No solution in sight for ailing state-run businesses

Following accusations that many state-owned companies are financial money pits, pundits have questioned the the current administration's ability to tackle the issue.

According to legislator Chen Chao-jung (陳朝容), "in the past, state-owned companies used their market monopoly to make money ... but in recent years they have been poorly run and gradually become a burden on the treasury."

Some say the government should cut its losses and eliminate the companies all together.

"Most of the loss-making, state-owned companies should be closed," said Norman Yin (殷乃平), a banking and finance professor of National Chengchi University.

But pundits agree that shutting them down will only draw to the surface other problems -- problems deeply embedded in the system.

"The problem is that with the thousands of employees in every state-owned company, closing them would put these employees out of work and create a huge amount of retirement and pension expenses. You could expect strong opposition from the employees of state-owned companies. It's one of the major reasons that politicians do not want to touch the problem," Yin said.

"I doubt that the DPP administration would be able to solve the problem that the KMT created decades ago," said Dicky Dai (戴震), a veteran market commentator. "During the KMT administration, many of these state-owned companies have lost money. But the KMT did not close them down."

But even if Cabinet officials are sincere in their resolve, a lack of expertise may hamper the plan.

"If the DPP administration intends to solve the problem, they have to recruit professionals who first understand the problem. There are few in the DPP who understand economic issues, let alone have the ability to solve such complicated and difficult problems.

"What the DPP has been doing is to sell good state-owned companies, like Chunghwa Telecom Co Ltd (中華電信), as for the bad ones, the earliest opportunity for tackling the issue would be when the new Cabinet is seated after the year-end election," Dai said.

Regardless of the timetable, the problem is not expected to go away anytime soon.

"But sooner or later, politicians will have to face the issue. Whether the administration dares cut out the tumor -- especially with the general election coming at year-end -- will be interesting to watch," Yin said.

According to statistics provided by the Directorate General of Budget, Accounting and Statistics, many state-owned enterprises are operating in the red.

The current legislative review of state-owned enterprise budgets has only helped to focus the spotlight on the issue.