TR EMERITUS

Ng Eng Hen was the Manpower Minister in 2007. (Photo ST) In May, after blogger Roy Ngerng received a letter of demand from PM Lee's lawyer, the CPF issue suddenly became a hot topic of discussion among Singaporeans. On 31 May, responding to media queries on what the Government does with the money that goes into the CPF and how it determines CPF interest rates ('MOF’s official reply on CPF monies & interest rates'), MOF admitted that the CPF monies are, indeed, invested through GIC ultimately. MOF replied: CPF monies are invested by the CPF Board (CPFB) in Special Singapore Government Securities (SSGS) that are issued and guaranteed by the Singapore Government... The proceeds from SSGS issuance are invested by the Government via MAS and GIC, just as it invests the proceeds from the market-based Singapore Government Securities (SGS). No CPF monies go towards Government spending. Government borrowings, whether via SGS or SSGS, cannot be used to fund expenditures. Under the reserves protection framework enacted in 1990 in the Constitution and the Government Securities Act (enacted in 1992), the monies raised from government borrowings cannot be spent. When government securities are issued, the proceeds are first deposited with MAS as Government deposits. MAS converts these funds into foreign assets through the foreign exchange market. However, as a major portion of these assets are of a long-term nature, such as those that provide backing for long-term Government liabilities like SSGS, such assets are transferred to GIC to be managed over a long investment horizon. The Government’s assets are therefore mainly managed by GIC. GIC is a fund manager, not an owner of the assets. It merely receives funds from Government for long-term management, without regard to the sources of Government funds, e.g. SGS, SSGS, government surpluses. However, thanks to a revelation from prominent blogger Leong Sze Hian [Link], we now know that 7 years ago in 2007, then Manpower Minister Dr Ng Eng Hen, who was in-charge of MOM from 2004 to 2008, told opposition MP Low Thia Khiang that GIC did not use money derived from CPF to invest (CPFB comes under MOM). Dr Ng told this to Mr Low in a Parliamentary sitting on 19 Sep 2007 [Link]: Mr Low Thia Khiang rose--- Mr Speaker: Mr Low, you can seek or make clarifications but no speeches. Mr Low Thia Khiang: Sir, I would like to seek clarifications from the Minister. Does the Government Investment Corporation (GIC) use money derived from CPF to invest? If the answer is yes, then the next question --- Dr Ng Eng Hen: The answer is no. Mr Low Thia Khiang: Then no question. Then later, realising that he may have given an incorrect answer, Dr Ng tried to clarify but proceeded to "muddle" his reply: Dr Ng Eng Hen: Mr Speaker, Sir, in the course of this debate, I may have misheard certain things and if I misquoted the Members, let me apologise. Mr Low asked whether the GIC money is derived from CPF money. The relationship is not so simple. Let me give an example. You put money in the bank, and you agree that you put it there and you get 2%. The bank publishes a report and says that of all its earnings, it earned 8%. You go to the bank and say you want 8%, it does not work. MOF has taken on our liabilities. What MOF does with its money is MOF's consideration but the Government takes over the liabilities of CPF Board that promises a risk-free rate to members. That is how it works. As I have said, the market test is, if anybody else thinks he can take on that liability, please line up, but no one will take on that liability because they cannot deliver. At the point, Mr Low astutely took the opportunity to ask Dr Ng if the Government is trying to use Singaporeans' CPF monies as a cheap source of funds to invest and generate returns for itself: Mr Low Thia Khiang: Sir, further clarifications. I am not sure now whether the GIC does use money derived from CPF to invest given the latest answer by the Minister. If that is the case, then my next question is: does the Government shortchange Singaporeans by giving CPF members 3.5% of the interest rate while the GIC makes 9% and pockets the balance of 5.5%? And the third question leading to that is: is the motive of holding payment of CPF, the draw-down age, to enable GIC to have a readily available and cheap source of funds to invest? Then Dr Ng gave a cryptic answer before the Parliamentary session was ended that day by the Speaker of Parliament: Dr Ng Eng Hen: Sir, if it was that cheap, we would have a line of suitors waiting for that money. There is none. Mr Speaker: Pursuant to Standing Order 44(2), the motion to consider the Ministerial Statement on the CPF Reforms and Other Measures for a Secure Retirement lapses at the conclusion of debate. Thanks to Roy's incident, the CPF return issue has resurfaced again 7 years later. With regard to the Government using Singaporeans' CPF monies as a cheap source of funds to invest, NMP Laurence Lien had this to say in his recent article to ST (‘NMP Lien on GIC: Pay out bonus returns periodically‘). Mr Lien said, “The Government is not a commercial entity that needs to be profitable and obtain compensation in return for taking risks. It can take a long-term view and smoothen returns on behalf of CPF members. Even the Ordinary Account can be invested in the long term. Although more liquid by design, the net contributions into the Ordinary Account are generally positive year on year.” “In fact, the total balances of CPF members have increased every year from $52 billion in 1993 to $253 billion in 2013. This gives GIC the stability that it needs to invest CPF funds for the long term,” he added. “Apart from more transparency, I believe the Government should commit to being revenue neutral over the long term on the investments of CPF funds. Based on GIC’s current asset allocation, the Government should be able to accumulate excess returns on invested CPF funds over the long term and pay out bonus returns periodically,” said Mr Lien.    Read More →

Wang Qishan runs Beijing's feared anti-corruption unit, the Central Commission for Discipline Inspection. Photo: Reuters (25 Jul 2014)  -  Beijing vows to drive corrupt officials from their overseas refuges in a bid to save the Chinese Communist Party from extinction. China's Communist Party has launched an international "fox hunt" for corrupt officials, vowing to track fugitives to the four corners of the earth and bring them to justice. Chinese officials have been lining their pockets and skipping the country since the 1980s, the Xinhua news agency reported this week, but the problem has now reached staggering proportions. More than 750 errant civil servants were repatriated last year after fleeing China with more than £960m, according to figures released this week. Reports have emerged this year of government officials and fraudsters escaping to countries including Uganda, Thailand, Malaysia and the United States with huge sums of public money. "We will hunt them down and bring them to justice wherever they try to escape and hide," Liu Dong, the deputy director of Beijing's Economic Crime Investigation Department, vowed earlier this week at the launch of a campaign dubbed "Operation Fox Hunt 2014".   Read more:  http://www.telegraph.co.uk/news/worldnews/asia/china/10991255/China-launches-global-fox-hunt-for-corrupt-officials.html    Read More →

The new IPPT system has arrived with a yawn. The standards are as follows: [Link] BLIND FOLLOW THE BLIND Predictably, it has chosen to follow blindly what other armies are doing, such as the US army. When asked about why the need to switch from pull up to push up, the answer was a dismay. “As for the push-ups station which is new, we take reference from the US Army. And I think you will also have done your research I am sure, that some of the conscript militaries like Korea has also adopted these three stations.” The rationale for adopting push up was not explained properly. One possible reason could be that the decision to adapt the US system was a top down directive, so that the generals just complied without a deep understanding of why the other armies are using push-ups. If other military men wear push-up bras, are we going to do the same? PUSH-UPS MAKES NO SENSE The decision to include push-ups is a flawed one. What kind of combat situation would require a soldier to push unless we are going to tackle sumo wrestlers? Mindef should explain further on this point. The implementation is also going to be subjective. What kind of push-ups will be accepted? Wide or narrow distance between the palms? Body stiff straight or can be crooked? Legs together or separated? How low does the body need to be lowered? Chest touch the floor or no count? I foresee argument with the PT instructor what would count or not. More fundamentally, adopting push up as a test parameter that again wrongfully penalized those with larger upper body mass. A 100 kg NSmen perhaps cannot do a single push-up, but he is able to bench press a heavier load, or push a heavier object with his body weight, or carry a heavier pontoon. Don't we need to recognise the sheer ability of such NSmen? Mindef should think deeper if they would allow alternatives to push-ups, such as weight-lifting or bench-press. NO CONFIDENCE IN NEW IPPT My initial impression of the NEW IPPT is that the changes are introduced in a rather haphazard manner. It worries me because I would not want our men to be guinea pigs to test out a half-baked system ill-thought through by Mindef. Over the years, it is not known how many casualties have been claimed by the IPPT. Recapping what is taught at the OCS - leadership by example, perhaps our male MPs could try the new IPPT system so as to motivate us with their stellar results? Kampong Boy *  Submitted by TRE reader.  Read More →