There is an alarming lack of transparency and accountability with the Government of Singapore Investment Corporation (GIC) and Temasek Holdings. Singaporeans have little knowledge over how our reserves are being used or invested by the two sovereign wealth funds.
Temasek, run by PM Lee Hsien Loong's wife Ho Ching, owns a myriad of businesses covering a broad range of industries all over the world.
In 2004, Mr Lee, then deputy prime minister, introduced a constitutional amendment to allow the Government to transfer funds from our reserves to Government-linked companies (GLCs) and statutory boards without the transfer being deemed a draw on the reserves.
This effectively means that the Government can make such transfers without the knowledge of the President – and, more importantly, the public – because drawing on the reserves would need the assent of the President.
Apart from the issue of transparency, economists have repeatedly questioned the role of the state in the corprorate sector, raising issues of productivity and accountability.
In 1986, the Government set up the Public Sector Divestment Committee (PSDC) to encourage the privatisation of GLCs, but the process seems to have since stalled.
As for the GIC, which describes itself as a “private company wholly owned by the Government of Singapore”, its operations and the amount of funds it manages is not transparent. PM Lee is its Chairman, taking over from his father Mr Lee Kuan Yew in May 2011. (Incidentally, Mr Goh Chok Tong did not chair the company even though he was prime minister from 1990 to 2004).
Under the SDP's A New Economic Vision: Towards Innovation, Equal Opportunity and Compassion (Abridged) (Full), the GLC Divestment Commission (GDC) will replace the PSDC and efforts will be redoubled to review the performance of GLCs and their subsidiaries, and recommend to the MOF a schedule detailing which GLCs will be divested and the timeline such divestment will take place.
Exceptions will be made for companies with security concerns, for example, Singapore Power and SingTel.
For the GIC, management of the company will observe good corporate governance and maximum transparency and accountability by adopting the following practices:
1. The GIC shall publish annual reports on the management of the funds and these reports shall be submitted to Parliament for scrutiny.
2. The annual reports shall consist of all investment activity as well as extracts of the GIC’s financial accounts.
3. The management team of the GIC shall give an account of the Corporation’s funds, management costs, investment strategies, a projection of value creation and risk management of the strategies.
4. The annual report shall also state the GIC’s work in relation to good corporate governance and environmental and social issues.
5. Ministers and Members of Parliament and their relatives shall not be permitted to be on the management of the GIC.
6. The management team of the GIC shall be appointed by the President subject to a public confirmation process of Parliament.