MR YONG PUNG HOW'S DILEMMA
He had checked in at the Hyde Park Hotel in London together with his boss, Dr Goh Keng Swee, then First Deputy Prime Minister and Education Minister....
They were on the first leg of a mission to recruit experienced fund managers for their new investment company established to manage Singapore's external reserves and Yong had only recently been appointed the Managing Director.
The hotel gave them adjacent rooms, Dr Goh a large spacious room, the “biggest in the hotel”, and Yong a smaller room, a “tiny, tiny room” by comparison. After the porters had brought their bags up and placed them in the respective rooms, Yong took a walk around the hotel to get his bearings.
When he returned, he found Dr Goh's bag in his room, while his bags were missing. Wondering what had happened, he walked into Dr Goh's room, and found his own bags there.
The great man was at the desk working on his papers.
He looked up as Yong came in and announced that he would be taking over Yong's room, and Yong could have his grander quarters. Yong protested but to no avail. The frugal Dr Goh, he famously washed his own undergarments when travelling, said he preferred smaller rooms.
Scrambling to avert an awkward breach in protocol, Yong, a future Chief Justice of Singapore, told Dr Goh that the rooms had been assigned on the advice of the British security service. While Dr Goh's room was positioned such that security officers could keep it under surveillance, Yong's overlooked a park adjoining the hotel and the security service could not vouch for its safety.
Yong's explanation was probably apocryphal but it worked. Mumbling under his breath, Dr Goh reluctantly agreed to return to his own room.
As it turned out, they did not find any suitable candidates in London.
They were more successful in New York, where they found three American fund managers willing to leave established investment houses to join a company in South East Asia that was then little more than a shell.
Indeed, the shell had come into existence only recently, three months after 27 February 1981, when Dr Goh, then also Chairman of MAS, had issued a statement announcing that the Government would set up an investment corporation.
They were on the first leg of a mission to recruit experienced fund managers for their new investment company established to manage Singapore's external reserves and Yong had only recently been appointed the Managing Director.
The hotel gave them adjacent rooms, Dr Goh a large spacious room, the “biggest in the hotel”, and Yong a smaller room, a “tiny, tiny room” by comparison. After the porters had brought their bags up and placed them in the respective rooms, Yong took a walk around the hotel to get his bearings.
When he returned, he found Dr Goh's bag in his room, while his bags were missing. Wondering what had happened, he walked into Dr Goh's room, and found his own bags there.
The great man was at the desk working on his papers.
He looked up as Yong came in and announced that he would be taking over Yong's room, and Yong could have his grander quarters. Yong protested but to no avail. The frugal Dr Goh, he famously washed his own undergarments when travelling, said he preferred smaller rooms.
Scrambling to avert an awkward breach in protocol, Yong, a future Chief Justice of Singapore, told Dr Goh that the rooms had been assigned on the advice of the British security service. While Dr Goh's room was positioned such that security officers could keep it under surveillance, Yong's overlooked a park adjoining the hotel and the security service could not vouch for its safety.
Yong's explanation was probably apocryphal but it worked. Mumbling under his breath, Dr Goh reluctantly agreed to return to his own room.
As it turned out, they did not find any suitable candidates in London.
They were more successful in New York, where they found three American fund managers willing to leave established investment houses to join a company in South East Asia that was then little more than a shell.
Indeed, the shell had come into existence only recently, three months after 27 February 1981, when Dr Goh, then also Chairman of MAS, had issued a statement announcing that the Government would set up an investment corporation.
REASON FOR GIC CREATION
While central banks seek macroeconomic and financial stability, investment management entities strive to exploit the opportunities arising from economic and financial volatility.
There is the inherent tension between keeping reserves liquid so as to manage the exchange rate, and using the reserves to generate higher returns.
For these reasons, Dr Goh decided that MAS was not the best entity to manage the country's foreign reserves to achieve long-term returns.
Thus GIC was created.
This corporation would invest the foreign reserves that were in excess to what the MAS, the country's de facto central bank, needed to manage the exchange rate, the statement explained.
While MAS would keep its own foreign reserves liquid, the new company would be free of liquidity constraints and would thus be able to invest in long-term assets with a view to capital appreciation.
It was a far-sighted, original and bold move.
Farsighted because it foresaw that Singapore would have chronic balance of payments surpluses for years to come.
Original because it broke with the convention of vesting reserves management solely in the central bank.
Bold because it conveyed confidence that Singapore would be able to overcome the lack then of local expertise in global investment management.
The genesis and development of GIC is part of a larger narrative of how Singapore has managed its reserves, since it gained its independence in 1965, for the benefit of Singaporeans over the decades
There is the inherent tension between keeping reserves liquid so as to manage the exchange rate, and using the reserves to generate higher returns.
For these reasons, Dr Goh decided that MAS was not the best entity to manage the country's foreign reserves to achieve long-term returns.
Thus GIC was created.
This corporation would invest the foreign reserves that were in excess to what the MAS, the country's de facto central bank, needed to manage the exchange rate, the statement explained.
While MAS would keep its own foreign reserves liquid, the new company would be free of liquidity constraints and would thus be able to invest in long-term assets with a view to capital appreciation.
It was a far-sighted, original and bold move.
Farsighted because it foresaw that Singapore would have chronic balance of payments surpluses for years to come.
Original because it broke with the convention of vesting reserves management solely in the central bank.
Bold because it conveyed confidence that Singapore would be able to overcome the lack then of local expertise in global investment management.
The genesis and development of GIC is part of a larger narrative of how Singapore has managed its reserves, since it gained its independence in 1965, for the benefit of Singaporeans over the decades
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