S’pore could’ve had common currency with M’sia, negotiations detailed in book celebrating GIC’s 40th anniversary

Titled Bold Vision, the book tells the story of Singapore’s reserves and the founding of GIC.

Today, one ringgit can be exchanged for about S$0.30, but it might not have been the case if discussions between Singapore and Malaysia in 1966 had concluded differently.

The negotiations — characterised by frantic shuttle diplomacy — to preserve a common currency are detailed in the second chapter of a special commemorative book launched by GIC on Oct. 5, 2021.

Bold Vision: The Untold Story of Singapore’s Reserves and its Sovereign Wealth Fund celebrates GIC’s 40th anniversary by spanning the history of how the nation’s reserves have been managed from the early years of the Republic to the founding of GIC, and through GIC’s 40 years as Singapore’s sovereign wealth fund.

Written by Freddy Orchard, a former director of Economics at MAS and GIC, the book contains chapters, including an additional foreword from Senior Minister Tharman Shanmugaratnam and episodes — like the one mentioned above — that are little known, yet carried far-reaching consequences for the country.

Image courtesy of the National Archives Singapore

SM Tharman mentioned about GIC’s unusual past in his foreword:

“GIC was an unconventional idea, and the first sovereign wealth fund that was not funded from commodity earnings.

It was the vision of Dr Goh Keng Swee, then-deputy prime minister and chairman of the Monetary Authority of Singapore, that the nation would be better served by the government taking surplus reserves off the balance sheet of the central bank, to be invested at risk for long-term returns.”

Leaving the door open for reunification

According to the book, Singapore’s finance minister at the time, Lim Kim San had raised the matter of a common currency with his Malaysian counterpart as early as October 1965 — just two months after separation.

The pair agreed to approach the IMF for technical guidance on how such an arrangement would work between two sovereign nations.

Apart from facilitating trade and economic partnership between Singapore and Malaysia, a common currency for also favoured as it was seen as leaving the door open for a possible reunification.

However, negotiations faltered when it became clear that Singapore would not be guaranteed indisputable ownership and control of its reserves.

By August 1966, it was announced that a second separation would occur — Singapore would have its own currency.

Can-do attitude of the pioneers

In a press release from GIC, Orchard said that he hoped readers would be inspired by the stories he’d collected for the book.

Image of Freddy Orchard
Freddy Orchard. Image from GIC

“The can-do spirit and vision of our pioneers, as well as the energy, professionalism and dedication that went into husbanding the reserves that are so critical in assuring Singapore’s financial security,” he said.

“As we commemorate our 40th anniversary, we recommit ourselves to our founding leaders’ vision, boldness and steadfastness in creating and stewarding the financial reserves that are such a unique asset for Singapore,” added GIC chief executive officer Lim Chow Kiat at the book’s launch.

Lim Chow Kiat. Image from GIC.

Bold Vision is available for purchase in bookstores and online.

An audiobook version can also be found for free on Spotify.

GIC’s royalty fees will be donated to the Singapore Book Council to help its education outreach to schools.

By : Andrew Koay – MOTHERSHIP.sg

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