MINISTER Mentor Lee Kuan Yew, who is also the chairman of the Government of Singapore Investment Corp (GIC), said yesterday that the sovereign wealth fund would be cautious and take few risks.

His comments came after the country's other sovereign wealth fund Temasek saw losses on its investments in Western banks. 'GIC will be cautious, low-risk,' said Mr Lee, in a discussion at an aviation meeting here.

Temasek's new American chief executive Chip Goodyear would, however, 'seize opportunities along the way', said Mr Lee.

He was in Kuala Lumpur to receive the prestigious Global Aviation Leadership Award (Gala) from the summit of the International Air Transport Association (Iata), after which he consented to a wide-ranging, 30-minute dialogue with Nik Gowing of the British Broadcasting Corporation (BBC) before a packed audience.

Asked whether he had ever feared the worst during the global financial crisis, Mr Lee replied that he 'wasn't an expert' but 'knew many experts', singling out (former US Federal Reserve chairman) Paul Volcker, (former Harvard president) Larry Summers and (US Treasury Secretary) Timothy Geithner.

Mr Lee said that, in their judgement, the economy was near the bottom. 'Volcker thinks it could be between the long U or a long L. I think it is a long U. But a rebound may not be as frenetic as previous pick-ups.'

Asked if things would ever return to a business-as- usual mode, Mr Lee's answer was an emphatic no. 'Commercial banks will remain pure commercial banks, keeping the currency in circulation by lending to businesses and industry,' he noted. 'I don't think they will try becoming investment banks. That's how they ended up with the toxic assets. But it will be a change for the better.'

Mr Lee said the gradual evolution of China and India to economic-power status would make the difference going forward.

'There are 1.3 billion Chinese, one billion Indians who are going out into the world, who no longer want to be poor and backward. There are 2 million Indians doing well in the US and 100,000 Chinese going there to study every year.'

He said the same applied to the future of the aviation industry after Mr Gowing said it was in 'a survival mode'. Mr Lee's reply: 'There has been an inexorable shift from the Atlantic to the Pacific.'

On his opinion of President Barack Obama, Mr Lee said that he hadn't met him but 'the (Singapore) prime minister, my son, met him for an hour . . . during his campaign and found him thoughtful and curious about South-east Asia, China and India. That he is capable, I have no doubt.'

Mr Lee threw in a caveat, however, saying that 'his only concern' was that Mr Obama seemed to be fighting on too many fronts. 'It should be just . . . the economy, the economy, the economy,' the minister mentor told the audience. 'But he's looking at climate change, healthcare, housing. There are so many balls in the air.'

Mr Lee is only the third recipient of Iata's Gala accolade. In its statement, Mr Lee was described as an 'outstanding, incredible leader' whose 'unique vision founded one of our industry's strongest carriers and most efficient airports. His unwavering commitment to liberalisation and free-market principles was ahead of its time in 1972 - principles that are critical to the industry's development even today.'

Iata was unstinting in its praise. 'Minister Mentor Lee's approach to industry regulation was similarly visionary,' the statement said. 'Under his leadership, Singapore implemented an aviation policy based on free and open competition, positioning Singapore as an important hub for global aviation.'

Iata represents some 230 airlines comprising 93 per cent of scheduled international air traffic.