What is the President’s role in safeguarding the reserves?

The President is entitled to all information that the Cabinet and the boards of the Fifth Schedule entities are entitled to.

The President is entitled to ask Ministers, Permanent Secretaries and senior public officers and any of the board members, directors or CEOs of the Fifth Schedule entities for such information. When asked, all these persons are duty bound to supply the information requested.

The President has full information about the size of the reserves (including a listing of physical assets like land) and the performance of the investment entities. Each year, the Accountant-General prepares and submits the Government’s financial statements to the President. These statements are independently audited by the Auditor-General.

• In October 2008, then-President S R Nathan gave his approval for a S$150 billion guarantee on all bank deposits in Singapore to be backed by Past Reserves. This was against the backdrop of the Global Financial Crisis where other jurisdictions were guaranteeing bank deposits as well. If Singapore had not provided a guarantee, we would have run the risk of funds flowing out of Singapore to other jurisdictions that had guarantees, even though our financial system was sound. The guarantee lapsed on 31 December 2010, without being triggered. In this case, Past Reserves were not drawn on, although it could potentially have been.

• In January 2009, the Government obtained then-President S R Nathan's approval to draw down S$4.9 billion from the Past Reserves for the first time to fund special schemes in light of Singapore's worst recession then since Independence. The two measures were the Jobs Credit Scheme which subsidised employers' wage bills and the Special Risk-Sharing Initiative which helped viable companies gain access to credit. The actual amount drawn for these two measures was S$4.0 billion, less than expected. This was the first time that Past Reserves were drawn on.

• In February 2011, the Government decided to put back the S$4.0 billion that it had drawn down from the Past Reserves. This is because the economy had recovered well from the recession, putting our fiscal position on a stronger footing. While there is no legal or constitutional obligation for the Government to return to Past Reserves any amount drawn, it is the responsible and prudent thing to do, once a Government has secured a stable fiscal position within its term. This is the way to uphold the philosophy that has enabled us to build up and maintain our reserves, and derive from it income each year to meet our strategic needs.

• In response to COVID-19 crisis, the Government had to protect lives through public health measures, and protect livelihoods through economic and social support measures. The Government obtained President Halimah Yacob's approval to draw from Past Reserves up to $52 billion in FY2020, $11 billion in FY2021, and $6 billion in FY2022.

• The total draw on Past Reserves from FY2020 to FY2022 is around $40 billion (see here for details).

The President does not direct the operations of Fifth Schedule entities. In particular, the President is not empowered to direct the investment strategies of GIC and Temasek.

The investment strategies of GIC and Temasek are the responsibility of their respective Boards and managements. The Government’s role is to ensure that each entity has a competent board to oversee the management and ensure their respective mandates are met.

The President, after consulting the Council of Presidential Advisers, has discretion to decide whether or not to approve the Board appointments proposed by the Government. The President also receives the audited annual accounts of GIC and Temasek, and has access to any of the information that is available to their Boards.

Click here (52 KB) to read the statement by the Minister for Law.

A misperception that crops up from time to time is that former President Ong had been denied the information needed for him to perform an effective role in protecting the Past Reserves. In fact, President Ong was given all the information required for the purpose. This information included the value of all the Government’s financial assets, as well as a listing of physical assets, such as buildings and land.

At his 16 July 1999 press conference, President Ong spoke of how he had been informed by the Accountant-General that it would take "52 man-years" to produce the value of the full list of physical assets of the Government.

The facts of the case were explained by former Prime Minister Goh Chok Tong in Parliament on 17 August 1999, as summarised below:

• The President's Office had requested a listing of physical assets from the Accountant-General on 18 Jun 1996. At a meeting with the President on 14 Aug 1996 (i.e. less than two months later), the Accountant-General provided a listing of State buildings, while the Commissioner of Lands provided a listing of State lands. Updates were subsequently sent to the President's Office.

• It was at this meeting that the President remarked that to protect the Past Reserves, the reserves should ideally be denominated in dollar value. To this, the Accountant-General said that it would take 56 man-years⁶ to conduct a complete valuation of the physical assets, even though he had already produced the listing (without valuation figures).

• The Attorney-General’s Chambers subsequently advised that there was no need to revalue all State properties at each changeover of the term of Government, as the question of whether Past Reserves were being drawn did not arise unless a piece of land was actually about to be sold off or alienated. At the point of sale, land is valued, and the Reserves protection framework requires only that the land be sold at fair market value.

• Furthermore, the proposed revaluation would be a waste of resources. First, the reality was that much of State land would remain as State land, i.e. unsold. Second, the value of each piece of land depended on planning and zoning restrictions, which the Government could change.

Click here (105 KB) for the Parliamentary speeches by former Prime Minister and former Minister for Finance Dr Richard Hu (17 August 1999)

Click here (103 KB) for the subsequent Parliamentary Q&As (17 August 1999)