DIVESTMENT OF GOVERNMENT COMPANIES

Mr Chng Hee Kok asked the Minister for Finance how many companies have been divested and are about to be divested by the Government as a result of a review by the Divestment Committee.

The Minister for Finance (Dr Richard Hu Tsu Tau): Mr Speaker, Sir, the Government has so far sold off its shares in four companies on the recommendation of the Divestment Committee. The companies are National Iron and Steel Mills Ltd, United Industrial Corporation Ltd, Dowty Aviation Services Pte Ltd, and the Singapore Airport Duty-Free Emporium Pte Ltd.

Two other companies, Singapore National Printers Pte Ltd and Resources Development Corporation Pte Ltd, are seeking listings in the Stock Exchange. These companies will be partially privatized through sale of equity but control will be retained by Government for the time being.

The Public Sector Divestment Committee has presented its report and its recommendations are being studied by Government. An announcement will be made in due course.

Mr Chew Heng Ching (Kaki Bukit): Sir, may I know what are the criteria for divestment of a Government company?

Dr Richard Hu Tsu Tau: Mr Speaker, Sir, the basic criteria have been announced previously, and this is that Government will consider the divestment of companies in which there is no longer any reason for Government to retain either partial or controlling shareholdings. These would generally consist of companies which are mature and where we consider that there is no strategic reason for Government to retain the shareholding,and they would include companies which might be in conflict with the private sector. There are a variety of reasons but these would be the principal ones.

Mr Chng Hee Kok: Sir, is the capital gain or loss in divestment a criterion in this respect?

Dr Richard Hu Tsu Tau: The preferred route of divestment would be through the placement of equity in the stock market so that there is a diversified and widespread public shareholding. This would require that companies floated in this way are viable and profitable. There are, of course, certain small companies where Government has a negligible minority interest which do not meet these criteria and these would be sold off to the majority shareholders. By and large, the record is that the majority of Government companies have been profitable. So one could assume that substantial and significant capital gains would have accrued over the years.