Track: Case Studies

Abstract

Numerous research has pointed to the significant roles of State-Owned Enterprises (SOEs) in driving economic growth in Asia, particularly in the 1980s. Such enterprises have immensely benefited from both state support and legal and natural monopolies, often at the expense of crowding out private sector growth and investment. The 1997-1998 Asian Financial Crisis, however, have exposed many countries to the fact that it can no longer rely solely on SOEs.  There has been pressure to reform its SOEs, to improve its competitiveness or even privatize. SOE Reform in China and Indonesia provide interesting case studies, considering their dominance in key sectors, and extent and scope of state influence. SOEs in both countries remain obliged, to this day, to deliver political and social objectives while expected to generate profits. This paper, therefore, aims at performing a comparative analysis of SOE reform in both countries during the period of 2010-2020, with a view of examining governance and financial management changes as consequences and products of reform. Questions to be answered in this paper include: 1) what considerations for reform are; 2) how SOE governance change as consequence of reform; and 3) extent of financial management and operational changes that SOEs experience. Numerous research has pointed to the significant roles of State-Owned Enterprises (SOEs) in driving economic growth in Asia, particularly in the 1980s. Such enterprises have immensely benefited from both state support and legal and natural monopolies, often at the expense of crowding out private sector growth and investment. The 1997-1998 Asian Financial Crisis, however, have exposed many countries to the fact that it can no longer rely solely on SOEs.  There has been pressure to reform its SOEs, to improve its competitiveness or even privatize. SOE Reform in China and Indonesia provide interesting case studies, considering their dominance in key sectors, and extent and scope of state influence. SOEs in both countries remain obliged, to this day, to deliver political and social objectives while expected to generate profits. This paper, therefore, aims at performing a comparative analysis of SOE reform in both countries during the period of 2010-2020, with a view of examining governance and financial management changes as consequences and products of reform. Questions to be answered in this paper include: 1) what considerations for reform are; 2) how SOE governance change as consequence of reform; and 3) extent of financial management and operational changes that SOEs experience.