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Around the world, governments are important owners of commercial enterprises and assets. How well the government manages these assets will have a great impact on the substancial values these enterprises represent and thus on a country’s public finances. Better performance of these enterprises is a positive factor for economic growth and competitiveness. In addition, state-owned enterprises often supply fundamental services such as water, electricity and transportation that private companies and all citizens depend upon for their competitiveness and welfare.
Many governments are therefore trying to improve the governance of their state-owned enterprises. There is an upcoming interest to improve the value creation and not destroy often important investments made by state owned enterprises. In addition to this, pressure comes from the consumers who demand better services at lower cost and from private sector companies that require a level playing field when they compete with state-owned enterprises.
But while the benefits are obvious, there is still a great deal of uncertainty about how to formulate and implement effective ownership policies. Experiences and awareness of state corporate governance practices are still evolving, and governments are also uncertain of how to make the best possible use of the opportunities for privatisation that have emerged with internationalisation, market de-regulation and technological change. Also, the internationalisation of state-owned enterprises themselves raises important new issues in relation to cross-border investments and disclosure practices.
Against this background, the OECD has been actively involved in promoting an international dialogue on privatisation and corporate governance of state-owned enterprises. As part of that work, OECD issued the Guidelines on Corporate Governance of State-Owned Enterprises in 2005, which now serve as a global benchmark for countries introducing governance reforms in the state-owned sector. A large number of non-OECD economies have also participated in this work and made important contributions. The OECD Working Group on Privatisation and Corporate Governance of State Owned Assets considers such co-operation important in shaping the direction and content of its future work.
For this purpose, the Working Group is establishing a “Global Network,” involving participants from both OECD and non-member countries. The Network’s annual meetings will provide a structured dialogue on OECD’s initiatives to support improvements in the governance of SOEs and, for cases in which governments decide to privatise, provide support to ensure that it is done effectively. The OECD has so far worked mainly through regional SOE networks (Asia, southern Africa, the Middle East and North Africa) and Corporate Governance Roundtables covering Latin America, Southeast Europe, Eurasia and Russia to build up awareness of the Guidelines and to encourage their use. The Global Network provides a mechanism for sustaining and enhancing such exchanges across all regions, as an opportunity to build knowledge of and contacts with a broader range of countries. It will provide a means for better understanding of emerging new issues and trends in state ownership, and for reviewing priorities and approaches for implementing the Guidelines on such issues as transparency and accountability, ensuring effective processes for nomination of professional SOE board directors, and other issues that the participants themselves may wish to flag as important for future consideration.
The first meeting of the Global Network will take place in Paris, France, on 5 March 2008.
Further reading
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