Retirement Fund to take up shares in Tonga Development Bank
Friday, September 7, 2018 - 20:13
Tonga's National Retirement Benefit Fund Board has taken up a 15% shareholding of the government-owned Tonga Development Bank, under a current restructuring of its capital base. The Minister of Finance said that the legislative amendments will not only remove the TDB from being under the Public Enterprises Act, but also change the ministerial responsibility.
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I think it would also be a
I think it would also be a good idea for the NRBF on their side to perhaps provide a report to their members on the decision-making behind investing in the TDB. What they expect to make from this investment, how much will they invest, and what's that compared to other opportunities available.
According to the NRBF annual report 2016-17, +70% of the members funds were invested in term deposits (34%), government bonds (15.5%) and its small loans scheme to the members (24%). So the investment in the TDB seems like quite a big move and a little bit of a shift from its past investments. On one hand its good, diversification is good, putting all your eggs in one basket as we know can be risky. But knowing that TDB is Government owned, and Government officials sit in the NRBF board, it's even more important the decision making behind this investment is made available to the members. It's not different if the NRBF were to invest in a business owned or represented by few of the board members, members of the fund would want more information and disclosure on how the decision came about. The rest of the information needed perhaps can be acquired from the next NRBF annual report, but this investment decision should be provided as soon as possible.