SOE reform policy from next month

A state-owned Enterprise Act (SOE Act) is now being drafted to be presented to Parliament in the coming months most probably by mid this year to give legislative authority and operational effect to SOE reform policy.

The government will implement the SOE reform policy, including associated government policies by March this year ensuring that the holding company and the advisory committee comprise skilled, independent, and professional staff.

The principles expounded in the reform policy broadly align with good practice and, if realised, should result in improved fiscal and governance outcomes from commercial SOEs, a Finance Ministry report revealed.

The Government maintains ownership and control over somewhere between 300 and 500 entities (527 to be exact) that it characterises as public corporations.

A Public Enterprises Division has been established within the Ministry of Finance which collates the budgets, business plans, and financial reports of 52 SOEs –those which it considers to be the most strategically important.

Some130 SOEs have been earmarked for conversion into public liability companies of which 17 were defunct and state intervention is not needed for 87 enterprises, the report indicated. The holding company will be responsible for the “ongoing operational management” of its subsidiary SOEs.

Under the SOE reform policy an “advisory committee” devoid of political influence has to be appointed for the oversight of the holding company, said a senior official of the ministry.