Here's a news article that I found. It's quite interesting. On a side note, I think that I've become less creative. I'm always copying artwork when I need art to be done. Then for music project, I have no idea what to do...

Corporatisation of Changi: Will it serve national interests?
Wed, Oct 15, 2008
The Straits Times
By Chua Mui Hoong, Senior Writer

What is surprising about corporatising Changi Airport is not that it was done at all, but that it took so long.

After all, corporatisation has been the way for governments to divest [to get rid of something that you own] state assets since the 1980s.

When a state asset or government agency is corporatised, citizens may start asking who benefits from such an exercise. The key question is whether the national interest is served, and how, by corporatisation. Otherwise, why bother?

Singapore's love affair with corporatisation dates back some 20 years, when the virtue of small government was touted, and theorists advocated the mass hiving off [to seperate one part of a business from the rest, usually by selling it] of flabby [weak and ineffective] state enterprises to subject them to the discipline of the market.

Corporatisation involves introducing corporate structures to a former government-controlled entity, like having a management team report to a board of directors and giving autonomy in hiring and firing decisions. The entity may still be fully owned by the state, but has an intermediate layer to report to.

Corporatisation may be considered the half-way point in the eventual journey towards privatisation - which is when a corporation is sold to private investors or listed on the stock market.

Many types of state enterprises or services have been corporatised or privatised. The decision on which structure to consider depends on the nature of the entity. Often, one key consideration before privatising a former state-owned company is to ask if a strategic asset is involved. If it is, then it may not be in the national interest to privatise it.

To determine if a particular corporatisation move benefits the national interest, we may consider several issues.

First: Does it inject discipline into a flabby enterprise?

For Singapore, this was not really an issue since many state-owned entities were actually doing well financially.

Changi Airport, for example, wins accolades for being among the best in the world, and managed an operating surplus of $367.7 million last year.

But Changi Airport would enjoy more flexibility as a result of corporatisation, which would allow it to compete for businesses overseas. From this point of view, removing the shackles of direct state control benefits the airport management company, and gives it leeway to expand.

Second: Do customers benefit?

This is often a pertinent question in corporatisation of domestic services. When formerly government-run hospitals or universities are corporatised, there may be an inherent conflict in their new desire to improve bottom lines, and in the public interest of keeping fees affordable.

Ensuring that customers - patients and students in these cases - are better off after corporatisation keeps the focus sharply on the public interest.

But in the case of airports or ports, customers are not individual citizens, but are foreign companies - airlines which use the airports, or shipping lines which call at the PSA port.

Still, benefiting customers protects the national interest in an indirect way, if the airport or port can enhance its status as an aviation or shipping hub, bringing about economic benefits to the nation.

The third question to pose: Who benefits from the transaction when a state agency is corporatised or privatised? If an agency is sold, what is the price? If it is privatised, who benefits from the capitalisation?

In SingTel's case, the Government made a canny decision to let Singaporeans benefit from the initial public offering and expected rise in price of its shares, via a massive share ownership exercise in 1993. This silenced any potential critics that the sale of a state telecommunications agency benefits foreigners, or speculators, at the expense of citizens.

In Changi Airport's case, the transaction price to Temasek Holdings will be settled after a separate valuation exercise by the Government.

The Business Times reported analysts estimating the value of Changi Airport as between US$1.5 billion to US$2 billion (S$2.2 billion to S$3 billion). One analyst predicted that the transaction may be at a slight discount given that it is an internal transaction - since Temasek Holdings is wholly owned by the state anyway.

Still, it is desirable for the sake of transparency for the basis of that valuation, the final transaction price, and the justification for it, to be made public.

Fourth and most vital question when an infrastructure asset is corporatised: Does control of a strategic asset pass out of state or national hands after corporatisation or privatisation?

This is important because few governments will want to lose control of the use of key infrastructure, including ports and airports, in times of emergency.

In Singapore, utilities company Singapore Power and port operator PSA are both 100 per cent owned by Temasek Holdings, an investment agency whose sole shareholder is the Finance Ministry.

Changi Airport too will be run by a Temasek-owned company, and will not be open for bidding by foreign airport management companies. Nor will it be sold any time soon, the Transport Ministry said.

But retaining control of an asset does not mean no competition is possible. Even while protecting management control of the airport operation, some elements of airport operations have been opened up for competition.

One example is ground services handling, including check-in, baggage handling and catering services, which was opened up for competition in 2004.

This differentiated approach of opening the competitive segment of a market while retaining management control of the strategic part of the infrastructure, was also adopted in the deregulation [removal of governmental rules and controls from a business] of the energy market.

Control of the power grid which transmits electricity to homes and businesses remains with Singapore Power, while power generation is contestable.

Singapore's past experience with corporatisation has clearly paid off for Changi Airport. Separating the regulator from the operating company; ensuring a fair price is paid; and allowing competition while preserving strategic control of the infrastructure - these are all time-tested ways of preserving the national interest while corporatising to allow the operator maximum autonomy.

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