STRAIGHT TALK
MARK BARNES: The rules are different for SOEs and private sector companies
The debate about whether state-owned entities (SOEs) would do better as either partially or fully owned in the private sector, or not at all, will be settled by neither simple argument nor any one solution applicable across the board. Governance is critical. In the public service the rules and regulations applicable to SOEs are onerous and complex, and often difficult to rationalise while maintaining a competitive position. I don’t think such rules were designed for businesses competing in open markets. Public service businesses, in the main, are meant to deliver goods and services not also provided by the private sector, primarily because public service enterprises do not have, as their central purpose, the maximisation of economic returns on shareholder capital. SOEs’ rules of governance are best suited to enterprises that are either monopolies or which provide essential services. With monopolies, procurement has to follow strict rules. It is fair that the government has the right...
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