Temasek and Singapore have done well over the past 50 years, but they cannot rest on their laurels as “dark clouds” are looming over the horizon, says Prime Minister and Minister for Finance Lawrence Wong on Sept 23.
“We are in a new era, marked by the growing contest for dominance and leadership between China and the US,” says Wong in his speech at the investment firm’s 50th anniversary dinner. “The two sides are continuing to engage one another, but there is deep mutual suspicion and mistrust in the relationship. Neither side wants a conflict, but both sides are preparing for a conflict to happen. That is why more and more economic activities around the world are being viewed through a security lens.”
Restrictions have already been imposed on key technologies like artificial intelligence (AI) and semiconductors, notes Wong. “What is worrying is that security concerns are spilling over to more and more areas.”
Wong adds: “Once national resilience and security become the overriding priorities, there will be many potential gaps and areas of vulnerability to address. For example, during the Covid pandemic, some countries were suddenly surprised to realise that they were not able to make enough masks, test kits and ventilators, no one wants that to happen again. No country wants to be a situation where their manufacturing capabilities grind to a halt, because of shortages in certain critical components."
As a result, there are more state interventions in business activities and more attempts to reconfigure supply chains for security considerations, says Wong.
The “pendulum of economic thinking” has “swung to the other extreme”, he adds. “The consensus of the late 20th century was all about free trade and laissez-faire economic management. Now we hear more calls for targeted protectionism and aggressive subsidies for key industries.”
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Singapore will have to find its own path forward in this new environment, says Wong. “As a small economy, we have to stay open, we have to be nimble, quick enough to seize new opportunities and we must continue pushing for free flows of trade and investments, through regional and multilateral forums. Importantly, as countries and companies everywhere look to diversify their exposures, and widen their range of partners, we want Singapore to be their choice partner. We want to be a reliable and trusted node from which they operate. ”
Citing the investment term of “alpha”, or “the extra edge that drives higher returns”, Wong says Singapore’s “greatest source of alpha” lies in its “more enduring” reputation for “trust, integrity and reliability”.
When Temasek was established 50 years ago, it had an initial portfolio of 35 Singapore-based companies, which it took over from the Singapore government. At the time, the organisation’s role was mainly a custodial and administrative one, as it maintained accounts, conducted share transactions and processed board appointments, notes Wong.
However, the firm’s role evolved to become a more active manager of its portfolio, rationalising the companies that were no longer viable and supporting the more promising ones to scale up and expand overseas.
Over time, the firm’s portfolio grew to encompass a more global outreach, with investments across Asia, the Americas, Europe, Middle East and Africa.
“It was this boldness to create new value and push the frontiers that laid the foundations for the transformation for Temasek and its portfolio companies,” says Wong.
“Amongst the original 35 companies, a few have become regional and global champions in their respective industries, like DBS and SIA. Temasek itself is regarded as one of the foremost equities investment companies in Asia and the world,” he adds.
He concludes: “Even as Temasek embarks on its next phase of transformation, some things cannot, and must not, change: your adherence to exemplary standards and values; your ability to think long-term, to grow with commercial and strategic discipline and to add to the Singapore brand of quality, reliability, discipline and integrity. These are the attributes for which Temasek is well-known for, and which will ensure Temasek remains a valued and trusted long-term partner.”
