From start-ups to stalwarts

Government ‘start-ups’ have grown in the last 60 years to become economic stalwarts of today, but private heritage companies have played equally critical roles too

In recent years, Temasek has been in the news for its investments in overseas companies and start-ups. However, when Singapore’s state investment agency reported a record-high net portfolio value last month, it was its less talked about portfolio of local listed companies that were clearly shining, providing a fitting report card of sorts to mark Singapore’s 60th birthday.

Following years of planning, groundwork, clear commitment to improve shareholder returns, plus a fair dose of luck from external events, companies such as DBS Group Holdings, Singapore Telecommunications (Singtel), Singapore Technologies Engineering (ST Engineering, the “stalwarts” of Temasek’s locally listed portfolio, have all outperformed the market in the past one year.

Goh Keng Swee, former deputy prime minister and widely hailed architect of Singapore’s economy, was instrumental in many of these companies that would eventually be known as Temasek portfolio companies.

Most of all these companies were founded in the early years of independence out of necessity. Singapore was already notable as a transshipment port, but more needs to be done. As described by author Aaron Low in the recently published book The First Fools — B-sides of Lee Kuan Yew’s A-Team. “As unusual as it might have been for a politician, Goh was the foremost creator of businesses in the tiny island,” writes Low.

Goh was motivated, according to Low, by a deep desire to sustain Singapore’s fragile independence and keep the idea of a nation alive. His form of capitalism was tinged with a hefty dose of socialism. “Dr Goh is a state capitalist,” says Philip Yeo, a former top civil servant who was involved in numerous of these companies. According to Low, a conservative estimate of Goh’s businesses today was close to $200 billion.

DBS, most famous of Goh’s companies, started as the Development Bank of Singapore. It was spun out of the EDB’s industrial financing arm, incorporated in July 1968. The fledgling bank took over loans of some $50 million, given a paid-up capital of $100 million and was listed right away on the stock market.

By 1970, DBS financed over 300 projects ranging from textiles to cement to precision engineering, industries which helped generate jobs in the fledgling nation, where the focus on manufacturing was equal parts creating employment and generating value. For DBS, commercial banking and retail banking followed. In the 1990s, like many other government-linked companies, DBS looked outwards as encouraged by then Prime Minister Goh Chok Tong, who extolled the “second wing” economy.

In 2000, its property unit, DBS Land, was merged with Pidemco Land, a unit of Singapore Technologies, to form what is listed as CapitaLand Investment today, the leading property player.

Strategic location
As the country’s well-known story goes, it became a British colony because of its strategic location, which helped create this free port. As transshipment volume grew over the years, Goh sees value in capturing the adjacent activities in repair and shipbuilding.

Keppel, which now prefers to call itself an asset manager, can trace its roots to Keppel Harbour. Today, it is a key power generator and has significant presence in new growth areas, including data centres and subsea cables.

Sembawang Naval Base, built to great fanfare by Great Britain just years before Japan’s invasion, was turned into a commercial entity. Jurong Shipyard, the first shipyard in Singapore, was set up with Japan’s help. Both entities helped form what would become Sembcorp Industries, which was then restructured into another listed entity, Sembcorp Marine, renamed Seatrium after it merged with Keppel’s offshore and marine unit.

ST Engineering, the best-performing stock on the Straits Times Index year to date, is another Temasek portfolio company created by Goh. In 1968, Chartered Industries of Singapore was set up to manufacture ammunition and mint coins, as their production flows were similar. Numerous other deals, according to Low in the book, have been signed to equip Singapore with the capacity to produce other military equipment such as helmets, tools and heavier ammunition besides bullets, as well as the necessary maintenance and repair capabilities.

Despite the hefty costs of acquiring tooling equipment and the lack of production scale, Goh recognises the need to push ahead with building Singapore’s own military-industrial complex. Various entities were set up to build and repair vessels, vehicles, aircraft, and even to procure and manufacture foodstuff — after all, an army marches on its stomach, as Napoleon had famously said. “In Dr Goh’s mind, the Singapore Armed Forces needed to have repair and maintenance, right up to the highest level, done locally,” says Lim Siong Guan, who, before his retirement as the head of civil service, was a permanent secretary of the Ministry of Defence.

Intraco’s transformations
To be sure, not all of these early-day government-linked companies have lasted till today by staying roughly in their original form. Intraco, not quite 60 years old, but close, was set up too by Goh as far back as 1968 as one of the government start-ups. This company has undergone way more transformations in its business operations than most entities.

When it was incorporated in 1968, it formed a joint venture in shoe-making and was also the sole authorised importer of gold for local consumption.

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The following year, it rapidly expanded its trading network, with offices set up in Sydney, Saigon, Jakarta and even Moscow, at a time when the Cuban Missile Crisis — a key chapter of the Cold War — was still fresh in the minds of many.

In 1972, Intraco listed on the Singapore Exchange’s Mainboard and expanded its business to building a bulk liquid terminal at Jurong and also manufactured knock-down wooden furniture and parts. Two years later, it was incorporated into Temasek, when Singapore’s state-owned investment agency was started. Intraco was given the mandate as the country’s agent to import rice and maintain both stable prices and strategic supplies for emergencies. Over the years, the company traded a wide range of other commodities and goods ranging from jeans to furniture; it got involved in ventures to manufacture steel sheet, concrete and even found time to set up and operate a golf driving range in East Coast Parkway.

As listed by Intraco on its website, it was often early into emerging or previously closed markets. In 2013, when Myanmar started opening up, it formed a joint venture to lease cranes in Myanmar. Decades earlier, in 1970, it sold soya bean oil to the Vietnamese military even while the war was raging; in 1980, it sold plywood directly to a pre-reform era China, bypassing Hong Kong. Nearly a decade later, it became a distributor for Lada, a brand of Soviet Union-manufactured cars, in Asia.

Even with the break-up of the Soviet Empire, Intraco kept its ties. In 1992, it started a joint venture with Russia to import fertilisers and resources from the Commonwealth of Independent States, and help them buy “much sought-after” consumer goods. Intraco’s revenue reached an all-time high of $918 million in 1995.

The company was divested by Temasek Holdings in 2003, but there were further changes to Intraco’s businesses. For example, in 2014, it invested in a fire protection systems business. In May, KA Group, which held this business, was sold for $6.9 million. Today, trading and distribution remain its primary business, but Intraco today includes 51% of corporate finance firm Taurus Point Capital, which helps arrange short-term commercial papers issued in digital token format.

There was a recent rough patch, but things are picking up for the company, though. In June 2023, it was included in the Watch-List of the Singapore Exchange following three consecutive years of losses. However, with improving financials, it has exited the Watch-list with effect from April.

These companies play different roles in Singapore’s economic development. Behind whatever is glowing today is the willingness to make regular transformations, the stomach to cope with challenges and also the aptitude to seize opportunities.

Indeed, Singapore’s economic history isn’t written just by government-linked entities, however big they may be. The entrepreneurial zeal of private sector businessmen has played an equally crucial role. In the following pages, we profile some of the other private sector heritage names with decades or even century-long histories, showing how far they have come and what they are aiming for in the years ahead.

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