Fixed deposits: GIC and Temasek Holdings should accept them
WITH reference to the article last Saturday, 'Why consumption won't help Singapore', I agree with Prime Minister Lee Hsien Loong that 60 cents flows out of our economy for every dollar spent in Singapore.
As an open economy, we can never fully stop money from leaking out of Singapore. We should spend money on education, on specialised training, certification and upgrading ourselves to a more skill-based economy. Investing in the construction of competitive infrastructures will enable Singapore to compete in the global arena.
We should encourage those who cannot spend their money in these areas, and build a culture of disciplined savers instead of an economy based on consumerism.
The saga of structured products here shows there are a large number of risk-averse Singaporeans who save large amounts of money bank fixed deposits.
As the cost of running a bank has increased dramatically in recent years, the return on fixed deposits is miserable, hovering around 1 per cent even when banks here lend at around 4 per cent (commercial rate). This naturally forces many depositors to look for better returns. This was made worse last year when we experienced one of the highest inflations in the past 20 years.
Although CPF gives a much better return than fixed deposits, many shun it as it is heavily regulated and withdrawals are not easy.
Singapore's GIC and Temasek are two of the best managed funds in the world, with a pool of exceptionally good managers with an excellent track record. The Government should look into the possibility of enabling GIC and Temasek to accept fixed deposits by Singaporeans, especially the older and less educated citizens.
These deposits would form only a small portion of the entire portfolio managed by these two bodies. We should encourage Singaporeans to be financially independent by encouraging more savings. One way is to reduce to a minimum the amount of cost passed to depositors and give them a higher rate of return. The Government should consider absorbing the cost of managing this fund as it helps us build a stronger and wealthier country.
The savings accumulated now will enable us to invest in ourselves and good companies when they expand. By preparing now, we can poise ourselves to leapfrog competing economies when the next upswing comes.
Syu Ying Kwok
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WITH reference to the article last Saturday, 'Why consumption won't help Singapore', I agree with Prime Minister Lee Hsien Loong that 60 cents flows out of our economy for every dollar spent in Singapore.
As an open economy, we can never fully stop money from leaking out of Singapore. We should spend money on education, on specialised training, certification and upgrading ourselves to a more skill-based economy. Investing in the construction of competitive infrastructures will enable Singapore to compete in the global arena.
We should encourage those who cannot spend their money in these areas, and build a culture of disciplined savers instead of an economy based on consumerism.
The saga of structured products here shows there are a large number of risk-averse Singaporeans who save large amounts of money bank fixed deposits.
As the cost of running a bank has increased dramatically in recent years, the return on fixed deposits is miserable, hovering around 1 per cent even when banks here lend at around 4 per cent (commercial rate). This naturally forces many depositors to look for better returns. This was made worse last year when we experienced one of the highest inflations in the past 20 years.
Although CPF gives a much better return than fixed deposits, many shun it as it is heavily regulated and withdrawals are not easy.
Singapore's GIC and Temasek are two of the best managed funds in the world, with a pool of exceptionally good managers with an excellent track record. The Government should look into the possibility of enabling GIC and Temasek to accept fixed deposits by Singaporeans, especially the older and less educated citizens.
These deposits would form only a small portion of the entire portfolio managed by these two bodies. We should encourage Singaporeans to be financially independent by encouraging more savings. One way is to reduce to a minimum the amount of cost passed to depositors and give them a higher rate of return. The Government should consider absorbing the cost of managing this fund as it helps us build a stronger and wealthier country.
The savings accumulated now will enable us to invest in ourselves and good companies when they expand. By preparing now, we can poise ourselves to leapfrog competing economies when the next upswing comes.
Syu Ying Kwok
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