Sure, you may have heard that we had our beginnings as a fishing village and then very quickly became economic powerhouse. But did you know HOW we actually came about being so?
The answer is not found in your social studies textbook, but rather this new eBook by GIC: “Securing Singapore’s Financial Future”. It is free to download and it tells the story of how the nation’s financial prowess was founded.
Fact 1: We were once flat broke
Singapore started with a budget deficit of $14 million in 1959. Under the leadership of Goh Keng Swee, this was soon turned into a surplus of $1m.
Fact 2: Like the EU, we had a Common Currency
Since 1897, Singapore shared a common currency with Malaysia and Brunei until 1966 (when Malaysia announced the Ringgit)
Fact 3: Flirting with the dollar
Singapore cheated on the British and flirted with US dollar. When we were part of the Colonies, Singapore was part of the “Sterling Area” and we were obliged to hold reserves in Sterling. When the British devalued the pound in 1967, Singapore revealed that half of our reserves in other currencies, chiefly the US dollar.
Fact 4: Justice and Finance
GIC’s first Managing Director was Yong Pung How. Yong had started his career as an advocate and solicitor of Malaya in 1952. In 1971, Yong switched from law to finance. Initially groomed to be the Chairman of OCBC, it was Goh Keng Swee whom persuaded Yong to head a fledging Government of Singapore Investment Corporation. Yong was later appointed to be Singapore’s Chief Justice in 1990.
Fact 5: Our own money
Singapore issued its own currency on the 12th of June 1967. But at that time, we still did not have our own Central Bank. The conventional wisdom was to have established a Central Bank at the same time, but the government chose to maintain a “Currency Board System”, an archaic symbol of colonialism (considered to be so even at that time).
Fact 6: The Monetary Authority of Singapore (MAS) was established only in 1971 and was unique to Singapore
Up until then, there was no central monetary authority in Singapore. Dr. Goh masterminded the formation of MAS, which would take over the duties from a number of agencies operating Singapore’s financial system. Conscious that the currency board would not meet all of Singapore’s needs, a central coordinating financial authority was necessary. It was deliberately called an “authority” and not a “bank” as it would not have the power to issue currency. This was an innovation unheard of in the world at that time.
Fact 7: GIC was conceived in just 7 months
The GIC was a response to the nation’s needs. The MAS could only produce small returns as it is not designed for profit maximisation. In 1980, at the behest of then Prime Minister Lee Kuan Yew, a review of the MAS was initiated. The review would then lead to the formation of GIC, charged with the mission of investing national reserves.
You know what? Just download the eBook anyway, if not for the knowledge of our financial beginnings then at least for the beautiful watercolour drawings.