SINGAPORE—Singapore’s founding prime minister Lee Kuan Yew relinquished all major government posts Wednesday after ceding chairmanship of the Government of Singapore Investment Corp. (GIC) to his son.
Prime Minister Lee Hsien Loong, 59, is the new chairman of GIC, a company founded in 1981 to invest Singapore’s foreign reserves, which stood at close to Sg$300 billion ($243 billion) in April.
Premier Lee said his 87-year-old father will stay on as “senior adviser” to the firm, one of Singapore’s two state investment vehicles and among the world’s biggest sovereign wealth funds.
The elder Lee last week quit his advisory cabinet post – with the special title “Minister Mentor” – after more than half a century in government, and a much younger cabinet with an average age of 52 years was unveiled on Wednesday.
He will remain a member of parliament representing the port district of Tanjong Pagar.
“Mr. Lee Kuan Yew will be appointed Senior Adviser to GIC,” the prime minister said in a press conference where he announced a sweeping cabinet revamp after the opposition scored major gains in the May 7 general election.
The overhaul came after the ruling People’s Action Party’s share of all votes cast fell to an all-time low of 60 percent, reflecting voter anger with the government.
“I suppose if they want to make a clean break, it is really the only way to do so,” said Song Seng Wun, a Singapore-based regional economist with CIMB research.
“He is now just a special adviser and MP… In that sense he only needs to be called upon for his advice as and when, and will not be as involved as before,” Song told AFP.
Singapore invests its massive financial assets globally through two vehicles – the GIC and Temasek Holdings.
The GIC periodically reviews the mix of its investments by assigning weights to different asset classes such as stocks, bonds, private equity and prime real estate across the world.
In its latest available annual report, the GIC said 41 percent of its portfolio as of March 2010 was in public equities in developed markets.
Geographically, 36 percent of its assets were in the United States, 30 percent in Europe and 24 percent in Asia.
Lee Kuan Yew said in a recent book that he set up the GIC to act as a financial guardian for Singapore’s reserves.
“My cardinal objective was not to maximize returns but to protect the value of our savings and get a fair return on capital,” Lee wrote.
The US-based Sovereign Wealth Fund Institute in March ranked GIC as the eighth-largest in the world.