In 1981, Singapore’s then deputy prime minister Dr Goh Keng Swee, so frugal he washed his own underwear while travelling, was unhappy with his allocated room at London’s Hyde Park Hotel.
GIC is an investment colossus. It does not reveal the extent of funds under management. Estimates vary between $US550 billion and $US744 billion. By all counts, it is among the top 10 sovereign wealth funds worldwide. In the last two years, it has announced budget assistance packages of more than $S100 billion and the expected draw on reserves over that period will be $S53.7 billion, 10 times the amount tapped during the global financial crisis.
The book details how Lee was initially reluctant to take on the role of chairman of the nascent GIC but was persuaded by Goh, the architect of the young nation’s monetary policy who went on to become the driving force behind GIC. Excerpts of letters from both sides reveal not just the facts but also the tenor of those discussions. Similarly, the reproduction of typed – of course – correspondence between British and Singapore officials brings a human dimension to the drawn-out demise of the “sterling area”, a time when the currencies of Malaysia, Singapore, Australia and other former colonies were pegged to the British pound.
Occasionally, this meant ignoring well-meaning advice. That happened in 1967, when the IMF recommended the adoption of a central bank system. Singapore listened politely and then did what it wanted to, which was establish a currency board instead.This was broadly how Britain had secured the value of currencies in its colonies, by ensuring they were all backed by reserves in London.
Singapore, he believed was likely to be an economy that lived within its means. Indeed, he sometimes used the term “chronic surplus” to describe a country where the national savings rate generally ranges between 35 per cent and 40 per cent of GDP.So, he reasoned, the country’s reserves could serve a dual purpose – one pot, or portfolio, to manage the exchange rate and back the Singapore dollar and another second portion that could be invested for capital appreciation.
A great read