Singapore’s sovereign wealth management ecosystem, comprising the Government Investment Corporation (GIC), Temasek Holdings, and the Monetary Authority of Singapore (MAS), has been instrumental in securing financial stability and generating long-term returns. However, the shifting global economic landscape necessitates a third sovereign fund—one specifically designed to capitalize on high-growth opportunities in the Global South while accelerating domestic innovation.
As global economic power disperses — the Global South an emergent pole —and the dynamics of investment evolve, Singapore must proactively adapt to sustain its financial influence. The creation of a third sovereign fund would serve as a strategic tool to:
Expand Singapore’s economic reach into high-growth but underinvested regions.
Diversify investment risks and reduce over-dependence on
Fortify national innovation capabilities to future-proof economic resilience.
This fund would play a strategic role in positioning Singapore as a key economic architect in a multipolar world, mitigating risks associated with economic concentration in developed markets, and bolstering its competitiveness in emerging sectors.
Capturing Growth in the Global South
The economic epicenter of global growth is shifting towards emerging markets, particularly in Africa, Latin America, Central Eurasia, and the Indian Ocean Region (IOR). A dedicated sovereign fund targeting these regions would allow Singapore to:
· Diversify risk: Reduce exposure to volatile developed markets by investing in rapidly expanding economies.
· Secure first-mover advantage: Focus on under-penetrated sectors like renewable energy, agritech, and fintech.
· Leverage Singapore’s neutrality: Navigate geopolitical complexities and avoid the challenges faced by Chinese and Western investments.
The Global South is projected to drive global GDP growth, averaging 4.06% annually through 2035, compared to 1.59% for advanced economies, according to a 2024 S&P report, “Emerging “Markets: A Decisive Decade.”
Infrastructure gaps in energy, transport, and digital networks provide Singapore with a unique opportunity to deploy its expertise in sustainable urban development and technological innovation.
Furthermore, as the global economy becomes increasingly fragmented due to shifting trade policies, sanctions, and geopolitical realignments, Singapore’s ability to act as a neutral and strategic investor in these markets could yield long-term economic and diplomatic advantages.
Strategic investments in emerging economies would not only provide substantial financial returns but also deepen Singapore’s trade and financial linkages with new economic powerhouses.
The expansion of digital banking, mobile payments, and cross-border financial infrastructure in Africa and Latin America, for example, presents an opportunity for Singaporean fintech firms to establish a presence in these regions, leveraging existing expertise in digital financial services and regulatory frameworks.
- Strengthening Singapore’s Influence as a Global Investment Hub
A third sovereign fund would allow Singapore to deepen economic ties and expand diplomatic influence by
· Aligning with regional trade partnerships: Strengthening connections with ASEAN, MERCOSUR, and the African Continental Free Trade Area (AfCFTA).
· Positioning as a counterweight to China’s Belt and Road Initiative (BRI): Offering an alternative, transparent, rules-based investment model.
· Enhancing Singapore’s reputation as a bridge between emerging markets and global capital: Facilitating investments in frontier markets that traditional funds may overlook.
Strategic investments in key transit and energy hubs such as Kazakhstan and Azerbaijan — whether in traditional infrastructure or startup ecosystems — can further bolster Singapore’s economic footprint in Central Eurasia, reinforcing its role as a crucial player in global trade networks.
The ability to navigate and operate in complex environments where traditional investors hesitate will allow Singapore to consolidate its position as an indispensable financial intermediary for frontier markets.
For instance, in recent years, Central Eurasia — comprising Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan — has gained prominence in the global economy.
With a population of about 100 million and around 7,000 start-ups as of 2023, the region shows strong potential for economic development and innovation. Increasing internet usage is reshaping user habits, enhancing B2C opportunities, and solidifying its role as a B2B hub for start-ups.
A third sovereign fund would help Singapore tap this development potential and respond to the emerging realignment of supply chains and economic structures that such development brings. As countries and corporations seek to reduce dependence on single-source manufacturing and logistics hubs, Singapore’s investment vehicle could facilitate the development of diversified production bases in Central Eurasia and the Global South, ensuring economic security for both Singapore and its trading partners.
- Fueling Domestic Innovation and Economic Sovereignty
Despite Singapore’s strong startup ecosystem domestically, local firms face significant challenges in scaling beyond early-stage funding rounds. A new sovereign fund could:
· Provide patient capital for deep-tech ventures: Focus on AI, quantum computing, and advanced manufacturing.
· Support SME expansion into Global South markets: Offer co-investment frameworks and risk-sharing mechanisms.
· Prioritize strategic national sectors: Enhance self-reliance in cybersecurity, logistics, and bioengineering.
Singapore’s economy is highly dependent on its ability to continuously innovate and upgrade its industrial and technological base. However, private venture capital and commercial financing models often prioritize short-term returns, limiting funding for high-risk, high-reward innovation sectors.
A third sovereign fund would allow Singapore to take a long-term perspective on investments in critical technologies, positioning itself at the forefront of the next industrial revolution. Furthermore, the fund could serve as an enabler for cross-border innovation collaborations.
By investing in research hubs and technology transfer partnerships with universities and enterprises in the Global South, Singapore could create a pipeline for cutting-edge innovations that align with national economic priorities.
Encouraging the expansion of Singaporean SMEs into frontier markets would also create new revenue streams and lessen reliance on traditional economic sectors such as financial services and trade.
With ongoing geopolitical realignments, including US-China decoupling and supply chain disruptions, targeted investments in domestic R&D and critical mineral assets in Africa would strengthen Singapore’s economic resilience.
Unlike GIC, which focuses on liquid assets, and Temasek, which invests in commercial equity, the proposed third fund would pursue frontier market investments and pre-commercial technologies with a 20–30-year horizon.
While investing in emerging markets presents challenges such as political instability and currency fluctuations, Singapore’s robust governance framework allows for effective risk mitigation through
· Blended finance structures: Combining concessional capital with private investment to de-risk projects.
· Scenario-based exit strategies: Reducing exposure to geopolitical shocks.
· Partnerships with multilateral institutions: Collaborating with the African Development Bank (AFDB) and regional sovereign funds to enhance investment stability.
To avoid redundancy, the new fund’s mandate should be clearly demarcated from existing entities. Its scope should focus on markets where GIC and Temasek have minimal presence, such as Ethiopia and Bolivia. Structurally, a hybrid model—sovereign-backed but privately managed—would provide the necessary agility to navigate complex emerging market conditions.
Moreover, the fund should implement a governance framework that ensures transparency and accountability. Lessons from international sovereign funds, such as Norway’s NBIM and Abu Dhabi’s Mubadala, illustrate the importance of maintaining strong oversight mechanisms to safeguard national interests while enabling financial flexibility.