Leong Sze Hian / Columnist
I was really tired this morning, when I received a SMS from TOC editor Zheng Xi at 5 a.m. to write on the U.S. congress rejection of the bailout, and TOC deputy editor Andrew Loh’s SMS yesterday to research the power companies’ profits.
Then, the news of JBJ’s demise came - and memories of my 3-hour meeting with him when he invited me for tea last year, broke my lethargy.
I would like to say if I may - that I would like to dedicate these two articles to JBJ.
Electricity crisis?
I refer to the report “Households to see average rise of about 21% in electricity bills from Oct” (CNA, Sep 29).
Singapore Power’s Net Profit After Taxation increased by 72 per cent from $ 630 million in FY 03/04 to $ 1.086 billion in FY 07/08 - an annualised increase of about 15 per cent per annum.
The power generation companies like Tuas Power had a profit increase of about 70 per cent from $ 104 million in 2006 to $ 177 million in 2007 ; Powerseraya’s profitis for FY 07/08 increased by 30 per cent in a year to $ 218 million, Senoka Power’s profits for the year ended 31 March, 2008 was $ 130 million.
The above financial means that the total profits of the power companies was about $ 1.604 billion.
This sum is even greater than the original projected increase in revenue from the 2 per cent increase in GST last July to help the needy.
To what extent has the pegging of electricity tariffs solely to fuel prices, contributed to the high profits of the power companies.
Shouldn’t other factors like increase in profits be considered too ?
If the formula for transport fares can be pegged to average wage increase, average inflation and productivity, why is the electricity tariff pegged only to fuel prices ? (Note : Even this formula has led to ever increasing record profits for SMRT).
Now that two of the three power companies have been sold to foreign companies, and the third one is in the process of being sold, will the profits of power companies continue to rise ?
Since Singapore Power and the power generation companies (before their sale) are in a sense, owned by the state, why is the state making a whopping $ 1.604 billion in profits in a year, from providing a monopolistic essential good to Singaporeans ?
Instead of just announcing tariff increases due to fuel prices, why not require the projected increase in profits to be announced too ?
What’s the point of announcing a 50 per cent increase in the U-Save rebate on national day, only to see it being eroded by the subject tariff increase just a month plus after ?
As to “But the government rebates of $ 310 to $ 330 will more than cover the increases for these households” (one to three-room HDB flats), according to the Department of Statistics (DOS), only 271,650 were 1, 2 and 3-room HDB flats, out of a total of about 1,118,260 residential properties in 2007.
Does this mean that the U-Save rebates are not enough for about 76 per cent of households (846,610 divided by 1,118260) ? (Note : private property households don’t get any U-Save rebates).
I also refer to media reports on the Electricity Vending System (EVS) trial.
Consumers will pre-pay for electricity under the EVS.
If the trial is successful, it is the plan to have the EVS as the electricity delivery system for all consumers, by 2010.
As of June this year, about 13,700 households have been put on a pre-paid metering scheme (PAYU) after they had their power supply cut off or were in danger of having the supply disconnected (“More unable to pay electricity bills”, ST, Aug 29).
Social workers have also said that surprisingly, there has been a 35 per cent increase in 4 and 5-room HDB households, who are unable to pay their electricity bills.
This brings up the question as to whether the U-Save Rebate for utilities are enough to offset the rising inflation of electricity tariffs and bills.
I would think that most households may try very hard to pay their electricity bills first, over other outstanding bills, as I cannot imagine what life may be like when one’s electricity is cut-off.
What will happen to households like the 13,700 who cannot pay now, and new households who may be unable to pay in the future, if the EVS is fully implemented in 2010 ?
At least now, if you cannot pay, you can be in arrears, giving one a few months’ grace, before electricity is cut-off, and replaced by the pre-paid metering scheme.
I would like to suggest that the current pre-paid metering scheme, and a grace period for arrears, be continued, particularly for lower-income households.
Otherwise, Singaporeans may become even more financially stressed under the EVS.
It was last reported in the media in 2006 that the number of accounts in arrears exceeding $ 500 for three months and longer is about 3,600, against about 10,000 reported in the media in 2005.
So, why has the number of Pay-As-You-Use (PAYU) meters increased to 13,700 ?
In Malaysia, the government announced on its last national day on 31 August, 2008, that free electricity would be given to all households with electricity bills not exceeding RM 20 to help the needy.
Financial meltdown?
The anticipated bank bailout did not receive the U.S. Congress’ approval and the Dow Jones dropped 778 points.
Is it the end ?
Perhaps we need to start at the very beginning - how and why did the financial crisis start ?
The current financial crisis began with the bailout of Fannie Mae and Freddie Mac (F & F).
Sub-prime and HDB
Are there parallels, historical similarities, contrasts and comparisons, between the bailout of F & F in the United States, and Singapore - in the context of housing policy ?
F & F were founded with the primary aim of helping more Americans to own homes.
The HDB was set up with a similar objective.
Just as F & F enabled poorer Americans to get home financing, where banks had historically been hesitant to lend, by guaranteeing loans, the HDB actually went even further by building the flats and providing the loans.
As it was implicitly perceived that F & F was backed by the U. S. Government, lenders lent to practically anybody (sub-prime), without worrying about the risk of default.
Well, before the HDB introduced recent measures like the loan eligibility letter, it too in its early years sold flats and gave low interest loans to practically anyone who applied.
Now, it will only give HDB concessionary loans to those who upgrade to a bigger flat, but not to those who down-grade or buy a same size flat.
The chairman of the U.S. Federal Reserve (the Fed) had sounded the alarm long ago, that F & F was a monster that may grow out of control.
HDB
In Singapore, I guess, probably the crunch came when it was reported that about 40,000 HDB flat dwellers were in arrears.
The latest HDB Annual Report does not show the number given financial assistance anymore, but the previous Annual Report showed over 26,000.
So, from 1 January 2003, banks were allowed to give loans for HDB flat purchase.
Even those who were eligible for the maximum two times HDB concessionary loan, could choose a bank loan.
In fact, many who were lured into choosing bank loans because of lower interest rates in the first three years, many now be regretting as bank rates are generally higher than HDB’s.
It was reported in the Straits Times this year, that reportedly about 60 HDB flats a month, are foreclosed by banks.
The last reply in Parliament to a MP’s question, was that seven per cent of HDB bank loans were in arrears over three months. The estimated number of HDB bank loans is now about 100,000.
In comparison, even at the height of the sub-prime crisis in the United States, the estimated delinquency rate is 5.12 per cent for home mortgages (“A simple, painless way to tackle the credit crisis”, ST, Sep 22).
According to the Economist (Sep 27), the chart in the article “The doctor’s bill”, shows a 90+ days delinquent rate of only about 4.5 per cent.
In this connection, the HDB said that only 360 flat owners voluntarily surrendered their flats between 2003 and 2006.
From the experience of HDB flat owners who cannot pay, the HDB has asked them to sell in the open market, helps to initiate a valuation of the flat, and allows any loss between the flat sale proceeds and the HDB loan balance outstanding to be paid by installments in the future.
Such “open market” sales by those who cannot pay for their mortgage, are of course not counted as “voluntarily surrendered their flats” statistics.
For private property loans, the first charge was changed from CPF to banks with effect from 1 September 2002.
For pre-1 September 2002 housing loans, only the CPF Minimum Sum will be protected (first charge) from the mortgagee bank, when the borrower reaches age 55.
The above two measures partially solved the problem of defaulted mortgages which had CPF as the first charge.
The U.S. experience of encouraging particularly poorer Americans to own homes has now resulted in the sub-prime crisis, and the bursting of the housing asset bubble.
It is still not known, to what extent the bailout will cost American taxpayers.
In Singapore, to what extent has our over 80 per cent home ownership achievement, resulted in the loss of homes and maybe CPF life savings too ?
We don’t really know, because unlike in the U.S., there are no regularly published break-down statistics on HDB concessionary loans, HDB bank loans, private property loans, arrears, default, foreclosure, CPF losses, negative equity sale losses, etc.
In this connection for example, the last time a reply was given in Parliament to a question - about three per cent of about 11,000 first-timer HDB flat-buyers on bank loans, were in arrears over three months.
One needs to note from this statistic, that it only refers to “first-timers” on bank loans.
Another difference possibly, between the U.S. and Singapore, may be that whilst taxpayers’ money are being used for the F & F bailout to help Americans keep their homes in a rapidly assedeclining environment, perhaps the foresight of the Singapore Government has forestalled the eventuality of a sub-prime or housing asset bubble crisis.
In this regard, perhaps the only slight blur on the silver lining, is that both HDB and private property price indexes now are still below their last highs in 1996.
Another possible difference in future scenarios, may be that the U.S. crisis is more confined to housing, as Americans’ pensions cannot be used for home purchase.
In Singapore, because of the use of CPF for housing, only the future may tell, as to what extent, particularly lower-income Singaporeans, may have difficulty monetising the last reported statistic that even the lower-income have about $ 138,000 of equity in their HDB at retirement.
In this regard, I understand that the HDB may be reviewing its policies, like the 30-month waiting period to rent, buy a smaller new HDB flat, or down-grading from private property, to take into account the financial plight of applicants.
I hope that the HDB’s policy review, will follow the U.S.’s focus and rationale in the F & F bailout, i.e. to help people keep their homes.
According to the article “Too many data cooks” (Newsweek, Sep 15), statistics in many countries are unreliable and may be watered down to look better.
In a sense, we may be better off in Singapore, as some of the above-mentioned remarks on statistics may indicate that not having regular break-down statistics may actually be better than having fudged ones ?
In memory of JB Jeyaretnam.
This article was written on 30 September 2008.
———-
this is sing power financial statement for 2007/2008: http://www.singaporepower.com.sg/pdf/pdf0708/SP_AR_2007_Financial.pdf
those who can read it might wanna look thru it and comment on it.
These are some links to reports, that show sg is buying natural gas from indonesia:
Herald, 1999: http://www.iht.com/articles/1999/09/22/singas.2.t.php
SP Power, 2002: http://www.singaporepower.com.sg/publish/PR/Files/Approve/PR17_7243.html
energy use, a comprehensive report on indonesia’s gas transmission:
http://jakarta.usembassy.gov/econ/natural_gas2003.html
(seems to suggest rate might be fixed at time of negotiation of contract)
Jarkata Post, 2008: http://www.thejakartapost.com/news/2008/04/16/ri-secures-best-deal-gas-contract-singapore.html
EMA news on LNG procurement: http://www.ema.gov.sg/gas/gas_lng.php
HOpe all these help.
I observed that everythime when there is a price increase in certain garment related issues which most of them are of course unjustified, all they do was just tell you some bull stories and they just go ahead and collect their $$$. They dun even give a damn on what the citizens think. All these has been happening once too many time already, not a new thing anyway. So,. . . . what are you citizens of Singapore going to do about this????
tiredsgrean, it’s shd be wat are we singaporeans gg to do abt tt. sg belongs to each and everyone of us, n we shall decide how sg shd be run.
the govt haf bn talking abt a govt tt’s open to public’s views. i notice tt some pts brought up by our citizens might be highlighted by the media, but the public is usually “pacified” after a unsatisfactory reply by the authority.
i was an “obedient” citizen, who dun usually speak up even when unjustice is done. but the recent price hikes are unbearable. the electricity tariff hike, an essential utility, is the limit, esp when sg power is making so much profit every year. i’m sure our people feel the pinch as well.
u asked wat can be done?
Firstly, we can create awareness to the public on the price hike (if they not already know), and study the effects on our people. We cant just rave and rant on the issues, but also to find support for our cause.
Then, we can bring it up to the relevant authorities. It’s pointless to get provoked over the incident, instead when we make our voices heard, we propose wat can be done and should be done to help our citizens. (Reduction of tariff is one of the option.) We present what the majority of the sg’rean think.
I hope the authorities will listen to our people and understand our people.
To create awareness and getting feedbacks from the public, one of the possible mean is thru talk at Hong Lim Park. I do hope someone could empower our people at Hong Lim Park, just like what our columnists Mr Leong and others have done for the recent transport fare hike.
I’ve proposed posting links to reports, statements, and your point of views for the incident. All these will definitely help in our fight for our cause.
So much has been said about the unexpected increase of electricity rate of 21% at the time when fuel price is tumbling………….especially in the press like The Straits Times.
Has anyone actually calculated the percentage increase of The Straits Times itself?
Interestingly, there seem to be no complaint about that increase!
May I add here that the writings here are for the enlightenments of readers and engagements with our leaders.
I am sure the Leadership monitors and read TOC and if it takes no action to refute the many(too many in fact) allegations here, I take it that it means the allegations stand. When the complaints are true and legitimate and no action is taken by the Leadershipship to rectify them or make amends, it is clear signs of neglect, negligence and failures of duties by the Relevant Authorities.
When the Leadership is mandated(by the people it says) to take care of the country and its’ citizens, showing apathy and fleecing its’ people are the greatest sins that it has(as a duty/propriety) to avoid at all cost.
We maybe powerless to fight the Oligarchy, HOWEVER, WE CERTAINLY AND DEFINITELY HAVE THE DUTIES TO EXPOSE INJUSTICE, INCOMPETENCE AND IMMORALITY.
patriot
Hi Moderator(s);
please help me to correct a spelling mistake in ‘moniters’ to monitors, if t can be done.
Many thanks from: patriot
It beats me – I just cannot figure out how the govt calculate or justify this 21 percent hefty increase in our electricity bills. I feel the pinch and this really hurts my pocket like most people here. The hawker food centres will also want to increase prices because now their electricity bills getting more expensive and so on, and so on….HELP !!
21 % increase is really no joke man. It’s like being hit by a big truck when you read about such an increase in the papers. What has this to do with selling Tuas Power Station to China and Senoko Power Station to Japanese bidders ?? Will this increase mean more profits to these new foreign owners or what?? Can the govt consider instead to stagger the increase gradually so that we, the ordinary folks, can digest the higer costs to our living – so we can breathe a little??? And should the govt calculate the electricity costs based on the drop in recent oil price instead??? Oil price is going down so how come electricity price is going UP ??
If the 21% increase is pegged to the oil price fluctuations – I need to ask : the oil price today has dropped to USD96 to USD 100 per barrel from the High of USD147 per barrel recently but Singapore is increasing electricity charges instead of dropping the charges???. Everywhere I am reading about the fall in oil price happening now due to the Recession in the USA which means drop in oil consumption which means cheaper oil costs??? Can someone help to explain why this electricity costs increase and so fierce increase of 21% ?? Maybe our govt has very good reasons which we may not know??
This government is testing the citizens’ tolerance for pain and hardship.
So far most citizens seem to be able to endure the pressure.
Perhaps this govt needs to find out the citizens’ threshold and at the same time collect lots of money for their coffer.
The bright side to all these increments is that the pro PAP supporters will also share the same misery.
wow…
ammmm….
GOv increase electricity fees to 22% but actually was 23.54% if u check…
so the purpose is to tell WE to DON USE WATER AND ELECTRICITY anymore right,..same as ERP method..
if GOV WANT WE SINGaporeans like tat.
i think goV should
INCREASE
1)2000% of electricity and water fees.
2)ERP increase to $50,when u enter in..
3) fuel =$3per litr
4) COE to 50K per car.
STILL HAVE MORE …………………………………………………………………
so singaporeans REALLY THANK THEM…
AND THE COMING ELECTION,,,HEHEHE>>>..
“GIVE RID OF SINGAPOREANS SIGHT”…
gov solve many problem just to INCREASE FEES FEES FEES…
AND THEY SAY,we HAVE CLEVER PP TO OPERATE GOV SYSTEM..
so i really see clever pp operate sing…AHHAHA.
sing gov V RICH,BUT CITIZEN V POOR,,,
GOV salary V high can leh,u guy AR,DON CARE LAH>>….<<>>
AND DON ANYHOW VOTES TO ANY PARTY,,,,SHOULD THINK TAT WHICH PARTY IS GOOD FOR THEM….THEN THEY VOTE TO TAT PARTY..
increase INCREASE INCREASE…
HAPPY GOV,UNHAPPY CITIZEN…DON CARE!!hahahs…
WE PAY TO GOV PP SALARY,
SO GOV SHOULD FOCUS ON DEVELOP THIS COUNTRY,,
NOT TAKING OUR MONEY TO INVEST OTHER COUNTRY.and doing business..
they invest other country,we did not have any benefit.!!
IS it NOT FAIR TOWARDS THE SINGAPOREANS AND BUSINESS MAN..
JUST BENEFIT TO ,………U GUY USE YR BRAIN AND THINK BA…
STAND UP.STAND UP FOR SINGAPORE!!!!!!!!!!!!!
STAND UP.STAND UP FOR SINGAPORE!!!!!!!!!!!!!!!!!!!!!!!!!!!!
from:
@young generation@
Whichever way you look at it, I say SG. is a police state in very subtle forms. The govt. has all the facts, the media, etc in control. They can manipulate all things, having the power and money to buy the best brains.
I feel that the LHL has been stuck in a dillema. He’s always trying to prove that he can implement unfavorable decisions and ideas. BUT, in his brain lock, he has totally forgotten about people.
Look at the recent policies that his team make, kept repeating the same mistake, thinking the ordinary people are stupid. Whenever any policy going to be implemented, they will pretend to let some low level officials to leak out some news. Actually everything is set. Then, let people make noise abit. Then giving some sweeteners, rebate. Then annouced the already decised policy.
Like GST increment, GST increment is for permant. They giving u that $200, $300 dollars just to let you accept their decision only. In the long run, they knew that they are going to profit much much more. what are $200 $300 ?
Similarly ERP case. They say cutting ther road tax, misc tax, but they knew that they are going to profit much more from the ERP toll. These short term losses is ok to them.
So, same case as electric tariff. They give u some money cos they knew they will get back sooner or later.
I think we better change a better player next election
The increase in electricity rate is unjustified. They have already made big profits from current rates, moreover the price of oil is forecasted to drop due to the current financial crisis(according to articles in the papers). The people who are running the power companies and the regulatory bodies have explaining to do. They gloss over it by offering subsidies……..justify the increase first, forget the subsidy. To those in charge, do not try to get fat bonuses at our expense…this is neither clever nor creative…. just plain sandbagging. Do something to help us manage our current cost of living…….if you cannot do it, let others run the shop.
If i am not wrong the price of natural gas is tag at a premium price because of a water supply agreement our govdement have sign with our friendly neighbour.
Ya i am still thinking why they increase the tariff but still cant find a good reason to justified that. You see the power they have on he media to prepare the public for all the changes they want to make? For example, making more babies all the channels are now showing about babies. Fustrating? yes i believe all of you feeling it. Coping with utilities price increase now they have a program to show u how to save electricity. Get my point? Generally, if you see the Singaporean interviewed on NEWs they all say its ok although it is a bit painful. So that really sum up the views of typical Singaporean. Just like they are gg to increase the home phone line prices, Singaporean are generally ok with it because on TV they want to look good. And that give all the impression of well that ok wat.
Anyway i am abit saddened by the decision the gov make it seem to be out of control. It seems that they want to forced true Singaporean to be out of the country as they have predicted as now there is a series drama on the problem Singaporean face while they are living in foreign country sending this message clear to all Singaporean to think twice before leaving the country. Sigh…..how long are we gg to be like this?
“64) Kruser on October 7th, 2008 2.05 pm
Sigh…..how long are we gg to be like this?”
As long you can tahan, they will give it to you lah. Supply and demand at work in its finest form. The mechanism is in place to ensure that all like-minded disagreements are not amplified to a level that connotes wide spread disagreement.
The magical hand (words) of MSM will make you feel that is alright to “enjoy” the “masochistic pain” of price increases.
Have you ever wondered the peculiar behaviours of some Singaporean customers – that they can concur so happily and speak so agreeably on price increases especially when it is going to hit their pockets. Hopefully the pockets are still around after withstanding the burn.
for those who are interested in the construction cost of an average standard high rise appartment in singapore, i have found a source (Davis Langdon and Seah Singapore), dated 03/03/2008, which compare it with other countries.
http://www.bca.gov.sg/keyconstructioninfo/others/dls_intl_2q07.pdf
if we take the cost as stated, US$970 psm (ie S$1455 psm), a 5-room flat of size 110 square metre would cost S$160k to build.
Our Mr Mah says that the HDB flats are heavily being subsidized by the garment but how come an average 5rms flat now cost around 300K +, luckily its heavily subsidized or else must live on roadside instead.
Kruser I am one of those Sinkaporean who had voted with my feet by means of a one way ticket to England.Private life is the same everywhere except in UK, there is true democracy and freedom of speech. I worked hard and make use of the opportunities here. There are lot of educational opportunities here for one to part take and quality of life here is mile ahead of Sinkapore. One do not fear to speak one mind and most importance of all the legal system here is fair. Even the police is not above the laws. PAP ( Pay & Pay) regime is a crook regime as bad as those in China. Except this regime used the judicial system to silent all oppositions by making potential opposition candidates bankrupt and hence disqualified to run for election. I had not return to Sinkapore since and will not return until the day LKY goes to meet his maker. With him out of the way, Sinkapore will become Singapore again and people will truly exercise their natural rights as a citizen. God bless.