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Goh
says western fears on wealth funds irrational
Reuters
21 Feb
08
http://www.guardian.co.uk/feedarticle?id=7326244
Western
arguments against sovereign wealth funds, which have made high
profile investments in banks, are driven by irrational fears and
a nationalistic backlash, a senior Singapore government minister
said on Thursday.
State-backed funds from Singapore, South
Korea, China and the Middle East have recently tapped their big
foreign exchange reserves and pile of petro-dollars to buy large
stakes in western banks hit by losses related to loans in the
troubled U.S. housing market.
Still, there were legitimate
concerns about wealth funds so Western and Asian nations should
work together to improve their transparency, said Goh Chok Tong,
senior minister and also chairman of the central
bank.
"Underlying the debate are irrational fears and
a nationalistic backlash fuelled by domestic politics and
economic problems that cloud reason," Goh said at a
conference in South Korea, according to a speech released by the
Singapore government.
The acquisitions by sovereign wealth
funds have drawn criticism from some politicians around the world
worried about the effects of the funds on economic and financial
security. They are trying to determine if the aims of the funds
are political or purely profit driven.
"The West and
Asia should cooperate to work out transparency rules governing
sovereign wealth funds, while at the same time ensuring open
investment regimes on all sides," said Goh, who was also a
former prime minister.
Singapore's Temasek and the
island's bigger Government of Singapore Investment Corp (GIC)
recently bought stakes in Citigroup , UBS and Merrill Lynch.
The
GIC, which manages Singapore's foreign reserves, has over $100
billion but has never revealed the exact size of its portfolio.
Temasek started to issue an annual report from 2004.
Goh
said the stakes that government funds bought in western banks
showed that sovereign wealth funds are "long-term players"
that are "mutually beneficial" to all parties.
The
U.S. congressional Joint Economic Committee said earlier this
month that the Congress will consider legislating sovereign
wealth funds if the International Monetary Fund does not quickly
come up with a voluntary code of conduct for the wealth
funds.
Australia said earlier this month it will study
more closely investments into the country by sovereign wealth
funds because they raised issues related to national
interests.
More
than 20 sovereign wealth funds manage between $1.9 trillion and
$2.9 trillion around the world, according to the U.S. Senate
Banking Committee and the International Monetary Fund.
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