The Singapore Democratic Party has called on Singapore’s Sovereign Wealth Funds (SWF) GIC & Temasek to “open” their books. SDP’s Dr Chee had questioned why GIC and Temasek invested in banks like Barclays, Citigroup, UBS and Merill Lynch. Dr Chee had earlier stated that GIC and Temasek only recovered by “a stroke of fortune” after benefitting from the US government’s bailout.

The question here really should be whether the books ought to be made public?

Fairly there are reasons that the books be opened to the public. These tend to revolve around transparency and accountability. And as Chee said, it would allow the public to scrutinize decisions to invest in certain companies.

But there are also pretty strong reasons to reject this proposal to open the books.

Temasek actually does publish the value of its assets but the same does not apply to GIC. Reason being publishing GIC’s assets would actually reveal the entire extent of Singapore’s assets. It is incredibly dangerous to make public a country’s entire reserves.

What are the reserves?

Basically, Singapore has two parts to its reserves – the foreign-exchange reserves and the investment portion. A country foreign-exchange reserves comprises reserve currencies, usually the US dollar or others like the euro, the pound, the Japanese yen and more recently, the Chinese yuan. It is used to back up a country’s currency. The Official Foreign Reserves (OFR) is actually managed by the Monetary Authority of Singapore (MAS) and MAS actually provides the value of Singapore’s Official Foreign Reserves on a yearly and monthly basis.

Temasek Holdings also does publish its net portfolio on a yearly basis. As of 2015, Temasek’s net portfolio value stands at $266 billion Singapore dollars. Temasek Holdings is audited by KPMG as well as the Auditor General. As KPMG is a reputable international auditor and one of the Big Four auditors globally, there should not be too much debate over their credibility in auditing Temasek Holdings. KPMG also releases a statement every year on whether the accounts are unqualified or not.

For GIC, financial statements are not released but as a public corporation, it is audited by the Auditor General’s office to ensure accounts are properly kept. Is that unusual? Actually no. A majority of the world’s largest sovereign wealth funds do not open their books to the public.  What is known, however, is it has at least $300 billion in assets.

So what’s so wrong with revealing your entire reserves?

Well, it opens your currency to attack. If MAS, Temasek’s and GIC’s assets were publicly known, it would actually encompass the entire of Singapore’s reserves.  It would require simple mathematics of adding the value of assets from the 3 bodies together to get the entirety of Singapore’s reserves. If a currency crisis were to occur, a foreign country/trader would know exactly how much Singapore is able to shore up its currency before it is forced to devalue. That actually effectively gives some element of control over your own currency to foreign powers and that is perhaps something to avoid.