Defamation versus transparency – Singapore’s fine balancing act

Singapore's defamation laws are back in the news. Recently, the public has seen a couple of instances of a popular, anti-PAP website receiving notices under the Defamation Act.

Perhaps the Act has no place in a free, democratic society. However, is it likely Singapore's defamation laws will be meaningfully amended anytime soon? Not really. So, should opposition groups and politicians spend massive amounts of time, energy and political capital campaigning against the Act? Probably not.

Certainly, the end objective of almost all Singaporeans' is greater political transparency so as to increase fairness, and a whole host of other good wholesome things.

But rather than focus on libel laws, other tangible and more realistic steps towards transparency can be the focus of civil society and opposition groups.

For starters an open debate about the use of Singapore's massive wealth as represented by holdings of Temasek Holdings and the Government Investment Corporation (GIC) is in order. Inevitably, such a discussion cannot skirt critical issues such as transparency and accountability (see my letters published in the Straits Times Forum about Temasek's Board of Directors in November 2009 and sharing returns with Singaporeans' in July 2010). 

As published in The Economist magazine

One model for Singapore to examine is found in Norway, specifically Norway's Government Pension Fund Global (GPFG). Like Singapore, Norway has a small population (approximately five million citizens), but is a wealthy nation.

Norway's GPFG is valued at over USD 600 billion. The Fund is an integral part of the country's fiscal policy. In other words, depending on the GPFG's returns and domestic economic considerations the government may draw upon the GPFG for budgetary support. Conversely, in good times, the government transfers funds to grow the GPFG.

[The Fund] also served as a tool to manage the financial challenges of an ageing population ... The fund is an integrated part of the government's annual budget. This means the fund is fully integrated with the state budget and that net allocations to the fund reflect the total budget surplus, including petroleum revenue. Fiscal policy is based on the guideline that over time the structural, non-oil budget deficit shall correspond to the real return on the fund, estimated at 4 percent. The so-called spending rule that no more than 4 percent of the fund's return should over time be spent on the annual national budget [emphasis added by author] was first established in 2001.

- Norges Bank Investment Management, Government Pension Fund Global

Perhaps it is time for the government to legislate clear policy guidelines about the use of investment returns from the country's wealth funds. Such a policy will have far reaching implications for many facets of Singapore's governance:

1. The President's guardianship of the nation's foreign exchange reserves may need to be formalized and tightened;
2. Long term investment return guidelines and benchmarks will be made explicitly available. The entire process of transferring wealth 'to and from' Singaporeans' rests on defining prudent return parameters  - Singapore's own version of a 'spending rule;'
3. Accountability to the nation will require reasonable transparency before Parliament or, at the very least, some sort of appropriately structured Parliamentary committee.

At its most basic level, politics is about the distribution of wealth. Fortunately, over the past several decades, Singaporeans have worked hard to accumulate a hefty national bank account (Temasek Holdings and GIC). While it is important national finances are prudently managed, it is not a crime to spend from savings now and then – within predefined strictures.

Surely, Singapore's national bank balance is now large enough for Singaporeans' to directly draw upon a part of Temasek and GIC's long term investment returns.  

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Imran is a business and management consultant. Through his work at Deodar Advisors, Imran improves the profitability of businesses operating in Singapore and the region. He can be reached at imran@deodaradvisors.com.