SINGAPORE, Sept 9: Singapore Prime Minister Lee Hsien Loong said on Tuesday the United States should treat investments from sovereign wealth funds objectively and avoid a “paranoid xenophobic” response.

At a forum attended by top corporate chief executives, Lee strongly defended the overseas forays by Singapore’s state-linked investment firms, saying they do not have any political agenda.

“Our sovereign wealth fund has a very clear mandate,” Lee said in response to a question on SWFs, government-created investment vehicles which have emerged as a potent force in global markets.

“They are there to maximise the long-term, risk-adjusted returns of the portfolio, to do well, grow the money but not go and break the bank and not to have other political or non-commercial objectives factored into their decision.”

He was interviewed late Tuesday by Steve Forbes, the publisher of Forbes Magazine, in front of the corporate audience attending an international conference.

The rise of SWFs, many of them from Asia and the oil-rich Gulf region, have sparked concerns that their investment policies are too opaque and could threaten national security.

As the US economy and banking system has faltered in the past year, SWFs have come to the rescue of over-stretched US banks hit by multibillion dollar losses tied to a housing market slump.

State-linked Singapore investment firm Temasek Holdings invested heavily in US bank Merrill Lynch, a victim of the financial crisis that erupted after the meltdown in the US subprime mortgage sector.

Singapore’s other investment arm, the Government of Singapore Investment Corporation has also made multi-billion-dollar investments in global banking giants UBS and Citigroup, both victims of the crisis.

“I think if you take it from the United States point of view, you should treat this with some equanimity... Your challenge is how to keep the economy open and yet have adequate safeguards,” Lee said.

“You have to look at it in an objective way... and ask what does this transaction mean for America and yet not come to a paranoid xenophobic response and refuse all foreign investment or scare off all foreign investors.”—AFP