University:
University College London
Course:
LAWS0220 | Administrative Law
Academic year:

2024
Views:

467

Pages:

2
Author:

Namira A.

Sovereign Wealth Funds Case Study in Singapore Case Study: SINGAPORE  Singapore: small country with no natural resources. Key role of reserves.  Singapore's reserves (March 2022): 1. Monetary Authority of Singapore (MAS): central bank - U$S 384 billion Official foreign reserves (OFR), conservative, liquidity. 2. GIC Private Limited (GIC): 1981-SWF [estimated] U$S 100 billion Private company, wholly owned by the government, manages assets on behalf of the gov. 3. Temasek Holdings (Temasek): 1974-investment company - U$S 301 billion Private company, wholly owned by the government, owns the assets it manages.  Singapore's SWF's evolution: national development/international oriented Governance and Accountability:  Role of Law (international, bilateral and domestic)  Independence: SWFs' investment and commercial decisions.  Role of Government: mandates, objectives, competent boards, portfolio risks, capital allocation.  Transparency: Exempt private companies (Companies Act, Cap. 50). Nevertheless, both funds have become more transparent in the last decade (Santiago Principles).  Annual Reports: GIC reports to the government through Singapore's Accountant General and Temasek publishes an annual report and its financial performance is scrutinized by bond rating agencies (AAA rating) and its financial statements (audited by an int. audit firm).  Accountability: both GIC and Temasek are accountable to the President of Singapore. GIC And Temasek In Times Of Crises: Crucial Role - Contributions to Singapore's government annual budget: 1. 'Net Investment Returns Contribution Regime (NIRC): (i) up to 50% of the Net Investment Returns (NIR) on the net assets invested by GIC, MAS and Temasek; and (ii) up to 50% of the Net Investment Income (NII) derived from past reserves from the remaining assets. The NIRC in Financial Year (FY) 2022 is estimated to be S$ 21.56 billion. 2. 'Past Reserves': the Singapore government can draw upon the 'past reserves' during exceptional circumstances. These 'past reserves' refer to the reserves accumulated during the government's previous terms. The government agreed with the president in 2020 to draw up to S$ 52 billions. - Active players during crises: Examples GFC (lead by GIC, rescue of financial inst.) and Covid-19 crises (lead by Temasek, recapitalizing and rescuing sectors affected and by investing in healthcare and technology). Concluding Remarks:  SWFs key players in the global financial markets  Improvements in institutional and governance arrangements overcome concerns from 'recipient countries'  Voluntary standards (Santiago Principles): long-standing policy coordination regime among 'home countries' and increased transparency  Uniquely placed in crises scenarios (state actors and market actors): macroeconomic management and financial stability  Paradigm shift: from international to domestic focus and from implicit to explicit liabilities  Balance: strong governance and clear rules funding and withdrawals / avoidance of protectionism