State-Owned Enterprises and Economic Development in Asia
In some resource-rich countries, SWFs rose to prominence during the financial crisis. For example, in the face of highly volatile commodity prices and growing current account imbalances in Azerbaijan and Kazakhstan, these funds have proved useful for maintaining macroeconomic stability. Thus, SWFs could also be viewed as a special group of SOEs. As major holders of government debt, these state-owned investment funds are used to mitigate external shocks, implying that SOEs, including SWFs, have also become active in global markets. Clearly, state ownership occurs in various forms: the state could be a majority shareholder, or it could be a minority shareholder and still influence the governance of SOEs (Musacchio and Lazzarini 2012).
These examples show the increasing role of the state in economic affairs and the importance of managing SOEs more effectively without compromising macroeconomic stability.
1.4 Stylized Facts and Data Set
This section presents the stylized facts of SOEs in six Asian countries: Indonesia, Kazakhstan, the PRC, the Republic of Korea, Sri Lanka, and Vietnam, all of which have been selected largely for their diverse experience in SOE management. The Republic of Korea, representing an advanced economy, serves as a benchmark for how the role of SOEs can change effectively through the various stages of development.
Data are extracted from the Orbis database, which defines an SOE as a company in which the government shares 51% of total assets.[v] The data set covers the period 2010–2018, while the number of SOEs varies across countries. For purposes of analysis, however, we have confined our study to SOEs with available financial data.[vi] It is, therefore, important to note that despite the database’s extensive coverage, the data set is by no means fully exhaustive. Hence, the statistics reflecting various aspects of SOE activities should be considered indicative and for illustrative purposes only.
The analysis shows that the prevalence of SOEs across sectors in the sample countries varies considerably. The largest concentration of SOEs is found in the services sector, including public utilities, financial and insurance activities, and in the trade and transport sectors. The significant presence of SOEs in manufacturing is due mainly to the large number of SOEs operating in the manufacturing sector of the PRC (Figure 1.1)