Power strikes, budget deficits, economic recession, tax hikes, currency volatility, rocketing oil prices, global disinflation - the 70s and early 80s were rife with changes in social, political and economic ideology and policy as the world economy grappled with stagflation. However, Singapore's financial reserves grew with increased private savings, yearly public sector surpluses and strategic currency and bond investments.
In 1981, first Deputy Prime Minister and Monetary Authority of Singapore (MAS) Chairman, Dr Goh Keng Swee, recommended to Prime Minister Lee Kuan Yew that Singapore should create a specialised and separate investment management entity to invest Singapore's growing reserves abroad for better returns and to enhance the nation's wealth over the long term.
Dr Goh proposed that Mr Yong Pung How, a senior banker, be its first Managing Director. Mr Yong advised Dr Goh to incorporate the new organisation as a private company which would manage but not own the reserves, leaving the government as the owner. Thus, on 22 May 1981, the Government of Singapore Investment Corporation (GIC) was born. Dr Goh further proposed that Mr Lee be the Chairman, a proposal which was accepted. Dr Goh was appointed Deputy Chairman.
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