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Temasek’s success down to separation of its role from Govt’s

SINGAPORE — The clear separation between the Government’s role as a policymaker and regulator and that of Temasek Holdings as a shareholder and commercial owner of companies has driven the steady growth of the investment giant and helped Singapore thrive as a nation, President Tony Tan said yesterday.

Temasek Holdings' executive director and chief executive Ho Ching (in blue) and Temasek's chairman Lim Boon Heng (fourth from left) welcoming guest-of-honour President Tony Tan and his wife Mary (centre) to Temasek's 40th anniversary dinner, held at the Istana yesterday. Also present were (from left) Deputy Prime Minister Tharman Shanmugaratnam and his wife, Deputy Prime Minister Teo Chee Hean and Prime Minister Lee Hsien Loong. Photo: Ooi Boon Keong

Temasek Holdings' executive director and chief executive Ho Ching (in blue) and Temasek's chairman Lim Boon Heng (fourth from left) welcoming guest-of-honour President Tony Tan and his wife Mary (centre) to Temasek's 40th anniversary dinner, held at the Istana yesterday. Also present were (from left) Deputy Prime Minister Tharman Shanmugaratnam and his wife, Deputy Prime Minister Teo Chee Hean and Prime Minister Lee Hsien Loong. Photo: Ooi Boon Keong

SINGAPORE — The clear separation between the Government’s role as a policymaker and regulator and that of Temasek Holdings as a shareholder and commercial owner of companies has driven the steady growth of the investment giant and helped Singapore thrive as a nation, President Tony Tan said yesterday.

“Even today, 40 years later, it is a distinction that remains unclear to some,” he said at Temasek’s 40th anniversary dinner held at the Istana, attended by about 500 guests, including Prime Minister Lee Hsien Loong, other members of the Cabinet, business leaders such as Parkway Pantai chief executive Tan See Leng and international guests such as World Bank managing director Sri Mulyani Indrawati and former US Treasury Secretary Timothy Geithner.

Mr Lee’s wife Ho Ching, who attended in her official capacity as Temasek executive director and chief executive, was also among the audience who enjoyed a vocal performance by Temasek Voices and a recital from 10-year-old award-winning pipa soloist Chen Xinyu.

Temasek, a corporate entity fully owned by the Ministry of Finance, turned 40 in June. However, it timed its anniversary celebration for last night as part of a 4-in-1 series, coming after its inaugural Ecosperity Conference last Friday, the Singapore Summit on Saturday, and the Singapore Airlines Singapore Grand Prix on Sunday.

The shared commitment to meritocracy, commercial discipline and accountability among the Temasek portfolio companies also helped these firms become regional and global champions in their own right, Dr Tony Tan said.

“Government didn’t make them champions. Temasek didn’t make them champions. They competed freely against the best in the world for a customer base far larger than our home market. They earned the support and trust of their customers in a globally competitive marketplace,” he added.

Harking back to Singapore’s early years as an independent country, Dr Tan said that as British forces carried out plans to leave Singapore by 1971, the Government had to convert military and naval bases to other facilities to keep jobs.

“Naval yards became ship repair yards, and naval workshops became engineering companies. By 1974, the Singapore Government owned shares in a motley collection of companies, from detergent manufacturers to chicken essence producers, from newly converted shipyards to a start-up airline.”

But “it was clearly not the business of Government to run such enterprises” and Temasek was set up to take over the companies. That separation allowed Singapore companies to be free of political patronage and compete on a level playing field, he said.

This is unlike many state-owned enterprises (SOEs) around the world that are protected from competition and cushioned from corporate realities through subsidies, he said. Some of these SOEs may also become instruments to achieve politically-driven agendas, he added.

“Singapore saw all these scenarios as unacceptable,” Dr Tan said.

He noted that Temasek is one of the many Singapore institutions which epitomises a culture of hard work and ceaseless innovation to build for the future.

“We kept an eye on our nation’s future. Just as our people have a strong culture of savings, Government also set out to live within its means from day one. Thus, Temasek was born in this fluid milieu of early nationhood, of self-reliance and fiscal prudence, of the imperative to strive for survival while fostering unity amidst the diversity of race, language and religion.”

As many of its portfolio companies have flourished domestically and globally, Temasek, too, has grown and expanded beyond Singapore and its journey has helped the country to grow its wealth. “From a humble beginning 40 years ago in a tiny office at the mouth of the Singapore River, Temasek has come to be regarded as one of the foremost global equities investment companies today.”

Temasek grew its portfolio over the four decades from just S$354 million in 1974 to S$223 billion this year, and reported a 16 per cent total shareholder return compounded annually since inception, its website showed.

In terms of the geographical distribution of Temasek’s portfolio assets, 31 per cent are in Singapore, 41 per cent are in Asia ex-Singapore, 24 per cent are in North America, Europe, Australia and New Zealand, and 4 per cent are in Latin America, Africa, the Middle East and elsewhere.

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