Debated in Parliament on 5 Jun 2020.
Mr Leon Perera asked the Deputy Prime Minister and Minister for Finance (a) whether the Government is involved in, or prescribes any rules for, loans being given by Temasek Holdings, GIC or their subsidiary companies to large corporations or other kinds of entities; (b) if so, how much of these loans are made to companies which Temasek Holdings or GIC has existing investments in compared to other entities which they do not have existing investments in; and (c) whether the President's concurrence is required for the extension of loans by GIC or Temasek Holdings that are above a certain proportion of their total assets.
GIC and Temasek invest using a variety of instruments, including equity and debt. There is a range of debt instruments, including bonds and loans, with different structures, such as a mezzanine or preferred instrument, depending on the capital structure of the investee company.
GIC and Temasek can and do provide loans, where the loans are provided in the investment context. However, they do not provide the same loans as banks or finance companies do, that is to say, they do not provide mortgage loans or working capital loans which banks provide.
The Government does not direct GIC’s and Temasek’s individual investment decisions, including decisions as to whether, when or in whom to invest in a loan. The President’s concurrence is not needed for investment decisions by GIC or Temasek. Instead, the Government holds the Boards of GIC and Temasek accountable for their overall performance. The Government ensures that GIC and Temasek have competent Boards, and such appointments are subject to the President’s concurrence.
Mr Leon Perera.
Mr Deputy Speaker, I have just one supplementary question. This question is in the context of our sovereign wealth funds when they provide a rescue package, be it through loans or other instruments, to help to support the viability of some companies but not others. That sometimes creates a question among some members of the public and they ask how are these decisions made that certain companies obtain this kind of support and other companies do not.
So, as a general principle, given that these are public funds, is there any way that the public can have some transparency about the thinking behind these probably quite significant decisions which may continue to happen as this crisis winds its way forward?
I thank the Member for his question. The way the Member has phrased the question, which is when they provide a rescue package to support viability, that is a wrong assumption. The parameters are, as I have laid out before, GIC and Temasek primarily invest, and they invest our Reserves, and their mandate is to act within their investment policies to get the returns that they can, that we are then able to use in various ways, as we have seen.
So, they operate in the context of investment. They do not do business the way banks do, or other kinds of entities who may look to do rescuing just in the context of rescuing. As I have explained before, they do it in the investment context, and that is very well known. The framework within which they operate is well known. The commercial principles – and these are all commercial decisions – these are decisions that are taken by their professionals which are employed by GIC and Temasek. So, there is actually no difference with what they actually do, or loans made in the investment context.
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