|
Twenty years ago, on 22 May 1981, the GIC was incorporated.
I was then Prime Minister. Singapore's foreign reserves were then managed
by the MAS. My Deputy, Dr Goh Keng Swee, convinced me that it was necessary
to have a GIC, a separate institution to manage these reserves and specialize
on investments. This would allow the MAS to concentrate on its function as
a central bank, which was to ensure a healthy financial system, with sound
banks and low inflation.
In an inflation-ridden world, GIC's mission was to invest our reserves abroad
so as to preserve their store of value and to get a fair rate of return. To
do this the GIC had first to build the capability to invest long term in different
asset classes: equities, bonds, real estate and special investments. We had
to proceed with caution. The future then was fraught with the dangers of financial
failure. Several Latin American countries teetered on the brink of debt default
after poor investments, and threatened the solvency of major international
banks. Oil prices had gone up 8-fold since 1973, and the banks had eagerly
're-cycled petrodollars' from the OPEC oil-rich states to developing countries.
Those were difficult times for the world economy. Paul Volcker had instituted
a tight monetary policy to wring inflation out of the American economy. In
this harsh external environment, the outlook for our economy looked poor.
Prospects for return on investments were similarly dismal.
As it turned out, 1981 happened to be an auspicious time for GIC's birth.
It marked the start of a global disinflationary era initiated by Paul Volcker's
tight money policy. It ushered in an exceptionally long period of sustained
economic growth with low inflation. As a result, stock and bond markets generated
abnormally high returns by historical standards.
GIC has since grown in size, breadth and depth. Starting with a fund size
of several billion Singapore dollars, it now manages over a hundred billion
US dollars. Our returns are quite adequate. Our investments are spread over
the developed nations and many emerging markets, a total of over 30 countries.
We have built up a strong management team and a cadre of investment professionals.
In recent years, we have recruited talent globally. Their experience and expertise
have enhanced the skills of the Singapore talent at the GIC. We have good
reasons to celebrate GIC's 20th Anniversary.
In 1981, GIC shared offices with the MAS in the former SIA Building in Robinson
Road. In 1985, it moved into the MAS Building and in 1987 to Raffles City.
Capital Tower is now GIC's headquarters. It is an outstanding building, strategically
located as a gateway to Singapore's financial district. It is a worthy site
for the next phase of GIC's growth and development as a global investment
management company.
I am happy to declare open this new head office of GIC at Capital Tower.
|
|
