GROWTH over the next five years will likely be driven more by privatisation and entrepreneurship than by decisions by policymakers, according to Morgan Stanley Asia (Singapore) analysts.
Economist Hozefa Topiwalla said in a briefing yesterday that he expects that Temasek Holdings' government-linked companies will embark on internationalisation and restructuring in the near future.
He pointed to companies like Ascott Residence Trust and Global Logistic Properties which, while already international in outlook, have more markets to venture into.
Mr Topiwalla added that firms such as Sembcorp Industries and Keppel Corp have room to grow revenue internationally.
The restructuring process would also include mergers and acquisitions (M&A) and divesting companies through listing and privatisation.
"For Singapore, the biggest medium-term driver is going to be (government-linked company) restructuring," said Mr Topiwalla, the Singapore-based head of Asean research and equity strategist at Morgan Stanley.
He noted in a report released yesterday that Ascott Residence Trust, SembCorp Industries and Keppel Corp were among companies with a high potential for M&A acti- vity.
Mr Topiwalla's predictions of increased privatisation follow conversations in the past few years about government involvement in sectors like public transport.
Fellow analyst Deyi Tan noted in her report, also out yesterday, that state-driven growth "is vulnerable to policy group-think, which could result in wrong bets on sectors, incurring high opportunity costs in terms of the resources used".
As Singapore's economy matures, Ms Tan believes that growth should come from a more vibrant start-up culture, along the lines of California's Silicon Valley.
She pointed to an increase of venture capital being deployed here, from US$12 million (S$16 million) in 2007 to US$454 million in 2013, as well as relations developing between universities and industry, and the establishment of government technology incubators and accelerator programmes.
But Ms Tan warned that entrepreneurial attitude must be fostered as a risk-taking appetite remains low in Singapore.
She also recommended that the country look to the Nordic model, not just for a departure from a test-based education system, but also for its active labour policy that extends training grants and skills-upgrading benefits to unemployed residents.
Ms Tan said this will be crucial to raising competitiveness and productivity, which remain low here.