ABSTRACT
The corporate economy in Singapore in the past three decades has been characterized by the rise of a few large and often monopolistic corporations owned and controlled by the state and its investment groups. This increasing concentration in the industrial and corporate structure is clearly evident from the following statistics. In 1963, large firms accounted for 3.8 per cent of the total number of firms; by 1988 this rose to 10.4 per cent. Manufacturing output of large firms contributed to 36.6 per cent of total output in 1963 but rose to 81.5 per cent in 1988. Value-added manufacturing attributable to large firms in 1963 was 47.8 per cent, rising to 73.4 per cent in 1983 and 81.6 per cent in 1988.1
This concentration in production within large firms intensified by 2000-1. Large government-linked corporations and foreign-owned firms produced 67 per cent of the GDP in 2001.2 This industrial concentration was also reproduced by corporate concentrations where, in 1999, 27 per cent of the total market capitalization of the Singapore Stock Exchange was held by a single investment company – Temasek Holdings. Temasek Holdings, in turn, held a dominant stake in the top 20 companies, listed on the Singapore Stock Exchange.3 These 20 corporations alone accounted for almost 40 per cent of the total manufacturing output in 1999-2000.4
The second critical feature is the level of foreign participation in this concentrated growth between 1968 and 1990 and after 1990 with the increasing substitution of these foreign firms by large government-linked corporations. In 1968, wholly local-owned firms formed 80.5 per cent of the total number of firms, while wholly foreign-owned firms accounted for 11.7 per cent; their respective shares in total output that year were 41 per cent produced by local firms, and 46 per cent attributable to foreign firms. By 1990, this had transformed to local firms accounting for 67.7 per cent of the total number of firms and share of foreign firms contracted to 23.4 per cent of the total. Their output, however, remained higher than that of local firms, 5
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of local firms was 17.8 per cent and foreign firms’ share rose to 70.7 per cent. However, this was to change in the 1990s. The one major factor for change was the rise of the government-linked companies (GLCs) deepening concentration and influence. GLCs numbered 361 in 1981, rising to 720 in 1994 and declining to 592 in 1996.6 The decline in number between 1994 and 1996 was largely because of the incidence of mergers and acquisitions within them, creating even larger conglomerates. By 2001 these GLCs were dominant despite staggered attempts at privatization after the recession in 1985. Companies owned by Temasek, the state holding companies alone, accounted for 10 per cent of GDP and 27 per cent of total stock market capitalization in 2000.7
The aim of this chapter is to identify the systematic factors facilitating the growth of these large firms in successive periods after 1965, with the emphasis on the final decade of the twentieth century. The focus here is on the four large GLCs: Keppel Corporation, Sembawang Corporation, Singapore Technologies and SingTel. In addition, a private electronics firm, Creative Technologies, is used to identify distinctive and differing organizational structures and growth variations, contrasting with that of the GLCs.
