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Singapore to keep mum on size of reserves, returns

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  • MellanieHewlitt
    Tuesday October 19, 7:43 PM Singapore to keep mum on size of reserves, returns SINGAPORE, Oct 19 (Reuters) - Singapore said on Tuesday it would not disclose
    Message 1 of 1 , Oct 19 10:43 PM
      Tuesday October 19, 7:43 PM
      Singapore to keep mum on size of reserves, returns

      SINGAPORE, Oct 19 (Reuters) - Singapore said on Tuesday it would not
      disclose details on its large stockpile of financial reserves or the
      return it makes on them, to guard against financial speculators.
      The city state -- Asia's third wealthiest society after Japan and
      Hong Kong -- is thought to have over a US$100 billion of reserves in
      the secretive Government of Singapore Investment Corp.(GIC).

      The GIC, which invests the government accumulated budget surpluses,
      has holdings ranging from Australian real estate to U.S. equities but
      has never published its accounts.

      In a rare admission several years ago its said the portfolio was
      worth about US$100 billion.

      "Disclosure of the exact size of, or the returns on, Singapore's
      financial reserves will not be in Singapore's national interest,"
      Raymond Lim, Acting Second Minister for Finance told parliament.

      Lim was replying to a question about greater disclosure of the
      returns on government-managed assets to enable the public to
      understand the performance of such investments.

      Singapore was recently criticised by ratings agency Standard & Poor's
      which said the city-state's investment returns had underperformed
      those of Hong Kong by 2-4 percent in nominal terms since Asia's 1997
      financial crisis and termed its approach to disclosure as "guarded".

      State investment agency Temasek, which has large stakes in most of
      Singapore's biggest listed and unlisted businesses, published its
      first annual report in 30 years just last week.

      Temasek disclosed its average annual rate of return was just three
      percent over the past 10 years, although its returns over 30 years
      have averaged 18 percent a year.

      Lim said the reserves were key to maintaining confidence in, and
      discouraging speculation on, the Singapore dollar.

      "While market traders do not doubt that the government has
      substantial resources to defend the Singapore dollar, they do not
      know the exact amounts nor full details of the asset allocation nor
      the investment criteria," he said.

      "Publishing this information would make it easier for speculators to
      plan their attacks on the Singapore dollar."


      Comments By Mellanie Hewlitt
      Singapore Review
      1 Oct 2004

      Transparency Needed In Management of Public Funds

      With an obscene amout of surplus in Medisave Reserves, huge hidden
      fiscal surpluses enrich the Singapore government and state
      enterprises but impoverish the private sector and tax payers.

      Lack of Transparency is a common issue with the CPF Board and State
      Owned Enterprises. The ST article (in 1 Oct 2004 issue) below is
      vaguely reminiscient of similiar revelations of the huge hidden
      reserves which the National Kidney Foundation had stashed away, even
      as it sort more charitable funding from the general public. Indeed
      the common theme in both CPF and NKF exercises is that they have the
      central objective of siphoning even more funds from tax-payers into
      the already fat coffers of many state owned vehicles. All
      this is cleverly done under the guise of schemes and policies which
      are supposedly designed to look after the welfare of Singapore

      But the abuse is quite glaring since money only flows one way:- into
      the pockets of the state administrators. There is no outflow from the
      state to the public. What happens to the billions of dollars in
      reserves is also a total mystery.

      The high-surplus strategy lowers Singapore's standard of living.
      Deprived of disposable income by numerous taxes, Singaporeans
      consistently consume a share of GDP 10-20 percentage points below
      Hong Kong levels, while Hong Kong maintains a higher per-capita
      income. It was only recently that the CPF Board has also stepped up
      measures to sue "Medisave Laggards" who fail to top-up on their own
      Medisave accounts.

      These Big structural surpluses most benefit the ruling party, to the
      detriment of the private sector. Unconstrained by tight finances, the
      government pays cabinet members and civil servants some of the
      world's highest public-sector packages. See:

      A variety of analytical shields obscures the embarrassing size of
      government surpluses. Accounting principles differ from global
      standards. A bewildering array of statutory boards, government-linked
      companies, investment corporations and holding companies transact
      among themselves at undisclosed prices. Key data such as the
      government's share of national savings and the profits of holding
      companies and investment corporations are kept secret. One analyst
      calls the national accounts a "masterpiece of obfuscation." See:

      The other troubling issue which is tactfully avoided by the
      government is the fact that CPF investments (and
      returns/profitability of State Owned Companies as wells as GLCs and
      TLCs) are under performers and laggards well behind private sector
      standards. Is this is an intended result of figures manupulated
      to obscure huge returns, or are State Owned Entities really so
      appalingly bad at earning decent returns on investments? No one will
      ever know the answers.

      It is indeed cruel irony that State Organisations and Government
      Linked Companies are ripping-off the very individuals which they are
      established to protect. So blatant is the abuse of public funds that
      such occurences have now been institutionalised and formalised, with
      the Constitution re-written to allow the state and State Owned
      Enterprises direct access to state/public reserves. All this has
      happened with the blessing of the Auditors General office and Finance
      Ministry. See:

      Legitimisation of Corruption and Nepotism has been tansformed into a
      art-form by Singapore's Ruling Bureucracy, all at the expense of the
      man on the street.
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