Temasek Holdings

Background

Temasek Holdings is an investment holding company incorporated on 25 June 1974 under the Singapore Companies Act to manage the Singapore government’s investments in government-linked companies (GLCs).¹ Headquartered in Singapore, the company covers a broad spectrum of investments in industries such as financial services, telecommunications, media and technology, transportation, consumer and real estate, life sciences and agribusiness, energy and resources.²

Overview
As a key institution in Singapore, Temasek is designated as a Fifth Schedule entity under the Singapore Constitution and is required to follow, by law, the safeguards pertaining to its past reserves and the appointment of its board of directors.³

Under the Singapore Constitution, a draw of past reserves accumulated from the previous term of government is subjected to approval by the President of Singapore. Other institutions in the Fifth Schedule include GIC Pte Ltd and the Monetary Authority of Singapore.⁴

By March 2018, Temasek had a S$308 billion portfolio, with assets mainly in Singapore and Asia.⁵ Since 2004, Temasek has had an overall credit rating of AAA/Aaa from rating agencies S&P Global Ratings and Moody’s Investors Service respectively.⁶

Temasek is commonly referred to as a sovereign wealth fund by international media.⁷ However, it regards itself as a commercial investment holding company instead, where the company owns its assets outright, pays taxes and distributes dividends.⁸ Although wholly owned by the state, the government does not direct Temasek’s investment decisions.⁹

History
In 1959, a statutory board, Minister for Finance Incorporated (MFF Inc), was set up by the newly elected People’s Action Party to invest government funds in a host of companies. This was done to stimulate investments and ensure that the necessary infrastructure industries were in place. The investments ranged from steel mills to shipyards, food industries and engineering services.¹⁰

As the scale and scope of the investments grew, Temasek Holdings was formed to manage these investments as a commercial entity. On 28 January 1975, the assets of MFF Inc were transferred to Temasek in exchange for 21 million shares – the entire issued capital of the new holding company.¹¹ The initial portfolio of S$354 million comprised shares in 35 companies, startups and joint ventures previously held by the government.¹²

Portfolio of companies
In its early years, Temasek held controlling interests in 35 original investments in Singapore companies including Neptune Orient Lines, Keppel Shipyard, Sembawang Holdings, the Development Bank of Singapore, Jurong Bird Park, Singapore National Printers, and Singapore Airlines.¹³ 

As a private company, Temasek is not required to disclose its financial figures to the public. However, to “demystify Temasek and to be more transparent”, the company released publicly its first annual performance report in 2004 and continues to do so.¹⁴

In 2017, 11 of the original investments were retained while the rest were divested or liquidated.¹⁵

Divestments from companies
In 2002, Temasek unveiled its charter, which set out its role and the types of investment it would hold or divest, according to its definition of critical resources to hold or companies that could succeed regionally or internationally and could be divested.¹⁶

The decision to divest was in line with the government’s direction.¹⁷ In presenting the recommendations of the Entrepreneurship and Internationalisation Sub-Committee (EISC), the chairman of the committee, Raymond Lim, noted that Temasek should exit any business that could not be more than domestically competitive.¹⁸

Lim’s remark resonated with an earlier government-directed review that recommended Temasek Holdings reduce its stakes in the GLCs. The Public Sector Divestment Committee, formed in 1986 under the instruction of then Finance Minister Richard Hu, was tasked to formulate a programme for the divestment of GLCs. The committee recommended Temasek Holdings reduce its stake in some companies, including Singapore Airlines, the Development Bank of Singapore, Keppel Corporation, Sembawang Shipyard, and Neptune Orient Lines.¹⁹

Key personnel
S. Dhanabalan: Dhanabalan became chairman of Temasek Holdings in 1996.²⁰ In July 2013, he announced his retirement from Temasek Holdings. At the time of his retirement, Dhanabalan, having helmed the Temasek Board for 17 years, was the longest serving chairman of Temasek Holdings.²¹

Lim Boon Heng: Lim succeeded Dhanabalan as chairman of Temasek Holdings with effect from 1 August 2013.²²

Chua Yong Hai: Formerly the deputy secretary of the Ministry of Trade and Industry, Chua was seconded to Temasek Holdings as its first general manager in September 1979.²³

Lum Choong Wah: Lum took over from Chua in 1982 and held office until 1995.²⁴

Quek Poh Huat: Quek, who was previously with Singapore Technologies, was appointed the president of Temasek in 1995.²⁵

Ho Ching: The wife of current Prime Minister Lee Hsien Loong, Ho was appointed as the company’s executive director on 1 May 2002, and has served concurrently as chief executive officer (CEO) since 2004. During her tenure, she unveiled the first Temasek Charter in 2002.²⁶ Over the next two years following the unveiling of the charter, Temasek divested key investments including NatSteel, and reduced stakes in Singapore Telecoms, Singapore Post and Hyflux.²⁷

Controversies
The appointment of Ho Ching as executive director of Temasek Holdings in 2002 was met with public perceptions of alleged conflict of interest and the involvement of a “Lee family member” to restructure the GLCs.²⁸ S. Dhanabalan (then chairman of Temasek), and then Prime Minister Goh Chok Tong explained on different occasions that Ho had been appointed on the basis of merit, and that she would not be reporting directly to her husband, then DPM Lee, who was also the Finance Minister.²⁹ The issue resurfaced 10 years later, when sociopolitical website TR Emeritus alleged that nepotism was behind Ho’s appointment. The website subsequently removed the post and issued an apology.³⁰

As a wholly state-owned enterprise, Temasek has had to manage suspicions about whether they are controlled by the Singapore government, especially when overseas investments in strategic sectors such as banking or telecommunications are involved.³¹ Temasek’s 2007 acquisition of a 42 percent stake in Shin Corporation from former Thai Prime Minister Thaksin was resented in Thailand for the sale of a “national treasure” that owned substantial broadcasting rights in the country.³² In the same year, Temasek’s investment in Optus, a technology services firm with Australian defence contracts, fuelled political concerns in Australia.³³ Following the global banking crisis that began in late 2008, Temasek sold its stake in Bank of America at a substantial loss over a short period of time. Critics were unconvinced by Temasek’s explanation for its controversial decision in terms of commercial expediency.³⁴

Leadership changes
In 2009, Temasek announced that Ho Ching was stepping down as CEO in favour of Charles "Chip" Goodyear, who was to become Temasek’s first foreign CEO.³⁵ However, Goodyear was subsequently not appointed and Temasek cited “differences regarding strategic issues that could not be resolved”.³⁶

Temasek continued to review suitable candidates. In 2019, it was reported that while Ho Ching would remain as CEO of Temasek Holdings, she would step down as chairman of Temasek International, the wholly owned management and investment arm of Temasek Holdings.³⁷



Author
Lim Puay Ling



References
1. “Frequently Asked Questions,” Temasek Holdings (Private) Limited, accessed 10 January 2018; Temasek Holdings (Private) Limited, “Temasek Review,” 2017, 64.
2. “Corporate Profile,” Temasek Holdings (Private) Limited, accessed 11 March 2017.
3. Temasek Holdings (Private) Limited, “Frequently Asked Questions.”
4. Temasek Holdings (Private) Limited, “Frequently Asked Questions.”
5. Faris Mohktar, “Ho Ching to Step Down as Chairman of Temasek’s Subsidiary,” Today, 19 March 2019. (From Factiva via NLB’s eResources website)
6. Temasek Holdings (Private) Limited, “Corporate Profile.”
7. Wilson Ng, “The Evolution of Sovereign Wealth Funds: Singapore’s Temasek Holdings,” Journal of Financial Regulation and Compliance 18, no. 1 (2010): 6–14. (From JSTOR via NLB’s eResources website)
8. Chia Yan Min, “Temasek’s a ‘One-of-a-Kind Sovereign Wealth Fund’; It Is Not a Govt Fund Manager; It Pays Taxes, Has Equity Focus: Lim Boon Heng,” Straits Times, 6 December 2013, 1. (From NewspaperSG)
9. “Temasek Says It Is Not a Sovereign Fund,” Straits Times, 22 March 2008, 77. (From NewspaperSG)
10. Quek Peck Lim, “Temasek: More Than Meets the Eye,” Business Times, 14 February 1977, 1. (From NewspaperSG)
11. Quek, “More Than Meets the Eye.” 
12. Temasek Holdings (Private) Limited, “Frequently Asked Questions.”
13. Temasek Holdings (Private) Limited, “Temasek Review,” 100.
14. Edna Koh, “Temasek to Make Annual Report Public,” Straits Times, 24 March 2004, 18. (From NewspaperSG)
15. Temasek Holdings (Private) Limited, “Temasek Review,” 8, 100.
16. Ignatius Low, “Temasek Sharpens Its Focus,” Straits Times, 4 July 2002, 1. (From NewspaperSG)
17. Ignatius Low and Alvin Foo, “Divestment Now Just an Option,” Straits Times, 29 August 2009, 10. (From NewspaperSG)
18. “The Surest Way to Shut Up Critics Is to Open Up,” Straits Times, 2 July 2002, 14. (From NewspaperSG)
19. Public Sector Divestment Committee, Singapore, Report of the Public Sector Divestment Committee (Singapore: Singapore National Printers, 1987), 38. (Call no. RSING 338.74095957 SIN)
20. “Our Leadership,” Temasek Holdings (Private) Limited, accessed 25 April 2019.
21. Robin Chan, “Steadfast Leader in the Face of Challenges,” Straits Times, 23 July 2013, 6. (From NewspaperSG)
22. Ministry of Finance, Singapore, “Appointment of Chairman for Temasek Holdings,” press release, 22 July 2013; Temasek Holdings (Private) Limited, “Our Leadership.”
23. “Temasek’s First GM Is a Top Ministry Official,” Straits Times, 4 September 1979, 12 (From NewspaperSG)
24. “Lum to Give Up Post in Finance Ministry,” Straits Times, 1 December 1982, 11; Schutz Lee, “Temasek Head Appointed to BIL Board,” Business Times, 18 June 1991, 1; “Quek Poh Huat to Be Temasek President,” Business Times, 20 November 1995, 22. (From NewspaperSG)
25. “Quek Poh Huat to Be Temasek President.”
26. “Story behind Ho Ching’s Appointment,” Business Times, 5 June 2002, 1 (From NewspaperSG); Mohktar, “Ho Ching to Step Down as Chairman”; Low, “Temasek Sharpens Its Focus.” 
27. Serena Ng, “Temasek Sheds Stakes in 12 Companies,” Business Times, 28 February 2004, 10. (From NewspaperSG)
28. “PM Explains Ho Ching’s Appointment,” Straits Times, 19 June 2002, 3. (From NewspaperSG)
29. Paul Jansen, “‘PM Helped Overcome Objections’,” Straits Times, 5 June 2002, 3. (From NewspaperSG)
30. Teh Jen Lee, “TRE Says Sorry for Defamatory Post,” New Paper, 21 February 2012, 2–3; Tessa Wong, “Website Editors Apologise to PM Lee,” Straits Times, 23 February 2012, 3; “PM Lee's Lawyers Receive Reply from TR Emeritus,” Today, 23 February 2012, 4. (From NewspaperSG)
31. “Challenges for Temasek,” Business Times, 23 January 2007, 22. (From NewspaperSG)
32. “Shin Corp Deal Fallout Spooks Foreign Investors in Thailand,” Straits Times, 8 November 2006, 6. (From NewspaperSG)
33. Denesh Divyanathan, “Singapore Bid Spark Talk of ‘Conspiracy’,” Straits Times, 21 June 2001, 4. (From NewspaperSG)
34. Siow Li Sen, “Temasek Defends Sale of Bank of America Stake,” Business Times, 22 May 2009, 2. (From NewspaperSG)
35. Ignatius Low, “Ho Ching to Leave Temasek,” Straits Times, 7 February 2009, 1. (From NewspaperSG)
36. Vivien Chan, “Goodyear Will Not Be Temasek’s New CEO,” New Paper, 22 July 2009, 8. (From NewspaperSG)
37. Hoe Pei Shan, “Search for Temasek CEO Continues: Boon Heng,” Straits Times, 25 August 2013, 14 (From NewspaperSG); “Ho Ching to Step Down as Chairman.”



Further resources
Minister for Finance (Incorporation) Act (Chapter 183), rev. ed. 2014.  

Temasek Holdings (Pte) Limited, Directory of Subsidiaries and Related Companies by Temasek Holdings (Pte) Ltd.,Sheng-Li Holding Co. Pte Ltd., MND Holdings (Pte) Ltd (Singapore: Temasek Holdings, 1982). (Call no. RCLOS 338.860255957 DIR)



The information in this article is valid as at April 2019 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.