According to a Bloomberg report out this morning by Janet Ong, Taiwan’s Finance Ministry is studying the possibility of setting up a new SWF akin to Singapore’s Temasek. And while it’s still early days, the Straits Times is already reporting some specifics:
“The planned unit will be in charge of the government’s direct or indirect investments in a total of 419 companies…The purpose will be to more efficiently manage the government’s resources.”
Interestingly, it appears this fund will not be financed out of foreign exchange reserves (though the Bloomberg and MarketWatch accounts do contradict one another on this point). Rather, the underlying capital will come from existing state assets. The objective will be to transform these assets and render them more efficient to boost returns.
In a way, then, the announcement of this fund seems to parallel with the recent announcement of Guoxin Asset Management – also known to some as CIC 2.0 – in China, which will consolidate the country’s SOEs in a bid to make them profitable.
Anyway, a group of experts have been tasked with drawing up a proposal that will be submitted and considered by year end. Until then…
nice summary. somehow this feels like 2007 all over again, when countries with large reserve stockpiles all started to talk about diversifying. I guess we’ll see if some of these risk-averse governments in Asia actually follow through this time.
It has started to feel that way, yes. Country’s around the world throwing their hat in the SWF ring; from Taiwan to India to Lebanon to Nigeria to Colombia to … it’s been pretty darn remarkable! A fun time to be an SWF spectator at least…
Why would they call this a SWF? Singapore does not consider Temasek a SWF. And since all it does is managing existing state holdings, why not simply call it a state holding? Many countries have entities that aggregate and manage state holdings.
The comparison with Temasek would be valid if the Taiwanese entity would have a similar mission as Temasek before it’s 2009 “carter” change. Here is the 2002 charter, which seems more associated with industrial policy than with the investment of surplus reserves, FX manipulation, intergenerational saving etc. Also (even in the 2009 charter that no longer elicits industrial policy associations) there is mention of “stakeholders” rather than “shareholder(s)” Temasek’s only shareholder is the Minister for Finance Inc.
All in all it is more likely that this will consolidate the many state participations resulting from past and present industrial policy for sound management reasons and in order to ensure unified political control as well. For the time being a domestic affair..
Well, the link to the 2002 Temasek charter did not come across. Here it is:
http://www.temasekholdings.com.sg/media_centre_news_releases_250809_charter02.htm