The threat of taking over large chunks of the economy comes more from countries which will accumulate very big funds, said Mr Lee.

The Minister Mentor noted that China has reserves of US$1.3 trillion. "With oil at US$100 and if it carries on for 5 years, I think you are going to have Saudi Arabia and a few of the Gulf states with enormous resources," he said.

"So, I think (for) the US Treasury, there is a reason why they have engaged GIC and Norwegian - I can’t remember the name of the Norwegian fund - for discussions to work out what we can recommend as enough disclosures to satisfy the countries we’re investing in (that) we don’t have a hidden agenda. And that shouldn’t be difficult," Mr Lee added.

He was speaking during a question and answer session at the 40th anniversary celebrations of the Institute of Southeast Asian Studies in Singapore on Monday night.

GIC had recently bought a 9 percent stake in the Swiss bank UBS for nearly US$10 billion, while Temasek had injected about US$4.4 billion into Merrill Lynch, a US investment banking outfit.

Mr Lee was asked by a journalist from the London-based Financial Times if he was worried about Western backlash against sovereign wealth funds.

Responding, Mr Lee said: "Definitely your government welcomes all sovereign wealth funds, including the Chinese. So if you’re not afraid of the Chinese, with US$1.3 trillion (reserves), you wouldn’t be worried about Singapore, with its (reserves of) only over US$100 billion from GIC and another US$80 billion—US$90 billion from Temasek. So rest in peace, sleep well." — CNA/ir

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