The National State Enterprises Bill, which will dramatically shake up the governance of state-owned companies and envisages them moving from line departments to a newly created state asset management company, was published for comment on Friday.
The bill is the most far-reaching reform of state-owned companies since the 1990s, when some were corporatised under the Companies Act, mostly with an eye to future privatisation. Due to political opposition, the model never really took off. The bill sets out the legal basis for a state holding company – to be known as the State Asset Management Company – into which state-owned companies will migrate and be converted to subsidiaries.
It is modelled on the Singaporean, Malaysian and Chinese models – where a holding company plays the role of a global investment asset manager - using state-owned companies to earn a return for investors. Investors other than the state would invest to earn returns through listings on the stock exchange.