HOW IT STARTED

Within a few days of taking office in June 1959, the newly elected Government discovered to its horror that its predecessors had dipped into the state kitty and spent $200 million. It also found itself staring at a budget deficit of $14 million for the year.

There was no oil money, no natural resources and little foreign reserves.

Speaking to US congressmen, diplomats, think-tankers and corporate bigwigs on receiving the prestigious International Business Award from the Asia Society in Washington DC last Wednesday, Ms Ho Ching said: "Temasek has never been a sovereign wealth fund in the conventional sense. It was more like a 'sovereign poverty fund'."

Then Prime Minister Lee Kuan Yew, 35, and Finance Minister Goh Keng Swee, 40, took a pay cut of about 25 per cent, from $2,600 a month to $2,000. The top 6,000 state officials also lost part of their variable allowances.

BONUS

Said Ms Ho: "There is a phrase in Chinese, 'yin shui si yuan' " remember the source when you drink the water. This is why Temasek has donated $500 million last year to a trust for the larger community in Asia and Singapore."

SAFEGUARDS

The Singapore Constitution was amended in 1991 to guard against an irresponsible government.

The President has a second key to the vault to ensure fiscal prudence. He has a veto right over the imprudent drawdown of Temasek's assets, and over the appointment and removal of its board members and CEO.

INVESTMENT STRATEGY: THEN

Foreign investors were "desperately wooed".

Factories making anything from shoes to mosquito coils to bottled chicken broth were set up, with joint investment from the Government and foreign investors.

DIVIDENDS

Since 1974, Temasek has grown its portfolio about 1,000 times - from just over US$100 million at the start to more than US$100 billion ($136 billion) today.

Total shareholder return is about 18 per cent compounded yearly since its founding in 1974.

INVESTMENT PORTFOLIO: NOW

When it was set up, Temasek inherited "a diverse portfolio of investments with a doubtful future in the middle of a struggling Asia".

Today, its portfolio of investments include PSA, MediaCorp, Fraser and Neave, Shin Corp and Singapore Airlines. It believes in detachment from the companies' management decisions.

Ms Ho Ching said: "Singapore Airlines has its own board, which decides what aircraft to buy and which routes to fly. They do not go to the Cabinet, the Government, or the Parliament for these decisions. They do not go to Temasek either for these business decisions."

Temasek is after all only 34 years old, investing like a 34-year-old, balancing his full-blooded risk appetite with his need to care and plan for his young family.

- Ms Ho Ching (right), chief executive of Temasek Holdings. She received the prestigious International Business Award from the Asia Society in Washington DC last Wednesday.