Parliament: Reserves are a strategic defence to deter parties wishing to hurt Singapore, says Heng Swee Keat

Finance Minister Heng Swee Keat said that Singapore's reserves comprise assets invested by GIC as well as the Monetary Authority of Singapore and Temasek Holdings.
Finance Minister Heng Swee Keat said that Singapore's reserves comprise assets invested by GIC as well as the Monetary Authority of Singapore and Temasek Holdings.PHOTO: BLOOMBERG

SINGAPORE - Singapore's reserves are a strategic asset, allowing the country to ride out a crisis without being reliant on others, Finance Minister Heng Swee Keat said on Thursday (Feb 28) .

But they also serve as a "strategic defence, to deter parties who wish to undermine the interests of Singapore and Singaporeans" with moves that go beyond currency speculation attacks to other threats, Mr Heng said in his wrap-up of the Budget debate.

"Our reserves, like our investments in defence and security, give us the confidence to plan long term, knowing that we will have the ability to take care of our people and to defend our sovereignty," Mr Heng added, as he outlined to Parliament the need to be disciplined in managing the reserves.

Currently, the Government takes up to 50 per cent of the expected returns for spending, and ploughs back at least 50 per cent to grow the principal and generate more returns.

This ensures that both the current and future generations benefit from the reserves, Mr Heng said.

Responding to a call from Workers’ Party MP Pritam Singh (Aljunied GRC) for more data on the reserves so Singaporeans can better understand the Budget policy trade-offs, and for more transparency on the performance of GIC, Mr Heng said Mr Singh is "misinformed".

Mr Heng explained that Singapore's reserves comprise assets invested by the Monetary Authority of Singapore (MAS), GIC and Temasek Holdings.

The size of MAS' and Temasek's assets is public information, but the GIC portion is not disclosed. This is because doing so would reveal the complete picture of Singapore's financial reserves, Mr Heng said.

As of March 31, 2018, the official foreign reserves managed by MAS was $377 billion and the size of Temasek's portfolio was $308 billion, according to the Finance Ministry's website.

While the size of the Government's funds managed by GIC is not published, it has been revealed that GIC "manages well over US$100 billion (S$135 billion)", the ministry noted.

Mr Heng noted that Singapore is a small country exposed to global forces beyond its control.

 
 

"We should not underestimate the need for a rainy-day fund," he told Parliament. "With an economy worth nearly $500 billion a year, we should set aside enough to protect it and our people's livelihoods and future."

During the global financial crisis in 2008, Singapore's accumulated savings allowed it to fund $16.5 billion, or three-quarters of the $20.5 billion Resilience Package, with the remainder being funded from past reserves, said Mr Heng.

The package helped to save jobs and stimulate bank lending, and helped families and businesses weather the recession.

Mr Heng said Singapore "not only rode through the crisis well, but emerged stronger".

"Having our reserves as a strategic asset played a key role in this. So let us not squander this strategic advantage that we have," he added.