Parliament is not the risk committee for individual firms: Foo Cexiang on SIA’s Air India investment

Parliament's primary role is to ensure accountability, but it is not the "risk committee" for individual companies, stated Minister of State for Trade and Industry Foo Cexiang on September 15. Foo was responding to Workers' Party MP Kenneth Tiong's claim that Parliament serves as the risk function for the reserves and that SIA's board is the investment team - a comparison Foo deemed a "major leap of logic".

MPs are entitled to question the management of national reserves, including their protection and stewardship, but they do not have the necessary operational data, expertise, or authority to determine how much commercial risk companies should undertake, Foo added. He further emphasized that if Parliament were to assume such a role, it would leave the SIA board and other Temasek portfolio company boards without any responsibility.

Foo's remarks follow a Sept 8 exchange in Parliament between Tiong and Transport Minister Jeffrey Siow discussing SIA's 25.1 percent stake in Air India, which reportedly seeks a capital injection of around US$1.5 billion (S$1.9 billion) after posting its largest-ever annual loss. Tiong questioned whether SIA's losses from foreign investments have been evaluated against its capacity to provide essential transport services and expressed his opposition to any further cash infusions from state investor Temasek, SIA's majority shareholder.

Siow countered that SIA's investment in Air India does not negatively impact its ability to operate and serve Singaporeans, and that the airline must continue to remain competitive in challenging markets.

Foo clarified that the SIA board is not merely an investment team; rather, the SIA management runs the business, while the board oversees management, sets the company's strategic direction, and is responsible for governance and risk oversight. Temasek, as a shareholder, exercises oversight over its portfolio companies. He asserted that Tiong's argument, if taken to its logical conclusion, would necessitate Parliament setting political limits on the risk-taking capacity of every Temasek portfolio company, not just SIA, including DBS, Singtel, and others.

Such a move, Foo argued, would cripple Singapore's companies economically and lead to "a sure recipe for failure". He further criticized Tiong's comments on SIA's debt during the exchange in Parliament, stating that while SIA is in net debt with $10.5 billion in cash against $10.7 billion in debt as of June 30, the crucial factors are the timing of debt repayment, interest rates, and SIA's ability to comfortably meet its obligations.

Foo emphasized that debt is not inherently a sign of financial weakness and in SIA's case, most of its borrowings are long-term, with most of its liabilities within the next year covered by its cash reserves.