CNA 3 Nov 07
Prudent to protect sinking funds of town councils: DPM
Wong
By Wong Mun Wai, Channel NewsAsia | Posted: 02 December 2007 1835
hrs
SINGAPORE : Protecting the sinking funds of town councils is
prudent, said Deputy Prime Minister Wong Kan Seng on Sunday.
He said capping the amount town councils can invest in
non-government investment vehicles at 35 percent will protect the
money they have for the future.
Mr Wong made his comments while meeting residents and shopkeepers
at Bishan North Shopping Mall on Sunday.
The new rule by the Ministry of National Development (MND) on
investing town council money kicked in on December 1st.
The aim is to strike a balance between town councils trying to get
a good return on their funds and not taking unnecessary risks with
residents' money.
Mr Wong agreed with this new rule, saying if town councils rundown
sinking funds because of wrong or bad investments, then the money
will not be available for other uses if and when needed.
Inflation hit a 16-year high recently at 3.6 percent and is
expected to hit 4.5 or 5 percent next year.
Government bonds and short-term fixed deposits give a return of
around 1.5 to 3 percent which is lower than the returns from
riskier market investments.
So when asked about inflation eating away the low financial
returns, Mr Wong said inflation is only one factor considered when
investing and protecting sinking funds.
DPM Wong said: "There are world prices due to many reasons and
therefore we have this increase in inflation. But it goes up and
down and we just can't depend on that alone as a measure to decide
how we invest our town council funds. So we cannot look at one spot
and say it may go up to 5 percent, or 4 percent inflation and
therefore that particular decision by MND will not cover the
inflation."
Mr Wong said residents he spoke to did not complain about the price
of hawker centre food going up, although some were concerned about
general food prices having gone up.
The shops are part of the heartlands.
Mr Wong spoke to shopkeepers selling produce like fish and
vegetables, listening to the concerns they face.
Some concerns included higher prices of produce and limited display
areas, said shop owner Mr Ker Yeow Chong, who've been running his
business for more than 15 years.
Other MPs from the Bishan-Toa Payoh GRC also joined Mr Wong on his
Sunday visit. - CNA/ch
It is a timely advice given the volitality of the market.
however, something cross my mind.
1. What is the primary function of the Town Council?
Given that the primary function of the TC is to take care of the
estate, why is it into investment?
2. Who is doing all the investment?
Did the TC employed a professional investment manager for the
investment? If it does, is the return justifiable for the
ROI?
3. Who approved or oversees the investment? the MPs? If an
investment turns sour like that of the Barring, CAO or Sembawang,
who is answerable?