SINGAPORE AIRPORT DUTY-FREE EMPORIUM (Sale of Government's equity)

Mr Ho Kah Leong asked the Minister for Finance what is the rationale behind the sale of 31 per cent of the Government's equity holding in Singapore Airport Duty-Free Emporium Private Limited to Singapore Airlines Limited; and what are the benefits to the Government from that transaction.

Mr Hon Sui Sen: Sir, I do not consider it appropriate, as a rule, that I should be called upon to explain operational decisions on investments, particularly where they involve transactions between one Government company and another. I shall, however, make an exception in this case.

Singapore Airport Duty-Free Emporium was set up in October 1974 as a joint venture between the Government, Singapore Airlines, and Singapore Airport Terminal Services. SIA is owned by the Singapore Government while SATS is owned by SIA. The joint venture company is therefore essentially a Government company. The Government's shares in both SIA and SADE are now held by Temasek Holdings (Pte) Ltd, which is a Government company.

In March last year the SIA Group suggested that its stake in SADE should be increased to reflect more closely its major involvement in SADE's operations:

1. The Group was managing the company.

2. SIA was promoting SADE not only in its ticketing outlets in Singapore but throughout its network.

3. SIA would prefer to sell duty-free goods at the Airport than on board its aircraft.

This was agreed, and after negotiations, a suitable transfer price was agreed.

The benefits to Government from the transaction are presumably that credit is given where credit is due, higher profits accruing to the organisation striving to promote increased business.

Mr Hwang Soo Jin (Jalan Kayu): Sir, will the Minister please inform the House, as a matter of principle why should he make an exception in this particular case?

Mr Hon Sui Sen: Sir, the object of this exception is to inform Members that, in operational details, there is really no purpose in the House enquiring nor is there any purpose in the Minister enquiring why in a particular company, the SIA, for example, chooses Boeing 727 instead of the Airbus. This is a matter of commercial judgment and the details are best left to the company concerned. The Minister would himself not be in a position to make any better judgment nor would the Members of this House if the details were known.

Mr Hwang Soo Jin: Sir, who are the owners of all these monies belonging to all those companies?

Mr Hon Sui Sen: The Minister for Finance is ultimately the owner. This is a corporation which is enacted under an Act of Parliament, so that ultimately the Singapore Government is the owner of all the monies of all the Government companies.

Mr Hwang Soo Jin: Sir, would the Minister not agree that since we are all representatives of the people, and the people own the money, but which the Minister alleged that he owns them, are `we not shareholders in all these companies?

Mr Hon Sui San: I agree entirely that the people of Singapore, including Members of Parliament, are shareholders in the Government companies. But as to the process of enquiring into the operations, I think the shareholders of companies are not really asked at annual general meetings to consider whether, in fact, SIA or any other company has made a good commercial judgment in, say, using Sulzer Diesel Engines rather than Burmeister and Wain Diesel Engines, or whether they should buy a Boeing 727 rather than an Airbus. I can see no connection between shareholding and enquiries into operational details.

Mr Hwang Soo Jin: Is the Minister suggesting or implying that Members may raise questions concerning policy matters relating to all these companies and not day-to-day administrative matters?

Mr Hon Sui Sen: Certainly. All matters of policy are the concern of the Minister for Finance and consequently, since he is accountable to Parliament. he is accountable to Members of Parliament.