TR EMERITUS

For those who have been following the public discussion on the CPF schemes and how it should be tweaked into a better system must be very assured of how good the improved version 1.01 would be, or must be. The experts have them all worked out. The new system would be carefully structured and calibrated to apportion the CPF savings for retirement, for medical, for emergencies, for sudden short of funds, and for the savers to retire comfortably with no worries. I would not hazard to guess how much one would need to put into the CPF to have peace of mind and no financial worries in the golden years. And it would likely have to prepare the people to save enough to live till 100 years. All this sounds so good. The main assumption is that the people can afford to save all the money they need to save. Question, what about those who cannot afford to save? What about those who don’t even have enough to meet their daily needs? There is also this tussle between saving enough to retire and live comfortably or a scheme that treat the CPF as one of many other provisions for old age, and that a compulsory scheme should only dictate one to provide for the minimum or basic needs. Even the MediShield Life which I thought was on the right track in providing for the basic coverage, there are people, rich people, who wanted the MediShield Life to provide for B1. If this is an upgrade for those who are able to pay for more, it is fair. If this is used by the rich for their rich needs, and used as the premise for computing the premiums for all, then the not so rich would end up sharing the cost of the rich. I still think that such compulsory schemes should be designed to cater for the lowest denominator, the basics while the extras should be an options for those who demand for them and able to pay for them. Do not make the poor pay for the fancies of the rich in a public compulsory scheme. And the CPF must not be thinking of becoming the only means of savings and thus must be loaded up for a comfy retirement for the rich. People have many other ways to provide for their retirement and CPF is not the only way. Do not impose a savings schemes on the people that cannot afford to have one. And do not make the CPF the mother of all savings schemes to provide for everything under the sky. Not many can afford such a comprehensive and rich scheme, or need such a scheme. Many would rely on family support for their golden years and even regard the CPF as superfluous. There are many roads leading to Rome.   Chua Chin Leng aka redbean * The writer blogs at http://mysingaporenew.blogspot.com    Read More →

The following is a KEY extract of what was reported on CNA whereby Deputy Prime Minister and Minister of Finance has replied Roy Ngerng, who attended the forum, asked DPM Tharman several questions, including whether Temasek Holdings had managed CPF monies prior to the establishment of GIC and why GIC did not know if it was investing CPF funds. A full of transcript of their exchange is HERE. There are a few contradictory and nonsensical points in Tharman's reply and I expect political parties to point them out in this important National debate over CPF issue. Tharman has basically contradicted himself a couple of times in his reply as well as obfuscated the primary issue of how our CPF money is managed and who is supposed to be responsible for our CPF money. He is basically saying, we have your money, put it somewhere call GIC but everybody should pretend it doesn't exist there! The first OBVIOUS NONSENSICAL CONTRADICTION put up by Tharman in his effort to disassociate CPF from Temasek is that prior to 1992 CPF was used for investment in Infrastructure and Temasek was set up by putting together a few companies set up by PAP government without injection of CPF money. First of all, assets in these companies Didnt just pop up from nowhere. Secondly, most of these companies are companies with massive infrastructure built into them! Eg Singtel with communication infrastructure, Singapore Power, PSA with massive port infrastructure ...etc. Thus Tharman just contradicts himself in such spectacular way because he has just said CPF was used to invest in these infrastructure! So make no mistake about it. The very existence of Temasek Holdings depended on our CPF monies invested in these infrastructure in the early days. Without our citizens CPF there can be no Temasek Holdings. It is just counter-intuitive for Tharman to suggest that all our CPF was SPENT instead of INVESTED somewhere because it would mean PAP was very irresponsible because how would PAP government REPAY our CPF monies if it did not invest in something that generated return? The second contradiction comes obvious on his explanation of "how CPF money is being invested". In this part, there are DOUBLE CONTRADICTIONS. In his first part, he tried to give the impression that CPF has nothing to do with Temasek because it was used by PAP government to use in infrastructure construction. The truth is, although the PAP government is allowed to use CPF for building up of infrastructure, it doesn't necessary mean that ALL CPF has been used for that purpose. This is especially so when there were budget surpluses over those years. It would mean that some of our CPF had to be managed and invested somewhere else via MAS! Thus, Tharman said that prior to the formation of GIC (1981), MAS was the one which managed the CPF as part of the National Reserves. MAS was formed in 1971 while Temasek Holdings was incorporated in 1974. Prior to the formation of MAS, all those GLCs set up prior to the formation of Temasek Holdings, were directly managed by MAS! Thus we can only conclude that part, if not all, of the CPF were used to create these GLCs which subsequently transferred to Temasek Holdings. Furthermore, it is not entirely accurate to say that Temasek Holdings only manages funds that were invested in these initial number of GLCs. Throughout the decades, Temasek Holdings have received additional injections of funds periodically, with the recent injection of $5 billions only a few years ago! Where do these monies come from? The National Reserves which includes our CPF monies transferred via the issuance of government bonds! The Third nonsensical contradiction of Tharman lies in the explanation of GIC. Tharman claims that GIC was formed because they wanted to invest CPF into "longer term" assets. Pray tell, Temasek's investment isn't "long term" in any sense? The formation of GIC is for solving a few STRATEGIC problems. Temasek back then mainly managed the GLCs which were basically local entities. It is deemed inadequate for our reserves to be invested only in Singapore companies and a "foreign investment" arm has to be catered for. Furthermore, in the event of any invasion like what happened to Kuwait which was invaded by Iraq, money invested in Singapore would be trapped and rendered "captured" by enemy forces while money invested overseas could be used to pay foreign powers like USA to help us to fight back and regain our land in Singapore. This was what happened Kuwait whereby it was said to pay USA over US$300 Billions for Desert Storm Operations. The most absurd contradictory assertion made by Tharman is that GIC is formed so to invest CPF along with other Government reserves for longer terms but when explaining whether CPF is managed by GIC, he did a spectacular UP turn and say that GIC did not manage CPF but Government reserves or assets which just happened to include CPF! Tharman is trying to obfuscate the issue here. We just want to know whether CPF is invested in Temasek, GIC or both. Why would PAP government refuse to acknowledge any of these? The reason, my fellow Singaporeans, is that they DO NOT WANT YOU TO THINK THAT YOUR MONEY HAS ANYTHING TO DO WITH GIC or Temasek so that YOU WILL NOT THINK ABOUT the OBSCENE amount of money they have earned by utilizing your money to invest in these two entities, while giving you pittance return of 2.5% or 4%! They cannot continue to claim how superb their brains are in making good investment returns from Temasek and GIC without making you angry that you are not benefiting from all these even though your CPF are involved in these investment. That's the crux of the matter! Tharman's reply on whether GIC knows they are managing CPF money has in fact CHANGED from GIC's initial stance that "it does not know" whether they are managing CPF money. This is after we have exposed the fact that Tharman himself, along with the Prime Minister, are sitting on the Board of GIC! If they don't know, who know? Now he has changed tune, just saying that GIC will "disregard" whether CPF was in fact within the government funds it is managing! This flipping of prata is really great! He further claims that GIC should not view itself as investing CPF money only else it would have very different investment strategy which will not enable it to pay CPF members the current amount of return! For goodness sake, at current situation, CPF members DIDN'T benefit from higher return which GIC has achieved and thus, what difference does it make for us? It just means that by disregarding the fact that CPF is part of these government fund, GIC is taking MORE RISK than it should at the expense of CPF members? i.e. taking more risk, earning higher returns but not giving them to CPF members? What is Tharman trying to say here? Furthermore, is Tharman trying to say that GIC is actually such a lousy investment vehicle as compared to other funds in the world that it could only garner an average of 5% return over the 10 or 20 years even when it is taking more risk than it should, assuming it is investing only CPF funds? The truth is, GIC can and should invest in different portfolios of differential risks. It could take into account of CPF funds is within the assets entrusted to it and invested accordingly to the desire risk portfolio adhered to it. It could have allowed CPF members to invest directly into GIC with directed differential risk portfolios. And this is WHAT PROFESSIONAL fund managers would do! The more I listen to Tharman's nonsensical reply, the more I get worried! As I have illustrated in my previous post on CPF, if you put coffee powder into the water along with the milk (budget surpluses) and sugar (land sales) to make coffee, you just cannot claim that there is no coffee powder in the coffee you made. Any coffee (or funds) given (or injected) into Temasek or GIC via this coffee mixer (Government Reserves) must contain a certain percentage of coffee powder in it! Thus Tharman's claim that Temasek doesn't have CPF money is absolutely nonsensical as we know money has been injected into Temasek throughout the decades using this common fund called Main Reserves. It is even more nonsensical to claim that GIC should disregard the fact that CPF is in the funds it is managing. Whether it is Government Funds derived from Land Sales (Sugar), Budget Surplus (Milk) or simply CPF, THEY ARE ALL LONG TERM entities and that is precisely the reason why they are ALL invested in GIC. The risk profile of these entities should be more or less the same! The only problem is that GIC is UNDER-PERFORMING as compared to other pension funds or sovereign funds! People are getting 6% to 8% over the 20 years period while GIC is just getting merely 5%! And even with that, GIC is not giving FAIR RETURN to CPF and in fact, acting like a parasite, creaming off the rightful returns and gave back only 2.5% or 4% to CPF holders! That's the crux of the matter. The truth is, for any sovereign fund or National Pension Fund, there will be a few important components. If you look at the Japanese National Pension Fund, most of it has been invested in LOCAL equities to reduce the foreign exchange risks. That may not be a good idea for a small market like Singapore with a huge amount of funds but at the very least, PAP should acknowledge the fact that Temasek has indeed utilized part of CPF money in its foundation years as well as the periodical injections of money into it. Temasek should be the "local investment" vehicle for CPF so to reduce the huge amount of foreign exchange risks, especially so when we are maintaining a strong Singapore Dollar as our international monetary policy. Although it is strategic for us to invest in foreign land via GIC, but we must also be mindful of the great foreign exchange risks we face, as seen in the continuous weakening of US dollars against Singapore Dollars. Thus, it is TOTALLY UNPROFESSIONAL for Tharman and PAP to just focus ALL our CPF funds in GIC! Tharman, it is only PROFESSIONAL to diversify our CPF money into investment LOCAL and FOREIGN entities. Please stop your nonsensical statements here! . Goh Meng Seng *The writer blogs at http://singaporealternatives.blogspot.ca/  Read More →

The rustic Bottle Tree Park in Yishun will be closed next month as most businesses there said they were not able to come to an agreement on rent with the new operator, Chinese company Fullshare Group. Located just opposite Yishun Stadium, the park is renowned for its kampung-like atmosphere. Apart from its interestingly shaped bottle trees, the place has ponds for fishing, a seafood restaurant and paintball facilities, among others. However, all the businesses at the park will have to vacate by August 17. Kang Weng Sang of Bottle Tree Prawn Pond, said, "$30,000 - it's not a fixed rate, you have to pay an extra 10 per cent... For example, if 50 people make a booking for prawning, for an hour, you'll have to pay the operator an extra 10 per cent... This model isn't very reasonable." Neo Kee Huat of Bottle Tree Seafood Restaurant said, "After painstakingly building up the place with its 'kampung' feel, it's all over. Those who are older say this is their second village because you can't find places like this in Singapore anymore." Fullshare Group had put in a bid of $169,000 a month for the seven-hectare piece of land in Yishun, managed by the Singapore Land Authority (SLA). This is more than double the $68,000 the existing operator had put in for the site and 10 times more than the rental which the existing operator has paid before. The park was first opened 10 years ago. The existing operator said it did not put in a higher bid because it did not want the rustic enclave to become commercialised. "If we bid anything more than this price, we would have to think of how to recoup the money... When we first started, we wanted this place to be affordable," a spokesperson said. "A lot of hard work and time were put into transforming this place from a bare land into a place that people like... Of course, I feel sad that whatever we have developed will now have to be passed onto the next tenant," he added. Fullshare Group has the rights to lease the park till 2020. It wants to re-develop the place into a resort and recreation centre, to be ready earliest by the end of the year. Fullshare Group (www.fullsharegroup.com) is an integrated Chinese holding company with businesses covering traditional Chinese medicine, construction projects, real estate development, travel, tourism, new energy, medical equipment, overseas investment, hotel management, resort and health services. Group has more than 30 subsidiaries in 29 Chinese provinces, autonomous regions and Hong Kong SAR. The company is based in Hong Kong.    Read More →