Monday, July 15, 2019

L.A.M on Sir James Dyson’s $74m penthouse

One of the more common comments you encounter when reading about Sir James Dyson snapping up Singapore’s priciest penthouse is how the commentator would be able to buy a luxurious penthouse if they sold vacuum cleaners for $500 or fans for $700.

But this cliched attempt at humour ignores a very fundamental fact about how Sir James Dyson got rich. 

He didn’t become rich because he sold “overpriced” vacuums. He became rich because he spent nearly a decade subsisting on just his wife’s art teacher salary so that he could create the world’s first bagless vacuum cleaner. (Back in the 80s, the sale of vacuum bags was a £100m a year industry In the UK alone, so imagine the level of savings this product would have provided to customers.)

He became rich because he worked tirelessly for 5 years on 5,176 failed prototypes before creating a working model. 

He became rich because despite creating a working model, no manufacturer wanted to carry his product and it took a decade before he managed to set up his own manufacturing company to manufacture his vacuum cleaners.

He became rich because even after his success with the cyclone vacuum, he continued to refine his product further and branch off into other product lines that displayed the same level of quality and attention that his customers loved. 

It is easy to be envious of the success of a 72 year old man. But few people would be envious of failing 5176 times, getting the door slammed in their face by all the major manufacturers in the UK and spending a decade and a half living like a pauper because most of your savings are reinvested into your business.


If you want that $74m penthouse, don’t look at the $500 vacuum cleaner. Look at the 40 years of hard work it took to get there.

L.A.M.

Sunday, February 3, 2019

First World Country, Third World Mentality

The company I work for uses the services of a particular limo driver regularly, when we had a full day of packed meetings and had to rush from point to point.

This driver was always on time, provided service with a smile and drove safely and reliably. Suffice to say we were always satisfied with his service.

We booked his services for a full day on Thursday. Unbeknownst to us, our last ride of the day with him that day turned out to be our last ride with him ever. Because that night he passed away, leaving behind his wife and 2 children.

Representing the firm, I attended the wake the next day, bearing condolences on behalf of the company. 

I found out from his relatives, that he also drove Grab/Uber part-time to supplement his income and that it was common to drive 15 hours a day. 

Speaking to his family, it came as a shock to me how much work and stress one had to bear to drive long hours to make a living. 

Looking though my Facebook feed this morning, one of the top trending videos depicted a lady who gave her driver grief because he went through an Electronic Road Pricing Gantry, causing her cab bill to rise by $1.50.

She kicked up a huge fuss and even accused the driver of kidnapping her when she found that the door had been locked (an automatic safety feature on most modern cars).

In the end it turned out that it was impossible to avoid toll fees on the route she was on. Consequently, the driver ended having a sleepless night and will no doubt be traumatised for a long time.

Gandhi said in 1931, that the greatness of a nation and its moral progress can be judged by the way in which its animals are treated.

I would like to add that the greatness of a nation can also be judged by the way in which its service staff are treated.

We live in a first world country but a significant amount of black sheep possess a third world mentality. We have mothers who tell their children to study hard, otherwise they may end up as a road sweeper. We have multiple instances of domestic worker abuse cases annually. We don’t even treat the people defending our nation fairly and fuss up a storm when we see a man uniform taking a seat on the train.

My hope is that the above mentioned trending story will not end up as just another cyber witch-hunt, but will serve as a reminder for us to be a more gracious and inclusive society, to treat every member of society with respect and equality.


It is important to remember that everyone plays a role in society and that only by treating each other with respect can we finally call ourselves a first world nation.

Thursday, January 24, 2019

L.A.M. on an Interesting Lunch

Had the most interesting lunch today.

Caught up with an SMU junior whom I haven’t spoke to for more than half a decade.

This was a guy who completed 2 degrees within 3 years while maintaining a near perfect GPA and was someone I thought and still do think is the epitome of drive and determination. This guy was one of the few juniors I admired and inspired me to work hard in my finals semesters.

During lunch, he told me that I was his first mentor, albeit unofficially. We happened to take the same module when he was in the second semester of his first year. During that time, he had come out of his first semester with a GPA of only 3.3 out of 4.0 (it was in his view a miserable score for someone with a history of being a high achiever) and he was semi-depressed and just wanted to finish school as quickly as possible.

In class he noticed that I was always playing games but when he learnt that I had a GPA of 3.99, he was stunned and grew determined to learn as much as he could from the guy who manages to ace classes despite “playing computer games in the back row.”

He learnt and modeled through observation how to be efficient, how to be meticulous in tutorials, how to make presentations more interesting and how to get professors to like you without being viewed as the teacher’s pet.

What he said next really struck me. He said that when he asked me for tips or questions, even for modules that we were taking together, that I would not hold back and be very willing to share all my knowledge. 

He said that most people would be a little stingy with their sharing because they wouldn’t want someone else to steal the only A+ grade for the class. And he said that he wouldn’t have done so well in school if not for my candor.

I left that meeting feeling very refreshed and encouraged. I was pleasantly surprised that I have subconsciously made a positive impact on someone else’s life. There were some things my 10 year younger self was doing that I could certainly learn to do more of today. 

In the evening I met up with an ex-colleague whose boss told him that he needs to cheat, lie and deceive in order to succeed in his company. We both agreed that this is something we could never do.

Reflecting back on the day’s events, I realised that there are many paths to success. Some requires you to do things that keeps you awake at night. But another one requires you to be open, to uphold integrity and to be consistent.

The first path might be easier but it is the latter that is more satisfying. So when presented with multiple paths, always take the high road because you never know who you might pick up along the way.


#My10YearChallengeInLiteraryForm

RIP CFC Aloysius Pang

RIP CFC Aloysius Pang.

The passing of one Singaporean Son during training is one too many. As someone who believes strongly in Singapore’s ability and responsibility to defend itself, I would like to say that CFC Aloysius Pang didn’t die in vain. I would like to say that he did a great service to his nation. But. I. Can’t.

The fact of the matter is, we have had 8 deaths in the past 16 months. That is 8 sons, 8 brothers, 8 boyfriends, 8 fiancés, 8 fathers we have lost as a nation. 4 from training accidents, 3 from suicide and 1 from a hazing accident. 

At which part of this statistic do we start to say that their death is in vain? At which numerical order does, “you have done a great service to the nation” become “we have failed you as a nation”?

What is the point of having the fiercest warriors, the most accurate marksmen or the toughest soldiers who strikes fear in the hearts of our enemies if we fail them during peacetime?

We hold CEOs accountable when they fail to make profit targets. We hold senior managers accountable when they fail to create a workplace free from discrimination and sexual harassment. Where is the accountability when leaders fail to meet the most important safety target? Profits lost can be recouped but a life lost is immutable.

I don’t have answers to this question. I don’t have solutions to this problem. What I do know is that we have to do better. We must do better.

Just as how each Singaporean Son has a responsibility to defend this nation. This nation has a responsibility to protect each Singaporean Son. It has a responsibility to show that it deserves to be defended. That it deserves every sweat, tear, blood and pain that our soldiers give.

As a nation we have failed CFC Aloysius Pang and 7 other sons. The tragic end to their life story is preventable. The day we keep the verb in its past tense, “prevented”, instead of its future tense, “preventable”, is the day when we can finally say that they didn’t die in vain. Only then can we finally say that they have done a great service to their nation. 


Until then we mourn and grieve as a nation because we didn’t just lose a Singaporean Son, we failed a Singaporean Son and his family.

Tuesday, December 18, 2018

L.A.M. On What Stars Do

Dear friends,

  It seems that bilateral relations are getting murkier. This week, we’ve seen the number of ships “invading” Singapore waters increased from one to two. We’ve seen announcements banning egg exports and 4 species of fish and prawns. We’ve seen the land checkpoints between Singapore and Malaysia shutter all but 1 immigration and checkpoint control lane leading to 7 hour jams at the Causeway due to an “exercise”

  In times like these, it is important to remain calm and not escalate the situation. Let’s try to be civil. Let’s strive not to resort to name-calling, unhelpful proclamations of bravado and mindless taunting or trolling.

  Whatever the Mahathir government is doing is hurting their own people more than Singapore. Singapore is able to quickly diversify its food sources. If push comes to shove we have a military that in Mahathir’s own words is more powerful than Malaysia’s. So we know that Mahathir will not go to war with Singapore. 

  Singapore will survive but those who are really suffering are the Malaysian chicken farmers, fishermen, distributors who rely on exports to supplement their income and the workers who travel across the Straits everyday for a better salary. So let’s not put the blame on them. We are brothers after all.

  So if we are not committing ad hominem or thumping our chest like testosterone filled gorillas, what do we do?

  Let me quote Yvaine from Stardust, written by Neil Gaiman and published by DC Comics. What do stars do? They shine.

  In the 90s the same PM threatened to cut water supplies. We poured millions into water filtration technologies, built world class desalination and NEWater treatment plants. Today Singapore is a globally recognized water specialist and has the potential to be self-sufficient in water. The tables have turned and this year, we were the ones who had to come to the rescue when Johor suffered a drought. When faced with a water crisis, we literally looked our aggressors in their eyes and said that we rather drink our own pee.

 When we faced a sand import ban that threatens the pace of our land reclamation projects, we developed innovative ways of reclamation which uses less sand that is more efficient and environmentally friendly.

  No natural sources of oil? We built the 7th largest oil refinery in the world on Pulau Bukom, the first underground oil storage facility in South East Asia and are today the largest supplier of offshore oil rigs. Despite producing 0 barrels of oil, we have embedded ourselves into the hydrocarbon process flow giving us undeniable access to oil and gas.

  Not enough land for our rubbish? We built an island out of thrash that looks more like a resort than a rubbish dump.

  Even when it comes to egg farming. The modern way of farming eggs the region uses has its roots from Ho Seng Choon (yes our very own egg farmer) who through continuous innovation, overcame constraints in land, and raised productivity in poultry farming. When challenged, he pioneered a way to raise patridges, a temperate fowl in a tropical climate. Although our egg farms only supply about a quarter of our egg requirements, given time and focus, they do have the potential for self-sufficiency.

  When faced with crisis, Singapore has always came out stronger. The old adage is true. What doesn’t kill us makes us stronger. 

  So instead of lowering ourselves to childish spats with strangers online, let’s rise up to the challenge. Let’s reject fake news that tries to divide us. Instead, let’s continue to work hard and contribute in our own way to making this country more vibrant, more resilient and more attractive. When we stand united, there is nothing we cannot overcome.

  Because at the end of the day. What do stars do? They shine. And we have five stars and a crescent moon that shines brightly through these dark nights.


L.A.M.

Sunday, December 16, 2018

L.A.M. Reviews Aquaman (2018)

Ok here’s my official non-spoilery review of Aquaman.

This review is best read while listening to Skylar Grey’s Everything I Need which encapsulates perfectly the essence of the entire movie. For your convenience. The link is provided below.

Are you listening to the song now? Not yet? Ok I’ll give you a minute. 

...

...

Ok, now that you have the song playing in the background, the review can begin.

Aquaman is the child of a lighthouse keeper and the Queen of Atlantis. A product of forbidden love between star crossed lovers who with the help of an Atlantean, Mera must find a mystical trident to a stop a war with the surface world.

The movie starts off with a quote from Jules Verne and at the end pays tribute to one of Jules Verne’s classics by way of an Easter egg
For an action flick that that portrays itself as mindless fun, it carries much more intellectual depth than you would expect from a feel good action movie, drawing inspirations from great literary works like Shakespeare’s Romeo and Juliet, Macbeth and the greatest classic of all, Carlo Collodi’s Pinocchio.

Despite its intellectual depth, the movie is at its core one that tugs at the heartstring of viewers, combining parallel depictions of romance between Aquaman and Mera with that of his long suffering father Thomas and Queen Atlanna (played by Nicole Kidman). The chemistry between Jason Momoa and Amber Heard is undeniable and will leave many viewers “shipping.”

The action set pieces are absolutely amazing. The epitome of which is a rooftop fight scene, seemingly shot in one take that traverses seamlessly between the foreground and the background while keeping audiences at the edge of their seats. 

Some of the dialogue is cheesy but the movie is engaging enough that you will be more preoccupied with the action sequences set among some of the best visuals in its genre. Basically, if you randomly freeze framed at any point in the movie, it would have made a perfect screensaver.

Unlike some other comic book movie that requires you to watch 10 other movies or read the years of history in the pages of its comics to understand the subplots. You don’t need any pre-knowledge to enjoy Aquaman. Just leave your brain and pre-conceived notions at home and enjoy your time.

At the end of the day, Aquaman takes the thrill from Indian Jones, the romance from Romeo and Juliet, the action from Fast and Furious and the visuals from Avatar and combines it into a 2 hour 22 minute movie that keeps you wishing you were still in Atlantis days after you have left the cinema.

In my opinion it is the best comic hero movie of the year and definitely not one to be missed.

5 out of 5 stars.


Friday, December 14, 2018

L.A.M. on the Water and Air Space Disputes of 2018

Dear friends on both sides of the Causeway. To say that we live in tumultuous times is an exaggeration. However, the fact is, one wrong move, a series of unexpected tense bilateral escalations and one itchy trigger finger is what separates us from possible war.
In times like these, it is important to remind ourselves that we share more than just 2 land bridges and a love for chendol (or “cendol”). We are each other’s top 3 trading partner. Virtually everyone has a friend or family on the other side of the Causeway. Historically, we have been together far longer than we have been apart.
During more peaceful times, we are your largest fan and supporter. We poured in more investments into Malaysia than any other country in the world. We are the largest foreign employer of Malaysian labour. When we are not playing against you in the AFF Suzuki Cup, we cheered for you.
Despite our tense relationship with Mahathir, we celebrated with you when you overthrew a kleptocracy. To show that we wanted to develop closer ties, we reached out with an olive branch when Mahathir was in Singapore. We gave him an honorary degree and named an Orchid after him, which is probably the highest unofficial honor you can get in Singapore.
During trying times, we are your biggest helping hand. When Johor Bahru went through a drought this year, we supplied more treated water, above and beyond our contractual obligations.
When MH370 crashed, we mourned with you and provided aid and support in every way we can. When you said you were broke, we reduced the penalty for postponing the bilaterally agreed HSR down to a token $15m.
When a judge said that Zaleha’s chicken rendang should be crispy on MasterChef UK, we called him out on his ignorance.
When tsunami struck in 2004, our soldiers were the first on the line to support you. When Jho Low embezzled money from 1MDB through the global financial market, impacting over a dozen financial systems, we were the first to put him on Interpol’s wanted list. We remain today, the first and only country, to jail and fine misbehaving bankers and the only country to have closed 2 banks, all these while your courts claimed there was no wrongdoing.
There is a lot of fake news and biased reporting circulating online. Many of which tries to divide us. There is probably a high chance a vengeful nonagenarian is stirring up tensions to distract everyone from the weekend’s protests and that he is an Emperor with no clothes. Regardless of who is right, there is one truth: We have much more that unites us than divides us.
I admit that we appear rigid and stuck up because we live in a “fine” city. But trust me when I say this. Deep down, beyond this stuck up, rigid facade, we genuinely wish you well. When you fall, we mourn with you, when you rise, we cheer with you. Because at the end of the day, we are not just neighbours. We are brothers.

L.A.M.

Thursday, November 19, 2015

The Future of Public Transport in Singapore



Singapore's public transport sector is dominated by two companies, ComfortDelgro Corporation and SMRT Corporation.
ComfortDelgro owns 75% of the bus routes through SBS Transit, 22% of train services through the NEL line and 62% of taxi market share.
On the other hand, we have SMRT with 25% of bus routes, 78% of train services and 11% market share of taxi services.
Together, they own 100% market share of bus and train routes and 78% market share of taxi services.
This duopoly in the public transport sector has led to a dearth of innovation as evidenced by how quickly taxi booking applications such as GrabTaxi and Uber have captured a sizable market share without owning a single taxi. In the absence of competitive forces, their first reaction to rising costs is not to innovate but to pass on the costs to consumers.
A strong example of this is credit card fees. Most merchants absorb credit card fees, choosing to utilize credit card services as a way to legitimize the business, gain additional sales and reduce the cost of payments reconciliation.
SMRT and ComfortDelgro however, chooses to pass on this cost to consumers through a 10% administrative charge when credit card fees are typically only 2% of transaction value. This unfair surcharging practice led to Visa pulling out its services from taxi operators in 2013.
Therefore, it is hardly surprising when transport operators choose to reach out to the Public Transport Council (PTC) as a first instinct to raise fares, since this has become their modus operandi when faced with falling profits or rising costs.
However, change is on the horizon. Taxi booking applications have the ability to revitalize the taxi industry and to force this duopoly to embrace innovation or see itself becoming the Kodak of taxi operators.
Furthermore, a new entrant to the bus services industry, Tower Transit is on track to bring in new industry best practices that allows the operator to pay competitive salaries while keeping costs low and meeting the Bus Service Enhancement Programme (BSEP) objectives.
One such practice is having a separate team to refuel, maintain and park buses at the end of the day, utilizing economies of scale to keep costs low while allowing bus captains to concentrate on their primary duty; driving.
In the near future and with the implementation of the Government Contracting Model in the public transport sector, there will inevitably be changes in the public transport industry. Whether these changes come about through the revitalization of existing operators or through new entrants with new tricks up their sleeves, will be the big question.

L.A.M.

Saturday, September 12, 2015

On the National Swing


The votes are in and PAP has won big this GE with 69.89% of the popularity vote, a 9.79% increase over 2011. This was a surprise to many political analysts but is a timely reminder that the middle ground exists, that the political battlefield is not just a division between the opposition and the PAP. 



It is also a reminder that ultimately, the middle ground who do not vote along party lines have the biggest impact and surprises up their sleeves. That they have the capability to provide the government with a true barometer of how their policies fare, since they do not vote according to sentiments or alliances but to sound policies and judgments. 

It is hard to determine the size of the middle ground. But the best opportunity came during the Presidential Elections in 2011, when we had 4 Tans trying to get into the IsTANa. 




There was:
  • Tony Tan, the PAP backed candidate who scored 35.2% of the vote. 
  • Tan Jee Say and Tan Kin Lian, the pro-opposition candidates and who scored a combined 29.95% of the vote 
  • And Tan Cheng Bock, the most middle ground of the lot who scored 34.85% of the vote. 

This in itself is very similar to the voting sentiment on the ground where the opposition scored 30.11% in GE 2015.

Middle ground voters have been a difficult lot to tie down and have traditionally been silent. When we step up to criticize PAP policies, we have been told by hardcore PAP supporters (such as Calvin Cheng) to migrate if we hate Singapore so much.

And when we mention that the opposition needs to get its act together and that we don’t want just any troublemaker in parliament, we have been told that we are unpatriotic or self-serving. 

Although, some of the effects of swaying the middle ground could be due to the SG50 sentiments and the passing of Lee Kuan Yew, I believe that the current voting percentages compared to 2011 is an endorsement of how the average Singaporean really feels across 3 important issues.


Housing



In 2011, we had just come out of 5 years where there were only less than 6000 BTOs built a year (the lowest in Singapore's independent history), leading to escalating costs of housing and lack of housing for young couples. 

Post 2011, HDB has ramped up housing construction to record levels and put in place a slew of measures to cool the property market. Subsequently, wait times for BTOs have come down significantly enough that this hot button issue appears to be on its way to resolution.

Foreign Workers


Another key issue in 2011, was the influx of foreign workers/talents who have crowded the work force. However, since then there has been a slew of action such as:
  • More checks on firms hiring foreign PMEs to support Singapore workers, under the Fair Consideration Framework. 
  • The Singapore Jobsbank, where employers are required to advertise their job vacancies for at least 14 days before they can submit applications for Employment Passes.
  • Singapore has also seeked to cut quota on Foreign Workers (having seen the growth in the foreign worker workforce fall from 7.61% to 2.58%. 
  • We have also seen Tan Chuan Jin, the Minister of Manpower holding closed door talks to encourage banks and other industries to hire more Singaporeans or place greater emphasis on developing Singaporean talent.

Empathy in Public Policy


Thirdly, another issue is the lack of empathy in public policy. Post 2011, the ruling government has created more channels to listen to ground sentiment, pushed unpopular ministers such as Mah Bow Tan and Wong Kan Seng out of the Cabinet and spent $8b on the Pioneer Generation Fund to recognise the contributions of first-generation Singaporeans born on or before 1949.


In the end, Singaporeans have spoken and the message is that if the PAP listens and puts in place policies that benefits Singaporeans, we will vote for them. 

Finally, I would like to congratulate to the PAP on a landslide victory. This is a huge endorsement by voters that you are moving in the right direction, but, although there has been marked improvement in 2011, that the work is not over. We place the trust of the nation in your hands for the next 5 years.  

L.A.M.


PS: To the opposition parties. The results are a time of reflection. Although in general, Singaporeans want more opposition voices in parliament, we do not want any Roy, Han Hui Hui or Cheo Chai Chen in Parliament. We need quality candidates and not just troublemakers. I hope that with this result, the non-Worker’s Party opposition parties can get its act together. 

The NSP, the biggest opposition party in 2011 is in shambles due to in-fighting and over inflated egos. The RP has been lying in bed with the wrong crowd, choosing to pick from among the pariah for its candidates. Hopefully in 2020, we can see more qualified opposition candidates who are in a better position to bring alternative voices to Parliament.

Thursday, September 10, 2015

On SG Budget Babe's: The Truth About Temasek vs Chee Soon Juan's Claims


A friend of mine asked me to take a stab at the article from SG Budget Babe about Chee Soon Juan's Claims about Temasek (see below).


This was the first time I have come across this blog. But I was impressed by the quality of her writing and her blogpost. (Ok I know, I'm not here to promote other people's blog. I'm here to analyze, so I'll continue)

She had 3 major investigations:

1) Did Temasek really pay $4 billion for Shin Corp, an "investment that ultimately ended up in smoke?"


SG Budget Babe's (SGBB) analysis led to her conclusion that Temasek made a 57% increase in unrealized gain. Therefore, the "investment did not ultimately end up in smoke."

To run my analysis, I analysed various news report and poured through 9 years of Temasek's Annual Reports from 2006 to 2014. My analysis results below.



Based on the analysis, Temasek indeed realized SGD 1.9Bn from the investment in Shin Corp and this is a 61.8% gain over a 9 year period or a CAGR of 5.46%.

Conclusion to Investigation 1: The investment in Temasek did not end up in smoke. Although, the value of Shin Corp fell substantially immediately after the sale, Temasek patiently waited for 9 years before selling it's stake in Shin Corp. 

Although it was a substantial gain of 61.8%, the compounded annual growth rate of this investment was a slightly more modest 5.46%. 

In summary, SG Budget Babe was right in this aspect.

Her second investigation was:

2: Did Temasek really lose "billions through investments in banks like Citigroup and UBS" in 2008?


SG Budget Babe's (SGBB) analysis led to her conclusion that

i) GIC sold it's stake in Citigroup in 2009 for $1.6bn profit. 
ii) She wasn't sure if Temasek who bought Citigroup at it's peak has sold it's stake in Citigroup but she concluded that the share price had increased 70% in just 4 years.

I did some research and came to slightly different conclusions

i) GIC sold it's stake in Citigroup in 2009 for $1.6bn profit. That is correct and widely documented in news sources.

ii) Citigroup share prices did NOT increase 70% in just 4 years. 

Her conclusion that Citigroup shares went up 70% was false. She had failed to account for the 10-1 reverse stock split by Citi in 2011.

In layman term's, a reverse stock split is when a company reduces the number of shares it has.

For example, 

A company has 200 shares outstanding. Each share is worth 10 cents each. The total value of the company is 200 * 10 cents = $20.

If the company did a 10-1 reverse stock split, it would have 20 shares outstanding. However, the total value of the company is still the same at $20. This means that each share of the company will be worth $20 / 20 = $1.

Therefore for a true apples to apples comparison, Citi would be worth about $5 per share and not $50. This is a huge loss from the $29.50 she claimed Temasek bought Citi for in 2007.

However, she can heave a sigh of relief, because Temasek Holdings did not buy Citibank shares in 2007, she got the whole transaction confused with GIC's. (who thankfully made a $1.9bn gain. Phew!) 

Instead, Temasek had invested in Merrill Lynch shares, investing USD4.4bn at USD48 per share in 2007.

So therefore Temasek did not make a loss on Citibank shares. (Phew!)

In conclusion, Temasek's performance isn't as bad as it is made out to be but there were some discrepancies in SGBB's analysis. However this was a case where 2 wrongs happened to make a right.

L.A.M.



On the National Swing

Link to Excel File

Temasek's Shin Corp Investment Analysis:





Wednesday, September 9, 2015

On Whether AHPETC Overpaid it's Managing Agent?

Previously, I wrote about which Town Council was managed the most wisely, and I made comparison across a range of ratios. However, there was one pertinent question that I did not answer and that question is whether AHPETC overpaid it's managing agent.

To answer this question, I had to hit the Annual Reports again to examine whether AHPETC overpaid it's managing agent, I relied on 2 key figures from the Income and Expense Statement as well as Electorate numbers to generate 2 different analysis.

The 2 key figures from the Income and Expense Statement were:

1) Managing Agent Fees (duh!)
2) Total Operating Expenses


They are located in the Operating Expenditure part of the Income and Expense Statement (sample from Moulmein Kallang Annual Report 2013/2014 below)



As explained earlier, I did 2 analysis

1) Proportion of Managing Agent Fees to Total Operating Expenses (MA/OE)

I divided the Managing Agent (MA) Fees against Total Operating Expenses to see the proportion of total operating expenses that are taken up by MA Fees. If AHPETC had a larger proportion than other TCs, this could be a sign that it is overpaying it's MA.

2) MA Fees per electorate

I have used electorate numbers as a denominator to compare the performance between Town Councils which have different sizes and number of residents. (Ideally, I would prefer to use the number of residents/residential units in the estate as a denominator, however, in the absence of such data, I will use the electorate numbers as a proxy and pray to the god of large numbers that any discrepancies will be wiped clean.)


Based on the analysis I have done, 


On per voter basis, AHPETC was ranked 6th and 10th place in 2014 and 2013 respectively. On the surface this means that their spending on Managing Agent fees are pretty much in line with other town councils. The worst performers based on this matrix are Pasir Ris-Punggol and Bishan-Toa Payoh.

However, one thing that is worth nothing is that AHPETC's Managing Agent's Fees were a significantly large proportion of their overall Operating Expense at 15.2% and 15.0% for 2014 and 2013 respectively. 






If I were to average MA/OE numbers from all the other TCs, we can see that AHPETC is 2.4% to 3.6% higher than the other TCs (depending on whether we exclude BTTC or not). This in itself is rather strange. Based on this matrix, either AHPETC is over-paying it's MA or it's MA is so efficient that all other costs comes down significantly.

Another interesting thing to note is that the worst performer based on this matrix is Bishan-Toa Payoh, who is the only TC who have employees on it's payroll instead of Managing Agents. This is very interesting because on Feb 13, 2014 Hri Kumar said the following in parliament.



Based on the metrics above, Bishan-Toa Payoh may be coping just fine, but there is a potential to reduce costs if they were to outsource the task of Town Management to a Managing Agent instead of relying on internal staff. They could then rely on the economies of scale of the Managing Agent to perform Town Council works for them and hopefully pass on these savings to the residents of Bishan-Toa Payoh.

In conclusion:


I performed 2 analysis on AHPETC's Managing Agent's Fees. In 1 of them, they were in line with other TCs. In the other one, it was the 2nd worst performer in both years. Based on the analysis, I cannot immediately conclude that AHPETC did not overpay it's Managing Agent. This is something that needs to be explored further. 

Furthermore, we concluded that Bishan-Toa Payoh might be better off (at least financially), if it outsources Town Council works to a Managing Agent.

L.A.M.


Link to file: https://onedrive.live.com/redir?resid=CF7F78C43CE14ADC!3937&authkey=!ADt3Y_jYG-s2QPc&ithint=file%2cxlsx

If you liked this, you might also like:


Which Town Council Was Managed the Most Wisely

 

On Beauty Parades and General Elections

 

Whether We Can Cut Military Spending by 5.75Bn.

 

On SG Budget Babe's: The Truth about Temasek vs Chee Soon Juan's Claims


Why do Opposition Parties need to sell stuff to raise money but the PAP doesn't?

 

The Day the Father of Accounting Rolled in His Grave

 


On the National Swing