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There is Nothing Murky About Temasek's Goals

18 Feb 2009

Your editorial "Temasek and Transparency" on Feb. 12 was puzzled by Temasek's mission to create and maximise long-term shareholder value, and asked whether the reserves should not be used to support Singaporeans in times of recession, like now.

Our reserves have been accumulated through prudent fiscal policies, as well as the good investment returns over the years. They form an endowment meant for posterity, which provides a steady income stream that can be used for public spending for the benefit of current and future generations of Singaporeans.

The reserves also provide a substantial buffer for Singapore at times of extra-ordinary crisis. This year the Government is in fact drawing on some reserves to fund exceptional measures to stem job losses and share in the risks of bank lending. This has enabled Singapore to respond forcefully to the crisis with a large fiscal injection, without needing to borrow and burden future taxpayers.

This approach to husbanding and employing reserves makes more sense than WSJA's advice to give back Temasek's "piles of cash" to Singaporeans.

It is for the Government to decide whether to draw on reserves, with the agreement of the President, in accordance with clear rules set out in the Constitution. This is a public policy issue in which Temasek has no role.

There is nothing "murky" about Temasek's goals. It is widely acknowledged in the investment world that Temasek invests and operates on a commercial basis. While it is not required to do so, Temasek publishes an annual review of its performance and its investment approach, including a listing of all major investments. It has also issued an international bond, so as to subject itself to scrutiny from credit rating agencies and bond-holders.

Temasek's appointment of Charles Goodyear as its next CEO after a thorough selection process only reflects the high standards of governance it holds itself to, and which the Government expects.