Singapore Inc peels a veil in the
dark By Gary LaMoshi
HONG KONG - After biting off a
corner of its ban on chewing gum, Singapore now promises
to prick the bubble of secrecy around Temasek Holdings,
the government investment company in this alleged
bastion of free-market capitalism (see Singapore's capitalist myth
, November 7, 2002). On
Wednesday, Temasek announced that it will make future
annual reports public, starting with the fiscal year
ending March 31.
That's another veil that
Temasek - aka Singapore Inc, a wholly owned subsidiary
of Singapore's Ministry of Finance - is dropping during
this 30th-anniversary year. Last month executive
director and chief executive officer Ho Ching revealed
that the company has produced annual returns of about 16
percent over its history. Over the past decade, Temasek
has managed returns of slightly over 13 percent, or half
of what General Electric managed for its investors.
Don't expect Temasek's upcoming annual report,
due in July or August, to feature detail comparable to
what Singapore's government demands from its publicly
listed companies. "Hopefully, we will have some kind of
financial information about Temasek" in the annual
report, company spokeswoman Eva Ho explained to the
government's Straits Times newspaper, "but in what form,
and how much we can disclose, we don't know at this
point."
'Mirror, mirror on the wall
...' Instead, readers can look forward to the
typical glossy annual report full of smiling workers and
upbeat words from the top brass, without any numbers to
back them up. But don't worry, because Temasek "held up
a mirror to ourselves", according to CEO Ho, to find a
strategy to ensure continued success.
In that
mirror, Ho would see the wife of her boss, the finance
minister and future prime minister (perhaps within
weeks, according to some pundits) Lee Hsien Loong, whose
father is the country's patriarch Lee Kuan Yew. Ho's
brother-in-law Lee Hsien Yang runs Singapore
Telecommunications, one of the jewels in Temasek's
crown. Some, less conscious of Singapore's libel laws
and government officials' penchant for using them, might
see that as a portrait of a royal family. In response,
Ho and clan can point to a track record that's made the
tiny state rich.
Ho doesn't give interviews,
other than an occasional chat with Singapore's
government-owned media. In a speech in February at
Singapore's Institute of Policy Studies she revealed
that Temasek hoped to accelerate its investments
elsewhere in Asia, where it sees prospects for more
robust growth. "We will work to transform our portfolio
from a proxy for the Singapore GDP [gross domestic
product] into a balanced GNP [gross national product]
portfolio leveraging on the growth and promise of
Singapore, ASEAN [the Association of Southeast Asian
Nations], Asia and the world," Ho declared. That work is
progressing with dispatch.
Family jewels
held While Temasek may shave some of its holdings
within Singapore, "We don't intend to raid the larder or
sell the family jewels," Ho assured all. To finance
future offshore acquisitions, Temasek could range beyond
its own DBS Bank to the bond markets. While Temasek
won't open the books to the public, it might let
Standard and Poor's or Moody's have a peek, in order to
establish a bond rating for borrowing.
Temasek
has shown a growing appetite for acquisitions. Just
across the Johore Strait this week, it scooped up a 5
percent stake in Telekom Malaysia. Both Temasek and its
SingTel nephew have rival stakes in Indonesia's
cellular-phone business. But Temasek's principal
overseas focus has fallen on banking.
Last year, it led consortia that
bought control of two Indonesian lenders, Bank Danamon
and Bank Indonesia Internasional (BII). With the opening
of Indian private banks to foreign investment (see FDI keeps India's banks on their
toes
,
February 4), Temasek took a piece of the biggest
available target, ICIC. This week, reports emerged of
Temasek training its radar on Malaysia's ninth-biggest
bank, Alliance; South Korean market leader Kookmin, one
of Temasek's partners in the BII deal; and Thailand's
Bank of Asia.
Added complications Why
shareholders and host governments would allow Temasek to
extend its tentacles in this fashion is a mystery.
Foreign investment can be tricky, particularly when the
local government is selling the stake and a
multinational is buying. When that multinational is
owned by another government, relationships can be far
more complicated.
As ASEAN moves toward economic
and, if Indonesia gets it way, security integration,
there's at least the possibility that Singapore could
not only negotiate on behalf of its commercial interests
(that's pretty normal), but have the potential to cause
disruptions of key services in countries that won't go
along. Citigroup may be a US company, but it doesn't
take its orders from its government: Temasek does.
Furthermore, while Temasek pledges to obey local laws
wherever it operates, it is hard to imagine it can shake
the habits of censorship and surveillance in fields
where privacy matters, such as banking and telecoms, or
using its political clout to punish rivals. Whether
Temasek can and will, why should any other government,
or company stakeholders, believe it?
They should
not until Temasek begins to take a more responsible
attitude toward its own shareholders. Although
Singapore's media call the Ministry of Finance the "sole
shareholder" in Temasek, that's simply not so. Temasek's
shareholders are the 4 million citizens of Singapore.
For 30 years, Temasek has refused to share even
the most basic information about the company with its
owners. Now Singapore Inc has embarked on a bold new
strategy based after it "held up a mirror to ourselves",
rather than consulting the public on some basic
questions: Do Singapore's citizens think it's a proper
function of their government to buy stakes in Korean
banks and Indonesian cell phone systems? Or are there
better things the government could be doing closer to
home? Now that Singapore has risen from the swamps to
one of the richest places on Earth - and an alleged
bastion of free-market capitalism - isn't it time to let
go of some "family jewels"?
These are questions
that deserve a vigorous debate. Pity is that few in
Singapore seem to be asking those questions. Bigger pity
is that if they did, Temasek and the government that
runs it would be unlikely to join the debate and provide
answers.
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