(Delivered in Parliament on 6 March 2018)
Temasek Holdings as Shareholder – Sylvia Lim
Back in 2008, GIC was part of the pioneering effort to develop the Santiago Principles, a common global set of 24 voluntary guidelines that assign best practices for the operations of Sovereign Wealth Funds. These Principles address concerns about visibility, accountability and the governance structure of Sovereign Wealth Funds, and include Ethics and Professionalism, and the ability to follow foreign rules.
Though Temasek does not direct business decisions or operations in its portfolio companies, it pitches itself as an active promoter of sound corporate governance in them.
As the sole shareholder of Temasek, the Government should naturally be concerned that the entities Temasek invests in adhere to the spirit of the Santiago Principles, in order to safeguard Singapore’s reserves and international reputation. To this end, it was reported yesterday that Temasek has now taken some steps in tackling corruption within its portfolio companies, with Chairman Lim Boon Heng announcing a roundtable “in the next few months” focusing on questions of governance and ethics.
Turning to what other countries have done, the Norwegian Government Pension Fund Global has led the way. Through an ethics council established in 2004, companies that are unethical are excluded from its investment portfolio. It appointed a corporate governance advisory board in 2013 to be a more engaged and responsible investor. The oil fund has tackled issues such as high executive pay by voting against pay proposals at Alphabet, JPMorgan and Volkswagen in 2017.
While the Santiago Principles require that SWFs like Temasek be operationally independent from their owners i.e. the MOF, how has MOF worked with Temasek on areas such as its investment policies or otherwise to maintain ethics? Will MOF add further accountability for Temasek on the ethics front? I am of the view that reputational challenges to Singapore’s integrity as a country should not be left to be steered by what is legally just a commercial entity.
Role of Temasek Holdings and GIC – Leon Perera
During the debate on the bribery probe at Keppel O&M, SMS Indranee Rajah said: “Likewise, Temasek does not interfere in the business decisions or operations of its portfolio companies.”
Do Temasek – and GIC – seek to share ideas and experience with their investee companies in ways that may tend to enhance long-term share-holder value? Or are Temasek and GIC totally “hands-off” as it were? Are they not interfering in investees’ business decisions or operations at all, not even offering insights, information or suggestions of any kind, on any matter, be it commercial or corporate governance-related?
If Temasek and GIC are totally “hands-off” in this sense, would this not be a lost opportunity, since they have the opportunity to share learnings, where permissible, across their portfolio companies and from their past experience as investors, not to mention connecting investees to agencies like EDB which could generate win-win opportunities for investees and Singapore?
Playing such a role, if kept within the boundaries of permissible information and idea dissemination, could be consistent with the Santiago principle #16 on operational independence while advancing principle #19 on commercial orientation.
Tax Deductible for Private Hire Car Driver – Faisal Manap
I have received queries from residents who are full-time Private-Hire Car drivers on why they are not allowed to claim tax deduction for the amount they spent on motor car expenses, in particular car rental fees.
A search on IRAS websites under the FAQ segment provides an answer to this query, “The expenses incurred on a private car by private-hire car drivers are not tax deductible because of the national policy to restrict the car population.”
In my view, this answer does not seem to clarify the circumstance well. How does not allowing PHC drivers claim tax deduction correlate to the issue on the restriction of car population? Isn’t the Certificate of Entitlement (COE) scheme already there to regulate the car population?
The service provided by private-hire car compliments our public transport services and, anecdotally, to a certain extent, this service contributes in reducing the number of car ownership rather than increasing it. I say this because I have friends who did not extend or buy new cars after their COE expired, reason being it is more convenient and cheaper to travel by private-hire cars as compared to owning one.
I would like to urge the Ministry to work closely with the various stakeholders to come up with a framework that would ensure that the full-time PHC drivers are taxed in a fair and just manner.
Water – Harmonisation of Accounts – Pritam Singh
Mr Chairman, public communication on the way water is priced can be significantly improved. At last year’s budget debate, the Minister in charge of the Ministry of Environment and Water Resources (MEWR) shared that the numbers in the books of PUB do not lend themselves to a straightforward understanding of what they mean. The Minister observed that while PUB’s books are in accruals, the Ministry’s budget is in cash. The Minister in charge of MEWR also said that he would ask the Minister of Finance to look at a Whole of Government approach to funding Singapore’s water infrastructure because things do not add up if one looks at the books separately. In light of these remarks, can I clarify what progress has been made on this?
Many Singaporeans note that PUB’s books record significant surpluses after government grants and that any increase in water prices should take into account the size of such surpluses. More fundamentally, there is a greater desire to understand the variables and assumptions that go into calculating Long Run Marginal Cost (LRMC), which form the basis of determining water prices. The Government should attempt to explain this in a simple manner so that the public can appreciate the basis of hiking water prices up 15% in 2017 with another hike scheduled for 2018. Thank you.