KEY ISSUE: Mrs Lim stressed that GIC and Temasek operate independently of each other and the Government. -- BT FILE PHOTO

This document will elaborate on the GIC's processes, its investment aims and its corporate governance structures, said Minister of State for Finance Lim Hwee Hua.

It will however not disclose the size of the Government's reserves.

Speaking in Parliament during debate on her ministry's budget, she said the international discussion that has been raging over sovereign wealth funds (SWFs) relates less to the size of funds and more to the demonstration of commercial orientation.

Mrs Lim was responding to questions from Mr Inderjit Singh (Ang Mo Kio GRC) and Non-Constituency MP Sylvia Lim, who asked if the Finance Ministry could do more in managing the funds to protect Singapore's reserves.

Ms Lim also wanted the minister to elaborate on details of the funds that it might eventually disclose.

Both the GIC and Temasek Holdings have been in the media spotlight after buying big stakes in financial giants hit by sub-prime woes, including Citigroup, Merrill Lynch and UBS.

Mr Singh wondered if the two investment outfits had become 'too heavily invested' in the financial sector after their recent acquisitions. Why not invest in agricultural-type companies, considering commodities or food prices will continue to rise, he asked.

'My point is that some rationalisation needs to be made for both GIC and Temasek to have some coordinated pattern of investment,' said Mr Singh.

Mrs Lim said it was critical that the two funds remain strictly independent of each other. They make their own decisions, she said.

Replying to Mr Singh's suggestion that Singapore take a leadership role in the SWF debate, Mrs Lim noted that the Finance Ministry, GIC and Temasek were indeed actively engaged in talks with investment-recipient countries, including the United States where the SWF debate is most prominent.

She also said that Mr Edwin Truman, a prominent American economist with an interest in SWFs, has been seeking Singapore's inputs on the subject.

Mr Truman, a former US Federal Reserve and Treasury official, has urged SWFs to adopt a wide-ranging code of best practice. He also created the first 'scorecard' for such funds.

The Finance Ministry recently disclosed that it had met US Treasury officials in Abu Dhabi to discuss draft rules governing SWFs.

A key issue was a proposed commitment that SWFs invest outside their home countries based on commercial, not political, motivation.

Mrs Lim yesterday stressed that GIC and Temasek operate independently of each other and of the Government.

Their performance is monitored based on the overall returns of their portfolio, she said. As long-term investors, they can take calculated risks in the short to medium-term, said the minister.

A different issue raised by MPs concerned government tenders handled by the Finance Ministry. Did the Government tend to 'award contracts to the lowest bidder when outsourcing projects?' asked Mr Singh.

The Government, she replied, is mindful not to turn 'best' outsourcing into 'cheap' outsourcing. About a third of government tenders last year were not awarded to the lowest bidders, she said.

Gains were also achieved through outsourcing non-strategic functions such as carpark enforcement by the Urban Redevelopment Authority and HDB. This has yielded annual savings of $3.8 million, she said.

joyceteo@sph.com.sg

Finance Ministry