Tag Archives: Transparency

Kenneth’s questions to PM Lee matter – here’s why

The separation of public power and private benefit is essential for transparent, effective and honest governance. The Chairman of NEA cannot ask his staff to go and clean his kitchen, or the premises of his sister’s hawker stall, when it gets dirty. The Commissioner of Police cannot ask his officers to set up a road block at the end of his street because he finds the traffic too noisy. The Minister of Community, Culture and Youth cannot just instruct a local museum to display his daughter’s art work. So can the Prime Minister ask a civil servant to write letters on his behalf, and in his support, on the very personal topic of his defamation case against Roy Ngerng? This question matters, and it is the reason Kenneth Jeyaretnam of the Reform Party is quite right to seek a full accounting of public funds spent on a case the PM has clearly stated he is bringing in his personal capacity.

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The truth about Temasek, CPF and Lee Hsein Loong

Temasek doesn’t really make 16%
Your CPF money isn’t really safe.
And Lee Hsien Loong is a coward.

Sometimes we get so caught up in the day-to-day arguments that crop up on Facebook, social media, and even in real life, that we lose track of the big picture. Despite the very obvious question marks surrounding the way CPF funds are managed, though the government, through Temasek, through GIC and ultimately by the Lee family, I realise that I’ve written almost nothing on the topic. Given Lee Hsien Loong’s sustained and ethically dubious attack on fellow blogger Roy Ngerng, now seems like a good time to visit these topics.

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Olam, Temasek and a huge pile of debt

Temasek’s offer to buy out Olam in a S$2.53 billion deal comes as the commodity trader continues to pile on debt. While Olam’s politically well-connected management and shareholders may appreciate the sovereign wealth fund’s backing, this is a deal which ticks all the wrong boxes for Singapore.

Olam’s management have been fending off critics of their financials and accounting for years. While Carson Block’s very public decision to short the stock in 2012 was widely reported, less well-known is the fact that top Asian equity house CLSA incurred the commodity trader’s wrath the year before over a research note that raised some of the same concerns. And while the public response from Olam has always been defiant, privately management have admitted defeat – tearing up a flagship six-year plan to generate US$1 billion in profits by 2016 and slashing the debt fuelled growth that Block saw as unsustainable.

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Xenophobic MDA triggers Breakfast Network shutdown

If xenophobia is defined as an unreasonable fear of foreigners, then the Media Development Authority may have some explaining to do. An obvious fear of foreign influences permeates the piles of paperwork which the MDA requires news websites to submit as an apparent condition of operating. Those burdensome sheets seem to have overwhelmed former Straits Times associate editor Bertha Henson and her fledgling Breakfast Network site has now been shuttered. Losing a professional journalist from the online media space is a significant loss, although she has committed to continue her personal blogging. But one question remains – should foreign influences really be excluded from Singapore’s media landscape? Is the fear of foreign meddling in local politics well founded, or is the MDA acting irrationally?

Xenophobia or hypocrisy?

The fear of foreign influence on local politics may appear well founded on the surface – Singaporean media for Singaporeans, right? But the most cursory of analysis reveals that the government position on this topic is hypocritical and untenable. One of the conditions that publishers are required to submit to is that they receive no foreign funding for their site. “Foreign” includes Singaporean permanent residents and companies with more than one foreigner (again, including PRs) on the board. The first whiff of hypocrisy comes from Mediacorp. I’ve not checked all their passports, but it does appear that at least one member of the Mediacorp board is not a Singapore citizen. Temasek Holdings, which owns 100% of Mediacorp, appears to have two board members who might fall foul of those same regulations. So is the MDA acting hypocritically in holding non-government linked news websites to a more stringent set of rules than those which Mediacorp appears to operate under?

More significant than the presence of a few overseas board members however is the explicit platform that foreigners are often given by the mainstream media to engage on local political matters. This being despite the MDA continuing to re-iterate that “politics must remain a matter for Singapore and Singaporeans alone” as they chase Breakfast Network off Facebook and other social media. The most obvious and recent example of this double standard is Parag Khanna. Parag Khanna is a foreigner (a PR) in the terms set by the MDA, yet he is given an open invitation by the mainstream media to speak at length in an effort to influence Singaporeans’ views on contentious local political issues – such as the population white paper. This is a clear violation of the MDA’s principle that politics should strictly be for Singaporeans, yet they apparently decline to censure the Straits Times for canvassing his views so openly.

This peculiar double standard however is easy to resolve once we understand the relationship between the government and mainstream media. Of course, Parag Khanna is given a government sponsored platform – and coming in the form of the government controlled Straits Times, the platform definitely is government sponsored – precisely for the purpose of speaking in support of the government and their unpopular policies. This is in contrast to the stated fear of foreign influences online, where perhaps it is not so much a fear of foreign voices exactly, as it is a fear of critical voices, which coming from overseas are much harder for the government to manage and contain.

As with many things in Singapore then, this is a power play by a ruling party which fears any dissenting voices that cannot be coerced or bullied into line. Foreign influences beyond the control of the government are kept on a tight leash, yet at the same time, foreigners who wish to influence the political landscape in support of the ruling party, enjoy the most sizable of platforms to put forth their views. In taking this approach, the government is attempting to ensure that the flow of information is always in their own favour.

The closed circle

This is therefore another example of the closed circle, wherein legislative and institutional structures which should be independent are actually designed and aligned to support the power of the ruling party. While this double standard on foreign voices influencing local political issues makes little sense superficially, the deeper principle is an immutable truth about Singapore. The government controls the media to support their goals and motives, through the availability of a monopoly platform for supportive voices, while simultaneously maintaining a significant legislative arsenal – which includes the MDA and the their licensing framework, but also defamation and contempt of court laws – aimed at silencing independent and critical voices.

The way forwards

If we sought to resolve the hypocrisy problem, there are two obvious approaches – a uniform ban or a uniform acceptance of foreign influences on local political matters – the latter of which is obviously preferable and clearly less xenophobic. But once we accept that the double standard is in fact by design, the claims of hypocrisy and irrationality directed at the MDA begin to melt away, for while to some their actions may seem heavy-handed and blundering, the fact remains that the MDA appear to have served their political masters successfully. And political is exactly what this situation is. Stripped of the hypocrisy and irrationality, the heart of the problem is obviously a political and partisan effort on the part of the ruling party to control the flow of information their own favour.

So if the problem is political, then the solution should be political too. A dismantling of the closed circle of power that the PAP have built over many years seems essential. A total reform of the laws making up our media landscape should also be front and centre, including mainstream as well as digital and social media. These changes will not come easily however, the PAP are certainly not going to give up control of the media voluntarily. The only real solution is political, through the ballot box, and it can only come by replacing the PAP with parties committed to making the necessary reforms.


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Court of Appeal gives green light to unlawful governance.

The Court of Appeal has just handed down judgement in Kenneth Jeyaretnam’s IMF loan case. The case is crucially important and it raises two key points. Can the government lend away the wealth of the nation without Presidential approval? And can an individual citizen challenge the behaviour of the government in court, if it is alleged that there has been a breach of the constitution? The ruling of the court is against Kenneth on both counts. The government apparently can lend away the reserves without Presidential approval – effectively making the role of the President as the holder of a “second key” worthless. And furthermore, an individual citizen does not have the right to challenge the government in court, even if the case is of such gravity as this one where a breach of the constitution has been alleged. In stating as they do, that “the nature of the issue is entirely political” – the judges have completely misconstrued the reality of the case and the nature of the constitution. The decision is a difficult one to agree with. Upholding the law is not political.

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Auditor General: Breaches of Law in Prime Minister’s Office

Barely a week after Lee Hsien Loong spoke of integrity and the importance of admitting ones mistakes, the Auditor General released his annual report and gave the PM the perfect opportunity to practice what he preached. The report for 2012/13 cites more than two dozen incidents relating to contracts worth almost S$300M where the PMO’s National Research Foundation appear to be in violation of The Building and Construction Industry Security of Payment Act. While the PM himself is not directly implicated, the failure of a department under his oversight to abide by its legal and contractual obligations clearly raises significant questions. Will the PM or his office stand up for their integrity and admit to these mistakes – as the PM has urged his political opponents to do over much smaller matters – or will a hypocritical silence be maintained?

To quote the Auditor General’s report directly, under the heading “Prime Minister’s Office”:

62. The Building and Construction Industry Security of Payment Act (Cap. 30B, 2006 Revised Edition) stipulated the time frame for making payment and requirements for payment response to a payment claim. The Act was passed to address cash flow problems faced by the construction industry by upholding the rights of parties to seek progress payments for work done and goods supplied.

63. For the contract for building works construction and another contract for foundation works (total contract value of $295.72 million), AGO found 32 instances of late payment to contractors (totalling $254.04 million). In six instances (totalling $26.09 million), the delays ranged from 33 to 174 days.

64. For the three consultancy services contracts (total contract value of $27.25 million), AGO observed that NRF did not provide payment responses to the consultants’ payment claims (totalling $24.56 million).
Report of the Auditor-General for the Financial Year 2012/13

Some observers may find it shocking that the Auditor General claims to have observed unlawful behaviour on the part of the government, but in fact this year’s revelation follows even more serious breaches detected by the AG last year. As was first reported by Kenneth Jeyaretnam, the Ministry of Finance last year broke the law – in fact the constitution – in issuing a “promissory note” to the World Bank without presidential approval. In the same year, the Ministry for National Development was also found to have breached the constitution by engaging in unlawful accounting methods on a land reclamation project.

In any normal democratic country, unlawful or unconstitutional behaviour on the part of the government would be a significant scandal, in Singapore however these mistakes go completely unreported by a mainstream media that apparently deems the cleanliness of a hawker centre to be much more significant. A mainstream media also that uncritically toes the government line on what constitutes “integrity“, but will surely not call the PM out if he maintains a hypocritical silence in failing to admit to the many unlawful mistakes that have been committed by entities responsible to him.

The key question arising from the AG’s findings is whether the current government are fit for purpose in terms of upholding the public interest. Can a government that despite being extremely well paid, repeatedly breaches the law, the constitution and their own contractual obligations be entrusted with the wealth and wellbeing of the nation? The PM should take his own advice. Speak the truth. Things have clearly gone wrong, and even though it is inconvenient the PM should admit to the unlawful mistakes made by the current government. A failure to do so will only leave the PM open to accusations of hypocrisy since these are exactly the steps the PM urged his political opponents to take over actually much more trivial mistakes made in the cleaning of a hawker centre.

The PM should respond. His integrity is at stake.

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The author of this article contacted the Prime Minister’s Office who were offered the chance to comment on the concerns raised by the Auditor General’s report. No response was received.


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K Shanmugam chooses his words carefully

The internet smoulders today with the fallout from Foreign and Law Minister K Shanmugam’s alleged late night phone call to Remy Choo, wherein they apparently discussed the allegedly libellous nature of an article originally published in The Global Mail and shared widely amongst Singaporeans. The Minister appears to be in damage limitation mode – attempting to downplay the significance of the phone call which was first revealed by Kirsten Han, and secondly by seeking to clarify his historical business relationship with companies ultimately controlled by Indonesia’s Widjaja family that was raised in the article.

Like all good lawyers, Mr Shanmugam appears to have chosen his words carefully – very carefully. For this reason, a close look at what he said – and didn’t say – could be instructive.

Starting with the phone call to Remy Choo, the Minister admits that it took place. The minister does not deny that it was a late night phone call, or even a “midnight phone call” as stated by Kirsten Han. While the Minister seeks to downplay the significance of this phone call by emphasising the strength of his relationship with Remy, he never goes so far as to say that Remy Choo is his friend. Is it normal for the Minister to make unsolicited late night phone calls to people who are not his friends or family members? It seems unlikely. Furthermore, the Minister very clearly does not deny the key point – that the purpose of the call was to convey the message that “he would not hesitate to sue those republishing [the article]”.

Mr Shanmugam is a very experienced and successful lawyer. Lawyers are trained to choose their words careful, and in this case he appears to have done so. He could have chosen to deny these facts, but he did not. For this reason, we should presume that the central premise as reported by Kirsten Han is, more likely than not, true.

Despite asserting that what Kirsten wrote is “quite untrue” and that the conversation had been “twisted”, the Minister chooses a very different tenor when addressing the points raised by foreign journalist Eric Ellis in the original article. Most importantly, at no point does the Minister appear to state that anything written by Mr Ellis is false or untrue. At no point does he accuse Mr Ellis of twisting anything. Since accusing someone of publishing lies is presumably libellous itself, neglecting to make this allegation may be the pragmatic approach to take. The relevant article was originally published by a media outlet from Australia, a country with a very different legal relationship between freedom of speech and defamation from Singapore. Perhaps the Minister has chosen not to make any statements alleging falsehoods in Mr Ellis’ article in case such statements would be considered “actionable” in Australia. Regardless of the reasons, the fact is that at no point does the Minister state that anything written by Mr Ellis is false. Furthermore, the Minister provides no details whatsoever regarding what about the article causes him to find it actionable.

To re-iterate, Mr Shanmugam is an experienced lawyer, and we must assume he has chosen his words carefully. He does not assert that anything written by Mr Ellis is false. In fact he can point to nothing specific in the article which he finds libellous. If the Minister finds the article so troubling as to require him to make late night phone calls to convey the message that “he would not hesitate to sue those republishing [it]” then he should come out and explain why. If such an explanation cannot be provided, many are likely to draw the inference that Mr Shanmugam’s assertion that the article is libelous is unsubstantiated.

What Mr Shanmugam says about his historical business relationship with Sinar Mas Group (SMG) is also noteworthy. Most importantly he admits his previous paid directorships of two companies ultimately owned by SMG. This admission is to be expected because it is a matter of fact on the public record. The question is whether there is a conflict of interest between the Minister’s historical business dealings with SMG and his current role as Foreign and Law Minister in Singapore. Singapore is currently embroiled in an dispute with Indonesia, that may or may not ultimately revolve around other (different) companies owned by SMG and may or may not lead to legal proceedings in Singapore against those companies. It could be argued that Mr Shanmugam’s historical relationship with SMG presents a conflict of interest. It is important to note that the existence or apparent existence of a conflict of interest is not indicative of corrupt, illegal or immoral behaviour. However, a conflict of interest must be carefully and transparently managed to ensure a fair outcome. Whether or not there even is a conflict of interest in this case is debatable, since Mr Shanmugam’s relationship with SMG ended many years ago. Regardless though, it is quite proper for Mr Ellis to raise the question and Mr Shanmugam should prioritise answering it over suing Singaporeans who share the article online.


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MDA’s absurd pretence of parity

Singapore’s Media Development Authority have gone to some lengths in an attempt to downplay the chilling effect on freedom of expression likely to result from the recently announced licensing regime for news websites. One of the more peculiar claims was that the changes are intended to bring about “parity” between online and mainstream media sources. Reporters Without Borders quite rightly described this suggestion as “utterly absurd”. When it comes to broadcasting television programs over the airwaves, regulation and licensing is required because there is a definite lack of broadcasting spectrum, the allocation of which needs to be carefully managed. Given the relative scarcity of available frequencies, there is an argument to be made for creating an artificial barrier to entry to discourage wastage. It should be obvious that no such argument exists online – in fact the power of the internet is that the opposite applies – anyone with a single meaningful thought can and will share it with the world at the click of a button. For this reason, MDA’s purported intent – to create parity – is detached from reality.

Furthermore, the mainstream media in Singapore which MDA seek to bring websites into parity with are far from a beacon of excellence. Singapore’s television and print media are so cowed by the spectre of government interference that they score lower than that of Vladimir Putin’s Russia in RSF’s press freedom rankings. It seems clear that the parity MDA seeks establish is one wherein both online and offline media are equally lacking in the freedom to express views critical of the government. To deploy the over used butterfly and toad-in-a-well analogy, it seems that MDA wishes to kill the butterfly of online freedom and throw its corpse down the well, to rot in parity with the shackled toad.

In spite of all this, Singapore’s ruling party present us with one further paradox of parity. Alex Au of Yawning Bread fame argues – in a magnificent post which makes the point through images rather than words – that the government does not have any intrinsic desire for parity. When it suits them – for example on the question of 377A – they are quite happy to avoid a form of parity apparently on the grounds that some segments of society find it offensive. The contrast with MDA’s latest antics is stark. Again, some segments of society find these regulatory changes extremely troubling, but here the government are apparently happy to enforce an unwanted form of parity without so much as a single minute of debate.

So it seems obvious that an intrinsic desire for parity is not the true driver of this change. Silencing critics by squashing the butterfly of internet freedom however does appear to be much more consistent with the way Singapore has been ruled since independence. The obvious inference to draw is that this – not parity – is the driving force behind the new licensing regime.


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A total fallacy. The Online Citizen “not affected” by licensing changes.

I alluded in my previous post to the fallacy of MDA pretending that The Online Citizen and Temasek Review Emeritus are not affected by the recently announced licensing changes. Today’s “The New Paper” helped MDA to re-iterate the fallacy by running the below headline “The Online Citizen not affected”.

MDA's fallacy that sites are not affected by licensing changes

MDA’s fallacy that sites are not affected by licensing changes

Of course, this claim cannot possibly be true. “Affected” is a word that can cover many states of existence. On Sunday last week an editor may have enjoyed some freedom to operate under the existing “light touch” system of group class licensing. By Tuesday afternoon however – less than 48 hours later – it was clear that many sites had been thrown into a state of legal limbo. As a result of the licensing changes, sites popular enough to meet the 50,000 visitor threshold suddenly have a sword hanging over them. The sword being that a faceless bureaucrat can, at the stroke of a pen, impose onerous financial and administrative restrictions on their publishing. Restrictions so onerous that when the sword falls, it could easily put a site out of business. Clearly, such a sudden transition to such an arbitrary and threatening model is a huge change and sites are most definitely “affected”.

MDA’s position however seems to be that an editor is not affected by a sword hanging over his head as long as it has not yet fallen and crashed through his skull. That MDA has empowered itself to hold the sword is particularly galling. Our supposedly highly educated ministers and civil servants have perhaps forgotten the story of Damocles – that the presence of the sword is more than enough to instill fear. On second thoughts perhaps they have not forgotten the story at all.


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We need to talk about the reserves

We need to talk about the reserves.

As a firm believer in democracy, I see the SDP and The Reform Party as the most credible parties for bringing a meaningful improvement to the way Singapore is ruled. This may surprise many people since these parties are obviously not the most popular, but I see there being little mileage in the sort of conciliatory or non-confrontational approach that other parties seek to take with our current leaders. Simply put, collaboration or opposition will quickly become irrelevant if the ruling party deem you a threat to their power. Once that point is reached, they will seek to destroy you. Indeed, I think we see this playing out right now in the way Dr Teo Ho Pin has been attacking WP in recent days, and I imagine some WP members will come around to my way of thinking in the short to medium term. The only way forwards is thus to fix or, if you will, reform our system of government.

Since it is RP and the SDP that I see as the most credible opposition parties, I read with some interest Kenneth Jeyaretnam and Jeremy Chen’s thoughts on how to deal with Singapore’s reserves. The reserves are an area of particular interest to me and my first meaningful blog entry was on that topic. Unfortunately I am not an economist so I do not have any fully fledged policy manifesto to share with the world. Rather, I seek to hopefully enlighten ordinary Singaporeans as to the state of the nation by arguing from what I see as first principles and hopefully common sense.

There are many questions to ask on this topic. Some of them are outlined here but there are surely many more. Let us start with a few

What is the purpose of the reserves?
How much reserves do we need to fulfil their purpose?
Do we have too little or too much reserves to fulfil their purpose?
How should the reserves be managed?

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What is the purpose of the reserves?

This is a big question. Given the amount of government secrecy around their accumulation and management, it is hard to give a concrete answer. I would however suggest that we can infer the purpose of the reserves from how they have been used in the past. First of all, let us put to one side the unlawful gifting of millions of dollars from our reserves to the World Bank, and the practically identical, shocking, but apparently not unlawful gifting of billions to the IMF. Since it must surely be the case that our government has accumulated these reserves for the sake of the nation rather than foreign NGOs, we can hopefully discount these as examples of their true purpose.

As far as I am aware there is only one occasion in the history of Singapore that the reserves have been drawn down for government spending. That was in response to the worst financial crisis in living memory, the sum drawn down was S$5 billion, and it was drawn down to fund policies to protect local workers and the economy. This appears to me at least to be a reasonably uncontroversial Keynesian approach to economic policy and the reserves can obviously serve a very useful role in this context.

How much reserves do we need to fulfil their purpose?

This question is deceptively simple. If S$5 billion was enough to ride out the last financial crisis, perhaps it is enough for the next one? Sadly not. Singapore was arguably lucky to return to strong growth so quickly after the last financial crisis and furthermore we cannot assume the next one will not be worse. Since, for better or worse, we have already accumulated vast quantities of reserves, we do have the option of maintaining them at a high level if we deem that appropriate. We must therefore make some assumptions to drive the answer to this question. What if the next recession is three times worse than the last one? What if it lasts for five years instead of one? Europe today shows us these arbitrary assumptions are not unreasonable. So if we take these numbers and apply them to the sum of S$5 billion we end up with S$75 billion. To me that seems like a reasonable start. Clearly we need some reserves, but not an unlimited sum. Perhaps even this value is too much but I think many Singaporeans would not be comfortable drawing down to a bare minimum value.

Do we have too little or too much reserves to fulfil their purpose?

Recently the Straits Times pegged the value of the reserves at S$800 billion. To give some perspective, the government’s draw down in 2009 of S$5 billion is less than one percent of this value. The exact total of our reserves is of course a secret but just from what we know of government stakes held in locally listed companies (which are worth over S$100 billion) we do appear to have a vast surplus of reserves. Of course this surplus should not be squandered, but for the government to continue accumulating such sums under extreme secrecy is not justified. From the above, I propose we maintain a government controlled quantity of reserves around S$75 billion, but the remainder poses a more complicated question. Let us be conservative and suppose it is worth S$500 billion. What do we do with this quantity of reserves that the state has no moral claim over?

What to do with our excess reserves?

Here we join the debate between Messrs Jeyaretnam and Chen. Mr Chen earmarks certain spending priorities on social welfare which is laudable, but he does not appear to address the much larger question around the hundreds of billions of dollars the government has accumulated to date. In fact, Mr Chen’s spending priorities come out as costing much less than ten billion dollars. The Singapore government reported a surplus of S$36 billion last year. Clearly the plans he has in mind can be funded many times over from existing revenue without even talking about the principle value of S$500 billion. This is a shame because he appears to miss the wood for the trees, and we do need a debate on this bigger question. To over simplify, this can probably be characterised as “keep the reserves and live off the interest”.

Mr Jeyaretnam is arguably looking at the bigger question in suggesting that the sum (which in my argument, not his, is suggested to be S$500 billion) should be distributed to citizens. This is not unreasonable either. If we accept that the government has over-accumulated the reserves then the decision tree is relatively simple. Either the government keeps it or they do not. If they do not, then who do they give the value to? Foreigners or citizens? Behold! The binary choice with only one answer. Everything else is just details.

My position is also that the government has no moral claim over this wealth. It has been needlessly accumulated from citizens in the first place. The suggestion that individuals will squander this money that would be better managed by the state is not valid for various reasons. Ho Ching’s track record does not appear to be strong enough to support this argument. Further, this reasoning sets up a false dichotomy between the state and the individual. In most developed countries a hybrid approach exists for retirement savings. Individuals do control their own private pensions, but they are only allowed limited control in the sense that their pensions must be invested with approved fund managers. If we distribute the value of the reserves in some fashion, we can follow this model to ensure they are not squandered. So distributing this wealth to the citizens seems to not be unreasonable.

How should the reserves be managed?

Mr Jeyaretnam makes the most important point here. The principle objective has to be to make the management of the wealth of the nation transparent and accountable.

First let us talk of the management of the S$75 billion which I seek to keep under government ownership. Clearly we can not rely on the IPO route to force transparency in this case, but legislation could easily serve such a purpose. If we suppose then that transparency can be imposed, accountability follows to some extent. Citizens could vote out a government that mis-managed the reserves, but I believe we should ideally seek to make management of the reserves independent from government policy, and thus the ballot box would not be the ideal path to accountability. Another idea would be to give citizens management shares in whatever vehicle holds these assets. In that way, managers could be held accountable annually through an AGM like process or similar.

Secondly, let us talk of the S$500 billion to be distributed to citizens. Here I diverge somewhat from Mr Jeyaretnam’s plan to do an IPO of Temasek & GIC. Some of the stakes taken by Temasek and GIC are frankly bizarre and we can come up with a better plan if we think through the asset allocation in more detail. Essentially we want to give this wealth to our fellow citizens in a reasonably secure form that encourages long-term wealth creation. I don’t believe that this sum needs to be actively managed. A strategy to track global equity markets and high-grade government and corporate debt does not seem unreasonable. I think this is the sort of advice an independent financial adviser would give on long-term wealth management. To summarise, we then need to rebalance the holdings of Temasek and GIC and probably merge them into one investment vehicle. One of Ho Ching (CEO of TH) and PM Lee (Chairman of GIC) are going to lose their jobs, but that is a loss we can cope with. We then do an IPO of this vehicle and give the shares to citizens in a transparent fashion.

To speak more on asset types. I have noted previously that holding the reserves in the form of controlling stakes in local companies creates perverse incentives that prevent the government from taking difficult decisions for the wellbeing of the nation. Furthermore, I propose that the government uses the reserves to fund policy driven spending to support the economy in difficult times. In that case, the reserves need to be easily convertible to cash in a recession. Under the current model, converting large stakes in locally listed companies is fraught with difficulties – if not actually impossible. Strategically important companies would undergo management turmoil at the worst possible time. Finding a buyer would be practically impossible – not least because a potential buyer would presumably know that the Singapore government needs the cash. For these reasons, the government controlled S$75 billion would have to be held in more liquid positions. Equity stakes over a few percent would be avoided and high-grade debt and cash would be in the portfolio.

To conclude

The current management of our reserves is frankly a mess. We are ideological prisoners to a government that blindly believes in accumulating wealth, to be managed by the state itself in the utmost secrecy. Given that less than 1% of the current reserves was drawn down to deal with the most severe global financial crisis in living memory, it appears that the current multiple hundreds of billions of dollars held is grossly excessive. Whilst I am open to the suggestion that we keep the reserves and “live off the interest”, I prefer to distribute the wealth back to the nation from which it was incorrectly accumulated in the first place. I propose keeping a relatively smaller sum under government control to serve a purpose I believe to be worthwhile – that being to fund government spending during difficult times. A sum of S$75 billion is chosen. This should be held in liquid instruments that can readily be converted to cash in a crisis. I suppose that there are multiple hundreds of billions of dollars beyond this value to be distributed to citizens. This is done by converting the current holdings of Temasek and GIC into more passive investments in global indices. The fund managing these instruments is listed and shares distributed to Singaporeans.

As noted previous, I am not an economist, but I hope to contribute to this debate as a reasonably well-educated lay person. What do you think?


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