The following article was written on 8 August 2000 - (there
seems to be a printing error concerning the Year 2000, which should
be Year 2003, as it contains comments on the recent NTU Academics
interpretation of Manpower Statistics).
Given the many declaration by the Singapore Government of the need
to change, to restructure, to accept that changes are needed to
face the challenges of a New World, new competition, the attitude
and the practise of politics of the Ruling Party (a.k.a the
Singapore Government) govern the lives of Singaporeans remains
unchanged for the last twenty years.
More
transparency, please
Asian Wall Street Journal
August 8, 2000
Column: By Hugo Restall
IN most countries, if the government is withholding information you
can bet it's bad news. It follows that when journalists reveal that
officials are hiding something, the public starts salivating for a
scandal.
In Singapore, by contrast, the government routinely holds back all
manner of data. And Singaporeans don't seem all that bothered about
it because, believe it or not, they trust their government.
That may seem incredible considering that in today's world,
cynicism about government behavior is pratically considered common
sense. So it's actually a tribute to the Singaporean government's
past performance to point out this trust. But that doesn't mean the
city state's attitude toward informat! ion, or entrusting important
decisions entirely to the elite, is healthy.
The current debate over "remaking Singapore," in Lee Kuan Yew's
phrase, is critically important. The economy suffered recessions in
1998 and 2001 and contracted severely in the second quarter of this
year, and while society remains stable, there is an expectation
that the government will take action to put things right. However,
that very assumption -- government has all the answers -- is at the
center of Singapore's malaise. If the economy is to be freed up and
entrepreneurs encouraged to take risks in order to restore growth,
full disclosure about the state's stewardship of the nation's
wealth is needed.
Up until now, data on the economy has been kept patchy until
outside criticism has necessitated an informed response. Most
recently, a study by a team of researchers at Nanyang Technological
University found that foreigners had taken three out of every four
new jobs over the last five years. The government replied that the
true figure was one out of 10, and the university economists
admitted that there had been a flaw in their calculations. But
still there are no reliable figures on the size of the foreign
labor pool and its breakdown across different sectors.
Another good example is the allegation by economists Alwyn Young
and Paul Krugman that Singapore's economic success was based on
increased inputs, particularly capital, rather than productivity
growth. This thesis deeply upset the Singaporean elite, as it threw
into doubt the wisdom of their policy of enforced saving and
investment in government-linked companies (GLCs). It inspired the
government to offer several rebuttals which did clarify the real
productivity picture, without entirely demolishing the original
argument.
Mukul Asher, an economist at the National University of Singapore,
conducted a landmark study that discovered that
the Central Provident Fund,
Singapore's state-run pension system, achieved only a 1.8% return
from 1983 to 2000, a time when the economy was growing at an
average rate of 8%.
Prof. Asher accused the fund of having "a lack of transparency and
accountability, particularly in investment management."
It's rather incredible that there
is still no official data on the portfolio or returns for a fund of
more than $50 billion which is supposedly to provide for people's
retirement.
Two years ago, the US Embassy in Singapore published a report which
estimated that the GLCs accounted for 60% of the domestic economy.
In order to rebut this, government statisticians went to work on
this problem for the first time, coming up with their own figure of
13%.
Whether or not that figure is correct, Singaporeans themselves are
sometimes rankled by the secrecy surrounding the GLCs, since these
favored firms are suspected of stifling private-sector competition.
The government controls its most
significant stakes in companies through the holding company
Temasek, which is accountable to the Finance
Ministry but doesn't reveal details about its
holdings or performance either. As a private company that may be
within the letter of the law, but since it is a major store of
national wealth, with assets of more than $40 billion, it's not
unreasonable to expect its accounts to be open to the public.
The same goes for the Government of Singapore Investment
Corporation (GIC). Controlled by a board chaired by Lee Kuan Yew,
the GIC is charged with investing Singapore's offshore wealth,
estimated at more than $100 billion. For a long time, this
organization was a completely closed book. Two years ago Mr Lee
started to talk about the need for more transparency, but this
apparently only applied to the organization's structure, such as
who sits on the board. It's still not known what assets the GIC
holds, or what returns it has achieved.
In most places, such secrecy about public wealth would create
massive corruption. In Singapore, it has just sown confusion.
For instance, the government's surplus returns stored up
during good times can be spent off-budget during recession to
stimulate the economy without increasing the fiscal deficit. This
is comparable to the corporate practice of managed
earnings; in this case, the government is managing citizens'
expectations. That might sound benign, but
it obscures the real state of
government finances and makes it harder to debate fiscal
policy.
It won't be easy to change this preference for secrecy, because
Singapore's system is an organic whole. There is no viable
opposition in parliament to hold the government's toes to the fire
and force it to divulge inf! ormation. And secrecy and control over the economy helps the
government maintain its political control. It's no
wonder that the elite is hesitating over taking any substantive
steps to reduce forced savings or divest its stakes in the
GLCs.
That said, releasing more information is one of the logical first
steps in remaking Singapore. The recently concluded free trade
agreement with the US will require greater transparency, one sign
that this has already been recognized. A better understanding of
where the old model is falling down is necessary to convincing the
public of the need to build a more entrepreneurial economy -- a
transition which may also bring more inequality and
uncertainty.
Fortunately the Singapore's government has built up reserves of
trust with its people which can be drawn on to manage this
transition. Sharing more information about the financial reserves
it has been holding in their name would ser! ve to enhance that
trust and prepare the way for change.
Mr Restall is Editorial Page Editor of The Asian Wall Street
Journal