Wed, Dec 29, 2004 - Page 10 News List

MOF may take over state-owned firms

REFORM PLAN The finance ministry may become the sole watchdog for state-owned companies. The government is also studying a Singapore-style state holding company

By Joyce Huang  /  STAFF REPORTER

The Executive Yuan yesterday gave initial approval to a proposal submitted by the Ministry of Finance, which will be empowered to become the sole regulatory body for all state-owned enterprises.

"This reform plan will help separate management and ownership within the nation's state-owned enterprises, which will be put under one regulatory umbrella" Premier Yu Shyi-kun told his economic and financial ministers at a meeting yesterday morning, according to a written statement released by the Cabinet.

Yu further instructed the finance ministry to study the feasibility of establishing a government holding company to centralize the ownership of all state-owned enterprises.

Currently, state-owned enterprises come under the supervision of several different government agencies, including the Ministry of Economic Affairs and the Ministry of Transportation and Communications.

Taiwan Sugar Corp (Taisugar, 台糖), Chinese Petroleum Corp (中油) and Taiwan Power Co (台電), for instance, fall under the economic affairs ministry while Chunghwa Telecom Co (中華電信) and Chunghwa Post Co (中華郵政) are regulated by the transportation ministry.

The finance ministry controls Taiwan Tobacco and Liquor Corp (台灣菸酒公司) and all state-owned banks such as the Bank of Taiwan (台灣銀行).

This structure has invited criticism for confusing the role of government agencies -- which act as both as business managers and regulators. But Liu Teng-cheng (劉燈城), director of the finance ministry's Department of National Treasury, defended the stance, saying it will be clarified in the ministry's new proposal.

At a press conference held after the Cabinet meeting, Liu said the finance ministry plans to set up an ad hoc "government-owned shares management committee" to carry out the proposal in three stages.

In the first stage, the ministry will centralize the ownership of government shares in enterprises that have been gradually privatized, such as China Steel Corp (中鋼), Taiwan Fertilizer Co (台肥), First Commercial Bank (一銀) and Chang Hwa Commercial Bank (彰銀), beginning from March.

In the second and third stages, the ministry will found a "national asset management department" to complete the transfer of state-owned shares from other government agencies, according to Liu.

The ministry, however, doesn't have a timetable for implementing the plan's final two stages, while state-owned utilities such as Taiwan Power, the Taiwan Railway Administration (台鐵) and Taiwan Water Corp (台灣自來水) may not be included under the regulatory umbrella if they remain responsible for carrying out the nation's utility policies, according to another finance official.

The ad hoc committee will also be charged with the task of formulating a long-term plan for establishing a state holding company under the ministry to exercise the centralized regulatory power, Liu said.

According to the finance ministry, the state holding company will follow the example of Singapore's Temasek Holdings Pte, which owns and manages the Singaporean government's direct investments, both locally and overseas.

Chang Yue-shan (張玉山), chair of the finance department at National Chungshan University, yesterday lauded the government's plan to found a state holding company.

Chang said that the current regulatory structure allows top-ranking ministers to abuse their power, as they can appoint the heads of state-owned enterprises based on personal preferences, rather than professional considerations, which puts the management of all state-owned enterprises at risk.

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