TOC Note: 14 of our readers have sent emails, since Tuesday, to query their town councils on their investments. None of the town councils have replied so far. We’d like to urge more of our readers to do the same. Please click here to copy and paste the email to your town councils. Thanks.
The following is by Dr Teo Ho Pin, co-ordinating chairman of the 14 PAP town councils . From TODAY.
We would like to take this opportunity to clarify the recent commentaries and queries from your readers on Town Councils’ investments.
Why is there a need for Town Councils to accumulate sinking funds?
Town Councils are required to maintain sinking funds to finance the longer-term and expensive works such as replacement of lifts and water supply systems as well as repainting, re-roofing and electrical re-wiring works.
In addition, the Town Councils use sinking funds to co-pay for lift upgrading so that residents pay a smaller portion of the total cost.
By accumulating sinking funds over time, HDB residents do not have to pay an additional lump sum each time one of these major works needs to be done. For example, lift replacements are carried out every 28 years on average.
The 14 PAP Town Councils manage about 900,000 HDB flats or 9,000 HDB blocks in Singapore.
After almost two decades of accumulation, our sinking funds amount to under $2 billion or just over $200,000 per HDB block. This is not excessive as the overhaul cost of just one lift for a 12-storey block can cost about $100,000.
Some readers may have the impression that we are investing with short-term operating funds from S&CC collected. We would like to clarify that the investments are made with Sinking Funds and accumulated surpluses, which are meant for long-term use.
How are our sinking funds managed?
The PAP Town Councils are guided in their investment decisions by guidelines set by the Ministry of National Development and approved financial advisors and/or professional fund managers.
We are mindful that overly conservative investments generate a low rate of return and do not sufficiently protect the funds against inflation, thereby building up pressure to increase service and conservancy charges (S&CC).
We take a prudent stance by spreading our investments over a mix of deposits, securities and other financial products, within the approved investment framework.
Our aim is to generate higher returns during the good years to offset lower or even negative returns during the bad years, so that we can still achieve a healthy average return over the medium term.
We take a longer-term view of Town Council sinking funds, in line with the funds’ long-term objectives.
We recognise that the amount invested in Lehman Brothers’ related products is not a small sum in absolute terms ($16 million), even though it is only 0.8 per cent of the funds.
These losses arise from the unprecedented situation facing financial markets around the world, which saw the failure of an “A” rated bank and the near failure of other financial institutions that had received similarly good rating. Institutions and investments that were considered safe by most have failed and are now deemed high-risk on hindsight.
Out of the eight Town Councils that have been exposed to Lehman Brothers either directly or indirectly, six of them had their investments made by their fund managers.
The Town Councils invest our funds prudently as we understand our responsibility to our residents. We have not done poorly or mismanaged the funds.
Over the last 6 years, we have achieved an average rate of return on investments of over 3 per cent per annum. This is more than three times the average interest of about 0.9 per cent per annum earned on Fixed Deposits, and greater than the2.9 per cent from SGS 10-Year Bonds over the same period.
We wish to reassure our residents that we are financially secure. Estate maintenance and improvement plans will not be affected.
How will the PAP Town Councils make sure that their residents are kept informed of their Town Councils’ finances?
Our financial statements, including our statements on our sinking fund and disclosure on the fair value of our investments, are audited and published annually. They are prepared in accordance with the Financial Reporting Standards.
The residents can access our financial statements and annual reports via the Town Councils’ websites or from our Town Council offices.
As our investments and circumstances differ, the PAP Town Councils will reach out to their respective residents directly to address their queries and receive feedback through channels such as newsletters, town hall dialogues and websites.
We will continue to explore ways to better communicate with our residents and keep them informed of our finances.
In conclusion, we will continue to manage our Town Council funds in a prudent and pragmatic manner.
We wish to reassure our residents that their estate will be well-looked after and that there are sufficient funds for the proper maintenance of their town, both now and in the longer-term.
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“We may have a corrupt-free government but something is not right with the transparency part here.”
Does the gov even know the meaning of corruption in Singapore ? Who define corruption in Singapore gov ? At the bottom, they recognize corruption, at their level, it is just business as usual.
WSJ recently get fine for a unfair trial, and AG get $30,000. Now tell me is this corruption or just business as usual ?
He does not look well over the last 2 days in the APEC meetings.
We need to ask if something bad crops up – who will succeed?
WKS – shiver shivers.
Reminds of Sarah Palin. Let us be careful of our next vote!
53)PM Lee does not look well
YA I shared the same sentiments here.
He looked haggard and lost quite alot of weight to me lately. His hair is also almost white and he smiles less as if there are alot of thoughts on his mind.
He does not look as well as before even up to the NAtional Day period when he looked radiant.
Let’s hope he is well even though we are against his policies. We are not against the person but his governance.
….. their estate will be well looked after ……. not true, please Dr Teo come to my estate, you can smell the urine at staircase and lift. You collected so much S & C and provide sub standard service. You don’t walk the estate, only during election time then you go house visit. Then in that case I better vote Mr Ling How Doong to be my MP, he can bring up the minibond saga for us, he will care better in TC.
52/ PM Lee does not look well.
I hope nothing will happen to him because we are shortage of talent. Any thing happen, we have to import a FT to be our PM.
Hi 50) Gilbert Goh,
Someone has opted not to pay S & C fees earlier. Know what the PAP town council did? They don’t even bother to check on why the resident is unable or unwilling to pay. Just a lawyer’s letter by mail. Talk about procedural efficiency.
Why are all the town councils investing separately, instead of combining and invest as a whole?
Is it to create a competitive environment for returns on investment by various town councils? If not, what is the rational to invest separately then?
Wouldn’t it be better that if they consolidate the amount as a whole and bargain for a better terms from the investment company?
Anyway THP ought to be embarrassed to mention the 3% returns on investment when govt bond gives 2.9% interest. A 0.1% higher interest at risk of $16 million, is it worth it?
aiyoyo,
invest at 3% returns,
GST how many %?
He said
“Over the last 6 years, we have achieved an average rate of return on investments of over 3 per cent per annum. This is more than three times the average interest of about 0.9 per cent per annum earned on Fixed Deposits, and greater than the2.9 per cent from SGS 10-Year Bonds over the same period. ”
But according to their annual report ending Mar07, it was stated on page 23 under Point #10 Cash and Cash Equivalents,
Quote.
The short-term bank deposits have a maturity of 1 month to 3 months (2006: 11/2 months to 3 months) from the end of the final year with weighted average effective interest rate of 3.25% (2006: 2.25%) per annum.
Unquote.
Well, the average rate of return of 3% is nothing to shout about if the funds have to be invested higher risk instruments compared to short term bank deposits giving an average yield of 3.25% in 2007 or 2.25% in 2006.
I made some calculations and the figure smells fishy:
Taking a 3 room flat as an average paying household for S&C fees:
S&C charges for 3 room flat in Pasir Ris- Punggol GRC = $60 /mth
35% has to go to sinking fund = $21/mth
Assuming there are 100 households in a block, a monthly collection would get = $21 x 100 = $2100 per block
No. of months to collect $200,000 = 200000 / 2100 = 95.24 mths or approximately 8 years
Does it really take 2 decades to collect the $200,000 amount that our dear elite has claimed?
Apologies but I have omitted the S&C rebates given by the govt in the above calculations. However, even after factoring the rebates, the figures still smell fishy.
Assuming a 5 month rebate being given every year for 3 room households, each block will still collect $2100 x 7 mths = $14, 700
No. of years to collect $200,000 = 200000 / 14700 = 13.6 years
This is still no where near the 2 decades figure that our elites are claiming.
Please note that the S&C rebates from year 2008 budget for 3 room flats is only 2 months.
However I have assumed a 5 month rebate figure so as to factor in those households that were unable to pay their S&C fees due to difficulties.
(And also I’m trying my best to be kind to our dear elites too in the above calculations. HAHA. )
The BIG question here is WHERE HAS OUR $$$ GONE TO????
TC members should be elected.
TC members report to the constituencies.
TC members should conduct annual General Meetings like all societies.
“The BIG question here is WHERE HAS OUR $$$ GONE TO????”
believe me, you don’t want to ask that question because bad things will happen.
In TC reports & interviews by TEO, they mentioned that their investments was determined by fair value. Anyone knows what does that means?
Of course the honorable MP will say the TC fund is well managed despite the loss of millions of public fund placed in his trust! What else could he say? He was in charge of these public money!
It would be more credible if a third party, an independent person, has looked into the loss as well as the purchase of 500,000 Creative Tech share and come to a conclusion that the TC fund is indeed well managed and the TCs are allowed under the Town Ciuncil Act to make such investments.
Although Dr Teo reassured the residents not to worry on sc/cc increase, as “whether town council charges increase is not dependent on town council investment returns”, but I still don’t get the assurance.
Mathematically, if every $1 we paid for our sc/cc, 25 cents go to sinking fund and 75 cents go to pay for current maintenance charges. The 25 cents now used to invest in Lehman’s Brother investment and the losses cannot be recouped.
We still have to come out with the 25 cents to pay for our future cyclical maintenance, don’t we, Dr Toh ?
Hmm.. I noticed that all town council have already uploaded their 2008 report on their website, however
Holland-bukit panjang TC ‘s report is missing
Something really fishy going on ??
How can one compare the sinking fund’s average return of 3% against the 0.9% earned on Fixed Deposits and claim that the returns is 3 times higher?
According to the fixed deposit rate offered by United Overseas Bank, the 0.9% is applicable for deposits from $500,000 to $999,999.
Given the magnitude of the sinking fund, which is in terms of Millions, I am sure the interest rate offered by the bank would be much higher than 0.9%.
Dr Teo, please compare the returns of the sinking fund against other investment of a similar size or magnitude and tell us whether the average 3% return is still considered “high”.
We recognise that the amount invested in Lehman Brothers’ related products is not a small sum in absolute terms ($16 million), even though it is only 0.8 per cent of the funds.
Thank you for first recognizing $16m is not a small sum.
Next, we should query into why residents should also foot the bill for lift upgrades, and also look to see if the current S&C charges are unnecessarily high.
Ref: Ang Mo Kio – Yio Chu Kang Town Council
Annual Report for Financial Year 2007 / 2008
http://www.amk-ycktc.org.sg/aboutus/pdf/Annual%20Report%2007%2008.pdf
Ref: Aljunied Town Council
Aljunied Town Council – Capital guaranteed funds have no exposure to credit-linked notes since end September 08
By Jeffrey Chua, Secretary, Aljunied Town Council
http://www.aljuniedgrc.sg/newweb/news.php
Question: Did ATC lose any monies when it “divested out of the position”.
The latest annual report is for FY 2006/2007 (at time of posting)
http://www.aljuniedgrc.sg/publication.php?type=Annual%20Report
Home page has the following newspaper article:
http://www.aljuniedgrc.sg/download/Funds_are_financially_secure.pdf
Ref: Bishan-Toa Payoh Town Council
The latest annual report is for FY 2006/2007.
http://www.btptc.org.sg/E%20News/AnnualReport.htm
We need more like Mr Tan.
Mr Tan has mentioned one of his wish is to see more come to the fore.
I hope Mr Leong will also stand for election.
But then he is too good in Finance. I wonder who in parl can be better than him in this aspect. AND still willing to ask the needful questions. That is very important!
Ref: East Coast Town Council
Lastest Annual Report FY 2007/2008 (PDF)
http://www.ectc.org.sg/pdf/Audited%20Financial%20Statements.pdf
The filename is named as Audited Financial Statements. The annual report is scanned page by page and then a PDF version is created from the scanned images.
Ref: Holland-Bukit Panjang Town Council
Latest Annual Report is for FY 2006/2007.
http://www.hbptc.org.sg/annualreport2007.html
Ref: Hong Kah Town Council
Latest Annual Report for FY 2007/2008
http://www.hktc.org.sg/publications/annual/08/HKTC%20Annual%20Report%20FY%202007-2008.pdf
The Annual Reports section has only one report.
http://www.hktc.org.sg/news_ar.htm
Ref: Jalan Besar Town Council
The website has no annual reports section.
http://www.jbtc.org.sg/
But, a search on the net found that the print annual reports can obtained in Lee Kong Chian Reference Library (Adult Reference Singapore) The latest report is for FY 2006-2007.
http://snb.nl.sg/holding/itemholding.aspx?bid=6259254
Thanks Joe for the uploaded report. You are the man!
This is a serious flaw on the part of the govt and on top of so many other fiascos e.g. Mas Selamat’s escape, Lehman Bros minibond investors, GIC mis-timed insvestment, one-party system, one gets the feeling that something wrong may be happening at the top.
I also noticed that PM Lee looks very haggard at the recent APEC meeting. His smile is very artificial and forced. IS he affected by the current economic crisis or is his health going downhill?
The govt all along has a problem with transparency since the old days of LKY. GIC/Temesak accounts are not readily available due to security reason and the late President Ong Teng Cheong also had problem digging out some official assets.
It showed that something is not right with our financial system and accountability is in very bad shape for a democratic country. I am not saying our govt is corrupt but transparency is certainly important and very lacking. if you are not transparent, you give the idea that there is something sinister you are trying to hide.
One of the serious flaw of our govt is that we have a dominating one-party political system. There is no one to check them and so long as Singaporeans keep on giving them the mandate to rule we will end up very entrenched with a one-party system. The two elected opposition MPs can only do so much. They can’t be arguing and asking for the govt to reveal details in Parliament as they are very much in the minority. We also wont expect PAP MPs to bite the hand that feed them surely. NMPs like Ms Olsen can only do so much. They can’t perform miracles.
Singaporeans have only themselves to blame for the current political situation. As I have mentioned often, all this boil down to us voting for them and giving them the mandate to rule over us. We have to accept the hook, worm and sinker so call. There is no perfect govt and if we dislike them, we have to use our vote to our advantage. Even LKY has always advocated that if the population dislikes the current govt, we can use our vote to put them out. We have the choice on our hand so keep your chin up Singapore! The situation can be put right.
i agree with you, Gilbert. That’s why I advocate voting the opposition, any opposition infact, to break the PAP stranglehold. It might sound all too simplistic or misguided, but such is the need right now. There’s no room to pick and choose, if the problems with the ruling party are so deep-rooted and widespread, as most of us perceived up till this point. And quite frankly, MM Lee aside, there is no clear leader in the ruling party and that spells further trouble if they are allowed to continue.
However, to make things easier to swallow, the opposition should band together like what Anwar and gang did in Malaysia, agree on a common manifesto, and work the ground together for the next GE. It’s still not too late but the work must start now. It is actual one of the best moments in our recent history for the opposition to seize and arise. But I would leave the same words for the opposition as I did for the PAP: do the right thing for the people of Singapore.
新动网:” 累积基金投资受到保护 无不被滥用”.
Misleading headlines, what a joke!!!!!! or is it true????
It means nothing was not being mis-use, or all are being mis-use.
新动网:” 累积基金投资受到保护 无不被滥用”.
Misleading headlines, what a joke!!!!!! or is it true????
It means nothing was not being mis-use, or all are being mis-use.
Technically correct. Dr Teo explained that the money lost was from the $24m profit accumulated over the last 6 years.
Nice logic, Mr Teo. Tell you what, we pay you 75% of S&C charges so that you can focus on maintenance work and won’t be accused of misusing funds. We the residents will invest on our own. When you need to carry out expensive works, tell the RC. We will call for 3 quotes if your bulk tender prices are not competitive. Oh by the way, please return us the 25% taken over the last 2 decades with interest. Thank you
82)logicalman:
The problem with our voters are that they often want a candidate that has similar characteristics with the ruling party: scholar, well educated,upright, so much so that anyone that does not fit the bill will be discarded.
Perhaps we are always been associated with maverick opposition politicians – CSJ, Francis Seow, Tang on the alternate camp that we often put them on the secondary voter list during GE. When i doubt, vote for PAP.
People like Low and Chiam got elected because of their long gentlemanly reputation and die-hard loyal voters. They deserve our respect – both the voters and candidates. However, I doubt that they are solid enough to come together and unite as one political party yet. Their differences are apparent.
Singapore is in need of good leadership speaking for the alternate party. He has to be brave assertive and able to command the respect of our sophisticated population.
Let’s hope TKL can provide this difficult task of leading the alternate party. If not, we are doomed for another one or two elections at least.
aiyoyo
can we take back our $ & put inside CPF??
CPF still give us 4% leh, better than 3%, correct??
aiyoyo how come simple math also not know…
With all these good questions that the citizens of Singapore have,
I think it is a good idea to invite Dr.Teo to meet the people and clarify any questions and doubts that the citizens should have.
This will be good both ways as Dr.Teo will be working VERY closely with the common people.
MP’s and reporters reading this don’t you think this is a good idea ??
Right now we have one way communication – this is the old school approach.
It would be best to have an interactive feedback session.
“83) Omong Kosong on November 28th, 2008 8.12 am
Technically correct. Dr Teo explained that the money lost was from the $24m profit accumulated over the last 6 years.”
Ya loh. So does it mean they can continuously to do so for the remaining accumulated profit. Still technically correct hoh.
So shiok hoh to be in such a wonderful position to be losing money and yet can still be technically correct hoh. What a perfect technical (or should I say legal hoh) excuse hoh. Everything so right except we have to pay hoh.
Ref: Jurong Town Council
FY 2008 Financial Report
http://www.jrtc.org.sg/annual_report/31_March%202008.pdf
The Annual Reports section has only this one report and there are no past annual reports.
http://www.jrtc.org.sg/pr_annual.htm
They have a Tender Results section and observed that some tenders have some interesting bidding numerical differences.
http://www.jrtc.org.sg/services_tender.htm
aiyoyo
not sure upcoming S&C fees will increase??
time are really tough nowadays, yet still have to worry bread & butter,
then also worry our $ maybe loss in TC investments,
wa it seems we more work done than those PEOPLE, correct??
(but we still earn normal $ only)
aiyoyo
Ref:Marine Parade Town Council
There is no annual report on their website.
http://www.mptc.org.sg
Ref: Sembawang Town Council
Latest annual report is for Financial year 07/08
Page 1 – 34:
http://www.sembawangtc.org.sg/annual%20report/annualreporta.pdf
Page 35 -65:
http://www.sembawangtc.org.sg/annual%20report/annualreportb.pdf
There are annual reports for FY 06/07, FY 05/06, FY 04/05.
Ref: Pasir Ris – Punggol Town Council
Annual Report & Financial Statements for 1 April 2007 – 31 March 2008
http://www.prpg-tc.org.sg/cms/uploads/Annual%20report%200708.pdf
There is another report for FY 06/07.
http://www.prpg-tc.org.sg/cms/index.php?page=annual-reports
FAQ on Town Council Investment (dated 27 Nov 2008)
http://www.prpg-tc.org.sg/cms/uploads/FAQ.pdf
We can quote their words, if it is otherwise.
Do note the date of this FAQ release.
“We recognise that the amount invested in Lehman Brothers’ related products IS NOT A SMALL SUM in absolute terms ($16 million)……we understand our RESPONSIBILITY to our residents…. We wish to reassure our residents that we are financially secure.”
“financially secure” or “FINANCIALLY OBSCURE”?
aiya … why you people make so much nosie for f*** … be grateful that you have a roof over your head and we are only charging you peanuts and in return, you have a pigeon hole that you call home
dun forget we build up this nation from slump and the nation reserve has increased to $400 billion over the last few decades. if not of our visionary leaders and A-team minister, your grandmum & mum could be working as foreign maid right now
so shut up and pay your S & C fee timely
It’s interesting to know how Dr Teo arrived at the average interest rate of 0.9% p.a. on fixed deposits. Based on the recent available financial statements of 3 TCs, the weighted average effective interest rates(EIR) for fixed deposits ranged from 1.65 % to 3.25%. Isn’t it the average EIR as used in the annual reports a more appropriate benchmark to use?
As this is a public forum, can the editor explain why my comments are always subject to moderation?
aiyoyo
“After almost two decades of accumulation, our sinking funds amount to under $2 billion or just over $200,000 per HDB block. This is not excessive as the overhaul cost of just one lift for a 12-storey block can cost about $100,000.”
thought we do pay for the lift upgrade, correct?
think after co-pay, think the lift upgrade cost should be lowered, correct?
aiyoyo
Dr Teo explained that the money lost was from the $24m profit accumulated over the last 6 years and so it was not the money of the citizens.
What a crazy warped logic from an accounting point of view..
Using that logic, supposing Lehman brothers investment was making money, say $10 million. Does that mean that the extra money is not citizen’s money?
In all investments, everything start from seed capital. Some make money, some lose money. If it turns out that on a net basis, there is positive income, this income belongs to the owners of the seed capital. The portion of the net income which is not doing well, IS ALSO THE CITIZEN’S money, it is immaterial that it was netted off in favour by other successful investments. We should not isolate the profits of an earlier investment and then claim that this money is not the citizen’s anyway, so it’s ok to lose it. Such a warped argument will also lead to a conclusion that so long as there is a net postivie income from investments, losing any amount of money (even $100m) is ok. IT is no different from Dr Teo’s earlier comment.. please you people should thank the Town Council that the net flow is positive, don’t complain.
REX
aiyoyo
if we are the RM that sell the product to TC
wa think the commission a lot a lot, correct???
aiyoyo