GIC may lose more than SGD$20 billion dollars of Singapore’s reserves
January 12th, 2010 | 
Author: Written by Our Correspondent
Singapore’s largest sovereign wealth fund Government Investment Corporation (GIC) may have lost more than SGD$30 billion dollars of the country’s reserves in risky overseas investments last year.
GIC was established in 1981 as a “private” company to manage the reserves of Singapore which is accumulated from years of budget surpluses due to Singapore’s high national saving rates, especially in the 1970s.
The Government of Singapore Investment Corporation does not own the funds it manages but manages them on behalf of their clients: the Government of Singapore, and the Monetary Authority of Singapore.
According to the Sovereign Wealth Fund Institute, GIC has an estimated reserve of USD$247.5 billion dollars or SGD$346.5 billion dollars. (taking USD$1 = SGD$1.40)
Due to the global financial crisis in 2008, GIC’s portfolio slumped more than 20 per cent in Singapore-dollar terms for that financial year.
The gigantic losses suffered by GIC and another Singapore sovereign wealth fund Temasek Holdings has caused some disquiet among Singaporeans, especially netizens who have been speculating on the real extent of their losses.
GIC is headed by Singapore’s geriatrician leader Lee Kuan Yew since its inception in 1981. Temasek Holdings is led by his daughter-in-law Ho Ching since 2002.
The latest investment loss suffered by GIC in a New York property project has cast the spotlight once again on its track record.
Though the exact figures were not revealed, GIC is said to have invested a total of US$675 million (S$925 million) in Manhattan’s Stuyvesant Town and Peter Cooper Village.
News of its possible losses surfaced as early as September last year in an article on the Wall Street Journal, but GIC had declined to comment on the matter. Neither did the Singapore media report on it.
On 8 January 2010, Tishman Speyer and BlackRock Inc released an official statement saying that “they wouldn’t make a full scheduled debt payment to senior lenders on Stuyvesant Town and Peter Cooper Village.” (read report here)
The Temasek Review was the first internet news site to report on the news, well before any of the newspapers owned by SPH and Mediacorp (read our article here)
The matter would have been kept under wraps if not for the wild speculations and rumors circulating in cyberspace after we published the news which finally forced Straits Times and Channel News Asia to report on it two days later.
According to Straits Times, ”GIC has written off the losses, which reports have estimated to be around US$575 million in debt and US$100 million to US$200 million in equity” which translates to a loss of between SGD$945 million and SGD$1.085 billion dollars, a mindboggling figure. (USD$1 = SGD$1.4)
Still, the potential $1 billion loss pales in comparison to the losses it suffered in the fiscal year ended March 2009, – estimated at around $59 billion Singapore dollars by Wall Street Journal. (read article here)
GIC said last September that it has since recovered “more than half of those losses”.
As no figures were provided, we can only warrant a guess that this means it has lost between 7 to 9 per cent of its reserves of SGD$346.5 billion dollars which translates to a loss of between SGD$24.255 and SGD$31.185 billion dollars, more than the entire Gross National Product of some Third World countries.
If the amount of money is given to the 3 million or so Singaporean citizens instead, each of us will expect to receive between SGD$8,085 and SGD$10,395.
Despite the catastrophic losses, nobody has stepped forward to accept responsibility for the mistakes. Both Lee and Ho remains in charge of GIC and Temasek Holdings respectively.
Lee’s ruling party has governed Singapore continuously for 50 years since coming to power in 1959. There is no opposition in parliament to hold the ruling party accountable to the people.
All institutions of the state are controlled by the ruling party including grassroots organizations. Lee himself admitted lately that “all CCs, CCCs and RCs are part of the PAP”.
Singapore’s Law Minister K Shanmugam wrote a lengthy commentary in the PAP magazine Petir recently that “Singapore, more than most states, needs an excellent, strong leadership, and its political structures and systems must allow for effective and speedy decision-making.”
The GIC fiasco has shown once again why the PAP needs a political system which allow for “effective and speedy decision-making.”
In other democracies, a Commission of Inquiry will be called to investigate the losses and the entire board of directors replaced leading to a messy transition period. Mass protests will break out in the streets with the people calling for the government to step down and fresh elections be held.
In Singapore, life continues as per normal without much of a hassle. Singapore’s “unique” one-party system allows the PAP to make the ultimate ”speedy” decision that the best course of action will be to do nothing since doing anything will not be in the “strategic” interest of the country (PAP).
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don’t know whether GIC/temasek invested in commercial real estate in US or europe (but should have since they claim to be diversified), banks are still refinancing the loans refusing to recognize losses by forcing default.
If bernanke & co. raise rates high enough, refinancing will fail and defaults will come in. then, investments in them will go kaput.
there are many cockroaches still hiding in the kitchen. i expect more news of losses to emerge after FED raise rates
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This is unfortunately a “meritocracy” Singapore style so much publicized by the ruling party over the last 5 decades. Indeed in comparison, the entire Norvegian Sovereign Fund Board folks have stepped down voluntarily to take responsibility last year and if Singapore is so adamantly “transparent” to coin it with “democratic values of a transparent government free of corruption”, have Temasek and GIC show the tax payers some real responsibility.
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Is our CPF money safe?
Shouldn’t someone take the responsibility and resign? In the private world, if some one under performs, he/she is sacked. At the very least, they should apologize. Not that it will help, but at least that is the minimum courtesy right….
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More or less the same smart people making the same “smart” mistakes whcih can be “smartly” explainded away!
how ‘crever’,we not stupid ,leh?
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It’s a big shock.
Our government receiving the highest salary in the world and they should protect our reserves.
In the contrary, see what happen to our hard earned reserves ?
The worst will be expected when the Lee family disappears from Singapore’s government. A group of between 10 to 20 most powerful figures in the government may then gang up and rob our reserves away.
It’s just a matter of time. Singapore is so fragile. A result of low transparency.
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Rest assured pap will inform us that it is long term investment and case closed.
What we able to do now is to wait patiently for election.
If you want unreasonable reason to be explained vote for pap.
If you want a change of government, simply Vote PAP OUT.
Nobody or any political party is indispensable !
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I want to see some heads roll.
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why am i not surprised by the news?
yo mentor, what you got to say about this yo?
stop playing with your golf balls.
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Singapore reserves in billions are lost in a very short span of time accumulating “negative equity”, I am not sure if Singapore will eventually bankcrupt. This is very serious matter pertaining to the survival of the country.
Singaporeans cannot be forced to pay for their honest mistakes perpetually by increasing cost and taxes. We and our future generations will burnt out in no time.
Please vote wisely for the future and Singapore reserve.
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sometimes, it takes a real crisis to put everyone down to earth. the trumpeting of talent in the past is now more sound rather than substance when you are dealing with paper investments.
it is a big casino in the jungle out there and unfortunately we are not the dealers this time unlike the case when you are in your home turf.
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As I has always said, The PAP goverment has lost multi-Trillion of sing Dollar in investment, They always announce it in Billion. That’s Bull Shitting,This has to take few generation to recovered it, Just like America, they have to take multi-Generation to recovered.
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I find it extremely amusing that it would require the President of Singapore to unlock the reserve, much less account for how much the reserve is while a group of people (current, ex-PAP leaders and their associates) from the GIC gets to manage the same reserve daily, without being accountable to anyone except the Government, which of course, is made up of the same power circle. Perhaps someone can enlighten me as to why this is so.
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You were expecting them to earn money during that economy? I am sadden by the lost but not surprise.
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They are going to explain it as follows :
“Actually the situation is not that bad. GIC only lose about $20bn in value of investments, that’s less than 10 % of its total assets. When compared to other sovereign funds they lose more, some between 20 – 40 % of their total assets. So you see GIC actually made a profit of 10 % when compared to other sovereign funds. In other words, it’s not so bad because we could have lost 20 % ($40bn) like the others so the other 10 % which didnt lose is our profit. See, our PAP leadership is so good, we always lose less than others.”
Shifting the goal posts once again.
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why so sure its only this amount ? We will be suprise when the can of worms open …. only cents left .
This TR website MUST be improved else we are all wasting time and effort to bring light to singaporeans .
The MIW knows oppositions can only WIN via the internet . They will not sit and relax so please put most effort into this
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lky keeps warning about rogue governments!!!! voila.
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i am told, that as an investment arm, suffering losses are part of the game. am also gently reminded, that not all forumners understand the mechanics of financial investment and the costs of risks involved.
however, there is clearly one area that needs to be seriously looked into – the way GIC switches between funds/investments to garner higher returns. most SWF invest in safe funds that guarantee a safe return, over a period of time, not high risk funds/investments that may or may not have the same high returns projected, in double quick time.
some control measures need to be in place on how GIC manages its funds and the freedom it is given.
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• When ever you make mistake, it is a honest mistake.
• When you loose national reserve, it is due to down turn of world economy.
• When you about turn and fire a CEO you selected and groomed, it was due to strategic differences. (prior to the saga, our great forecaster said there were no any suitable candidate in the entire TH)
• When our great forecaster said in 2007, it was a golden era, the economy almost immediately crash and is still struggling to recover.
• When you fail to meet demand of housing needs, it is due to unpredictable short term volatility.
• When you see a major flood, it is a once in a 50 years freak event.
• When you raise prices of basic necessities, it is inevitable. (while you could have done more to help the people, instead of just simply pass the cost on in the midst of persistent unemployment, imagine what you could do if you just loose less from TH & GIC)
• When you encourage charity fund raising, you expect ordinary people to donate generously when all the GLCs, Telco, TCS especially Spore Pools (your corporate social responsibility) and highly paid ministers/MPs should lead by example. Small amount from you is huge amount from them, your small amount may mean one less holiday trip but a small amount from them may mean a few days meals for their family. Get it?
• When you need the people to strive harder, work faster, produce bigger, paid cheaper, you have a big team, the most number of ministers/MPs, even mayors for this small nation (oops, not even a nation yet, it is only a nation in the making as told).
• When you can freely criticize people and make sarcastic comment on others, you will not tolerate the reverse and will sue with no consideration.
For all the ‘honest mistake’ and ‘inevitable event’. You just don’t apologize; your ego and arrogance make it so difficult to say sorry, right? (To be fair, I think only health minister has done that for some incident) no body takes responsibility. Let’s move on………………..KNS.
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//that not all forumners understand the mechanics of financial investment and the costs of risks involved.//
that is what the tailor told the emperor whom everyone sees knows that he is naked.
gosh, all these lessons on the mechanics are now easily available in the internet. just give enough details, there will be enough knowledgeable volunteers who will pick apart and give explanation pro bono that even dummies will understand.
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It was said: Time will tell! And indeed, the facts have been told many times, again and again!
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They just dun apply what Warren Buffet said: Buy low, sell high! Instead, they buy high, sell low. Or perhaps buy high, sell for peanuts, or even nothing!
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When the Banks here cheated retired Singaporeans of their saving and hard earned money through veil bank products like DBS and minibond..the old fart mentioned ” They went in with their eyes wide open “..Now GIC went in with their eye wide open too??…They duly deserved such retribution!!! but the problem is …not their personal money but the Country reserves..so the government must be open and transparent as heads must rolled for such huge losses!! So what the old fart going to say now???..SPH is keeping this news in a very low profile??..what all these???
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What to do? Its happened.
Lets continue to accept.
We are singaporeans, please.
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Lord Blackwood,
“some control measures need to be in place on how GIC manages its funds and the freedom it is given.”
So, who in your opinion can check on them? as in open the books?
If any.
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i wonder… whether GIC has ever made money since it was set up. and if so… how much did it make? perhaps the gvernment should come clean with it…
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Who is going to make good of all these losses??? Taxpayer’s money is lost, tax payers now need to top it up. We should expect to pay more in fine and other taxes.
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In other country if you lose so much money, you are surely in trouble, the people will get angry. They will go on the street and ask those loser to take responsibilities and march them out of office. In Singapore we have a different ideology.
In Singapore, people loves LKY. Even if he loses all our monies, it is like he is losing his own money. He has every right to lose all our monies. We consider that without him we probably don’t have any of the money and the money is more his than ours. What a funny notion but well what the heck, it is not my personal money. Anyway when you gamble, sometime you win, some you lose. Anyway we have handled him and his team the key to losing more monies and no one can stop them from earning their big salaries that cannot be deducted for incompetency. Up till today they still have the support of the majority.
Singaporean are the born loser. We call one another fool, while those incompetence fools are laughing to the bank.
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to be fair, if GIC has never made money at all since it was set up, you still be staying in a kampong..
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Wow. Government will never admit mistakes, people will never dare to complain publicly. Singapore is exactly like China!
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To janetnt :
to be honest, if GIC keeps losing money like this, you are going to stay in a kampong …
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To all
If our forefathers and us did not work hard and honestly paid our taxes,GIC would have been bankrupted earlier!
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//janetnt
I wonder why we will end up staying in a kampong when the first flats were built before 1981 and GIC was only set up before 1981.
How did the first flats got financed?
Please check your history.
You don’t make any sense.
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GIC was only set up in 1981
That’s what I wanted to say.
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It is not a coincident why we are seeing a wave of fees hike from the govt (masked as HDB rule change) when GIC losses were made known.
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I dare say GIC stopped making monies after GOh KS left GIC.
Whatever he made, is milked by the pigs now.
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//janetnt
stupidity knows no boundaries.
GIC was set up in 1981.
There were already a town of HDB flats in Toa payoh in 1973.
What makes you think that flats are built using GIC monies?
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1. It is true that investments will either make or loose money. Investors should be cautioned about this fact. GIC / Temasek, did make and did loose money over time.
2. Singaporeans did not know about these gains before – because we were never told the kind of portfolio which was held by GIC / Temasek – Tharman was very clear about this point – Only on need to know basis and Singaporeans “did not need to know”
3. I will take a bet now and you all heard it from me here (on TR) 1st – that Chip Goodyear left partly for philosophical reasons – as a outsider and professional investor – he wants to be accountable to shareholders (Local Singaporeans) and not just the Board.
When told that he should NOT divulge Temasek’s value, SPIN all losses in the main media, How and What Temasek will be investing in (effectively, its decision making process) – then, I guess he has “strategic differences”
4. Theoretically, Tharman is correct – we, the people of singapore need not know – we did not know how well we did before, we need not know these losses now.
Well, more accurately….WE NEVER ASKED BEFORE AND SO WHY ARE WE ASKING NOW?
5. Talent to Lead Temasek, the search goes on – yes, of course there are talents around – it is simply that the criteria which Temasek is looking for
is not so easily avail….the person should not ask too much questions, should not divulge too much info and should only be accountable to MOF and its own Board.
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I just wonder with such a performance, what bonuses did the staff of GIC and TH get last year. A little bird told me that the very senior staff got tens of millions in bonuses on the grounds that they ‘earned’ money for GIC and TH by losing less than they otherwise would. If you have trouble following this logic it is because the whole concept is illogical.
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The link between CPF and GIC, Temasek. More complicated than you think fellow posters. But govmin’s argument that there is no link is BS.
http://atans1.wordpress.com/2009/12/26/where-gic-and-temasek-gets-their/
And how top US paper describes Temasek
http://atans1.wordpress.com/2009/12/30/how-nyt-describes-temasek/
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I think a point brought up earlier is absolutely correct. Ultimately what we need is transparency. Losses and gains are expected, however, what is going to stop future ‘leaders’ from profiteering from the reserves if a culture of transparency is not cultivated now
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You know what these financial folks will say: “Past performance does not guarantee future performance”, so at some time, someone will come out and justify GIC’s losses by blaming the world economy. They try to make us forget that GIC and Temasek recruited some of the “brightest minds” in their ranks of economists and analysts– so obviously book-smart scholars are nowhere in comparison to tried-and-proven street smart Wall Street traders.
…incidentally, does this mean increase in income tax or further delays to when we can take out our CPF?
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VOTE the monkeys out!
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To be honest, if GIC keeps losing money like this, “our woman is going to be maids in a foreign country”…
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janetnt :-`to be fair, if GIC has never made money at all since it was set up, you still be staying in a kampong..’
pathetic effort at diversionary tactics – here it is about transparency, taking responsibility for bad decisions, and not hiding behind the MSM cloak – closing eyes and hope the storm will go away. no-one takes the blame, take comfy pay every month, etc
i rather stay in a kampong – the present HDB environs are full of dog shit, drunks, litter and urine smell, loan shark graffiti. is it any better?
of course your next response is to blame Sporeans for all this and accept our bad karma.
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Its precisely because of LKY and his daughter, Ho Ching, at the helm of these two investment companies that GIC and Temasek are getting “sapued”.
Their positions gives them a very very fragile PR. Should these two companies attempt to recover losses.. its just going to get more publicity and more murmurings about nepotism. The natural reaction to this fear of publicity is to keep quiet. Unfortunately it just means they are easy to take advantage of…. and this recent loss is likely to only further perpetuate that idea in the financial circles, won’t it?
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These jerks getting Millions$ and throwing away billions$ without any consciences and accountability really sickening!!!
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S$20B/S$346.5B = 5.8%. Thus TR estimate of GIC losses divided by the estimated reserve of GIC reserves is less than 6%. With the market in such upheaval, if an investor lose 6%, we cannot say that that he is a bad investor.
Using Warren buffett berskire hathaway share as a proxy,
2008 losses = -32%
2009 gains = +2.7%.
Buffett is still considered a great investor and we should not judge Buffett or GIC investment over a short period of 2 years unless he loses more than half the value of the portfolio.
If u consider Buffett or GIC as bad investors because of their performance in 2008/2009, then if u are so smart, wht are u not rich?
I wonder how many people who criticise GIC performance has held a stock portfolio of more than S$200k . If u have never held a stock portfolio, are u qualified to say such unkind things?
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Transparency in the management of public funds cannot be compromised in whatever name. Where there is no transparency, complacently, compromise and subsequently dishonesty creeps in. I am not saying there is dishonesty or corruption yet. But there is NOT enough check and balances built in.
Like the naked emperor who believed he is wearing clothes of the finest quality, even the best and most discipline party can be doing something less than right if they are cheered on by supporters beholden to them
I am beginning to see the importance of having an honest and sincere opposition in Parliament.
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Do not be worried citizens of Singapore! The goverment has already come out with the solution to plug the $925 mil hole caused by GIC.
For the new financial year, excise tax for cigarretes will increase so that relevant tax receipts will increase from previous level at $700 mil to $925 mil.
Voila! problem solved. In just 1 year, this loss will be covered!
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> “GIC is headed by Singapore’s geriatrician leader Lee Kuan Yew…”
Uh… a “geriatrician” isn’t an old person, it’s a doctor that specializes in old people.
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a dose of an incompetent government. there you get it.
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Its scary!Our small sized island’s GIC losed BILLIONS!Some of the world’s banana republics also never lost so much in so short a time!I wonder if I will still have a home if they continue to lose and lose and lose and lose and lose and lose BILLIONS!HELP!!
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Alternative parties should take note of this important thing: In Singapore, almost every adult has a handphone.
Therefore, what I suggest is that your supporters should gather as many handphone numbers as possible from those who are likely to vote for you and ask them to virally spread the news about a website (which you should set up) where other people can register to receive your smses. Make sure it is opt-in and keep proofs that it is done by the owner himself/herself. Verify each opt-in so that you won’t get charged for sending unsolicited smses.
Then, one day before the elections, mass SMS those people and remind them to vote wisely.
I am sure this method is more efficient than yelling outside MRT stations selling books. Try it. You have nothing to lose.
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lee sg wondered how many people who criticise GIC performance has held a stock portfolio of more than S$200k . If u have never held a stock portfolio, are u qualified to say such unkind things?
So going by your logic the ministers or MP who do not live in public housing or take public transport are not qualified to make policies on them right?
So lesser mortals cannot criticise because we are not qualified to do so? Therefore they can’t be criticised at all?
So how long-term is long term investment? let’s not play with numbers and more transparency please.
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GIC loses $1bn ! We will be staring at GST being increased from 7 % to 10 % very soon
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to leesg,
you talk abt buffett, do you know buffett admitted to investing mistakes made even they were just a miniscule of his portfolio.
shouldn’t GIC/Temasek emulate him in transparency and accountability?
buffett said that “if you are going to deceive others,sooner or later you are going to deceive yourself”
remember buffett rule of investing: Rule no.1 Don’t lose money rule no.2 remember rule no.1
yes i agree handling a big portfolio will limit you to lower returns but that’s no excuse for taking unnecessary risks with your portfolio.
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Singapore’s premier has NOTHING to do with GIC’s loss and especially not this titanic loss in NYC, over a bad property deal gone sour. I have been to Singapore and it is a beautiful city & all Singaporeans should be so thankful that you have a great leader.
However, the real estate folks in GIC should be AXED for this especially the top bosses/investment heads or directors who oversees and manages the real estate investment decisions in the USA. They should take responsibility. ( By the way, are these decision makers Singaporean by nationality? Are there working for the interest of Singapore people, or are these foreigners working for their bonuses & did they immorally put Singapore’s reserves at risk? Can’t find this info in the GIC website although it does show that there is an office in NYC and in San Francisco. )
Doesn’t investing in real estate require very local expertise? GIC has an office in NYC so, why didn’t they understand the complexity & risk of investing in ‘affordable housing’ (Stuyvesant project)? Were the folks sleeping on the job or maybe this deal was done from folks in the San Francisco office?
Ok..Ok..granted GIC had JV partners such as Tishman & Blackrock and these folks are supposed to be real good at property investing but , seriously…did GIC just followed their partners without doing their own investigations/ diligence? Obviously, the underwriting / financial anaylsis was flawed as it did not take into account the severity of the risks of mezz debt financing and to think,..that they intended to raise rents on the tenants just by sprucing the place up with gyms & etc! Sound like mafia tactic…or just desperate measures to gain some returns…which is really not the goal of a SWF. GIC should be investing cautiously for long term benefits, right?
Funnily too,…Fannie Mae & Freddic Mac lost a lot in 2009 due to many bad loan deals that they made. Ironically, they weren’t as dumb as the GIC folks who did this deal by providing mezzaine debt and equity as well! The deal was reportedly made at the peak of the market. Do the real estate bosses KNOW what they are doing? Why invest in both? Greed? Or is there just some pressure to invest or you lose your bonus or your jobs?
Shame on you! You have lost Singapore’s reserves…and you have smeared Singapore Govt name as Singapore is now associated as landlord who tried to twist the arms of tenants in affordable housing just for their own commercial gains. I live in NYC and because of your negligent, there is precedence now with your mistake & this NY appeal court case is cited by other affordable housing estates in NY. I guess your loss is the gain of other affordable housing folks!
As for the increase in taxes to recuperate this loss,..good luck Singaporeans. I am not shopping there anymore if yur GST is going higher! NY is only 9.25%. YOu want to tax 10%!!! Why bother? I will shop online.
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//janetnt
GIC is using the opportunity to announce the losses that they have been making all these years.
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