Singapore to keep stakes in local economy

Singapore to keep stakes in local economy

Agencies, Singapore

State-run companies have been key to Singapore's success and the government will keep its stake in parts of the local economy though slowly reduce its involvement with time, the chairman of the government's powerful investment holding company said Wednesday.

S. Dhanabalan, chairman of Temasek Holdings, said the island- state would not be so wealthy if the government had not formed companies after independence in 1965.

The government will remain involved in the city-state's most strategic companies while divesting stakes in others, he said. The government is also venturing into high risk areas such as life sciences, he said.

Singapore's government is involved in telecoms, banking, ship repair, engineering, transportation, news media, financial services, property, hotels, construction, and power and gas - to name a few.

Critics have coined the term "Singapore Inc" to describe the government's heavy involvement in the economy. But Dhanabalan said that Singapore's state-linked companies, unlike many of their counterparts elsewhere in the world, are well-managed, not corrupt and offer good financial returns.

Some Temasek-held companies, such as DBS Group Holdings Bank, Singapore Airlines, NOL and Singapore Telecommunications have acquired foreign assets, fulfilling a key government aspiration.

"SingTel's done well," he said, referring to the regional telecommunications player which recently acquired Cable & Wireless Optus Ltd., Australia's second largest phone company.

Dhanabalan, also chairman of Southeast Asia's biggest lender DBS Bank, maintained the government must remain in key sectors of the economy.

"We feel that we should have control or influence over projects with strategic importance," he said, citing Temasek's primary objective in the next five years.

A second priority would be to "participate in high-risk growth sectors" like biomedical sciences which Singapore is developing to reduce the city-state's dependence on electronics exports.

The third area would be to "nurture" Singapore companies, whether part of or outside its stable, to become regional and global players, Dhanabalan said.

He said there was a need to keep interests in strategic sectors, although not necessarily controlling stakes, because Temasek wanted to "continue to have some insight into the industry and into the company."

"Outside these, we will continue to reduce our participation (in marginal operations) through our divestment policies basically because we want to focus our scarce management resources," he said.