Singapore to keep mum on size of reserves, returns
- 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
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
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
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.