We thank Mr S. Kumar ("Brave, novel growth plans, but some caution needed") and Ms Ewe Seow Chie ("SBF's CPF idea not sustainable"; both published last Friday) for their views on last Thursday's report ("'Use CPF money to help liven up local stock market'").

The use of Central Provident Fund (CPF) money is one of the 18 recommendations in the Singapore Business Federation (SBF) Position Paper For A Vibrant Singapore.

The intent of this recommendation is to examine how our securities market can be made more vibrant and liquid.

A stock exchange serves an important role, which is to raise capital for businesses, mobilise savings for investments and facilitate companies' growth and profit sharing. As we develop our local enterprises to make greater contributions to our economy in the future, the local exchange must evolve in tandem.

In our local market, we note that there is a lack of participation of large institutional funds.

This is unlike advanced countries where local pension funds are active in their own markets. One reason is that our CPF money is invested by GIC externally.

Our recommendation calls for the restriction that currently prevents CPF money from being invested in our local stock market to be lifted.

Under our recommendation, CPF money will still be required to deliver the same or better risk/return performance as per the current arrangement.

Without the local restriction, eventually, some of the funds might be invested in local stocks. The market should decide this.

We fully understand the need to protect CPF savings with good sustainable returns.

We recognise the challenges and complexity in adopting some of the recommendations in the position paper and are grateful for the views of citizens and the business community. The purpose of the paper is to generate good discussions leading to solutions for the greater good and prosperity of Singapore and its people.

Ho Meng Kit
Chief Executive
Singapore Business Federation