Commercial Times: Set up sovereign fund to revitalize public assets
Central News Agency
2014-02-28 12:40 PM
The Ministry of Finance recently identified "asset revitalization" as one of the major steps toward improving the government's finances. In our opinion, setting up a national-level financial management agency, especially a sovereign wealth fund, can help to achieve that goal. At present, more than 30 countries around the world have established sovereign wealth funds, including Singapore, Kuwait, Brunei, Norway, China and France. Meanwhile, Canada, Bolivia and several African nations are planning to follow suit. As of the end of 2013, global sovereign wealth funds had totaled US$5.6 trillion, a 60 percent growth from three years ago. If Taiwan plans to set up its own sovereign wealth fund, it may consider adopting the model of Singapore's Temasek Holdings, whose capital mainly comes from the country's pension fund and foreign-exchange reserves. Taiwan's four major funds -- the Labor Insurance Fund, the Labor Pension Fund, Public Service Pension Fund and Postal Savings Fund -- now have a combined value of NT$7.1 trillion. They are supervised separately by various government agencies and have not shown satisfactory investment performance. It will help enhance their performance if they are integrated. Of course, sovereign wealth funds do not always perform well. Temasek Holdings, for example, lost US$27.8 billion between 2008 and 2009. In the long term, however, most sovereign wealth funds have shown good results. Norway's Government Pension Fund Global yielded an average 6.6 percent annual return between 1997 and 2010, while that of Government of Singapore Investment Corp. was 9 percent between 1981 and 2010. The Abu Dhabi Investment Authority posted a 16 percent return between 2000 and 2008, and Temasek Holdings also achieved 16 percent between 1974 and 2009. In creating a sovereign wealth fund, it is very important for the government to establish a good system to maintain the independence of the fund, ensure that it is properly managed by professional investment companies and lower the investment risks. (Editorial abstract -- Feb. 28, 2014) (By Y.F. Low)
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