Tuesday, January 27, 2015
Lately, I've noticed that there is land cost on everything and when the oil price falls to half it was last year, the petrol prices are only lowered by 15%. "Since June 2014, the benchmark Brent oil price has declined from a peak of US$115 per barrel to around US$50 per barrel recently."
From an unverified source, the tender for 10 years to run a petrol kiosk Temporary Occupancy License can cost up to S$40 million. This means $4 million a year of rent, on top of the high petrol tax in Singapore.
Building of Condos can be an expensive risk for developers. Many developers though old loopholes and partnership with Temasek Holdings, have already made it big. The newer estates that was up for tender in 2014 in Punggol and Seng Kang are about S$280 per sq ft per plot ratio. Lowest since 2011.
This means that the apartment that you buy (excluding taxes and stamp duties) $280 or up to $700 per sq ft. goes to the government. The government gets the land free or at low cost (formally grass or forest), and sells it at a profit, driving up housing prices.
Looking at this trend, it seems that everything that the government says, "fair market value" and they call for tenders, it means there are market forces (which may be related to government linked companies) that will buy and drive up land cost and overall property cost. This translates to higher rents and expensive housing.
Compared to various other countries, like German, and even land scarce Japan, many of the industrial land has "rent control" and certain pricing in place, favoring the industries and businesses in the area, ensuring that the rents are kept low to keep the country's export and business cost competitive.
Driving up cost in everything, allowing speculators to come in, declaring "market value" on things like coffee shops, public housing and many other properties which should be regulated will only drive costs up.
For a small coffee shop, the cost can be S$10 million, and the rents of each stall can be $10,000 a month. This usually mean the rent actually cost more than labor costs. And in Singapore, the business owner that is faced with high rent can either increase price, lower quality of materials used, or exploit their workers.
I'm no economics guy, but I'm certain that everything you buy, coffee, a watch, clothes, etc. A significant portion of what you pay, actually goes into rent cost. I'm not sure if I like paying more thing because rent is high, even in far away places.
So where does the money go?
The money that SLA make from land sales, property taxes, stamp duties and the excess taxes collected by the government, along with ERP, COE, and various other schemes to siphon money. Along with your CPF, medisave and other $$$, along with profits made by Temasek holding and GIC, say about S$10B a year for about 10 years, will see about S$100B or more in the reserves.
I'm not sure that the "rainy day fund" will every be used to better the lives of Singaporeans, and the excess money now seems to lead to "constant over budget" on projects which do not really benefit the average Singaporean.
I do wonder if anyone knows how much in the reserves do we actually have, and how is it audited, since it is managed by Temasek Holdings and GIC, and whether are there plans to use the money in the near future perhaps when the funds grow beyond S$200B (say a 5% return) eliminate GST, and have more programs to benefit the ones who are left out in the Singapore success story.
I personally do not think such a high reserve is necessary, and I do feel that a lot of people in Singapore are not doing as well now compared to 10 years ago, and something needs to be done to help them aspire more and keep their dreams alive, so that we can all have prosperity and progress for our nation.
-- Iron Bowl
Sunday, January 18, 2015
The GRC system is a great disservice to the citizens in a democratic country, and it is not ok when the incumbent party with 60.1% votes gets 81/87 seats in the parliament.
Many people are afraid to speak out against the government or even about the failed policies. The 6.9 million white paper which is proposed by the government to increase population in the already strained infrastructure is a good example that in the last 10 years, the government seems more interested in profits than the people.
This problem happens in many countries as well. When there is a time of great prosperity growth and high GDP, and yet, you do not feel any effects at all, except inflation, then something must be wrong.
There are many signs that things are not going well. Since 2007 after the salary increase of the highest paid ministers in the world, things just went south. It seems that the policies are primarily focused on driving up GDP because it seems that the minister's salaries are pegged to the economy. Then, the tax structure are changed much, allowing more rich people to pay less taxes, dropping capital gains tax and inheritance tax.
For 80% or more Singaporeans, this tax does not affect them, and yet, there is GST which is now at 7%, and this GST affects everything, including food, clothes and medicine.
For the past 10 years, inflation due to the open floodgates of foreigners coming to work in Singapore cause rents and properties to be not affordable. Resale HDB sells for over S$1 million and new HDBs in Toa Payoh and Ang Mo Kio can be easily S$400k and up.
However, salaries for the majority of Singaporeans have not increased much. In 2000, I've a friend who was making $5k a month and he bought a $200k 5-room HDB in Hougang flat with his wife (who is unemployed). Today, someone with his qualifications and experience can make about $6.5k and the brand new 5 room flat for about $420k.
Rents have risen sharply for commercial properties as well, driving up the cost of food and services. The roads are much more congested than before, and there are more ERP. Cost of ownership of a car is greatly increased by high cost of maintenance, (though salaries of the technicians are not much higher) and high COE prices.
Many think that they do not own cars, but as commercial vehicle prices are high, tolls both incoming to and from Malaysia is high, food prices are also affected. Public Transportation is also getting more expensive as the feeder bus service discounted price is no longer applicable.
I've always thought that food prices in the city is high, and people living in the newer estates may pay less for things as rents are lower, however, this is not true. Food cost more in the food courts in Punggol because they are owned and operated by commercial operators, out to make profits.
Because you live away from the city, most of the time, traveling to work and town cost more and takes more time. Housing and rents may be cheaper, but there is not really that much of savings to be made.
Town Councils in many areas are run by "PAP people" and it seems they care more for "building things" than actual social impact. There are so many playgrounds and new playgrounds that are only occupied during weekends, and empty exercise areas which are empty most of the time.
In Toa Payoh, they are actually building elevators at Multi-Storey Carparks which seems to only benefit the rich folks that can afford $100k cars, yet the residents in many HDB flats, especially those who live in the shorter 4 storey ones do not get elevators.
Poorly built sidewalks, bus stops, playground are changed and fixed every 5 years, and there seems to be renovation done to hawker centers every few years as well. And I do not see much improvement beside more inconvenience to the residents during the renovations.
I could say that many of these contracts for the unnecessary constructions and renovations go to the "volunteers" in the GRC who are mainly there for the benefits they get by allying to PAP. They just so happen to own contracting companies as well.
The CPF, Medisave and Medishield don't seem to work well, and as a mandatory system, it seems that the money locked inside the system does not really belong to the owner. Large restrictions are placed to limit access to the money and you incur interest from borrowing your own money.
When a young blogger writes about this, he gets sued by the Prime Minister. When you fear to talk about the government or its policies, perhaps its time to change the government.
When things are not going as well as it should, I think it is time to vote in the opposition to make sure that the government and the highly paid ministers do in fact work for the people and not just for the rich. The growing income gap needs to be addressed, and the focus should be progress and prosperity for the nation.
For a more transparent and accountable government, 50 years should be a new milestone and past state secrets should be open for the public to browse after 50 years.
Wednesday, January 14, 2015
Sadly, really stupid homicidal individuals killed many people in France. And there are many world leaders showing up to stand in solidarity to support the cause of free speech. However, upon examination, it seems that many of these leaders are in government who do jail bloggers and journalists.
This brings an important message to people that just because you are in a protest, it does not make you a better person.
Recently, I've met people at the #icantbreathe protests and I am not surprise that some of them are racists.
I just have a message to Netanyahu -- marching in that protest does excuse Israel's actions against free speech.
-- Iron Bowl.