Much has been written about privatization. Partial privatization is a lesser known fact, although most privatization programs begin with a period of partial rather than full divestment of state-owned enterprises (SOEs). In this type of privatization, the government plays the role of a regulator and a shareholder. This could give rise to conflicts of interest; for example, the possibility of political interest overriding the commercial interest. As a consequence, privatized SOEs may face difficulty in globalizing their business through financial and fixed asset investment. This article argues that setting up state-owned holding companies (SOHs) can be a constructive way to manage the important link between the government and the privatized SOEs and demarcate the government’s role as regulator and shareholder. By means of a case study, the Temasek Holdings Limited of Singapore, this article illustrates the Singapore’s experience in managing and globalizing partially privatized firms.
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