Source: TR EMERITUS
NUS Busines School’s study praising Temasek
July 13th, 2014 | Author: Editorial
In a study by the NUS Business School, “The State as Shareholder: The Case of Singapore“, it praised Temasek Holdings as well as Government-linked Companies (GLCs) and Government-linked Real Estate Investment Trusts (GLREITs) for having sound corporate governance practices in comparison with non-GLCs.
It also indicated that good corporate governance and a clear business mandate have helped these government-linked entities perform better than the market in Singapore.
“Monitoring and accountability measures are in place to ensure that Temasek fulfils its role as a state holding company,” the report said.
It also said that that there is an “internal network formed” by directors from the parent GLC and its subsidiaries, GLREITs. “These practices promote information exchange within the network and encourage alignment of the corporate strategy,” it said.
It further added, “SGX-listed GLCs and GLREITs are well managed, efficient, and profitable. They play a vital economic role in transforming Singapore from a developing third world country to its current status as a globalised city-state. It can be argued that GLCs and GLREITs in Singapore are an exception to how state-owned enterprises (SOE) around the world are owned, managed and governed.”
The research linked several drivers of good corporate governance to the better-than-average performance of GLCs, including:
While MCSI Singapore consists of stocks listed here, Temasek’s Singapore exposure includes unlisted assets which made up 30% of its portfolio in 2013. “Temasek does have unlisted assets and international stocks, we just had to take the best (benchmark) available,” said a co-author of the study.
Findings also showed that between 2008 and 2013, GLCs accounted for an average of 37% of the stock market’s value of $500 billion, while GLReits made up 54% of the Reit market value of $35 million.
The report concluded:
Temasek-connected directors sit on NUS Business School Advisory Board
Looking at the NUS Business School Advisory Board [Link], we can find the following members sitting inside:
Dr William Fung is the Chairman of his own Li & Fung company in Hong Kong [Link]. On top of that he also sits on the board of SIA. Temasek, of course, is a strategic investor of Li & Fung (‘Li & Fung sells stake to Temasek for HK$3.88b‘).
Mr Hsieh Tsun-Yan the Chairman of LinHart Group. He also sits on the board of SIA.
Mr Liew Mun Leong is a familiar figure in the corporate scene. He was the President & CEO of CapitaLand Group under Temasek.
The NUS Business School Advisory Board is supposed to provide strategic advice and guidance to the Dean and the leadership of NUS Business School. With so many “Temasek-connected” directors sitting on the advisory board of NUS Business School, will the Dean be willing to publish anything negative (if any) about Temasek Holdings?
Conversely, can we consider the above report from NUS Business School “objective”?
In other first world countries, when, say a magazine of a publishing group is writing matters pertaining to the publishing group itself, the magazine will put up an advisory to disclose to readers its relationship with the publishing group. This is to maintain transparency with the readers. No such disclosure has been observed inside the above NUS report.
NUS Busines School’s study praising Temasek
July 13th, 2014 | Author: Editorial
In a study by the NUS Business School, “The State as Shareholder: The Case of Singapore“, it praised Temasek Holdings as well as Government-linked Companies (GLCs) and Government-linked Real Estate Investment Trusts (GLREITs) for having sound corporate governance practices in comparison with non-GLCs.
It also indicated that good corporate governance and a clear business mandate have helped these government-linked entities perform better than the market in Singapore.
“Monitoring and accountability measures are in place to ensure that Temasek fulfils its role as a state holding company,” the report said.
It also said that that there is an “internal network formed” by directors from the parent GLC and its subsidiaries, GLREITs. “These practices promote information exchange within the network and encourage alignment of the corporate strategy,” it said.
It further added, “SGX-listed GLCs and GLREITs are well managed, efficient, and profitable. They play a vital economic role in transforming Singapore from a developing third world country to its current status as a globalised city-state. It can be argued that GLCs and GLREITs in Singapore are an exception to how state-owned enterprises (SOE) around the world are owned, managed and governed.”
The research linked several drivers of good corporate governance to the better-than-average performance of GLCs, including:
- ability to operate with a clear business mandate and at an arm’s length from politics
- being publicly listed on the stock exchange
- internationalisation of GLCs’ businesses
- leadership continuity
- adoption of corporate governance best practices
While MCSI Singapore consists of stocks listed here, Temasek’s Singapore exposure includes unlisted assets which made up 30% of its portfolio in 2013. “Temasek does have unlisted assets and international stocks, we just had to take the best (benchmark) available,” said a co-author of the study.
Findings also showed that between 2008 and 2013, GLCs accounted for an average of 37% of the stock market’s value of $500 billion, while GLReits made up 54% of the Reit market value of $35 million.
The report concluded:
The research findings show that Temasek is an active investor with long-term returns maximisation as the key motive in its investment decision-making. It is able to fulfil its role with limited political interference. Monitoring and accountability measures are in place in Temasek, as disclosed by its Group Financial Summary and Portfolio Performance.
Temasek owns GLCs and GLREITs in a multi-tier corporate structure. Since 2003, Temasek has reduced its holding on the number of SGX-listed GLCs while its holding on SGX-listed GLREITs increased. Despite these changes in its investment portfolio, Temasek maintains a high percentage of ownership in transportation and communications companies.
In conclusion, our findings show that SGX-listed GLCs generally have better corporate governance practices in comparison with non-GLCs. As articulated by one observer, “Singapore … has been a major exception to the central tenet of Economics 101 that government participation is bad for the economy”.
Temasek owns GLCs and GLREITs in a multi-tier corporate structure. Since 2003, Temasek has reduced its holding on the number of SGX-listed GLCs while its holding on SGX-listed GLREITs increased. Despite these changes in its investment portfolio, Temasek maintains a high percentage of ownership in transportation and communications companies.
In conclusion, our findings show that SGX-listed GLCs generally have better corporate governance practices in comparison with non-GLCs. As articulated by one observer, “Singapore … has been a major exception to the central tenet of Economics 101 that government participation is bad for the economy”.
Temasek-connected directors sit on NUS Business School Advisory Board
Looking at the NUS Business School Advisory Board [Link], we can find the following members sitting inside:
- Mr S Dhanabalan, Chairman
- Mr Hsieh Fu Hua, Deputy Chairman
- Dr William Fung
- Mr Hsieh Tsun-Yan
- Mr Liew Mun Leong
Dr William Fung is the Chairman of his own Li & Fung company in Hong Kong [Link]. On top of that he also sits on the board of SIA. Temasek, of course, is a strategic investor of Li & Fung (‘Li & Fung sells stake to Temasek for HK$3.88b‘).
Mr Hsieh Tsun-Yan the Chairman of LinHart Group. He also sits on the board of SIA.
Mr Liew Mun Leong is a familiar figure in the corporate scene. He was the President & CEO of CapitaLand Group under Temasek.
The NUS Business School Advisory Board is supposed to provide strategic advice and guidance to the Dean and the leadership of NUS Business School. With so many “Temasek-connected” directors sitting on the advisory board of NUS Business School, will the Dean be willing to publish anything negative (if any) about Temasek Holdings?
Conversely, can we consider the above report from NUS Business School “objective”?
In other first world countries, when, say a magazine of a publishing group is writing matters pertaining to the publishing group itself, the magazine will put up an advisory to disclose to readers its relationship with the publishing group. This is to maintain transparency with the readers. No such disclosure has been observed inside the above NUS report.
End of article
