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Singapore Democrats
A re they still there? This is the question that Singaporeans keep asking about our financial reserves but to which answers don't seem to be forthcoming.
If they are still there, how are they invested? Are the investments carried out in socially responsible ways? What are the returns? Are they benefiting the people or just the ones managing the reserves? Who makes the decisions on these investments and do Singaporeans have a say?
The concern over the performance of our investments is justified especially when we hear about mega flops in the projects that the GIC and Temasek Holdings are involved with. Below is a compilation of business ventures and investments carried out by the two funds that have gone awry and the amounts of money that were involved. Needless to say the list is not exhaustive.
According to the GIC and Temasek Holdings, a total of $140 billion was wiped out from their accounts when their investments in American and European banks like Merrill Lynch, UBS, and Barclays went sour following the sub-prime crisis that engulfed the banking system in US. The amount could very well have destroyed all our savings in the CPF.
Is the PAP finding it difficult to return us our CPF savings as a result of these bad investments? Is this why the Government is delaying the withdrawal age of CPF account holders, making workers delay their retirement, and even withholding our money outright through the Minimum Sum Scheme?
With our population ageing rapidly more and more Singaporeans will be looking to withdraw their CPF savings for retirement. Presently 7 percent of the population is 65 and older. By 2030 every one in five persons in Singapore will be in this age group. Is there not enough in the reserves to make good these withdrawals?
Why the secrecy?
If our reserves are in as healthy a state as the Government claims them to be, why not invite all and sundry to verify the accounts rather than hide the records away from scrutiny. Indeed, why does the GIC and the Ministry of Finance not open up their books for public verification?
Those in charge of the money tell us that revealing the information about our reserves would give the competition a leg-up over us as far as investment strategy is concerned. The secrecy, it says, is a necessary part of the business.
If that is the case Norway's Government Pension Fund Global (GPFG) should have folded a long time ago. Described universally as the model sovereign wealth fund in terms of the transparent and efficient manner in which the Fund operates, GPFG has posted solid gains in its investments over the years with a 26 percent surge in returns in 2009 and another 10 percent in 2010.
The fund is Norway's equivalent of the GIC. It was established to manage the country's petroleum dollars after oil was discovered off its coast in 1969. Managing a total of US$570 billion it is the biggest sovereign wealth fund in the world. Yet it operates in a manner quite the opposite of the GIC. The GPFG keeps to strict reporting guidelines stipulated by the country's Ministry of Finance:
Public reports on the management of the GPFG
1. The Bank shall publish quarterly and annual reports on the management of the Fund. The reports shall be based on the greatest possible degree of transparency within the limits defined by a sound execution of the management assignment.
2. The reports shall consist of a descriptive part and extracts from the Bank’s accounts concerning the management of the Fund in accordance with the current accounting regulations for Norges Bank.
3. The descriptive part shall include a true and fair summary of the performance of the Fund, management costs, investment management strategies, creation of value in the investment management and relevant risk in the investment management, including utilisation of the limits defined in this mandate. In addition, an account shall be given of the organisation of the investment management in the Bank.
4. The descriptive part of the annual report shall include a separate account of the management of the real estate portfolio.
5. The descriptive part of the annual report shall also contain a separate account of the Bank’s work related to active ownership and integration of good corporate governance and environmental and social issues, including an account of separate environment-related investments. The account of the environment-related investments shall include, for example, the scope, strategy, asset type, description and evaluation of how they fulfil the intention of the environmental programme.
6. If the calculation methods on which the reporting of performance and risk have changed since the last published report, then an account shall be given of why the methods have changed and information shall be provided on any effects of the changes. In addition, pro-forma figures shall be provided in accordance with the previous calculation methods in four subsequent reports.
7. The annual report shall be published no later than three months after the end of the financial year. The main points in the reports shall be made available in print. Other data may be reported electronically.
http://www.regjeringen.no/en/dep/fin/Selected-topics/the-government-pension-fund/the-guidelines-for-the-management-of-the.html?id=434605#7
Not only is the GPFG transparent in its operations, it also invests in ethically acceptable businesses. The rules forbid it to invest in “tobacco producers, companies involved in human rights abuses, environmental damage or production of weapons that through their normal use may violate fundamental humanitarian principles (nuclear arms, cluster munitions, land mines etc.)”
An insanely dangerous position
Compare: The Norwegians elect a government in freely and fairly held elections where ministers are held accountable for all that they do. The government then appoints managers who run the GPFG in a manner that is transparent and in the people's interest.
Singaporeans, on the other hand, take part in an election system that the PAP controls, one that all but guarantees its victory. Its leaders then appoint themselves as heads of the GIC and then refuse to tell us how they operate and how much of our reserves they hold.
Unlike our Norwegian counterparts who are firmly in control of their reserves, we have put all our reserves in the hands of a few individuals (Mr Lee Hsien Loong chairs the GIC and his wife heads Temasek). Not only that, we have ceded all our rights to know and question what is being done with our money.
Singaporeans are living dangerously, playing Russian roulette with our reserves. The global financial and economic system is far from the stability that it portrays. The US is grappling with its budget deficit with President Barack Obama presently dueling with the Republicans over America's debt ceiling. Europe is engulfed in a potentially explosive economic situation with Greece, and more worryingly Italy, as its epicentre. There are signs, amid all the bullishness about China's economic development, that the country's expansion is a bubble waiting to pop.
Given such indicators, it is bizarre that Singaporeans continue to display such nonchalance towards our lack of control over our reserves. This is an insanely dangerous attitude to adopt. If and when these global financial troubles visit this island, we will find ourselves completely out of our depths.
Through the years, the SDP has been calling for Singaporeans to stand up for their political rights. These rights enable us to protect our reserves. Skeptics continue to argue that rights won't make us rich. Maybe so. But without them we may wake up one day and finding ourselves bankrupt.
Are we rich or are we bankrupt?
Part 1: How the PAP Govt borrowed against our CPF savings to conduct commercial activities both in and outside S'pore.
Part 2: How all this affects the average citizen
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