OVERSEAS INVESTMENTS OF GOVERNMENT AND GOVERNMENT-LINKED ORGANISATIONS (Performance)

Dr S. Vasoo (Tanjong Pagar): Sir, may I ask the Minister whether there are any changes in Government policies in relation to the sale of Government-linked companies?

Dr Richard Hu Tsu Tau: We have announced that it is our policy to try and divest as much as possible of Government's holdings in established companies which are ready to be sold to the public. Generally, the preferred way of doing this is through the public listing of shares. I do not think we have deviated from this policy for many years. The problem is that some of these companies are so large that placing of the shares in large amounts would destabilise the market. So we have to do it gradually. I do not think there is any change from our traditional policy.

Mr Thomas Thomas asked the Minister for Finance if he will give an evaluation of the performance of overseas investments made by Government and Government-linked organisations, particularly its performance since the 1997 Asian currency crisis.

Dr Richard Hu Tsu Tau: Mr Speaker, Sir, the Government's overseas investments are managed by the Government of Singapore Investment Corporation or GIC. As Mr J B Jeyaretnam has raised a query on GIC in Question No. 11, I suggest Mr Thomas Thomas awaits Government's response later in Question Time.

As to the GLCs overseen by Temasek Holdings, most of the larger companies would have made investments overseas in order to seek growth outside the constraints of the small Singapore market. Several are publicly listed companies and their overseas investments have been well publicised.

As I have explained in my response to the questions on SingTel's and DBS Bank's acquisitions, the GLCs operate strictly on a commercial basis. The Government does not interfere in their business decisions, which are the responsibility of their boards of directors. Not all overseas investments will yield immediate benefits but it is a direction which all the larger GLCs will have to take if they are to participate in an increasingly globalised economy.

Mr Thomas Thomas (Nominated Member): Could the Minister also try and explain the impact the performance of our foreign reserves, including Government-linked companies, have on Central Provident Fund balances and holdings?

Dr Richard Hu Tsu Tau: The CPF balances are managed by the Government through a mechanism in which the net surpluses of the CPF are acquired by Government through the issue of long-term Government bonds to the CPF Board. These long-term Government bonds guarantee an interest yield to CPF which is then passed on through their internal mechanism to CPF members.

The Government investments, which will be clarified later on, have been profitable over the years and I think this is clearly reflected in the substantial increase in the total size of our reserves over the last 10-20 years. So there is no risk whatsoever that any single and relatively small investment setback encountered by a particular GLC would have any impact whatsoever on the viability of CPF funds. This is quite assured.