Singapore’s finance minister has quashed suggestions of political manipulation of its state investment corporation, Temasek, in the wake of its controversial purchase of the Thai telecommunications company, Shin Corp.
Many countries have an inaccurate view of the relationship between the finance ministry and Temasek, Lim Hwee Hua, minister of finance and transport, told Emerging Markets.
“Most people still have the impression that we micromanage every investment decision, which is really as far from the truth as you can get”, she said. “It behoves Temasek to continue to reinforce [that message] and to explain the clear relationship.”
Temasek has come under increasing fire as it has expanded overseas, most notably in last year’s $3.1 billion deal that brought it a 49.6% share in Shin Corp, which was previously owned by the family of deposed Thai leader Thaksin Shinawatra.
The Shin purchase was controversial partly for its structure, but also because of objections in Thailand to a major asset being owned by a body seen as representing the Singapore state.
Without speaking specifically of Thailand, Lim said that whereas Singapore is used to foreign ownership in its companies, “for other markets that may not be so”.
In such markets, Temasek inevitably found itself “part of the learning process for the people and government”. She added: “If you want to open up, if you want to encourage more participation, this is what it needs: someone to own a large part of your national asset.”
Asked if Temasek’s state ownership was an impediment to its investment strategy, she said: “It cuts both ways.” In some cases it is useful, but “in some countries, that relationship may not necessarily be beneficial. But it’s not something we apologise [for]; it’s a fact of life. We do own them.”
She said the government did in relation to Temasek “what normal shareholders would do”. The government appoints directors and the chief executive, and has its own internal dividend policy.
On Temasek’s overall performance, she said: “It is doing well, taken in the context of the constraints that any investment company would face ... in sectors which hitherto have been heavily regulated.”
Temasek has been suggested as a model for China’s future management of its reserves. “We feel very complimented that they are adopting a structure that’s similar to Temasek,” Lim said.
She saw no competitive threat from China’s approach and predicted it would boost the development of its domestic capital markets. “Most governments are doing it ... to bring about commercial discipline and they have found Temasek’s structure to be quite suited to what they are doing.”
Lim also said there was no plan for Temasek to deviate from its investment philosophy of having one third of its assets in Singapore, one third Asia and one third in developed markets.