Direct and portfolio assets tend to take longer to reap returns after their initial formation. Industrial parks, transportation and telecommunication infrastructure are examples of major projects of the external economy that could have generated poor returns in the early years. The Asian crisis and currency devaluation in Southeast Asia could have negatively affected both stocks and income flows of the external economy. Both the ringgit and the rupiah have also sharply depreciated against the Singapore dollar. We have emphasized in our previous analysis that management of the external economy has rapidly become the most important economic activity for the republic.
Diversification is key to securing steady returns and protecting investment.
While gestation periods and the Asian crisis may have played a role, we cannot rule out poor investment decisions. The simulation that we carried out in our previous article demonstrates that not only is the future rate of return critical to the growth of the external economy, it will also determine its relative contribution to the Singapore economy. Given the preponderance of government ownership, the task of raising returns clearly lies in the hands of government and the GLCs. Morgan Stanley Dean Witter does not undertake to advise you of changes in its opinion or information. Morgan Stanley Dean Witter and others associated with it may make markets or specialize in, have positions in and effect transactions in securities of companies mentioned and may also perform or seek to perform investment banking services for those companies.