The Government of Singapore Investment Corporation (GIC) which manages the city-states reserves has for the first time announced how its massive foreign investments have performed.

“GIC has made an annual return averaging 9.5 percent in US dollar terms over the past 25 years to March 2006 since its establishment in 1981.In real terms, adjusted for inflation, the rate of return was 5.3 percent a year, “GIC has fulfilled its mandate of preserving the international purchasing power of our reserves,” Lee, 82, said in a speech to mark the investment agency’s 25th anniversary. He also said that in Singapore dollar terms, the average annual rate of return was 8.2 percent, while the return over global inflation was 5.3 percent a year”

Why is the news so startling?

The main reason being the public never really know much about its financial performance. Incidentally, this secretive agency which says it aims “to achieve good long-term returns…to preserve and enhance Singapore’s reserves”, rarely discloses its investments. Its financial statements and investment returns are not open to the public.

Hence, the disclosure of GIC’s performance is a major turnaround from the government’s long-standing position that it is in the national interest not to release such details publicly. The reason given by the government previously to withhold the details of GIC’s investments is to protect the Singapore dollar from speculative attacks.
For those who would like to have a little bit of history of GIC development:

• The GIC was founded in 1981 with assets of less than S$10 billion ($6.4 billion) and invests in equities, fixed income, foreign exchange, commodities, money markets, alternative investments, real estate, private equity and special projects and assets worldwide.
• GIC manages the country’s foreign exchange reserves while Temasek is a holding company with interests in a diverse range of local and overseas firms. GIC and Temasek Holdings are the government’s two investment vehicles;
• Chairman of GIC is Mr. Lee Kuan Yew, 82, Singapore’s founding father and former prime minister & his oldest son, prime minister and finance minister Lee Hsien Loong, also sits on GIC’s board;
• Among GIC’s landmark assets are the AT and T Corporate Center in Chicago, the Shiodome City Center in Tokyo and the Seoul Finance Center in the South Korean capital;
• Starting with several billion dollars in 1981, GIC now manages more than 100 billion US dollars with investments in stocks, bonds and properties, among other things
• Looking ahead, GIC expects to shift its investment focus towards the region’s emerging markets including China and India, while extending the portfolio to non-Asian markets including Russia, South Africa and Brazil.

Bravo! First, the disclosure of the exact salary of the top five(5) earners in SingTel, next is the announcement on GIC. With more of these disclosures, this definitely will give a boost to clearer transparency and good corporate governance.