(CONTINUED 2):Motion on Temasek Charter and EISC'S Recommendations on Government in Business By Deputy Prime Minister and Minister for Finance Mr Lee Hsien Loong - Speaking Points for DPM'S Round-up Speech at The Parliament, 28 Aug 2002

EISC Recommendations on Government in Business

The Temasek Charter and the government's attitude towards divesting GLCs are fully consonant with the recommendations of EISC on Government in Business. The govern-ment fully supports in principle all these recommendations.

Mr Leong Horn Kee went beyond the EISC proposals, to make ten recommendations of his own. I have already dealt with most of them, but let me recap them briefly:

• Curb proliferation of GLCs - agree that GLCs growth should be disciplined, but cannot agree never to start or grow GLCs;

• Government to set up specific timeframe for divestment - disagree;

• Government to outsource any commercial requirements - agree in principle;

• Review of subsidiaries under the SBs and government agencies - agree;

• NTUC/SLF to review its stable of companies - for NTUC/SLF to decide. Halimah and Heng Chee How have already explained eloquently NTUC's views;

• Give priority to enacting competition law - agree;

• GLCs to enlist more private sector persons in boards and management - GLCs need to seek best talent, whether private or public sector;

• Encourage more MBOs and divestment to locals - MBO is one method of divestment to be considered, but whether it is the best approach depends on particular circumstances of the GLC and the specifics of the MBO proposal;

• More GLCs and private sector co-operation as cluster or consortium - agree in principle; and

• Regular study by DOS on GLCs' share of GDP - agree.

Conclusion

I thank Wang Kai Yuen for the historical perspective. These same issues were debated 20 years ago and we will probably still be debating them 20 years on. We need to try to rise above the situation. Do not assume the problem will go away if there were no GLCs. As Koo Tsai Kee and Halimah Yacob pointed out, without GLCs, the vacuum could be filled by the large private companies or MNCs, and SMEs would still have to face fierce competition.

The EISC recommendations on Government in Business will help to define the government's role, and foster the growth of private enterprise and entrepreneurship. Temasek's Charter will guide the Temasek companies on what the govern-ment as shareholder expects of them. As for the private sector's concerns over GLCs, the govern-ment will tackle those problems whenever they arise. The government will exit from businesses that are no longer relevant, but it cannot do this overnight.

The solution is not to dump the GLCs altogether, or to handicap the GLCs in order to prevent them from competing fairly but robustly against private companies. GLCs, private companies and SMEs all have roles to play in growing our economy and developing our external wing. They will sometimes compete, but they should also co-operate with each other. As Indranee and others said, the issue is Singapore Inc. versus the rest of the world. Government's overall thrust is thus to grow the private sector as a whole, whether GLCs or non-GLCs. And as Fang Ai Lian pointed out, the issue is also entrepreneurship, because that it is the spirit of enterprise that will help us to adapt and grow as the world changes.

As the economy grows, and the private sector expands, the shape of government in business will change. The key is not whether companies are government owned, but whether they are well run, entrepreneurial and profitable.We have every intention of ensuring that GLCs are as well run, entrepreneurial and profitable as private companies. That is the way to build an efficient and vibrant economy.

In this spirit, I support the motion.