Proposal for GIC to Re-allocate Some Investments to Securities Listed on Singapore Exchange

33 Mr Liang Eng Hwa asked the Prime Minister and Minister for Finance whether the Government will review its investment mandates with GIC to consider the suggestion from some industry players for GIC to allocate part of its investments to securities listed on the Singapore Exchange to revitalise our local stock exchange.

The Second Minister for Finance (Mr Chee Hong Tat) (for the Minister for Finance): Mr Speaker, GIC's mandate is to preserve and enhance the international purchasing power of Singapore's reserves. That means two things.

First, to enhance the value of Singapore's Reserves, GIC's investment decisions aim to achieve good long-term returns for Singapore. That remains GIC's main focus. GIC must therefore continue to make professional investment decisions and the Government should not direct or interfere with GIC's investment decisions.

Second, to preserve the international purchasing power of the Reserves, especially for crisis needs, GIC invests in a globally diversified portfolio that reflects the availability and attractiveness of global investment opportunities and asset classes.

The Government will continue to find ways to improve the attractiveness of our local equity market, but directing GIC to invest in locally listed companies is not the solution. Doing so will compromise our objectives for setting up GIC, which is not beneficial for Singapore and Singaporeans. Under our current arrangements, GIC can already invest in appropriate Singapore companies if these companies have a global footprint and generate good returns to GIC's portfolio.

Sir, a more sustainable way to develop the local equity market is to first have a pipeline of good companies to list on the Singapore Exchange (SGX). In addition to anchoring international enterprises which bring new ideas, technology and good jobs, we will continue to groom and develop local companies. Some of these companies will have the potential to list locally. In 2022, we established funds to support growth enterprises and prepare them for Initial Public Offerings (IPOs) here in Singapore when the opportunity arises, such as the Anchor Fund @ 65. These funds have invested in nine companies to date and they are working closely with the portfolio companies to prepare them for IPO on the SGX.

Another priority is to help more companies which are listed on the SGX to grow their operations and expand into overseas markets. By becoming globally competitive and having a larger international presence, these companies would become more attractive to global investors. We have implemented schemes to support business innovation, transformation and internationalisation to help Singapore-based companies develop their capabilities.

Sir, the Government remains open to new ideas and measures to improve our equity market and support business growth. We will continue to work with industry stakeholders on this goal.

Mr Speaker: Mr Liang.

Mr Liang Eng Hwa (Bukit Panjang): Thank you, Sir. Let me first declare that I work in a financial institution. I thank the Minister for his reply, which further clarifies the position of GIC's investment mandates.

I do agree with the Minister that we should not compromise on delivering returns and to achieve the best Net Investment Returns Contribution for the country. But having said that, I would still nevertheless like to ask the Second Minister how our very own investment agencies like GIC, Temasek, the Monetary Authority of Singapore, can help strengthen our status as a premier international financial centre, given the scale that they have, as well as the sophistication in terms of the scope of investments.

Mr Chee Hong Tat: Mr Speaker, I thank Mr Liang for his supplementary questions. I think I would like to respond in two parts.

First is to say that Singapore's financial sector, as a whole, is doing well. The local equity market is, of course, one part of it. But Singapore continues to be an important pan-Asian gateway for capital formation and intermediation.

And this includes foreign exchange – we are the largest foreign exchange centre in Asia Pacific. We have almost US$1 trillion in foreign exchange traded daily in Singapore.

Wealth and asset management. Singapore is a developed pan-Asian asset management centre, with over 1,100 asset managers and over S$4.9 trillion of assets under management.

Fixed income. Our bond market has grown significantly in recent years, reaching $512 billion in 2022, with foreign issuers making up half the issuance volumes. SGX is also one of the largest bond listing venues in Asia.

And, of course, a new area that we are going into, is sustainability. We are a leader in sustainable finance in the region, accounting for over 60% of cumulative sustainable bonds and loans issuance in ASEAN in 2022.

Having said that, we do recognise that for the local equity market, more can be done to grow this segment. We are working closely with the industry to look at what is the best way to do this.

There are different ways to achieve this goal, including what I mentioned in my main reply: working with companies, grooming local companies that are able to go IPO and list here in Singapore. Existing companies that are already listed on the SGX but helping them to grow their presence, to grow their operations because when you expand overseas, global investors, including institutional investors then become more interested in doing research and investing in this company, and I think that will help to increase the amount of activity and liquidity here in Singapore.

For the Government's investment entities, like Temasek, GIC, they do invest locally, but I think there is a difference between asking them to make those investment decisions based on returns and what is in the best interests for shareholders, for Singaporeans ultimately, versus we give them a directive to invest locally.

Mr Speaker: Mr Leong.

Mr Leong Mun Wai (Non-Constituency Member): Thank you, Speaker. I have one question for the Minister. Given that a vibrant local equity market is an integral part of an innovative economy. Over the last 20 years, actually, the equity markets in Singapore have been on a steady decline, in terms of the number of IPOs that have come onto the market, the liquidity and all that.

So, does the Government plan to have an integrated plan on reviving our local equity market? Is there a plan that the Government has in mind?

Mr Chee Hong Tat: Mr Speaker, I thank Mr Leong for raising his question. Indeed, as I mentioned earlier, we do want to look for ways to grow our local equity market. This is an important part of our overall economy. It would not only help to support our local companies who want to list and expand. It will also be an important contribution to our status as a financial centre.

Indeed, we have plans to work with industry partners to see how we can do this. As I mentioned earlier in my response to Mr Liang, there are different ways to achieve this goal and some, I think, are more viable, more sustainable than others.

Mr Speaker: Mr Leong.

Mr Leong Mun Wai: Thank you, Speaker. Sorry, one more supplementary question. But I think what we need is that the local equity market, in a way, there has not been an integrated effort to promote the market. So, now, I think we have reached a stage whereby I think we should be paying more attention to it. So, what I am asking is that, does the Government have a very definite integrated plan and does the Government feel the urgency now to give priority to promoting our local capital market?

I think from what the Minister have said just now: you are doing this, you are doing that. But I think there ought to be a new emphasis. And I think a lot of the market participants have actually voiced these concerns to the Government for many years already.

Mr Chee Hong Tat: Mr Speaker, I am not sure which part of my replies earlier gave Mr Leong the impression that we are not taking this seriously or with urgency. I mentioned several times that we are taking a look, working with industry players to see how we can do better. I mentioned a couple of times that growing the local equity market is an important priority for us. So, I hope that there is no misunderstanding on that front.

I do not disagree with Mr Leong that this is something we want to do better. But as I mentioned, there are different ways to achieve the goal. Some ways are more appropriate, some ways are more sustainable. I think we need to look for what are those levers that will allow us to achieve that outcome.