Singapore Technologies



Singapore Technologies (ST) is a group of companies with interests in engineering, technology, infrastructure and lifestyle, property, and financial services. The corporation’s history began with the Chartered Industries of Singapore (CIS), which was established in 1967 to manufacture ammunitions. CIS and a number of defence-related companies, created during the late 1960s and 1970s, were grouped under holding company Sheng-Li in 1974. Sheng-Li was renamed Singapore Technologies Holdings in 1990, and came under state investment company Temasek Holdings in 1994.1 Singapore Technologies Holdings was dissolved in 2004 in a restructuring exercise and all of its assets were taken over and became directly owned by Temasek Holdings.2 ST recorded revenues of S$12.7 billion in 2003.3

Early years
In 1967, newly-independent Singapore was in the process of establishing its military, and then Minister for Defence, Goh Keng Swee (Dr) was a prime mover in developing defence-related companies that would support the military while being commercially viable.4 The first of these was the CIS, set up to manufacture 5.56-mm ammunition rounds for the M-16 rifles the Singapore Armed Forces (SAF) were to use. CIS was incorporated on 27 January 1967, and its factory opened on 27 April 1968 at Boon Lay.5


Over the next two years, Singapore Shipbuilding & Engineering (SSE) and Singapore Electronic & Engineering Limited (SEEL) were formed. SSE, started in May 1968, was a private venture with the government taking a minority stake. The company constructed vessels for the Republic of Singapore Navy and commercial operators. SEEL was formed in 1969 and arose from the weapons and electronics workshops, as well as staff left behind after the withdrawal of the British Royal Navy. SEEL continued to service and maintain the Royal Navy Fleet, and later the fleets of US forces in Vietnam as well as the SAF. It further diversified into aviation electronics, as well as automation system and systems integration in later years.6

The 1970s saw the creation of more defence-related companies. In 1971, Singapore Automotive Engineering (SAE) was formed to provide the SAF with vehicle maintenance and servicing. It branched into vehicle modification and engineering and later, design. To develop artillery, field guns and other weapons, the Ordnance Development and Engineering (ODE) and Allied Ordnance of Singapore (AOS) were started in 1973. That year also saw the creation of Singapore Food Industries (SFI) and SAF Enterprises (SAFE), which sold basic food items to SAF personnel.7

Singapore Aerospace Maintenance Company (SAMCO) and Singapore Aero-Engine Overhaul (SAEOL) were set up in 1975 and 1977, while Unicorn International was started in 1978 to market the products and services of the defence-related companies overseas.8

These companies were linked by the nature of their work and a philosophy articulated by Goh. They were established along commercial lines, focused on profits and had to compete for SAF contracts. Driven by technology, the defence-related companies were constantly on the lookout for opportunities to translate their capabilities into new industries and businesses.9

Sheng-Li and rebranding
In January 1974, eight defence-related companies came under the umbrella of Sheng-Li, a holding company started by the government. Sheng-Li was an early attempt by the government to rationalise the defence industries, monitor the profitability and strategic capabilities of the companies, coordinate their activities, and cut waste. It also provided management services and coordinated the investment of surplus funds.10


By the late 1970s, there were more than 16 defence companies, forcing the government to review the industry. After a review and re-organisation in 1981, the companies under Sheng-Li were grouped into four main areas – aerospace, general services, marine and ordnance. The Singapore Technology Corporation (STC) was formed in 1983 and became the holding company for the ordnance-related companies except AOS, while the shipbuilding, aviation and enterprise companies, as well as STC itself and AOS, came under Sheng-Li.11

In 1987, Sheng-Li began another review which became known within the group as the Monitor Study. The study identified strategic weaknesses including the lack of synergy and a strategic management process, as well as poor information flow within the group. Sheng-Li underwent restructuring in response to the findings of the study.12 In order to promote a consistent and coherent corporate identity that would facilitate ventures in the international marketplace, a new corporate identity consisting of the new brand name, Singapore Technologies, with a new sunburst logo, was launched in April 1989.13 On 11 May 1990, Sheng-Li was officially renamed Singapore Technologies (ST) Holdings. The ST group came under state investment company Temasek Holdings in 1994, and in 1995 ST Pte Ltd was formed as the group’s operational headquarters.14

Diversification and commercialisation
From the 1980s, the defence-related companies began to diversify beyond their traditional businesses. One man credited with this push was public servant Philip Yeo, CIS chairman from 1979 to 1992.15 Yeo began to spin off the service functions of CIS, such as testing and freighting, with the aim of making at least half of the company’s business non-defence related. Companies dealing with logistics, computer services and construction, among others, were the products of this move.16


In 1987, the Ministry of Defence drew up the Singapore Defence Industries Charter, making it clear that beyond contributing to Singapore’s defence, the defence industries would have to undergo commercialisation and diversification to lower costs, and maintain their capabilities, economic viability and efficiency in order to survive.17

Some defence-related companies had already been taking on non-military work and opening up new areas of business. One such example was SEEL, later renamed ST Electronic and Engineering, which ventured into control and communications systems for Singapore’s Mass Rapid Transit rail system, automation systems for Changi International Airport Terminal One and Singapore General Hospital, as well as various management and monitoring systems.18 However, initial forays into new ventures and technology acquisitions resulted in losses due to market conditions that were worse than expected, and a capital structure with too much debt and too little equity.19

In 1990, technology companies that were spun off during the 1980s, including Charter Semiconductor, were grouped under Singapore Technologies Ventures (STV).20 From 1990, the ST group began to list some of its companies on the Stock Exchange of Singapore.21 ST Aero and ST Shipbuilding were the first in August 1990, followed by ST Capital, ST Electronic & Engineering, ST Auto and ST Computer Systems & Services. For defence-related companies, ST maintained management control by retaining at least 51 percent of the shares.22

Acquisitions and restructuring
In 1995, defence-related activities made up just 27 percent of ST’s turnover. By 1997, the group’s businesses were spread across five main competencies – engineering, technology, infrastructure and lifestyle, property, and financial services.23 The traditional defence-related companies, including ST Aero, ST Marine, ST Electronics and ST Kinetics, were merged into ST Engineering.24 As a measure of its diversity, the group’s businesses ranged from semi-conductor manufacturing, defence, coin minting, infrastructure development, electronics, control, monitoring and management systems, to property, tourism, financial services, telecommunications and medical equipment. The group had a turnover of S$4.5 billion, assets of S$13.7 billion and an employee base of more than 21,000.25


The next decade saw a number of acquisitions, including SembCorp Industries and CapitaLand, in the late 1990s and early 2000s.26 The years of 1997 and 1998 saw massive losses of S$690 million and S$1 billion respectively, but ST recovered with net profits of S$118.6 million in 1999 and S$424 million in 2000.27 By 2001, ST had over 50,000 employees and an annual revenue of S$7.2 billion.28

In 2003, ST announced plans to sell S$801 million worth of bonds convertible into shares in CapitaLand and ST Engineering. The issue raised funds for ST and reduced its shareholdings in the two companies.29 In the same year, ST Telemedia acquired 61.5 percent of United States network operator, Global Crossing, in a deal worth S$450 million.30 It had earlier paid 5.62 trillion rupiah (S$1.2 billion then) to acquire 42 percent of Indosat, Indonesia’s second-largest telecommunications company.31 The deals marked ST’s parent company, Temasek Holdings’ strategy of investing and expanding operations globally.32 In 2003, about 48 percent of ST’s revenue came from Southeast Asia with the rest from global sources. That year, the group marked a return to profitability with S$101 million net profit on revenues of S$12.7 billion.33

A restructuring exercise in 2004 saw ST’s assets, including around 40 companies, transferred to its parent Temasek Holdings. From then on, Temasek directly managed the ST companies, including CapitaLand, Chartered Semiconductor Manufacturing and ST Engineering. Lower debt and staff costs from the rationalisation were said to have saved Temasek S$30 million annually.34



Author
Alvin Chua




References
1. Singapore Technologies. (1997). Towards tomorrow: The Singapore Technologies story. Singapore: Singapore Technologies, pp. 5, 202, 235, 238. (Call no.: RSING 338.7620 SIN)
2. Tan, A. (2004, October 14). Temasek to dissolve subsidiary ST. The Straits Times, p. 1. Retrieved from NewspaperSG.
3. Wong, W. K. (2004, October 14). Temasek to take over STPL assets. The Business Times, p. 1. Retrieved from NewspaperSG.
4. Singapore Technologies. (1997). Towards tomorrow: The Singapore Technologies story. Singapore: Singapore Technologies, pp. 15–18, 25. (Call no.: RSING 338.7620 SIN)
5. Cheong, C. (2007). Under one sun. Singapore: SNP International, pp. 19, 21–22. (Call no.: RSING 338.7623095957 CHE)
6. Singapore Technologies. (1997). Towards tomorrow: The Singapore Technologies story. Singapore: Singapore Technologies, pp. 46–47, 54–56, 235. (Call no.: RSING 338.7620 SIN)
7. Singapore Technologies. (1997). Towards tomorrow: The Singapore Technologies story. Singapore: Singapore Technologies, pp. 40–43, 235. (Call no.: RSING 338.7620 SIN)
8. Singapore Technologies. (1997). Towards tomorrow: The Singapore Technologies story. Singapore: Singapore Technologies, p. 236. (Call no.: RSING 338.7620 SIN)
9. Singapore Technologies. (1997). Towards tomorrow: The Singapore Technologies story. Singapore: Singapore Technologies, pp. 172–173, 220–221. (Call no.: RSING 338.7620 SIN)
10. Singapore Technologies. (1997). Towards tomorrow: The Singapore Technologies story. Singapore: Singapore Technologies, p. 176. (Call no.: RSING 338.7620 SIN)
11. Singapore Technologies. (1997). Towards tomorrow: The Singapore Technologies story. Singapore: Singapore Technologies, pp. 176, 178–179, 236. (Call no.: RSING 338.7620 SIN)
12. Singapore Technologies. (1997). Towards tomorrow: The Singapore Technologies story. Singapore: Singapore Technologies, p. 180. (Call no.: RSING 338.7620 SIN)
13. Tsang, J. (1989, April 20). Sheng-Li restructured and given new corporate identity. The Business Times, p. 22. Retrieved from NewspaperSG; Singapore Technologies. (1997). Towards tomorrow: The Singapore Technologies story. Singapore: Singapore Technologies, p. 236. (Call no.: RSING 338.7620 SIN)
14. Singapore Technologies. (1997). Towards tomorrow: The Singapore Technologies story. Singapore: Singapore Technologies, pp. 236, 239. (Call no.: RSING 338.7620 SIN)
15. Ministry of Information & the Arts. (1992, June 19). Speech by BG (RES) Lee Hsien Loong, Deputy Prime Minister and Minister for Trade and Industry, at the 25th anniversary dinner of Chartered Industries of Singapore (CIS) at Raffles Ballroom, Westin Plaza on Friday, 19 June 1992 at 8 pm (p. 5). Retrieved from National Archives of Singapore website: http://www.nas.gov.sg/archivesonline/
16. Singapore Technologies. (1997). Towards tomorrow: The Singapore Technologies story. Singapore: Singapore Technologies, pp. 77, 87, 236. (Call no.: RSING 338.7620 SIN)
17. Singapore Technologies. (1997). Towards tomorrow: The Singapore Technologies story. Singapore: Singapore Technologies, p. 87. (Call no.: RSING 338.7620 SIN)
18. Singapore Technologies. (1997). Towards tomorrow: The Singapore Technologies story. Singapore: Singapore Technologies, p. 89. (Call no.: RSING 338.7620 SIN)
19. Lee, H. S. (1992, May 30). STH unit lost $164m but will turn around: Dr Hu. The Business Times, p. 1. Retrieved from NewspaperSG.
20. Singapore Technologies. (1997). Towards tomorrow: The Singapore Technologies story. Singapore: Singapore Technologies, p. 238. (Call no.: RSING 338.7620 SIN)
21. De Silva, G. (1990, May 12). Companies in Sheng-Li group to go public. The Straits Times, p. 1. Retrieved from NewspaperSG.
22. Singapore Technologies. (1997). Towards tomorrow: The Singapore Technologies story. Singapore: Singapore Technologies, p. 183. (Call no.: RSING 338.7620 SIN)
23. Singapore Technologies. (1997). Towards tomorrow: The Singapore Technologies story. Singapore: Singapore Technologies, pp. 80, 202. (Call no.: RSING 338.7620 SIN)
24. Chia, J. (1997, August 29). S’pore Tech to merge four units. The Straits Times, p. 64. Retrieved from NewspaperSG.
25. Singapore Technologies. (1997). Towards tomorrow: The Singapore Technologies story. Singapore: Singapore Technologies, pp. 89, 133–135, 190, 212–214, 235. (Call no.: RSING 338.7620 SIN)
26. SembCorp, STIC to merge. (1998, June 1). Reuters News; Singapore merged property group to be renamed CapitaLand. (2000, September 6). Agence France-Presse. Retrieved from Factiva via NLB’s eResources website: http://eresources.nlb.gov.sg/
27. Raj, C. (2002, June 12). ST group dragged down in 2001 by recession. The Business Times, p. 2. Retrieved from NewspaperSG.
28. Boey, D. (2002, March 13). Peter Seah has work cut out for him. The Business Times, p. 3. Retrieved from NewspaperSG.
29. Siow, L. S. (2003, October 4). ST Group issues exchangeable notes to raise $801m. The Business Times, p. 5. Retrieved from NewspaperSG.
30. Wong, W. K. (2003, December 10). A global challenge for ST and Temasek. The Business Times, p. 3. Retrieved from NewspaperSG.
31. Indosat staff clash with police over sale to S’pore. (2002, December 28). The Straits Times, p. 4; Telecom. (2002, December 30). The Straits Times, p. 19. Retrieved from NewspaperSG.
32. Wong, W. K. (2003, December 10). A global challenge for ST and Temasek. The Business Times, p. 3. Retrieved from NewspaperSG.
33. Tang, W. F. (2004, July 2004). S’pore Technologies back in the black with $101m profit. The Business Times, p. 1. Retrieved from NewspaperSG.
34. Tan, A. (2004, October 14). Temasek to dissolve subsidiary ST. The Straits Times, p. 1. Retrieved from NewspaperSG.




The information in this article is valid as at 2011 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.

 

Subject
Business, finance and industry>>Business organization>>Government linked companies
Organisations>>Companies
Business enterprises
Financial services industry--Singapore
Engineering--Singapore
Business, finance and industry>>Industry>>Construction and real estate>>Real estate
Business, finance and industry>>Finance
Defense industries--Singapore