COMPANIES WITH GOVERNMENT SHAREHOLDING (Submission of Annual Reports to Parliament)

Mr Low Thia Khiang asked the Minister for Finance whether he will consider introducing legislation to require companies operating both locally and abroad, in which the Singapore Government has a shareholding, to submit their annual reports to Parliament for scrutiny.

The Minister of State for Finance (RAdm Teo Chee Hean)(for the Minister for Finance): Mr Speaker, Sir, it is not possible or practical to require foreign companies to submit annual reports to Parliament for scrutiny just because the Singapore Government happens to own some shares in that foreign company.

As for companies in Singapore, they are governed by the Companies Act, and are not accountable to Parliament. This has to be so as companies are private entities run on a commercial basis, and have to respond and react quickly to market changes. It would be difficult for our companies to operate if they were to be made accountable to Parliament for their actions. In this respect, Government-linked companies are no different from other companies. Like other companies, they are subject to the same disclosure and reporting requirements under the Companies Act, unless specifically exempted under the provisions of the Act.

In addition, Government-linked companies listed on the Stock Exchange are accountable to their shareholders for their annual performance and operations. They have to circulate their annual reports to shareholders.

Strategic companies owned by the Government, such as Temasek Holdings and Government of Singapore Investment Corporation, are included in the Fifth Schedule of the Constitution. Such companies are subject to the provisions of the Elected President in the use of their accumulated reserves and the appointment of directors and chief executive officers.

There is thus no further need to introduce new legislation to require Government-linked companies to submit their annual reports to Parliament, as existing requirements under the Companies Act and the Constitution are adequate. To do so would not improve the disclosure requirement of the companies but, conversely, could adversely affect their flexibility to operate in the market environment.

Mr Low Thia Khiang: Does the Minister of State agree that companies which the Government has a shareholding, and it is the country's and people's money, should also be accountable to Parliament?

RAdm Teo Chee Hean: Sir, the Government is responsible to Parliament for the financial performance of its investments. But what the Member is asking for is for each company in which the Government happens to own shares, whether foreign or local, to submit its report to Parliament. I think Parliament will be deluged by a great number of such reports and it would not serve the purpose of this House.

Mr Low Thia Khiang: Would the Minister of State consider publishing the list of companies which the Government has a shareholding, whether foreign or local.

RAdm Teo Chee Hean: Sir, there is a very large number of these companies and from time to time the Government may acquire some shares in some companies and other shares in other companies, and may divest shares in one company according to the investment needs. These holdings may not be of a very long term or permanent nature. To make such a list, I am not sure would also serve the purpose. The basic point is that the Government is responsible to this House for the financial performance of its investments. These are reported annually in the Budget.

Mr Low Thia Khiang: Sir, does the Minister of State agree that by disclosing the shareholding of the Government in each company, it will be easier for the public as well as Members of Parliament to know what are the investments and whether a particular investment is making profits or making losses, rather than lumping them together as a lump sum figure.

RAdm Teo Chee Hean: Sir, the fact that the Government is an investor or not an investor may itself have an impact on the market. Therefore, we should deal with this matter in a rather more circumspect way. Let us concentrate on what are the things which are important for this House. It is important for this House to know whether the Government's total investment strategy is working or not working, and whether or not Government is making a reasonable return on its investment. The total performance of the Government's investments is reported in the Budget book already. That is the criterion from which Government's financial performance should be assessed.

Mr Low Thia Khiang: Sir, does the Minister of State agree that it is also equally important for this House to know the detailed pattern of the Government's investments? What is the objection if, let us say, you report to Parliament once a year on what has been invested?

RAdm Teo Chee Hean: Sir, I am not sure that it would serve the purpose of this House to have such a listing, because what you are interested in is the performance of the Government in its investments. Having such a listing would not serve that purpose.