PURCHASE OF SHIN CORPORATION OF THAILAND (Consideration of political risk)

PURCHASE OF SHIN CORPORATION OF THAILAND

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(Consideration of political risk): **

19.

Mr Low Thia Khiang asked the Prime Minister and Minister for Finance whether political risk was considered by Temasek Holdings in the purchase of Shin Corp of Thailand and, if so, to what extent was the risk weighed.

Mr Lee Hsien Loong: Temasek Holdings has a comprehensive risk management framework to guide its investments. This framework addresses all major categories of investment risk, including

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market risk, credit risk, regulatory risk, operational risk and political risk. Like any professional investor, Temasek will weigh these risks and take up investment opportunities only if the expected returns are commensurate with these risks and meet its investment objectives. This applies to all of Temasek’s investments, including Shin Corp.

Temasek invested in Shin Corp because it saw value in the investment. Temasek has a positive outlook for the region and the communications sector. Shin Corp is a strong player in the Thai market with a capable management team.

As shareholder, the Government’s role is to ensure that Temasek has in place a competent board of directors to guide its investments and a clear set of processes to ensure accountability and rigour in its investment decisions. The Government holds Temasek accountable for delivering a good rate of return on the overall investment portfolio. As we have stated in this House before, it is not in Government’s interest to approve individual investments by Temasek, nor to second guess Temasek’s risk assessments. These are business decisions for Temasek to take.

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