Are we growing with our economy or not?

From 1980 to now, Singapore's economy has been steaming ahead at an average growth rate of 7% per year. Last year, in 2010, the economy grew by a whopping 14.7%, making Singapore the fastest growing economy in Asia and the second fastest in the world. By all accounts we have done well. To add to our feat, Temasek Holdings ("Temasek") has been returning 17% annually  since it was established. It is estimated that Temasek together with GIC, MAS, HDB and other GLCs and Statuary Boards manage about a S$1 Trillion in funds. Our reserves are about five times the size of our GDP. So, what's there to complain?

Our public debt, on the other hand, which is mostly domestic debt is financed primarily by CPF and the local banks in Singapore. The public debt stands at about S$200B. While our public debt is considered very high in terms of public debt to GDP, it is only 20% of the national reserves and therefore, a default risk is minimal. The thing that caught my eye was that a large proportion of our public debt is financed by CPF, meaning to say, our national savings are used to power our economy. So what does that mean to CPF holders?

Fund managers do hold government bonds and securities at prudent levels because it is considered a low risk investment with very modest returns. Currently, the CPF Board gives out about 2.5% interests per year on our CPF balances. While this may be higher than the bank rates, it is much lower than the rate of economic growth and much lower than the 17% returns that Temasek is making each year. This has prompted me to compute the opportunity cost of keeping your monies in the CPF. 

Suppose if you had invested S$20,000 with Temasek in 1980, you would have made a whopping S$2.2M by now. Conversely, at the current rates of 2.5% per year, your CFP savings would have only grown to a paltry $42,000. That is a HUGE difference, I must say... be wise with your monies.

Who are your best clients?

I am beginning to wonder if there is such a thing as a lousy client. And if you're in a position to choose between an employee and a bad client, who would you choose?

Is acceding to everything the client asks for good customer service or saying 'no' would be better at the end of the day?

It turns out that there are organizations that squeeze everything out of the service provider. These are the guys who use illegal software, manipulate service providers through fixed contractual terms and try to include everything under the ambit of the scope of works. My only advise is 'get out' of this kinda of situations. It's not worth your time and energy.

In this case, retaining your employee is the way to go.

Quote of the Day.

Arbitrageurs keep the markets honest. They bring perfection to imperfect markets as their hunger for free lunches prompts them to bid away the discrepancies that attract them to the lunch counter. In the process, they make certain that prices for the same assets in different markets will be identical.

- Peter L. Bernstein

Email from Reid Hoffman, Co-Founder & Chairman of LinkedIn

Dear Kumaran,


I want to personally thank you because you were one of LinkedIn's first million members (member number 391148 in fact!*). In any technology adoption lifecycle, there are the early adopters, those who help lead the way. That was you.


We hit a big milestone at LinkedIn this week when our 100 millionth member joined the site.

When we founded LinkedIn, our vision was to help the world's professionals be more successful and productive. Today, with your help, LinkedIn is changing the lives of millions of members by helping them connect with others, find jobs, get insights, start a business, and much more.


We are grateful for your support and look forward to helping you accomplish much more in the years to come. I hope that you are having a great year.


Sincerely,


Reid Hoffman
Co-founder and Chairman
LinkedIn

Interview by Tampines Junior College Link

In conversation with TPJC Link:


TPJC Link: Mr Pillai, you highlighted in your speech that success is mainly a matter of attitude. Could you please elaborate?

Mr Pillai: Yes, surely good attitude goes a long way in paving your success but the other important attribute of success, along with attitude is aptitude. I'm more inclined to use the word competencies instead of aptitude. Aptitude seems to suggest that one has the innate ability to achieve a skill, whereas competencies seems to suggest that skills can be acquired through education and training.

If my experience is anything to go by, I'd say that success is rather illusive; like beauty, it's in the eyes of the beholder. So you need to have your own definition of success and make sure that you set your sights on something that is achievable in a reasonable period of time. Sometimes, I find that having incremental successes (or minor milestones) helps in achieving your overall goals and objectives.

Success is a commitment you make - You need to declare your love for success before success loves you back in return!


TPJC Link: What advice would you offer to TPJCians who wish to succeed not just academically but also in life in general?

Mr Pillai: I need to live another 40 years to talk about life in general. Nevertheless, what is important to me is the means rather than the end. There were instances in my life to make an awesome lot of money. But, I knew that there are no shortcuts in life and the law would certainly catch up when one goes down the wrong path. So I deliberately avoided such trappings and focused on developing my skills further, nurturing the relationships that matter most to me and to conduct my business ethically. As it turns out, these good traits paid off and I have earned the trust and confidence of my clients, investors and the community. There is nothing more to life than this, actually.


TPJC Link: What values do you feel attributed to your success?

Mr Pillai: Freedom of mind and the power to influence / change the mindsets of my constituents. Life as it turns out, is not a one man show. My success depends on the people around me – so I focus on the successes of the individuals around me who in turn make me very successful at what I do.

Questions

1. What kind of challenges did you face in College or in your career while working towards your goals and trying to realize your dream? How did your values and attitude enable you to overcome these challenges?

My first business collapsed during the 2001 recession. I found myself broke, depressed and unemployed. If I ever had a dream, it was shattered the day I put the shutters down on that business. Conversely, I also found myself enriched with more knowledge about business operations, profitability and had a deeper understanding of what contributed to my initial failures. I used these as lessons in life and moved on to achieve even more successes in my career and business. I realised that when one fails in a task, it is a message from the world around you that the job done is sub-optimal.

A lot of the values that I hold today are a culmination of my successes and failures. I graduated with flying colours from the school of hard knocks and I often wished that there was an easier way to learn all this or if I had paid more attention in school, I could have avoided these hardships.


2. Given the fierce competition that students today face in terms of gaining admission to the local universities, what is your advice for students, especially the JC2s, who intend to vie for a place in courses where there is high demand?

The last time I checked, your competitors have the same amount of grey matter as any one of you. So you don't have to sweat about the fierce competition. There is something sexy about the underdogs beating the top dogs in their own game. So, go for it!

The question that you need to ask yourself is whether these courses are the best option for you for the careers that you intend to pursue in the future. You may want to consider careers in areas where there is a severe talent shortage in Singapore, for instance. Above all, choose a course that interests you and one that'll give you the best skills to succeed in your intended careers.

Life is pretty strange, so you will really need to learn how to ride it as it comes to you with all its awe and wonder. I wish all TPJCians all the success in their studies and future endeavours.

Speak confidently and deliver your message clearly

Recently, I gave a speech at the TPJC Annual College day as the Guest of Honour and someone came up to me and asked me, 'How do you give a speech like that?'

The trick I have learned is to focus your thoughts and energies into what you are currently doing, and in this case to speak confidently to the audience and to deliver the message in a clear concise manner.

The hardest part of giving a speech is in the beginning, when you are up there on the stage and all the eyes are glued on you to say something smart. I always focus on getting my opening remarks right. This sets the tone of the entire speech. I have also found it to be effective to make a positive remark or comment about what was said by the previous speaker. Adding humour to the opening remarks helps break the ice.

Public speaking is about both form and substance. You need to connect to your audience and establish rapport with them almost instantaneous. Lets face it, you are not going to win them all. There will definitely be a group of people who will be against whatever you say. Therefore coming across as someone who is friendly, humble and approachable helps you connect to the audience better.

The funny thing about public speaking is that people focus on what you're saying while you are saying it, but days or weeks later, when they have forgotten about what was said, how you said it becomes the primary focus.

So make an impression in your speeches and you'll be alright. All the best!

If you can't take the heat, get out of the kitchen.

It takes more than just business skills (salesmanship) to run a successful business. While business practices have been standardized across many countries, there are cultural differences between country to country, and it is sometimes the idiosyncrasies in a particular country or an industry that can drive the businessman nuts.

As apparent as it seems, there are people who do not understand what constitutes a commercial transaction. Money is exchanged in return for a good or service. There are laws to protect the buyer from the unscrupulous seller and the buyer is entitled to check the goods for quality before payment is made.

However, there are situations where a service is rendered over a prolonged period and the buyer has little or no control over the process. In some cases, the entire project may be off-shored and the exposure to risk may be further heightened. (Cos once you transfer the money, your money is gone forever!)

It becomes the seller's responsibility to define proper milestones and deliverables and above all manage the expectations of the buyer throughout the project life-cycle. Service providers in this space are not employees of the party that is procuring the services - they are merely contractors and they undertake the delivery risk.

While there are laws and legal framework to protect us and while I have complete trust in our judicial process, I feel that we are not completely immune to fraud and mismanagement. So this is really a case of 'buyers beware' and sellers, 'show me the goods or your track record!'

This is definitely not for the faint hearted. Every year I see new entrants into this business and they simply can't take the heat!!!