Singapore's government investment firm Temasek Holdings claims that it does not use the country's pension funds and reserves for investment, but as the below analysis shows, this claim is baloney.

This month, Temasek Holdings took to its Facebook to say, “Did You Know?: Temasek does not manage: Singapore CPF Savings, [the] Singapore Government Reserves, [and the] Singapore Foreign Reserves.”

According to the Sovereign Wealth Fund Institute, Norway’s Government Pension Fund Global is the largest sovereign wealth fund in the world while Temasek Holdings ranks ninth.

Singapore’s other sovereign wealth fund, the Government of Singapore Investment Corporation (GIC), ranks seventh. Together, Singapore’s sovereign wealth funds rank the fifth-largest in the world, by country.

GIC and Temasek Holdings together manage total assets of US$765 billion, or more than S$1 trillion, and are headed by Prime Minister Lee Hsien Loong (as the chairman) and his wife Ho Ching (as the CEO), respectively.

The CPF is the Central Provident Fund or Singapore’s public pension scheme.


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Singapore's Prime Minister Lee Hsien Loong and his wife Ho Ching attend a wreath laying at the Mausoleum of Ho Chi Minh in Hanoi, Vietnam 23 March 2017.

Transparent falsehoods

There is a great deal riding on the perception that the two sets of funds are managed separately, not least that Temasek Holdings earned 12.19 percent in returns last year, while Singaporeans only earn between 2.5 percent and 4 percent on their CPF pensions.

A small group earns up to 6 percent on a capped amount of their funds, but in 2011, Singaporeans’ median monthly pension payout was only S$260, while in 2014, it was only S$394. Information from the other years is not available.

It is obvious, then, why Temasek Holdings would want to promote the idea that it has nothing to do with investing Singapore’s pension pot.

But Singaporeans do not buy Temasek Holdings’ claim, with several responding to its Facebook post with comments including “fake news” or simply describing it as “a joke”.

Temasek Holdings responded to the jibes with a disclaimer: “Just to clarify, as a Singapore exempt private company under the Singapore Companies Act, we’re actually exempted from disclosing financial information publicly.

“Nonetheless, we’ve been publishing our Temasek Review annually since 2004 as a public marker of our performance.”

In fact, as the book "Sovereign Wealth Funds and International Political Economy" explains: "Due to its exempt status, information about Temasek Holdings, including its financial statements between 1974 and 2000, is not available and only a summary of data for financial years 2002 to 2004 is included in the first Temasek Review which was issued in 2006.”

In a comment following the same post in which it denied deploying Singapore’s pension funds and reserves, Temasek Holdings also said: “Our [sole] shareholder [the Ministry of Finance (MOF)] may also allocate us with fresh funds, as part of its own asset allocation.”

It then shared a link to its webpage, titled 'Ins & Outs of Temasek,' that repeated: “Our shareholder, the Minister of Finance, may inject fresh capital or assets into Temasek.”

But Temasek Holdings does not mention what these government funds constitute.

A crucial amendment

According to the book "Reforming Corporate Governance in Southeast Asia: Economics, Politics, and Regulations," an April 2004 constitutional amendment “allowed the government to transfer reserves to key statutory boards and companies, and the transfer of reserves among [these companies …], was introduced.”

Another book, "Constitutionalism in Asia in the Early Twenty-First Century," said that the amendment “allows transfer of reserves from the government to statutory bodies (e.g. the Housing & Development Board) or government companies (e.g. Temasek Holdings).

“This capital injection could potentially fuel the latter [Temasek Holdings]'s aggressive investment strategies," it added.

Shockingly, this bill “was not debated at second reading" in parliament.

In effect, the amendment allowed Temasek Holdings to take on management of Singapore's reserves.

In fact, as stated in the book on reforming corporate governance, "Temasek Holdings [even] acknowledged that it [could] access the reserves" in 2004. So, why is it denying this today?

And why does Temasek Holdings not state exactly what government funds and reserves it is able to access?



Ho Ching, Chief Executive Officer of Temasek Holdings and wife of Singapore's Prime Minister Lee Hsien Loong, attends an official dinner at the Istana presidential palace in Singapore April 23, 2012.

Ho Ching took over Temasek Holdings in 2002. Lee Hsien Loong became Singapore’s prime minister in 2004 – the same year the 2004 amendment was introduced. He was also the chairman of Singapore’s central bank, the Monetary Authority of Singapore (MS), from 1998 to 2004.

Aside from its own admissions, there is documentary evidence that Temasek Holdings is permitted to use the country's pension funds for investment.

According to the FAQs on Temasek Holdings' website, it reiterated its claims to the contrary in answer to the question, "Does Temasek manage Central Provident Fund (CPF) savings or Singapore’s foreign reserves?"

It said: "Temasek does not manage CPF savings (which are managed by the Board of the Central Provident Fund)."

It also said that it does not manage "government surpluses, or Singapore’s Official Foreign Reserves (which are managed by the MAS)."

"More information on the management of Singapore’s reserves is available by visiting the Singapore MOF website, which has an 'Ask MOF' section on the management of reserves," Temasek said.

Temasek Holdings chose to include a hyperlink that does not link to the exact webpage but the general “Ask MOF” webpage. You have to wade through reams of information to find the required passage, which is under the question: "How are CPF monies invested? What does the Government do with the monies?"

According to the MOF, "CPF monies are invested by the CPF Board (CPFB) in Special Singapore Government Securities (SSGS) that are issued and guaranteed by the Singapore Government."

"The proceeds from SSGS issuance are pooled with the rest of the Government’s funds, such as proceeds from issuing Singapore Government Securities (SGS) in the markets, government surpluses, as well as the receipts from land sales which under our Constitutional rules are accounted for as Past Reserves. The comingled funds are first deposited with MAS as government deposits," MOF added.

On another MOF website, it adds: "Borrowing proceeds [from the CPF/SSGS] are invested."

In other words, Singaporeans’ CPF pension funds are invested in government bonds (SSGS), which are then invested in the reserves.

Under the 2004 amendment, Temasek Holdings has access to the reserves – as it has admitted. As such, it also has access to Singaporeans' CPF pension funds.

So why does Temasek Holdings deny this?


Photo Credit: Reuters / TPG

A man reads his newspaper near tricycle rickshaws outside a Buddhist temple in Singapore.

Denials of denials

Strangely, the MOF also denied this.

On its website, MOF said: "The SSGS proceeds have not been passed to Temasek for management. Temasek hence does not manage any CPF monies."

But MOF also said that the “CPF monies are invested” in SSGS which are then “comingled” and invested in the reserves, which Temasek Holdings has access to.

So, if the funds have been “comingled”, how would Temasek Holdings suddenly be able to "un-mingle" the funds and distinguish which are CPF monies?

MOF also said: "Temasek also has its own borrowings and debt financing sources. The Government’s relationship with Temasek is that of its sole equity shareholder."

But why doesn't the MOF admit that Temasek Holdings has access to the reserves, especially since it is apparently Temasek Holdings’ sole shareholder?

More information can be found in another question on the MOF's website: "Can reserves be transferred easily among our investment entities to buffer their losses?

But only if you can make sense of it – you have to cut through a load of crap.

According to the MOF, "The [constitutional] amendments in 2002 and 2004 [...] enable[d] the transfer of Past Reserves within the Reserves protection framework (i.e. among the Government and Fifth Schedule entities), without any loss of protection to Past Reserves."

In other words, the reserves are managed by the Fifth Schedule entities and they can move the past reserves between them. The Singapore government has ensured that this is not considered as withdrawing from past reserves.

Tracing the obfuscations

So what are Fifth Schedule entities?

According to the MOF, "Fifth Schedule entities refer to key statutory boards and Government companies that are listed in the Fifth Schedule under the Constitution. Examples of Fifth Schedule entities are the CPF Board, MAS, HDB [the Housing & Development Board], GIC and Temasek. The reserves of these entities are protected under the Reserves protection framework."

So, guess what? Temasek Holdings is a Fifth Schedule entity. So are Singaporeans' CPF pension funds.

If you can follow the above legalese, then whatever Singapore’s MOF and Temasek Holdings say about Temasek Holdings not using the government reserves and CPF does not make sense at all.

And in the case of the reserves and how the government refers to them, to the lay person, this is all just semantics. First, Singapore's reserves are actually fiscal surpluses that the government accumulates.

It is known that the MAS, GIC and Temasek manage the reserves -- in fact, the MOF used to write this on its website but then decided to stop doing so. Blogger Roy Ngerng compiled a chronological order of how the MOF tried to hide the information.

The MOF had said: “Our reserves are managed by three agencies – the Government of Singapore Investment Corporation (GIC), Temasek Holdings (Temasek) and the Monetary Authority of Singapore (MAS).”

"Past reserves" refers to those that have been accumulated and then kept aside -- "surpluses accumulated by [each new term of] of government would be ‘locked up’ at the end of its term,” the book, “Singapore's Fiscal Strategies for Growth: A Journey of Self-Reliance,” explained.

In short, past reserves are still government reserves, but are “locked up” by the government.

Now, Temasek Holdings claimed in its annual report: “Temasek does not manage Singapore’s Central Provident Fund (CPF) savings; the budget surpluses or foreign exchange reserves of Singapore; or the reserves of any other Fifth Schedule entity. These are independently managed by the relevant Fifth Schedule entities themselves.”

But we have already settled this: (1) the MOF said that the funds from the CPF, government surpluses and land sales are all “comingled” – so the government is apparently not able to distinguish the source of the funds, (2) the reserves get “locked up” after each term of government, and (3) Temasek Holdings is able to access these locked up reserves that can be transferred to them, which therefore means that Temasek Holdings has access to the reserves.

In fact, GIC, the other government sovereign wealth fund, said in its FAQs: “We receive funds from the Government for long-term management, without regard to the sources, e.g. proceeds from securities issued, Government surpluses.”

Isn’t it funny then, that the government investment firms – at least GIC – and the MOF would both claim that they do not know the provenance of the government funds because they are comingled, but Temasek Holdings is so crystal clear regarding the sources of the funds they manage?

In technical language, MOF says: "Constitutional amendments make clear that there is no draw on Past Reserves as long as (i) Past Reserves are being transferred among entities that are within the Reserves protection framework; and (ii) the receiving entity undertakes to protect the Past Reserves that are transferred over. In such circumstances, the overall amount of Past Reserves being protected is unchanged, and hence the President’s approval need not be obtained for such transfers.”

In short, Temasek Holdings’ funds are part of the overall reserves, and since the CPF and government reserves are also part of the overall reserves, the CPF monies and government reserves do not need to be transferred ‘out’ or withdrawn in order to let Temasek tap them. They can simply be transferred directly to Temasek Holdings and no one will bat an eyelid.

“In such circumstances, the overall amount of Past Reserves being protected is unchanged,” the MOF said.

Presidential powerlessness

But here is the other shocker – note the last statement in the previous quote from MOF: "In such circumstances, the overall amount of Past Reserves being protected is unchanged, and hence the President’s approval need not be obtained for such transfers."

In “Constitutionalism in Asia in the Early Twenty-First Century”, essay author Thio Li-ann wrote: "Government [members of parliament] in media interviews stated that this [2004] amendment did not compromise the need for checks, even if presidential oversight was removed from these transfers."

They reasoned that "we should have an implicit trust and confidence in how the Government manages our reserves".

But as opposition Singapore Democratic Party’s Secretary-General Chee Soon Juan explained, “It seems a very clever way of unlocking the safe. By saying that such a move to transfer reserves from the Government to a GLC [government-linked company] would henceforth not be considered a draw on the reserves, the Government is now free to raid the reserves without getting consent from the president or making it public.”


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Chee Soon Juan, leader of the opposition Singapore Democratic Party, speaks to supporters after a final rally ahead of general elections in Singapore, Wednesday, Sept. 9, 2015.

Singapore’s President Halimah Yacob is the country’s head of state, whose constitutional role is defined thus: “The President of Singapore acts as a guardian in relation to certain matters such as the use of national reserves. He [or she] does not govern the country - that falls to the Prime Minister and the other members of the Cabinet who exercise the executive powers of the Government and are accountable to Parliament.”

Let's unpack.

First, Temasek Holdings is part of the overall reserves.

Second, when past reserves are transferred among the entities, say from the CPF to Temasek Holdings, "the overall amount of Past Reserves being protected is unchanged", so apparently there is no withdrawal.

And thus, shockingly, "the President’s approval need not be obtained for such [internal] transfers."

Now, according to the MOF, “The Government can only draw on Past Reserves with the approval of the President.”

But if Temasek Holdings is part of the overall reserves and past reserves can be so-called transferred to Temasek Holdings, say from the CPF, without actually withdrawing from the past reserves, then the president's approval would therefore not be needed, because there would be no “drawing on” the past reserves.

But isn't the role of Singapore's president precisely to safeguard the reserves?

By changing the rules, the Singapore government effectively removed the role of safeguarding the reserves from the Singapore president’s remit, essentially eliminating the post’s constitutional obligation.

And since the reserves comprise Singaporeans’ CPF pension funds, government surpluses, land sales, and funds managed by the two government investment funds GIC and Temasek Holdings as well as all other reserves and surpluses in the government agencies – pretty much almost all of Singapore’s money – and since all these can be transferred among one another without the president’s approval, then what exactly does the president have to do?


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South Korea's President Moon Jae-in shakes hands with Singapore's President Halimah Yacob during a visit at the Istana in Singapore July 12, 2018.

And who made this change to remove the president’s role and to pack all the reserves together?

The MOF revealed: "The Board of Directors of MAS [were the ones who] had resolved that the Past Reserves transferred [...] would be added to the Past Reserves of MAS and protected.”

Singapore Prime Minister Lee Hsien Loong was the chairman of MAS – the Monetary Authority of Singapore – when the amendment was passed in 2004.

In 2011, The Business Times reported Home Affairs and Law Minister K Shanmugam as saying that "the elected president cannot publicly challenge the government without acting against the Constitution.

"The president can only act and speak as advised by the Cabinet,” he added.

In his speech in parliament last year during the debate to review the elected president system, Lee Hsien Loong said: “The President must have the right to exercise his [or her] veto powers, even against the advice of the [Council of Presidential Advisers].

Then Lee added: “But if the CPA disagrees with the President, then the President can still veto, but Parliament, in this case, can override his [or her] veto with a two-thirds majority.

In the greatest irony of all, the committee which has decided that parliament can override the president’s veto with a two-thirds majority was chaired by current president Halimah herself when she was the speaker of parliament. The committee also recommended that “a motion to overrule the President should be decided on a yes-or-no basis, with no amendments allowed.”

The People’s Action Party (PAP)-led government, which has hoarded power for nearly 60 years in Singapore, has simply made a mockery out of the whole institution of the president.

But it is not just the MOF and Temasek Holdings that are trying to whitewash the truth.

GIC used to say it knew clearly where its sources of funds came from: "The Government's financial assets, other than its deposits with the MAS and its stake in Temasek Holdings, are mainly managed by the GIC. Sustained balance of payments surpluses and accumulated national savings (aka. Singaporeans' CPF pension monies) are the fundamental sources of the Singapore Government's funds."

But after blogger Roy Ngerng probed the link between the CPF and GIC, and the connections to Temasek Holdings, the government changed the information on the GIC and MOF websites. Ngerng was later sued by the Singapore prime minister.

Why Singaporeans would put their trust in a government and leaders who are so forgetful is beyond comprehension.

GIC later changed its tune and said: “GIC manages the Government’s reserves, but as to how the funds from CPF monies flow into reserves which could then be managed by either MAS, GIC or Temasek, this is not made explicit to us.”

When the GIC was mocked for doing this about turn, it said: “GIC, along with MAS, manages the proceeds from the Special Singapore Government Securities (SSGS) that are issued and guaranteed by the government which the CPF board has invested in with the CPF monies. So while the CPF monies are not directly transferred to GIC for management, one of the sources of funds that goes into the Government’s assets managed by GIC is the proceeds from SSGS.”

Triple double-backs

From initially knowing what sources of funds it was using, the GIC suddenly did not know, then suddenly knew again – as was the case with the MOF and Temasek Holdings.

The Singapore government, the prime minister and his wife – who both manage the two sovereign wealth funds – seem to have a strong case of amnesia. Why Singaporeans would put their trust in a government and leaders who are so forgetful is beyond comprehension.

In fact, in 2001, when Singapore’s first and former prime minister the late Lee Kuan Yew was the chairman of GIC, he had said: “GIC does not use CPF funds.” He added: “I want to clarify that there is no direct link between the GIC and the CPF.”

Then in 2006, he said: “There is no connection between GIC’s rate of return and the interest paid on CPF accounts.” And in 2007, when asked in parliament by the Worker’s Party’s then-General Secretary Low Thia Kiang whether GIC used money derived from CPF to invest,” then-Manpower Minister Ng Eng Hen said: “The answer is no.”

So, we have denial after denial from the GIC, Temasek Holdings, and the MOF about not using the CPF monies, when the fact of the matter is that they do have access to Singaporeans’ CPF pension monies and the government reserves.

So why does the Singapore government not want to come clean?

Maybe the PAP might want to heed the advice of one of their ministers, Vivian Balakrishnan. She had previously accused the Worker’s Party’s Low of taking advantage of people: “Politics is a contest for power, but the key principle when you have power is, don’t take advantage of people under your charge, and always be honest and upfront with them. All of us will make mistakes.”

She also said: “When a mistake is made, just come clean and say so, but don’t cover up.”

She added: “That’s why I have not let this go, because it is not about cleanliness of the ceiling, it is about clean politics, and I appeal to you because I know you to be an honourable man. I appeal to you, go back, do a thorough investigation of what’s gone wrong in your TC [Town Council] and put it right, set it right.”


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Indian Foreign Minister Sushma Swaraj greets her Singapore counterpart Vivian Balakrishnan during the Delhi Dialogue of ASEAN countries in New Delhi, India, Thursday, July 19, 2018.

Coincidentally, with all the comingling that the Singapore government is doing with Singaporeans’ monies, do you know there is an anti-commingling policy in Singapore? The aim of this banking policy is “enhancing market discipline [and] increasing transparency of transactions.”

“The unwinding of cross-shareholdings will further improve local banks' corporate governance through a clearer and more transparent ownership and control structure. It will also minimize conflicts of interest between bank and non-bank businesses. These measures benefit depositors and shareholders, and strengthen the financial system as a whole,” the policy said.

In spite of all the declarations of market discipline and transparency aimed at the corporate sector, the MOF, the GIC and Temasek Holdings – three of the most important financial institutions in Singapore – do not abide by this policy.

The policy expects a clear and transparent ownership and control structure, but to date, Singaporeans do not have detailed information about either aspect from the GIC or Temasek Holdings.

Mounting demands

Revisiting the fallout from Temasek Holdings Facebook post, blogger Leong Sze Hian calculated that Norway’s sovereign wealth fund – the largest in the world – would have only spent about S$0.75 billion (US$550 million) on management costs (on its S$1.49 trillion fund) against the S$8 billion he estimated Temasek Holdings spent (on its S$275 billion fund) and asked: “Why is it that Temasek does not disclose its ‘management costs’ like Norway’s sovereign wealth fund?”

The blog likedatosocanmeh added: “An increasing number of Singaporeans are demanding to know why Temasek Holdings is unable to disclose management cost.”

Temasek Holdings has stated: "Information on the compensation of board directors and senior management is not relevant to our performance."

Moreover, former Temasek Holdings director of corporate communications Eva Ho is quoted in the book “Authoritarian Capitalism: Sovereign Wealth Funds and State-Owned Enterprises in East Asia and Beyond” as saying: "Total transparency is neither possible not desirable given the commercial confidentiality and market sensitivities which any commercial company would need to observe.”

Indeed, GIC does not even provide annual reports or let Singaporeans know the amount of funds it manages. No one knows how much the management of GIC and Temasek Holdings is paid, or how much they take out of Singaporeans’ monies in administrative charges.

The good news is that Singapore launched a review of the Anti-Commingling Framework for Banks last year.

Perhaps the review should ask these important questions: Why does the Singapore government keep wanting to deny the link between the GIC, Temasek Holdings, and Singaporeans’ pension funds? And why are its highest financial institutions apparently exempt from the standards of market discipline and transparency that is supported to govern commercial banks?

Of course, such a review would be unlikely to come to the conclusion apparent to everyday Singaporeans: If Temasek Holdings uses Singaporeans’ CPF pension funds to invest, then it would have to return the interest earned to Singaporeans’ pension funds.

But they wouldn’t want that now, would they?

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Editor: David Green