Santiago Principles
GIC was a key participant in the development of the policy principles for Sovereign Wealth Funds (SWFs) and countries receiving SWF investments, to address protectionist fears and maintain an open and stable investment climate. These policy principles, announced in March 2008, contributed towards the development of the Santiago Principles which are a voluntary set of principles and practices developed by the International Working Group (IWG) of Sovereign Wealth Funds (SWFs) in October 2008.
The Principles have now been in place since 2008. SWFs are encouraged to assess their adoption of the Principles and report on how they have implemented them.
GIC’s implementation of these Principles can be grouped into the following three key areas:
A. Legal framework, objectives, and coordination with macroeconomic policies 
Guiding Philosophy
Sound practices and principles in this area underpin a robust institutional framework and governance structure of the SWF, and facilitate formulation of appropriate investment strategies consistent with the SWF’s stated policy objectives.
GIC’s Implementation
GIC’s legal framework is set out in the Singapore Companies Act, and our legal relationship with the Government is explained in our Annual Reports as well as our website. GIC’s objectives are clearly spelt out in line with our responsibility to preserve and enhance the international purchasing power of Singapore’s foreign reserves. As GIC primarily invests outside of Singapore, the principle of domestic macroeconomic policy coordination does not apply to us.
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B. Institutional framework and governance structure
Guiding Philosophy
A sound governance structure that separates the functions of the owner, governing body(ies), and management facilitates operational independence in the management of the SWF to pursue investment decisions and investment operations free of political influence.
GIC’s Implementation
The Investment Mandate from the Government to GIC clearly defines GIC’s terms of appointment, investment objectives, investment horizon, risk parameters and investment guidelines for managing the portfolio. The Government, which is represented by the Ministry of Finance in its dealings with GIC, neither directs nor interferes in GIC's investment decisions. It holds the GIC Board accountable for the overall portfolio performance. The management executes investment strategies, is responsible for all investment transactions, and reports regularly to the Board and the Government. GIC is also accountable in various key areas to the President of Singapore as a Fifth Schedule company. The role of the President of Singapore in safeguarding reserves is further elaborated in the reserves management framework on MOF’s website: http://app.mof.gov.sg/reserves.aspx
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C. Investment and risk management framework
Guiding Philosophy
A clear investment policy shows an SWF’s commitment to a disciplined investment plan and practices, while a reliable risk management framework promotes the soundness of the SWF’s investment operations and accountability.
GIC’s Implementation
GIC is committed to a disciplined investment plan and practices, anchored in our policy portfolio which defines our strategic asset allocation to meet our investment return objective within risk parameters determined by the Government as owner of the funds. Identifying and managing risk is a clear and integral part of management responsibility at all levels in GIC. Our approach to risk management is three-pronged: managing portfolio risk to ensure appropriate and efficient risk-taking; managing process risk so that investment decisions are implemented well; and managing people risk.
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For a print-friendly complete version of the Santiago Principles, please click here.