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MPs urge for more scrutiny over sale of SoEs

MPs urge for more scrutiny over sale of SoEs

A new draft proclamation intending to amend the existing privatization laws has been tabled before the House of People’s Representatives (HPR), with MPs suggesting further scrutiny to identify the advantages and disadvantages of transferring public enterprises and urged to keep some of the public enterprises under the government, based on their respective importance for public advantages.

The proposed draft bill grants the Council of Ministers (CoM) the power of a final say on privatizing state-owned enterprise matters. In addition, it states that the revenue from privatizing or the sale of public enterprises would prosper the Industry Development Fund.

Cited as the Public Enterprises Privatization Proclamation, the latest draft bill was tabled before the HPR on Tuesday, where MPs held first hand debates.

During the House’s regular session, it was said that the draft bill aims to introduce reforms, to sustain the country’s economic growth and transformation, and create an enabling policy environment for private sector investments.

Contrary to the existing proclamation, a new provision stipulating the pre-privatization activities has been improved, redefining the role of the supervising authority as well as the agency, with regards to a particular enterprise.

The latest draft bill of Article 4 stipulates specific ‘Institutional Responsibilities for Pre-Privatization Activities,’ the roles of the CoM, Ministry of Finance (MoF) and management board of the enterprise, decided for privatization.

Hence, according to the draft bill, the CoM shall determine the full or partial privatization of enterprises, taking into consideration the recommendations of the MoF and the Supervising Authority of the Public Enterprise.

The new draft, further proposes a new provision, concerning “Public Enterprise Restructuring and Other Activities Prior to Privatization.”

Hence, accordingly, in coordination with the Supervising Authority, the Ministry is required to undertake specific duties such as evaluating whether the Public Enterprise has the appropriate capital structure, business strategy, corporate governance structures and reporting and disclosure practices prior to privatization, and take appropriate action in the event of deficiencies.

While discussing on the provisions, in addition to suggesting the government keeps some of the public enterprises under its possession, MPs have requested for the government to present specific enterprises which are going to be fully and partially privatized.

According to the draft provisions, the Government may choose, in the case of the sale of a majority or controlling interest, to retain a golden share. Nevertheless, it also stated that a golden share will provide the government with a voting and veto rights over any board resolution, which it believes is not in the public's interest.

The House, after discussing on the provisions of the draft bill, it has referred the bill to the Revenue, Budget and Finance Standing Committee for further revisions. Three MP’s have voted against the bill with six abstaining.