SOEs to end ‘ social functions’ in bid to streamline their operations, reduce costs

State- owned enterprises ( SOEs) will transfer parks, transport infrastructure and other “social functions” to local authorities by the end of this year, regulators said on Monday, part of the country’s ongoing efforts to reform the State sector.

The State- Owned Assets Supervision and Administration Commission ( SASAC) said in a notice that SOEs must transfer functions that “do not match the main direction of their business development” to local authorities.

The heavily indebted SOEs are under pressure to ditch schools, hospitals, retirement homes, fire fighting services and other “social functions” to cut costs and focus on their core businesses.

The assets, which also include water supply and household sewage treatment infrastructure, as well as environmental and public health facilities, will be transferred to local governments free of charge, the SASAC notice said.

From 2018, no SOE will be obliged to cover the costs of “social functions” that have already been transferred to local governments, according to the commission’s notice.

The reform process has been complicated, however, with under- resourced local governments unable to aff ord to renovate rundown SOE- owned infrastructure or cover the health care, education and pensions of thousands of retired workers and their families, especially in “one- company towns” where the SOE was the major source of income.