They also account for 42 percent of gross domestic product (GDP), the department said in releasing the results of a study conducted in 1998.

Local firms accounted for 46 percent of GDP, with government-linked companies (GLCs) contributing only 12.9 percent, it said.

The report followed remarks by Deputy Prime Minister Lee Hsien Loong last week that the government would reduce its profile in GLCs as they expand overseas, to ease concerns of a hidden agenda.

The statistics department disputed estimates by the US embassy that GLCs contributed more than 60 percent of GDP.

"Such a high estimate is probably due to mistaken perceptions, rather than based on factual analysis of the actual contributions," it said.

Of total GDP, the GLCs where government controls more than 50 percent contributed 9.2 percent.

With government plans to reduce its stake in controlled companies, this contribution is likely to dwindle, while "foreign-controlled companies, mainly multinational corporations, have a substantial presence in the Singapore economy," the department said.

"These companies, though fewer in number, accounted for nearly 60 percent of the corporate sector's total assets and 42 percent of total profits in the economy," it said.

Their contribution to the GDP is "more than three times" the estimated contribution of GLCs, it added.

Deputy Premier Lee, speaking to parliament, conceded that some countries have been reluctant to allow Singapore firms to buy into sectors considered nationally strategic because of the perception they are government owned.

He said the government would remove a special share that enables it to veto major decisions at Singapore Telecommunications Ltd. (SingTel), which failed in its bid to acquire at least two Asian carriers last year.

The government was also prepared to trim its shares "significantly" in SingTel, DBS Group Holdings and other companies, in the medium term, Lee said.

Through its investment holding arm, Temasek Holdings Pte Ltd, the government owns controlling stakes in Singapore Airlines, the Keppel Group, property firm CapitaLand Ltd., Singapore Power Ltd and Singapore Technologies Ltd.

It also holds substantial equity in DBS Group, Southeast Asia's largest bank, Neptune Orient Lines, port operator PSA Corp, subway operator Singapore MRT and SembCorp Industries.

Temasek says its major listed companies comprise about 25 percent of the total market capitalisation of the Singapore Exchange. Total assets are estimated at more than S$70 billion (US$40 billion).