Singapore’s sovereign wealth funds (SWFs), which have helped bail out troubled global financial institutions, could for the first time be tapped to help the ailing domestic economy, a report said yesterday.
The city-state’s leaders are considering the unprecedented step of drawing on its reserves to fund aggressive measures needed to fight an economic downturn, Singaporean Senior Minister Goh Chok Tong (吳作棟) was quoted as saying in the Straits Times.
Goh, a former prime minister, said the reserves were for a rainy day, and now the weather had turned bad.
“If this is not a rainy day, I don’t know what is a rainy day,” Goh was quoted as saying ahead of the government’s budget statement on Thursday.
The reserves include assets managed by the Government of Singapore Investment Corp (GIC) and Temasek Holdings, the newspaper said.
GIC and Temasek are both sovereign wealth funds — a form of government-created investment vehicle that has emerged as a potent force on global financial markets.
Late last year and early this year GIC injected billions of dollars into Swiss bank UBS as well as US banking giant Citigroup. Temasek pumped billions into the former US investment bank Merrill Lynch.
All three financial institutions suffered massive losses from US subprime, or higher-risk, mortgage investments. The US mortgage crisis evolved into a global economic slowdown which, late last year, made Singapore the first Asian economy to enter recession.
A 2007 report by Citigroup Global Markets listed both Temasek and GIC as among the largest SWFs in the world.
“The issue which the prime minister and the minister of finance are now thinking over is whether we should go to the president and ask him for approval to use the reserves for extraordinary measures,” Goh said.
GIC in September said its nominal rate of return over the past 20 years was 7.8 percent in US dollar terms. It said it managed well over US$100 billion in investments.
Temasek, which has stakes in well-known regional firms including Singapore Airlines, in August reported a record annual profit of S$18.2 billion (US$12.25 billion).
The country’s official foreign reserves were US$234.5 billion in 2007.
“There must be exceptional measures for exceptional times,” Goh said, without revealing a figure for how much the government might take from the reserves.
Singapore Finance Minister Tharman Shanmugaratnam has said that the “significantly expansionary” budget would emphasize help for businesses.
Singapore is Southeast Asia’s wealthiest economy in terms of gross domestic product per capita, but its heavy dependence on trade makes it sensitive to problems in developed economies, particularly the key export markets of the US and Europe.
Just a little more than two weeks ago the government forecast that the economy could range between a contraction of 2 percent and expansion of 1 percent this year.
But Singapore Prime Minister Lee Hsien Loong (李顯龍) was quoted on Saturday as saying that Singapore would scale down its economic forecast for this year because the global situation had worsened.
“It’s a situation which is already gloomier now than it was on New Year,” Lee was quoted as saying in the Straits Times.
Singapore’s key exports fell a sharper-than-expected 20.8 percent last month from a year ago.
A Chinese freighter that allegedly snapped an undersea cable linking Taiwan proper to Penghu County is suspected of being owned by a Chinese state-run company and had docked at the ports of Kaohsiung and Keelung for three months using different names. On Tuesday last week, the Togo-flagged freighter Hong Tai 58 (宏泰58號) and its Chinese crew were detained after the Taipei-Penghu No. 3 submarine cable was severed. When the Coast Guard Administration (CGA) first attempted to detain the ship on grounds of possible sabotage, its crew said the ship’s name was Hong Tai 168, although the Automatic Identification System (AIS)
An Akizuki-class destroyer last month made the first-ever solo transit of a Japan Maritime Self-Defense Force ship through the Taiwan Strait, Japanese government officials with knowledge of the matter said yesterday. The JS Akizuki carried out a north-to-south transit through the Taiwan Strait on Feb. 5 as it sailed to the South China Sea to participate in a joint exercise with US, Australian and Philippine forces that day. The Japanese destroyer JS Sazanami in September last year made the Japan Maritime Self-Defense Force’s first-ever transit through the Taiwan Strait, but it was joined by vessels from New Zealand and Australia,
CHANGE OF MIND: The Chinese crew at first showed a willingness to cooperate, but later regretted that when the ship arrived at the port and refused to enter Togolese Republic-registered Chinese freighter Hong Tai (宏泰號) and its crew have been detained on suspicion of deliberately damaging a submarine cable connecting Taiwan proper and Penghu County, the Coast Guard Administration said in a statement yesterday. The case would be subject to a “national security-level investigation” by the Tainan District Prosecutors’ Office, it added. The administration said that it had been monitoring the ship since 7:10pm on Saturday when it appeared to be loitering in waters about 6 nautical miles (11km) northwest of Tainan’s Chiang Chun Fishing Port, adding that the ship’s location was about 0.5 nautical miles north of the No.
SECURITY: The purpose for giving Hong Kong and Macau residents more lenient paths to permanent residency no longer applies due to China’s policies, a source said The government is considering removing an optional path to citizenship for residents from Hong Kong and Macau, and lengthening the terms for permanent residence eligibility, a source said yesterday. In a bid to prevent the Chinese Communist Party (CCP) from infiltrating Taiwan through immigration from Hong Kong and Macau, the government could amend immigration laws for residents of the territories who currently receive preferential treatment, an official familiar with the matter speaking on condition of anonymity said. The move was part of “national security-related legislative reform,” they added. Under the amendments, arrivals from the Chinese territories would have to reside in Taiwan for
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