Prudent to protect sinking funds of town councils: DPM Wong
By Wong Mun Wai, Channel NewsAsia | Posted: 02 December 2007 1835 hrs

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SINGAPORE : Protecting the sinking funds of town councils is prudent, said Deputy Prime Minister Wong Kan Seng on Sunday.

He said capping the amount town councils can invest in non-government investment vehicles at 35 percent will protect the money they have for the future.

Mr Wong made his comments while meeting residents and shopkeepers at Bishan North Shopping Mall on Sunday.

The new rule by the Ministry of National Development (MND) on investing town council money kicked in on December 1st.

The aim is to strike a balance between town councils trying to get a good return on their funds and not taking unnecessary risks with residents' money.

Mr Wong agreed with this new rule, saying if town councils rundown sinking funds because of wrong or bad investments, then the money will not be available for other uses if and when needed.

Inflation hit a 16-year high recently at 3.6 percent and is expected to hit 4.5 or 5 percent next year.

Government bonds and short-term fixed deposits give a return of around 1.5 to 3 percent which is lower than the returns from riskier market investments.

So when asked about inflation eating away the low financial returns, Mr Wong said inflation is only one factor considered when investing and protecting sinking funds.

DPM Wong said: "There are world prices due to many reasons and therefore we have this increase in inflation. But it goes up and down and we just can't depend on that alone as a measure to decide how we invest our town council funds. So we cannot look at one spot and say it may go up to 5 percent, or 4 percent inflation and therefore that particular decision by MND will not cover the inflation."

Mr Wong said residents he spoke to did not complain about the price of hawker centre food going up, although some were concerned about general food prices having gone up.

The shops are part of the heartlands.

Mr Wong spoke to shopkeepers selling produce like fish and vegetables, listening to the concerns they face.

Some concerns included higher prices of produce and limited display areas, said shop owner Mr Ker Yeow Chong, who've been running his business for more than 15 years.

Other MPs from the Bishan-Toa Payoh GRC also joined Mr Wong on his Sunday visit. - CNA/ch