20151012 Should GIC invest US$1 billion in Brazil’s healthcare sector?

Five months ago, it was reported that GIC paid US$1billion for 15% of Brazil’s Rede D’or.

Rede D’or ranks among Brazil’s biggest hospital operators with 4500 beds across more than 27 locations. Although Brazil’s healthcare sector is profitable, it is “grappling with an ageing infrastructure, a dearth of qualified staff and rising costs”.

PAP seems to have got its priorities all wrong – it has prioritised foreigners over citizens. Why does it not invest in citizens’ well being and force hospital patients into tent/corridor wards? Why do hospital appointments stretch for months, some more than a year?

Why are we not investing in our local doctors but import many foreigners who don’t seem to be qualified?

Singaporeans would understand if PAP did not have the funds to finance healthcare infrastructure but it did. The problem is billions are invested overseas because Singaporeans’ well being does not provide any financial returns to PAP.

But our Brazilian investments do not guarantee any returns because they are extremely risky as is evident by the exchange rate volatility.

Since May when the investment was first announced, the Brazilian real has already depreciated by 17%.

Over a 10-year period, the Brazilian real has halved in value. This would mean the returns (dividends, if any) if converted into local currency has been steadily declining in value or any capital gain must exceed 100 % just to break even.

By assuming huge risks in its investments, it appears GIC has not hedged its currencies. GIC is simply taking a huge bet that there’ll be capital gains because its investments do not provide a sufficient steady stream of dividend income to pay CPF members. GIC could clarify if this is not factual.

Since 1994, the Brazilian real has lost about 900%.

Should GIC make billion-dollar bets, instead of smaller ones, knowing full well the impossibility of exiting such investments when they sour?


Before PAP invests in foreigners’ healthcare infrastructures, it should ensure that thousands of Singaporeans are not warded in makeshift wards and hospital appointments do not stretch longer than a year.


Image source: SDP

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11 Responses to 20151012 Should GIC invest US$1 billion in Brazil’s healthcare sector?

  1. ron says:

    they should invest BUT not with the citizen $

  2. dan says:

    Hey, I came across this post and found it pretty interesting. Firstly, I’m not sure you fully understand GIC’s role. Before reading on, I want to clarify that I am just an average Singaporean youth, and the content below represents only my humble opinion.

    Before explaining GIC’s role, I’d like to start with the CPF. I am assuming you agree that the CPF is a functional and actually beneficial pension fund. (not to mention, one of the best in the world, listed as top ten in Mercer’s Global Pension Index) Let’s say that the CPF monies that the government has collected amounts to a total of 200B. Now, this money is not the government’s. It belongs to the people, and if the government is to keep it for anything between 10-40 years, until retiring Singaporeans need it back for retirement, the money would have devalued due to inflation, right?

    SO, in order to keep it from devaluing so that the 200B is still worth the equivalent of 200B in the future, the government needs to invest it in something that gives returns of equal to or MORE than the inflation. Seeing that inflation in Singapore is an average of about 1-2%, and that our CPF ordinary account is giving 2.5%, it means that our money would not only be protected from inflation, but also be growing by about 0.5-1% per annum. That is already infinitely better than just putting it in the bank, whose interest rates can’t even cover for inflation. If you’re saying, “Hey, I can probably invest it better myself for returns of 5-10% per annum in bonds and whatnot”, remember that this is your pension fund, and bonds/stocks/real estate aren’t nearly as safe as the government’s word. (not to mention their vast reserves) Besides, our government’s credit rating is rated triple-A, the highest rating, by all major credit-rating agencies including Standard&Poor’s, Fitch, Moody’s, JCR, and Dagong.

    So moving on, how is the government able to protect our CPF monies from the 1-2% inflation and still provide 2.5% interest in our ordinary account and 4% in our special accounts??

    The answer is GIC. Remember the 200B? It is “given” to GIC through the Special Singapore Government Securities (SSGS) so that GIC can manage these funds and grow them. (The SSGS is guaranteed by the highly credit-rated Singapore Government, in order to pacify doomsayers and fearmongers, so now you can’t say that our CPF monies are going to disappear.) Anyway, this means that GIC DOES NOT OWN any of the things that they buy, they are merely buying and investing on behalf of the Singapore Government, unlike Temasek, who actually owns all their assets, which is owned by the Minister of Finance, whoever that may be.

    Now that you know where GIC’s fund comes from (your CPF), think about what you asked. You asked why GIC isn’t investing into Singapore’s healthcare system. If we took the 200B and put it into the healthcare system as government spending, that right there is fraud. Yes, you spent your post asking the Gov to commit fraud. GIC’s funds represent a portion(not all) of our CPF monies, and taking citizen’s money to put into healthcare as government spending means that when you want to retire, the government no longer has your 200B to give back to you! That is why on the GIC site, it specifically mentions that “No CPF monies go towards government spending.”


    Moving on, GIC employs the brightest Singaporean sons and daughters to seek out the most profitable deals, including public equities, private companies(which includes Rede D’or), foreign real estate, regular bonds and cash, and some bonds against inflation. After all they’ve done, they manage to get approximately 5% per annum REAL rate of return, which means returns after inflation. This 5% return of their portfolio, how much is it? No one knows, because if they told you its 20B, then you’ll know that their portfolio is 400B, which, together with information on our foreign reserves held by MAS and some other miscellaneous info, will reveal the total amount of money our government has, and that is not information you want to be giving to other governments or people who might want to attack our economy or the SGD in financial ways.

    Moving on, did you know that Temasek/MAS/GIC’s investments have been good enough that last year, 8Billion of the gov’s budget came from Temasek/MAS/GIC’s investment returns in the form of the NIRC? And that is only about half of the returns, because 50% of the returns need to go back into Temasek or GIC or MAS to further grow the funds so they can make larger investments and more returns in the future.

    Here’s a link in case you need further information:

    If you got this far then I thank you for your time. Everything I know was read from official online sources, so do correct me if I mentioned something wrongly.

    • Phillip Ang says:

      Thanks for reading. Our assumptions are worlds apart. 😦
      International rankings mean nothing where a non-transparent fund is concerned. Have you asked yourself the origin of all the info fed to foreign media?
      “The money belongs to the people” is only on paper. When legislations could be changed at the government’s whim, its as good as belonging to the government.
      During the last 7 years, CPF balances doubled. Which national pension fund does this?
      Perhaps you may have read other posts I’ve written on CPF but these are a few questions worth repeating:
      Why is the government investing 100% of savings meant for retirement overseas knowing it has to be converted into local currency?
      Why is our CPF subject to extremely high and unmanageable forex risk?
      How does the government discharge its CPF obligations with so little certainty of its future income stream?
      If you look at GIC’s investments, most pay low dividends, some hardly any.
      The government can’t return us our CPF and that’s the reason for implementing the minimum sum scheme.
      You probably have some finance background/interest and if start to look a little deeper into this issue, you will sense something is terribly amiss.
      Are you unaware that our CPF had been used to finance infrastructure? Surely you don’t think we need $200 billion for our healthcare system!
      A lot of questions you have raised have been answered in other posts under “CPF” or “Temasek”. Would like to explain here but it’ll take quite a while. 😦
      Official sources are not to be trusted unless the government improves its transparency.
      Do continue to be interested in CPF issues but don’t accept everything blindly. Try to analyse a little bit more. Why do you even trust statements from MAS, GIC, etc when more than 90% of MPs, our representatives in parliament, DO NOT KNOW where OUR CPF is invested? You should be trusting your MP so go ask him. But don’t be too hopeful.
      Help Singaporeans get to the bottom of the CPF issue and be very mindful of propaganda.

  3. dan says:

    Hi Phillip, thanks for replying. I’ve only read a few of your articles unfortunately, so maybe I should be reading the rest. I agree with the fact that we should not accept everything blindly. Perhaps we should disregard international rankings too.

    However, I don’t think we should not trust official sources. I think we need to be discerning about what can be trusted. Growing up in Singapore, we have only been exposed to an efficient, centralised and most importantly, streamlined government. This leads us to think of every department and person working for the government as one organism, all headed by one person, the prime minister. People fear things that they don’t understand or can’t control, and our government is basically both. However, we shouldn’t fan our biases and jump to assumptions/conclusions.

    For example, Temasek is audited by PWC, which is a foreign multinational company, one of the Big Four. Their reports were unqualified(which is good) in accordance with GAAP standards. So, what are you going to say about that? That we shouldn’t trust Temasek because maybe they weren’t really audited by PWC? Or that PWC is corrupted because Temasek is a huge company bribing them? PWC has a reputation and in fact, as a US company, they’d be much more inclined to expose Temasek if there were any discrepancies. I don’t know how else to take that statement by Temasek other than the fact that their finances are completely in line. If you agree with the above paragraph, then we both agree that Temasek is unequivocally NOT corrupted. No need to second guess, no need for conspiracy theories.

    “When legislations could be changed at the government’s whim, its as good as belonging to the government.”
    Legislations are made by the government yes, because who else would propose them? If Singaporeans were to propose and pass legislation, they’d give themselves a opt-in choice to contribute to the CPF. Then 90% of the uneducated low to lowest income group will choose not to contribute and squander the money on useless depreciating goods like $500 iPhones and then ask for money from the government to retire when they’re 70. Look at my Gen Y friends. You think my generation will save? This leads to the age-old question of individualism vs collectivism. Do you want the government to tax less so you can buy an Audi instead of a Toyota, or do you allow the government to tax more so the country progresses, in the form of better schools, roads, ports, street lights, new neighbourhood centres, lush greenery, cheap consistent utilities, strong national defence, lowering reliance on neighbouring countries, increasing recognition of the Singapore brand, and a lot more than I care to list. Most humans are greedy so they choose individualism, and there’s nothing much I can say about that really.

    “Why is the government investing 100% of savings meant for retirement overseas knowing it has to be converted into local currency?”
    How is this even a legitimate concern? When your investment figures reach 100millions to billions of dollars, the exchange rate cost is basically negligible, trust me on that. The larger the sum the smaller the cost. Don’t quote me on this, but the government could bring the business of changing foreign currencies to DBS, which is mostly owned by Temasek, which means that we basically would be “keeping it in the family” anyway. Besides, the returns on investment usually covers the small exchange rate costs.

    “Why is our CPF subject to extremely high and unmanageable forex risk?”
    What forex risk? Investing in countries around the world reduces risk. If all your ~700 billion(T+GIC) was in SGD, I’d be shivering in my pants.

    “How does the government discharge its CPF obligations with so little certainty of its future income stream?”
    I’ve argued that GIC actually lowers risk; they are much more risk averse than Temasek, therefore GIC has 5-6% returns while T has about 16%.

    “If you look at GIC’s investments, most pay low dividends, some hardly any.”
    You said 90% of MPs, reps in parliament, do not know where “our CPF”(you mean GIC?) is invested, so how you know got low dividends??? Besides, you may find some loss making ones, but the majority may be profitable, so you cannot say MOST pay low dividends. That’s defamation. (see I’m not accepting everything blindly)

    “The government can’t return us our CPF and that’s the reason for implementing the minimum sum scheme.”
    I’m sorry but this statement is blatantly assumptive and libellous. Let me offer you an equally assumptive but less libellous statement that I truly believe: The minimum sum scheme was implemented to ensure uneducated retirees have an alternative source of income, instead of roaming the streets after their children abandon them for whatever reason.(dementia) See, two can play at this game.

    “Are you unaware that our CPF had been used to finance infrastructure? Surely you don’t think we need $200 billion for our healthcare system!”
    I’m not aware, please enlighten me. (with sources)

    “Official sources are not to be trusted unless the government improves its transparency.”
    Eh if official sources are not to be trusted then I trust whose? Yours? If I don’t trust anything I can literally come up with baseless accusations which will result in my ass getting sued for libel.

    “Why do you even trust statements from MAS, GIC, etc when more than 90% of MPs, our representatives in parliament, DO NOT KNOW where OUR CPF is invested?”
    Once again, this is all by extension. You need to know part of our cpf is invested through GIC, which, I’ve argued, is doing pretty well. With that said, I’m going to repeat and say that GIC cannot reveal its portfolio because of two things: the amount of money, and the location of where that money is at. If people know how much money our MAS+T has and where they’ve put the money, (GIC does not own anything because it just borrows money from MAS through SSGS to invest) then they may attack our government financial as such:

    EG. GIC is heavily invested in healthcare in Brazil. Enemies of the state(could be a country) may try to invest in a rival healthcare company and cause our Brazilian healthcare company to suffer losses. If GIC loses money, part of it is your CPF. So basically, you no money to retire.

    I really appreciate all that you’ve discussed here with me. After all thats been said, I just want to say that if anyone wants to pass judgement on a matter, one needs to study THOROUGHLY the NEGATIVE parts of it, but ALSO the positive parts. If you spend 10 hours reading, for example, Roy Ngerng’s posts about the CPF, then you better spend 10 hours reading the MAS, GIC and Temasek’s financials and explanations on why they’re doing what they’re doing, in order to have an unbiased judgement. Remember that everyone has an agenda.

  4. Phillip Ang says:

    Hi Dan
    I do not dispute all that have been disclosed but there is material information which one doesn’t know.
    for eg, Temasek’s ridiculously-high 40-year returns is based on its portfolio at inception, an arbitrary figure which has been kept secret.
    I believe this figure was understated and posted it @ https://likedatosocanmeh.wordpress.com/2015/06/15/20150615-temaseks-354-million-portfolio-at-inception-long-term-tsr-and-facts-a-load-of-crap-transparency-needed/
    Nobody’s making any allegation of corruption, don’t go off track. What I have always been asking is total transparency to clear our doubts once and for all. 🙂
    Temasek did not make the oversized returns because assets were not transferred at market value. Again, if Temasek has nothing to hide, why does PAP conceal such material information?
    What’s clear to me is (based on available information) Temasek’s foreign investments are not doing as well as it claims. Do you have figures to convince me otherwise?
    Since you are convinced only the government, ie really an inner circle of PAP politicians, should decide for the people, we can agree to disagree.
    Bear in mind that such a system is not a functioning democracy. You share PAP’s belief that power should not be in people’s hands and we can’t decide what’s right or good for us. 😦
    My oldest child is 20 and FYI, I know what and how his generation think.
    You went off tangent and mentioned investing ~ $700 billion in SGD. This is unrelated to my point about investing 100% of our CPF retirement savings in foreign investments.
    Back to the point – would you invest 100% of your retirement savings in foreign investments 3 to 4 decades before your retirement? Who does this?
    You can go through GIC’s (2013 May) listed securities portfolio to confirm the low dividend yield of some 281 securities @ https://likedatosocanmeh.wordpress.com/2015/02/12/20150212-for-reference-only-may-2013-gic-listed-securities-portfolio/
    You again went off tangent to suggest that I had thought we might have needed $200 billion to finance our healthcare system!
    Perhaps you should have continued to read other posts as most of your questions would have been answered.
    The latest on CPF @ https://likedatosocanmeh.wordpress.com/2015/12/29/20151229-silly-singaporeans-should-stop-believing-in-cpf-half-truths/
    I have also briefly described myself as a professional trader at the SGX for 10 years trading with my own capital and 5 years with an American company.
    Believe me, I do understand what risk is and am currently managing my own retirement funds. I also know that if bureaucrats make good fund managers, you will be seeing pigs fly very soon. 🙂
    Remember ex minister Dhanabalan crediting Ho Ching for being courageous when she cut $630 million in tax dollar losses in 24 months on its Micropolis investment? Do you think Dhanabalan knew what he was talking about? These bureaucrats spout nonsense: they don’t understand risk. What they know is losing billions isn’t an issue because the govt will pump more reserves or other assets into Temasek.
    Thanks for your interest and my apology for not being able to reply in full. Do not take every word at face value from a government which conceals material information. It’s only when you start to question that you will begin to realise something is really amiss.
    Happy 2016.

  5. dan says:

    You missed almost all the points that I’ve tried to explain to you. You say I go off on a tangent when you don’t understand something I’m saying… How to have an intelligent discussion? We need to stop covering 20 points in a single post because it allows you to swipe my valid points under the rug, and then you go back to saying things like “read my posts” or attempt to prove credibility by saying “professional trader at SGX for 10 years.”

    SO, let us focus on points, ONE by ONE.

    Phillip: Why is our CPF subject to extremely high and unmanageable forex risk?

    Dan: What forex risk? Investing in countries around the world reduces risk. If all your ~700 billion(T+GIC) was in SGD, I’d be shivering in my pants.

    Phillip: You went off tangent and mentioned investing ~ $700 billion in SGD. This is unrelated to my point about investing 100% of our CPF retirement savings in foreign investments.

    Dan: No I did not go off tangent. 700 Million is to describe the approximate value of GIC and Temasek’s AUM. (assets under management) EXPLAIN. What forex risk?

    Answer this one question please.

  6. Phillip Ang says:

    Thank you for your interest in this topic.
    I believe I have read the websites of MAS/Temasek/GIC/CPF more than most Singaporeans and I am being as objective as our local media. 🙂
    The problem with most Singaporeans is they are afraid to question despite the amount of nonsense thrown at them by PAP.
    When you begin to think a bit deeper about all these concealment of information on a large scale, it will begin to frighten you. No one knows what’s really happening besides a handful of politicians.
    I have written more than 100 posts related to CPF,Temasek and GIC. A lot of research went into them despite tons of material information concealed from the public.
    If you are certain that I am factually incorrect, please verify with Temasek or GIC. I am not one to shy away from admitting to a mistake and I believe I have already made some in previous posts. 😦
    I am not sure if you really understand the meaning of risk. I have been a futures and stock trader for more than 20 years.
    Don’t accept information at face value, especially from a government which does not believe in transparency and accountability. That’s the best advice I have for Singaporeans, including you.
    Do continue reading as I will be writing more on Temasek, GIC, CPF, NS, etc.. Discuss with your friends but if I still don’t make any sense, just disregard my post.

    • dan says:

      You’re beginning to sound like a broken record.

      For a professional futures and stock trader of 20 years, with 10 years of experience in the SGX and 5 in an American company, please, answer my humble question.

      How is our CPF exposed to forex risk?

      Please, show me the way.

  7. Phillip Ang says:

    Sorry, since you have such a low opinion of me, there is no point to further this discussion.

    • dan says:

      I think you’ve done a good job proving that your accusations are baseless.
      You’ve shown your arguments to be biased.
      You obviously practice selective reading of information.

      In fact, you choose to completely twist other people’s words. All I said is that you sound like a broken record, which is just saying that you’re repeating yourself. It’s not a low opinion of you, I’m just observing…

      I won’t be writing anymore after this post, but I do want to bring up one last point.

      You’ve spent so much time writing so many respectable articles, reading even more from online and offline sources, and you come to the realization one day that you can’t even explain yourself occasionally.

      Maybe we just need to take a step back and see what our motivations are. Perhaps we just need to be less pessimistic. Take a loved one for example; if you focus on their bad habits, you’ll find that it doesn’t matter what they excel in or what they’ve done for you, you’ll never be grateful for them. Maybe that’s why we Singaporeans complain so much.

      JUST because we don’t know everything about something doesn’t mean we need to fear it or jump to conclusions, because if we do, it just shows how insecure we are.

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