By Leong Wee Keat, TODAY | Posted: 12 November 2010 0639 hrs
SINGAPORE: Town council investments, which came under scrutiny
and took a beating during the recent global financial crisis, have seen
values recover in tandem with the financial markets. And those that
invested in toxic structured products recovered some amounts recently.
The
Pasir Ris-Punggol Town Council, which wrote off its $4 million
Minibonds investments in the financial year 2008/09, recovered $2.3
million in February. This "represents a write-back" into its balance
sheet, said chairman Ahmad Magad.
"While we're glad to have
recovered part of our Minibonds investment, we would continue to manage
our funds in a prudent manner," the Member of Parliament wrote in the
town council's annual report.
The Holland-Bukit Panjang Town
Council told MediaCorp it had recovered $1.68 million, or 56 per cent of
the $3 million invested in Minibonds Series 3 Notes, during the last
financial year.
As for its $5 million invested in Jubilee Series 3
Link Earner Notes, the town council said it "lost the full invested
sum".
But it made a net investment income of $3.67 million when
the global financial market recovered, said chairman Teo Ho Pin. "The
value of our investment has also recovered to par or above par value."
The
Sembawang Town Council, meanwhile, reported recovering the fair value
loss in its investment income and made $20 million. The Ang Mo Kio-Yio
Chu Kang Town Council achieved a similar rate of return: 6.2 per cent
over the 2008/09 financial year.
The town council annual reports
were submitted to Parliament on Sept 28. Some were made available on
the town council websites in recent days, while MediaCorp requested for
the others.
Their overall financial positions were healthy and
most cited prudent financial management.
While Hougang recorded a
$101,820 deficit in the last financial year, the rest achieved
surpluses between $1.06 million and $7.35 million during the same
period.
The Potong Pasir Town Council's $1.06-million operating
surplus boosted its accumulated surplus to about $3 million.
"Considering the size of our estate, the accumulated surplus is
substantial," chairman Chiam See Tong wrote.
Some town councils
flagged financial pressures to residents, though. Ang Mo Kio-Yio Chu
Kang expects maintenance costs to rise in the future as the town
installs more lifts, covered link-ways and other facilities, wrote
chairman Inderjit Singh.
But the annual reports do not indicate
if service and conservancy charges (S&CC) - the primary source of
income - will increase. The town councils cited efforts to keep a lid on
operating costs, with the installation of energy-saving lights as a
common approach.
Arrears management was another area flagged by
some town councils. West Coast, for example, has been "expending much
effort in arrears management and rendering assistance to needy
residents".
At the end of the last financial year, it was owed
$1.21 million in arrears.
It has taken steps to recover arrears
from residents who are not in any financial hardship by imposing late
payment penalties and administrative charges and by initiating court
action.
Better S&CC collection has helped Hougang to buffer
its operating deficit. These efforts led to a 14-per-cent drop in
arrears compared to the 2008/09 financial year, said town council
chairman Low Thia Khiang.
He attributed its deficit to the
demolition of six Housing and Development Board blocks for estate
redevelopment, which meant a reduction of S&CC collected, and to
higher operating costs charged by suppliers and service vendors.
While
financial markets have recovered, town councils stressed they are being
prudent in their investments, considering the markets' volatility.
"We
manage our funds as a diversified portfolio with risks that are well
spread," Holland-Bukit Panjang's Dr Teo told MediaCorp.
"Whilst
it's not possible to avoid short-term diminution ... we aim to provide
long-term healthy returns for our residents." - TODAY