By Leong Wee Keat, TODAY | Posted:
12 November 2010 0639 hrs
SINGAPORE: Town council investments, which came
under scrutiny and took a beating during the recent global
financial crisis, have seen values recover in tandem with the
financial markets. And those that invested in toxic structured
products recovered some amounts recently.
The Pasir Ris-Punggol Town Council, which wrote off its $4 million
Minibonds investments in the financial year 2008/09, recovered $2.3
million in February. This "represents a write-back" into its
balance sheet, said chairman Ahmad Magad.
"While we're glad to have recovered part of our Minibonds
investment, we would continue to manage our funds in a prudent
manner," the Member of Parliament wrote in the town council's
annual report.
The Holland-Bukit Panjang Town Council told MediaCorp it had
recovered $1.68 million, or 56 per cent of the $3 million invested
in Minibonds Series 3 Notes, during the last financial year.
As for its $5 million invested in Jubilee Series 3 Link Earner
Notes, the town council said it "lost the full invested sum".
But it made a net investment income of $3.67 million when the
global financial market recovered, said chairman Teo Ho Pin. "The
value of our investment has also recovered to par or above par
value."
The Sembawang Town Council, meanwhile, reported recovering the fair
value loss in its investment income and made $20 million. The Ang
Mo Kio-Yio Chu Kang Town Council achieved a similar rate of return:
6.2 per cent over the 2008/09 financial year.
The town council annual reports were submitted to Parliament on
Sept 28. Some were made available on the town council websites in
recent days, while MediaCorp requested for the others.
Their overall financial positions were healthy and most cited
prudent financial management.
While Hougang recorded a $101,820 deficit in the last financial
year, the rest achieved surpluses between $1.06 million and $7.35
million during the same period.
The Potong Pasir Town Council's $1.06-million operating surplus
boosted its accumulated surplus to about $3 million. "Considering
the size of our estate, the accumulated surplus is substantial,"
chairman Chiam See Tong wrote.
Some town councils flagged financial pressures to residents,
though. Ang Mo Kio-Yio Chu Kang expects maintenance costs to rise
in the future as the town installs more lifts, covered link-ways
and other facilities, wrote chairman Inderjit Singh.
But the annual reports do not indicate if service and conservancy
charges (S&CC) - the primary source of income - will increase.
The town councils cited efforts to keep a lid on operating costs,
with the installation of energy-saving lights as a common
approach.
Arrears management was another area flagged by some town councils.
West Coast, for example, has been "expending much effort in arrears
management and rendering assistance to needy residents".
At the end of the last financial year, it was owed $1.21 million in
arrears.
It has taken steps to recover arrears from residents who are not in
any financial hardship by imposing late payment penalties and
administrative charges and by initiating court action.
Better S&CC collection has helped Hougang to buffer its
operating deficit. These efforts led to a 14-per-cent drop in
arrears compared to the 2008/09 financial year, said town council
chairman Low Thia Khiang.
He attributed its deficit to the demolition of six Housing and
Development Board blocks for estate redevelopment, which meant a
reduction of S&CC collected, and to higher operating costs
charged by suppliers and service vendors.
While financial markets have recovered, town councils stressed they
are being prudent in their investments, considering the markets'
volatility.
"We manage our funds as a diversified portfolio with risks that are
well spread," Holland-Bukit Panjang's Dr Teo told MediaCorp.
"Whilst it's not possible to avoid short-term diminution ... we aim
to provide long-term healthy returns for our residents." -
TODAY