ST Forum: MAS should have been more objective

Png Eng Huat writes to the Straits Times Forum, 10 July 2009:

MAS should have been more objective

I REFER to Wednesday’s report, ‘MAS acts against 10 institutions’.

It seems the Monetary Authority of Singapore (MAS) has learnt little from the Lehman crisis. The crux of the sale of those toxic structured products was that their profits were oversold or misrepresented while their underlying risks were undersold.

In short, too much positive spin was put on the marketing of such products. In its latest report on the structured notes linked to Lehman Brothers, MAS has fallen into this ‘positive spin’ mode by highlighting the impressive statistics on settlement cases, while not addressing the pressing issue that most affected investors did not get any closure at all.

Continue reading “ST Forum: MAS should have been more objective”

“No regrets” for $6.8bn loss?

Sometimes I wonder why Parliamentarians and political commentators even bother to debate government expenditure. To paraphrase a senior statesman, perhaps we all have “no sense of proportion”.

Temasek’s realised loss after selling its Bank of America (BoA) stake could be as high as S$6.8 billion, according to figures published by the pro-government Straits Times. That’s more than the Singapore government’s 2009 budget for healthcare, community development, social services, and manpower development combined!

And the secretive Temasek thought it could keep it hush hush when it sold its stake before the end of March. It was only discovered when a filing with the US Securities and Exchange Commission revealed that Temasek no longer held BoA or Merrill Lynch shares.

Continue reading ““No regrets” for $6.8bn loss?”

Greater transparency needed for Presidential decisions

On Tuesday, Singaporeans witnessed for the first time a sitting President publicly justifying a decision he made.

President S R Nathan explained to Singaporeans why he consented to the Government’s $4.9 billion draw on the national reserves — another first in the history of this country. In the process he revealed that it took him not 11 days, but just one day to approve the draw from the time he received the proposal in writing from the Government.

The President said that he “responded after clinically examining the proposal”. Yet TODAY reported that he had already made up his mind when he received the proposal from the Finance Minister on Jan 20th — just two days before the Budget was presented in Parliament. Given that it takes much longer than two days to write a 60-page Budget speech with six annexes, let alone draft detailed policies on the use of the drawn reserves, it is not unreasonable to conclude that the decision was a done deal long before the proposal was submitted to the President — perhaps even before the Prime Minister “informally sounded him out” nine days before that.

When asked about his views on the $4 billion-plus Jobs Credit Scheme and the $5 billion-plus Special Risk-sharing Initiative, the President said that he was “not here to judge whether these schemes would ultimately work”. I am curious to find out who then is in a better position to judge, and prevent a rogue government from stealing cookies from the cookie jar?

Local dailies reported his explanations in depth, and also explained the functions of the Council of Presidential Advisors (CPA) and their responsibilities in this decision-making process. Many Singaporeans might not have been aware that the President is required to consult the CPA when making such decisions.

I think it is commendable that the President decided to explain his rationale publicly, even though he is not obliged by law to do so. Having said that, I feel there is room for our laws to be tweaked to make such transparency de jure.

Firstly, the President should be required by law to make public his reasons for approving any draw on the reserves. This should be done within one week of making the decision, and before any of the money is actually withdrawn and used.

Secondly, the CPA should also make public its recommendations to the President and their reasons for such. The individual votes of each of the council members should be transparent to Singaporeans as well, since the council makes its decisions on majority vote.

This would serve as a useful safeguard of the two-key system, particularly if the President decides to go against the advice of the CPA — which is his prerogative. The public can then decide which party it agrees with, and judge the Elected President and the Government accordingly.

Currently, according to Article 37K of the Constitution, for Supply Bills, the CPA is required to send a copy of its advice or recommendation made to the President to two individuals — the Prime Minister and the Speaker, who will present it to Parliament. I am not sure if this covers requests to draw down the reserves.

I will reserve judgment on the President’s decision until I see the effect (or non-effect) of the Jobs Credit Scheme. However, I think there is still a long way to go before we can claim that this two-key system is not one where the Government unlocks, and the other automatically follows suit, as Opposition leader Low Thia Khiang charged in Parliament.

Today the government draws down $5 billion. If in future it draws down $50 billion, or $250 billion, are Singaporeans still to expect the same degree of opacity as we have now?


Read also President Ong’s interview with AsiaWeek – revisited, on The Online Citizen.

Parliament debates HDB rental flats, upgrading, e-engagement and Gaza crisis

PARLIAMENT on Friday [6 Feb] debated the budgets of three ministries – Foreign Affairs, National Development, and Information, Communications and the Arts.

Ministry of National Development

Mr Low Thia Khiang (WP-Hougang) queried the Minister for National Development about the recent demolition of flats on Hougang Avenue 7. He lamented that the demolition took place just seven years after Hougang Town Council used its own funds to upgrade the lifts in those flats. (Hougang, being an opposition ward, is at end of the queue for the Lift Upgrading Programme [LUP]. The LUP expenses for PAP wards are typically borne by HDB with small co-payments by the local town council and residents.)

Mr Low remarked that much of the money was wasted because of the early demolition. He said that in future, HDB should inform the Town Council earlier of its redevelopment plans, lest such waste took place again.

In her initial response, Senior Minister of State (National Development) Grace Fu, skimmed over the issue. Mr Low later pressed Ms Fu for an answer, adding that HDB ought to reimburse Hougang Town Council for the money that went to waste.

Ms Fu reiterated the Government’s earlier commitment to complete the LUP by 2014. Given the time needed to complete the works, HDB would have to make their selections and announcements of contractors by 2011.

Regarding the flat demolitions, the Senior Minister of State explained that HDB regularly reviews its land use, and that her Ministry “can’t tell seven years in advance” of redevelopment plans – “not even seven months”.Mr Masagos Zulkifli (PAP-Tampines) and Mdm Ho Geok Choo (PAP-West Coast) asked the Minister about the shortage of subsidised HDB rental flats for needy residents.

Minister for National Development Mah Bow Tan revealed that there were currently 4,550 applicants in the queue for subsidised rental flats. He said that “two-thirds of them have reasons not to be in the queue”. He cited examples of retirees who had no income but significant savings from the sale of their flats, yet qualified for rental flats. His ministry’s solution to this housing crunch would be to further tighten the eligibility criteria for rental flats.

Mdm Cynthia Phua (PAP-Aljunied) expressed dismay at this proposal, emphasising that in times of economic downturn, the Government “should have more love” instead of tightening the rental housing criteria for old folks. Mr Mah responded, saying that the purchase of a $90,000 two-room flat is “easily affordable” to someone earning $1,200. Continue reading “Parliament debates HDB rental flats, upgrading, e-engagement and Gaza crisis”

Trust, but verify

This is the exchange in Parliament between Finance Minister Tharman Shanmugaratnam and MPs, including the Opposition leader and PAP MPs, taken from Channel NewsAsia:

“The concern arises over the way the two-key system operates. It seems the two-key system operates simultaneously at the same time. When the government key says ‘unlock’, the other key unlocks automatically,” said Low Thia Khiang, MP for Hougang.

Mr Tharman said: “This is not a ’wayang’ (show)… The point is: the President, advised by the CPA (Council of Presidential Advisers), makes an independent and careful judgement on the government’s case.”

MP for Tampines GRC, Irene Ng, said: “Can I ask the minister whether the process can be refined and improved further so that in future we can make the process more transparent — that the public knows that the institution of the President is one that is strong, and that it can exercise an independent turn of the key.”

Inderjit Singh, MP for Ang Mo Kio GRC, said: “What’s missing is the process that the President took after he got briefed by the government. If we could get a sense of what they discussed and what process they went through to decide, then this may clear many of these questions.”

But Mr Tharman said: “I’m not sure why it is relevant. At the end of the day, this is a system that is different from Norway and Australia, where as much detail as possible is provided.

“This is a system that relies on trust in the individuals who are in charge, including those appointed to the CPA and the Elected President. Do you trust them? Have they made decisions wisely? Has the government been acting responsibly?”


I am deeply shocked that the Minister would say that our government’s system is one that relies on trust.

How can you have trust without transparency? The two go hand in hand. Particularly so for financial and governance matters. Is the Minister expecting Singaporeans to trust a few handpicked men with hundreds of billions of dollars of our nation’s reserves?

In my opinion, this is the most fundamental weakness in Singapore’s system of governance. Those in leadership expect — or even demand — that we trust them, without them having to demonstrate a commensurate level of transparency. It extends down to the ruling party’s philosophy that a one-party system works best for Singapore, and there is no need for an opposition to keep them accountable.

All men are fallible. Donning a white uniform does not put one above scrutiny.

Now who is the pork barrel champion?

It has become a familiar pattern. Whenever PAP leaders want to emphasize a point about how wise and capable they are, they cite negative examples from other countries and contrast it with Singapore.

Tuesday in Parliament was no different. Despite the PAP itself inching closer to the sacred kitty (i.e., the reserves) by increasing the proportion of investment income the government can use, Prime Minister Lee Hsien Loong gave a long speech about how important it is to safeguard the reserves from “pork barrel” spending.

Of course, he was not referring to pork barrel spending by the ever-prudent PAP. He was implying that if Singaporeans elected any opposition party into power, that party would exhaust all our hard-earned reserves.

Mr Lee cited the examples of Norway and Australia, which according to him both came under populist pressure to spend their reserves during the heat of elections.

In Australia, he said, candidates John Howard and Kevin Rudd had promised multi-billion dollar packages if elected, so much so that major newspapers started a “pork-o-meter” to keep track of the cost of campaign promises.

In Norway, Parliamentarians set the rules then subsequently “broke the rules” on spending caps on their reserves.

I wonder why the PM decided to stick his foot in his mouth when Parliament had already voted unanimously for his government’s proposed spending increase.

Did he not realise he sounded a tad hypocritical?

Since the 1991 election, the PAP has used pork barrel promises in the form of HDB upgrading to further its political objectives. It declared that it is completely justified in upgrading the flats of constituencies that voted for them, and bumping opposition held wards to the end of the queue — a truly non sequitur kind of logic.

In the last election, Senior Minister Goh Chok Tong promised $180 million to upgrade Hougang and Potong Pasir flats, without even thinking through how the government was going to fund that spending, as he admitted months later.

How about the $2.6 billion “Progress Package” dished out days before Polling Day? Does that smell porky enough?

It is amusing that he cited Australia as a negative example. Kevin Rudd actually proposed less spending than John Howard — and won.

The newspapers came up with a “pork-o-meter”. Well at least they were educating citizens about politicians’ populist proposals. I don’t recall our local papers pointing out that selective upgrading promises were pork barrel spending, or that election cash giveaways could be considered vote-buying in many developed countries.