I never knew how difficult it was to call in a taxi unless yesterday at around 11:45am. I wanted to go to the airport and thought that I will just call a taxi 15 minutes earlier. Usually I would book a cab but I thought the timing this time is not too bad and I should be able to catch one.
Boy was I wrong. After 30 minutes calling different cab companies, there was no taxis around. The worse thing about the current system is that it will keep you on hold for up to 5 minutes and at the end of this time, simply state that there is no taxis available and drops the line. Worse are the taxi companies that have operator assistance that will take all your particulars and then put you in their automatic queuing system and at the end of a 5 minute wait, tells you that there is no taxi and drops the line.
Eventually, I took a premium taxi service which charges $50 to anywhere in Singapore. The taxi driver then explains to me that this is a common issue esp for those who stay in housing estates. Taxis simply don't want to go into these estates, especially mine in the Northeast area. I also found out from him that he also provides a pickup service from the airport charging $55..... $5 extra for parking him taxi and then, waiting for you in the airport with a placard with your name. Actually, this is quite a good service for those who travel long distance and just want to get back home early.
After my bad experience trying to book a taxi, I looked at various other options including Uber, TaxiMonger and the 2 apps mentioned above. From reading the comments on the internet, I think the issue with 3rd party apps is that there may not be a commitment from the taxi drivers to honour the booking and hence, some users complain that the cabs never arrive. I don't think this solves the issue as it may be even worse if the taxi does not turn up.
Uber is interesting as it ties up with a private hire company here in Singapore and hence, overcomes the issue of driver commitment. However, it is a premium service and can easily cost double or more the flag down rate of a taxi.
My kids asked me once whether it was cheaper for them to take a taxi or to call me to fetch them. I thought that it will be a lot cheaper for me to fetch them. As I was not sure of the answer, I decided to have some fun with the numbers.
Taxis normally charge 22cts for every 400 meters. This means that for a kilometer, they will charge 55cts, assuming that one ignores the flag down price of around $3.20 and the peak hour surcharges of between 25% to 50% of the metered fare.
For cars, the petrol will cost us around $2.30 per litre. The fuel consumption of an average family car is around 10 km per litre. This means that 1 kilometer will cost us around 23ct of petrol. Ignoring the costs of maintaining the car (as this is sunk cost), it appears that it is roughly 50% cheaper for us to drive than to take the taxi.
However, to pick up someone, one has to travel from home to the destination and back to home. This is double the distance a taxi would have to take. So, in actual fact, just comparing the cost of petrol and the distance traveled by car to the cost of the taxi charge for the distance traveled in a taxi, the costs are roughly the same.
Of course, if one then adds up the flag down price of a taxi, it will get a lot more expensive to travel by taxi, especially for shorter distances. However, it is certainly a lot more convenient for the parent to wait for his kids in the comfort of his home than to go out to pick them himself. But like most things in life, there is the human element that cannot be priced in. As such, I still prefer fetching them myself.
But this exercise is certainly interesting as it shows that it is really not that much more expensive taking a taxi than to drive, even if you already have a car at home.
Challenges of the Singapore stock-broking industry
By Edward Meow 9 Jun 2015
Recently, The Economist highlights an important trend that all in the financial services industry must take note if they expect to be around in even five years - the use of technology in the industry. In the local stock broking context, the invasion of borderless internet trading platforms would count as one. Besides the technology threat, there are also other challenges our local stock broking industry faces. I will surmise each of them as below:
1. Competition from non-SGX member internet trading platforms
Our local stock-broking houses were slow in reacting to the threats posed by such foreign internet trading platforms who are not SGX members. Not only are these foreign internet platforms packed with features that our local stock-broking houses do not have, they also charge lower commission rates. It is only in the last few years that member stock-broking houses are spending money on improving their trading platform capabilities, whereas these competitive internet trading platforms had capabilities like stop-loss, trailing stop-loss etc, a decade ago. Furthermore, users can also trade soft & hard commodities, indices, forex, CFD, options - all on one platform. If they have to choose, our younger tech-savyy investors will likely choose such a more capable trading platform. Advisory trading (phone calling your stock-broker) will be used by the older generation who are less tech-savvy, and those who are too busy to key in their own trades. Over time, if our member stock broking houses do not "catch-up" on improving their trading platform to be on par, or even surpass that of these competitive trading platforms, we will all (both member stock-broking houses and their remisiers) lose out. The only solution has to be a holistic one involving all stakeholders of the industry - the SGX, the Government and the investors, both institutional and retail.
So, what should be the position of SGX, MAS and SIAS with regards to such non-SGX member internet trading platforms? It is a difficult position that SGX has, in that it cannot be seen to be stifling Singapore as a financial centre. With the current internet-age, it would indeed be a challenge and near impossible for SGX to keep out such internet trading platforms. The most effective way would be for SGX to work together with member broking houses to introduce trading platforms with better capabilities, and with more products like stock options & indices, and perhaps even commodities and forex. This will make their trading platforms more interesting to local investors and not lose out to the foreign competition. With trading platforms of better capabilities, member broking houses can, and should, compete for international business from other countries, just like what these alternative internet trading platforms are doing in Singapore. This will then ensure the survival of, especially, the local stock broking houses.
Regardless of the fact that we want to make Singapore a vibrant regional financial hub, it is important for MAS to ensure sufficient policing so that our Singaporean investors do not fall into any scams by rogue internet trading platforms. For the retail investors, SIAS needs to move beyond its role as champion to do some due diligence and intelligence work to sieve out and warn retail investors of any potential rogue internet trading platforms.
2. Singapore stock market vs Foreign stock market
If you are trading in the US market, you would have noticed the flurry of activity in this market. There is no denying that the dynamism of foreign markets, like the US, or HK (which has the hinterland support of China), surpasses our Singapore market. With due respect to the Singapore companies listed on SGX, it is sad to say that none of these companies show the promise of innovation that US companies can. Singapore companies only grow organically or geographically, but none like the types of Apple or Microsoft, or recently Tesla, where their stock prices can grow multi-fold due to the value-added of their product innovation. Take Apple for example. During May/June 2007, it was about USD80. It then grew to nearly USD700 in June 2014. In June 2014, it exercised a stock-split of 1 into 7, which brought it to just above USD90. It has now gone up to about USD129. That is a 9 fold increase over a period of 8 years. Clients finding the Singapore market less exciting, are gradually moving to foreign markets, but unfortunately, with more of them slowly shifting to the use of the more capable foreign internet trading platforms mentioned above.
SGX cannot depend on the local stock investing community to attract premium companies to list in Singapore as this community is too small to have any impact. It has to find ways to make the Singapore listed companies accessible to a bigger population of investors worldwide, and not just within Singapore. With a bigger net cast, hopefully there will be more vibrancy, and therefore will attract better quality corporate listings. Otherwise, we will end up in a vicious cycle of low vibrancy, and therefore lower quality corporate listing, and vice-versa. The current initiative by SGX to link up with Taiwan, Japan, and rumoured talks of link up with the Chinese Exchanges, should hopefully move us in this positive direction.
3. Competition of brokerage fees from foreign markets
Brokerage fees in USA are generally lower than ours, and in some cases are fixed ($) on a per trade basis. This encourages big volume trading unlike percentage (%) based brokerage that is the norm in Singapore, where the higher the volume traded, higher is the brokerage cost. But of course, Singapore being a smaller market, it would be unwise for us to follow a fixed value ($) brokerage system as this will lead to lower revenue for the local broking fraternity. Nonetheless, the US brokerage system will certainly attract Singapore investors away from our local market which is seen as less dynamic and with less potential "multi-bagger" stocks. This shift is further aided by the borderless foreign internet trading platforms, together with their lower commission rate. Such a self-perpetuating situation will become worse, unless we break the vicious cycle of low vibrancy as stated in point 2 above. However, our top priority now should not be to implement a similar type of brokerage system as the USA. Only after we are able to attract more transaction volume into our Stock Echange should we then be able to consider fixed value ($) brokerage system.
4. Unhealthy competition between local broking houses
While in the past, the fixed 1% brokerage fee was seen as unduly high, the current, supposedly, market dynamics of competitive brokerage fees is certainly unhealthy for the industry. Local broking houses and remisiers undercut each other. In the end, everybody loses. Revenue for the brokerage houses and remisiers is reduced. Demanding small clients may not get the service they want if the motivation of a remisier is to balance the time he has to spend on such clients versus the returns. The competition is not only between the broking houses, but sometimes also amongst remisiers of the same broking house. This can happen during roadshows, where a client may not reveal immediately that they already have a broker with the same broking house. In order to gain business, the remisier at the roadshow may unwittingly promise a lower commission, thus causing much unhappiness with the client who may think that his/her current broker has not been honest. Most clients expect their brokers to give them the lowest commission rate out-right, not knowing that they may have to meet certain volume criteria before such a low rate can be granted. For the local broking industry to survive, this kind of unhealthy competition has to stop. All stakeholders have to sit down and thrash out a scheme of fixed brokerage rate (%) that is fair to both investors and the stock-brokers. This should certainly not be seen as price-fixing as there are precedents in other cases/industries.
The Singapore stock broking industry is certainly facing many challenges. I would not venture to say that the industry has to innovate or reinvent itself, but rather it is downright very practical things that has to be done by the various responsible parties. Instead of working independently within their narrow scope of self-interest, all concerned parties have to work in consultation and in synergy of each other. If all parties are not united in the objective of improving the situation, the ultimate loser will be the Singapore stock-broking industry and its prominence in Asia, or even in S.E. Asia. China (together with Hong Kong) is already coming up very fast. Indonesia, with a domestic base of 260 million people, can outdo us in S.E. Asia if they put their act together better than us.
SGX has to push and take the lead in all the actions below:
i) Member (especially the local ones) stock broking houses has to invest on improving on the capabilities of their internet trading platforms to ensure that the tech-savvy younger generation investors do not move away to the more attractive non-SGX member foreign internet trading platforms. With their improved trading platforms, the local broking houses should then explore the possibility of attracting overseas investors to trade in the SIngapore stock market.
ii) SGX should explore to include more products that can be traded via the member broking houses' trading platform, e.g. stock options, indices, and possibly commodities futures and forex.
iii) SGX has to work hard on improving the vibrancy of our Singapore stock market through links with other regional and foreign stock exchanges. SGX and the member stock broking houses should also work towards making it easy and simple for overseas investors to trade in our Singapore stocks.
iv) All stakeholders should sit down to thrash out a fixed brokerage (%) scheme which would be fair to both investors and stock-brokers, and which would prevent the unhealthy undercutting. The value-add of remisiers has to be recognised as they not only act as "no basic salary" sales-force, but also bear complete risk of the clients that they acquired. Although there are efforts by some broking houses to introduce cash-deposit trading, a lot of clients still prefer to keep money in their own hands. The contra-players would also not see the advantage of depositing their money with the broking houses. In large countries like China or the USA, it may perhaps make sense to have cash-deposit trading as the population mobility is high, and the risk of bad-debts from open-credit trading in a large continent will be too high, but not in Singapore. The undercutting of commission resulted in very thin commission that has to be shared 60:40 between broking house and remisier respectively. This does not commensurate with the financial resources that the broking house needs for rentals, backroom support, trading platform improvements etc.It also does not commensurate with the high risk that remisiers have to bear in terms of bad-debts. We should unite to gain back our share lost to external forces, but sadly it seems that we are competing even more amongst ourselves for the slowly shrinking piece of cake taken away by such external forces.
NB: The opinion expressed here is the personal opinion of the author, and any mistake made is solely that of the author, and not that of the SRS or its Ex-Co.
Personally I've not tried Uber/GrabTaxi. I find this read a great opportunity to learn about the two from a cabby's POV.
" Jason explains that it depends on his finances for that day. “Both GrabTaxi and Uber don’t deduct any fee for accepting credit cards, so that is fine. However, GrabTaxi takes 2 working days and Uber 3 working days respectively to deposit the funds to our bank account,” he explains.
This can be a big issue if he is cash-strapped, which happens very often. With the daily deduction of his taxi rental, he has to ensure he has sufficient funds.
Even if you are a few hundred meters away, the booking can be taken so quickly before you can get it. But in our trade, every tool is helpful to make a living, but I am not totally reliant on any one tool. "