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Panel suggests corporatization of state-owned firms

To sharpen the competitiveness of state-owned enterprises, the government should make a greater effort to corporatize these institutions and review regulations to loosen set-in-stone restrictions, according to the representatives attending a panel meeting yesterday.

The panel was formed to discuss management of state enterprises as part of the preparations for the Conference on Sustainable Economic Development, scheduled for July 27 and 28.

State-owned institutions currently refer to the organizations in which the government holds, directly or indirectly, greater than a 50 percent stake. However, in some cases, the government is able to control businesses with shareholdings of only 20 percent.

Boost governance

Former vice minister of finance Yang Tze-kiang (楊子江) suggested that professional management be commissioned to run state enterprises saddled with policy burdens, such as Taiwan Power Co (台電), Chinese Petroleum Corp (中油) or Chunghwa Post Co (中華郵政), to boost corporate governance and management efficiency.

For others that can be privatized without damaging industrial development, he urged the government to speed up share sales using a fair and transparent mechanism, as with China Shipbuilding Corp (中船), Taiwan Tobacco and Liquor Corp (台灣菸酒公司) and Taiwan Sugar Corp (台糖).

Zero share

Democratic Progressive Party Legislator Wang To-far (王塗發) echoed Yang's view, saying that privatization, if required, should be carried out to reduce the government share to zero.

But he doubted whether it was feasible to introduce professional management to run state enterprises as the decision would require the consent of private shareholders.

Huang Tien-lin (黃天麟), a former national policy adviser to President Chen Shui-bian (陳水扁), suggested that the government enact a law managing state-run enterprises or state-run financial institutions, which would be conducive to corporatizing these businesses.

According to statistics provided by the Council for Economic Planning and Development, the Cabinet has approved the privatization of 68 state-controlled enterprises since 1989.

Of those, 35 have been privatized, 17 are defunct, two have ceased privatization due to policy changes and the remaining 14 are undergoing privatization.

The panel yesterday, chaired by CEPD chairman Hu Sheng-cheng (胡勝正), concluded that the privatization of those 14 businesses should be reviewed.

The government should reserve its shareholdings in key enterprises which bear policy development tasks but they can be corporatized or run by professional management teams, rather than the government, to boost their competitive edge, they noted.

The consensus reached yesterday will be subject to further discussion at the economic conference at the end of the month.
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