From State to Temasek

Posted by theonlinecitizen on June 20, 2011

Leong Sze Hian/

According to Changi Airport Group’s (CAG) Annual Report 2009/10 , “Changi Airport Group (Singapore) Pte Ltd (CAG) was formed on 16 June 2009 and the corporatisation of Changi Airport followed on 1 July 2009”.

Its revenue for the year was $961 million, profit after tax was $227 million and total assets was $7.2 billion.

Changi Airport only worth $3.3b?

According to the report, “the estimated consideration payable to CAAS for the transfer of airport undertaking and other assets is $3,277,987,000.” Also,  the consideration will be funded via “a capital injection by the immediate holding entity, the Minister for Finance (Incorporated).”

Does it mean that the Minister of Finance only paid $3.3 billion for the ‘World’s Most Awarded Airport’ with total assets of $7.2 billion, revenue of $961 million and profit after tax of $227 million?

So, now that it has been transferred to Temasek, to what extent will it boost Temasek’s annualised returns in the future, considering that the sum paid was arguably, grossly under-valued?

Do State assets increase portfolio returns?

In this connection, to what extent has the 1990′s corporatisation and transfer of state entities like SingPower and PSA, and the biggest single-year jncrease in its portfolio value with the listing of SingTel in 1993, contributed to its phenomenal 17 per cent annualised returns from Temasek’s inception?

Who benefits from the transaction when a state entity is corporatised? If an entity is sold, what is the price? How do Singaporeans benefit?

It may seem quite odd to debate and approve in Parliament the sale of a strategic state asset, like Chang Airport, when the price was still not known.

By the way who owns the 1,300 hectares of land that Changi Airport sits on?

And what is the valuation of this land?

How much does CAG pay for the use of this land?

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About the Author

Leong Sze Hian has served as the president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), Hotel Mumbai (associate producer), invited to speak more than 200 times in about 40 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of 2 countries. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.