Questions that have been asked for a long time are bubbling to the surface again in the newest wave of heated public discourse about the CPF, the GIC , Temasek Holdings and the Government. I’m going to go out on a limb and disagree with people such as Catherine Lim. I don’t think the problem is the loss of public trust in the Government or its leadership. I’m not denying it exists; I’m saying it’s not the crux of what ails Singapore right now. I think that the loss of public trust in the leadership (to what degree is still being vociferously debated) is a symptom of a much deeper problem: ownership. Or more precisely, the lack of it.
Not A Different Kind Of Democracy, After All
Ownership is the cause of much of the discontent with the CPF system, in a few ways. First, there is resentment about the most basic premise of the CPF system, as it’s a compulsory savings scheme (read: forced saving scheme.) To begin with, people are unhappy that they are not only told what to do with their money, but are also forced to give a portion of their income up every month. In a nation of people who feel politically powerless, the compulsory nature of the CPF scheme only serves to rub salt into an already festering wound. We feel that we don’t own this country. To add insult to injury, Singaporeans feel they are left in the dark about exactly what the Government does with their money – the CPF monies.
Amid the speculation that inevitably springs up when there is a vacuum of information on a topic people care about, suspicions about the GIC are numerous. There is speculation that the GIC doesn’t disclose information about its investments because it has made massive losses. There is speculation about the board of directors, speculation of the extremely libellous sort. Fun fact: the ministers on the GIC’s board of directors do not take director’s fees at all, which I thought a pleasantly surprising anomaly.
In fact, a large chunk of the speculation about the GIC and relevant questions about the CPF monies and the GIC have perfectly rational explanations. The problem is that this information is not made readily available to the public. For example, if the GIC were indeed making huge losses, our NIR (Net Investment Returns) would be falling with each annual Budget. Few even know that the NIR is a bonus of sorts that goes back into the expenditure for each Budget. It’s unsurprising that few know this, as the information is not made easily available.
Another huge bugbear is the lack of transparency. After all, the GIC scores 6/10 on the Linaburg-Maduell transparency index, compared to Temasek Holdings’ perfect 10. If the GIC makes investments in foreign strategic assets – infrastructure, commodities, property – and if all of this information is made publicly available, this could cause unnecessary tension in bilateral ties. Why doesn’t this apply to Temasek? Because GIC and Temasek are very different products, albeit both trying to achieve the same outcome: rubbing two coins together to produce four coins. As for the size of the GIC’s sovereign wealth fund, while the GIC is not in the habit of publicly announcing the size of the fund, in the interest of national security, this information is readily available with a quick Google search.
The explanation for how GIC does not directly manage CPF funds, while reasonable, does not assuage anxiety about the CPF monies, either.
Yes, it is true that the GIC does not directly invest CPF monies. They invest the proceeds of a special blend of government bonds called SSGS (Special Singapore Government Securities) which are sold to the CPF board. It is also true that even if the GIC makes impressively heavy, long-term losses on their investments (we’re looking at a span of 20 years), those bonds are fully guaranteed by the Government, who have no choice but to cough up the shortfall from these losses, should this happen.
However, perception is a powerful thing.
These explanations of how the funds are managed and secured do little to shift the common perception that GIC manages CPF monies, or anxiety about what should happen to the CPF monies, should the GIC sustain heavy and prolonged losses. Building on the basic resentment at the CPF system is further unhappiness from the perception that CPF monies are managed by GIC, but there is not enough transparency about how the funds are being managed.
All the explanations for the way GIC and Temasek invest government funds, and the CPF system – be they easily accessible to the public or not – are moot when you consider the underlying issue: a sense of ownership (or more the point, the perceived lack of it).
This problem is made even stickier by the rift in communication between the Government of Singapore and its citizens.
Interestingly, this is the flip side of issues of ownership and electorate apathy in mature democracies: when people feel that they do not have ownership or agency in their own lives, they either get angry or they switch off. Unlike mature democracies, the electorate in Singapore seems to be getting angry instead of switching off, but this may not remain the status quo indefinitely.