Yet more secrecy on reserves, returns

October 20, 2004
Singapore Democrats

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Reuters
19 October 2004

Singapore said on Tuesday it would not disclose details on its large stockpile of financial reserves or the return it makes on them, to guard against financial speculators.

The city state – Asia’s third wealthiest society after Japan and Hong Kong – is thought to have over a US$100 billion of reserves in the secretive Government of Singapore Investment Corp.(GIC).

The GIC, which invests the government accumulated budget surpluses, has holdings ranging from Australian real estate to U.S. equities but has never published its accounts.

In a rare admission several years ago its said the portfolio was worth about US$100 billion.

“Disclosure of the exact size of, or the returns on, Singapore’s financial reserves will not be in Singapore’s national interest,” Raymond Lim, Acting Second Minister for Finance told parliament.

Lim was replying to a question about greater disclosure of the returns on government-managed assets to enable the public to understand the performance of such investments.

Singapore was recently criticised by ratings agency Standard & Poor’s which said the city-state’s investment returns had underperformed those of Hong Kong by 2-4 percent in nominal terms since Asia’s 1997 financial crisis and termed its approach to disclosure as “guarded”.

State investment agency Temasek, which has large stakes in most of Singapore’s biggest listed and unlisted businesses, published its first annual report in 30 years just last week.

Temasek disclosed its average annual rate of return was just three percent over the past 10 years, although its returns over 30 years have averaged 18 percent a year.

Lim said the reserves were key to maintaining confidence in, and discouraging speculation on, the Singapore dollar.

“While market traders do not doubt that the government has substantial resources to defend the Singapore dollar, they do not know the exact amounts nor full details of the asset allocation nor the investment criteria,” he said.

“Publishing this information would make it easier for speculators to plan their attacks on the Singapore dollar.”