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Pasir Ris-Punggol and Tampines town councils told The Straits
Times yesterday that they are rethinking how best to invest their
funds in the light of the global downturn.
Dr Ahmad Magad, MP and chairman of Pasir Ris-Punggol, said that
his town council is exploring safer financial options that are
'much more protected, which will also mean lower returns'.
Parliament was told on Monday that the Pasir Ris-Punggol Town
Council had invested $4 million, or 2.7 per cent of its total
funds, in financial products linked to the now-bankrupt Lehman
Brothers investment bank.
It was one of eight town councils which had a total of $16
million exposed to various troubled products. These included Lehman
Minibonds and the now worthless Merrill Lynch Jubilee Series 3
LinkEarner Notes.
Dr Ahmad acknowledged that his town council's investment had
caused some unhappiness. It thus decided to move to safer
options.
In addition, the bleak global economic outlook 'means that we
have to think about how best to invest our money', he said.
Likewise, Tampines Town Council chairman Ong Kian Min said he
will discuss with his fund managers what needs to be tweaked in
their investments: 'We will not tell them exactly what to do, as
they are the experts. But it is a good time to discuss our strategy
now, as we constantly do.'
Tampines Town Council has $22 million parked with three fund
managers and had $250,000 invested in Lehman Brothers bonds, which,
like the Minibonds, are also in distress.
Other PAP town councils The Straits Times spoke to said that
they were comfortable with their current levels of investing as
they had taken care to be conservative and prudent. For instance,
Tanjong Pagar Town Council, which had $250,000 in Lehman bonds,
said that it takes a cautious approach.
The fund managers told the council that they invested in the
Lehman product because it was rated very safe earlier this year,
said the council spokesman. About 22 per cent of its funds are
parked with fund managers. These generated $16 million from 2004 to
last year, she added.
A check with the opposition wards showed that Potong Pasir put
funds only in Singapore bonds and cash deposits, and did not employ
a fund manager.
Its latest financial statement showed that it held $2.5 million
in bonds last year, now valued at $2.61 million - a return of about
4 per cent.
Hougang placed 40 per cent of its sinking fund with a fund
manager. This generated 6 per cent a year in the last three years,
said Hougang MP Low Thia Khiang earlier this month.
He did not respond to queries from this newspaper yesterday on
how this was achieved.
That town council investments have been paying off over the
years is something that should not be brushed off, said Mr Inderjit
Singh, chairman of Ang Mo Kio-Yio Chu Kang Town Council.
His town council had $1.5 million exposed to Lehman Brothers
bonds through its fund manager, but it has otherwise been
generating 3 per cent returns a year for three years.
Mr Inderjit said: 'Just one investment out of 30 lost money. We
have made money overall, which is good for the town.'
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rethink their investment? they should stop, not
rethink!!
