Singapore: Transparency And Finance Sector Reform


Dr Garry Rodan

Since the Singapore government's endorsement of the 'Report on Banking Disclosures' in May last year, there has been significant progress towards greater transparency in the finance sector. All eight recommendations are being implemented and some are already making a difference to the type and extent of information available. This was most clearly in evidence recently when one of Singapore's Big Four local banks, OCBC, filed its annual report. New laws forced the company to reveal its 'hidden assets', which many analysts had previously estimated at around twice the figure of S$2.11 billion declared.

Transparency reforms are now an integral component of the government strategy to elevate Singapore to the status of a world-class financial centre. The vision encapsulates a comprehensive range of financial services, with fund management and bond markets especially prized. Towards this, Deputy-Prime Minister, and chairman of the Monetary Authority of Singapore (MAS), Lee Hsien Loong, is leading a major transformation of regulatory and reporting regimes. By international transparency standards, though, Singapore starts from a very low base and it remains to be seen how far the government is prepared to go beyond the corporate disclosure agenda. Information control has in the past been a strategic element of the Singapore Inc. model: much data either unavailable or provided on a need to know basis to preferred investors.

Given the extensive direct and indirect economic influence of the state, major improvement in transparency would have to encompass government departments and government-linked companies (GLCs). Temasek Holdings Ltd. owns more than 1,000 companies on behalf of the Ministry of Finance, GLCs control most land in Singapore, and national savings are largely steered through the state-run compulsory superannuation scheme or deposited in state banks. Yet reporting by many GLCs and public authorities is limited. Temasek, for instance, reports only to the Finance Minister and a parliamentary budget committee. The Goverrnment Investment Corporation (GIC), which manages more than S$100 billion of Singapore taxpayers' money, operates in virtual secrecy. Data on the levels and make-up of guest workers in Singapore and trade figures between Singapore and Indonesia have also been withheld for political or commercial reasons.

In the International Monetary Fund's recent assessment of Singapore reforms, it called for 'improved data on consolidated public sector operations and on medium-term fiscal projections, as well as on trade, reserves, and government assets held abroad'.

WATCHPOINT: The government will need to respond to the challenge of reform, but in such a way that its strategic control of information is not substantially eroded.


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