FAQs

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Why was Temasek established?

Temasek was incorporated under the Singapore Companies Act in 1974 to hold and manage investments and assets previously held by the Singapore Government. These were investments made in the first decade of nation building since independence in 1965. The objective of the transfer of these assets to a commercial company was to free the Ministry of Finance to focus on its core role of policymaking and regulations, while Temasek would own and manage these investments on a commercial basis.

Where did Temasek’s original portfolio come from?

The initial portfolio of S$354 million comprised shares in companies, start-ups and joint ventures previously held by the Singapore Government. They included a bird park, a hotel, a shoe maker, a detergent producer, naval yards converted into a ship repair business, a start-up airline, and an iron and steel mill.

For further information on the list of companies in Temasek’s initial portfolio, please see Temasek Portfolio since Inception in the Temasek Review 2014.

Is Temasek a statutory board or a government agency?

Temasek is a company incorporated in Singapore, and operates under the provisions of the Singapore Companies Act. Temasek is neither a statutory board nor a government agency.

Like any other commercial companies, Temasek has its own Board of Directors and a professional management team. It pays taxes to tax authorities, and distributes dividends to its shareholder.

In addition, as a key institution in Singapore, Temasek is also designated a Fifth Schedule entity1 under the Singapore Constitution, with certain safeguards to protect its past reserves. For instance, any transaction which is likely to result in a draw of Temasek’s past reserves2 is also subject to the approval of the President. The right to appoint, terminate or renew board members is subject to the concurrence of the President of Singapore.

Other than specific safeguards to protect the integrity of Temasek board appointments and its past reserves, Temasek continues to operate fully and independently as a commercial investment holding company.

Footnotes:

1 Under the Singapore Constitution, the concurrence of the elected President of Singapore is required over certain governance matters concerning Fifth Schedule entities. These include the appointment and removal of board members and the CEO, and the drawdown of past reserves built up by the entity before the term of the current Government. Other Fifth Schedule entities include the Central Provident Fund Board, Government of Singapore Investment Corporation Pte Ltd, and the Monetary Authority of Singapore.

2 Reserves accumulated by Temasek before the term of the current Government form Temasek’s past reserves. Current reserves are primarily profits accumulated after a newly elected government is sworn into power. The swearing-in of the new Cabinet on 21 May 2011 after the Singapore Parliamentary General Election marked the start of a new term of government.

Is Temasek required to pay tax?

Temasek pays the required taxes to the tax authorities, and separately declares dividends to its shareholder, as a commercial investment holding company.

Does Temasek disclose its financial results? How can I find out more about Temasek?

As an exempt private company, Temasek is not required to disclose financial information.

However, since 2004, Temasek has published its annual Temasek Review, which provides a summary of its group financial results based on audited financial statements, as well as data on Temasek’s portfolio, shareholder returns and its governance and investment frameworks.

The Temasek Review forms part of Temasek’s annual disclosure exercise, which also include an online version of the Temasek Review, international media engagement, and advertising.

To reach out and engage the public, Temasek also recently launched its Twitter platform @Temasek.

Through these channels, Temasek provides updates on its performance, activities, and topics of interest. We hope to build communities with whom we engage more directly, as we share Temasek’s story over time.

Temasek’s annual report exceeds the standards of disclosure under the Santiago Principles, a set of best practices adopted by sovereign investors in collaboration with the IMF and various governments, including Australia, Canada, Norway and the USA. 


Please refer to www.temasekreview.com.sg for the latest Temasek Review and to www.iwg-swf.org/pubs/gapplist.htm to read more about the Santiago Principles.

Is Temasek credit rated?

Temasek has corporate credit ratings of AAA and Aaa by Standard & Poor's and Moody's respectively.

Temasek’s Global Medium Term Note (MTN) and Euro-commercial Paper programmes are rated, as well as each Temasek Bond.

Temasek’s MTN Offering Circulars and Reports by international credit ratings agencies are published on the
bond section on Temasek’s website.

Who is Temasek's shareholder?

Temasek's shareholder is the Singapore Minister for Finance1.

Footnotes:
1Under the Singapore Minister for Finance (Incorporation) Act (Chapter 183), the Minister for Finance is a body corporate.

Does Temasek manage Central Provident Fund (CPF) savings or Singapore’s foreign reserves?

Temasek does not manage CPF savings (which are managed by the Board of the Central Provident Fund), Government surpluses, or Singapore’s Official Foreign Reserves (which are managed by the Monetary Authority of Singapore).

More information on the management of Singapore’s reserves is available by visiting the Singapore Ministry of Finance website, http://app.mof.gov.sg, which has an 'Ask MOF' section on the management of reserves.

Are Temasek and the Government of Singapore Investment Corp (GIC) the same organisation?

There are 3 key financial institutions in Singapore, which are linked to the Singapore Government.

The Monetary Authority of Singapore (MAS) was formed in 1971, and acts as the central bank of Singapore. It manages the foreign reserves of Singapore. It is a statutory board.

Temasek is an investment holding company incorporated in 1974 in the early years of Singapore‘s independence to own and manage its assets and investments on a commercial basis.

GIC or the Government of Singapore Investment Corporation is wholly owned by the Singapore Minister for Finance1 and manages Government reserves, including surpluses accumulated and built up since independence.

They are separate entities with distinct roles and mandates, and distinct management teams.

Temasek is an investment company with a global portfolio, and manages its investments in accordance with its Charter. Temasek owns the assets it manages, is credit rated and issues international bonds.

As an active shareholder, Temasek encourages a culture of excellence and meritocracy, thoughtful leadership and sound governance in its portfolio companies. As an active investor, it has flexible investment horizons and aims to maximise long term returns from its investments.


You can obtain more information about GIC at www.gic.com.sg, and more information about the MAS at www.mas.gov.sg.

Footnotes:
1Under the Singapore Minister for Finance (Incorporation) Act (Chapter 183), the Minister for Finance is a body corporate.

Is the President involved in Temasek’s business decisions?

The President of Singapore is not involved in Temasek’s investment, divestment or any other business or corporate decisions, except in relation to his custodial role in the protection of Temasek’s past reserves due to Temasek’s status as a Fifth Schedule entity1 under the Singapore Constitution.

Similarly, the Singapore Government is not involved in Temasek’s investment, divestment, or any other business of operational decisions. Its role as shareholder in respect of Board appointments is subject to the concurrence of the President in order to protect the integrity of the Board of Temasek as a Fifth Schedule Company.

Further information on the President’s involvement is covered comprehensively in the Singapore Ministry of Finance FAQ on their website, http://app.mof.gov.sg.

Footnotes:
1 Under the Singapore Constitution, the concurrence of the elected President of Singapore is required over certain governance matters concerning Fifth Schedule entities. These include the appointment and removal of board members and the CEO, and the drawdown of past reserves built up by the entity before the term of the current Government. Other Fifth Schedule entities include the Central Provident Fund Board, Government of Singapore Investment Corporation Pte Ltd, and the Monetary Authority of Singapore.

How is the President involved in the protection of Temasek’s past reserves?

The President of the Republic of Singapore has an independent custodial role to safeguard Singapore’s critical assets and past reserves.

As a key institution under the Singapore Constitution, Temasek is required by the Singapore Constitution to seek the President’s approval before a draw occurs on Temasek’s past reserves.

Temasek’s Chairman and CEO also certify the Statement of Reserves and Statement of Past Reserves to the President at prescribed intervals.

Further information on the President’s involvement is covered comprehensively in the Singapore Ministry of Finance FAQ on their website, http://app.mof.gov.sg.

Is an investment loss considered a draw on past reserves?

A draw on past reserves happens when total reserves are less than past reserves.

So if total reserves equal or exceed past reserves, there is no draw.

We then have to look at what is meant by investment loss.

When we invest in a portfolio of shares, there are constant changes in market values. Such changes happen for instance to the value of our shares during the global financial crisis, where we saw our portfolio value fall 30%, only to rebound 43% one year later. Such falls in the market value of shares are not a draw.

When investing to maximise long term returns, we may have realised gains or losses on disposal of shares. We may realise losses in our investments, either because the investment has gone bad, or we decided to exit in order to redeploy our funds to more attractive opportunities.

We may exit at a high or a low, depending on our views of the potential returns compared to putting the same dollar to work elsewhere.

Our Board has a responsibility to ensure that every disposal of investment is transacted at fair market value.

A realised loss would not constitute a draw on past reserves, so long as the disposal is done at fair market value (i.e., based on a price agreed between a willing buyer and a willing seller on an arm’s length basis).

The final test is whether total reserves are less than past reserves, after taking the divestment loss into consideration.

Further information is covered comprehensively in the Singapore Ministry of Finance FAQ on their website, http://app.mof.gov.sg.

Is a fall in the share price of Temasek’s investments considered a draw on past reserves?

When we invest in a portfolio of shares, there are constant changes in market values. Such changes happen for instance to the value of our shares during the global financial crisis, where we saw our portfolio value fall 30%, only to rebound 43% one year later. Such falls in the market value of shares are not a draw.

We will also test if total reserves are less than past reserves, after taking the fall in market value into consideration. A draw on past reserves happens when total reserves are less than past reserves.There is no draw if total reserves equal or exceed past reserves.

Let’s take an example. Assume Temasek owns five shares worth $10 today. But one year later, the same five shares are worth $8. These share price changes (mark to market declines) on existing investments do not constitute a draw on Temasek's past reserves. 

Further information is covered comprehensively in the Singapore Ministry of Finance FAQ on their website, http://app.mof.gov.sg.

How is the President involved with the Board of Temasek?

To safeguard the integrity of those involved in managing Temasek’s reserves, the President’s concurrence is required for the appointment, renewal or removal of Board members by its shareholder, the Singapore Minister for Finance1.

The appointment or removal of the CEO by the Board is also subject to the concurrence of the President.

Further to its normal fiduciary duties to the Company, the Board is accountable to the President to ensure that every disposal of investment is transacted at fair market value.

Over time, Temasek has assembled a Board and management team made up of people from broad backgrounds, across various industries, in both public and private sectors, from Singapore and overseas. The majority of Temasek’s Board of Directors are independent.


Further information on the President’s involvement is covered comprehensively in the Singapore Ministry of Finance FAQ on their website, http://app.mof.gov.sg.

Footnotes:
1Under the Singapore Minister for Finance (Incorporation) Act (Chapter 183), the Minister for Finance is a body corporate.

What are the companies in Temasek’s portfolio? How many are listed and what is the market capitalisation of these companies?

A list of some of Temasek’s portfolio companies as at 31 March 2014 is provided in the Temasek Review 2014.

For further information on Temasek’s portfolio companies, please see Temasek Major Investments in the Temasek Review 2014.

How does Temasek work with its portfolio companies?

As a shareholder, Temasek manages its portfolio as an active investor by increasing, holding or decreasing its investment holdings, to create and shape our risk-adjusted returns for the long term.

As an engaged shareholder, Temasek promotes sound corporate governance in its portfolio companies. This includes supporting the formation of high calibre, experienced and diverse boards to guide and complement management leadership.

Companies in Temasek’s portfolio are guided and managed by their respective boards and management. Temasek does not direct their business decisions or operations.

Temasek advocates that boards be independent of management in order to provide effective oversight and supervision of management. This includes having mostly non-executive members on boards with the strength and experience to oversee management. Similarly, Temasek advocates that the Chairman and CEO roles be held by separate persons, independent of each other.

Temasek protects its interests by exercising its shareholder rights, including voting at shareholders’ meetings as needed.

Does Temasek request representation on the boards of companies in which it invests?

In general, Temasek is not represented on the boards of its portfolio companies.

Overall, Temasek promotes sound corporate governance in its portfolio companies by supporting high calibre, commercially experienced and diverse boards to complement management leadership. By leveraging its wide network of contacts, Temasek can suggest qualified individuals for consideration by the respective boards.

Temasek employees on boards would be appointed in their own individual capacity, and are expected to meet their fiduciary responsibilities as directors of companies.

How does Temasek fund its investments?

Temasek investments are financed using dividends and other cash distributions it receives from its portfolio companies and other investments, divestment proceeds from sale of its investments, and borrowings and debt financing sources such as the Temasek Bonds and Euro-commercial Paper Programme.

What is Temasek's divestment schedule?

Temasek does not have a divestment schedule.

Temasek is an active investor and rebalances its portfolio from time to time. Decisions to invest, divest or hold portfolio companies are based on Temasek’s intrinsic value test.

How else does Temasek engage the community?

Temasek has established 16 endowments since its inception, for community, philanthropic and public good causes, as part of our support for the wider communities in Singapore, Asia and beyond. This commitment was further strengthened in 2003, when we decided to set aside a portion of our excess returns above our risk-adjusted hurdles as our community contribution.

In 2007, Temasek established Temasek Trust to independently oversee the management and disbursement of Temasek’s philanthropic endowments and gifts. The Trust re-invests the endowment gifts from Temasek, and serves as a growing stakeholder of Temasek. It is also responsible for the disciplined disbursement of the endowments on a sustainable basis to the various non-profit philanthropic organisations sanctioned by Temasek.

You can read more about Temasek’s community engagement at www.temasek.com.sg/community and more about Temasek Trust at www.temasektrust.org.sg.

Investment Themes

Guided broadly by our investment themes, we seek to build a portfolio that delivers sustainable long term returns.

Values

Our MERITT values are the foundation of our character and culture as an institution.

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