TODAY Commentary
Trading in picoseconds is pure madness
by Matthew Lynn 04:46 AM Mar 16, 2011

What's the right length of time to own a share? Ten years, perhaps. Five? Or maybe it depends on the company whose shares you are buying.

But seconds, or milliseconds, or even picoseconds? New trading technologies are making it possible to buy and sell stocks in ever tinier fractions of time.

Trading in picoseconds is madness. It makes the stock market more volatile and less useful for companies to raise capital or for investors to earn returns.

In the United Kingdom this month, the technology company Corvil, which includes the London Stock Exchange Group and Deutsche Boerse among its customers, created a stir by predicting that new frontiers in trading speeds were about to open up.

From trading in milliseconds, to microseconds, to nanoseconds, speeds are getting faster all the time. "There are no technological limits preventing firms from trading in picoseconds," CEO Donal Byrne said. For those of us who get our picos mixed up with our nanos, a picosecond is one trillionth of a second. Or, put another way, a picosecond is to one second what one second is to 31,700 years. In less technical language, it's a really, really brief period of time.

It's questionable whether it is possible for the buy and sell instructions to move fast enough. Depending on the location of the computers involved in a transaction, the messages may need to travel faster than the speed of light, which is 186,000 miles per second. Albert Einstein would scoff at the idea.

But why would anyone want to trade that quickly even if it can be done? And should they be allowed to?

For decades, there has been a clear trend for trading to become more and more frantic, and for the owners of equities to hold them for less and less time. In 1940, United States investors held their stocks for about seven years, according to Mr Andrew Haldane, an executive director at the Bank of England. That figure changed very little until the mid-1970s. By 1987, it had dropped to two years. By 2000, it was less than one year, and by 2007 less than seven months.

Much the same is true of Britain. In the mid-1960s, the average share was owned for five years. It was down to two years by the 1980s. Now it is slightly more than seven months, Mr Haldane said in a speech last year.

Seven months may soon seem like several lifetimes. The technology is available to enable speculators to buy and sell a share within fractions of a second. But is that really progress?

A stock market has two core functions. It exists for companies to raise capital needed to invest in their business. And it should help ordinary people to make a decent return on their savings by investing in those enterprises.

As the length of ownership has come down, have the markets gotten better at that? It is hard to argue that they have. If anything, it has made the markets less stable. Many people blamed high-frequency trading for the "flash crash" plunge in share prices on the New York market last year.

Trading equities in fractions of a second is crazy. What can possibly change about the prospects of the Vodafone Group or Nestle in the space of a picosecond? Is their business really any different at the end of any particular fraction of a second than it was at the beginning? If you want to change your mind about owning their shares, maybe you should take a second to think it over. Maybe a whole minute - or even two.

In reality, as shares have been traded more furiously, the stock market has become more volatile, more disruptive and less useful. Sure, it might allow one high-frequency hedge fund to steal a march on another one. But at a certain point, you have to step back and ask whether this is a road we really want to go down, and whether it performs any useful function.

Whether Corvil comes up with its picosecond trading technology doesn't matter much. Someone probably will soon. Information technology makes everything faster and faster all the time. If it can be done, it will be done.

But not all science makes the world a better place - and trading in picoseconds certainly falls into that category.

Just because we can build nuclear weapons doesn't make it a good idea for every country to have a big pile of nukes. And just because we can clone ourselves doesn't mean the world would be improved if we did.

The trading systems we have are fast enough for any reasonable purposes. The stock exchanges should call a halt - and tell the traders that if they only want to hold their investments for a picosecond, they might be better off going somewhere else. Like a racetrack. Bloomberg

Matthew Lynn is a Bloomberg News columnist and the author of Bust, a book on the Greek debt crisis. The opinions expressed are his own.

Business Times - 14 Mar 2011

Businesses swallow the tablet and smile

iPad impact touches restaurant menus, gas stations, schools

By VICTORIA HO

(SINGAPORE) The much- awaited iPad 2 became available in the US last Friday and is expected to hit Singapore in a couple of months' time. Apple's offering has caught the attention of Singapore businesses as well.

Local restaurant chain, Fish & Co, is in the midst of replacing its menu with iPad versions. It has placed iPads on each table at its Glass House outlet, allowing customers to send their food orders straight to the kitchen wirelessly from their seats.

The magic centres around a custom menu app, which Fish & Co commissioned Singapore- based app development outfit, Zimerick, to make. The app interfaces with the restaurant's point-of-sale system at the back-end in order to complete the order.

Jayss Rajashwary, Fish & Co's marketing manager, said this system has been a boon during peak hours, where customers struggled to catch a waiter's attention.

Fish & Co has installed 30 tablets at its flagship outlet and intends to place more at its other restaurants.

The F&B outlet is one of an increasing number of businesses looking to take advantage of the tablet phenomenon.

Bryan Ma, IDC Asia-Pacific associate vice-president of client devices research, said there has been an explosion of interest in the tablet form factor.

While the iPad was the only such device available for the most part of last year, tablets from HP and Motorola will join the fray this year.

Is the magic simply in the novelty? 'While a restaurant with a very big wine list could save on printing menus, you have to question the return on investment spending a thousand bucks on an iPad,' he said.

However, Zimerick founder Quek Choon Yang said return on investment goes beyond the differences in printing costs.

Fish & Co's app was designed with features intended to help upsell menu items, he said. The app is able to pair dishes with additional side order recommendations and set items, which are displayed to customers.

And there is an element of marketing worked into the app. It is connected to social media networks such as Facebook, and enables customers to broadcast their meal choices to friends - a subtle way of additional advertising for Fish & Co, he added.

A growing number of businesses are getting more savvy with what they can do on tablets, said Mr Quek.

Caltex, for example, commissioned an app which allows users to find a petrol kiosk nearby. It has released the free app in Singapore, Thailand, and Malaysia in the region, and uses the iPad's GPS chip to locate users.

Schools, too, are coming onboard the tablet craze with some innovative ideas on how to use the tablet.

Nanyang Girls' High School started a pilot project this year replacing textbooks with iPads for four classes of students.

The girls no longer sit in the traditional layout of rows of desks. Instead, they sit in a circle facing the teacher, their iPads perched on their laps as they participate in class work.

This has been a revolution for peer work, said the school's dean of curriculum, Seah Hui Yong.

She said the children complete most of their assignments in soft copy and work is submitted to a wiki- style collaborative space for peer evaluation.

Chinese language classes have employed voice recording apps and interactive titles in order to engage students. The audio recordings have helped many of the students who don't speak Mandarin at home to refer to how some of the words are read, she said.

The school, which did not negotiate a price discount with Apple, bought 150 Wi-Fi-equipped 32 gigabyte iPads for about $800 apiece. Most tablets out on the market at the time were going for over $1,000.

The school plans to extend the iPad project to a whole level of classes next year, and has plans to equip every teacher with a device within this year, she added.

IDC estimated that in the third quarter of 2010 some 60,000 tablets shipped in Singapore. This year, the number could hit 400,000.

Mar 12, 2011
True Spa customers seek compensation
240 have made claims against chain for unused portions of packages after closure
By Jessica Lim

A GROUP of beleaguered customers of True Spa have banded together to demand compensation from the spa chain over its closure last year.

It left them with unused portions of packages they had paid thousands of dollars for.

A law firm representing 240 of the spa's roughly 9,000 customers sent two statutory demand letters to True Spa yesterday. Another one was sent out earlier this week.

Seventy of them are claiming $249,873.13. The others will soon be sending out their letters of demand as well. The total amount the 240 customers are claiming is expected to exceed $600,000.

The letters were hand-delivered to the Jit Poh Building in Keppel Road, the company's registered address. True Spa - listed as a live company with the Accounting and Corporate Regulatory Authority - has 21 days to pay up or challenge the demand.

If there is no response, the company will be presumed insolvent and an application will be made to wind it up. Liquidators will then step in to examine the company's books and financial affairs.

Lawyer Salem Ibrahim, from Salem Ibrahim & Partners, who is representing the group, said: 'The advance payments made by True Spa customers were utilised by the company, and we hope to ascertain if any recoveries of these monies are possible.'

True Spa, which had two outlets at Ngee Ann City and Cuppage Terrace, closed suddenly last April and its customers - with unused amounts of packages worth $200 to $15,000 - were informed that another spa would take over its operations.

But that spa chain, Subtle Senses, was unable to handle the influx of customers. It tanked in October, leaving those 'rescued' - as well as about 8,000 of its own clients - in the lurch.

Many of True Spa's customers showed up at the creditor's meeting held for the liquidation of Subtle Senses last November, but they were told that their contracts were still with True Spa.

Taking matters into their own hands, a few customers approached Mr Salem and went online to look for other victims. Eventually, 240 agreed to contribute money to fund the legal process, such as paying for court and liquidator fees.

'It has been a really long road getting to this point. There is no telling how this will turn out but I hope it will go some way in helping us find out what happened to our money,' said Ms June Lau, 40, who put in a claim for $1,500.

Another customer, Miss Elaine Wong, 25, put $700 into the fund. She is making a claim for $6,800. 'They owe me my money and an explanation. I want justice,' she said.

When contacted by The Straits Times yesterday, the True Group - which also manages True Yoga and True Fitness - said the spa would not be refunding customers the unused amounts of their packages as 'it is a dormant company with no assets'.

Its spokesman said the chain had transferred its business operations to Subtle Senses. This included the takeover of its premises, fixed assets including aesthetics equipment, outstanding membership packages and cash - all worth close to $5 million.

'An essential condition of the agreement stipulated that Subtle Senses undertook to honour all existing True Spa membership packages,' said the spokesman, who added that it had also given customers the option of converting True Spa packages into True Fitness or True Yoga memberships.

'It could not be reasonably foreseen that Subtle Senses would not meet its obligations to service True Spa members.'

She added: 'True Spa is also a victim of the sudden liquidation of Subtle Senses as the latter was not able to fulfil the contractual business agreement signed with True Spa.'

The HealthTrends Group, which took over Subtle Senses, declined comment when reached.

Numerous spas have closed abruptly in the past two years. They include Wellness Village and Simply Spa, which closed in 2009, and Wax In The City, which shut down last April. These closures affected more than 15,000 customers.

limjess@sph.com.sg

Business Times - 03 Mar 2011

Provide small investors a way out of suspended companies

By VEN SREENIVASAN

SHOULD small investors be left holding the proverbial baby for a seeming eternity when a company's stock is suspended following the discovery of some irregularities?

That is the question David Gerald, president of the Securities Investors Association (Singapore), raised this week in the wake of the suspensions of China Hong- xing and Hongwei Technologies after their auditors refused to sign off on their accounts.

The two companies shocked the market when news broke over the weekend that their auditors (Ernst & Young in both cases) could not finalise the audit for the financial year ended Dec 31, 2010, as they could not confirm the cash and bank balances in the companies.

The stocks were promptly suspended.

These two are just the latest in a string of S-chips which have hit the rocks over the past three years due to a variety of serious issues. Most remain suspended, and some have been ultimately delisted. And in the process, thousands of shareholders - the majority of whom are retail investors - have lost huge bundles of money.

Mr Gerald reckons the sudden suspension of Hongxing and Hongwei has left some 14,000 minority shareholders in a quandary. And given the precedents set by previous suspensions of other S-chips under similar circumstances, there is a high likelihood that these two counters will remain suspended for months, if not years.

Being the advocate of the retail investor that he is, Mr Gerald also suggested that trading of the shares be allowed to continue, but under certain restrictions.

He has a point.

One can debate endlessly about the merits of trusting S-chips, and the principle of investors taking responsibility for their own actions.

But the fact remains that these are companies which were listed and traded on the local stock market, where they are accessible to all variety of investors, be they sophisticated ones or the 'moms and pops'. And all become equal victims when irregularities are detected and the shares are frozen for an indefinite period.

The Singapore Exchange (SGX) is perfectly correct when it says that allowing trading of shares in China Hongxing and Hongwei right away would be more detrimental to shareholders and throw the fairness and transparency of the market into question. Of course, investigations have to be done, and transparency has to be restored.

But surely there is some room for a solution to address the concerns of innocent shareholders who are being punished for a mess which is not of their doing.

Suspension means just that: no trading, no price discovery and no market value for the security.

One solution may be for the authorities to set a timeline for the investigations, and thus the suspension. This timeline - say, six months - would not only enable special auditors to come up with a preliminary report which would provide more information to the market, but also provide a cooling-off period.

Once this period is over, there could be restricted trading in the stock. Investors would have at least some facts with which to make informed decisions.

The controls can be as tough as necessary, with restrictions such as cash-only trades, a total ban on short-selling, and barring all insiders or company officials from trading their stock - whatever is necessary to ensure an orderly market.

The point is to allow the market to price the stock and, more importantly, to give minority shareholders a viable exit strategy.

Hongxing, for example, was among the most actively traded stocks on the market for weeks, if not months. Its market cap was some $500 million a week before the suspension. This value now remains trapped.

Of course, the price will likely collapse on resumption of trading. But even if it drops to, say, 3 cents, this would be better than the imputed zero-value as it remains suspended.

Resumption of restricted trading would not only enable sellers to exit, but could also attract potential buyers. These could be investors who hope to make a windfall gain if and when the company - which still has a thriving sports retail business in China - gets its act together.

The whole process enables price discovery and provide transparency. It also gives hope to the thousands of small investors who have collectively invested millions of dollars in the company.

Not quite the perfect solution, but far better than the black hole many innocent minority shareholders find themselves in.

By Ben Berkowitz

NEW YORK - Warren Buffett is looking for acquisitions as an outlet to deploy his $38 billion cash pile, the legendary investor said in his annual letter to Berkshire Hathaway Inc shareholders on Saturday.

Buffett gave an aggressive earnings forecast for Berkshire's collection of businesses, said the company would engage in record capital spending and forecast a recovery in the housing market would start within a year.

Foremost, though, was his acknowledgment of the need for Berkshire to expand its non-insurance businesses, a broad collection that most prominently includes the railroad Burlington Northern and the electric utility MidAmerican.

"Our elephant gun has been reloaded, and my trigger finger is itchy," Buffett said. The letter was released just before 8 a.m. EST Saturday, as it is in most years -- and many large investors say they get up early that day to read it the moment it comes online.

The so-called "Oracle of Omaha" said Berkshire will need "more major acquisitions" -- with an italicized emphasis on major -- to meet its goal.

One long-time Berkshire investor described the letter as "punchy" and "confidently American," among other things.

"I would say as an investor, I think it's a very upbeat letter, it's one that celebrates his courage on behalf of investors of going into the marketplace when the world was most fearful," said Tom Russo, a partner at Gardner Russo & Gardner in Lancaster, Pennsylvania, who is one of the 15 largest holders of Berkshire Class A shares.

SUCCESSION

Buffett addressed the hot-button succession issue in the 26-page letter, something investors had anticipated given his age, 80, and the lack of a clear replacement.

Investment manager Todd Combs, hired late last year, will manage an initial portfolio of $1 billion to $3 billion, Buffett said, and Berkshire may add another one or two managers over time alongside him.

But Buffett said he will continue to manage the bulk of the portfolio while he is CEO. Berkshire's equity holdings topped $52 billion at year-end.

He said less in the letter about who might follow him as chief executive of the company, though he said there were a number of good candidates. The most frequently tipped is David Sokol, chairman of MidAmerican and private jet service NetJets, who Buffett praised.

Buffett tends to give an economic outlook in his letter and this year's was no exception.

"A housing recovery will probably begin within a year or so," he noted, which has led Berkshire to ramp up spending and acquisitions at its housing-related businesses.

He was less bullish on interest rates, which have been low enough to earn the company a "pittance" on its cash in recent times. Buffett said rates will eventually rise enough to contribute more normal growth to the company's investment income, but it was "unlikely to come soon."

INVESTMENTS

Another hit to the investment portfolio will come from the redemption of crisis-era preferred investments in Goldman Sachs and General Electric. Buffett said both are likely to be gone by year-end. The Goldman investment in particular famously pays Berkshire $15 every second.

All things being equal, Buffett forecast Berkshire's "normal" earnings power at about $12 billion a year after-tax.

Some of that will come from dividends, particularly in large holdings like drinks giant Coca-Cola Co and bank Wells Fargo.

Wells has been hamstrung on its dividend payouts by post-crisis regulatory oversight, but Buffett said that should ease soon, leading to an increase of "several hundreds of millions of dollars" a year in dividend payments.

He forecast Coke would pay Berkshire dividends of $376 million this year, and he predicted that would double within another 10 years.

In the meantime, Buffett is spending on growth. He said Berkshire would make a record $8 billion in capital spending this year, with the $2 billion growth over last year to be spent entirely in the United States.

"Berkshire has created within itself its own outlet to redeploy capital," Russo said. "The best thing about that is when you can by that spending create additional competitive advantage."

Feb 24, 2011
Students find call of gadgets irresistible
Three-quarters in study dependent on them, with some suffering negative side effects
By Chua Hian Hou

THREE out of four of Singapore's tech-mad youngsters may be just a bit too fond of their electronic gadgets, suffering physically and socially as a result.

In a survey of 600 polytechnic and university students, three-quarters admitted to constantly fiddling with their mobile phones and other electronic gadgets.

Many of the respondents aged 17 to 25 checked their phones or laptops every few seconds, and took those gadgets with them wherever they went.

More than two in five, for instance, took their mobile phones everywhere - including the toilet. And one in 50 respondents admitted to getting chided 'all the time' for ignoring those around them in favour of their gadgets.

Miss Christine Tan, a final-year undergraduate at Nanyang Technological University's Wee Kim Wee School of Communication and Information, said her four-man team decided to look into the issue because 'we saw it in ourselves and our peers...where nothing else matters when we are on our gadgets'.

While technology had many proven benefits, like allowing users to work away from the office and increasing productivity, Miss Tan and her team wanted to red-flag what they believed was a rise in the number of young people so compulsively dependent on their gadgets that they suffered negative side effects.

The most obvious were physical pains such as aches in the head, neck and thumbs.

Raffles Hospital clinical director for pain management, Dr Ho Kok Yuen, said he had seen an increase in the number of younger people suffering from chronic pain - a condition earlier seen only in people aged 60 and above.

'Most people who continue using their gadgets do not realise that their usage patterns can have a very serious impact on their physical well-being,' said Dr Ho.

Those with the condition, which is increasingly being referred to as 'gadget over-dependency', may be affected in less obvious ways as well.

According to a New York Times article, those constantly exposed to a deluge of information find themselves unable to focus on tasks at hand, and also face increased stress.

Long-term exposure to a constant diet of text messages, Facebook updates and Twitter posts, say neuroscientists in the Times report, can 'rewire' human brains to the point that key areas such as analytical ability and creativity might potentially be impaired.

Compulsive usage, said psychologist Nicholas Lim, also 'robs you of the ability to know what controls you and what you control'.

This has the ring of familiarity for private school student Lynn Lim, 22.

'A few years ago, I was at an interview for a part-time job, and there was an alert on my phone. I took it out, checked the message and replied because that is what I always do. When I looked up, the look on the interviewer's face was priceless... No, I didn't get the job.'

chuahh@sph.com.sg

February 19th, 2011 | Author: Contributions

As I listened to the budget by our finance minister, I had a flash back of all the previous budgets speeches and what they had to offer in bringing Singaporeans to this poorer and decomposed state we are in, what happened to all the “handouts”, did they do more harm than good?

The budget sounds nice will all the “it will cost the government a couple of millions” so on and so forth.

But let’s all remember how we got here, is this the same government that imported cheap labor by the millions, without considering the impact it will have on its citizens that voted the PAP into power to safe guard the Singaporean interest in the first place?

Is this not the same PAP government that created a surge in HDB lease hold prices causing Singaporeans to take up a bigger debt liability to lease the flats from HDB, when they allowed PRs to lease directly from HDB.

I am very touched that the PAP government wants to help more Singaporeans own their HDB flats, but sir how is this possible when HDB is the actual owner, it seems the PAP is confused over the term “owner” and Lessee. It would be good if Mr. Mah Bow Tan could educate and clarify this confusion in parliament about the “HDB ownership” myth.

If HDB is the actual owner of the HDB flat and Singaporeans potentially lease it for 99 years, should HDB not be the one to pay the property tax instead?

Next we look at the scrapping of radio and tv license, to be honest there is no need for Singaporeans to pay for that kind of license as home owners that own a TV or radio do not do any forms of broadcasting, so why the need for the license in the very first place ? The advertisements and programs on TV and radio that Singaporeans have to put up with is indeed a torture, take for example playing “pretty woman” repeatedly over and over again.

Next is GST, if GST is to help the poor as claimed by the PAP government, why is it Singaporeans are poorer, so why not scrap GST in the first place, is it not the same as ERP,COE, Minister Mentor, Senior Minister, etc , etc. All this are just channels to collect taxes.

Question is how are these taxes accounted for and how do we know 40 billion is going back to the reserve, if there is no independent audit to account for our reserves.

Lastly I leave you with this thought, if the budget will help you, will you help the PAP in the coming elections, and how will the PAP help themselves once again?

Cheers

Stagnant wages, immigration fuel Singapore squeeze
Updated 08:35 PM Feb 17, 2011
by ALEX KENNEDY Associated Press

SINGAPORE (AP) - Singaporean Ramzi Mohamed is tired of sleeping in the living room of the two-bedroom apartment he shares with his mother and older brother.

His problem is that housing prices in the city-state are up almost 70 percent since 2006 while the 29-year-old gym administrator's monthly salary of 1,200 Singapore dollars ($938) hasn't budged in five years.

"When I was 20, I thought I'd have my own place by 30," Ramzi said. "Now that I'm almost 30, I wonder if that will ever happen."

Like tens of thousands of others living in the tiny island nation that boasts one of the world's highest levels of GDP per person, Ramzi's failure to realize his modest ambitions is no accident.

A flood of cheap immigrant labor - and stiff competition for manufacturing jobs from Asian neighbors like China and Vietnam - has kept wages stagnant for many and widened the gulf between a very wealthy minority and the island's poorest. Housing prices have skyrocketed as rapid population growth outstrips supply.

At the same time, ostentatious signs of the wealth enjoyed by the elite have multiplied. That has put the government under pressure to loosen its tightfisted stance on welfare in the next national budget Friday as it tries to defuse criticism its policies have worsened the plight of ordinary Singaporeans.

The government must also call general elections by February 2012. Analysts expect the ruling People's Action Party, which has held power since independence in 1965, to maintain its overwhelming majority in parliament. But if poorer Singaporeans who feel left out of the country's prosperity bring their discontent to the polls, the government could find itself with a weaker mandate and the beginnings of a stronger opposition.

"The lowest income group has struggled to stay afloat," said Irvin Seah, an analyst at Singapore's biggest bank DBS. "Plainly, not everyone has benefited equally from the economic growth that has occurred over the past decade."

Singapore's economy - which relies on manufacturing, finance and tourism - grew a record 14.5 percent last year.

Despite rapid economic growth, the U.N says income inequality in Singapore has risen steadily over the last decade and is the second highest behind Hong Kong among developed nations. From 1998 to 2008, the bottom 20 percent of households saw their income drop an average of 2.7 percent while the salaries of the richest 20 percent rose by more than half.

To be sure, the poor in Singapore as a whole are better off than their counterparts elsewhere in Southeast Asia - homelessness and hunger are almost nonexistent. The richest 20 percent of Singaporeans mostly live in private developments, and the rest of the population lives in housing built by the government, so slum areas of concentrated poverty don't exist.

The few opposition figures in tightly scripted Singapore are calling for more housing construction, a minimum wage - and fewer foreigners.

"We've had over a million new people come to live in Singapore in the last 10 years with very little increase in the stock of public housing, so it's inevitable that prices have risen sharply," said Kenneth Jeyaretnam, son of Singapore's best known opposition politician J.B. Jeyaretnam, who died in 2008.

"We need to slow the intake of foreign workers and concentrate on raising the productivity and incomes of Singaporean workers instead," he said.

The government in recent years has also courted events such as Formula 1 - a predominantly European sport with little local following - and allowed two casino resorts, where citizens must pay a $78 fee per day to gamble, while foreigners enter for free.

"Some feel that we're creating this place to be a playground for the rich," said Eugene Tan, assistant professor at Singapore Management University. "There are people who genuinely feel that Singaporeans don't come first."

The PAP has long rejected policies such as a minimum wage or public retirement pensions, arguing welfare state-style policies would undermine competitiveness, foreign investment and economic growth. But it increasingly recognizes its hold on power will be undermined if a large section of society is left behind.

"Economic growth must benefit all members of the community," top government adviser and former Prime Minister Goh Chok Tong said last month. "Otherwise, our community may be divided by differences in income levels within it."

Analysts expect the government - whose coffers are flush with last year's budget surplus estimated at about 7 percent of GDP - to announce Friday increased retirement fund contributions, training for low-income workers, tax cuts, rebates and cash handouts.

Part of the reason for the jump in income inequality has been the success of Singapore's richest - billionaires whose fortunes largely stem from banking and real estate development. According to Forbes' list of richest Singaporeans last year, eight of its 11 billionaires made their money in banking or real estate.

The island also has the world's highest percentage of millionaires - households with at least $1 million in liquid assets - at 11.4 percent of the country's 5 million population, according to a survey last year by Boston Consulting Group. Rolls Royce, whose least expensive model in Singapore costs about $850,000, said sales in the city-state soared 171 percent in 2010.

"The PAP has made it a central plank that it is a party for all," said Tan, the assistant professor. "Once enough people feel that is just rhetoric, then that would really undermine the government's legitimacy."
- AP
URL http://www.todayonline.com/Singapore/EDC...re-squeeze

Copyright 2011 MediaCorp Pte Ltd | All Rights Reserved

Who can blame Singaporeans for not having babies? Childcare and pre-school education are exorbitant!

Feb 17, 2011
special report
Childcare fees on the up and up
Operators blame rising rental costs and teacher salaries
By Theresa Tan

HOUSEWIFE Fenny Joman, 37, recently took her five-year-old son out of Rainbow Cove Preschool along Upper East Coast Road when it raised the fees for its full-day programme from $800 to $1,000.

The mother of two boys said: 'You can raise fees, but a 25 per cent increase is ridiculous. It's also very taxing to pay so much for childcare.'

Childcare fees for her elder son cost about 30 per cent of her project manager husband's income. Her younger son is 15 months old.

A check with the Ministry of Community Development, Youth and Sports (MCYS), which compiles childcare statistics, found that fees have risen steadily over the past five years.

Last December, the average full-day childcare fee was $776 a month, up 28 per cent from $608 in 2005.

Over that period, the number of childcare centres grew from 713 to 874, but keener competition did not bring down prices.

Ten childcare operators - which run more than 260 centres - blamed skyrocketing staff and rental costs for the increases.

They said better-qualified teachers and a high demand for staff among proliferating centres had driven salaries up.

Coupled with higher rentals, they said they had no choice but to raise fees. Salaries and rentals make up at least 80 per cent of operating costs.

Last year, there were 63,955 children enrolled in childcare centres, more commonly known as preschools, which take in those aged between 18 months and six years.

Childcare centre programmes typically run for the entire day, usually from 7am to 7 pm, compared to kindergarten classes, which run for only a few hours.

To raise the quality of preschool education, the Education Ministry mandated that from 2009, those who want to teach in childcare centres and kindergartens must have at least five 0-level passes, including a credit in English. They also need a diploma in preschool teaching.

Existing teachers have until 2013 to obtain an 0-level credit in English or pass an English proficiency test, and get the diploma.

With higher qualifications required, childcare teachers are demanding higher salaries. And with the rapidly expanding industry - last year alone, 141 new centres opened - childcare teachers are now in short supply.

It has left operators scrambling to attract and retain teachers with bigger pay cheques.

Just take PCF Sparkletots and My First Skool - two of the largest players in the industry. Both run dozens of centres.

PCF Sparkletots, run by the PAP Community Foundation, opened 24 centres in the past year alone. And by the end of this year, it aims to almost double its size from its current 58 centres to 92 islandwide.

With an average of eight teachers per centre, it will have to hire at least 272 teachers this year.

NTUC First Campus' My First Skool opened 32 centres over the past three years and now has 72. Over that period, teacher strength expanded from 119 in 2007 to 750 now.

This year it plans to open another 10 centres and hire at least 60 childcare teachers.

In 2007, its starting pay for a teacher with a diploma in early childhood education was $1,400. Now it is $1,800 - almost 30 per cent more.

Salaries are expected to continue rising, with at least 75 more new centres expected by 2013, according to MCYS projections.

The ministry has assured parents repeatedly that more centres will mean more choices and keep fees affordable.

In August 2008, Prime Minister Lee Hsien Loong announced the Government would double the childcare subsidy for working mothers from $150 to $300 a child per month.

In February 2009, MCYS Minister Vivian Balakrishnan urged childcare centres to hold off fee increases during the downturn.

He told Parliament that in just about six months since the start of the increased subsidy, 18 per cent of childcare centres had either increased fees or were planning to do so.

The ministry does not regulate fees as such centres are privately run. But under its guidelines, centres have to notify parents of changes at least two months before fees go up.

All 10 operators interviewed raised their fees in the past three years, blaming higher staff salaries andrentals.

Mrs Alexis Nielsen, 47, who runs Rainbow Cove Preschool in Upper East Coast Road, said her rental went up by 100 per cent in 2008. With staff costs rising, she raised her full-day monthly fee from $800 to $1,000 this month.

'This is my first fee increase in four years,' she said. 'I did not raise fees in 2008 and 2009, even though many operators did so.'

And even the industry's big boys have not escaped rising rentals.

Pat's Schoolhouse, an upmarket brand with 13 branches, said its rentals rose by up to 50 per cent at some locations in the past three years.

Last year, it raised half-day fees from $850 to $900. This year, full-day fees went up from $1,275 to $1,375.

Salaries have also risen because more graduates have joined the industry. For example, Pat's Schoolhouse has close to 300 teachers and at least half of them are graduates.

Aside from rentals and salaries, everything from food to education materials costs more now, said Dr Lim Teck Huat, chief operating officer at the PAP Community Foundation.

Since last year, nine PCF Sparkletots centres raised fees by between about $30 and $65 a month. Full-day nursery fees now range from $428 to $588.50.

At My First Skool, fees have increased twice since 2008 - by about 4 per cent each time - as its teachers' salaries have risen by 28 per cent since 2007. It now charges an average of $580 a month for its full-day programme.

Mr Francis Ng, 47, founder of Carpe Diem Holdings, which runs 20 childcare centres, used to give parents a guarantee that a child would pay the same fee throughout his stay at the centre.

Given the rising costs, he has scrapped the price guarantee for new pupils at the Carpe Diem Schoolhouse which he runs in Jurong Kechil. He will let his franchisees, who run the group's other centres, decide whether to continue offering the guarantee.

Ten years ago, he said he charged $590 a month for a full-day programme at his Jurong Kechil centre. Now the fee is $745 - a 26 per cent increase.

In that time, he says, teachers' salaries doubled, while his rental went up by 70 per cent.

The only winners appear to be childcare teachers, who now can pick and choose who to work for.

Ms Fiona Walker, 42, Chiltern House's principal director, said: 'You place an ad for teachers, people (call and) say they are coming, but they don't show up for the interview.

'We've seen a definite increase in such no-shows in the past three years. We also see a definite increase in people trying to poach our staff.'

Salaries at Chiltern House, another upmarket centre which is part of the Julia Gabriel Group, have risen about 21 per cent since 2009 and rentals have shot up too. It has raised fees four times since 2007.

Its latest fee hike was this year, a 10 per cent increase. Now, it charges between $925 and $1,000 for its half-day programme at its five centres.

theresat@sph.com.sg

By Andrew Frye - Feb 14, 2011

Berkshire Hathaway Inc. divested its stake in Bank of America Corp., the largest U.S. lender by assets, as Chairman Warren Buffett took control of the portfolio previously run by his backup stock picker, Lou Simpson.

Buffett’s firm had no shares in the bank at the end of 2010, compared with 5 million shares three months earlier, Omaha, Nebraska- based Berkshire said today in a regulatory filing that lists the company’s U.S. stockholdings. Berkshire also eliminated its stakes in Nike Inc., Comcast Corp., Nalco Holding Co., Fiserv Inc., Lowe’s Cos. and Becton, Dickinson & Co.

Buffett, 80, is reshaping Berkshire’s stock portfolio amid changes in the company’s investment managers. Simpson, once identified by Buffett as his emergency stand in, retired late last year. Berkshire, the biggest shareholder of Coca-Cola Co. and Wells Fargo & Co., hired former hedge fund manager Todd Combs to help Buffett with equity investments.

“Any position that Buffett was uncomfortable holding on his own will have been sold in the fourth quarter” as Simpson left, said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business.

Berkshire added to its Wells Fargo holding in the fourth quarter.

Buffett, also Berkshire’s chief executive officer, has trimmed the stock portfolio since the 2008 financial crisis and focused on buying whole companies. In the third quarter, Berkshire eliminated stakes in Home Depot Inc., trash hauler Republic Services Inc. and Iron Mountain Inc., a provider of records management.
Railroad Investment

Buffett acquired Burlington Northern Santa Fe last year for $26.5 billion to add a railroad to Berkshire’s collection of more than 70 subsidiaries in industries spanning insurance, energy and ice cream. In the last two years, the firm has cut its stockholding of Moody’s Corp. by more than a third and divested a stake in SunTrust Banks Inc.

Buffett has said Berkshire will divide his roles as head of investments and operations among more than one successor. Combs specialized in financial-services investments at hedge fund Castle Point Capital Management LLC.

Buffett has said he built his equity portfolio by buying and holding stocks of companies that he believes have durable competitive advantages. He’s held the stake in Atlanta-based Coca-Cola for more than two decades. Berkshire’s stake in San Francisco-based Wells Fargo, the biggest U.S. home lender, was worth more than $8 billion at the end of September.

To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net.

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net.