S$230,000 you never knew you had

Guest essay by Au-Chen ToShan

Our sovereign wealth funds were built from the diligence of its citizens over the decades. They grew as Singapore grew. Even after huge losses from poorly timed investments, those funds currently hold about S$500 billion or S$230,000 per adult citizen.

It has been 17 years since the late President Ong Teng Cheong unsuccessfully asked for more information on our financial reserves. Citizens still know little about the Government Investment Corporation (GIC) and not much more about Temasek Holdings. Temasek in recent years has begun providing some numbers, such as portfolio size and annual quantitative performance figures. That is not enough. For example, Temasek with 350 employees reported $8 billion in administrative expenses for 2009. Typically administrative expenses refers to costs such as salaries, rents, and stationary. But how much of that $8 billion is going to employee bonuses or paper clips or consolidated expenses from subsidiaries, neither parliament nor public has much of a clue. No wonder even establishment journalists like Conrad Raj have joined the call for transparency in Singapore’s sovereign funds.

Following the recent global banking crisis, executive compensation has become a hot topic in regulatory reforms world-wide. Abusively inflated executive compensation was a major reason why CEOs like Lehman’s Dick Fuld took on excessive risk and led their institutions into bankruptcy. This is why countries around the world, from Canada to Switzerland, are emphasising transparency and regulation of executive compensation.

Neither TH nor GIC reveals compensation numbers for top management. So I asked two friends better placed than most to know – a top head-hunter in the finance industry and a senior private equity deal-maker once recruited by Temasek. Their thinking was that the real numbers can be inferred by Charles Goodyear’s flirtation with Temasek. In one form or another, it is likely Goodyear would have made Temasek match his base at BHP — which was GBP3.7 million. In addition, sovereign wealth funds in Asia are known to pay bonuses up to 200% base. Based on those figures, the estimate is that Temasek values its CEO between S$8million to S$24 million, depending on the bonus pay-out. The compensation can be structured in many ways but the final number is probably not too far off. The chairman would have a comparable base as the CEO, but should not enjoy the same bonus arrangements for oversight reasons. I acknowledge that these numbers are highly educated guesses. However, until Temasek and GIC decide they trust Singaporeans enough to reveal the actual numbers, this is the most reasonable estimate we have and a legitimate starting point for the purposes of public discussion.

While those figures look generous to most, salaries at GIC and Temasek are not that lofty compared to large hedge funds and private equity. Then again, compared to most sovereign wealth funds and public funds, S$8 – 24 million for a CEO is high. For example, the CEO of the Norwegian sovereign wealth fund (a fund larger than Temasek and GIC combined) draws a total package of only S$800,000 or between one-tenth to one-thirtieth of what is estimated at Temasek.

This ratio is consistent with the state of inflated compensation amongst Singapore’s top public leaders. The prime minister of Norway makes $286,000 a year, which is one-twelth of Singapore’s prime minister, one-eighth of a relatively minor minister like Vivian Balakrishnan, and probably less than the total earnings of some People’s Action Party (PAP) members of parliament (including MP allowance, day jobs and directorships). This is jarring when, according to 2009 IMF figures, the nominal income of the average Singaporean is less than half that of the average Norwegian and barely a third of those in the Norwegian capital of Oslo.

Could we have missed out one key reason why compensation within our sovereign funds remains mysterious? When the CEO of Temasek is the wife of the prime minister and the daughter in law of the minister mentor (who is also the chairman of GIC), the issue of pay in Singapore’s sovereign wealth funds can be a politically loaded one. Few would be keen to discuss or even enquire into it. In addition to Ho Ching’s package, there is Lee Kuan Yew’s compensation for his role as chairman of GIC and Lee Hsien Loong’s as vice-chairman of GIC . One would dearly wish to be reassured that those roles are ex-officio or in any way uncompensated – which we haven’t been yet. Otherwise, we are looking at millions more in compensation. Throw in the S$7 million political salaries the two Lees already draw, and this family trio could conceivably draw a public pay-check that looks uncomfortably large next to the S$42 million that is the entire 2009 government budget for social assistance to the elderly and disabled. It may be acceptable for public leaders to draw high salaries if that is the result of a robust business decision that is an outcome of a visibly robust due process. But is it robust? Is it visible at least?

Another interesting angle is how the ownership of Temasek and GIC is perceived, an issue that is particularly acute considering the disconnect between political leaders and citizens, and disparities in wealth between rich and poor (even between the median and the rich). Those funds were built by the sweat and tears of today’s Singaporeans, and that of our parents and grandparents. That effort and self-denial resulted in this national inheritance. Sure, we had admirable leadership in those first couple decades but surely the greater merit goes to the unsung Singapore worker for grinding it out. Each of the S$230,000 per head that is the rightful stake of every Singapore citizen generates tens of thousands of dollars in annual returns . This fact is something that the Singaporean scraping by on a median monthly income of S$2,400 does not realise. This is what the kidney patient struggling to pay his weekly dialysis bill does not know. This is what the elderly cleaner existing on $700 a month does not benefit from.

Nobody is seriously suggesting that we write every citizen a S$230,000 cheque but it may make sense for a percentage of annual returns from those funds to be returned to citizens in the form of a monetary dividend or transparent investment into key public goods such as healthcare or childcare. The Temasek Holdings website proudly states ‘our total shareholder return since inception 36 years ago is 17% compounded annually’. So even returning a modest quarter of that rate of return would mean over $9000 annually for every adult Singaporean. This transfer must be visible and transparent to us.

The perception problem is that Singaporeans tend to think of Temasek and GIC as PAP money. However, we need to understand that most in the PAP  are not at all well informed about our sovereign wealth funds, including PAP members of parliament and possibly the majority of ministers in the cabinet. Even the late president and PAP stalwart Ong Teng Cheong failed to get a satisfactory answer.

Let’s make this clear — Temasek and GIC belong to the nation. The PAP, as the current elected government, has stewardship over the funds but they are answerable to citizen stakeholders.  As our elected leaders, the Singapore parliament has a responsibility to provide a satisfactory level of oversight and governance over these funds. As citizens, we have the duty to know what is going on so this wealth can be optimally used for the benefit of the people and for generations to come.

We must know the real story and numbers for GIC and Temasek. Otherwise, no matter how honest our leaders may have been in the past, we run the risk of future abuses in this shadowy system that will jeopardise our national inheritance. Imagine the tragedy of a national enactment of that old Chinese adage about wealth not surviving past the third generation! In that scenario, we citizens have to bear our share of the blame for allowing our leaders an unhealthy degree of leeway.

We all need to start doing the right thing and get clear answers to these important questions. We owe that to ourselves, to Singaporeans who have come before us and to Singaporeans who will come after us.

* * *

Author’s footnote: There is little publicly available information on this topic, so I welcome all contributors who can improve, correct or add to this article.

20 Responses to “S$230,000 you never knew you had”


  1. 1 atans1 29 November 2010 at 11:33

    Err forgot to give discount for Ho Ching ala what ministers say they give S’poreans for their services.

    Otherwise gd stab at salary issue.

  2. 2 Jamesneo 29 November 2010 at 12:08

    Hi can i ask how you get the 500 billion? From MAS reports i did not see it listed there and could only see reserves.

    How much of the assets of TH and GIC paper assets denominated in US? Is it wise to continue holding so much in US or European financial assets or we should be like china aggressively trying to secure productive farmland and energy sources?

    And are these assets really assets and not liabilities. It is typically for many countries and companies to list their debt(bonds) as assets but in reality they are liabilities. The Ireland and other European problem is precisely due to them having difficulty in getting cheap interest rate in their bond markets.

    I am fearful that a unraveling of the world economy starting from Europe and US next year will reach a climax by 2012-2013 leading to even possibility of either a US default or hyperinflation destroying all paper assets in the world. It is therefore critical that TH and GIC reveal their balance sheet. I hope we will not reach a day when instead of giving us money, we will be forced to bail them out like what is happening in ireland, Portugal and spain.

  3. 3 Dead Poet 29 November 2010 at 14:08

    This is a revealing article which raises lots of question in my mind. I have always argued that office holders must declare their income and assets. Refusal to do so or blocking any legislation which proposes this only confirms that you have skeletons in the closet. The fact that you implement a opposite legislature (Ministers cannot be privately investigated) further adds strength to the argument. Many have told me that the accumulated networth of our royal family would put them on the higher bracket of the Forbes list. But then we will never know because we believe in transparency and accountability with our famous checks and balance principle.

  4. 4 Alan Wong 29 November 2010 at 14:21

    Why some privileged family needs to draw that kind of estimated salaries that can last several generations is just too mind boggling for the common man to comprehend ? Not forgetting the authority they yield and the unquestionalbe power to kill the career and future of any person that is not to their entire liking. And the endless fringe benefits like the aeroplane service and condominium discounts that can be that easily made available to any other unprivileged person.

    Is it any wonder that our MM has no desire to retire at all ?

    Looking in perspective and taking account of the estimated value of each citizen’s worth @ S$230,000 per head accumulated in our sovereign funds if that is correct, it makes a real mockery of the CPF life scheme that they enforced each eligible CPF contributor to participate in. They could have easily set aside the basic minimum sum for each citizen to retire and at the same time takes care of those ineligibles ones.

    But they rather not. It is clear they rather do it for themselves ie the PAP Ministers. Is that not correct, LKY ?

    • 5 Silva Kandiah 30 November 2010 at 00:55

      This article identified the crux of Singapore’s problems: “we citizens have to bear our share of the blame for allowing our leaders an unhealthy degree of leeway”.

  5. 6 Shocking!! 29 November 2010 at 23:16

    I don’t feel comfortable at all. By not disclosing their assets is equivallent to something to hide from the people. What if, in total, they turned out to surpass bill gate and became the top most wealthiest family in this planet while Singaporeans are struggling to make ends meet. People elected the ministers to speak up and ask questions. Unfortunately in the last few decades they have been strategically silenced (by the LEEgime) with huge salary package. That spells the end for Singaporeans. The trust between the ruling party and the people, no longer exist.

  6. 7 singaporeanorwell 30 November 2010 at 01:38

    This is a really nice article. The issues raised are pertinent and sharply expressed.

    Nevertheless I think we have to take a step back and understand the complexities behind our Government’s seemingly overbearing secrecy. Our Government is very firmly trapped in a victim mindset. There are always threats in this world, whether real or perceived. And the best response as the Government has always relied on, is a massive stash of reserves which it can draw on in any emergency. Its a very Chinese frugality, ants-vs-grasshopper mindset. It is also emblematic of the patriarchal system of governance in Singapore.

    Can an alternative mindset steeped in openness and trust work better? I am not sure, though I certainly am hopeful!

  7. 8 charlie 30 November 2010 at 07:45

    It is very rare that I find a spelling mistake in your essays. “salaries, rents, stationary” Stationary is standing still, whereas stationery is for office expenses.

  8. 9 Bitter Singaporean 30 November 2010 at 09:30

    I do not perceive the Billions to be PAP money, I only perceive them as the famiLEE’s money…..sad isn’t it

    Just because there is public curiosity and interest does not entitle them to know what is happening to their own money…as one fark-tard succinctly puts it

  9. 10 Have your own wealth 30 November 2010 at 10:14

    As an individual, I do not care how much there is in the sovereign wealth fund as it does not really matter, right?

    I am only interested whether my own bank account has $230,000 or much more.

    And Singapore provides lots of opportunities for many to amass their own personal wealth through entrepreneurship, good pay, prudent spending or make good investments etc, etc.

    Many have make it. I think in fact the majority had made it.

    Which explains why PAP has solid support at every election.

  10. 11 au-chen toshan 30 November 2010 at 10:41

    to ‘jamesneo’: $500 billion is given by Morgan Stanley analysts,their analysts are considered very credible in this area

    to ‘charlie’: spelling error noted and appreciated. btw, yawningbread blog guest writer =/= yawningbread

    to ‘have your own wealth’: even if my bank account or yours has ‘$230,000 or much more’, does not mean the majority has it. a credit suisse report puts the median wealth in SG as US$30,092.

    While an individual citizen should look out for his individual or family’s material well-being, we should also collectively keep an eye out for the well-being of broader society. That is what makes a truly successful nation.

    a century ago, the mathematician-philosopher Bertrand Russell pointed out the Chinese tendency to put family before self, and self before society as one of our greatest flaws. Looks like we have not changed that much!

    ‘The strength of the family generally, are perhaps the weakest point in Confucian ethics, the only point where the system departs seriously from common sense. Family feeling has militated against public spirit, and the authority of the old has increased the tyranny of ancient custom. The way in which Confucian emphasis on filial piety prevented the growth of public spirit is illustrated by the following story:[18]

    One of the feudal princes was boasting to Confucius of the high level of morality which prevailed in his own State. “Among us here,” he said, “you will find upright men. If a father has stolen a sheep, his son will give evidence against him.” “In my part of the country,” replied Confucius, “there is a different standard from this. A father will shield his son, a son will shield his father. It is thus that uprightness will be found.”

  11. 12 au-chen toshan 30 November 2010 at 12:27

    Rereading Bertrand Russell now. He has some interesting insights to why Chinese societies and organizations, for the last couple thousands years, are prone to regular bouts of stagnation and collapse.

    Below is an excerpt from one of his essays:

    “It is said by Europeans who have business experience in China that the Chinese are not good at managing large joint-stock companies, such as modern industry requires. As everyone knows, they are proverbially honest in business, in spite of the corruption of their politics. But their successful businesses—so one gathers—do not usually extend beyond a single family; and even they are apt to come to grief sooner or later through nepotism.”

    How much has changed since Russell wrote that?

  12. 13 Tommy 30 November 2010 at 17:24

    Alex I believe S$500 million is an under-estimate. The value of the the Temasek assets can be obtained from the Temasek Review (no not the website). However, I do not know if they report the market value of the assets for companies which they consolidate like SIA or Singtel as that is not required. The GIC manages the reserves so that shows up in the MAS accounts. However, again it is not very clear the accounting basis of those numbers. You are correct in stating that because they do not report Temasek’s own company numbers, the consolidated accounts include SIA, Singtel,etc etc so it is impossible to figure out the numbers for Temasek alone.

  13. 14 yawningbread 30 November 2010 at 18:05

    Could comment-makers bear in mind that the above article is not by me but is a guest article by a Singaporean using the pseudonym as stated?

    He’s better qualified at sifting through financial numbers than I am, so I’m sure he’ll value the leads you give.

  14. 15 Ben 1 December 2010 at 20:12

    “Throw in the S$7 million political salaries the two Lees already draw”. The bonuses received are twice the salary again, so make that S$21 million.

  15. 16 The Pariah 7 December 2010 at 13:58

    That’s why I reckon the whole island has already morphed:

    – From “Singapore Inc” to “Hotel Singapore”
    – From “Hotel Singapore” to “Casino Singapore”

    We are not a country, but a city – as per Minister Shanmugam

    How much of our country’s wealth (be it locked-up reserves, available reserves, operating income) should be SWF-related as that would mean more and more will go towards seed capital for such “investments” (or “bets” – calculated or otherwise)?

  16. 17 The Pariah 7 December 2010 at 14:08

    Fully agree with the concluding comment by the author, Au-Chen Toshan that: “We all need to start doing the right thing and get clear answers to these important questions.”

    This is all the more so when no less than our Law Minister professed in his speech at the forum “A Free Press for a Global Society” held on 4 Nov 2010 at the Columbia University: “There are thus less instititutional checks and balances on executive action in Singapore compared with the US – and that is deliberately so.”

    For public housing – The Govt have Alex Au/Hazel Poa on their back: http://www.temasekreview.com/2010/11/29/housing-minister%e2%80%99s-frustratingly-incomplete-sales-job/

    For condo housing – With 2010 drawing to a close, it’d be apt to:

    – Recap property-related policy measures over three years from Oct 2007 to date, replete with URA/MAS charts:
    http://singaporeenbloc.blogspot.com/2010/11/who-to-blame-and-shame.html

    – Contextualized against MND ministerial quotes over fifteen months from Jul 2009 to Oct 2010 relative to a slew of MND policies starting from Sep 2009 (Para 5 – Trust, but verify):
    http://singaporeenbloc.blogspot.com/2010/11/casino-singapore-part-3-whos-idiot.html

    Which one of our 82 PAP MPs stood up to ask questions that bloggers are asking?

  17. 18 yuen 7 December 2010 at 16:56

    Straits Times report on “Singaporeans’ all time high net household wealth” of $1.16 trillion in the third quarter of this year due largely to the 21% increase in property value from $537 billion last year to $651 billion this year. This averages to about $250K per person; while the no. does not show how much of this belongs to citizens and how much to others, it appears the private wealth per citizen is not much higher than the asset per citizen managed by Temasek and GIC

    (I am not singaporean so am not part of the $230K per citizen issue)

  18. 19 marowtherjew 1 June 2011 at 00:32

    The plans would surface ultimately when LKY suddenly resigns from his current position and from the PAP to become the President and lo an behold we have the Confucianist philosopher-king much better, objectively speaking than that reflection that we get from reading Francis Seow’s Analects of LKY.
    Whatever LKY’s mega obsession, I trust the younger LKY better than F.S whatever his intellectual or political pretensions

  19. 20 Anonymous 18 August 2011 at 01:34

    When the world’s bank based financial system collapses it would be too late for those who have not converted their shares and stocks and paper money into gold and silver.Silver has yet to reach its climax ao it would make sense to buy silver today which is in less quantity than gold and I hope that gold will fall soon but that is too optimistic, right?


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s





%d bloggers like this: