SINGAPORE (July 16): During the early years of this newspaper, I rarely made space in our pages for Temasek Holdings. While we actively covered the many public-listed companies in which it held major stakes, doing a story on Temasek itself seemed to be more trouble than it was worth. A former colleague once demanded to know why I would not make a page available for the state-owned investment company run by the wife of Singapore’s prime minister. I remember thinking to myself that his question was precisely the problem.

Over the last few years, I have changed my mind about the need to cover Temasek, for two reasons. Firstly, since Budget 2016, Temasek has been included under the net investment returns framework, which allows the government to spend up to 50% of its expected longterm returns. The NIR framework, which was implemented in Budget 2009 for GIC and the Monetary Authority of Singapore, replaced the previous net investment income framework, under which the government could only spend investment income comprising dividends and interest.

For the current fiscal year, the government is expecting total NIR contribution of $15.85 billion. That is more than the $15.11 billion the government expects to rake in from corporate tax, which is the single largest operating revenue item. In fact, the NIR contribution is equivalent to 19.8% of the government’s total projected expenditure of $80.02 billion. In short, Singapore is now heavily reliant on NIR contributions, including from Temasek, to fund its budget. That makes understanding Temasek increasingly important to investors who are tracking the Singapore economy.

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