CONTROL OVER DIVERSIFICATION OF GOVERNMENT COMPANIES

Mr Hwang Soo Jin asked the Minister for Finance and Minister for Trade and Industry what steps are being taken by the Government to strengthen control over the diversification activities of government-owned or government-controlled companies.

Dr Tony Tan Keng Yam: Most of the companies, which are owned or controlled by government, were set up in the 1960s and early 1970s. The companies were established principally to satisfy economic policy objectives prevailing at the time.

Every dynamic enterprise makes appropriate responses to changes in external conditions. Government companies are no exception. Many of them launched activities which were related to their main line of business or specialisation. Those companies have by and large done well.

A few companies may have strained the definition of related activities. Those companies are now being curbed and all companies have been reminded that they should not stray too far from their core businesses.

I wish to assure the Member that the Ministry of Finance takes a close interest in the affairs of government companies. Every quarter I chair a meeting of senior government officials which reviews, in some detail, the performance and major activities of government companies. Reports on the progress of the companies are submitted to Cabinet regularly. In addition, I make it a point to visit periodically the major companies which are owned or controlled by government.

With the above steps I am satisfied that there is adequate supervision over the diversification activities of government-owned or government-controlled companies. It would, however, not be desirable, in my view, to hobble government companies to such an extent that the managements are inhibited from making normal commercial decisions without reference to the Ministry of Finance.