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Singapore Privatization
Privatization was the long-term government policy that
ultimately could have the most effect on the structure of
the
economy and the lives of Singaporeans. At one level,
privatization
represented the government's decision, articulated in the
1986
Report of the Economic Committee, that the economy had
sufficiently
matured for the private sector to become the primary
engine. Since
government-owned enterprises had "been successful in their
respective areas of endeavor and should continue to be
so," the
government no longer needed to continue running them. In
1987 a
government-appointed committee, the Private Sector
Investment
Committee, issued a report recommending the sale of shares
in 41 of
the approximately 500 state-backed firms, ranging from
Singapore
Airlines (SIA) to the national lottery, while retaining
more than
half the value of the share. SIA shares subsequently went
public,
although the government retained control. Sale of four
statutory
boards, including the telecommunications monopoly, was
also
recommended in the proposed ten-year divestment plan.
At another level, privatization meant that, over time,
Singapore intended to divest itself of the loss-making
functions of
government--chiefly the responsibility for subsidizing
housing and
health care--the burden of which would increasingly be
shifted to
private employers and the workers themselves. Examples of
the
likely trend were the addition of Medisave and the
topping-up plans
to the Central Provident Fund package. The government was
increasingly unable, given escalating costs, to provide
subsidized
social services to match the ever-rising demands and
expectations
of the population. The result might be called a shift from
"state
welfarism" to "company welfarism."
Singapore's younger leaders seemed particularly in
favor of
privatization. Although they approved of the near-monopoly
on
political life maintained by the People's Action Party
(PAP), they
expressed fear that Singaporeans were growing far too
dependent on
the government and expected it to solve their problems.
Through privatization the state was changing its role
from that
of direct provider of social and business amenities to
that of
director and overseer of a much wider range of private,
social, and
business institutions. The strategy was not without
problems,
however. One of the most difficult questions was what
effect
privatization would have on the management of the divested
companies and on the statutory boards. Since the
government had
absorbed the "best and brightest" into the civil service,
there was
a critical shortage of private-sector top-level
entrepreneurial
talent. Moreover, even if the plan were carried out fully,
the
government would still maintain control in many areas of
industry
and services because more than half the value of shares of
state
firms would remain under government control, a partial
divestment
at best.
Economist Linda Y.C. Lim had suggested in 1983 that,
despite
the success of its state development policies, the
government
itself had succumbed to the free-market ideology and
believed that
its so-called Second Industrial Revolution in the
mid-1970s--
upgrading technology and moving upmarket--required
dismantling much
of the state apparatus rather than divesting itself of its
profitmaking functions. She also warned that the shift would
likely also
mean more interference by the government in companies'
internal
production and employment decisions. The new policy, Lim
contended,
could also inhibit rather than enhance free-market
adjustments in
the labor market: labor and management would be locked
into
benefits derived from a particular company, which in turn
could
adversely affect productivity. Singapore's spectacular
economic
success, Lim asserted, was the result more of state
intervention
than of the free market. "Privatization--the reduction of
the
state's responsibility for social welfare--will further
limit free
market adjustments and personal freedoms, and possibly
pose a
threat to continued economic success while undermining the
government's political support on which both political
stability
and labor peace--the strongest investment attractions of
Singapore-
-were based."
Economist Lawrence B. Krause suggested in 1987 that
Singapore
needed less government control of the economy, which could
come
about through the government's restraining itself from
absorbing
new investment opportunities and encouraging local private
entrepreneurs to undertake the new investing. In time,
this would
likely produce a more vibrant economy.
Data as of December 1989
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