Assessing the implementation of Santiago Principles by Sovereign Wealth Funds in the ASEAN Community

Abstract

The International Forum of Sovereign Wealth Funds (SWF) adopted the Santiago Principles to foster good governance, accountability, and transparency practices. The origins, objectives, market impacts, financial performance, and investment strategies of SWFs have dominated scholarly discourse. A still unsolved question is how and to what extent SWFs implement governance practices. We analyse the governance self-assessment reports of the three SWFs that are signatories to the Santiago Principles and belong to the Association of Southeast Asian Nations (ASEAN). That is, Indonesia, Malaysia, and Singapore. As SWFs grow in size and number, deepened coordination with domestic fiscal and monetary authorities will be needed. We also find that the Santiago Principles’ economic and financial targeting objective appears indifferent to the environmental and social impacts that have the potential to affect the stability of financial markets. The variation in levels of disclosure across SWFs threatens to dilute the essence of the Santiago Principles badge. Fifteen years after their formulation, the Santiago Principles show signs of needing an update to reflect emerging realities and expanded member contexts.