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Excerpts from the AWSJ interview with Senior Minister Lee Kuan Yew, 23 April 2001


On the need for more talent

We learned the hard way that this is a global marketplace, and that we need top class players.  When we started, we were competing in the Southeast Asian Games.  Whether we like it or not, the big players have come in to join these Games, so like football teams, we have to look for good foreign strikers for our team.
GIC has reached a certain competence level, and also we can now attract and afford to pay for some of the best.  Remuneration is performance based.
We have succeeded in recruiting good foreign managers but it is a continuing process.  We want them in all age groups.  We are also recruiting fresh graduates world-wide, green-harvesting.  And we want our own Singapore graduates to know that if they are good enough to make the cut, they,ll have good prospects with GIC.


On the competitiveness of Singapore companies

We have been too inbred.  Until recently our bank chairmen had old friends on their boards.  No fresh outside inputs.
On (a scale of) one to 10, they were at two or three.  After the recent
changes, it is now three to four.  They,ve got a long way to go.
I think there has to be a generational change at the very top.  The present
managements have been too comfortable, and they expect us to keep them comfortable. That's not possible.
(Hostile take-overs) That's bound to happen sooner or later, and we,re not
going to stop it if it is in Singapore's interest. There are assets which are
not being put to maximum use.  Before, they knew we would prevent their being taken over.  Now, we'll just let the market decide.  That may spur them into action.


On GIC's disclosure of financial information

We are managing over US$100 billion.  The assets have steadily increased in value over the years.  The returns are adequate.
We are a special investment fund.  The ultimate shareholders are the
electorate.  It is not in the people,s interests, in the nation,s interests, to
detail our assets and their yearly returns.
The accounts of GIC are checked by the Accountant General, Auditor-General and examined by the Council of Presidential Advisors.  There is total accountability.


On National Service investments performed by GIC and the Astra deal

National Service is better done by Temasek  (Temasek Holdings Ltd).  GIC does portfolio (investment) and real estate, based on commercial not political considerations.
(The Astra deal)  At the time Cycle & Carriage closed the deal it looked
commercially sound and GIC participated in it.


On investment mistakes

We have made mistakes and have had successes;   this is part of risk-taking. One mistake was our purchase of GITIC bonds. The lady in charge of the bond section believed that the Chinese government would not want to see GITIC default.  That was back in 1993.  It defaulted in 1999.  It was an error of judgement, but her performance over a nine-year period showed that she's competent.  We,ve not lost confidence in her.  We assess our officers on their overall performance over time.


On Singapore companies moving abroad

We,ve had some successes.  But it has been a difficult process.  Our companies operate in Singapore,s clean air environment, almost microbe-free.  When they operate abroad, they've to develop resistance to microbes.  It's part of our learning process.


On premiums Singapore companies have paid for overseas acquisitions

When Daimler-Benz merged with Chrysler, it had rave reports in the market, (the share-price) shot up.  Three years later, its shares went down.  The acid test is the execution. Yes, our companies paid premiums.  Can they execute?  Are the managements good enough to make the merger a success?  If they are not, the companies are in for a rough time.  If they are, all this criticism will be forgotten and the share price will rise.  You can,t go by immediate market reaction.  We will know in 3 to 5 years.


On US-China relations

It,s the single most important relationship in Asia.  If it is troubled, there
will be turbulence in Asia.  The way the aircraft collision on April 1 has been handled showed that neither side wanted the relationship to break.  It's too costly for both.  For the Chinese, their whole modernisation agenda, WTO and everything else, would be put at risk.  For the Americans, apart from losing out on China's business opportunities, it means making a long-term adversary they do not need.
I think it was a win-win solution.  George W. Bush increased his standing with the American people.  Even the opposition, the Democrats, complimented him.
Jiang Zemin did not do so badly, although Chinese chatrooms were most
nationalistic.
The longer term relationship will be settled in 12 to 18 months.  It was an
unplanned incident.  It would be unwise to make this collision the defining
factor in relations between an American administration in its first hundred
days, and a Chinese leadership that is in transition to a fourth generation.