Ho Ching
The S$58b plunge
The terrible loss was revealed three days after she quit, fuelling talk that they’re related; sadly, she’ll not lead the recovery. By Seah Chiang Nee.
Feb 14, 2009

SINGAPORE’S hard-earned reserves, which are tied to the island state’s global investments, have plunged in unprecedented proportions over the past year.

In just eight months, the invested portfolio of the state investment corporation, Temasek, fell by a staggering S$58bil – or 31%.

That it has dropped from S$185bil (RM443.3bil) in March to S$127bil (RM304.3bil) in November is confirmation of the extreme pessimism that had been privately spreading among informed citizens for more than a year.

The government has been reluctant to reveal much about where its money was placed even in good times, but the dramatic downturn has increased public pressure for greater openness.

Singaporeans are deeply worried about losing such a big slice of their collective savings, and it’s not even final yet.

Many people are fearful that they may eventually be asked to bear a heavier financial burden for it in higher indirect taxes.

The feared news was announced in Parliament on Tuesday – three days after Temasek’s powerful CEO, Ho Ching, said she was leaving the company on Oct 1.

(Ho Ching, wife of the Prime Minister and the world’s eighth most powerful woman, was instrumental for Singapore’s major investment decisions during the past six years she was there.)

The company emphasised that her exit had nothing to do with the losses – but very few people really believe it.

Predictably, the two deve­lopments have come as a shock to a people already facing a terrible recession that’s bleeding jobs by the week.

The S$58bil loss does not include the foreign bank equities’ sell-down since November, which means the red ink would have continued to flow.

Neither has it taken into account similar losses in the republic’s second – and larger – sovereign wealth fund, Government Investment Cor­poration (GIC).

It is too early to count their total losses.

Taken together, the global woes and poor investment decisions could have reduced Singapore’s reserves by more than S$200bil, not all of which are recoverable.

To be fair, the spectacular losses are caused by the global meltdown that originated from America’s sub-prime woes, which is punishing economies – and investments – everywhere, with Singapore being one of the worst affected.

Kuwait’s Investment Authority has also announced that its oil-rich sovereign fund had lost US$30.73bil between March and December last year.

In its own defence, the government here has said its investment record is better than two main stock indexes.

The leaders have assured the citizens that most of the losses are on paper, and recoverable when the crisis blows over.

No time frame is mentioned, but Minister Mentor Lee Kuan Yew talks of 10 to 20 years.

“We went into these investments as a long-term investment – for up to 30 years” was the rationale behind the 40% invested in the troubled banking sector.

Not always red ink

One sympathetic writer pointed out that despite Temasek’s poor performance, its devalued assets of S$127bil last November were better than the S$90bil in 2004.

This meant that Ho Ching had merely lost back some of the money that she had made since joining in 2002.

As pressure mounted from the public for information on how badly their reserves are faring, Lim Hwee Hua, senior minister of state with the Finance Ministry, finally went to Parliament on Tuesday with some figures.

The next target could be GIC, which manages the country’s foreign reserves, estimated at some $550bil pre-meltdown.

If it loses by a similar 30% as Temasek, it could mean a decline of about S$170bil.

Observers believe that, in this crisis environment, it is not possible for any government to remain secretive about losses of such magnitude for long.

“Secrecy is not good for Singa­poreans or the government,” argued a semi-retired professional.

“In the absence of official news, the populace tends to believe the worst of rumours, and trust in leaders is affected.”

Compelled by its increasing role as a major global investor – often in “sensitive” businesses, the Singapore wealth funds have been opening up their books – slightly – in recent years.

Temasek Holdings under Ho Ching began releasing annual statements several years ago, albeit without revealing too much.

The government, however, still adopts a general attitude of secrecy – or tells the least possible.

Critics say this is untenable in the modern age of globalisation, especially with the emergence a better-informed younger generation at home.

Some businessmen I talked to find it hard to understand this unwillingness to trust their own people and to tell them like it is.

A friend who grew old with Lee Kuan Yew said: “This was what Lau (old) Lee would have done in his years, when our problems were bigger than this.

“Speak frankly about the problems, and say ‘Please, I need your help. This is what is happening to us, and what you can do’.”

The younger leaders, he added, seem to be interested only in talking about the good things that they and their political party can claim credit for – not the bad news.

He is right in one respect, however, when he said that despite the current debacle, Singapore has enjoyed a good track record in investing Singaporeans’ savings for many years.

These are extraordinarily bad times for many Singaporeans.

But despite the investment bloodbath, their savings remain awesome, and I have little doubt that, barring more disasters, these will enable the city to bounce back strongly when the trouble ends.

I may or may not be around to see it, but I am very sure that it will happen.

(An expanded version of Star article published on Feb 14, 2009)