Affordability

An excerpt from Straits Times Singapore

To calculate personal affordability, United Overseas Bank economist Ho Woei Chen suggests looking at it from a cash flow perspective, as banks do when they evaluate individual home loans.

Assume a couple is buying their first home and has just enough savings to pay for their 20 per cent down payment. They earn the median income last year, which was about $5,000 each.

If they want to pay for their monthly home loan instalment entirely through their CPF funds and not use any cash, the most they can pay every month is $2,070 in total. CPF contributions are capped at a salary of $4,500, and only 23 per cent of that can go towards paying for a home.

At an interest rate of between 1 per cent and 2 per cent, based on a 30-year loan, that works out to a loan of about $550,000, says Ms Ho. Taking that to be 80 per cent of a home's purchase price, the couple can buy a property worth $680,000.

This method of using monthly instalments to calculate affordability is heavily relied on by banks, which are mainly concerned with a home buyer's ability to repay his loan.

They therefore calculate how much of a home buyer's monthly income he can afford to spend on mortgage instalments. As a rule of thumb, this should not exceed 40 per cent of gross income.

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MFA confirms new China visa rules for S'poreans from July 1

THE Ministry of Foreign Affairs on Monday confirmed that China has temporarily suspended the visa-free facility for Singaporeans who plan to travel to the country for 15 days or less, from July 1.

Businessmen from Singapore, please take note! Let's hope this is just temporary!

How To Successfully Joint Venture Your Online Business With Offline Businesses

There are many advantages joint venturing with offline businesses. You could increase your target market by reaching audiences you couldn't advertise to before. You could get referrals from the offline businesses you joint venture with.


The key to joint venturing with offline businesses is to find ones that have the same target audience. If you're selling business software, you wouldn't want to joint venture with a store that sells candy. You won't be very successful. You would want to joint venture with an office supply or computer store.


Below are three possible joint venture deals you could set up:

1. Write a tip booklet that is related to your business. Make a deal with an offline store where they giveaway your tip booklet to their shoppers with each purchase. The store you pick should attract your target audience. The store could have something free to giveaway to attract shoppers and you could have your web site ad in the tip booklet.

2. Design a printed flyer for your online business. The flyer should include a description of your web site, e-mail address, web address and any other important information. Make a deal with an offline store to have them include the flyer in each bag of products they sell in exchange for free advertising on your web site.

3. Make a deal with a computer store to have them display your web site on the computers they display in their store in exchange for free advertising on your web site or in your e-mail newsletter.


Once you find a targeted offline business, contact them and present your joint venture proposal. Tell the business owner the benefits of the joint venture. Tell him or her why it would be a win/win situation for both of your businesses. Give them a lot of compliments about their business, products and services. Using all three methods above will greater your chance of having a profitable and successful offline joint venture.

It never rains but POURS!

From the straitstimes...

Surprise drop in retail sales
Retailers report 1.3% dip in February revenues as prices soar to 26-year high and worries over world economy linger..
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What's so damn surprisingly about it? Are journalists with fat pay packets immuned or so removed from reality?

Realty bites in the U.S. but apparently not really felt here.

Wachovia's loss shocks US financial sector
NEW YORK - WACHOVIA, the fourth-largest United States bank, has stunned Wall Street with an unexpected loss, signalling that the pain for the financial industry is far from over. Giants like Citigroup and Bank of America, as well as dozens of smaller banks, are expected to report weak results in the coming days and weeks.
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Sit tight everyone, Singapore should brace itself! But heck, no...NOT EVERYONE apparently...

Another headline:
Private home sales recover in weak market

With a caveat of course:
"But Knight Frank director of research and consultancy Nicholas Mak expects sales to stay thin in the coming months due to ongoing economic and financial market uncertainties. 'Homebuyers, especially in the mass-market segment, are expected to remain cautious until there is a sustained recovery in the financial markets and economic conditions,' he said."

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Although it is true that NOT everyone would fee economic pain during a bust period in the economic cycle, you have to wonder IF people are buying because:

1. They can afford it
2. They THINK they can afford it?

A whole world of difference there!

Never ever make decisions based on straitstimes or newspaper reports

Conflicting news abound!

14th of April, the straitstimes reports about a banker saying that the 2nd half of 2008 will be rosy again.

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Deutsche banker forecasts equities rebound
US could end year on positive note once all the bad news is out; Asian stocks to follow suit 'Once the bad news, primarily about the write-downs of major banks hit by the sub-prime crisis, is deemed to be largely in the open, some certainty will return to the markets,' said the Frankfurt-based Mr Martini, who was in Singapore last week to meet his staff.

He expects the US market to recover in the second half of the year once the effect of interest rate cuts and tax concessions kicks in to boost the US economy.

Although Asian equity markets could still suffer swings, he added, their long-term growth story is attractive.

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But HEY LOOK, he qualified his statement which meant that hell! What he said, isn't worth anything! Could he be thinking Asians are dumb just because sovereign wealth funds are bleeding from their investments? Well, the rest of us ain't and the rest of asia wouldn't be moping up their stocks.

Then Straitstimes ran another story the next day...

15th April headline
Worst of US sub-prime crisis not over yet
THE worst of the United States subprime credit crisis is not yet over with more write-downs expected, said a Singapore-based structured debt expert from Standard Bank.

Mr John Pang, Standard Bank's head of securitisation and cash flow lending in Asia, said after a seminar in Singapore: 'The subprime borrower tends to be a lower-end earner. Thus, when the economy goes bad, there'll be more negative effect on him.

'People want to pay their mortgages, but they may not have the means if the economy goes bad and they lose jobs.'

'The worst is not over, based on market talk and the potential US portfolio. With more uncertainties, I think there're more write-downs to come,' he said.
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Well, in case Mr. Martini hasn't noticed, 2nd half of 2008 is just 2 months away.

Anyone in the right mind wouldn't believe that the US economy would give a V shape recovery would it?

Moral of the story? Don't bet on newspaper reports, do your own research and cross your fingers you have made the right choice!

Director of construction firm charged for tax evasion

Don't bill for work NOT done! Make sure you can prove you have done actual work. And please NEVER EVER UNDER DECLARE your income!

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7 Apr 2008

VISA Engineering Pte Ltd and its director, Ong Kah Sut, were found to have under-reported about $900,000 in income, between the Year of Assessment 2001 and 2005, and evaded $195,048 in tax. For their wilful intent to evade tax, they were charged under Section 96 (1)(d) of the Income Tax Act.

Ong Kah Sut also committed other offences resulting in a total of $1.25 million in tax and penalties.

“Modus Operandi”

Ong Kah Sut, also a sole proprietor of VISA Contract Services (VCS), had prepared fraudulent invoices from VCS. The subcontract and installation works described in the fictitious invoices were in fact never performed for VISA Engineering. VISA Engineering Pte Ltd created the false records in the General Ledger to substantiate the false claim of expenses. Investigations revealed that the payments were in fact paid to Ong Kah Sut.

The Charges

VISA Engineering Pte Ltd, located in Bukit Batok Crescent, pleaded guilty to two charges of falsifying the company’s General Ledger in the year 2001 with a wilful intent to evade tax. Ong Kah Sut also pleaded guilty to two charges of wilfully with intent to evade tax, assisting the construction firm to evade $19,131.12 in tax in the year 2001. The company and its director had therefore committed offences under Section 96 (1)(d) of the Income Tax Act. The penalty is three times the tax evaded.

Under the Income Tax Act, anyone found guilty of assisting another person to evade tax will similarly be liable to a penalty of three times the tax evaded.