GOVERNMENT LINKED COMPANIES (Review of performance)

The following Question stood in the name of Mr Tay Beng Chuan -

Mr Tay Beng Chuan: To ask the Minister for Trade and Industry (a) whether his Ministry has conducted a critical review of the performance of Government linked companies (GLCs) and its impact on the Singapore economy; and (b) whether the strong presence of the GLCs in our domestic economy will impede our current efforts to create a pro-enterprise environment for businesses, especially the private entrepreneurs and the small and medium enterprises.

Mr Simon Tay: Question No. 8, Sir.

The Minister for Trade and Industry (BG George Yong-Boon Yeo): Mr Speaker, Sir, GLCs operate on a commercial basis, like private-sector companies. They do not receive any subsidy or preferential treatment from the Government, and are subject to the same regulations and market forces as private entrepreneurs and SMEs.

The influence of GLCs on our economy is often over-stated. There is a perception that GLCs dominate our economy. Even a recent US Embassy report over-estimated that GLCs contributed 60% to our GDP. This is not correct. The Department of Statistics (DOS) has studied this matter and found that GLCs contribute just 12.9% to our GDP. This refers to companies where the Singapore Government has effective voting shares of 20% or more. In contrast, MNCs play a much bigger role, accounting for 42% of our GDP. The Department of Statistics will be releasing its detailed study soon.

Although complaints are made from time to time, there is clear evidence that the presence of GLCs has not compromised the ease and attractiveness of starting up new businesses in Singapore. For example, Singapore was ranked 8th in the Startup Index of the 2000 Global Competitiveness Report. The number of new companies registered yearly have also been on the rise, with the number registered in the 2000 up 16% from five years earlier, and 70% compared to 1990.

The Government will continue to ensure that our markets remain open and competitive, and that the playing field is level for all companies. It is not Government's policy to favour GLCs and, if there are valid criticisms, we will act on them. In fact, the Government is reviewing its rules and regulations to make sure that these rules and regulations facilitate, and not inhibit, private enterprise, especially for the New Economy.

The question is: should we reverse-discriminate against GLCs in Singapore in order to favour private companies? If we do this, Singapore consumers will lose out. As long as their practices are competitive, we should not force GLCs out of the local market. In any case, our domestic market is small. To grow, Singapore companies have to look beyond Singapore and, for this reason, the Government encourages Singapore companies, including our GLCs, to venture overseas.

Mr Simon Tay: Sir, I think the Minister's revelations of the figures are quite interesting, given the feeling among many that it is not the case. Could I invite the Ministry to also reveal the figures according to sectors - manufacturing, etc - so that we can get a clearer picture? Additionally, would the Minister share his views about the possibility of having competition law in Singapore to ensure a level playing field for all, including GLCs?

BG George Yong-Boon Yeo: Mr Speaker, Sir, I will ask the Department of Statistics to consider including the statistics which Mr Simon Tay has asked for, when it releases its detailed report on its study.

As for whether we should introduce a competition law in Singapore, such as is found in some of the more advanced countries, we are still reviewing this matter in MTI. In fact, we are under some pressure to do this, in the course of our negotiations on Free Trade Agreements with other countries. But there are complications involved. We propose to do this step-by-step, and the Energy Market Authority that we are setting up, will be a first step towards the establishment of such a regime where, for industries which we identify explicitly, certain rules governing competition will apply. But as to whether we should apply this across-the-board in Singapore for all sectors, it is a step that we are not yet ready to take.