THE ROLE OF PUBLIC ENTERPRISE AND PRIVATISATION IN SINGAPORE

Abstract

Public enterprise has played and is continuing to play a very important role in the economic development of Singapore. The emergence of public enterprises in Singapore was due to a large extent, a result of the government's attempt to provide the necessary infrastructure for its ambitious industrialisation programme, beginning from the mid-1960s. They originated from an active structural policy based on the fact that local entrepreneurs were lacking the ability as well as the will to participate actively in economic activities. In the 1980s, the government shifted the emphasis on the growth of economic development from the public sector to the private sector and laid down the formal guidelines for its privatisation programme. The main reasons (aside from the common ones) for privatisation includes the desire to redraw the public-private boundary before the economic, political, management and technological strains become too difficult to diffuse, to reduce the severe contractionary impact the huge surplus of statutory boards has on the economy as well as to reduce the overdependence on civil servants who tend to be over cautious and inflexible. Despite the trend towards privatisation, the government is by no means reducing its involvement in the nation's economic development The government is practising a rolling concept of privatisation where it divests in areas that no longer required their involvement and invest in new high priority industries. Included in this academic exercise is the case studies of four enterprises. Of the four, three enterprises namely, Singapore Airlines (SIA), Singapore Bus Service (SBS) and Singapore General Hospital (SGH) were already privatised, whereas the fourth enterprise, Singapore Telecom is earmarked for privatisation. Of the three privatised enterprise that were evaluated, SIA and SBS can he considered successful cases of privatisation although in SBS case, the full impact of the competition from the MRT is yet to be felt. As for SGH, there are much room for improvement. As for Telecom, despite the controversies surrounding its time-based charges and considering the fact that it is similar to SIA before the latter is privatised, its privatisation is likely to result in greater efficiency and effectiveness. Taken as a whole, the prospects of further privatisation looks good and already some statutory boards such as the Public Utilities Board (PUB) etc. are in line for privatisation.