Saturday, May 12, 2012

Risky Systems, Dire Consequences...Part 2

A reader posted this in the comments section of the last article:

Lucky Tan,

can you make this posting and analyse in your future post ?

http://christopherbalding.com/

"The Mess that is Singapore: Part II Explaining the Role of the CPF"

This guy is a higher flyer...

appear in 
http://www.youtube.com/watch?feature=player_embedded&v=Q4tdixdVvKY#!

http://forums.hardwarezone.com.sg/eat-drink-man-woman-16/make-believe-world-temasek-holdings-singapore-inc-3719918-7.html

before sin censor it.

This professor is a expert in SWF, and find something wrong with TH and gic
.



Christopher Balding is a professor in Peking University, HSBC Business School,[Link].
You can read his article in full but I'll summarize it as usual so there is clarity on the issues and questions he asked:

The Mess that is Singapore: Part I Explaining the Debt

1. Most of the public debt issued by Singapore govt consists of money borrowed from the CPF Funds of Singaporeans.

2. Since 1990, the Singapore govt borrowed $250B and has another $262B in budget surpluses, giving a total of of more than $500B.

3. GIC + Temasek do not publish their assets but it is estimated to be roughly $500B.

4. Even if they return 1%, they should have significantly more mone...and if returns are 7% as widely believed, the money should have doubled.

5. What happened to the money? Is it lost or hidden?

The simple answer to this question is the Singapore govt  has never published the total assets of the GIC so we don't know. There is no reason yet to believe anything sinister is going on. Former President Ong tried to get a full list of the assets but was told it is not a simple task. Over the years, there were reports of GIC investing in real estate, commercial properties around the world and those have to be revalued. Its not a mess as Christopher Baling alarmingly claimed but a lack of information.

In his next posting, The Mess that is Singapore: Part II Explaining the Role of the CPF:


"The reason the CPF matters and should concern Singaporeans is simple. The government of Singapore is borrowing money from its citizens through the CPF payed 2.5-4% and investing that money in other assets through GIC and Temasek hoping to earn a higher return. Publicly, GIC and Temasek claimed to have earned 7% and 17% since inception meaning they are earning a comfortable spread above the 2.5-4% they must pay for those funds. If Temasek and GIC earn less than the 2.5-4% they pay to the CPF, the government must essentially subsidize the losses to keep the CPF whole."


This issue has been discussed on my blog. If GIC makes above 2.5% (-4%), it keeps the excess returns. If it makes less than 2.5%, how does it pay the debt owed to CPF/Singaporeans? They would have to collect more taxes or print money to monetize the debt. The other way is to kick the can down the road by delaying CPF withdrawals. 

Countries build up reserves to guard against crisis and financial instability. However, GIC and Temasek's fund are invested in various risk bearing assets that will be affected by crisis - the last crisis they lost $50B. To fund the deficit in the budget due to the jobs credit in the last crisis roughly $4.5B of reserves was used. The size of the reserves are far bigger than what is needed to cushion against crisis - remember if the crisis is very big e.g. local bank failures, etc it is best not to use reserves created from borrowings from CPF to do it.

My main objection to the whole system is the fix returns for CPF account holders who at the end of the day bear the risk if there are investment losses and inflation but get none of the excess returns. The 2nd problem is even basic information on the total assets is not made public by the GIC. Third issue is the size, you can't just keep building and controlling it because a large part of it is paid for by ordinary Singapore taking up high debts for housing. There has to be a limit beyond which the surplus should be used to benefit Singaporeans in more direct ways rather than go into reserves controlled by a small group of elites.

Our contribution to the CPF is extremely high but retirement is still a worry for Singaporeans. This is caused by 2 things - low fixed returns on CPF money and use of CPF for expensive public housing. Both results in flow of money to the GIC to build up govt coffers and causes major retirement problems for ordinary Singaporeans. Many Singaporeans accept the system as it is thinking they can always monetize the homes for retirement (overseas?), it makes they system all the more vulnerable as housing prices get linked to Singapore's ability to retire for poor and lower middle income Singaporeans. The whole system passes the risk to Singaporeans who are already shouldering plenty of risks due to the healthcare system and the lack of social safety nets.

64 comments:

Anonymous said...

It is our national duty to accept low returns on our CPF so that our national reserves will always have huge surplus.

I am so glad that the Lee family and their extended family has been zealous in keeping our reserves safe.

Anonymous said...

If it looks like a duck,
walks like a duck,
quacks like a duck,
it's probably a duck.

Anonymous said...

"The whole system passes the risk to Singaporeans who are already shouldering plenty of risks due to the healthcare system and the lack of social safety nets."
Lucky Tan

So what is the solution?

Vote PAP out and vote WP in?

But does WP even have enough talents to form a Cabinet?

WP can't even exercise proper QC for only 6 MPs, you expect voters to trust them to do that with majority seats in Parliament?

So as you can see, there are no easy solutions.

PAP is thus still the best available, even though PAP make Singaporeans shoulder plenty of risks and may I add, burden and hardships more than PRs and foreigners.

It is all fated lah. As someone had said in comments,only GOd can solve these problems for Singaporeans.

Anonymous said...

God make PAP the best available party to rule Singapore so far.

So only God can provide a better alternative to PAP for Singaporeans in future.

Anonymous said...

Any Singaporeans, including the Singapore Hougang residents, have to ask themselves these questions:

Have we lost any job to foreigners during the last 10 years?

Have any of our job application been rejected because the job offer was given to foreigners in the last 10 years?

Are our salary being depressed as bosses threaten that we can be replaced by cheap foreigners?

Are we a minority in the company or organization we are working at as a result of large number of foreigners working there?

Are we being bullied by the foreigners in our workplace?

Do we feel very insecure that we will lose our job and will be replaced by cheap foreigners when company or organization cut cost?

If Singaporean and Singapore Hougang residents answer "YES" to any of the above questions, then we have already knew that Singapore has already been flooded by tsunami of foreigners.

The miserable life of Singaporeans and Singapore Hougang residents is the result of these tsunami of foreigners flooding Singapore.

Isn't Singapore belong to Singaporeans?
Then who allow the tsunami of foreigners to flood Singapore?

It is the PAP who has opened the floodgate to permit the tsunami of foreigners to flood Singapore.

Singaporeans and Singapore Hougang residents must know that our miserable lives is the mess that the PAP has created for us.

Anonymous said...

WP is only good for Hougang SMC and Aljunied GRC.

I voted WP in Aljunied in GE 2011. Cannot give PAP 100% seats, right?

Some more after that, The Town Council under WP reduce my HDB flat conservancy charges. Very good, right?

But also cannot give WP and the opposition 93% seats lah. That will be no good lah, seriously speaking.

Amused said...

"The simple answer to this question is the Singapore govt has never published the total assets of the GIC so we don't know. There is no reason yet to believe anything sinister is going on. Former President Ong tried to get a full list of the assets but was told it is not a simple task. Over the years, there were reports of GIC investing in real estate, commercial properties around the world and those have to be revalued. Its not a mess as Christopher Baling alarmingly claimed but a lack of information."

I think you are being too kind or naive here. What happened to Former President Ong after he tried to perform his duty as a guardian of the nation’s reserve? He wasn’t treated very well, was he?

You are sidestepping the issue by attributing to simple lack of information and nothing sinister. I don’t even know where to start. What if this is another Madoff? We won’t know until it blows up, do we?

Given the fact that you are losing CPF money in real term and the fact that inflation has been persistently high in this country, something is amiss. Countries with huge reserves such as Japan and Germany don’t experience this level of inflation. Perhaps Singapore is unique, as PAP likes to say.

Anonymous said...

"Given the fact that you are losing CPF money in real term and the fact that inflation has been persistently high in this country, something is amiss."
Amused 12/5/12 11:42

Something is amiss? Then so be it lah.

It is not as if PAP will be voted out or there are mass protests in the streets like what happened in other countries.

Amused said...

This is quoted from Christopher Balding blog’s entry - The Make Believe World of Temasek Holdings and Singapore, Inc.:

“For instance, over the same time period that Temasek claims to have been earning 17% annually, other Singaporean indexes returned 7.8%. Major foreign stock markets fared no better, returning between 7-8% over the same time period. Put another way, Temasek claims that not only did they outperform the Singaporean and all other major stock markets, on average they performed nearly three times better every year for nearly 40 years.”

I agree with Balding that the 17% return figure is dubious. Has it ever been audited and confirmed by an independent accounting firm? If not, how can anyone, even LKY, believe the validity of the claim? Otherwise, I would like to know who the Warren Buffett of Singapore is. You should not have to worry about your retirement if this is true.

Anonymous said...

"Otherwise, I would like to know who the Warren Buffett of Singapore is."
Amused 12/5/12 12:11

In Singapore no need to have a Warren Buffett who always win or win most of the time in investments or stock market.

We already have a "Warren Buffett" who wins most of the time. During elections, that is.

Isn't that more important than winning anything else?

Lucky Tan said...

Amuse
Temasek growth figures and claims re not so difficult to figure because state assets were transferred to it at an unknown valuation and later repriced by the market...also there was rapid growth in the singapore economy in the 80s and 90s so those assets may have appreciated for a particular period. Some strategic assets like power stations were moved to Temasek portforlio at unknown valuations and later sold to foreigners for billions perhaps helping it to book huge returns.

Anonymous said...

All the more reasons to be concerned over the book juggling at such a massive scale. In the meanwhile, the super talents running them continue to milk millions for the camouflage while retirees have their CPF withdrawals postponed.

Amused said...

Lucky,

What you are saying about the internal transfer is pure accounting gimmick, not real investment return. It’s like Saudi Arabia claiming they are investment geniuses because of the gain in valuation in oil reserve when prices shoot up.

Anonymous said...

What you wrote is a severe understatement. The bottom-line of Balding's article is:

GIC and Temasek have squandered the CPF and budget surplus collected over the last 30 years.

CPF is your retirement money. Budget surplus comes from you paying the government $500,000 for a flat that costs the government $40,000 to build or $100,000 for a worthless piece of paper so that you may own a car.

Every cent that Temasek and GIC lost is your money. That's why most of you are living hand to mouth today despite working so hard your entire life.

This was already observed more than 10 years ago:

http://www.singapore-window.org/sw02/020518nz.htm

The wealth of an entire nation had gone down the drain -- all thanks to a despot and his daughter-in-law.

Anonymous said...

"... retirees have their CPF withdrawals postponed."
Anon 12/5/12 13:09

That's why these retires cannot rely too much on the money in their CPF account, but rather in their bank account.

If they are talented, having lots of money in their bank account on retirement should not be an issue because it is achievable and well within their will and control.

So no use making an issue of delayed CPF withdrawals, because it is beyond one's control. Not even by PAP govt, but by the 60% who voted PAP to be govt!

Amused said...

In its early days, the government practically "confiscated" land from private property owners by paying pittance on the dollar. Perhaps that explains some of its huge return in land holding. Similarly, it probably made huge gains in privatizing state monopolies. These are just accounting gimmick and nothing to brag about.

By being opaque, they are just inviting speculations. It's better for them to come clean and be transparent.

Anonymous said...

WP told you the hard truth

Anonymous said...

The Reserves has been much boasted by the Rulers to claim credit for outperforming themselves.
It was also purposely or otherwise much discussed by Sinkies after the Late President Ong Teng Cheong brought into focus.

Me, as a lay citizen, just cannot be bothered about it. THE REASON is that, even if it is TEN TIMES the present amount, me stands to gain nothing from it. At least, that was the case since me heard about the mention of surpluses and reserves. On the contrary, COST OF LIVING IS RISING ALL THE TIME.

Maybe, me not well educated, so does not understand how reserves and surpluses affects us Sinkies. Someone may like to generously tell us, the lowly educated, how the reserves and surpluses affect our living.

patriot

Anonymous said...

Li Con Yu is a devil. After his death, his ashes will be placed in the same urn as his wife. He will be reborn in his next life a Siamese twin so badly joined that no power saw or medical technology can separate. If his ashes are kept separately, he will be the first Siamese triplet to be reborn.

Anonymous said...

Too many things can and will go wrong. In a system as open as Australia, there are so much cheats and frauds by politicians. In a system as close as Singapore, the risk of cheats, frauds, corruptions and all sorts of crimes are real so. We should not and must not allow the papist Leegime to continue to managed over $1 trillion of our money behind closed doors. The risks is just too great. Singaporeans must pressure the papist Leegime to change. We deserve better.

DanielXX said...

Actually the professor doesn't really understand the system. The govt debt is not really that scary because it is similar to Japan's: the debt is SGD-denominated and funded by locals (through their CPF) so there is no danger of an Asian Financial Crisis type crisis where the debt was foreign-denominated.

However if you were to look at the entire funding system, essentially it looks like an insurance or banking operation where money is "borrowed" from insured / depositors to invest and the state earns the spread. The main risk is that investment gain is not enough to cover the promised interest, though clearly there're some levers that can be used to change the goalposts (eg. raising withdrawal age).

Anonymous said...

"There is no reason yet to believe anything sinister is going on....Over the years, there were reports of GIC investing in real estate, commercial properties around the world and those have to be revalued. Its not a mess as Christopher Baling alarmingly claimed but a lack of information. "

I do not agree to this. It is also self-conflicting. If nothing will cause alarm bells ringing, why the secrecy that even President Ong couldn't know how much we have? Revaluing does not take decades to do which was what President Ong was advised would take.

We are all stakeholders on this matter. For a long time many of us speculated that our government has been losing and squirreling away people's money or even worse, running a ponzi scheme and as CPF is compulsory we can't stop this. Finally someone has done the number crunching to tell us what we have all along been suspecting.

The government has chosen to remain non-transparent and this only serves to fuel speculation. The policies and outrageous statements made by our ministers have shown that they are a bunch of self-serving incompetent baboons who will do anything to keep themselves in power. More of us have finally been able to see through their wayang.

I bet that among the 40% many of us are hardcore anti-PAP. Misplaced trust is an understatement. Trusting that there's undeclared reserves by this government is to believe that we're living like the Swiss now as promised and all the problems we have now is just a mirage when the non-existence of undeclared reserves may not be far from the truth.

Anonymous said...

When HDB flats become expensive, a lot of "peasants" CPF will be used to pay for the flat over a life time of working.

So most "peasants" will not have much left in their CPF at retirement anyway, right?

And if there is not much to pay back, what's there to worry whether got enough money in CPF to pay back at retirement?

Anonymous said...

Our personal "reserves" have become very high because HDB flats now has high demand and hence high price.

But sorry lah. You cannot spend your HDB "reserves" by using it to buy food or for daily expenses.

Unless govt allow us to pitch tents to live in East Coast Park or some other Parks.

Anonymous said...

Why does Desmond Choo want to represent Hougang people in Parliament?

Will he ask questions like;

1.When will we get back our CPF money in full?

2.How much money did Temasek and GIC lose in the 2008 financial crisis?

Anonymous said...

you don't understand what christopher's paper is saying

Anonymous said...

You mean Christopher knows better about the CPF than the PAP knows?

Or someone knows better about your long time spouse than you know?

Anonymous said...

IF TH and GIC claim to be good in generating returns, what happens to the profits? They never get trickle back to the citizens with the meagre yield given by CPF. If the MIWs transferred these massive profits as their private wealth in some offshore banks, no citizen will be wiser considering how untransparent both TL and GIC are with their accounts. The more likely reason is that both sovereign funds have continually been making massive investment losses at the expense of the citizens. This explains the low yield for our CPF compared to Malaysia. Our indirect taxes, COE, maid levies, ERP, profits from our expensive HDB flats, land sales, etc are more than enough to cover the cost of our expanding infrastructure, the Civil Service, our education system, defence and police force and the high pay of the Ministers.

Anonymous said...

"Our indirect taxes, COE, maid levies, ERP, profits from our expensive HDB flats, land sales, etc are more than enough to cover the cost of our expanding infrastructure, the Civil Service, our education system, defence and police force and the high pay of the Ministers."
Anon 13/5/12 09:04

The opposition MPs should ask in Parliament whether this is true.

Hope these opposition MPs take note of this post. We are doing some homework for them.

Anonymous said...

//This is caused by 2 things - low fixed returns on CPF money and use of CPF for expensive public housing. Both results in flow of money to the GIC to build up govt coffers and causes major retirement problems for ordinary Singaporeans. Many Singaporeans accept the system as it is thinking they can always monetize the homes for retirement (overseas?), it makes they system all the more vulnerable as housing prices get linked to Singapore's ability to retire for poor and lower middle income Singaporeans.//

On top of allowing private home owners to own resale hdb (investment after seeking permission), another side effect if that foreigners (PRs) who are allowed to purchase resale would capitalize their monthly rental expenditure instead thus bidding up & inflating the price of resale which gets filtered down to new houses. Once they leave, they will sell off to live comfortably in their home countries while the higher base price get locked into whole system here.

Anonymous said...

"Once they leave, they will sell off to live comfortably in their home countries while the higher base price get locked into whole system here."
Anon 13/5/12 11:31

But this will contribute to GDP growth, right?

And ministers' pay and bonuses are pegged to GDP growth, right?

Some more 60% voters are OK with it, right?

So what's the problem?

Anonymous said...

Will rising property prices contribute to GDP growth?

If this is a stupid question, pardon me because I am a layman, not economist.

Anonymous said...

GIC and TH use our CPF as cheap money. When they make a profit, they skim off the profit. When they make a mega loss, it becomes our problem as CPFB quietly tweaks the CPF system to withhold payouts to Singaporeans or resort to cash confiscation policies like Medisave and CPF Life!

Anonymous said...

GIC and TH use our CPF as cheap money. When they make a profit, they skim off the profit. When they make a mega loss, it becomes our problem as CPFB quietly tweaks the CPF system to withhold payouts to Singaporeans or resort to cash confiscation policies like Medisave and CPF Life!

Anonymous said...

mandarin speaking are the supporters.

followed by melayu.

Anonymous said...

//But this will contribute to GDP growth, right?

And ministers' pay and bonuses are pegged to GDP growth, right?

Some more 60% voters are OK with it, right?

So what's the problem?//

That we know about the pegging of their peformance (or its presumed good performance) to gdp growth - like saying that the total increased consumption of 4 persons from 3 persons is equal to your own perforance has been improved by 33% (4/3 less 100%).

About the 60%, of course no problem for them. But why should you care if you are the other 40% who still have to make & defend your own decision.

Anonymous said...

//Temasek growth figures and claims re not so difficult to figure because state assets were transferred to it at an unknown valuation and later repriced by the market...also there was rapid growth in the singapore economy in the 80s and 90s so those assets may have appreciated for a particular period. Some strategic assets like power stations were moved to Temasek portforlio at unknown valuations and later sold to foreigners for billions perhaps helping it to book huge returns.//

Hahahaha. I wonder whether others are getting your hints over this twisted merry go round internal valuation and pricing and returns with its rent-seeking approach. Hahahahaha .......

Anonymous said...

All politicians in this world are there for themselves and not for their own people. Singapore politicians are not alone. If you try to be Jesus like, you will be crucifixed. This world is blind and full of sins.

Anonymous said...

60% people voted for pap probably voted because there is no other better option and not because they do not sin.

Din said...

We need to always bear in mind that Charles Goodyear decided not to become CEO of TH in 2009. Why till today is there no new CEO named to take over?

LHL now asking WP to give full and proper account of what happened to Yaw.

Perhaps LHL would like to give full and proper account of TH and GIC!!

Anonymous said...

Depressing after reading all these... E especially when I recall the fb conversation among frens, one of whom was saying she was gonna buy a car for her daughter who recently passed her driving. this fren emigrated to Canada 10 years ago and is working admin support in a small firm.

For whom do we toil in Singapore? Our standard of living is so low for the same kind of work in other countries...

Lion Hearted said...

This is very much your home as it is mine.

We were born here.
We schooled here.
We work here.

This is our home,
and no one is going to
make me leave.

Not a politician.
Not a foreigner
Not an elite
Not a capitalist

Understand this:

I will fight for my home, if

It means voting out politicians
It means reducing foreign workers
It means shaming elites
It means taxing capitalists

I am Singapore, Are you?

Ng Eng Hou said...

It is precisely due to this reason that many Singaporeans rather speculate on properties rather than let the government holds onto their CPF.

Personally I feel very uncomfortable and very suspicious that the government makes it more and more difficult for people to take out their CPF after they retire and this happens in the light of various high profile losses they incurred in their investments. This makes me wonder the real reason for making things difficult for us to withdraw and keep holding on to our CPF is probably they may not have enough to meet the withdraw if more and more retirees take all their money in the future.

Why is all these not brought up in the parliament by our Opposition MPs?

This is grave disregard for our basic human rights to our own money!

Anonymous said...

In the darkness of secrecy, sinister and evil in every shape shall have full swing.

Anonymous said...

"Why is all these not brought up in the parliament by our Opposition MPs?"

Good question.
I often wonder myself.

But then again, are Singaporeans willing to stand up and support our loyal Opposition politicians?

Or are Singaporeans so brainwashed, that they think like PAP.
Always voting only for politicians who have high academic qualifications.
Without realizing that these scholars have all become dependent on government handouts.
And will not jeopardize their positions to become opposition politicians.

Anonymous said...

Ng Eng Hou,

hey for once, can you stop been sex-craze LOL LOL ... why all your link refer to sex and love stuff ? Without finding what happen to CPF, how do we going to have lasting love and sex ? LOL

If you want love, go geyland and find aunt, and make sure you validate their IC that she is above 18. You know, in Singapore, the city of possibilities, you never known.

Anonymous said...

It has not been brought up by the opposition MPs because... what the professor is saying in his articles are not correct. You can see what has been discussed in the comments.

Personally, I think the Temasek and GIC setup is ingenious because it generates an additional source of revenue for the government. The government would never have had enough money for Workfare and other stuff if not for the investments. Im not bullcrapping, you can see the past budget papers for yourself.

So I would rather ask the question, are the opposition parties able to come up with something better than the PAP?

Anonymous said...

Yes and it answers your question about where your CPF money has gone. It has been invested, and the returns have gone back to the government to spend on subsidies, as well as giving you that interest rate.

Anonymous said...

""""So I would rather ask the question, are the opposition parties able to come up with something better than the PAP?""""

And how would you ever know if they are not yet the government.

What is so ingenious if the galvanishing of funds is just another form of taxation, whether direct or indirect. Every country does it in their own ways. Only most of our own country men are daft not to see it and have been thus fittingly labelled & chided as such "DAFT".

Anonymous said...

Yes, every country taxes its citizen, but what is our tax rate compared to other countries? If you say in terms of income tax, we have one of the lowest income taxes.

If you talk about GST, we also have relatively low GST rates.

Then what about CPF? Is it really tax when you can use it to buy your house, or invest in stocks with it?

Then you tell me which country takes the spare cash to invest so that we can enjoy lower taxes?

Anonymous said...

Maybe the high rate of return is achieved like this?
Maybe for e.g. government sells an asset like a phone company to a sovereign fund at an "agreed" price.
But not subject to an open tender.

Maybe sovereign fund then does an IPO on the phone company a few years later during a stock market bull run.
Phone company is then publicly listed at a price premium to original purchase price from the government.

See. Maybe it is as easy as "Learning ABC" in Australia? No?

Anonymous said...

No one will be able to unravel the system that this party has devised.

The intricacies are so delicate that any attempt will cause a tremendous chain reaction.

The system is unrivaled and the best alternative is just to tweak it.
That cannot be done because all the oppositions and lay people cannot even understand it!

Nothing will change.

Anonymous said...

What so risky? What so dire?

And for who? The PAP? The 60%? The 40%? The FTs?

Anonymous said...

The good professor's research note confirms what we all have been hearing all these years. The loud sucking noise is from the big sucking machine. The sucking from the machine is effective. But, not what it does with juices sucked (ie. investments). The public figures don't tally.

What the professor is not saying is whether the sucking is still going on and at a louder pace (I can still hear it in my sleep); whether the juices sucked are still there or frittered away (he provided a hint in his research note - "Mr Madoff Goes to Singapore"); whether this can be sustained without dire consequences (that is why there need more FTs to feed the sucking machine); this state of affairs is appalling (he is only human).

Anonymous said...

"Personally, I think the Temasek and GIC setup is ingenious because it generates an additional source of revenue for the government. The government would never have had enough money for Workfare and other stuff if not for the investments. Im not bullcrapping, you can see the past budget papers for yourself."

Can you please stop your nonsense ? govt can afford to lose $100 billions from TH and GIC but cannot afford workfare and infrastructure ? How many Sport Hub can it build if the hub is $2 billions in cost ?

Anonymous said...

//Yes, every country taxes its citizen, but what is our tax rate compared to other countries? If you say in terms of income tax, we have one of the lowest income taxes.

If you talk about GST, we also have relatively low GST rates.

Then what about CPF? Is it really tax when you can use it to buy your house, or invest in stocks with it?//

Relatively low gst & corporate tax ? Yes, these are the visible categories. How about indirect taxes e.g cars, petrol, properties, utilities, etc ? Even PRs are starting to complain now about the high rental.

Buying house ? How to encash it if it is locked into the only property that you need to live (for most average people) ? In fact, most of the cpf money will go into servicing the high price (locked up) of housing with little left if you are an average worker.

Talking about stocks, maybe you will believe in these bullshits ? The only people really benefiting are the first issuers, the rest are just playing poker with it among one another.

Anonymous said...

Some bootlickers get to benefit immensely from the System such that we will find them singing praises for it here.

Some are simply just fearful if the boat is being knock too hard, it will sink and they will drown. They do not know that many have not catch the boat and are left behind. These are the selfish every man to him/herself kind. So, Sin does have a fair amount of fair-weather folks who will die die support the incumbent policy makers.

Anonymous said...

I think it is ironical that when the aim of CPF is to provide at least some safety net for our retirement, yet the biggest and almost certain risk we'll face is inflation that diminish our savings. Shouldn't our savings be indexed to the inflation rate at least?

The said...

/// I agree with Balding that the 17% return figure is dubious. Has it ever been audited and confirmed by an independent accounting firm? If not, how can anyone, even LKY, believe the validity of the claim? ///

I think the 17% long-term return is correct. If you look at Temasek's returns over the years, the huge spike was due to the listing of SingTel. The original investment was probably tens or hundreds of millions, but the market cap now is $50 billion. So, yes, SingTel single-handedly accounted for the superior return. Look at the return chart of pre-SingTel and post-SingTel listing and you will understand.

The other point is that the assets of our SWFs are grossly understated. The gold holdings are probably at historical costs. GIC's assets are stated as "well over US$100bn." Now, tell me, what does that mean? US$110bn? US$200bn? US$1,000bn? No one has a clue except the insiders and they are not telling.

I don't think they are fudging the figures. I think it is just that they are not transparent and disclose only the bare minimum.

Anonymous said...

"
I think the 17% long-term return is correct. If you look at Temasek's returns over the years, the huge spike was due to the listing of SingTel. The original investment was probably tens or hundreds of millions, but the market cap now is $50 billion. So, yes, SingTel single-handedly accounted for the superior return. Look at the return chart of pre-SingTel and post-SingTel listing and you will understand."

Please throw your smokescreen somewhere. chris has already answer this.

Chris answer:

Both of your points while technically true do nothing but obscure the real issues about their investment returns. Here you can find their 10 years returns:
http://www.temasek.com.sg/investorrelations/portfolioperformance
They are listed in SGD terms for the 10 years ending March 2011 as 9%. I assume that their 22% is based on investments they made post 2002. Given that those investments comprise a small amount of their portfolio, that 22% really doesn’t mean much. It should also be noted that this 9% is right in line with the broader market of Singapore and Asia Pacific. In other words, this 9% isn’t the result of Temasek genius but rather market growth.

Concerning your second point, don’t you think it seems odd that when we can observe their portfolio, it returns over the long run very very close to the market average. However, when we cannot observe their returns and internal valuations, given their own private equity, their returns are off the charts amazing. In other words, when we track their known holdings in public markets, their returns are absolutely nothing special. When we can’t observe their returns, Temasek says: trust us, our returns are amazing? I would be a little suspicious….but that’s just me.

Anonymous said...

////I don't think they are fudging the figures. I think it is just that they are not transparent and disclose only the bare minimum.////

Perhaps they have some secret proprietory strategy guaranteed for longggggggggg term success. Only daft singaporeans believe in continuing to service the high rent-seeking costs (no nigerian scams) on top of the hugeeeeeee successful returns (i don't know for whose utilisation the huge returns is accumulated if it is really there).

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Inmanzieo said...

Amuse Temasek growth figures and claims re not so difficult to figure because state assets were transferred to it at an unknown valuation and later repriced by the market...also there was rapid growth in the singapore economy in the 80s and 90s so those assets may have appreciated for a particular period. Some strategic assets like power stations were moved to Temasek portforlio at unknown valuations and later sold to foreigners for billions perhaps helping it to book huge returns.

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