Financial Crime World

Finance Ministry Recommends Streamlining State-Owned Enterprises

The Ministry of Finance has proposed a range of measures to enhance the efficiency of state-owned enterprises (SOEs) and promote transparency in their governance.

Corporate Governance Guidelines for State Enterprises 2019

The guidelines aim to improve the performance of SOEs by providing clear roles and responsibilities. Key recommendations include:

  • Holding government shares in SOEs through the Minister of Finance, who will be responsible for monitoring and reporting on their performance.
  • Approving foreign borrowings, refinancing, and repayment of loans exceeding the aggregate paid-up share capital of the company.
  • Establishing a framework for corporate governance in SOEs.

Privatization and Borrowing

The Ministry has also recommended:

  • The privatization of companies
  • Domestic borrowing
  • Refinancing of loans
  • Setting up clear remuneration guidelines for state enterprises that promote long- and medium-term interests of the enterprise

Reporting Requirements

Under the new guidelines, SOEs will be required to submit an annual report to Parliament within three months of the end of each financial year. The report must include:

  • Details on material losses
  • Unauthorized expenditures
  • Irregular expenditures
  • Wasteful expenditures
  • Disciplinary steps taken as a result of losses
  • Material losses recovered or written off
  • Other matters prescribed by the Ministry

Portfolio Ministry Role

The Portfolio Ministry has been tasked with ensuring that SOEs are in line with their purpose of establishment and recommending any changes thereto. The ministry will also:

  • Provide technical expertise and assistance wherever necessary
  • Consult with the Ministry of Finance on policy shifts or interventions
  • Refrain from being involved in governance or day-to-day management decisions of SOEs

State Enterprises Reporting

SOEs are required to submit annual performance reports within three months of the end of each financial year. The reports will include information on:

  • Material losses
  • Unauthorized expenditures
  • Irregular expenditures
  • Wasteful expenditures
  • Disciplinary steps taken as a result of losses
  • Material losses recovered or written off
  • Other matters prescribed by the Ministry

The guidelines aim to promote transparency and accountability in the operations of SOEs, ensuring that they operate in line with their purpose of establishment.