The President, 2nd Key & Reserves of Singapore
Mr. Tharman Shanmugaratnam was elected as the 9th Head of State of Singapore with a landslide voter base (above 70%) in a nationwide election held September 1st. But Singapore is a system where most executive powers lie with its Prime Minister. On a more practical interpretation PM “runs the show” there.
So why the hassle of having a nationwide election to elect a president?
The main responsibility of the President of the Singapore is to act as a Guardian / Second Key to the National Reserves (Gov’t resources in broader definition) of the country. Meaning if a current government require to use the funding from these accumulated past reserves, they must take the clearance of the President.
This constitutional amendment was brought in as a suggestion by the legendary forefather of Singapore Lee Kuan Yew. It is said to be the remedy for “What If there is a rouge elected government which is having the free access to national resources. They can misappropriate the resources for its own interest”. The relevant constitutional amendments were made to introduce the elected presidency in 1991 to close this gap.
So what are these so “precious” national reserves of Singapore?
They may be the only country in the world which has clearly defined and recognized its national reveres as a part of its constitution. As per the constitution below are the schedule 5 reserves for which the 2nd key of president applies.
1. MAS – The Monetary Authority of Singapore. Founded in 1971. Regulator of Monitory policy and supervisory body for financial system of the country and the custodian of the external reserves and the local currency reserves, Official reserve position (July 2023 – official website S$ 442) approx. USD 340 Bn.
2. Temasek - The parent entity of the all State-owned enterprises (Government Linked Companies). And founded in 1974. Created with the objective of centrally managing all SoE’s without any government intervention. This is the holding entity for companies like Singapore Airlines, Singtel, Port of Singapore Authority etc. Valuation USD 287 Bn (March 2023 – official website S$382)
3. GIC - Government of Singapore Investment Corporation which was founded in 1981 is the Sovereign Wealth Fund of Singapore. This operates similar to the other Sovereign wealth funds in the world (Norwegian Wealth Fund-SPU, Qatari Sovereign Wealth Fund - QIA), Valuation est. approx. USD 700 Bn
4. CPF – Provident Fund of the citizens and permanent residents of the country founded in 1955. Valuation est. Approx. USD 450 Bn.
5. JTC & HDB – Primarily the land holdings authorities in the country with JTC holding industrial lands and lands which are newly reclaimed from sea and the HDB is holding the lands for housing.
Why are these reserves so significant to the Economy of Singapore?
Valuation
Singapore has a mammoth National Reserves compared to its size.
Whilst the actual valuation is kept confidential and protected as a matter of national interest. As per some published data the total valuation stands close to USD 1,777 Bn (Various sources have different values and derived as an aggregate on above given values) and that’s excluding the land values of JTC and HDB.
For a country with a Population of 5 Mn, GDP USD 466 Bn and a land size of Sq. Km 728 the reserve value is definitely significant both on comparative and on absolute bases.
Contribution to Public
Every year the Income contribution from these Reserves to Government Revenue is approx. 20%.
This is similar in value to the revenue from Corporate Income Tax, And it surpasses the revenue collected from the Individual Income tax collection and GST (Sales tax) collection of the country.
On aggregate basis it is enough to cover the Defense, Education and Health Expenditure of the country. Its 3.5% of GDP of the country and it is truly the strength of the nation for Singaporeans and the testament for their decades of success in governance and nation building.
“Locking it!”
Many can argue that the circumstances and the context was/is different in Singapore and may never be applicable to other Nations in implementing safeguards to their own national reserves.
Nevertheless, it is interesting to identify how Singaporeans have recognized the reserves as their key strength/weapon and implemented a governance process to safeguard their own national interests. And as per Lee Hsien Loong the current Singaporean Prime Minister,
“We got the people to understand ..that this is something precious, so you lock it up twice, And you think twice before unlock it”
(Disclaimer: The ideas /opinions in the article are fully private and personnel in nature and does not represent the organizations or institutes which the writer may have any connection in terms of employment, education or professional bodies that he may form part of. There by any liability is held strictly with the writer)
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