Prime Minister,
Mr Dhanabalan, former Chairman of Temasek,
Mr Lim Boon Heng, Chairman of Temasek,
Distinguished guests, ladies and gentlemen,

I would like to join the Prime Minister in recognizing the remarkable
role played by Mr Dhanabalan at Temasek. His 17-year leadership has
been marked by his clarity of vision and purpose, at a time of major
change and transformation at Temasek. It has also been marked by
Dhana’s deep commitment to the larger good, which PM spoke about, and
which is what his life has been about.

Dhana’s major contribution: sound and effective

2. From the perspective of the shareholder, Dhana’s most important legacy lies in the sound and effective system of governance that he leaves behind at Temasek. He has played a key role, in shaping our thinking on the relationship between Government and Temasek, and in evolving high standards of governance both within Temasek and in its portfolio companies.

3. The governance framework which Dhana helped establish provides for the Temasek Board’s accountability to the Government as shareholder for its long term performance, and for clear ownership of responsibility by Temasek for its investment decisions. Together with the Board and management, Dhana molded an ownership mindset in Temasek – which above all means thinking long term rather than focusing on short-term bets.

4. Almost all of Dhana’s conversations with me as Finance Minister have in fact touched on one aspect or another of corporate governance and responsibility. Dhana has been tireless in his efforts to refresh and renew the Temasek Board on a regular basis, to ensure that it stays effective in guiding the management in new circumstances, and has a diversity of views and expertise including that drawn from international experience.

5. In the same vein, Temasek has focused on promoting sound corporate governance in its portfolio companies. This has included supporting the formation of high calibre, experienced and diverse boards to guide management. Dhana has led this focus, starting as soon as he joined the Temasek Board, knowing well the pressures that the portfolio companies faced in a changing business environment.

6. On its part, the Government’s approach is to ensure that people of sound character and judgment are appointed to the board, to guide Temasek’s management and its strategies. We are careful not to have any role or influence in Temasek’s investment decisions. That has been the right approach for Temasek, which makes commercial assessments without having to second guess whether the Government would agree to its decisions. But it is also right for the Government, which has to avoid being put in a position where it is endorsing or vetoing a deal, or is seen to do so.

7. This alignment in our thinking on the governance of Temasek remains an important advantage for the future. The Government holds the Board accountable for Temasek’s performance over time. Temasek has the flexibility to seize opportunities when they arise, and to take calculated risks aimed at growing the value of its portfolio over the long term.

8. But it has only been possible for the Government to take this approach because we have people on the Board who are capable, and who can be trusted to work with the management to look after our long term interests: to protect what we have inherited in Temasek, build on it, and pass it on to future generations in better shape than we found it. Without Dhana in Temasek as Chairman, the Government would not have found this confidence.

9. This governance framework is especially important because Temasek operates at the higher end of the risk spectrum of the nation’s reserves. MAS, GIC, and Temasek engage in different investment strategies, and take different degrees of risk. MAS, as a central bank, is the most conservative of the three. GIC together with MAS manages assets that back the Government’s liabilities, such as the government securities issued to the CPF and on the market, which are all guaranteed. GIC is therefore well diversified across asset classes and geographies, but remains relatively conservative. Temasek, as an active, equities-only investor, absorbs higher risks, with the aim of achieving higher returns over time.

10. Temasek’s governance framework has in fact enabled management decisions that have to date produced good returns. They have not only exceeded the returns on the major equity market indices over the long term, and also compared creditably with the performance of private equity firms and other long-term investors.

11. This good performance has reflected two key aspects of growth. First, that of the pool of companies that were transferred from Government to Temasek. Through Temasek’s stewardship, these companies have been transformed. Several were eventually listed and their value unlocked, with Singtel being the largest.

12. However, a larger boost to Temasek’s portfolio has come from its decision in 2002 to step up its direct investments and to start investing outside Singapore. This allowed Temasek has participate more fully in Asia’s growth especially. It came with higher risks. But this newer vintage of investments has contributed most significantly to Temasek’s returns.

Closing Remarks

13. Dhana, in closing, may I as Minister for Finance, thank you for your leadership of Temasek during a period of transformation, and in challenging times. Your personal values and professional principles have shaped the Temasek ethos.

14. I have also been the beneficiary, as someone who entered politics long after you did, of your thoughtful advice and guidance on many other matters to do with Singapore – and always delivered with the humility that we all associate with Dhana.

15. I would finally like to welcome Boon Heng as Temasek’s fourth Chairman. Dhana has set a high water level. But Boon Heng has long and successful experience of dealing with unpredictable currents, and I know he will take Temasek forward capably in these challenging times.