Temasek says it does not manage CPF savings, gets questioned

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In the past week, several postings by Temasek on its Facebook page has made claims which are being questioned by members of the public. But Temasek has also responded to the reactions by explaining its positions on these questions.

As part of its “mostly commonly asked questions about us” series, the self-proclaimed “commercial investment company” had put up several posters providing answers to these queries.

In them, Temasek claims that it “does not manage Singapore CPF savings, Singapore Government Reserves, [and] Singapore Foreign Reserves.”

In another poster, it says that it in fact “is not a Sovereign Wealth Fund” but “a commercial investment company”, and “own and manage our own assets.”

In a third, Temasek explains it operates “on commercial principles, pay taxes wherever we operate, and invests off of our own balance sheet.”

Temasek is helmed by Ho Ching, the wife of Prime Minister Lee Hsien Loong. Its chairman is former minister Lim Boon Heng.

Temasek’s postings immediately drew questions and criticisms from members of the public, who challenged its assertions.

Shih-Tung Ngiam, commenting on the page on Temasek’s claim that it is not a sovereign wealth fund (SWF), but a “commercial investment company”, called it a “lie”.

“This is an outright lie,” he said. “I do not understand why Temasek keeps trying to deny that it is an SWF. What benefit do Temasek insiders get from that denial ? Singapore does not gain anything. If anything we lose points on transparency and honesty.”

But it is Temasek’s posting on the Central Provident Fund (CPF) savings that drew the most reactions from the public. The CPF is a compulsory savings plan for all working Singaporeans for retirement and housing needs, among others.

Some on Temasek’s page expressed disbelief that the fund does not manage CPF money, describing the claim as “a joke” and “fake news”, and asked Temasek where its funds for investment comes from, if not from CPF savings. Reactions also questioned the husband-and-wife relationship of the Chief Executive Officer (CEO) of Temasek and the Prime Minister.

Temasek responded that CPF monies are invested by the CPF Board in Special Singapore Government Securities (SSGS) that are issued and guaranteed by the Singapore Government.

“The proceeds from the SSGS are then invested by the government through MAS and GIC, just like how the proceeds from the market-based Singapore Government Securities (SGS) are invested,” Temasek says.

“We also do not receive any SGSS proceeds for management,” it added.

When asked to publish its financial statements, Temasek said:

“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. Also, you might be keen to know that our sole shareholder is the Minister for Finance; no other investors were involved in our growth over the last 44 years.”

It then directed readers to this page for more information.

The Ministry of Finance (MOF) explains on its webpage:

Temasek’s consolidated financial statements are audited by leading international audit firms. In addition, Temasek’s financial performance is scrutinised by bond rating agencies, which have given it a AAA credit rating.”

Temasek also publishes its investments portfolio on its website. See here.

Earlier this month, the fund reported a record net portfolio value of $308 billion.

It is now almost three times the dotcom peak of just over S$100 billion at the turn of the millennium,” Executive Director and CEO, Temasek International, Mr Lee Theng Kiat, said then.

Chairman Lim said, “To succeed as an investor is not an end in itself. Ultimately, that success must be translated into a better and more sustainable world for our people and communities.”

Temasek is one of three government entities which manage and contribute to the reserves. The other two are the Monetary Authority of Singapore (MAS) and the Government Investment Corporation Pte Ltd (GIC Pte Ltd).

The actual size of the total reserves are not published but is estimated to be about $750 billion.

Only MAS and Temasek disclose their assets. GIC Pte Ltd does not.

The MOF explains “what has been revealed is that GIC manages well over US$100 billion.”

“Revealing the exact size of assets that GIC manages will, taken together with the published assets of MAS and Temasek, amount to publishing the full size of Singapore’s financial reserves,” the MOF says.

“It is not in our national interest to publish the full size of our reserves. If we do so, it will make it easier for markets to mount speculative attacks on the Singapore dollar during periods of vulnerability.

For more detailed answers to the questions which readers posed to Temasek, perhaps it is best to refer to the Ministry of Finance website for the answers.

Please click here.