavish them with attention. But that doesn't happen, because such conservatives are hard to identify. Insufficiently rewarded for relaxing their standards, they relax their standards insufficiently.

So a socially valuable service is under-rewarded and therefore under-supplied. This is a problem we've experienced before. We face it whenever a producer fails to safeguard the environment.

Extrapolating from their usual response to environmental issues, I assume that liberals will want to attack the problem of excessive sexual restraint through coercive regulation. As a devotee of the price system, I'd prefer to encourage good behavior through an appropriate system of subsidies.

The question is: How do we subsidize Martin's sexual awakening without simultaneously subsidizing Maxwell's ongoing predations? Just paying people to have sex won't work--not with Maxwell around to reap the bulk of the rewards. The key is to subsidize something that is used in conjunction with sex and that Martin values more than Maxwell.

Quite plausibly, that something is condoms. Maxwell knows that he is more likely than Martin to be infected already, and hence probably values condoms less than Martin does. Subsidized condoms could be just the ticket for luring Martin out of his shell without stirring Maxwell to a new frenzy of activity.

As it happens, there is another reason to subsidize condoms: Condom use itself is under-rewarded. When you use one, you are protecting both yourself and your future partners, but you are rewarded (with a lower chance of infection) only for protecting yourself. Your future partners don't know about your past condom use and therefore can't reward it with extravagant courtship. That means you fail to capture the benefits you're conferring, and as a result, condoms are underused.

It is often argued that subsidised (or free) condoms have an upside and a downside: The upside is that they reduce the risk from a given encounter, and the downside is that they encourage more encounters. But it's plausible that in reality, that's not an upside and a downside--it's two upsides. Without the subsidies, people don't use enough condoms, and the sort of people who most value condoms don't have enough sex partners.

All these problems--along with the case for subsidies--would vanish if our sexual pasts could somehow be made visible, so that future partners could reward past prudence and thereby provide appropriate incentives. Perhaps technology can ultimately make that solution feasible. (I envision the pornography of the future: "Her skirt slid to the floor and his gaze came to rest on her thigh, where the imbedded monitor read, 'This site has been accessed 314 times.' ") But until then, the best we can do is to make condoms inexpensive--and get rid of those subway ads.

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News Junkie, Irreverent Blogger, Anarcho-Capitalist, Technologist