Singapore's
Super declines.
With their huge banking investments in the West souring fast, Singaporeans are becoming nervous about what will happen to their money. Commentary by Seah Chiang Nee.
Mar 20, 2008

When the government invested US$22b on three foreign banks – UBS (US$11b), Citigroup (US$6.88) and Merrill Lynch (US$4.4b) – it called it ‘opportunistic’ and meant for long-term strategic purposes.

After all, getting large chucks of such banks was a golden opportunity. Anyway it fit into the national scheme of developing Singapore into a financial hub.

And buying into a string of major banks in the world, east and west –if they can be had - is a part of it.

Since these historical purchases, the financial picture in the US and Europe has deteriorated with values dropping by the week.

Twenty years ago Singaporeans would have been contended to leave things unquestionably to the hands of the government – especially Temasek Holdings and the Government Investment Corporation.

After all, few people at the time were educated enough to understand the intricacies of financial investment anyway. But no longer!

More and more Singaporeans today understand these things. They know the risks involved. They read research reports.

As the bad banking news continued to pour out of the United States and Europe, informed Singaporeans are increasingly worried about the US$22b invested in troubled companies.

Even ordinary men in the heartland, incomplete as their information may be, talk about government’s “huge losses” overseas. All of them have to be assuaged.

This means that all-covering statements like “We have confidence in these companies” or that “Ours is for long-term investment” are no longer adequate to dispel Singaporeans’ concern.

What we need are more detailed accounts of where our investments stand every quarter (like other companies needed because things change rapidly), how much dividend our investments have yielded and what sort of paper or real losses we have suffered on each big investment.

I believe that by and large, Singaporeans understand the risk of global investments. They also know that these banks are long-term investments and that short-term paper losses are part of life.

The more business savvy will understand that not every one of Temasek’s investments is profitable, but if it is well managed, the bottom line should be able to beat market performance.

It is too early to call it a terrible investment; it is still early.

It may be possible that the banking crisis in American and Europe – especially regarding UBS, Merrill Lynch and Citigroup – may clear up in two or five or 10 years, in which case, the sun will shine again.

But what Singaporeans would like are very frank disclosures (whether the news is good or bad) and to receive the sort of frank, hard-hitting statements Mr. Lee Kuan Yew makes when things go wrong.

Like his recent one on the disgraceful escape of Mas Selamat Kastari!

When that happens, it could be assuring to have a confident leader addressing us with candour, hiding nothing. It will make people feel better. Ironic, but it’s true!

Not saying anything when people are very worried about their reserves is tantamount to dereliction of duty. Silence won’t make people less worried.

When the mainstream media avoids openly discussing this controversy or raising the question whether we were wrong to have gone so early in the game hasn’t helped its credibility. It is a big story for us.

In this case, pursuing a “Ignorance is bliss” attitude cannot be tolerated.

At any rate, Singaporeans can still get the bad comments from generally reliable sources in the West – through the Internet.
By Seah Chiang Nee