Thursday, August 14, 2008

What is fair regulation?

Last week, I attended an UMAS (University of Michigan Alumni Singapore) annual dinner and this year's Guest of Honor was Mr Tan Kin Lian, Former CEO NTUC Income.

He is a very passionate man, who believes strongly that NTUC income has crossed the ethical line in dealing with their insurance customer and has written harshly against them before. He also runs a website called THE ONLINE CITIZEN (

In the speech he gave, he emphasized that all businesses, not just NTUC, has a responsibility to make profits, but not obscene profits. And if there are obscene profits, they should be responsible to share it with their shareholders/customers. The talk also veered into the concepts of free market competition, and he emphasized that the government should step in to provide certain level of regulations in the market to prevent private firms from "cheating" the customers. Here is a link to an article on his the same issue which was basically the same speech he gave that night (–-honesty-while-making-profits/)

While i appreciate what Mr Tan was driving at, I also want to draw attention to what appears to be a contradiction to what our business education typically preaches. In school, we are taught that all businesses eventually has one goal - to maximize profits. Of course it does not state anything about how and what u should or should not do to attain that goal. Many companies make a lot of profits, and some state that they should not, and many of these arguments are usually pointed towards organizations that have a somewhat "noble" or "socially conscious" purpose. And thus insurance companies are usually ones facing such criticism.

Given the fact that private or government owned companies that make money off of providing a service that is somewhat "socially responsible" in nature, proposition for organizations such as NKF and health insurance being somewhat regulated is justified. And to a certain extent, it is also somewhat the government's responsibility to ensure some form of regulation, should exist to ensure fairplay and encourage healthy competition and innovation within any markets. But they should only exist like a referee within a football match to ensure the game is played fairly. However here lies the biggest problem. What if the referee is not just an independent party but a member who could potentially benefit from either game players' outcome?

We are facing this question in Singapore. And the question here is: given the fact that our Singapore government (the referee) is also a major player in every major industry in Singapore (whether directly via NTUC or somewhat indirectly via some close minister's family ties), who is there to ensure that these companies are working for the people's interests or not? If the referee cannot conduct a game fairly, how can we be sure that the regulations that they put forth, won't be one to pursue their own interests?

While I applaud Mr Tan for his righteousness in wanting to push for ethical business runnings in NTUC, what is to ensure that eveyone in NTUC is equally ethical like him? If (and please note that this is an assumption) a minister in the ruling party has family connections involved in running companies of the likes of say ... NTUC, GIC or Temasek Holdings, would it be unreasonable to say that any government policies that is proposed by this minister could have been for personal gains?

If our country's watchdog (the ruling party) is both the referee and the soccer team, who would want to play?

From a speech by Mdm Halimah Yacob, NTUC ASG & MP for Jurong GRC at the PAP 50 Rally Held on Sunday 5 December 2004 at S’pore Indoor Stadium. With respect to why should NTUC and PAP form such a close bond and if it is good for Singapore, she said "The NTUC wants to secure a better life for workers. The PAP government wants a better life for Singaporeans. So, the NTUC maintains a symbiotic relationship with the PAP to work together for the common good of Singapore." Given the recent accusations that NTUC insurance is "cheating" the customers (Singaporean citizen) and the fact that it is supposed to serve the nation, can we say that the actions and policies of NTUC (or any government linked organizations), as well as the government themselves need to be carefully policed to ensure fairness.

Problem is as a country, we do not have a system where we allow our leaders to be scrutinized properly. Even when it comes to voting, I can only vote within my GRC (if I even get the chance to) for the MPs of the decisions they make, the arguments they put forth etc, but not for the leaders who exact the kind of policies that affect us all like say ... ERP, road tax, GST?

Correction: Mr Tan is not "running" The Online Citizen. But he is one of the senior editors. :) See the comment below


Anonymous said...


Just wanted to clarify that Mr Tan does not run TOC -- but he does write for us. He's one of our senior writers. :)

Sub-editor, TOC

Mockingbird said...

it's hard to do business in Singapore if u r competing with the gahmen. At best you can make some profit, but you certainly won't be making obscene profits. Obscene profits are "reserved" for businesses run by the gahmen or those that are not competing with the gahmen.

Anonymous said...

The situation in Spore might be worst than what people know because many cases are covered up. You would consider clearing account payable and receivable on time or asap is good practice. But, those contractors of the state-owned companies will know the real situation. Only salary arrears to foreign workers by private companies are reported. Those involving state-owned companies will never be mentioned. The contractors are being squeezed and remain silent simply because they still need the future contracts. There is hardly good corporate governance in Spore when one includes state-owned companies. Think of it, the system very much like the old days (present days too?) communist China. Relationship and elitism are the foundations of doing business here. Private companies (SME not those powerful MNC) have no place here because whatever business that can make profit will be covered by state-owned companies, except perhaps those in Geylang.

jay paul said...

Nice and quite informative post. I really look forward to your other posts.

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