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8/03/2009

Another myth in the making?

Ho Ching's proposal to invite the public to co invest with Temasek has been receiving quite a lot of approval and favourable comments. At face value it looks like another great proposal for investors to grow their nest eggs. But before people plonk in their hard earned savings, they better think very carefully as investment is a high risk enterprise. The higher the returns, the greater the risks. Not very long ago, there was this great scheme called COWEC. It is a company welfare scheme where employees and companies joinly contributed to the fund to invest in stocks with the belief that stock investment was a sure win game in the long run. It was supposed to guarantee a higher rate of return than the CPF. It is now history. The same crazy belief also reemerged in the early 1990s when all the clever analysts and investment experts were churning out reports on how great investing in stocks and shares were against all other instruments. In the long run, investing in stocks will generate the highest returns compare to other forms of investments. This faith led to the release of CPF funds for stocks and shares and a kind of frenzy when every CPF contributor had a stock investment account. Again it became history when many of them lost their nest eggs, contributing to the miserable state of our CPF savings. Would co investment with Temasek lead to the same fate? Can investment guarantee a safe and high return? The fact that the CPF Life scheme has an escape clause in case the fund becomes insolvent speaks for itself.

14 comments:

Matilah_Singapura said...

This is not such a bad idea — although there are risks which are beyond the "usual" market/investment risks.

The biggest benefit is that Temasek can be privately owned (partially) by the citizens, and as owners they can (to a limited extent) decide the fate of the company and its direction. They can also pull out their funds if they disagree and savagely "short" the stock, in effect voting with their feet. Voting with the feet when it comes to money is very effective and the results are instantaneous.

Becoming owners in Temasek means that the citizens will get the chance to hold the management's feet to the fire, and (perhaps depending on the "courts" and their "justice") sue or fire the management if the need arose.

Wally Buffet said...

Am I dumb or something?

Investing and owning shares in something which belongs to the state and which as a citizen I already own?

Anonymous said...

At least the public can help Temasek to play with bigger stakes and win big. Why not ?

patriot

Matilah_Singapura said...

To Wally:

The state doesn't "belong" to anyone, and in today's context least of all the citizen.

To Patriot:

To "win big" (on a long term basis) in the brutal, uncertain game of jungle capitalism you need to serve as many customers as possible for the longest time possible. Bear in mind that customers in general are disloyal, looking for a "better deal" (they are selfish), and will probably resent you for making so much money as a businessperson.

Somehow, I don't believe Ms Ho has it in her to lead a corporation and actually make money, but I know that there is someone capable out there who can run Temasek properly — if he or she is not micro-managed by the buffoons in govt who have never met a payroll using their own money or assets. (like the folks in the private sector)

Anonymous said...

Haha. Some people still believe they own the money belonging to the State. Keep on dreaming!

Anonymous said...

Mr Matilah Singapura

You could have mentioned the Name of the Person You knew who would be able 'to run Temasek properly' and let Temasek considers him/her.

And with that person at the helm, the public will be more confident to put in the money without fear of getting burn.

As to citizens owning and having says on how Temasek runs its' business, in practice, it is usually the management that makes most decisions. Minority shareholders hardly have much influence.

In any case, the people have been asking for transparency and accountability and as we know, non is forthcoming and the calls totally ignored.

patriot

Matilah_Singapura said...

To patriot:

You can scream and yell until the messiah comes or chinese new year comes — whichever comes first — and you won't get any real transparency or accountability. It is an entity run by the govt, which means they can do as they please and they don't need your permission. They can also tell you what they please or tell you nothing, and there's nothing you can do except yell and scream at Hong Lim or post your complaints on uncle redbean's blogs.

The point is Temasek ain't going away anytime soon. It is here to stay — either as a broke-assed company or a successful one.

That being said ANY kind of citizen-ownership is a step in the right direction. You're not going to get a "perfect" situation from a govt multinational that is in the market, but you can get it "better".

When citizens take up an ownership stake, they can then as owners hold the feet of management to the fire for accountability, and also they can mount class action to sue the management — why? All because of private property. When you own something, there is something legally binding which binds other people to treat your property in specific ways.

When you go and vote at the ballot, you don't pay with money to "buy" anything therefore true ownership cannot occur.

Money talks. Bullshit walks. You want to own and therefore have a degree of control over the thing you own or partially own? Well then, buy it.

When the citizens own a significant portion of Temasek, the next step will be to privatise the entire country (including waterways, radio frequency spectrum, airways, roads etc — the whole darn thing). I have always supported private ownership of property — if it moves privatise, if it is fixed privatise.

Wally Buffet said...

Still don't get it. If we, the citizens don't own what Temasek owns then why are we so uptight when they lost the billions? By reasoning that "The state doesn't "belong" to anyone, and in today's context least of all the citizen." we should not be giving a rat's ass if they lose zillions right?

redbean said...

in a way the assets of the country, the reserves etc do not belong to anyone but the people who came and and took control of it. and if the people want to have a say, pay to be a member. but still on condition that the masters are willing to share the info and wealth.

Jaunty Jabber said...

Before members can expect to share info & wealth, members must first share all risks.

Anonymous said...

In investments(gambling ventures), one either win or lose big. When the stake(capital) money are not the gamblers' own, it will be great and wonderful to gamble as the risks are for others to bear.

AND IF GREAT PROFITS ARE MADE, THE GAMBLERS WILL AND SHALL TAKE THE LION SHARE.

patriot

Matilah_Singapura said...

The tried and true formula is this:

INDIVIDUALISE profits

SOCIALISE losses

i.e. if win - I win; if lose - you all lose (and Obama will rescue you)

Anonymous said...

Uptight about losses? Yeah, only those with money stuck in CPF.

The coffeeshop uncles with little or no CPF would not care a hoot about the losses. They just want to make some noises to pass the time. Just like those who go on the internet to make noises hoping to be heard. Anyone with an arse will have an opinion.

redbean said...

thanks for sharing your opinion.