3. W h y a r e t h e y i m p o r t a n t ?
State-Owned Enterprises
dollars in value
workers
of value
SOEs
ASSETS
PDVSA VENEZUELA PERUECUADOR CHILE PARAGUAY BRAZILPEMEX MEXICOCOLOMBIABOLIVIA
35% 30% 29% 13% 9% 9% 8.77% 5.65% 5%
SALES
2,111
2 quintillion
6 Million
the W O R L D
Data from OECD, WB
+10%
L A T I N A M E R I C A
GDP
over
of the world's largest
companies are owned
by the State
of employment
50% 60%
in the following industries
TransportationPetroleum/Gas Public Services
S T A T E - O W N E D C O M P A N I E S
SOEs
12% GDP
25%15% BrazilColombia
Ecopetrol
ISAGEN
ISA
Securities Market
SOEs
77% 11% 6% 6%SALES
3.6 trillionin sales in 2011
OTHER
6%
SALES
GDP
4. Reasons for the existence of SOEs
• Political and ideological reasons
• Social reasons
• Economic reasons
5. Problems of SOEs
• Political problems
• Financial problems
• Management problems
• Regulation and Competition problems with the private
sector
8. Efficiency and Effectiveness of SOEs
• Common belief: SOEs are less efficient
• Even though there is no conclusive evidence in this respect
• Potential inefficiencies stemming from the problems mentioned earlier
• Efficiency relates to the type of ownership and the market structure
• Efficiency and effectiveness are independent of the generation or non-
generation of resources
• An SOE must be an example of efficiency
9. Efficiency and Effectiveness of SOEs
Source: Author's, based on data from América Economía and https://finance.yahoo.com
10. Reforms of SOEs
• The main recent reforms have focused on three areas:
– Privatization
– Reorganization of the owner's role
– Introduction of enhanced corporate governance
• Main obstacles:
– Political opposition
– Opposition from steering teams and trade unions
– Lack of managerial capacity and experience
– Lack of coordination and cooperation between the different actors
involved in the Administration of the State
– Lack of global planning
11. • Dual Model
• Centralized Model
• Decentralized or Sector Model
Actually, uniform models do not exist
MANAGEMENT MODELS
12. CENTRALIZED MODELS (CM) - Types
• Agencies
– Ministry of Public Enterprises (Indonesia)
– Department or Unit (France, Poland, South Africa, Paraguay).
– Agency as such (China-SASAC, Chile)
• Corporate structures
– Holdings (Hungary, Peru, Spain)
– Investment companies (Malaysia, Finland, Singapore)
• Sovereign Wealth Funds (Saudi Arabia, Dubai, Kuwait)
• Development Banks (BNDES)
13. CENTRALIZED MODELS (CM)
PROS (I)
• They analyze SOEs from a joint perspective
• Political interference is more complicated
• They solve the problem of multiple owners
• They allow for the separation of roles between regulator and
owner
• Greater independence and managerial capacity
• Economies of scale
• They facilitate the assignment of responsibilities
• Better information and greater transparency
• Better monitoring and evaluation systems
14. CENTRALIZED MODELS (CM)
PROS (II)
• Harmonized operational policies
• Homogeneous corporate governance
• Better coordination with other actors
• Synergies and coordination between companies
• An exceptional opportunity to rethink the public
corporate sector in depth
15. CENTRALIZED MODELS (CM)
Pyramid Structure
Government/Owner
CM Directors
Institutional Organization: Management
of Investee Companies
Corporate Processes: Monitoring & Evaluation,
Fiscal, Accounting, Procurement, etc.
Administrative Committees
State-Owned Enterprises
Source: Enrique Moreno de Acevedo
16. CENTRALIZED MODELS (CM)
CONS/RISKS (I)
• Risk of continued political interference. Lack of political
commitment
• Development of a purely 'cosmetic' structure
• Become a bureaucratic entity
• Limited effect if large and subsidiary companies are not
included
• Power struggles
• A single central entity can be insufficient and inefficient
• Lack of suitable resources and/or sector specialization
17. CENTRALIZED MODELS (CM)
CONDITIONS FOR SUCCESS (I)
• The model must be part of a global proposition
• High-level political support and capacity to engage in dialogue
• Proper regulation
• Explicit, well-defined mandate
• Adequate resources. Capable and trained individuals
• Harmonization of cross-cutting policies
• Appropriate information systems
• Independent supervisory systems and entities
• Implementation may have different focuses, speeds and
phases
18. Conclusions
• SOEs are here to stay
• Need for unequivocal support from the Government
• Reforms to the public corporate sector must be conceived
as part of a whole
• There is no perfect, universal system
• A Centralized Model allows for a reorganization of SOEs to
look into the future and to face current and forthcoming needs
more efficiently. And above all, it can establish a management
system that is efficient, effective, transparent and long-
lasting and somehow immune to political interference.
19. Annex: Responsibilities of SOEs
Personnel
Public:
Citizens
Voters
Creditors
Civil Society
Professional:
Legal
Corporate
Professional
Associations
Management:
Central Government
Ministers
Treasury
Audit
Board of Directors
Policy:
Central Government
Ministries
Opposition Parties
I
N
T
E
R
N
A
L
E
X
T
E
R
N
A
L
SOE
Source: Author's, based on Luke, May 2010
20. THANK YOU!
Enrique Moreno de Acevedo Sánchez
http://www.iadb.org
The Inter-American Development Bank Discussion Papers and Presentations are documents prepared by both Bank and non-Bank
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