Not all the $16m is lost
Monday • November 24, 2008
http://www.todayonline.com/articles/288845print.asp
Ansley Ng
[email protected]
THE headline figure — $16 million — caught everyone’s eye. But it seems not all of the town councils’ investments in troubled structured products may be lost.
At least one town council has learnt from its bank that half its investment remains.
Pasir-Ris Punggol has $2.1 million in residual value from the $4 million it sank into minibonds, and yesterday, town council chairman Ahmad Magad sought to correct “a completely wrong perception” that all had been lost.
At the same time, he signalled that his town council will listen to residents’ views on how sinking funds should be invested.
“Whatever we do is in the interests of residents, and we want to listen to them. If they feel that it’s best for us to park our funds in fixed deposits, that’s what we will do. But bear in mind that fixed deposits will only give minimal returns, and at times doesn’t even cover inflation,” he said.
While there has been a buzz online about the status of such investments, Dr Ahmad said only “a trickle” of his residents have come forward to make enquiries, via phone and email.
And the town council has been “happy to answer any questions”, he and Defence Minister Teo Chee Hean, the town council’s first adviser, said.
“The information will be available – if it’s not already so – on the website to answer questions that residents have,” Mr Teo said. “They can feel free to ask any questions.”
With the news that there is still residual value in its minibond investment, which the town council discovered Oct 31, the big question is whether this is retrievable.
Speaking to reporters at the opening of a new road in Pasir Ris, Dr Ahmad said the town council has “yet to find out more about that” and added that the investment is “not being taken out because there is some complexity in how the minibonds are structured”.
“Hopefully things will change in the not-too-distant future and will revive the value of the minibonds,” he said.
National Development Minister Mah Bow Tan said on Saturday that town councils need to explain their investments - which comprise sinking funds and accumulated surpluses - to residents and inform them of the risks taken.
His comments came after his ministry revealed in Parliament that Pasir Ris-Punggol and Holland-Bukit Panjang invested roughly $12 million in products such as Lehman Minibond notes and Merrill Lynch’s Jubilee Series 3.
Due to the volatile financial environment, Dr Ahmad said the town council will now look at “instruments which are safest”.
“Other than fixed deposits, I asked my town council finance committee on Saturday at our meeting whether there are other safer instruments at this juncture. There aren’t any. All the types of derivatives products have disappeared and bonds are few and far between,” he said.
“As our fixed deposits expire, the only way is to keep rolling it ... I think that’s the safest for now, and I think will comfort everyone.”
Copyright MediaCorp Press Ltd.
