i also don’t believe that her stepping down has got nothing to
do with the huge losses.
Ho Ching
The S$58b plunge
The terrible loss was revealed three days after she quit, fuelling
talk that they’re related; sadly, she’ll not lead the
recovery.
By Seah Chiang Nee, littlespeck.com
Feb 14, 2009
SINGAPORE’S hard-earned reserves, which are tied to
the island state’s global investments, have plunged in
unprecedented proportions over the past year.
In just eight months, the invested portfolio of the state
investment corporation, Temasek, fell by a staggering S$58bil – or
31%.
That it has dropped from S$185bil (RM443.3bil) in March to
S$127bil (RM304.3bil) in November is confirmation of the extreme
pessimism that had been privately spreading among informed citizens
for more than a year.
The government has been reluctant to reveal much about where its
money was placed even in good times, but the dramatic downturn has
increased public pressure for greater openness.
Singaporeans are deeply worried about losing such a big slice of
their collective savings, and it’s not even final yet.
Many people are fearful that they may eventually be asked to
bear a heavier financial burden for it in higher indirect
taxes.
The feared news was announced in Parliament on Tuesday – three
days after Temasek’s powerful CEO, Ho Ching, said she
was leaving the company on Oct 1.
(Ho Ching, wife of the Prime Minister and the world’s eighth
most powerful woman, was instrumental for Singapore’s major
investment decisions during the past six years she was there.)
The company emphasised that her exit had nothing to do with the
losses – but very few people really believe it.
Predictably, the two developments have come as a shock to a
people already facing a terrible recession that’s bleeding jobs by
the week.
The S$58bil loss does not include the foreign bank equities’
sell-down since November, which means the red ink would have
continued to flow.
Neither has it taken into account similar losses in the
republic’s second – and larger – sovereign wealth fund, Government
Investment Corporation (GIC).
It is too early to count their total losses.
Taken together, the global woes and poor investment decisions
could have reduced Singapore’s reserves by more than S$200bil, not
all of which are recoverable.
To be fair, the spectacular losses are caused by the global
meltdown that originated from America’s sub-prime woes, which is
punishing economies – and investments – everywhere, with Singapore
being one of the worst affected.
Kuwait’s Investment Authority has also announced that its
oil-rich sovereign fund had lost US$30.73bil between March and
December last year.
In its own defence, the government here has said its investment
record is better than two main stock indexes.
The leaders have assured the citizens that most of the losses
are on paper, and recoverable when the crisis blows over.
No time frame is mentioned, but Minister Mentor Lee Kuan Yew
talks of 10 to 20 years.
“We went into these investments as a long-term investment – for
up to 30 years” was the rationale behind the 40% invested in the
troubled banking sector.
Not always red ink
One sympathetic writer pointed out that despite Temasek’s poor
performance, its devalued assets of S$127bil last November were
better than the S$90bil in 2004.
This meant that Ho Ching had merely lost back some of the money
that she had made since joining in 2002.
As pressure mounted from the public for information on how badly
their reserves are faring, Lim Hwee Hua, senior minister of state
with the Finance Ministry, finally went to Parliament on Tuesday
with some figures.
The next target could be GIC, which manages the
country’s foreign reserves, estimated at some $550bil
pre-meltdown.
If it loses by a similar 30% as Temasek, it could mean a decline
of about S$170bil.
Observers believe that, in this crisis environment, it is not
possible for any government to remain secretive about losses of
such magnitude for long.
“Secrecy is not good for Singaporeans or the government,”
argued a semi-retired professional.
“In the absence of official news, the populace tends to believe
the worst of rumours, and trust in leaders is affected.”
Compelled by its increasing role as a major global investor –
often in “sensitive” businesses, the Singapore wealth funds have
been opening up their books – slightly – in recent years.
Temasek Holdings under Ho Ching began releasing annual
statements several years ago, albeit without revealing too
much.
The government, however, still adopts a general attitude of
secrecy – or tells the least possible.
Critics say this is untenable in the modern age of
globalisation, especially with the emergence a better-informed
younger generation at home.
Some businessmen I talked to find it hard to understand this
unwillingness to trust their own people and to tell them like it
is.
A friend who grew old with Lee Kuan Yew said: “This was what Lau
(old) Lee would have done in his years, when our problems were
bigger than this.
“Speak frankly about the problems, and say ‘Please, I need your
help. This is what is happening to us, and what you can do’.”
The younger leaders, he added, seem to be interested only in
talking about the good things that they and their political party
can claim credit for – not the bad news.
He is right in one respect, however, when he said that
despite the current debacle, Singapore has enjoyed a good track
record in investing Singaporeans’ savings for many
years.
These are extraordinarily bad times for many
Singaporeans.
But despite the investment bloodbath, their savings
remain awesome, and I have little doubt that, barring more
disasters, these will enable the city to bounce back strongly when
the trouble ends.
I may or may not be around to see it, but I am very sure
that it will happen.
Be careful of what you write here.
You will be labelled as a "despot ass-licking dog" soon.
