#Talent – The Right Perspective

I spoke at a lunch event of The Economist Corporate Network last Monday. There were about 40 CEOs and other business leaders, mostly expats but a few Singaporeans. The topic I spoke on was “The Secret to Singapore’s Success?”…complete with the question mark! I had agreed to speak as I thought the topic to be both intriguing and timely, given all the excitement building up on commemorating the 50th year of Singapore’s independence.

Often when visitors come to Singapore wondering what has been the secret sauce for Singapore’s success, they get briefed on the HDB, CPF Scheme, the education system the EDB, and so on – all true, and all relevant, but, in my mind, perhaps not a fundamental enough explanation. So I started off my talk by saying:

“If you look at an atlas of the world, Singapore, the country, fits quite nicely into the letter “o” in its name. Unlike most countries in the world whose names fit well into their boundaries in the atlas, Singapore’s name is much longer than its size. And if you look again at the atlas, Malaysia lies to the north and east of Singapore, while Indonesia lies to the west, south and east. When Singapore became, rather unexpectedly, independent in August 1965, it had to find its own way into the future: the dream of a common market in Malaysia was broken, and Indonesia was still conducting konfrantasi (military confrontation) against Singapore.”

When President B J Habibie of Indonesia referred to Singapore as a “little red dot” in 1998, he had meant it as a disparaging remark. Little would he have expected that Singapore would take it up as a badge of honour, a symbol of success despite the odds.

President Habibie had sought later to make amends by saying he had not meant “little red dot” to be disparaging: he was speaking to an Indonesian youth group, and was challenging them to seek the progress and success of Indonesia by noting that Singapore, even though just a little red dot, had been able to make a success of itself.

Singapore had reached out beyond its immediate surroundings to adopt the whole world as its hinterland, its source of capital, investment, research and technology, management capability, and, most of all, markets. Later came its growth as a global financial centre, potentially the global financial centre in Asia.

Markets are critically the reason for welcoming MNCs to Singapore, because the smallness of Singapore and its economy simply means that no company in Singapore can grow merely by serving the Singapore market: the key to growth and success lies in penetrating overseas markets, mostly in the region but also globally. Of course we would wish as many Singapore companies as possible to have such global reach, but MNCs are what multiply the reach many many times over, without shutting out the Singapore companies.

What explains Singapore’s success in drawing investments from all over the world, where companies sink their money into Singapore and are prepared to wait 10, 15 or 20 years to recover their money through successful production and business operations? What explains the many research centres to discover new knowledge and design new products, where the protection of intellectual property is the name of the game? And what explains a willingness on the part of so many foreigners to park their funds and their wealth in Singapore?

The explanation lies in an ability to trust Singapore as a place where promises are kept, the rule of law maintained, justice is assured, government policies are predictable. Singapore offers reliability, integrity, quality, hard work and trustworthiness. These are what make for long-term relationships.

Trust is the root of relationships, and honour is the foundation of trust, where the people, businesses and government deliver on their word of honour.

Singapore’s place in the community of nations obviously depends not just on trust, but on being able to mobilize talent, synergise the efforts of workers, employers and government, and superior leadership. But honour has to be the starting point and the abiding foundation.

On my recent quick trip to the United States, I had the opportunity and privilege to meet Singaporeans in San Francisco and speak about Singapore’s Financial Reserves and GIC. I had given much the same talk in the past to Singaporeans in Shanghai, New York, and London. There is no escaping knowing them to be Singaporeans once they begin to speak: It is the expressions and the welcome of home. All the Singaporeans invariably think of home, not just their memories of their childhood but their hopes for Singapore to be a great place – the best place – for Singaporeans. Singapore is a point of honour for them, an idea to defend, a home to protect, and a future to secure.

To understand why financial reserves are so important to Singapore, we need to understand geography and history. Less than 20 years ago, a foreign leader referred to Singapore as the Little Red Dot, a point Singaporeans should not be forgetting. If we look at a map of the world, Singapore fits into the letter “o” in its name, unlike many countries whose names fit nicely into their geographical boundaries on the map. And unlike some other small states, we have no natural resources. We are a little dot among states with large land areas and large populations. While Singaporeans may not like to be reminded of this, it nonetheless holds true that “no one owes us a living” and “no one else is responsible for our security.”

And to understand more deeply the need for large financial reserves, we need to remember history. Not everyone learnt history in school, and many who did stopped learning Singapore history in Secondary Four, if not earlier in Secondary Two. While there is the annual reminder on National Day of Singapore’s independence and sovereignty, what an adventurous and risky course Singapore took to “leapfrog” the immediate neighbourhood to link up to the whole world as our economic hinterland is often unspoken, perhaps little understood or even unknown by many Singaporeans.

The point about history is not to hold us back and hold us to the past – it is to give us context for what we need to do to make Singapore a great place for Singaporeans. We cannot escape our geography, but we can make good use of history to create a worthy future for ourselves and our families. It is a whole tapestry about Konfrantasi, water, sand, granite, and food.

When we know our history, we can be clearer about requiring our children to grow up with the capacity for thought, enterprise, and self-confidence to make a Singapore for their time. In addition, we will understand why business in Singapore needs to have its unique capacity for competing on the world stage founded on values of integrity, quality, reliability, imagination, responsiveness, and an unending drive for excellence.

I explained GIC as the fund manager for Singapore’s financial reserves, with the task of preserving and enhancing the value of the reserves, and of helping to contribute towards the government budget each year. The government is allowed to use up to 50 percent of the Net Investment Returns, calculated on the basis of expected long-term real returns multiplied by the net assets (that is, after deducting the liabilities like the special government securities that have been issued to the Central Provident Fund Board). For the next Financial Year, the government is taking into the expenditure budget a sum of $8.1 billion from the Net Investment Returns, which amounts to two percent of the Gross Domestic Product (GDP).

GIC ranks among the large sovereign wealth funds in the world with well over USD100 billion under the management of GIC. It invests in a whole slew of asset classes – equities, debt, real estate – in both the public and private markets, and in both developed and emerging markets across the world. It is headquartered in Singapore with eight overseas offices in Beijing, London, Mumbai, New York, San Francisco, Seoul, Shanghai, and Tokyo. A ninth office is also about to open in Sao Paolo.

An important question is how much of foreign reserves is enough. Obviously, the greater the needs and the more Singapore buys from the world, the larger the foreign reserves need to be. Thus an appropriate balance needs to be struck between spending on the current generation and keeping resources for future generations. The way this is done at present is the Singapore Constitution allowing the government to use up to 50 percent of the long-term real returns for ongoing expenditure, with the rest retained for continuing investment for the benefit of future generations.

Geography and history dictate the wisdom of Singapore maintaining a significant level of financial reserves in order to assure the peace, security, stability, sovereignty, and independence of Singapore.

For GIC to do its job well, we need a continuing flow of talent to perform the investment functions with skill and competence, and also to support the investment operations with efficiency and effectiveness. To this end, GIC offers about five scholarships each year for undergraduate studies anywhere in the world, and also runs an annual GIC Professionals Programme for up to 20 new who have just graduated from university or who have worked for up to 3 years after graduation.

In addition, GIC offers internships for large numbers of undergraduates each year so that they may get familiar with what GIC is about and can then decide whether they wish to consider a career in GIC.

More information is available on the GIC website: www.gic.com.sg. Enquiries from students and parents on the GIC Undergraduate Scholarships, GIC Professional Programme and GIC internships are always welcome: http://www.gic.com.sg/en/contact-us

Tag / #Talent

What is the Secret to Singapore’s Success?

OUR GEOGRAPHY, OUR HISTORY, AND GIC