From Our Chairman

Successive waves of COVID-19 outbreaks peaked higher and higher, for most of 2020 and well into the first half of 2021. Lives and livelihoods were devastated around the world. The unexpected early successes of COVID-19 vaccines offered a ray of hope, clouded by production capacity constraints. However, the more infectious new variants of concern are now threatening to outpace vaccination deliveries.

Even as Temasek shouldered its part in various pandemic initiatives, we kept a full agenda as an investor, institution and steward.

Looking ahead, we expect policymakers to remain accommodative. Global growth may touch 6% in 2021 after the -3.3% decline in 2020.

The pandemic has exacerbated the ongoing US-China strategic rivalry. This geopolitical uncertainty will be a drag on the investment climate and economic confidence.

Other longer term global threats have not gone away. The window is closing rapidly on the carbon abatement front. We are nearing the tipping point for melting glaciers.

Our world has changed. It is not a sustainable option to bounce back to “business as usual”. We must all pull together, and bounce forward into a new norm for better lives and more sustainable livelihoods.

The world came together to deliver solutions to the pandemic threat, however untidy the politics and fractious the nationalistic urges. We can and must do the same to reduce carbon emissions, and improve food, water, energy and waste management.

Temasek can work to catalyse solutions to key global challenges. We will deploy financial capital to stimulate innovation and growth; develop human capital to uplift capabilities and enhance potential; enable natural capital to foster sustainable solutions for the climate and a better living environment; and crowd in social capital to transform lives for a more inclusive and resilient world.

Portfolio Performance

Forging Resilience

It is adversity that brings out the strengths and values of our people.

I am immensely proud that our staff have volunteered tirelessly, thoughtfully and selflessly during the COVID-19 pandemic. Their efforts have helped people keep safe and cope in these trying times.

Temasek actively enabled various cross-border COVID-19 initiatives. During the first outbreak in Wuhan early last year, we facilitated the provision of equipment and supplies to China. Later, we supported the reverse flow of critical supplies from China to various places in dire need, including most recently to India.

Indeed, several staff were on the swabbing frontlines supporting the testing and sorting operations for migrant workers in the dormitories, to protect them and contain the massive dormitory outbreak. Others quietly helped to keep supply lines open, or supported other initiatives.

Initiatives in diagnosis ranged from new test kits to be developed, to production to be scaled; from expanding lab capacity in Singapore, to supporting lab capabilities beyond; from seeding novel wastewater sampling testing, to stepping up lab automation for throughput, safety and capacity. Some 6,300 kits for over 1 million diagnostic tests, and various lab equipment, were donated to over 40 countries in Asia and elsewhere.

An early initiative in containment was the pre-emptive development of Community Care Facilities for younger “Walking Well” patients with mild or no symptoms — these greatly relieved the pressure on hospital beds. Other efforts in containment & contract tracing included pilots in Singapore like the mass community COVID-19 screening of some 5,700 hawkers, cleaners, and retail workers; and the use of the Antigen Rapid Test to pre-screen large scale events like the Singapore International Energy Week; as well as various contact tracing solutions.

The mainstays for protection & prevention are personal protective equipment, or PPEs, and hand sanitisers. These saw massive shortages last year.

We supported Temasek Foundation through four nationwide exercises for Singapore residents to collect over 30 million free reusable, washable, antiviral, and antibacterial face masks. Regional PPE donations ranged from reusable or single use masks for the community, to hospital grade items such as full protection hazmat suits and N95 respirators, to gowns, gloves, goggles and others.

The #BYOBclean pilot, launched in March last year, encouraged families to “Bring Your Own Bottles”, clean and ready to collect their free allocation of hand sanitiser. This was followed by a second nationwide free collection in April this year. Regional partners helped us cover Johor and the Riau Islands nearby. In all, more than 1.3 million litres of hand sanitiser were distributed for free, including to hospitals, residential care homes, and migrant workers.

Reusable mask distributions and #BYOBclean programmes also serve as reminders to reduce plastic waste.

Our portfolio companies also played their part. During the second half of 2020, Temasek Foundation worked with Singapore Airlines to sponsor flights for the World Food Programme. Some 40 flights carried PPEs plus other essential medical supplies and humanitarian items, to various points in Asia and the Pacific.

As demand for pre-travel testing increased, we connected our digital credentials technology company, Affinidi, with global aviation industry partners and government agencies. The company has since formed partnerships with industry leaders in the US, Europe, the Middle East and Asia Pacific, to enable safe cross-border travel solutions with mobile digital verification of health credentials including test and vaccination status.

Steering through Volatility

Major economies are now starting to relax lockdown measures, as vaccination brings some early successes. Growth could be strong this year and next.

The pace of recovery will likely be uneven across countries. Many emerging economies are still struggling with new peaks of infections, high hospitalisation numbers and slow vaccination rates. Uncertainty still remains, not least from the doubly contagious new variants, with potentially worse virulence.

In the US, the quick vaccination pace has cooled down infections, hospitalisations and deaths. Activities are normalising swiftly. Extraordinary fiscal stimulus and accommodative Fed policy will bolster this recovery. Real Gross Domestic Product is expected to return to pre-COVID levels this year, though inflation risks may dampen medium term prospects.

Europe has entered into a double-dip recession in the first quarter of 2021. However, the accelerated vaccine rollout and the consequent easing of restrictions are now facilitating a recovery in activity, especially in the services and tourism sectors. The pandemic lockdowns built up excess savings. This will fuel pent-up demand to spur a pickup in consumption growth. The Recovery Fund will stimulate investments later this year.

China’s economic recovery continues apace. Its focus is shifting towards sustainable growth for the longer term. The very loose policy stance during the pandemic is being pulled back into a broadly neutral gear. Any further policy tightening is more likely to be calibrated than abrupt.

Singapore’s economy is on the mend. Sectors such as manufacturing, and professional, financial, and technological services, continue to show strength. However, recovery in other sectors such as travel and leisure, will be muted and vulnerable to any resurgences in community infections. Policy remains accommodative overall. Fiscal support remains targeted at sectors most impacted by ongoing border restrictions or renewed safe management measures. Policies and efforts to accelerate restructuring and transformation should position Singapore well in the medium term.

We should expect COVID-19 to become endemic, and prepare to live with it.

Bouncing Forward to a Better Tomorrow

COVID-19 has not derailed our ambition to be future ready. The pandemic has accelerated the longer term trends that drove our investment posture. During the year, we have refreshed and sharpened our focus around the trends of digitisation, sustainable living, future of consumption, and longer lifespans.

We continue to shape our portfolio for resilience in anticipation of future threats and opportunities. The goal is to sustain our performance, generate risk-adjusted returns over the long term, and mitigate climate risks.

Our Artificial Intelligence (AI) and Blockchain pods have made significant strides with ventures such as Affinidi and a new Centre of Excellence in AI. Our new Strategic Development workstream is already investing further upstream in emerging science and technology innovation.

One major thrust is our engagement with our portfolio companies to prepare for future challenges and disruptive opportunities.

During the year, we invested in Sembcorp Marine as part of its demerger from Sembcorp Industries. This will enable both companies to sharpen clarity and focus in their respective domains. We participated in capital raising by Singapore Airlines, to weather the COVID-19 storm, and prepare for a post-COVID world ahead.

Accelerating to a Sustainable World
Sustainability remains at the core of all that we do.

We partnered Mandai Park Holdings to co-sponsor Mandai Nature Fund, a non-profit Institution of a Public Character (IPC). This IPC will support partnerships and co-sponsorships for nature conservation and climate change mitigation in Asia.

In 2019, we worked with Temasek Trust and other co-investors to launch ABC World Asia for impact and returns in Asia. Our recent strategic partnership with LeapFrog Investments will similarly catalyse solutions and unlock benefits for communities around the world.

In Appreciation

I am heartened by the incredible adaptability and resilience of our Temasek team. They did not let up in our core responsibilities, even as they volunteered for many pandemic relief projects around the world. I salute them.

Our international and regional advisors have been, as always, generous with their insights and advice, to help us navigate an uncertain future. I am most grateful to them all.

It is my great pleasure to welcome Lou Jiwei to our Temasek International Panel in April. He brings with him an incisive mind and a wealth of experience, including in macroeconomic and sectoral developments.

We announced earlier this year that Ho Ching will retire from her role as Executive Director and CEO on 1 October 2021. Words cannot adequately express the collective debt of thanks we owe to her for her remarkable leadership over almost two decades. It is hard to call out her many achievements, but perhaps above all else, she will be remembered for her unwavering commitment to build the people and our values-based ethos in Temasek. She also oversaw Temasek’s evolution into a respected and trusted global investor and institution, and sharpened our role as a steward.

Dilhan Pillay will succeed her as Executive Director and CEO of Temasek Holdings on 1 October 2021 and will join the Temasek Holdings Board. He will concurrently retain his appointment as CEO of Temasek International. The Board looks forward to supporting him and his team in our journey towards T2030.

Lee Theng Kiat will also retire as Executive Director of Temasek Holdings on 1 October 2021, but will remain on the Temasek Holdings Board as a non-executive Director. He will continue as Chairman of Temasek International, our investment management arm, to help guide our Temasek team, as he has done over nearly a decade in various leadership roles with us.

I am deeply grateful to Goh Yew Lin, who retired on 30 June 2021 after 16 years of service. We are pleased that he has taken on the Chairmanship of Seviora, our newly consolidated asset management group.

Finally, I thank my fellow Directors for their continuing commitment to Temasek, especially in such challenging times. I deeply value their counsel, and the perspectives they bring, as we safeguard the governance and fulfil the promise of Temasek.

Temasek has evolved and transformed over the years, seeking always to remain relevant. We have a strong team with diverse skills and competencies, and a deep sense of purpose.

Temasek is well positioned to bounce forward – into a world of new opportunities created by technological change, and driven by an urgent need to address our global climate emergency.

I know we can and will act with courage and conviction, to deliver a better and more sustainable future for all.

LIM BOON HENG

Chairman

July 2021