Sovereign Wealth Funds in Singapore

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The above article raises one side of an issue that has been brought to light in the recent months, that of sovereign wealth funds(SWFs). I do admit that small states like Singapore need SWFs to tide us over economic fluctuations that may leave us vulnerable on the global stage, however what i feel we need is regulated and transparent SWFs.


An SWF is a fund owned by a state composed of financial assets such as stocks, bonds, property or other financial instruments. They are entities that manage the national savings for the purposes of investment. Why transparent? First, we need to understand the current situation regarding SWFs in Singapore. Presently, there are 2 main SWFs in Singapore, Temasek Holdings and the GIC (Government of Singapore Investment Corporation) which answer directly to the Ministry of Finance. Now the main problem, I feel, lies in the fact that the money used for investment is taxpayer's money.

Recently, parliamentary reports in January have shown that the Minister of Finance expressed his trust in the SWFs, but how far can this trust go? Safeguards have to be put in place to protect the people's interests. The situation right now is that commonfolk like you and I have hardly any idea of what is going on in the investment scene. Is our money being lost? Or is it reaping in profits? We have the right to know, no matter where our money goes to.

My cautiousness is not baseless, as there are incidences to prove that SWFs cannot be fully trusted with taxpayer's money. For example, I quote from "Singapore Politics under the People's Action Party" by Diane K. Mauzy, Robert Stephen Milne: 'In 1996 a GIC manager was charged with eight cases of corruption involving at least $2.4m’. Even more recently, this was raised in a parliamentary debate at the start of the year by Mr. Inderjit Singh: “Sir, in July last year, Temasek invested a few billion dollars into Barclays bank. I think it was around $3 billion minimum and up to $7 billion, if I remember correctly. From what I understand, these values have now come down to about half of the value of the investment. Is the Minister not worried that if GIC and Temasek continue with this kind of multi-billion dollar investment all in one sector – in the banks – this could quickly wipe out a significant portion of our reserves. ”

As such, SWFs should not be given free reign on their investments, rather, the general populace should at least be informed, if not given a choice on whether to give the SWFs that vote of confidence to invest or not. We certainly cannot allow SWFs to invest in whatever they like without any knowledge whatsoever. Whatever losses or profits that are made, majority of the Singaporeans have no inkling of what is happening.

Now the issue here is actually not whether we control the investments of SWFs or not, frankly speaking that is not practical or even feasible. All i am saying is that there has to be a certain degree of accountability and responsibility on the SWF's part to at least inform the general public on it's investment schemes and their outcomes, be it good or bad. Only then can our nation succeed in moving towards a more trustworthy and transparent world-class economy.


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