Across the world, state firms are in the red. Singapore's government-owned and controlled companies are profitable and efficiently run. The Public Utilities Board, which spun off two power plants, a transmission company and a gas firm to newly created Singapore Power last month, was one of the island republic's top 20 enterprises last year. Lee Hsien Loong said in a recent speech. They are profit centers, not cost centers.
Managers know they are on their own from the very beginning.
In turn, the state does not burden government firms with public-service demands. If there is inflation and the cost of manpower and everything else goes up, that will be passed on too. If services need to be socialized, the government gives an explicit grant, such as that for the Housing Development Board, which builds subsidized public apartments. SIA was making money when it was privatized in 1985, as was Singapore Telecom when it was listed in 1993. This is especially important in sectors like telecommunications and public utilities.