The strategy aims to steer clear of nationalist obstacles when investing abroad, said its chairman S. Dhanabalan in an interview with The Straits Times.

First, Temasek will try to avoid buying over or taking a controlling stake in companies with 'iconic' value to a country.

'In every country, whether it is in Asia or Europe, there is an increasing tide of nationalism.

'So when we want to invest in these countries, we've got to take various factors into account, such as whether the company or the activity is iconic for that country, whether it will arouse all kinds of emotional sentiments.'

Second rule: look for good local partners to invest with.

And third, opt for a minority stake if investing in a company from a sensitive industry, or in an iconic firm.

'If we can invest in a good growing company which we can help grow further but not take a major stake, just a significant minority stake, we should do that.'

In any case, he added, even a small stake in very large companies amounted to significant investments.

'We need to be careful in how we structure our investments.'

Mr Dhanabalan was speaking ahead of a seminar that is part of a series on pioneering economic policymakers.

The series was launched in August, featuring Minister Mentor Lee Kuan Yew.

Organised by the EDB Society and The Straits Times, the next seminar, with Mr Dhanabalan, will be on Dec 11.

During the interview, the former Cabinet minister said that Temasek would also try to differentiate itself from other sovereign wealth funds by upholding high standards of transparency and corporate governance.

In recent months, a growing chorus of complaints has arisen about such funds.

There have been calls for these funds to be more transparent, and calls to stop them from buying a nation's strategic assets.

Temasek itself has been embroiled in legal tangles for some regional investments.

This week, an Indonesian watchdog ruled that it had violated anti-monopoly laws due to its indirect stakes in top telecommunications companies Indosat and Telkomsel.

Temasek has vowed to fight the ruling, saying, among other things, that the deals had been approved by the Indonesian government.

The case is being closely watched by analysts and investors concerned about the risks of doing business in Indonesia.

Mr Dhanabalan did not comment directly on the Indonesian investment.

But he was candid in discussing the January 2006 purchase of a stake in Thailand's telecommunications giant Shin Corp, owned by the family of the then-prime minister Thaksin Shinawatra.

On whether Temasek performed sufficient due diligence, especially in assessing political risk, he said: 'This is a big investment. It came to the board, the executive committee, everything. We discussed at many meetings, all the pros and cons, all the downside, upside, all were discussed.'

He added: 'We talked to many people and we got even blueblood Thai institutions like Siam Commercial Bank to become a minor partner with us.

'And everybody that we spoke to, who were very closely connected with the government and all the other institutions in Thailand, told us it's an excellent idea because it will take the prime minister out of business, he can focus on politics. So nobody anticipated that what happened would happen.'

The deal aggravated ongoing street protests in Thailand and deepened a political crisis that saw Mr Thaksin ousted in a coup in September last year.

Mr Dhanabalan reiterated a point made by the Finance Ministry, that the purchase of Shin was 'absolutely the right decision' with all the known information at the time.