By Chris Kuan
Here is another piece of talk cock (sorry ladies for the choice of words but it does describe the rubbish).
Page 24 of the Temasek Review 2016, it states "we do not manage
- Singapore CPF savings
- Singapore Government Reserves
- Singapore foreign reserves"
And yet on page 25, it states "From time to time, our shareholder, the Minister for Finance, may inject fresh capital into Temasek as part of the Singapore Governments own overall asset allocation of its total reserves".
Since CPF savings, having been transformed into debt proceeds by the act of the CPF Board of investing in Special Singapore Govt Securities, are co-mingled into a common pool with other cashflow of the government such as surpluses and savings - from which fresh capital are injected into Temasek, then that statement that Temasek does not manage Government Reserves is patently wrong.
From where does the capital injection come from but from that co-mingled pool of government cashflows.
I would add that those Government Reserves ought to include CPF savings but the problem is that once in the government's balance sheet they are no longer CPF savings.
On the same page 24, Temasek also states "Temasek’s sources of funds come mainly from our business as an investor and shareholder." Those business include Government-Linked Companies (GLCs) still on its books comprising 29% of its assets and divested former GLCs which provided funds in the past for its current assets.
If the shares of the GLCs and ex-GLCs were managed by GIC instead, the funds realised by dividends and proceeds from divestments would appear directly in the government's accounts and been part of the reserves, i.e. government savings (GIC manage assets but the assets remained iin the government accounts). Just because the GLCs and ex GLCs are in the balance sheet of Temasek may in the strictest legal sense not be part of the reserves but for all practical intents and purposes they are.
Why else is Temasek's net returns part of the Net Investment Returns Contributions, the constitution rule that permit the government to spend up to 50% of the expected inflation adjusted returns from Temasek, GIC and Monetary Authority of Singapore (MAS).
As I wrote at the beginning, talk cock is the way to describe it.