In 1972, Dr Goh Keng Swee, widely recognised as the architect of Singapore’s economic growth, said:
“One of the tragic illusions that many countries of the Third World entertain is the notion that politicians and civil servants can successfully perform entrepreneurial functions. It is curious that, in the face of overwhelming evidence to the contrary, the belief persists.”
With that in mind, Reuters reported Friday that French company CMA CGM has done what Neptune Orient Lines (NOL) could not do – make the company profitable.
In fact, the French have done it in less than a year after acquiring the former national shipping line.
“Container shipping line CMA CGM posted higher first-quarter profits, helped by a turnaround at recently acquired NOL, and gave an upbeat assessment for the current quarter in another sign that the shipping industry is emerging from a slump.
“The French-based group reported on Friday a first-quarter net profit, including Singapore-based NOL which it consolidated in June last year, of $86 million compared with a $100 million loss in the same period of 2016.”
NOL was sold to the French company in June 2016, after years of trying to adapt to the changing environment.
Led by former Lieutenant General and Chief of Armed Forces, Ng Yat Chung, NOL saw losses rising to US$460 million, while its debts grew more than US$4 billion.
In an interview last year, Ng, who was at the helm for 5 years, blamed the company’s demise on its inability “to compete on costs.”
“The market growth has slowed down, there is severe overcapacity, so we had to recognise that the business model needed change,” he told the press then. “We didn’t have the right cost position in an industry that was becoming more and more commoditised.”
But what Ng could not do at NOL, the French seemed to have done it – and all in less than one year.
“CMA CGM, the world’s third-largest container line, said in its results statement that it was confident operating profits would rise further in the current quarter, citing healthy volumes and a “continued improvement in freight rates”,” Reuters said.
It added that “net profit of $26 million for the former NOL business represented a first quarterly net profit for NOL since 2011.”
Ng, in the meantime, has moved on and is now the Chairman of the Board of Trustees for the Singapore Institute of Technology and a Trustee of the National University of Singapore. He is also a member of the board of Singapore Power and an independent director to the board of Singapore Press Holdings.