to addressing some of the global challenges in urban development and the growth of megacities, both within asia as well as in other parts of the world. demographics third, uneven global demographics will present countries with both challenges and opportunities. developing countries with young and growing workforces will face the challenges of creating enough jobs and investing adequately in infrastructure, industry and institutions. if they succeed, they will be able to reap their “ demographic dividend ” and grow rapidly into middle - income economies. if they fail, high unemployment will cause increasing restlessness and agitation for political change and revolution. the international labour organization, in its “ global trends for youth employment 2012 ” report, attributed the arab spring protests partly to high levels of youth unemployment. such instability could similarly affect other countries, and a demographic dividend could turn into a demographic curse. at the other end of the spectrum, many advanced economies are experiencing rapidly ageing populations. decades of low birth rates coupled with affluence and access to medical care and nutrition mean that the elderly live much longer even as fewer babies are born. even as life expectancy in the eu and north america increased, the average retirement age has fallen from 68 to 63 ( from 1970 to 2010 ). the state will find difficulty financing the increased public expenditure on healthcare and pension systems given shrinking populations of working adults, falling tax revenues and high dependency ratios. in order to remain competitive, these advanced economies have 2 options. they can choose to augment their population through the import of young labour or global talent. this path leads to challenges in cultural integration. the alternative is for these countries to compensate for a stagnant and aging workforce with the deployment of technology. japan and korea are the best examples, relying on an increasing level of automation and sophisticated robotics. as demographics change, so too will consumer demands. singapore is positioning itself to attract companies to monitor and understand these changes within asia. the singaporebased asian consumer insights institute, launched in 2011, is helping companies to develop and test - bed asian - specific products and business strategies. in 2012, nielsen, a global provider of consumer insights, chose singapore to launch an innovation hub. this hub, the first of its kind in asia, will develop new technologies and methodologies in neuroscience, shopper technology, and measurement science to enhance consumer and market insights for companies working to reach consumers in asia. technology the final trend i ’ d like to talk about is that of technology. technology, especially information technology, continues

to a substantial accumulation of ofr, well in excess of what was required for mas ’ central banking operations. so, in 1981, the gic was set up – in today ’ s parlance, a sovereign wealth fund – to manage part of the reserves for higher returns without the central bank constraints of liquidity. part of the ofr was transferred from mas to gic, which was tasked to invest the reserves in a globally diversified portfolio of asset classes with a higher risk profile to deliver good long - term returns. the third pot of reserves is managed by temasek holdings, an investment company wholly owned by the government. 3 / 7 bis central bankers'speeches temasek ’ s history also dates back to the early years of singapore ’ s development. there was little private capital in those days but a rapidly industrialising economy needed key infrastructure – in aviation, in shipping, in telecommunications, in banking, and so on. the government therefore set up enterprises in these areas. temasek was formed as a holding company in 1974 for these enterprises so that the government could focus on its roles of policy making and regulation without conflict, while temasek would own and manage these investments on a commercial basis. today, temasek is an active, equity investor that aims to deliver sustainable long - term shareholder value. more than a quarter of temasek ’ s portfolio is invested in singapore, with the rest invested in asia and global markets. the initial portfolio was provided by the government, but since then, temasek ’ s funds have come mainly from the investment growth of its own portfolio. compared to mas and gic, temasek is further out on the risk - return spectrum. how are the ofr managed? let me now move to the third question : how are the ofr managed? this is the portion of the reserves that mas is responsible for. there are three prongs to mas ’ approach to managing the ofr robust risk management ; balanced asset allocation ; and efficient investment process robust risk management the starting point to mas ’ approach to managing the ofr is its risk management framework, which sets out the liquidity and risk tolerance levels of the ofr. these relate to : the ability of the portfolio to meet liquidity needs under stress conditions ; and the maximum loss of the portfolio under tail risk scenarios. these liquidity and risk tolerance levels are determined on the basis of what is minimally required to meet the objectives of the ofr in supporting