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The PAP Debt-Traps & Financial Handcuffs - How They Suck You Dry

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  • MellanieHewlitt
    http://www.sgforums.com/?action=thread_display&thread_id=149304&page=1 Atobe Sg Forums 25 August 2005 · 01:35 PM Is Singapore truly so short of LAND ?
    Message 1 of 1 , Aug 30, 2005
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      http://www.sgforums.com/?action==thread_display&thread_id=9304&page==1

      Atobe
      Sg Forums
      25 August 2005 · 01:35 PM

      Is Singapore truly so short of 'LAND' ?

      Travel around Singapore, and one can see big plots of land that
      remains vacant, sparsely populated, and still waiting for
      development - but only to the highest bidder for that plot of land.

      Hong Kong has land that is much more then Singapore, and the density
      of population is even greater, but HOUSING is very dependent on
      PRIVATE developments, and not much is provided by the Government.

      Private developers have no Social Programs but only driven by
      PROFITS, which explains for the higher price of housing in Hong Kong
      than Singapore.

      Furthermore, the Hong Kong Dollar is about FOUR times lower in value
      than the Singapore Dollar - SGD1.00 is HKG4.65; this will only mean
      that raw materials will have to cost more in Hong Kong than in
      Singapore - as Hong Kong is like Singapore, all materials are
      imported.

      Singaporeans were led to believe that with a STRONGER SINGAPORE
      DOLLAR, we can achieve a higher STANDARD OF LIVING, and will have
      better control to moderate our COST OF LIVING by importing all our
      agricultural needs from the regional neighbors and further.

      The Malaysian Ringgit is TWO TIMES LESSER in value than Singapore -
      SGD1.00 is RM2.24 - and with salaries that are twice smaller in value
      than Singapore's wages, most Malaysians could still afford to buy a
      terrace house (no HDB programs), with enough low value Ringgit left
      to buy an imported car, have an occassional overseas holiday, save
      for their child to be educated overseas, enjoy LIFE shopping for
      cheaper products available at Giant, Carre Fours, and cheaper
      IMPORTED movies (paid in RM) at their Cineplex housed in large Malls
      and Shopping Complexes that are equal to Singapore's.

      After FORTY YEARS, and despite our strong Singapore Dollar, the
      majority of Singaporeans still have to work doubly hard and do not
      seem to have progressed any further from the first spot that our
      fathers have started from.

      Our grandfathers and fathers have either to work in big Europeans
      trading or banking firms, or small factories, or involve themselves
      in trading by travelling in the region or further.

      At least in their times, FORTY YEARS AGO, they could afford to buy
      two storey terrace house in community housing areas of Joo Chiat,
      Katong, Siglap, Bukit Merah, Tiong Bahru, Jalan Besar, Sembawang -
      and with a mortgage that is fully paid up in TEN YEARS - and with
      smaller wage amounts.

      After FORTY YEARS, with a bigger population - (which was suppose to
      pose a nightmare for the LKY administration, hence the Two Child
      Family Planning Policy that is now admitted to be wrong) - but a
      STRONGER DOLLAR, Singaporeans are still moving in the same
      directions, working to pay a mortgage.

      The mortgage require TWENTY YEARS to be fully serviced - despite a
      stronger SINGAPORE DOLLAR.

      NINETY PERCENT of Singaporeans work to pay the HDB (or private
      housing) mortgage; keep ourselves alive by buying from NTUC
      Fairprice; pay for transportation by MRT or SMRT, or SBS, or TIBS, or
      Comfort; entertain ourselves on Sentosa Island or NTUC 'East End'
      or 'Downtown', or SAFRA, or Orchid Country Club; glued our eyes to TV
      programs and Newspapers that are both controlled by GLCs; pay our
      utilities that are provided by GLCs - from electricity, water,
      garbage collection - even though these are supposed to have been
      Privatised.

      Even drinking Tiger Beer and some other Beers, or Coca Cola and some
      other soft drinks, the money will flow back into the coffers of
      Temasek.

      Not forgetting also the innocuous ring of our handphones and home
      phones, OUR hard earned money are paid to SingTel, M-1, and Starhub;
      while the Internet Service Providers are also similarly dominated by
      SingTel, Starhubs and Pacific - all of which are also GLCs.

      Is it little wonder that the Ruling Party is so keen to suppress the
      rise of any Opposition Party, to threaten their political-economic
      control, and continue with the lucrative enterprise of governing
      Singapore ?

      ----------------------------------------------------------------------
      ----
      Fare hikes

      TODAY
      2 June 2005

      MEANWHILE, BANKRUPTCIES RISE
      ----------------------------
      THE number of new bankruptcies in Singapore hit an 11-month high in
      April, according to latest Government data.

      Figures from the Ministry of Law showed that the number of bankruptcy
      orders for both individuals and companies rose to 378 last month - its
      highest level since April last year.

      The total number of undischarged bankrupts as of April 30 stood at
      22,079, the ministry's website showed.

      The economy contracted at an annualised 5.5-per-cent rate in the first
      quarter and prompted the Government to revise its growth forecast for
      this
      year to 2.5 to 4.5 per cent from 3 to 5 per cent.

      Under Singapore law, a person can be made a bankrupt by the High
      Court for
      debts of $10,000.

      TODAY
      7 JUNE 2005
      BEWARE THE DEBT TRAP
      --------------------
      Often people run into financial trouble because they borrow too much
      and
      have difficulties repaying their debts.

      If you do not want debt to rule your future, it is important to put a
      lid
      on your borrowings.

      There are a couple of ratios you can calculate to assess if you are
      borrowing too much.

      Debt-to-asset ratio

      This ratio helps to measure a person's ability to repay his debts. It
      is
      calculated by dividing total debts by total assets.

      A ratio of 50 per cent or less is considered safe.

      Debt servicing ratio

      This ratio measures how much disposable income is needed to repay
      debts.

      It is calculated by dividing the annual loan payment by the annual
      take-home income (i.e. after deducting all CPF contributions and tax
      liabilities).

      A ratio of 35 per cent or less is considered healthy.

      An example

      Mr Tan and his wife are in their late 30s and they have two kids.

      The couple have an outstanding home loan of $350,000 and a car loan of
      $80,000. They spend $24,000 per annum on mortgage payments and a
      corresponding $12,000 for their car loan. Their home is currently
      valued
      at $500,000 while the value of their car is $100,000.

      Mr Tan earns a monthly salary of $4,300 while his wife earns $3,700.
      They
      receive bonuses, equivalent to two months of their salary. So their
      gross
      annual salary is $112,000. They also get annual interest income of
      $700 on
      their bank deposit of $100,000. Hence, their total annual income is
      $112,700. Their annual take-home income (after CPF and tax
      liability) is
      $87,220.

      The current value of their assets, i.e. home, car and bank deposit,
      add up
      to $700,000. The value of their outstanding loans is $430,000. Hence,
      their debt-to-asset ratio is 61 per cent ($430,000 divided by
      $700,000),
      which is high compared with the recommended 50 per cent or less.

      The annual loan repayments on their home and car amount to $36,000.
      This
      translates to a debt servicing ratio of 41 per cent ($36,000 divided
      by
      $87,220), which is higher than the recommended ratio of 35 per cent
      or
      less.

      Suggestions

      Mr Tan and his wife need to work at reducing their debts given their
      high
      debt-to-asset ratio. This is important given that interest rates may
      rise
      further.

      One suggestion they can consider is to sell their car and turn to
      public
      transport. If they do this, their debt-to-asset ratio falls to 58 per
      cent.

      Their debt servicing ratio will also improve to 28 per cent.

      However, their debt-to-asset ratio will still be high, and they should
      work at reducing it further to 50 per cent or less, by setting aside
      more
      savings to repay their loans.

      Next week, we will look at the importance of insurance coverage and
      highlight some options you have to protect yourself and your loved
      ones.

      ----------------------------------------------------------------------
      -

      Mellanie Hewlitt
      Singapore Review
      22 Jan 2005
      Why & How The PAP Financially Handcuffs Singaporeans.

      You know about the COE and HDB scams. But have you ever wondered what
      the 2 biggest financial handcuffs of the avarege Singaporean are?

      Answer: a) The House and b) The Car.
      These are essentially fixed illiquid assets which cannot be easily
      taken off-shore. And these are also the two biggest items on the average Singaporeans list of expenses. They provide a stable income/revenue stream for the bloated coffers of the government bureucracy and also physically shackles citizens to this island.

      The following commentary by Robert Schwartz, chief economist for a
      strategic research unit in Australia, was written as part of a Singapore Studies project.

      For more information on the project and other articles, please visit
      JGNews at www.jamesgomeznews.com

      Read on and discover how and why the PAP Government financially
      handcuffs the average Singaporean.

      ---------------------------------------------------------
      Singaporean spending not central to Singapore economy
      by Robert Schwartz, 20 Jan 2005

      Writing about Singapore's economic outlook is boring.
      It's not that there is nothing to say, it's that there
      is nothing to say about Singapore itself. A pertinent
      discussion of Singapore's near term prospects for the
      first half of 2005 has to start with the effects of
      the tsunami. This then would segue over to the actions
      of America's Federal Reserve Bank, which in turn would
      be followed by a pithy, yet substantive, look at the
      global electronics cycle.

      Where do the people of Singapore fit into this
      analysis? Hopefully as readers of this piece, but
      that's about as far as it goes.

      In 2001, the Ministry of Trade and Industry published
      a paper that looked at the four primary, long term
      drivers of Singapore's economy. The number one
      influence was growth in the United States. Number
      two? Growth in the economies of Indonesia and
      Malaysia. Third was global semiconductor sales. And
      rounding out the top four was domestic construction.

      But wait, you might say, what about Singaporeans' love
      of shopping? Certainly that has to count for
      something? You're right it does. The problem is that
      Singaporeans love of shopping is usually done
      someplace other than Singapore. The fastest growing
      component of private consumption over the past decade
      or so has been Resident Expenditure Abroad.

      Of the spending done in Singapore, the fastest growing
      type of retailer (by far) has been motor vehicle
      dealers. From 1997 to the third quarter of 2004,
      dealership sales had increased by a total of nearly
      260%, not including the effects of inflation. The
      next fastest growing category was supermarkets, which
      grew by a total of nearly 32%. Overall, non-motor
      vehicle retail turnover grew, excluding inflation, by
      a total of 7.1% from 1997 through September 2004.

      The key to Singapore's retail sector is not the
      average Singaporean. The key to retail in Singapore
      is the overseas visitor. If you want to get a handle
      on how well the sector is doing, look at the growth in
      visitor numbers. These have traditionally led the
      retail numbers.

      So again, where does this leave the people of
      Singapore? In their government housing units voting
      for the PAP every so often and that's about it. As
      far as making the economy move forward, the average
      Singaporean is a non-event. And as such has little
      say in the political environment. No economic clout =no political constituency == no audible political
      voice.

      The consumer's share of Singapore's economy is around
      42%. This compares to about 55% in Japan, a country
      notorious for saving, and close to 70% in the United
      States. It is not coincidental that the average
      American, who is such a vital part of the US economy,
      has such a central role in the political sphere.

      In fact, the average consumer in the United States has
      more power over the direction of the Singapore economy
      than does the average Singaporean. It is the
      continually increased spending on ever more
      gadget-filled electronics equipment or on a new
      lifestyle drug done by a typical American that drives
      the sales which drive Singapore's production.

      To be fair to the government, it knows that any money
      spent on boosting the consumption of average
      Singaporeans is money that will very quickly find its
      way to foreign shores. As such, the PAP has decided
      that it would prefer not to spend its hard-earned tax
      revenues boosting the local economies of Batam, Johore
      or Bangkok.

      This is also why the government's interest in the
      domestic consumer economy is limited to construction.
      This is a section of the economy that can't be taken
      out of the country. The problem here is that by the
      mid-1990s the residential property was way ahead of
      the average Singaporean in terms of price,
      affordability and location. As a result, the property
      sector took a serious dive. Furthermore, neither the
      public nor private housing markets have come close to
      hitting the highs reached in 1996/1997.

      The problem with this emphasis on property is that it
      has handcuffed many Singaporeans. A typical private
      residence bought between the beginning of 1994 and the
      beginning of 1998 has, at best, not appreciated. At
      worst, this homeowner could have held onto this asset
      for over a decade and have it being worth less today
      than when it was purchased. This means that a
      Singaporean family could been paying off a mortgage
      that was higher than the value of the property itself.
      This negative equity is extremely depressing, both
      economically and psychologically.

      Alright, so where does this leave us? Talking about
      things far from Singapore's borders. And, quite
      frankly, it's a bit boring, not to mention impolite,
      to talk about other people's lives instead of your
      own. But when your lives don't count for much,
      economically, there just isn't much point to a conversation.
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