TWO town councils have invested a total of about $12 million in troubled structured products, said Ms Grace Fu, Senior Minister of State for National Development and Education, in Parliament yesterday.

Holland-Bukit Panjang and Pasir Ris-Punggol town councils have invested in products that included Lehman Brothers' Minibonds, DBS High Notes 5,Morgan Stanley Pinnacle Notes Series 9 and 10, and Merrill Lynch's Jubilee Series 3.

Town councils can invest up to 35 per cent of their sinking funds in non-government stocks, funds and securities.

The sinking funds are for major cyclical works such as repainting, rewiring, and replacement of lifts and water-supply systems in HDB estates.

Based on last year's financial statements, Holland-Bukit Panjang Town Council invested about $8 million or 6.7 per cent of its total funds available for investment in the structured products, while Pasir Ris-Punggol Town Council invested some 2.6 per cent, or $4 million.

Responding to a question from Nominated Member of Parliament Eunice Olsen, Ms Fu said that town councils need to invest their funds prudently to prevent them from being eroded by inflation.

And guidelines state that investments must be done with the advice of a qualified person and an approved bank.

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