7 May 2002
The working group of the Ministry of Finance revising the Act on State-Owned Enterprises has made proposals for amendments to the Act. The main objective of the reform is to improve the transparency of the competitive position of the enterprises and to increase competition neutrality. The FCA supports the proposed amendments but would sharpen them up to some extent.
The FCA finds that the objectives of the reform would best be met if official action were completely removed from the state-owned enterprises by establishing separate offices or by transferring official duties to offices, which already exist. Should the state-owned enterprises engage in official action, this should be wholly financed from the state budget. The special duties imposed on the enterprises that are commercially unprofitable should also be funded from an appropriation in the state budget.
This would ensure increased transparency and prevent cross-subsidization. The conduct would also best meet the demands of good administration.
The FCA finds the reform of the State-Owned Enterprise Act important, although, today, the state-owned enterprise as a form of organisation is justified in such cases only where the enterprise has a public service mission and the service cannot be obtained elsewhere from the markets.
Head of Research Juhani Pennanen