image source: Bloomberg

S$1.49 trillion Norway fund “management costs” S$0.75b, S$275billion Temasek “admin. expenses” S$8b

Why is it that Temasek does not disclose its “management costs” like Norway’s sovereign wealth fund? 

I refer to the article “Norway’s $1 Trillion Oil Fund Taken to Task Over Rising Cost” by Bloomberg published earlier this year in January.

The article wrote that the Norwegian Finance Ministry said that management costs of its sovereign wealth fund have risen “significantly over time” and are projected to hit 3.5 billion kroner (S$750 million) this year, up from 2.1 billion kroner (S$480 million) in 2014 and  pointed out that based on its 2017-2019 strategy plan the fund is now running ahead of schedule in terms of employees.

Does this mean that the “management costs” of Norway’s Sovereign Wealth Fund (SWF) that manages S$1.49 trllion are only about 0.05 per cent of its portfolio value?

To the best of my knowledge, I understand that Singapore's investment company, Temasek does not disclose its  “management costs” (such as the CEO’s annual remuneration) like Norway’s SWF as it deems itself as an exempt private company that is fully owned by the Ministry of Finance.

What we know is that Temasek’s administrative expenses were S$8.4 billion in 2017, on a net portfolio value of S$275 billion.

Image from Temasek's annual report

Of course, Temasek has clarified that its “administrative expenses” also included expenses of subsidiary companies such Singapore Airlines, PSA, and others, and not for Temasek only.

This was in response to a statement put out by the National Solidarity Party in 2011 by its then-Secretary General, Hazel Poa that voiced out concerns over the lack of transparency in the SWF.

She wrote, "The NSP believes that sufficient public information in the internal workings of GIC and Temasek Holdings is undoubtedly in the interest of all Singaporeans, as is a demonstrably robust system of check and balances in the management of our SWFs." and added, "It is also a disturbing state of affairs when Temasek Holdings, with about 400 employees, can report an $8 billion administrative expense without incurring significant public scrutiny."

Do most SWFs report “management costs” like Norway’s or just “administrative expenses” like Temasek? And do most SWFs report “administrative expenses” that include the “expenses of subsidiary companies” (which it owns wholly or partly in its portfolio?) like Temasek?