Singapore and Hongkong are both small in size, and both having a
largely cosmopolitan population that are open and dependent on the
World for a living.
Yet Hongkong thrives up till this day, without any paternalistic
figure such as LKY.
Singapore and Hongkong have different political systems and each is
attempting to solve near similar recessionary problems caused by
the same set of external economic problems:
From a report printed in the South China Morning Post on 6 June
2001, the following will be interesting alternatives to a
referenced article from DPM LHL on the same subject.
Lion City runs out of excuses for
secrecy
South China Morning Post
June 6, 2001
By SIMON PRITCHARD
THE SECRECY for secrecy's sake?
The retention of information is a defining characteristic
of big-brother bureaucracies and know-better elitists
everywhere. Favourite excuses for crimping public view of
economic data include national security and the public
interest.
More often, these mask inefficiency and outright
coercion.
Socialist states were heavily information retentive and
paid the price in economic efficiency, as poor-performing
companies are reliable cover-up merchants. But drawing a line
between public interest and data voyeurism is no easy task.
Singapore, a capitalist metropolis in socialist drag, offers an
interesting case in point.
Recently, it chose to loosen up and go with the market-economy
flow. That has seen public utilities partially privatised,
regulation loosened and less moral hectoring by a government
wanting to encourage a free-thinking, "knowledge-based"
future.
This has not been easy. High-cost
Singapore is heavily exposed to the global electronics slump and is
seeing foreign companies exit to cheaper locations. This
cyclical downturn has hit economic growth hard and, arguably,
portends a deeper malaise in the city's statist development track.
The general public suspects trouble
ahead and is politely asking for greater economic
transparency. The official
response last week was a resolute refusal.
Central to Singapore's planned economy is the state's ability to
capture an astonishingly high share of private-sector savings,
which are invested by government agencies such as the Government
Investment Corporation (GIC). These
surpluses are the result of taxation, forced social-security
payments and sterilised foreign-exchange reserves.
In recent weeks, Singapore's letter-to-the-editor writers have
called for greater transparency in GIC's holdings and performance.
In response to an opposition parliamentarian's calls to open the
books, Lee Hsien Loong, the Deputy Prime Minister and chairman of
the Monetary Authority of Singapore, fired back: "It [the
Government] does not stand up and say, 'Here are all the things;
here are all the data; here are my national secrets; here are my
defence secrets; here are my foreign-policy moves; and here are my
innermost reserves'."
The performance was vintage. Asked to cast light on the
public-asset accounts, he invoked the
mantle of defender against barbarian hordes. In
short, he engaged in absurd
exaggeration.
Last week at a press conference, Senior Minister Lee Kuan Yew was
queried on the same topic by the South China Morning Post's
Southeast Asian correspondent. Mr Lee was equally firm in rebutting
disclosure. The following day, a Straits Times columnist inveighed
against the Post's question to Mr Lee, invoking racist language and
arguing that secrecy at GIC was a matter of national
interest.
The average Singaporean - like his counterpart anywhere - cares
little about such details of governance. But he does worry when he
cannot fund his retirement and suspects his savings have been
squandered. That might sound harsh, as Singapore has clearly done
more right than wrong. Its economic success is real, even if civil
liberties have been abused.
Yet the call for greater disclosure comes at a time when the
deferred costs of Singapore's planned economy are coming home to
roost.
GIC is a government fund manager with a reported US$100
billion (about HK$780 billion) under its charge. Among other
things, it manages part of the country's US$80 billion
foreign-exchange reserves. Its operations are secretive and its
accounts are not disclosed.
Other than revealing a basic asset allocation among equities, bonds
and cash, little is revealed. Performance is monitored by a council
of government insiders.
The general public suspects reserves might have been wasted
following the post-1997 Asian crisis. A
secret S$17 billion (about HK$73 billion) loan to Indonesia, made
in 1998, was publicly revealed only after former Indonesian
president Suharto blurted out the fact of its existence to foreign
journalists. In another case, there has been scant
disclosure of losses on a failed investment park in Suzhou, China,
which has been largely swept under the carpet. Meaningful
disclosure, such as it is, occurs when required by regulators in
foreign jurisdictions.
Of immediate concern to most Singaporeans is the state of their
Central Provident Fund (CPF) accounts. An average of 30 per cent to
40 per cent of total wages have been forcibly extracted into
government-administered coffers over the past few decades, but the
average CPF account holder has sufficient money to fund just a few
years of retirement at the average wage.
There are two reasons for this. First, individuals can draw down
their CPF accounts to fund housing purchases and other social
needs, such as health care. Second, balances kept to fund
retirement - about S$90 billion at present - yielded a real return
of zero between 1987 and 1997, according to Mukul Asher, a National
University of Singapore economics professor who is a world expert
in the field. Last year, an International Monetary Fund
report called for radical reform of Singapore's CPF
system.
Last week, Senior Minister Lee was at pains to stress that
GIC fund managers did not manage CPF
funds[/color]. That surprised academics in the
field, who have long ssumed CPF funds and fiscal reserves are
essentially interchangeable because both are invested in
government-linked companies and schemes. The point is the
strategic fog maintained around economic data makes it impossible
to verify such statements and, more importantly, to monitor the
Government's performance record.
Extract savings on cheap terms and force-feed a planned industrial
economy, and unsurprisingly, growth is achieved. This was the basis
of criticism in the mid-1990s - based on Singapore's awful total
factor productivity - of the city's growth track. Far from being
dispelled, such criticism is only reinforced by unnecessary secrecy
about data which, if made available for examination, could provide
a more complete picture of economic performance.
Hong Kong resembles Singapore in
having substantial reserves confiscated from the private sector. To
date, these have been managed in a relatively transparent
manner.
Encouragingly, the SAR Government has agreed to put its own
accounts on a fully transparent accrual basis. The Government also
faces pressure to give back some of its surplus through public
expenditure .
There are valuable arguments either way for fiscal largesse.
Whatever is decided in Hong Kong, Singapore offers a salutory
lesson in how not to manage public assets. The city's refusal to open government accounts to
scrutiny seems less a matter of national security than of concern
that transparency would reveal the Government's investment
performance for all to see.
http://www.singapore-window.org/sw01/010606sc.htm
Related Reference:
http://www.singapore-window.org/sw01/010516a3.htm
