ENGAGEMENT OF PRIVATE FUND MANAGER

Mr Chuang Shaw Peng asked the Deputy Prime Minister what is the progress in engaging a private fund manager to manage public funds.

BG Lee Hsien Loong: Mr Speaker, Sir, the outplacement of public funds to external private fund managers is part of the Government's effort to develop Singapore into a premier asset management hub. It is a catalyst to encourage leading international fund management companies to locate or expand their operations in Singapore. Asset management companies receiving public funds to manage are committed to increasing headcount and funds under management, including non-resident funds, in Singapore. They are also expected to introduce new investment capabilities and activities in Singapore. This will expand the breadth and depth of our asset management industry.

In February last year, the Government of Singapore Investment Corporation (GIC) announced that it would place out S$25 billion over the next three years to external fund managers who have offices in Singapore. As at end-1998, GIC had placed out a total of $16.9 billion to fund management companies with offices in Singapore. Of this amount, $6.8 billion was placed out in 1998 as a whole. In other words, over the next two years, 1999 and 2000, we will be placing out about another S$18.2 billion.

In November 1998, MAS announced that it would place out S$10 billion over the next three years to external fund managers with offices in Singapore. MAS then followed up to meet 36 fund management companies to brief them on details of the outplacement and application procedure. Of the $10 billion, MAS expects to place out $2.5 billion this year.

The Government has also encouraged statutory boards and Government-linked companies (GLCs) to place out their excess funds to external fund managers. According to an MAS survey of 28 statutory boards and GLCs last year, these statutory boards and GLCs (excluding MAS and GIC) had placed out a total of S$4.1 billion as at 30th June 1998 to external fund managers with offices in Singapore.

Mr Chuang Shaw Peng: Can the DPM tell the House what kind of rate of return we are getting for those funds we placed out up to end of 1998?

BG Lee Hsien Loong: It depends.