Singapore PM Lee urges US to be open to overseas investments
By Yang Huiwen
PRIME Minister Lee Hsien Loong yesterday urged the United States to regard investments from overseas as a positive factor and not a threat.
The US shoud resist adopting the kind of xenophobic attitudes that could scare off foreign investors, he said.
The PM’s comments came during a question-and-answer session with Mr Steve Forbes, the chief executive officer (CEO) of Forbes and the driving force behind the annual Forbes Global CEO Conference being held at Shangri-La Hotel this week.
Mr Forbes said sovereign wealth funds (SWFs) were ‘one of the things Singapore pioneered’, and asked Mr Lee how the US and foreign funds should operate in order to not trigger a political backlash.
Mr Lee told the 450-strong audience that the US ’should treat this with some equanimity’. ‘(America’s) challenge is not sovereign wealth funds per se, it is how to keep the economy open and yet have adequate safeguards to cater to security concerns for foreign investments whether by sovereign wealth funds or other companies which may want to buy your companies from abroad.’
He also pointed out that foreign entities like United Arab Emirates-based Dubai Ports World and the Russian company Gazprom are conventional companies and not SWFs, he said.
‘Its about keeping the economy open, yet have adequate safeguards to cater to foreign investors,’ added Mr Lee.
A year ago, the administration of US President George W. Bush stepped up its vetting of foreign transactions that were deemed to affect national security. Mr Bush also signed into law a Bill that would boost oversight of acquisitions of US companies by foreign firms.
Mr Lee also reiterated that Singapore’s two state-owned investment firms - Government of Singapore Investment Corporation (GIC) and Temasek Holdings - make portfolio decisions without a political agenda or non-commercial objectives.
They have a clear mandate, which is to ‘maximise the long-term risk-adjusted returns of the portfolio’, he said.
GIC has invested about US$18 billion (S$25 billion) in beleaguered US banking giant Citigroup as well as Swiss bank UBS in the past year. Both have been hard hit by the collapse of housing-related debt.
Similarly, Temasek has invested US$5.9 billion in Merrill Lynch since Dec 24 and in August received the nod to further increase its stake in the banking giant.
On whether there will be further tightening of financial regulation given the events unfolding in the US, Mr Lee said that there is a need to ‘find the balance’ in banking and financial regulations, and the regulators will always be ‘behind the game’ as new instruments and new ways of doing business are invented.
He added: ‘Our challenge is not just how we regulate our own banks; that’s not so very hard because there are only three. Our challenge is that the big part of our banking system is connected with the rest of the world and all the big banks are here.
‘So if they go sick not because of us but because of what happens elsewhere, that’s going to have a big impact on our financial system and on our economy and that’s another set of cards we have been dealt which we have not that much say about.’
Source : Straits Times - 10 Sept 2008
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