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Temasek (company)

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Temasek Holdings
Company typeGovernment-owned company
IndustryInvestment services
Founded1975
HeadquartersSingapore
Key people
S Dhanabalan, Chairman
Ho Ching, CEO
ProductsN/A
RevenueIncrease $83.284 billion SGD (2008)
Increase $22.474 billion SGD (2008)
Websitewww.temasekholdings.com.sg

Temasek Holdings is an investment company owned by the government of Singapore. With a multinational staff of more than 300 people, it manages a portfolio of about S$185 billion, or more than US$127 billion, focused primarily in Asia. It is an active shareholder and investor in such sectors as banking & financial services, real estate, transportation & logistics, infrastructure, telecommunications & media, bioscience & healthcare, education, consumer & lifestyle, engineering & technology, as well as energy & resources. In 2008, The Economist reported that Morgan Stanley had estimated the fund's assets at US$159.2 billion[1].

The company announced in 2008 that it is not a sovereign wealth fund, with its spokesman saying the company "has to sell assets to raise cash for new investments and doesn't require the government to give approvals"[2]. Temasek was excluded from an agreement between Singapore and the United States requiring greater disclosure and transparency in transactions involving sovereign wealth funds, which included the Government of Singapore Investment Corporation (GIC), claiming it "already meets disclosure guidelines" and provides more details than sovereign wealth funds.

The company, along with its sister fund GIC (the Singapore government's second sovereign wealth fund), has sought to distance itself in recent years from questionable business investments such as oil sector investments in Africa (Sudan in particular) and plantation investments in Indonesia (responsible for significant deforestation). The company shares in common with the Singapore national government a high focus on managing public perceptions of its activities.[citation needed]

History

In the early 1960s, the Singapore government took stakes in a variety of local companies, in sectors such as manufacturing and shipbuilding. Prior to the incorporation of Temasek Holdings in 1974, these stakes were held by the Ministry of Finance (the Ministry remains Temasek's sole shareholder).

In addition to Temasek, the Government of Singapore has another investment arm, the Government Investment Corporation (GIC), which invests primarily the government's foreign reserves.

Ho Ching was appointed executive director of Temasek Holdings in 2002. She is the second wife of Lee Hsien Loong, who became Prime Minister of Singapore in 2004.

On 5 March 2008, Simon Claude Israel, Temasek Holdings’ executive director, appeared in the US House of Representatives before a joint sub-committee of the House Financial Services Committee in a hearing related to foreign government investments in the United States[3].

Investments

Main article: Temasek Holdings' investments

As of 2004, it owns stakes in many of Singapore's largest companies, such as SingTel, DBS Bank, Singapore Airlines, PSA International, SMRT Corporation, Singapore Power and Neptune Orient Lines. It also holds investments in public icons like the Raffles Hotel and the Singapore Zoo. It also holds a stake in Singapore Pools, the only legal betting company in Singapore. On October 14, 2004, it announced that it was closing the operational headquarters of Singapore Technologies and transferring the latter's assets to itself.

About half of its managed assets are external to Singapore and this includes stakes in telecommunication companies such as Telekom Malaysia. It has also taken up stakes in foreign financial institutions such as PT Bank Danamon in Indonesia and NIB Bank in Pakistan. Temasek-linked companies (TLCs) also hold an extensive global portfolio, such as SingTel's ownership of Australian telco Optus, and Singapore Airlines' 49% stake in Virgin Atlantic.

Although 75% of Temasek's holdings is in Singapore, it has set a target of eventually reducing this to only one-third. Another one-third will be in developed markets and the final third is planned for investment in developing economies.

Now Temasek Holdings is set to enter the NBFC market in India and is aiming SME and direct to consumer credits. Temasek has already started an office in Mumbai by floating its wholly owned subsidiary named First India Credit Ltd.

Earnings

2004

  • To satisfy the legal requirements in issuing bonds to raise money from the public, Temasek reported its accounts to the public for the first time in its 30-year history on October 12 2004. Net profit was S$7.4 billion (US$4.4 billion) on revenues of S$56.5 billion for the financial year closing on March 2004. Its 2003 profit was S$241 million on revenues of S$49.65 billion in the previous financial year, while its 2002 profit was S$4.92 billion on revenues of S$42.56 billion.
  • The 2004 report states that Temasek manages S$90 billion in assets. This represents an average total shareholder return of 18% year-on-year since 1974. This single year return was quite controversial as the average return over its 30-year history is only around 3%[citation needed], far below the industry average. Government Linked Companies lack transparency, for example Temasek had never opened its books until 2005. Standard & Poor's assigning Temasek Holdings a AAA credit rating for "the best companies". At the time of this report, the various Temasek holdings held one-third of Singapore's stock market capitalization between them.

Controversy

Temasek is an arm of the Singapore government and owned 100% by the Ministry of Finance, and these close links to the government have on several occasions caused protests in foreign countries.

When ST Telmedia, a TLC, took a significant stake in Indonesian Indosat, workers went on strike to protest working for Singapore. In 2003, when ST Telemedia acquired a two-third share of computer networking telco Global Crossing, the acquisition had to be approved by the U.S. government to ensure a foreign government did not control the extensive network. Moreover, it is said that Temasek has been trying to take control of major competitors in other countries for the sake of Singapore's economy.

Main article: Thaksin Shinawatra $1.88 billion deal controversy

Temasek's 2006 acquisition of Shin Corporation, owned by the family of then Thai prime minister Thaksin Shinawatra, was particularly controversial, with protestors burning effigies of Lee and Ho in the streets of Bangkok.[4] The deal was a factor in exacerbating the Thai political crisis, which eventually led to the downfall of Thaksin and a review of the transaction's legality. The military junta that overthrew Thaksin later forced Temasek to divest the majority of its investment in Shin Corp.[5]

Temasek is cited by journalist Eric Ellis as being central to the Singaporean support for the Burmese military dictatorship.[6] However, Singapore's High Commissioner to Australia has issued a response denying these claims.[7]

References

  1. ^ "Asset-backed insecurity". The Economist. 2008-01-17.
  2. ^ http://www.straitstimes.com/Free/Story/STIStory_219340.html
  3. ^ http://www.house.gov/apps/list/hearing/financialsvcs_dem/israel030508.pdf
  4. ^ Thailand: Protesters burn images of Lee, wife. Bangkok Post, March 18, 2006.
  5. ^ Asia Sentinel, Thailand Moves Against Foreign Firms, 10 January 2007
  6. ^ The Age, Web of Cash, Power and Cronies, 28 September 2007
  7. ^ The Age, Singapore Responds,29 September 2007
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