Sunday, July 10, 2011
A few weeks ago, prominent ex-civil servant, Ngiam Tong Dow, wrote an article that was published in the Straits Times. He wrote that the trust between the PAP and the people has weakened and 2 important issues needs to be addressed[Link to Ngiam's article]. The first is the high pay of our leaders and the second is greater transparency for our reserves. Although cutting the ministers' pay is not something difficult, the real problem today is the widening income gap which has caused great dissatisfaction among a large segment of the populace. This is much harder to fix as it is linked to the structure of our economy.
"The Singapore Government can seek to build more trust with citizens
by being more open about the size and composition of the national reserves.
While there is no outcry on the secrecy now, a more open,
transparent approach can reduce confusion and dispel any doubts on the issue. I
would urge the Minister of Finance to consider publishing an annual audited
statement on the size and composition of our reserves. It can be presented as a
White Paper to the new Parliament, which is due to begin its term." - Ngiam Tong Dow.
While there is no public outcry on the secrecy of those reserve, every time the veil is pulled aside and we get catch a glimpse of what they are doing, the desire for transparency goes up. Take the Shin Corp deal that triggered Thaksin's downfall as an example. Once the light was shone on the deal when Thaksin's political opponents had the deal investigated, it was found that Temasek used nominees to circumvent Thai laws to acquire Shin Corp [Link] and that result in massive losses when they wre forced to reduce their stakes[Link].
The suggestion by Ngiam Tong Dow to have Temasek and GIC publish an annual audited statement statement on the size and assets held in our reserves is a good start. It is ridiculous that the size of our reserves is kept secret from Singaporeans. Minister Mah revealed a few months ago that much of our reserves were accumulated from the sale of 99 yr land leases to Singaporeans who took up heavy loans to purchase their HDB flats. The purpose of accumulating reserves has to be very clear and there has to be a targeted amount of reserves to serve this purpose - it is best that this is debated in parliament along with the issue of how the reserves will eventually benefit Singaporeans. Without a clear articulation of purpose, targeted size and benefits, many Singaporeans will always view reserve building with suspicion - it is build from the 'sweat and blood' of Singaporeans but whose interests does it serve? Is it there to cushion against economic crisis? Is it there to cushion against poor demographics of an ageing population? Is it there to feed and sustain a network of GLCslinked to the power-elites? Is it to create jobs to parachute elites into top fund management positions?
Transparency is the first step to building trust - if that is what the PAP wants. That we don't even know the size of reserves shows how far we are from any form of real transparency. We would like to know what performance benchmarks are used so that we can tell if the benchmark is correct and whether the reserves are well managed over the long term. We would like to know the overall risk profile of the investments as part of it is borrowed from our CPF retirement accounts. What Singaporeans are generally are asking for is no different from what other major sovereign wealth funds and pension funds already practise.
The PAP govt stonewalled President Ong Teng Cheong who was their endorsed candidate. Then came a number of high profile risky deals with bad results. We saw Ho Ching planning to step down for Goodyear then Goodyear stepping down so that Ho Ching can stay. All this does not create trust and citizens are not going to accept secrecy any longer.
Dr. Tony Tan has been an executive director in the GIC for about 10 years and was part of the Cabinet for more than 10 years. He is clearly not an independent candidate although he says he is. The PAP appear to endorse his candidacy. He was executive director of the GIC during the financial crisis and in the last 10 years we see only minor improvement in the transparency of the GIC - far less than what Singaporeans want and have been asking for. What we need today is a truly independent president who will work with the govt on the issue of transparency bringing along with him to office the mandate of the people and channelling these requests for information to the govt. While the PAP govt can still choose to stonewall him, it will be wiser for them to work with him to resolve these issues to win the trust and support of the people.
Posting Time 6:52 AM
Posted by Lucky Tan