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Wednesday July 12, 10:17 PMMM Lee clarifies GIC's earnings not linked to CPF interest ratesMinister Mentor Lee Kuan Yew has clarified that GIC's earnings are not connected to the interest paid on CPF accounts.He was speaking at GIC's 25th anniversary dinner at the Ritz Carlton. The Government of Singapore Investment Corporation (GIC) is a global investment management company established to manage Singapore's foreign reserves. MM Lee said that the GIC invests the government's reserves abroad in assets which carry higher risks like equities, bonds, real estate. Therefore these are expected to earn higher returns on average over the long term. The returns are not related to CPF investments. "The CPF invests members' savings only in absolutely risk-free Singapore government bonds," MM Lee said. "CPF members are paid market-related interest rates based on the 12-month fixed deposit rates and the savings account interest rates of the major Singapore banks, subject to a floor," he said. "CPF members who are willing to accept higher risks for higher returns have many channels to do so on their own through the CPFIS scheme," he added. Mr Lee said that the GIC has significantly enhanced the value of Singapore's savings. But the growth of China and India will present more opportunities in the future. So he feels that the GIC needs to continue to build up the quality of people as one of its success factors. But it is not just about retaining home-grown talent. "We need to create an environment where professionals can be deployed where they can best exercise their skills and maximise their contribution," MM Lee said. "As a global investor operating in many asset classes across 40 countries, GIC can offer abundant opportunities for exceptional professional growth and experience," he added. Mr Lee also said that the training opportunity and exposure at GIC are probably unmatched among large investment firms in Asia. He hopes that the professionals will view their work at GIC as a long-term career. Over 25 years, GIC has grown to an outfit that invests in over 40 countries through nine asset classes, handling over a hundred billion dollars. And its track record has been good. Over a period of 25 years to March 2006, the annual rate of return on the foreign reserves managed by GIC averaged 9.5 percent in US dollar terms, and 8.2 percent in Singapore dollar terms. The average rate of return over global inflation was 5.3 percent per annum. |
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