23 June, 2024

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Is State Owned Temasek A Useful Concept For Sri Lanka?

By Kumar David

Prof. Kumar David

Temasek Holdings Limited, or simply Temasek, is a Singaporean state holding company 100% owned by the Government of Singapore. Incorporated on 25 June 1974, its net portfolio is US$287 billion as of end 2022 with US$61 billion invested during that year. It owns all the assets it manages, issues international bonds and is credit rated. 

Another interesting feature is the relationship between Temasek, the Singapore government and China. Singapore is becoming an important link in China’s financial and political strategy. For example, Singaporean PM Lee Hsien Loong and Malaysian PM Anwar Ibrahim bemoaned big power rivalry and said “economic imperatives are overshadowed by security concerns”. Chinese PM Li Qiang while actively courting Singapore, hit out at “Group Confrontation” and opposed unilateral sanctions. That is, he engaged in choreographed courting of Singapore and condemnation US American foreign policy.

The Singapore-Temasek concept

China’s global asset base is US$12 trillion or $18 trillion, (depending which source you believe) in banking, insurance, securities, Treasuries and capital investments. China Investment Corporation (CIC), modelled on Temasek, is a sovereign wealth fund which manages part of  China’s foreign exchange reserves. It was established in 2007 and manages about US$ one trillion of state assets. In 2008 it joined the International Forum of Sovereign Wealth Funds and signed up to the ‘Santiago Principles on best practice in managing sovereign wealth funds’. It established its first foreign office in Toronto, choosing it over New York and London. In September 2013, the fund acquired a 12.5% stake in the Russian potash fertiliser company Uralkali for $2 billion, in January 2017 acquired a 45% stake in the office skyscraper 1211 Avenue of the Americas, New York valued at $2.3 billion, and Nov. 2017 purchased Logicor, a European warehouse company, from Blackstone Group for $13.5 billion. This information may be reassuring to the JVP that the Temasek model can be used to ensure independence from US imperialist domination.

The public face of Singapore and Temasek

The JVP and National Peoples’ Power (of which I am a member) are firmly opposed to President Ranil’s (RW) intention to privatise successful, that is money making state enterprises. Ranil Wickremesinghe (RW) is a Thatcherite. Margaret Thatcher privatised the highly successful Central Electricity Board, British Rail, British Telecom and Water Supply. Her successors got rid of the Royal Mail. She was a neo-liberal in economics and a neo-conservative in ideology. I do not hesitate to describe her as a political felon!

The purpose of this piece is to explore whether Temasek is a usable example to bridge the gap between directive state control and the flexibility of private enterprises. First let me tell you about Temasek. The origin of the term is obscure and may refer to ancient Malay, Chinese or Sumatran folklore. From the 7th to the 13th centuries, the island was ruled by the Sumatran Empire. Diplomatic links with Vietnam may have been established at the end of that period. Later the city became a trading centre and in the 14th century during the Yuan (Mongol) Dynasty traded with the island in tame elephants. Something odd is that a web search does not reveal the birth date (enigmatically described as 1963/64), or origin (Indian?) of Temasek’s current Chief Executive Officer Dilhan Pillay Sandrasegara(n).

A large state-owned enterprise like Temasek with oversight and control of profitable state-owned enterprises should first take over and then dump white-elephants like SriLankan Airlines. That is give it away for a dollar to anyone who will take it with all its debts as with Silicon Valley Bank. This will satisfy leftists that privatisation of valuable state enterprises will be blocked, but rubbish discarded. This concept has to be thought out, filled in with detail and a programme written. The directive role of the state is preserved while space for enterprise-level innovation is accommodated. The international relations that Temasek has been instrumental in establishing, for example not becoming an instrument of American economic and foreign policy, will also be reassuring to the left. 

At the same time, it is essential to ensure that the authoritarian intentions of the RW Administration are choked off. This no Temasek can do; it will need the mobilisation of the broad mass of the people, trade unions, students, middle classes and the poor. With electoral victory in sight the JVP/NPP can execute a two-pronged strategy (economic and political) up to the time of the local government (LG) elections in April. Strategic political re-evaluation will be the next phase after the elections. RW knows that he doesn’t have chance in hell of winning the LG elections, which is why he finds one subterfuge after another for postponing. He may be able to pull together a right or centre-right alliance to secure second place. With Sajith Premadasa’s SJB in shambles that’s what the electoral scene looks like now. But let’s not cross too many bridges before we reach them.  

RW must face facts. Securing first place in the April Local Government and subsequent parliamentary elections is out of the question. However, he has the support of the bourgeoisie and the business classes, the Premadasa party is in disarray and he will be able deliver some economic goodies with the support of the IMF. He has to abandon his plans to replace the Prevention of Terrorism act by more horrendous alternatives. He will have to avoid the opprobrium of international human rights councils and NGOs by abandoning the repressive alternatives that he has toyed with. He must understand that playing with the military option will spark a popular uprising. RW must wake up the fact that his place as national leader, Executive President (or Prime Minister if the Ex-P post is abolished) is only a one-term job. He has fired his gun, emptied his barrel and must prepare for the luxury of retirement.

Well it may not be that negative. It is possible that RW as leader of the opposition for one constitutional period may consolidate himself as leader of a right-wing or centre-right bourgeoise democratic alliance and make a future bid for national leadership. Politics is an ever-changing comic opera and as I said a moment ago “Don’t cross your bridges” before you reach them. 

If RW is a realist he will appreciate that this innings is over he would be wise to declare it closed, refrain from provoking an Aragalaya style uprising and hope that with IMF backing, some economic deliverables and some improvement in the rupee exchange rate the electorate may give him another chance in the future. At $4000 per capita, at market not nominal (not PPP) exchange rates, Sri Lanka is far from what is called the “Middle Income Trap”; MIT is when a country reaches a moderate level of income for special reasons but cannot proceed any further due to general or global circumstances. But is RW over 70? Oh dear, then come-back-kid is not an option. He had better hang up his pads and retire to the old-timer’s bar for a beer.

What I am going to say next I have repeated many times but it bears repetition over and over again until the NPP/JVP show signs of being less deaf. People, by and large the Sinhalese majority of the population, need to feel reassured that there will not be a recurrence of insurrectionary excesses as in 1971, nor violent extremism as in 1989-91. I am satisfied that the JVP, under NPP tactical guidance, will not do anything so foolish, however, it would helpful if Anura Kumara Dissanayake in his press conferences and speeches makes a commitment to social-democracy and to democracy in general. I have also often complained about the absence of a written and officially endorsed NPP programme; I repeat that complaint.  

I have a parallel complaint about the left’s pronouncements regarding ethnic and religious minorities. The NPP must explicitly reject the Wijeweera-Somawansa inheritance, explicitly reassure the ethnic and religious minorities, rejects its previous stand on Sinhala-Only, the Chapter making Buddhism the State Religion, returning Tamil lands stolen by the military in the North and East, and change its attitude to the persons known as the “disappeared”. 

Undeniably the global conjuncture is amazingly unusual. A Post-Covid world, economic and strategic confrontation between America and China, the US dollar under unusual stress, and attempts afoot to bypass the dollar-based payments system (SWIFT etc) are all unusual. Worried about the shift in global power balances the US has taken steps to starve China of access to technology; nano-chip, AI, 5G, robotics and even business software. Sabre rattling in the Taiwan straits has peaked. These concerns are all too well known to readers and this article is not intended to be theoretical or ideological. It’s simply common sense and I do hope this piece captures the gut feeling of my readers about domestic necessities and global drifts.

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Latest comments

  • 3
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    I cross checked recently the Website of the JVP (under the new leadership of AKD) and it suggests that their political ideology is still ” Communism ” that somehow makes people fear. A full brush-up, from their website information , write ups and to TV interviews, would encourage more and more people incline towards NPP.

  • 3
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    “it would helpful if Anura Kumara Dissanayake in his press conferences and speeches makes a commitment to social-democracy and to democracy in general. I have also often complained about the absence of a written and officially endorsed NPP programme; I repeat that complaint.”
    It would help too if the JVP updated its website and removed the hammers, sickles, and references to state ownership of production. Or is that actually JVP policy, while AKD is the front man mouthing niceties? I hope not.

    • 3
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      How efficient the JVP cadres were during the Aragalaya. Library, dramas, waste bins, etc etc. How is it they have not bothered with their website, which after all is their face to the world? Is it so that after winning they can say “Our policies were there for all of you to see”? OC you have hit the nail on the head, or rather the hammer on the sickle.

      • 0
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        Svenson,
        When and if they come to power, on the votes of simple-minded souls from Bandarawela, they can always point to their website and ask, “didn’t you read it?”, while nationalising the poor guy’s Honda.

  • 3
    3

    “Chinese PM Li Qiang while actively courting Singapore, hit out at “Group Confrontation” and opposed unilateral sanctions.”
    Anything new?
    Opposing unilateral sanctions has been there for ages.
    ASEAN as a whole had moved out of the grip of the US.
    Singapore is smarter than Saudi Arabia in seeing the way the wind blows.
    There was not much for China to do to warm up to Singapore. The US has done the needful with its hamfisted global diplomacy.

  • 1
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    “The JVP and National Peoples’ Power (of which I am a member) are firmly opposed to President Ranil’s (RW) intention to privatise successful, that is money making state enterprises”
    Which State enterprises make money? Insurance? It makes money only because people have to insure their vehicles. Telecom? It makes money only because it’s 49% Malaysian. Like in other state outfits, the regular employees have granted themselves huge pay packets, so that the company is forced to use contract labour. Also, don’t forget that Sirisena could appoint his brother as chairman. SLT even has the gall to describe itself as the “National Telecom Provider”, while in reality Lanka Bell is the only Sri Lankan owned Telecom provider.
    The problem is not in the state owning businesses, but in how they are run. They definitely should not be used as political employment exchanges

  • 0
    0

    TAMASEK is the best model. State should not be engaged in running businesses. The biggest problem is when state owned, the Government appoints political catchers to run them and use the SOEs as a means of job creation. Corruption and inefficiency are then inbuilt. The JVP argues that Sri Lanka Telecom and Sri Lanka Insurance are making profits and should not be privatised. They are not making OPTIMUM profit being state run. Profits may be double what they make now and millions may be lost through corruption and in-efficiency.
    TAMASEK owns the assets- but management totally private. ZERO government interference. All SOES should be MANAGEMENT privatised or sold. The key problem of the country is this loss making corrupt SOES including utilities. Prof David is criticising Thatcher privatisations. UK Utility companies were far better run than our CEB and Water Board. Just see how many come in a CEB truck or Water Board van to do a repair- 10 to 20 in a truck.
    Vietnam is the best example where SOE reform has led to significant economic growth (https://www.adb.org/sites/default/files/publication/562061/adbi-wp1071.pdf)
    Another best model of how Sri Lanka privatised the plantation companies- a step wise approach to obtain best value to state from the sale. Initially consortiums were called to bid for 40% stake – but 51% management control. Then each plantation company stock was listed in the stock exchange. The balance shares were sold in the stock market.
    Prof Lalith Goonatilake

    • 2
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      L. Goonatilake

      “The biggest problem is when state owned, the Government appoints political catchers to run them and use the SOEs as a means of job creation.”

      True.
      SJ and his Maoist mates (the statist, love state capitalism) should know how Siri Mao and her merry men destroyed the cooperative movement through out the island, especially in the North.

  • 1
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    Lalith (Prof/Dr L Goonatilake
    Thanks for alerting me (in personal communications) to the importance of the Temasek model.
    Without your tip I would have remained ignorant of the importance of this system
    Kumar

  • 1
    0

    Lalith (Prof/Dr L Goonetilleka)

    Thank you (in a personal communication) to alerting me to the importance of Temasek.
    Without your tip I would have remained ignorant.
    Kumar

  • 0
    0

    Prof David
    More than the Singapore Tamasek (Which is not privatisation- but professional management of state venture), the best is the transformation of Vietnam, China, Former Soviet Union and Eastern Europe from state owned enterprises to better managed entities. Our JVP though providing credible solutions to the dire situation, still proposes keeping the SOEs

    • 1
      1

      Much of Chinese ventures are state controlled.
      Vietnam is not a capitalist free-for-all.
      Capitalism meant theft and corruption in Russia.
      How many East European economies are thriving?

  • 0
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    What? “returning Tamil lands stolen by the military in the North and East” What “Tamil lands”?
    For the information of the writer, Northern and Eastern lands of Sri Lanka were originally inhabited by the Sinhalese paddy farmers until Dutch settler colonists brought Malabari labourers to work in tobacco farms in Jaffna. From 1708, these labourers were listed as “Malabar inhabitants of the Province of Jaffna” in Dutch records.
    The advanced administrative system of the Sinhala Buddhist kingdom (Sinhaladvipa) had a record of all lands and their inhabitants. These native land records were the basis for “Thombus” (land registers) introduced by the Portuguese settler colonists.
    Contd’……

    • 0
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      Portuguese land records or “Thombus” may not be available now. However, there is one way to identify original Sinhalese Buddhist landowners recorded under the Portuguese “Thombu” system, which is from the Title “Don” (for masculine names) or “Dona” (for feminine names) in Sinhalese names. When entering details of landowners in “Thombus”, those two Portuguese Titles have been added after the “ancestral village name” and the “Ge name” of the native Sinhalese to recognize them as landowners. The origin of the word “Don/Dona” has come from the Latin word “Dominus” which applied for two types of social status; 1. The title “Owner” for economically successful people or landowners, in this case, and 2. The title “Sir/Madam” for highly educated people.
      Most of the Sinhalese Buddhists have dropped “Don” and “Dona” not knowing that their ancestors were landowners whose names were originally recorded in the Administrative System of the Sinhala Buddhist Kingdom (Sinhaladvipa) which was the basis for Portuguese “Thombus”. Anyway, this should not be confused with the Sinhalese who took Portuguese names after they became Roman Catholics. None of the Tamils or Muslims in Sri Lanka has this title because they were not registered as natives under the Sinhala or Portuguese Administrative Systems.
      Contd’……

      • 0
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        I challenge the writer of this article, Professor Kumar David, to show me proof of his assertion that there were “Tamil lands” in the North and East of Sri Lanka. For Tamils to claim the lands in the North and East, there should be an internationally recognized agreement between the Kingdom of Sinhaladvipa or Ceylon or the Sri Lanka government and Tamils clearly demarcating borders of the so-called “Tamils lands”. The truth is, there was no such agreement. In the 1978 Constitution, only Tamil language has been recognized as the preferred language of communication in the North and East, not the lands.
        Contd’…….

        • 0
          0

          Talking about border agreements, even Ukraine doesn’t have an official border agreement legally in force.
          Contrary to popular belief, the international treaty between the Russian Soviet Federative Socialist Republic (RSFSR) and the Ukrainian Soviet Socialist Republic (USSR) signed on 19 November 1990 NO LONGER VALID as the Friendship Treaty (in short form) between Ukraine and the Russian Federation signed on May 31, 1997 REPLACED AND SUPERSEDED the PREVIOUS TREATY signed in 1990. Even the Friendship Treaty is NO LONGER VALID as Ukraine UNILATERALLY TERMINATED it on December 3, 2018. Basically, there is absolutely no international border agreement between Ukraine and the Russian Federation currently in force. Ukraine’s ill-advised decision to terminate the Friendship Treaty in 2018 can be viewed as an “INADVERTENT ACTION” to return Crimea and Eastern Ukraine back to Russia.
          I invite the US officials, SG/NATO and the President/EU to learn history first. Maybe, they can consult China’s ambassador to France Lu Shaye.
          The sad truth is, Ukraine was misguided by the US+NATO+EU. Although they hailed Ukraine’s preposterous decision to terminate the Friendship Treaty in 2018, upto date, they couldn’t ensure the same security guarantee that had been offered by the Russian Federation to Ukraine under the 1997 Friendship Treaty.

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