Govt to take 'hands off' approach on state funds: Tharman
'It is important for the government to retain its stance of not
assessing Temasek and GIC on individual deals.' -- ST PHOTO:
MUGILAN RAJASEGERAN
THE Government will take a 'hands off' approach on investments made
by its sovereign wealth funds in banks including Citigroup Inc.
amid the subprime meltdown, Finance Minister Tharman Shanmugaratnam
said in Parliament on Monday.
The recent multi-billion-dollar investments in ailing global
financial institutions were made purely from a commercial
standpoint, he told the House.
The government plays no role in how the Government of Singapore
Investment Corporation (GIC) and investment firm Temasek Holdings
decide their investment policies, said Mr Tharman.
'They make these decisions for commercial reasons based on their
own calculations free of any influence from the government,' he
told Parliament.
'It is not the government's role to comment on or second guess
whether it was timely for GIC and Temasek to make these
investments,' he said in response to an MP's question.
He said the government is 'scrupulous in avoiding comment' or
influence not only publicly but internally on the individual
decisions of Temasek and GIC.
'It does not judge the performance of GIC and Temasek by their
individual deals,' Mr Tharman said.
GIC and Temasek are both sovereign wealth funds - a form of
government-created investment vehicle which has emerged as a potent
force on global financial markets.
With their newfound market muscle, such funds have led to concerns
over a lack of transparency and national security in recipient
countries.
The two funds made global headlines recently with their investments
in global financial houses battered by a US housing slump.
GIC, the custodian of Singapore's massive foreign reserves of more
than US$100 billion (S$143 billion), announced last week it would
invest US$6.88 billion in US banking giant Citigroup.
That followed its December investment of almost US$10 billion into
Swiss bank UBS, while Temasek Holdings committed to injecting
US$4.4 billion into US brokerage firm Merrill Lynch.
'These are large investments; there will be downside risks and it's
up to GIC and Temasek to assess these risks and decide if they are
acceptable,' said Mr Tharman.
'It is important for the government to retain its stance of not
assessing Temasek and GIC on individual deals.'
GIC, the government's fund manager, said in July 2006 it earned an
average 9.5 per cent annually since its inception in 1981.
Temasek, the state-owned investment company, had a return on
investment of more than 18 per cent by market value since its
inception in 1974, the company said in its latest annual
report.
Financial services rose to 38 per cent of Temasek's assets in the
financial year ended March 2007 from 35 per cent a year earlier,
the company said in the report released in August.
The company is the single-largest investor in banks such as
Standard Chartered Plc and DBS Group Holdings Ltd. -- AFP.
let's hope the new finance minister knows his responsibilities
