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Govt can now draw on more returns from investing Singapore's reserves

88max

Alfrescian
Loyal
We're farked !!!:mad:

Singapore News

Govt can now draw on more returns from investing Singapore's reserves
By May Wong, Channel NewsAsia | Posted: 21 October 2008 2026 hrs


Govt can now draw on more returns from investing Singapore's reserves

SINGAPORE: The government can now tap into the capital gains from Singapore's invested national reserves for its spending. This follows a unanimous vote in Parliament on Tuesday to amend the Constitution.

Before this, the government can only use the interest and dividend income from investing the national reserves for its spending.

The government wants to tap on the capital gains so that its income can keep pace with rising expenditure in the near future. It expects to spend three per cent more of the country's gross domestic product annually in five years' time.

Research and development projects will be one area where the extra funds will go into, to allow Singapore to stand out from other countries. More money is also needed to fund areas like medical care for an aging population.

75 MPs - all those present at the House - voted yes to support the changes to the Constitution.

A division was called, to make sure that the amendments are supported by at least two-thirds of elected MPs.

Nearly 10 MPs spoke to voice their concerns such as helping older Singaporeans and being careful with spending the reserves.

Wee Siew Kim, MP for Ang Mo Kio GRC, said: "I hope that we also slay another sacred cow by rebuilding the safety net for Singaporeans of this age group that had been handed the short end of the stick in this current financial climate."

Lee Bee Wah, MP for Ang Mo Kio GRC, said: "We should also not be ebullient when crystal-balling into future prospects and earnings."

Dr Ong Seh Hong, MP for Marine Parade GRC, asked: "Can we ensure future profligate governments will not attempt to change the Constitution to draw more from our reserves?"

Finance Minister Tharman Shanmugaratnam acknowledged the concerns and assured the House that the government will err on the conservative side when projecting expected rates of returns under the new framework.

Mr Tharman said: "Ultimately, it's a system that relies on robust governance. It sets in place in the Constitution, checks and balances.....I believe - and the government believes - this system will work more objectively than alternative systems and better ensure that we preserve our reserves, that we spend prudently and wisely."

Mr Tharman admitted the system may not be perfect. But the key is having the right people in the government and on the boards of Singapore's central bank and the Government Investment Corporation to make educated and informed judgements.

On why the government does not borrow money instead of drawing on the reserves, Mr Tharman explained it is critical to not damage Singapore's sovereign credit rating, especially during rough times.

He added that it is best not to exploit situations where you borrow cheaply and hope to earn more in the returns.

Mr Tharman said: "We've got strong reserves, it keeps our credit ratings strong. (This is) good not just for the government, but very importantly, more importantly, for our businesses, our banks, (it) lowers the cost of borrowing.

"And that way too, we generate sustained income over the long term, which will benefit both current and future generations, ensure that when we spend more, we spend on the basis on what we can afford, and we keep that spirit of self-reliance and living by our wits that Josephine and many others spoke about. That way, we make sure that Singapore continues to be built to search for excellence and built to last."
 

twinseeker

Alfrescian
Loyal
They don't even budge with the reserves to help buffer the down times of this island, they rob from everybody else to help the lower income tier, citing reasons that the reserves aren't meant to be fiddled with............. Now, they're using the reserves for more investments? How odd?

Surely investing the reserves into our own economy would also see results in due time, not unless they've no confidence in out own economy at all, despite all the promises they make.

Has it been a hoax all along?
 

tonychat

Alfrescian (InfP)
Generous Asset
We're farked !!!

It's ok. Vaseoline will make it painless.

SINGAPORE: The government can now tap into the capital gains from Singapore's invested national reserves for its spending. This follows a unanimous vote in Parliament on Tuesday to amend the Constitution.

I thought reserves is not to be touched, so they now admit that they used reserve for investments?

And where the hell does sinkieland has unanimous vote? Stop acting and worded it democratic, when the master nod his head , everyone just follows, you call that unanimous obediences and not unanimous vote.
 

phouse3

Alfrescian
Loyal
The previous arrangement was based on the premise that the PAP would remain in power forever.

For example, the PAP spent money from "current" fiscal budgets on land development (including reclamation) decades ago and they sold the developed land many years thereafter. The proceeds then went into investments. When the investments started generating returns, then only 50% of NII went into "current" budget.

It is wealth transfer from the sandwiched generation to the 3rd generation.

Another example of inter-generational wealth transfer (mainly through CPF) was through the sale of HDB flats. The first generation under the PAP bought flats for a couple of thousand dollars and sold them to the sandwiched generation for hundreds of thousand dollars.

So for every New Poor, there are 2 New Rich. And indeed PAP has won 2/3 of the votes. Upon returning to power in the last GE, the PAP thanked its benefactors. The PAP wanted to take care of the old and engage the young. The sandwiched generation was clearly left out in the cold.

But all good things must come to an end. The ranks among those in the middle will swell, especially in this current recession (very likely a long and deep one) and the next GE is smacked in the middle of it.

So by changing the rules, pre-GE spending from reserves is possible even during a recession.
 
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