Tharman is right - Conversion of reserves

 DPM Tharman once told Parliament that drawing down past reserves was “in essence a conversion of past reserves from one form (financial assets) to another (state land), rather than a drawdown of reserves”.


The above was quoted by Phillip Ang in his latest article on the drawing down of national reserves. In his article Phillip argued that a drawdown is a drawdown. A drawdown of $X billion of cash from the reserves means that this $X billion will be minus from the national reserves, thus the reserves will be lesser by this amount. But according to Tharman's explanation, the drawdown is actually a conversion of one form of reserves to another form, from cash to assets.

Now who is right? Look at this definition on the nation's reserves and the answer is quite clear.

Definition. The Constitution of Singapore defines reserves as “the excess of assets over liabilities of the Government, statutory board or Government company”.  The reserves comprise financial assets such as cash and shares as well as physical assets like land and buildings.

Clear? Tharman is absolutely right in this case. Drawing down the reserves to convert them into assets did not reduce the nation's reserves as many idiots in Parliament believed to be so. And as such they are so scare to touch the reserves as it would be a drawdown on the reserves, a frightening thing to do. Now would Tharman do the honour to educate the ignorant boys and girls in Parliament that they are wrong and stop behaving so stupidily talking without knowing what they were talking about? 

The conversion of cash reserves is not necessary a depletion of the reserves if the reserves are used to build assets that appreciate in value or could make more profits than the reserves lying inactive as cash and earning a miserable 1% interest. Or worse, if the cash are used in gambling aka investment and loses every cent of it. Converting cash in national reserves into valuable money making assets that make greater returns is not drawing down on the reserves.

The call to draw down the reserves to build T5 and Tuas mega port cannot be a drawdown on the reserves unless these are airy fairy schemes that would lose money. In that case these two white elephants should not be built at all, and the people should not be taxed unnecessary, the govt should not recklessly go around borrowing money to build white elephants. Does anyone disagree that the T5 and Tuas mega port are credible and worthy projects that would appreciate in value and bring in more profits or returns for the money spent? Oops, not money spent but cash reserves converted into asset reserves? If they believe that theses are worthy projects, then what is the problem? Why park the reserves as cash to be used in funny investments that only lose in the hundreds of millions or billions when projects like these could bring in more profits and beneficial to the country? Why defend the using or touching of the reserves so fiercely? Is there other reasons to do so that the people do not know about the state of the reserves?

If Tharman is right, all the nonsense being spouted in Parliament must made the speakers looked silly and they should rightly call for the drawdown of the national reserves to be converted to good money making assets as it would not draw down the reserves. Tiok boh? 

All the fools in Parliament defending the drawing down of national reserves to build T5 and Tuas on the false premise that it would draw down the reserves, please kee chiu.

The hysterical and dumbfounded defense of the national reserves from being drawn down is likely to have more unspeakable reasons for doing so, as it is crystal clear that conversion of national reserves into good assets is not a drawdown. It is a plus thing, a positive thing.