Singapore Urged to Enhance Transparency
04.28.2005, 04:18 AM
The International Monetary Fund acknowledged Singapore's efforts to increase transparency, but urged it to do more in an annual review of the city-state issued Thursday.
In the report, the IMF suggested that more information on key state-owned companies would be useful. It cited the Government of Singapore Investment Corp., the state-owned agency, as a group that continues to keep accounts confidential.
Temasek Holdings, the other state-owned investment company, made its financial accounts public last year for the first time, a move the IMF characterized as a "milestone in enhancing fiscal transparency."
"Following Temasek's example, the staff suggested that the government could also consider publishing, without disclosing sensitive details, the aggregate assets of the Government of Singapore Investment Corporation, the broad elements of its portfolio and its overall returns," the IMF said in the report.
The government says there's enough internal oversight to ensure proper functioning. Singapore has a reputation for clean government.
Temasek's investment portfolio includes top companies, such as Singapore Airlines Ltd. and lender DBS Group Holdings Ltd.
The fund also said Singapore could release consolidated public sector accounts and more detailed information about the government's inflation target and its exchange rate policy.
The Monetary Authority of Singapore publishes a monetary policy statement twice a year but doesn't disclose inflation or exchange rate targets.
The Incestous World Of Singapore's State Runned Enterprises
23 Jan 2005
I was very amused by Mr Chen Hwai Liang's weak and shallow rebuttal of Gary
Rodan's December article "The Coming Challenge to Singapore Inc." Mr Chen had
a) "GLCs are run commercially. Their managements are answerable to their boards,
which in turn answer to shareholders" and
b) "Most major GLCs are publicly listed"
These flippant statements by a senior representative of government (from the
Prime Minister's Office) on what are already publicly known "secrets" will only
cast more shadows and doubts over the credibility of public administration in
Singapore. It is a known fact that GLCs (Government Linked Companies), whether
in the form of TLCs (Temasek Linked Companies), GICs (Government Investment
Corporation) or SOEs (State Owned Entities) enjoy many special privileges which
ordinary bonafide private sector companies do not.
Regardless of how they are coined by the government, "GLCs" are viewed
suspiciously by the general investing public and members of the international
community. On the surface, these entities look and sound like bonafide business
concerns. Many are listed on the Singapore Stock Exchange.But this is a skin
deep appearnce which ends when one peers into the internal management of these
companies. Under closer scrutiny, little has changed as regards management of
Singapore's GLCs/TLCs/GICs (or whatever fancy new terms the authorities wish to
coin) and the old issues concerning TRANSPARENCY, ACCOUNTABILITY, NEPOTISM and
PERFORMANCE still remain.
Deep pockets into public funds, operating in heavily regulated and protected
markets and managed by retired Brigadiers, senior civil servants, ex-Ministers
and other members of Singapore's Ruling Elite, these lumbering government
vehicles are also known as scholar havens and double as "retirement homes" for
Singapore's Ministers and senior civil servants. All this at tax payers expense.
The attached "Nepotism" file will also show the close relations between senior
civil servants and senior management of these GLCs.
In fact, Singapore's State Owned Entities & GLCs are so privilleged that they
have the unique honour of having the country's Contitution 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
See actual Amendment to the Constitution below:
Double Standards in Policy administration also favour these state related
entites. For example, a competition law that Singapore plans to introduce in
2006 has been criticised for exempting some government businesses that dominate
local services in the city-state of 4m people. The legislation, which covers
foreign-owned and domestic companies, provoked an unusually fierce debate in
parliament despite the overwhelming dominance by the long-ruling People's
Some key industrial sectors, such as telecom-munications, media, postal
services, transport, power generation, water and waste management, would be
exempt from the competition law. These sectors involve businesses, some of which
are monopolies, that are managed by the government directly or are controlled by
Temasek Holdings, the state investment agency. Further details are available at:
But inspite of the many privilleges and exemptions lavished on them, these state
owned companies continue to be dogged by performance issues. After many well
documented failures and scandals, it is small wonder why GLC/TLC/GIC and other
state owned entities in Singapore are regarded with a degree of suspicion and
wariness by bankers and professionals within the financial industry. Many within
Singapore's well heeled financial circles affectionately referr to GLCs
(Government Linked Companies) as Giant Loss Making Entities or Giant Lee
Ever wonder what happens to your CPF moneys and Tax Dollars? Look no further.In
a paper published in 2000, Morgan Stanley's Singapore office estimated the size
of Singapore's external economy at S$395 billion against the governments figure
of S$339 billion at the end of 1999 or 2.4 times GDP. That was 3years ago and
today in year 2003, this figure is probably much larger.
The investment is held in the form of direct equity, portfolio investment
andother foreign assets. Morgan Stanley's Daniel Lian says the Singapore
government owns more than 50 per cent of the external economy through
GLCs(government-linked corporations) which control about 60 per cent of offshore
As Morgan Stanley's research paper says: "The external economy needs to secure a
minimum eight per cent nominal return to avoid dragging down the overall economy
from achieving its long-term growth potential of 6.5 per cent. The task of
raising returns lies in the hands of the government and the GLCs."
Offshore return has been declining as GLCs step up their investment. One
probable cause, says Morgan Stanley, is poor investment judgment. Singapore
wants to move into new high-tech industries, including biotechnology areas
requiring high human and intellectual capital. But in an economy essentially
driven by government policies, Singapore lacks a crucial ingredient -
It is also noteworthy that frank and open coverage of GLCs/TLCs/GIC usually
originate from the international press. Locally, within Singapore's heavily
regulated media industry (until recently) there is scant mention of these
government owned corporate entities which usually operate behind a veilof
"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."
6 May 2004 Far Eastern Economic Review "Fiscal Predator"
And where there is occasional mention of these elusive and painfully shy
corporate creatures by the local media, Singapore Press Holdings (which has a
virtual monopoly on Singapore's print media scene), these are usually adoring
letters of admiration. This is hardly surprising given that SPH is itself a TLC.
But the harsh economic reality today is that far from adding value to
Singapore's bruised and battered economy, GLCs, TLCs and GICs are a real drag on
the economy. The time is long overdue to retire these loss making relics and
allow private sector economics to take its natural and inevitable course.
Looking at the bigger picture, one often wonders what the dickens is happening
to Singapore's GLCs and State Owned Entities? Many have been listed in a bid to
create the illusion of an entity that is free of government influence. But
despite the listing/privitisation aspirations, it is evident that red-tape and
bureucracy permeate the rank and file management of GLCs.
If the intent was to instill private sector initiative and efficiency in GLCs
and SOEs, then looking at past experience, the listing exercise has failed
miserably. In previous years there have been spectacular failures in listed GLCs
and SOEs. (And of cause, being a GLC itself, one can forgive Singapore Press
Holdings in being discreet in publishing these facts and figures).
A half-hearted attempt with half measures yielding similiar results: Why have
the transformations (from State Runned Vehicles to Listed Entities) been less
then successful? This is mainly because these so called "Listed GLCs" take on
the exterior facade of their private sector counter part in form (and not
insubstance). The effect is a purely cosmetic one and is skin deep only.
Safe for a change in incorporated name (with a LTD in the front), they continue
to be managed and operated in all other aspects as civil service/public sector
entities. Perhaps this is because the government (and in many cases Temesek
Holdings) retains a stake in these companies and refuses to release its
influence/stake in various GLCs and SOEs. This has also been a hotly debated
issue under the recently concluded FTA and there is now pressure on the
government to completely divest its remaining stake in these enterprises.
Since Mr Chen has also alleged that the FEER articles were filled with
"unsubstantiated and misleading statements", we will atempt to substantiate some
of these statements and add clarity in this Sg Review exclusive. We append below
some of the many articles from various foreign publications and journals, which
shed further light into the camera shy and elusive corporate entities that are
Singapore's GLCs, TLCs and GICs.
[All data in this article (and the following attachments have also been sent to
SPH companies for their comments]
The coming challenge to Singapore Inc.
Far Eastern Economic Review
By Garry Rodan
SINGAPORE�S vast array of government-linked companies (GLCs) has enabled it to
manage the process of globalization with remarkable stability and effectiveness.
Indeed, it�s fair to say the city-state is a rare contemporary case of
successful state capitalism. Increasingly, however, the economics and politics
of the GLCs� gatekeeper role have started to conflict. And as GLCs
internationalize and the city-state�s markets are exposed to more intense market
pressures, tensions will continue to rise.
Nowhere is this more evident than in mounting friction over corporate governance
of the GLCs. Unprecedented critical interest from international business in GLC
activities has led to a closer analysis of how local rules and regulations are
administered. Whether or not these pressures will lead to a fundamental
transformation in the state capitalist model nobody knows. It is clear, however,
that reconciling the economic and political pre-eminence of the GLCs is the most
pressing challenge for the government of the new Prime Minister Lee Hsien Loong.
The driving forces behind governance scrutiny involve pragmatic international
business interests, which often rhetorically appeal to the concept of a level
economic playing field. However, the issues at stake are intrinsically
The GLCs, together with a long list of statutory bodies and the Government of
Singapore Investment Corporation (GIC) that invests more than $100 billion of
national reserves, form a complex network of power relations. This network is
essential to the ruling People�s Action Party�s social control and political
dominance. These institutions provide the Party with the resources for social
engineering, as well as for political reward and punishment. The GLCs have
tremendous influence over all Singaporeans� personal savings, housing, job
opportunities and business contracts.
The Singapore government responded to the 1997 financial crisis by aggressively
embracing the rhetoric of good governance and transparency. The intention was to
highlight the distinction between Singapore�s system and the crony capitalism
and rent-seeking practices found elsewhere in the region. But this endorsement
of global best practice is now bringing unintended consequences.
Rhetoric was quickly followed by improvements to corporate accountability and
disclosures, as well as more transparent macroeconomic data. At the time, the
reforms largely bypassed the state sector, especially among the many GLCs which
are not publicly listed companies. This divergence between rhetoric and practice
did not escape international attention. The International Monetary Fund called
for more transparent fiscal and monetary frameworks. Then in April of this year
it raised concerns about the scope for conflicts of interest inherent in such a
concentration of public decision-making power.
The criticism of the Singapore government�s governance gathered momentum
following the appointment in 2002 of Ho Ching, the wife of Singapore�s current
Prime Minister Lee, as executive director of Temasek Holdings, the state-owned
investment company. Last October�s move by Temasek to issue its first public
annual report in its 30-year history is the latest attempt to respond.
Temasek presides over more than $107 billion in assets and an investment
portfolio of around $53 billion, and has long dominated the commanding heights
of the domestic economy. Yet, in the government�s eyes, neither its importance
to the Singapore economy nor the fact that it invests public money warranted
routine, detailed public reporting and strategic statements. Temasek�s 2004
report is a positive move in this direction, but there is still a long way to
The reasons for increased governance scrutiny go beyond the Asian crisis; there
is also a structural basis. International manufacturing capital has been either
indifferent to, or actually supportive of, the role of GLCs in recent decades.
However, many in the expanding financial, high technology and service sectors
see it differently. They want to prise open more of the domestic economy than
their manufacturing counterparts did, bringing them into greater conflict with
governance regimes and transparency shortfalls protecting the interests of GLCs.
Pressure for greater access to telecommunications, banking and other markets has
gone hand in hand with mounting criticism of governance. Singapore�s ongoing
economic transformation assures continued critical focus on the GLCs in these
sectors. Foreign companies and their home governments want to be sure unorthodox
governance arrangements in Singapore are not giving the GLCs an unfair
Economic downturns also gave rise to doubts about the role of GLCs. During the
Asian crisis, Singapore�s GDP growth plummeted to just 0.4% in 1998 from an
impressive 8.4% in 1997. The immediate policy response included a fuller embrace
of economic deregulation and liberalization. The initial economic recovery was
dramatic, with Singapore enjoying 10.3% growth in 2000. However, in the
following year, the economy shrank by 2% in the worst recession since
independence in 1965. The acute export dependence on the U.S. economy by the
electronics sector that underwrote the sharp recovery set the economy back just
In this context, a range of private-sector interests�including those within
brokerage firms and other investment houses�argued not only for even more
substantive liberalization and deregulation, but for reforms specifically to
curtail the economic reach of the state. The government began to promote private
entrepreneurship, including a target of investing S$62 billion of national
pension contributions deposited with the Central Provident Fund.
Up to a point, the government has been responsive here, parcelling out portions
of the CPF to private fund managers. However, it is reluctant to surrender
fundamental control over the CPF because through it a range of social policies
are enacted. Indeed, the government increasingly deploys the CPF to foster
self-funded health, educational and social security investments.
Concern about the politicization of the GLCs has also escalated in recent years.
Symptomatic of this was a document entitled �Why it might be difficult for the
government to withdraw from business,� widely circulated in 2002 by email to
It provided an in-depth listing of the extensive involvement in GLCs by present
and former cabinet ministers and their relatives; active and retired senior
military personnel; and serving and former members of the PAP. This included
some 50 senior government officials holding �key appointments� while still in
government. There were no allegations of corruption, but the clear inference was
that a host of material and political interests are so deeply intermeshed in the
GLCs that separating them would mean challenging the interests of the entire
The government did not refute the accuracy of the document�s contents. However,
in the same year its Economic Review Committee, set up to chart future economic
directions, declared that all GLCs be run on �strict commercial principles and
be subject to the discipline of the market.�
This concession came about not because of domestic pressure, however, but to
allay concern in the international business community. One manifestation of this
was the protracted international negotiations leading to the United
States-Singapore Free Trade Agreement. Washington sought to have this principle
embedded in reforms as a way to increase access for American companies to the
domestic market for banking, insurance and other professional services. It was a
means to an end.
This is the sort of pragmatic politics the PAP government can respond to. After
all, a gradual opening up of sectors where GLCs are established is unlikely to
see a loss of their dominance any time soon. And now that GLCs are setting their
sights abroad, there is a bigger picture to bear in mind. According to one
private economist, Singapore�s external economy could be valued at five times
the gross domestic product by 2020.
The reluctance of GLCs to release information in recent years has made it clear
that the government doesn�t buy philosophical arguments about the public�s right
to information. However, it has come to understand that promotion of the local
bond market necessitates some degree of opening up, at least to rating agencies.
It has also been sensitive to claims that the GLCs� lack of transparency
conceals poor rates of shareholder return.
This probably explains why the GIC produced a commemorative 20th anniversary
publication in 2001 revealing the first detailed information about the successes
and failures of past investments. Chaired by Lee Kuan Yew, the GIC was so
secretive that even the composition of its board wasn�t public until the same
On the eve of Temasek�s historic first annual report, Standard & Poor�s
contended that Singapore�s investment strategy�largely in the hands of Temasek
and the GIC�had produced �markedly inferior� returns (between 1.7% and 4%) in
the last five years as compared to those achieved by comparable institutions in
Hong Kong. Temasek�s report responded by pointing to a string of adverse factors
in the last 10 years that held returns down, including the Asian financial
crisis and the impacts of SARS and the 9/11 attacks in the US. It also declared
that over the last 30 years Temasek has delivered a �robust� total shareholder
return of 18%.
Temasek�s disclosure hasn�t stopped criticism about its performance and the
methodology of reporting, but it has led to highly favorable ratings from
Standard & Poor�s and Moody�s for financial stability�ratings that will assist
the local bond market. Meanwhile, the opaqueness of the GIC is now even starker
Resistance to further opening up at the GIC is likely to be more resolute. Prime
Minister Lee has previously rejected calls to publish details on the GIC�s
investments on the grounds that it would reveal information useful to currency
speculators. Lee Kuan Yew has also declared, �It is not in the people�s
interest, in the nation�s interest, to detail our assets and their yearly
Despite such resistance, the Singapore government�s responses to sustained
challenges over GLCs and related governance regimes have been continually
evolving. Indeed, it will likely continue to make concessions to its
critics�however reluctantly. Yet a key consideration behind Singapore�s
governance regimes is the protection of the PAP�s political and economic
control. The PAP may be prepared to explore new instruments for achieving this,
but the objective itself is immutable. This difficult but not impossible
challenge will define the new phase in Singapore�s state capitalism.
Mr Rodan is director of the Asia Research Centre at Murdoch University in Perth
and the author of Transparency and Authoritarian Rule in Southeast Asia
This article is part of a discussion thread on Delphiforums. You can view it in
the context of the entire discussion by going to:
Forum: the Sammyboy.com's Alfresco Coffee Shop � Forum
Subject: Is Nepotism/Cronynism Corruption?
DateTime: 29/04/2005 18:12:21
Many Singapore political leaders r proud that SG is relatively free of corruption. They like to say that Singpore has very little corruption. Is that really so?Corruption is more than just taking
bribes or money. Corruption includes nepotism and cronyism. Can Singapore leaders truthfully say that we r free from nepotism and cronyism? Our record speaks for itself. Many singaporeans r
distressed by the way networking works in Singapore and how many well connected ppl in singapore are favoured when compared to the average Singapore Joe.So r we really that corruption free which our
poltical leaders r so proud off? Or shd our political leaders be ashamed of themselves when u see the amount of cronyism and nepotism in singapore?Edited 29/04/2005 18:13 ET ET by TracyTan866
Edited 29/04/2005 18:13 ET ET by TracyTan866
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