Macroeconomic Policies

1.18 The Economic Review Committee (ERC) is fundamentally rethinking our economic policies, and exploring ways to promote enterprise and growth. It is the private sector that creates wealth. Hence, our strategy must be to develop a vibrant private sector: entrepreneurial, regionally and globally competitive, and profitable.

1.19 We must attract more global talent, while upgrading our tertiary education system and maximising our own human capital. We must develop new areas of growth in both manufacturing and services. Outstanding domestic enterprises should be nurtured into significant international players. Internationally competitive local companies, led by entrepreneurial and innovative Singaporeans, will complement the multi-national corporations and make our economy more resilient and dynamic.

1.20 The Government's role is to create a pro-business, stable environment in which companies can operate efficiently. We must pursue sound macroeconomic policies, including fiscal policy - the government budget; and monetary policy - the exchange rate. The tax burden must be kept as light as possible. We must rely less on direct taxes and more on indirect taxes. This will encourage people to strive and create wealth.

1.21 On CPF savings, we need to review the balance between its different uses - healthcare, housing, and retirement. We also need to study the specific problems faced by older, less-educated workers, who have difficulty finding regular jobs that pay CPF. These are complex and sensitive issues, which affect many Singaporeans. We will study them in detail, and have not yet reached any decisions. Any changes we make will be done very carefully, after full consultations and without causing disruptions either to CPF members or the property market.

Government-Linked Companies

1.22 The macroeconomic functions I have just described are common to governments in all free market economies. In addition, however, the Government in Singapore for historical reasons also participates in business through its interests in the Government-Linked Companies (GLCs), many of which have played critical roles in Singapore's economic development.

1.23 The GLCs attract considerable attention, as well as a fair share of controversy. One possible reason for this is that the raison d'etre of the GLCs has not been explicitly spelt out and accepted. Minister of State Raymond Lim's ERC Sub-Committee on Promoting Entrepreneurship and the Growth and Internationalisation of Singapore-based Companies has been reviewing the role of the GLCs. They have given the Government their views and ideas, which we have taken into consideration.

1.24 Our philosophy is to have the GLCs operate as commercial entities. The Government does not interfere with the operations of the GLCs. The companies are supervised by their respective boards of directors, who are accountable to their shareholders, including the Government.

1.25 The Government will not favour GLCs with special privileges or hidden subsidies; nor will it burden them with uneconomic "national service" responsibilities. The GLCs are expected to compete on a level playing field, and frequently in a global environment.

1.26 As global competition heats up, the GLCs, like other Singapore companies, will have to continually enhance their core competencies. Temasek Holdings is the holding company that owns the Government's shares in most GLCs. It is therefore Temasek's responsibility to help the GLCs under its charge grow into internationally competitive businesses.

1.27 One issue of public interest is the Government's policy on divesting its shares in the GLCs. Where the activities are strategic and crucial to Singapore, such as aviation and the electricity grid, the Government intends to retain its majority or significant stakes. For those strategic activities that are still wholly-owned, the Government hopes to list them in future, if it makes sense to do so in order to help them grow and increase shareholder value.

1.28 For other major businesses with global or regional potential, Temasek will grow them to the benefit of Singapore over the long term. If growing a GLC into a major player requires the Government to dilute its stake through new share issues, mergers or acquisitions, the Government is prepared to do so.

1.29 As for the GLCs that are no longer relevant to the Government's or Temasek's objectives, the Government will divest or dilute its shareholdings in a controlled way. It will take a pragmatic approach, and pay close attention to prevailing industry and market conditions. For example, once the electricity market is operationally ready, we plan to divest our power-generating companies: Power Seraya, Power Senoko and Tuas Power.

1.30 It is often suggested that if only the Government would sell off all the GLCs to somebody else, Cinderellas would magically become beautiful princesses. Alas, this only happens in fairy tales. There is no effortless shortcut to upgrading and developing the GLCs, and the Government cannot abdicate its responsibilities as a major shareholder.

1.31 Temasek Holdings is currently working out a charter with MOF that will spell out Temasek's mission, role and responsibilities. Temasek intends to publish this charter soon to make it clear how the Government sees the role of the Temasek companies in the Singapore economy.