GIC must remain true to core values but bold in strategies: MM Lee

10May11

Lee Kuan Yew on the Government Investment Corporation.  CNA, with video:

Minister Mentor Lee Kuan Yew said the Government of Singapore Investment Corp (GIC) must remain true to its core values: retaining the best talents and maintain the highest of reputation.

But he added that the GIC must also have the courage to make bold strategic moves, even if they are unconventional.

MM Lee said: “Our national reserves are a buffer or shock absorber for Singapore in downturns like that in 2009.

It helped us to keep jobs with the job credit scheme where we created jobs by adding to the salaries of those holding jobs so that they work even when it was not in their interest to take on the lowly paid jobs.

Second, a strong national balance sheet fosters investor confidence and hence enhances the stability of the Singapore dollar.

Third, income from our reserves supplement government revenues.

To sustain our policy of building the reserves, we need a capable reserve manager like the GIC to invest the funds with a long term orientation and garner good returns.”

Mr Lee said the vision to create the GIC was bold for its time.

Today though, many countries have their own sovereign wealth funds.

He added: “The results speak for themselves. Since inception, GIC has preserved and enhanced the purchasing power of Singapore’s reserves, outpacing global inflation by a comfortable margin.

Compared with the popular high-return asset class of equities, which returned 10.2 percent per annum in nominal US dollar terms since 1981, the GIC portfolio made comparable returns with less risk.”

The next 30 years though would be challenging and the investment environment, less benign, added Mr Lee.

He also pointed to the rise of India and China which he said would create new long-term investment opportunities and risks.

In uncertain times, Mr Lee said there needs to be a certainty of purpose and thoughtfulness in direction.

So he called on the GIC to retain its fundamental core values and be bold in its moves at the same time.

MM Lee said: “GIC must have the courage and conviction to take original, bold, strategic, and forward-looking decisions. It must continue to be resourceful and adaptable.

As GIC grows larger and more established, the impetus to follow conventional practices will grow stronger. This could lead to mediocrity.

GIC must develop the capacity and courage to make the right decisions, thinking in depth and with foresight for what works best for us, even if the decisions are at times unconventional.”

Mr Lee added that GIC must also capitalise on its global reach, to harvest good returns and have a better view of new investment.



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