A special exception

THIS WEEK'S TOPIC: Should the state step in to save distressed companies such as airlines? What are the risks and downsides?

Lawrence Loh Director, Centre for Governance, Institutions and Organisations NUS Business School

State bailouts of for-profit companies, using public funds, are normally taboos - we should avoid these with a ten-foot pole. Yet, I think there are three tests for Singapore to save ailing companies. First, is the company in a strategic sector that is crucial to the country? In other words, is it in a business that is crucial for long-term national sustenance? Second, has the company a reasonable chance to bounce back to viability? This means that the calamity is but a blip when a black swan strikes. Third, is it in the public interest to rescue the company? In essence, the company should be making significant contributions, like employment or even global reputation. As a summary evaluation, companies like Singapore Airlines pass all three tests.