SWFs in the News: Taiwan and Summarizing Losses

By Brett Keller

Taiwan News has more on the still-pending question of whether Taiwan will get a new sovereign wealth fund.

If Taiwan opts for the establishment of a sovereign wealth fund (SWF) , this should be done independent of the Central Bank of the Republic of China (CBC) and under new legislation, CBC Governor Perng Fai-nan said Monday. Fielding questions at the Legislative Yuan, Perng said the existing Four Major Funds and the National Development Fund run by the administration are all SWFs in nature since they are all state-owned investment funds. “The best policy here and now is to integrate the Four Major Funds and the National Development Fund into a bigger one, instead of establishing a new SWF,” Perng said.

Perng also said the Singaporean model is “a good one to emulate” and that a Taiwanese SWF should comply with IMF regulations.

Bill Condie of the Evening Standard writes about the Santiago Principles and in “Once bitten, twice shy – sovereign wealth counts cost of big bets.”

Just a month ago, those discussions seemed little more than matter of arcane governance. Now, they could be crucial to the future of the global financial system and perhaps even the basis of a new order.

And then Condie quotes Dag Detter,  “a senior advisor to Guy Hands’ private equity firm Terra Firma, a non-executive director of property group DTZ,” and who has close contact with “some of the world’s largest sovereign funds.”

Detter says that it is in everyone’s interests that the SWFs hammer out the long-term Santiago accords to balance their interests with demands for greater transparency from governments in the West. “There are three fundamentals for success with SWFs or state-owned enterprises,” he says. “There must be political insulation — politicians are not best placed to direct investment, will have to take responsibility when things go wrong and will not always gain credit from success. The funds need clear objectives based on maximising long-term returns. And then there must be transparency.”

This fascinating graphic, researched by Victoria Stewart, appeared with the article:

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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