|
Prime Minister, Chairman GIC, Distinguished guests,
Ladies and gentlemen,
Introduction
Thank you for joining us for GIC's 20th Anniversary dinner
tonight. We are delighted to welcome the people who have contributed to GIC's
development, including current and former members of the Board, representatives
of the local and overseas fund management community, GIC's business partners
as well as present and former staff of GIC.
GIC has come a long way as the manager of Singapore's foreign reserves. Starting
in 1981 with a fund size of a few billion dollars, GIC now has more than US$100
billion in assets under management. This puts GIC among the 100 largest fund
management companies in the world. GIC has overseas offices in key financial
centres including New York, London, San Francisco, Tokyo, Hong Kong and Beijing.
Its assets are invested in more than 30 countries, in a globally diversified
portfolio of equities, bonds, real estate, private equity and money market
instruments.
GIC's investments have performed well. Since inception, GIC's portfolio returns
have comfortably exceeded the average G3 inflation rate of about 5%, in US
dollar terms. GIC has thus more than achieved its goal of preserving the purchasing
power of our reserves; in fact GIC has significantly enhanced the value of
our savings.
Meeting the Challenges Ahead
Looking ahead, GIC faces significant challenges. First,
so long as Singapore continues to do well and our investments continue to
prosper, the reserves to be managed by GIC should grow. Managers of large
portfolios enjoy certain advantages: they can extract better terms on deals
and transactions, they have access to research and information, and they are
highly sought after as co-investors. They can also diversify their portfolio
more widely, and employ more elaborate and analytical investment strategies.
But bigger scale also means more complex and less nimble operations. Transactions
to implement strategic changes in large portfolios will have greater market
impact and visibility. Discipline, both in strategy and execution, becomes
more crucial than ever.
Second, the global investment environment is undergoing rapid, profound change.
Information and analysis are instantly and copiously available. New and ingenious
derivatives offer more opportunities for arbitrage and hedging. A development
in one market affects other markets in other countries within minutes. Investment
management companies are reorganising into global businesses, so as to diversify
their risks and maintain a globally optimised investment stance.
Few fund managers will concede that these changes have made it impossible
for them to beat the market consistently. But certainly outperforming the
market is now much more difficult. Paradoxically, more information has made
it harder to anticipate which way the next shock will push the markets. And
more efficient markets mean that arbitrage opportunities are more fleeting,
and the margins narrower. Players who fail to react quickly to sudden changes
and instabilities in the environment pay a high price.
To meet these challenges, GIC must build a resilient organisation, tightly
run and founded on sound values. GIC has identified as its corporate values
integrity, teamwork, performance, long-term orientation and prudence. GIC
takes these values seriously:
GIC expects each and every staff to be unflinchingly honest, abiding by its
code of ethics and the highest standards of professional conduct;
GIC stresses teamwork in a collegial working environment, motivating innovative
and creative thinking and enabling all staff to perform to their full potential;
GIC strives to continually improve performance, recognising and rewarding
excellence;
GIC takes a long-term view in its investment decisions, aiming for sustained
good performance rather than bursts of short-term gains. Every officer is
valued as an investment, and the company works to build long-term relationships
with valued business partners; and
GIC is conscious that it bears a broader fiduciary responsibility than most
fund managers. So it must consider both investment and reputation risks, and
exercise sound judgment and discretion in its decisions.
To become an outstanding organisation, GIC needs outstanding people. It needs
to tap talent everywhere and understand markets around the world. GIC will
attract as many capable Singaporeans as it can, but it will never have enough
talented Singaporeans to meet GIC's needs. For the best possible performance,
GIC must assemble the strongest international team it can find.
This competition for talent is tougher than ever before. The market for top
talent is now global, especially in financial services. The opening of financial
markets in Latin America, Eastern Europe and South East and North East Asia
will only intensify this worldwide shortage of financial talent. In Singapore
too, MAS is actively liberalising financial markets and developing the fund
management industry, thus increasing demand for good analysts and fund managers.
GIC will have to compete harder against top financial institutions for local
and foreign talent.
GIC is government-owned and manages government funds, but it is not a closed
bureaucracy. GIC is run on meritocratic principles, with an open and cosmopolitan
outlook. Non-Singaporeans and Singaporeans alike are recruited, evaluated
and compensated competitively based purely on performance.
GIC must continue to strive to be a top-notch organisation, offering attractive,
satisfying career prospects for top talent. Its culture must motivate talented
people, enabling them to contribute meaningfully and meeting their professional
and personal aspirations. An ambitious and promising young fund manager must
see having GIC on his or her CV as a valuable plus.
GIC offers investment professionals broad opportunities to enlarge their skills
and exposure. Few fund managers can match the asset class diversity and global
coverage of GIC. With its policy of empowering its professionals as much as
possible, GIC gives portfolio managers and analysts the chance to exercise
discretion and manage considerable portfolios very early in their careers.
Over the years, GIC has assembled a highly competent team of professionals,
Singaporean and non-Singaporean. Today, over 40% of GIC professionals are
foreigners, including Americans, Europeans and nationals from many Asian countries.
They bring with them valuable networks of contacts, and knowledge of the countries
GIC invests in. They have served GIC professionally and loyally. GIC must
strengthen its team further, and continue to recruit both in Singapore and
abroad, to become an organisation of excellence.
Tapping External Expertise
Even as GIC strives to build its in-house capabilities,
it seeks to tap the ideas and expertise of outstanding global fund managers.
One way it does so is by placing out funds to external fund managers. This
also helps to diversify our fund management risks, and to build up the fund
management industry in Singapore.
Fund managers must on their own be able to attract funds to manage. They cannot
rely solely on funds from the Singapore government. But GIC mandates will
provide fund managers in Singapore with an initial source of business, and
encourage them to invest in infrastructure, build up their teams, and expand.
GIC has therefore been placing out a larger proportion of its funds to external
fund managers. Starting in 1998, GIC sought to place out a total S$25 billion,
over 3-4 years, to fund managers with Singapore offices, comprising both global
and regional mandates. To date, a total of S$19 billion has been placed out
to Singapore-based fund managers.
But of course this will not be all. As GIC's assets under management grow,
GIC will continue to put out more funds to external managers. We are therefore
happy to have with us tonight, representatives of the external fund managers
whom GIC has worked closely with. We look forward to developing an even closer
relationship with you.
Conclusion
GIC's vision is to become a truly Singapore-based multinational.
It aspires to be a world-class global investment management company, viewed
by global talent as a desirable employer, and one which allows talent to develop
to their potential. It is an ambitious vision. But GIC's first 20 years has
put in place a good foundation, and positioned the company well to meet these
future challenges.
|
|
