POST OFFICE SAVINGS BANK'S INVESTMENTS IN SECURITIES OUTSIDE AND INSIDE MALAYA

Mr David Marshall asked the Minister for Finance what is the present extent of investment of the Post Office Savings Bank in (a) securities outside Malaya, and (b) securities inside Malaya; and to what extent there has been profit or loss in respect of securities in both classes at the market rate.

Dr Goh Keng Swee: Sir, the Singapore Post Office Savings Bank has securities in Malaya and outside Malaya valued at $37,515,318.08, according to market prices as on 31st December, 1961. Of this amount 63 per cent or $23,542,024.96 was invested in securities outside Malaya; 3 per cent or $1,184,203.12 in securities of the Federation of Malaya and 34 per cent or $12,789,090.00 in securities of Singapore.

The book value of the total securities as at 1st January, 1961, was $36,903,066.48, in comparison with the market value of $37,515,318.08 on 31st December, 1961. Therefore, during the year 1961 the book value of securities held by the Singapore Post Office Savings Bank had, in fact, appreciated by $612,251.60. The breakdown of this increase in net values of the securities is as follows: - $ c. Securities held outside Malaya had gone up by 324,056.60 Securities in the Federation of Malaya had depreciated by 25,950.00 Securities in Singapore had appreciated or gone up by 314,145.00 giving thereby a total increase therein of $612,251.60

The book value of securities fluctuated as follows in other years: - $ c. In 1958 it went up by 278,140.00 In 1959 it went down by 240,835.00

In 1960 it went up by $606,190.00. I have given the figure for 1961.

On occasions when it was necessary to sell some securities held by the Savings Bank only those securities that were nearing a few months before their maturity dates and those that had actually matured were realised. Consequently, in realising these securities, no capital gain or loss was incurred as compared with the par value of these securities.

Mr David Marshall: In the light of the figures given by the Minister, he will appreciate that the investments in Singapore seem to show the best returns with twice as much profit as those overseas. In those circumstances, would he consider investing some of that 63 per cent that we invest outside Malaya within our shores?

Dr Goh Keng Swee: Mr Speaker. Sir, if it is advantageous for us to do so, we will certainly do so. But there is one factor which should be taken into account, and it is this. Over the last eight or ten years, there has been a decrease in the total deposit of the Singapore Post Office Savings Bank due to the fact that most new savers prefer to bank their savings in the commercial banks which have shown a phenomenal increase in recent years. The result was that the Post Office Savings Bank had to liquidate some of its long-term assets as and when they matured. This being so, it is better to keep a fair amount of securities in the London money market where large sums of money can be realised at very short notice. If these sums are not available and if a large part of the securities are held in Singapore, it will not be easy for the Post Office to sell them at short notice without loss of capital. As I said, the increases or decreases as entered in the balance sheet of the Post Office Savings Bank are really book values. They do not reflect the actual purchases or sales.

Mr David Marshall: I want to ask the Minister just one more question. The investment overseas, Sir, is over $20 million. The utilisation of that money locally would assist our own industries, or even in Malaya it would assist Malayan industries. There is an advantage, therefore, in investing locally.

Mr Speaker: Order. The Member for Anson must realise this is Question Time and not time to debate. If the Member will just ask the question, he will be permitted to do so.

Mr David Marshall: In those circumstances, the Government could not itself advance such monies which the Post Office may require in respect of realisation which it is not possible to make speedily, and provide for investment of these sums in Malayan securities.

Dr Goh Keng Swee: Sir, the need for investing more of local savings in Singapore must be borne in mind. Indeed, that is the reason why we in 1960 passed through this Assembly, a Bill to amend certain provisions of the Post Office Savings Bank Ordinance which allows the whole of the deposits in the Post Office Savings Bank to be invested in Singapore; formerly, there was a limitation of 40 per cent. But considerations of liquidity, for reasons which I will explain, for the time being, although there may be a need to increase more investments or more securities in Singapore, I do not think that we should go the whole hog, unless and until a proper money market is established in Singapore which can meet large claims for liquidation of assets. In this instance, for instance, even the Federation of Malaya, which has similar laws to ours, is keeping about half of its Post Office Savings Bank assets in London.