Bold Vision: The Untold Story of Singapore‘s Reserves and Its Sovereign Wealth Fund

Foreword by Tharman Shanmugaratnam

Prologue

The untold story of Singapore’s reserves and its sovereign wealth fund, born of vision, ambition and creativity. Steered ahead by its founding leader, Dr Goh Keng Swee, GIC was a radical, unheard-of proposition at the time. But alongside his band of “buccaneers”, Dr Goh defied convention and adversity time and time again to protect the reserves of our young nation, forging GIC’s values in the crucible of Singapore’s finances in its formative years and ensuring that GIC would fulfil its mission of securing Singapore’s financial future.

Chapter 1: A Singular Man Chapter 2 / Second Separation

Like so many chapters in the Singapore Story, the tale of how Singapore managed its reserves begins with a singular man, Dr Goh Keng Swee. He shaped its evolution; the culture, people and institutions. The founding of GIC is a testament to his genius to propose unique solutions for Singapore, and to his relentless effort to safeguard and grow our reserves.

Chapter 2: Second Separation

After their separation, Singapore and Malaysia sought to preserve the common currency arrangement, a link stretching back to 1897. However the negotiations failed despite frantic shuttle diplomacy, as Singapore was not guaranteed indisputable ownership and control of its reserves. The currency split – the Second Separation – confronted Singapore with stark economic realities.

Chapter 3: Donning a Straitjacket

The convention was for newly independent countries to have a central bank. Singapore instead kept the currency board system, where every dollar issued had to be backed by foreign reserves. It was a straitjacket on policy. But, it underlined a commitment to a sound Singapore dollar.

Chapter 4: The Sterling Raj

As a member of the Sterling Area, Singapore was obliged to keep its reserves in sterling. However, by the 1960s, holding sterling was a losing proposition as it was crisis-prone. How Singapore navigated the pitfalls of Sterling turmoil is a tale of foresight, determination and resourcefulness.

Chapter 5: The Buccaneers

The upheaval in global currency markets called for radical action. Seeking to protect our reserves, Dr Goh circumvented an embargo to buy gold. He initiated currency diversification and started an investment unit in the Ministry of Finance to invest in stocks and bonds, practices unheard of then. Truly, a buccaneer at heart.

Chapter 6: A Productive Interregnum

The formation of the Monetary Authority of Singapore (MAS) in 1971 marked another stage in reserve management. MAS developed expertise in currencies and bonds. But a central bank faces trade-offs in balancing central banking with investment management. Nevertheless, the MAS years were productive, as the investment acumen developed was critical for the next stage.

Chapter 7: Genesis of an Idea

Singapore was the first non-commodity exporting country to establish an investment corporation to manage its reserves. The idea was Dr Goh's. Its genesis was his insights about Singapore's propensity to save, how reserves should be managed and the strategic importance of reserves.

Chapter 8: Whippersnappers Inc.

GIC's first Managing Director started his assignment under the most inauspicious of circumstances; only a desk and an unusable telephone in a used office, no staff, not so much as a secretary, and to top it off, was unceremoniously brushed off as a "whippersnapper". Undeterred, he made GIC a going concern within a year.