The truth about Temasek, CPF and Lee Hsein Loong

Temasek doesn’t really make 16%
Your CPF money isn’t really safe.
And Lee Hsien Loong is a coward.

Sometimes we get so caught up in the day-to-day arguments that crop up on Facebook, social media, and even in real life, that we lose track of the big picture. Despite the very obvious question marks surrounding the way CPF funds are managed, though the government, through Temasek, through GIC and ultimately by the Lee family, I realise that I’ve written almost nothing on the topic. Given Lee Hsien Loong’s sustained and ethically dubious attack on fellow blogger Roy Ngerng, now seems like a good time to visit these topics.


It is completely inconceivable that Temasek has achieved the returns it claims through ordinary open market investment performance. Any attempt to attribute these returns to particularly excellent investment decisions by the Prime Minister’s wife is beyond ludicrous. Professor Balding has written on a few occasions about how out of kilter the numbers claimed by Temasek look when compared to pretty much every other index, benchmark or verifiable institutional investor (of which there are plenty). Are we supposed to believe not only that Ho Ching is the greatest investment manager of recent years, but also that all of her predecessors at Temasek were also the greatest investment managers in the world during their times as well? This is an incredible claim and the onus is on Temasek to prove it. Temasek has the numbers. If Temasek wants to claim extreme out performance of every benchmark over many years, let them go ahead.

Of course, Temasek will not come out and prove anything, because they cannot. Any careful attempt to verify the numbers will just throw up awkward questions. How much of Temasek’s returns are attributed to being sold government assets at offensively cheap prices? How much of Temasek’s returns are subsidised by government policy? Since the PM and the CEO of Temasek are literally in bed together, the scope for conflicts of interest is obviously massive. Can Temasek and the government prove that no errors have been made? Can they prove that no transactions were mispriced due to information leaks or conflicts of interest? Can Temasek and the government prove that suitable “Chinese walls” exist to prevent such issues arising? Do such “Chinese walls” extend to the bedroom of the Prime Minister and his wife?

Let’s just talk briefly about one deal between Temasek and the government. The sale of Changi Airport in 2009 for a reported S$3.3 billion. Temasek (under Ho Ching) paid this price with a cash injection from the government (under PM Lee). Yet Changi Airport was reported as having total assets of S$7.2 billion. Not to mention the fact that it sits on 1,300 hectares of valuable land. It’s interesting to look at how much that land itself might have been worth. Also in 2009, a 1.4 hectare land parcel at Jurong West was sold for S$38.5 million, that is about $27.5 million per hectare, which pro-rated for the size of Changi Airport puts the land value alone at more than ten times what Temasek paid for the land plus airport. Or to put it another way, you could demolish Changi Airport and bulldoze the runways, and just the land itself would still be worth more than Temasek paid for the worlds greatest airport. This is the sort of sweetheart deal that allows Temasek to claim unrealistic and inflated returns.


You may be wondering, if Temasek’s investments don’t make such great returns, where do the funds come from to pay back the money borrowed from our CPF accounts? The answer, obviously, is that it doesn’t come from anywhere. Obviously, as we are reminded every year, the CPF money is not getting paid back. Borrowers don’t just default on their borrowings, and unilaterally restructure their debts for no reason. Yet this is what happens every year when the minimum sum is increased, and when the retirement age is increased. A couple more tricks exist that governments can use to make inconvenient debts go away. The first is to “inflate it away”. This happens when the interest rate on the debt is below inflation, and in real terms the notional size of the debt will diminish. Again, this is exactly what we see when a large chunk of CPF savings is yielding 2.5%. Of course the last trick is to run a ponzi scheme, where new CPF members funds are used to cover the losses of those who need to make withdrawals, and we see an element of this again in the government’s never-ending immigration policies. To many people, Singapore is pretty full, and the case for increasing immigration and PR numbers to 2030 and beyond is not at all obvious. But all those new CPF members contributions would be convenient for the government in the case of CPF insolvency.

So, we have restructuring of the CPF debt, we have delayed repayment of the CPF debt, we have government policy that inflates the CPF debt away and we have government policy that guarantees an endless but hardly justified supply of new contributors to the CPF scheme. It looks bad.

Maybe now is a good time to remember that the largest increase in the minimum sum in recent years was 10.4% in 2009, coming hot on the heels of GIC and Temasek losing over $50 billion dollars in the global financial crisis. Coincidence? Or further evidence that a need to cover loses is driving the government’s policy to restrict withdrawals?

A few other thoughts on the CPF money. Is it safe? Really safe? Suppose that it is. The government has an investment model and system that guarantees the 2.5% on your ordinary account and also guarantees the 4% on the other accounts. Why doesn’t the government stop doing whatever it is doing that only guarantees 2.5% on the ordinary account, and just do whatever it is doing that gives 4% on the other accounts? Remember, money doesn’t just grow on trees, certainly not at Temasek. They must be doing something to make that 4% if it is really guaranteed, so what is it, and why don’t they do more of it? Why can they not guarantee 4% on the ordinary account as well?

Final point on CPF. The current outstanding debt is $249 billion, and the interest rate is presumably some mixture of 2.5% and 4%. Let’s be generous and assume 3%, that puts just the interest payments at an eye-popping $7.5 billion each year. So even if no one retired, and even if no one withdraws any of their CPF funds, the government has to find $7.5 billion, each and every year, just to pay the interest due on the various accounts. Just to give some context, $7.5 billion is a huge figure, more than the government’s entire annual spending on any one of many essential ministries including health ($7.1B), transport ($6.1B), trade and industry ($2.6B), national development ($2.0B) or in fact many others. Where is this money coming from every year, especially in 2009 when they lost over $50 billion?

Lee Hsien Loong

How many people really believe that Lee Hsien Loong became Prime Minister on merit and not because of his father? And how many also believe that he became Chairman of GIC (again taking over from his father), purely on merit? It is fair to say that the Brigadier General who apparently cannot shoot straight has done very well for himself. And with his wife at Temasek, and a brother bouncing around some of Singapore’s largest companies and statutory boards, not to mention the whole Hotel Properties “thing“, that “whiff of nepotism” has unfortunately never been far from Singapore’s most powerful family.

But while Lee senior has on occasions been willing to stand up and defend his reputation in court, the eldest son has preferred to hide behind his lawyers, and hide behind the legal system his father built. And since going to court to defend your reputation, and going to court and then refusing to answer any questions about your behaviour are two very different things, it is hard to know how much of a reputation LHL even thinks he himself has to protect.

Remember that the New York Bar Association once described how the Singapore government has “been willing to decimate the rule of law for the benefit of political interests”. This is the legal system that the Lees built, and it is the den into which one must step when challenged by the Lees to “prove” any suggestion of their wrong doing. The last (perhaps only) person to succeed was JBJ, and they did no less than re-write the constitution to prevent a repeat. Bear this in mind when Lee Hsien Loong threatens to sue Roy, or when the AGC threatens to sue Alex Au for that matter.

You see, Lee Hsien Loong’s political career is fundamentally built on a lie – that he has the merit to be in all the positions of power that he enjoys. And only by refusing to answer any questions, hiding behind his lawyers, hiding behind judges, hiding behind a legal system decimated by his father for political ends, can he maintain the charade. This is why any defamation case brought against Roy Ngerng is likely to be nothing more than a sham, and why Roy has nothing to gain and everything to lose if the matter goes to trail.


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21 responses to “The truth about Temasek, CPF and Lee Hsein Loong

  1. M C

    Excellent article!!!

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  3. GingerBaker

    something wrong with your change airport figs. shldn’t it be 1ha is $27.5m?

  4. George

    Unlike the Thais, a military coup here is well neigh impossible since the military top brass here are PAP handpicked – the very reason why lky was so confident of calling in the SAF should his party is sent packing by the opposition in a constitutionally valid change of govt after a GE.

    So what are we left with?

    • Matthew Oh

      The PAP regime under LKY and his son LHL is the most evil in the world. Because Singapore is such a small island and also all those who have been installed into the positions of power and are being rewarded by increases in salaries and a lot of benefits are all those ‘who know what to do’, including hidden agena and control over all media, it is very difficult to start a revolt or to express rational criticism to protect the interests of the majority, especially a lot of the locat citizens who have been exploited by these ‘elites’ (‘talents’) and deprived of their ritghts. This CORRUPTION OF POWER, by use of law to sue all oppositions into bankruptcy or even imprison many under the ISA Act in the past is the most EVIL in the world.

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  6. stewart

    please expect that letter from drew and napier in the mailbox..
    there is NOTHING we can do about the money…

  7. JG


    BTW, here’s what Alfian Saat and Dr Ang wrote about PM Lee : “Cannot say PM became PM because of his father. Cannot say PM’s wife is CEO of Temasek because of PM. Cannot say PM ‘criminally misappropriates’ CPF money. .
    What then can be said of Lee Hsien Loong? Is it possible then to call him a pampered princeling, a bratty dauphin, overpaid, out of touch (‘mee siam mai hum’; called a group of Malay women, regardless of age, ‘makcik’; said ‘unhappy people go on the internet’, which is an awesome way to connect with young, wired voters), gaffe-prone (forgot to observe bowing protocol in Germany, made a wisecrack about getting pork soup out of a tap in China–because of pig carcasses in the rivers–and free smoke by opening windows), authoritarian (‘fixing’ the opposition), bullying (all the defamation suits he’s launched), ungracious (used ‘condolence letter’ for JBJ’s funeral to say that JBJ ‘sought by all means to demolish our system of government’), rumour-haunted (first wife’s death, Dhanabalan slap), insincere, ineffectual, rudderless, uninspiring, insipid, awkward, wooden, contrived, pink-shirt-fixating, mincing-walk-suppressing, gawky white horse whose photo ops expose a deep elite discomfort of mingling with the very people he’s supposed to represent and serve? Oh dear me, is it possible? Keep on scorching the earth, Ah Loong, because lalang grass always grows back after each fire–spectacularly.”

  8. My proposed solutions:
    1) CPF Interest Rate should be reinstated to 4% p.a. for OA which was the rate paid to CPF Members during 1G PAP Govt (before the advent of our SWFs) and 6% for SMRA – Even on worst-case basis over the long term (commensurate with the long-term locked-in nature of CPF contributions, esp if CPF Withdrawals for housing are further limited), CPF savings which are mostly used by extension by our SWFs for investment forays would yield a return to SWFs of more than 8% p.a.. As SMRA Withdrawals are limited by vital needs (medical, living expenses) and the lock-in period is mostly until death and usually from age 55-65, an extra 2% bonus should be achievable.

    2) CPF Pay-outs from age 65 should be pegged to average inflation for food, transport, healthcare, housing, insurance (typical major spends of retirees) – Since CPF Min Sum is pegged to inflation, CPF Pay-outs should be too.

    3) CPF Future Withdrawals for housing should be limited to owner-occupied units (deemed for one unit if bought by married couple under single name, or deemed as investment unit if bound multiple names for singles) with added rigour in verifying/changing NRIC-registered address – CPF savings should not be exposed to high-risk investment (if CPF withdrawals are not allowed for penny stocks, they should not be allowed for shoebox condos which are equivalent of penny stocks when not bought for owner-occupation). Real estate investment risks should be taken only with private savings (not retirement savings) that buyers envisage would be sufficient and sustainable over the tenure of housing loan.

    4) CPF Past Withdrawals for private non-landed housing should be protected by mandating an additional settlement option of one-for-one exchange for qualifying owner-occupiers with only 1 residential unit (whether in Singapore or overseas) based on factual parameters of (i) strata title area, (ii) floor level and (iii) geographic orientation of living room main window where the redevelopment GFA exceeds current estate GFA by more than 30% with prohibition for sub-sale or resale by exchange owners until TOP or 100% sale of relevant phase redevelopment by developer – Housing security and unlocking land value for CPF members (instead of corporate developers) for homes bought with CPF savings and without any public subsidy must be honoured, esp when majoritianism by 80% will (as opposed to free market forces by 100% will) was legislated for private property rights.

  9. syed aljunied

    Unfortunately, people like andyxianwong are a small minority in Singapore. To effect the desired change, Singaporeans must first change their mindset (be less complacent) and develop a sense of self-respect.

  10. Pingback: The truth about Temasek, CPF and Lee Hsein Loong -

  11. SJI

    An almost good article.

  12. Tiny Tim

    Quote: Also in 2009, a 1.4 hectare land parcel at Jurong West was sold for S$38.5 million, that is about $2.75 million per hectare,

    I think something is wrong here. Should be $27.5 million. Please correct this.

  13. Sgcynic

    Did Romania have a coup? East Germany? Thought the people just decided one day to throw off the yolk.

  14. BTeee

    “Can they prove that no transactions were mispriced due to information leaks or conflicts of interest? ”

    ..funny, shouldn’t you be the one who is trying to prove it?

  15. Angrysingaporean

    Fortunately unlike the Thais, we wun get a military coup here at the moment. But I sure think the military should arrest traitors like you who even dare think about tearing the fabric of our society

  16. Richard Jefferson

    “Also in 2009, a 1.4 hectare land parcel at Jurong West was sold for S$38.5 million, that is about $2.75 million per hectare”

    Do you mean $27.5 millions per hectare?

  17. Milfy

    Nothing, apparently.

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