A state-owned enterprise ( SOE ) is a business entity created or owned by a national or local government, either through an executive order or legislation. SOEs aim to generate profit for the government, prevent private sector monopolies, provide goods at lower prices, implement government policies, or serve remote areas where private businesses are scarce. The government typically holds full or majority ownership and oversees operations. SOEs have a distinct legal structure, with financial and developmental goals, like making services more accessible while earning profit (such as a state railway). They can be considered as government-affiliated entities designed to meet commercial and state capitalist objectives.
29-651: The Tanzania Railways Corporation (TRC) is a state-owned enterprise that runs one of Tanzania 's two main railway networks. the Headquarters are located in Mchafukoge , Ilala District , Dar es Salaam Region . When the East African Railways and Harbours Corporation was dissolved in 1977 and its assets divided between Kenya , Tanzania and Uganda , TRC was formed to take over its operations in Tanzania. In 1997
58-552: A 49% stake. There were moves to abandon the contract "due in part, to the fact that the Indian investor failed to pay over USD 6 million in concession fees to the Tanzania government in 2008" but RITES officials countered noting that the contract "misled Rites officials by indicating that the Railway Assets Holding Company (Rahco) was in possession of 92 working locomotives when, in actuality, only 55 existed" . In 2010,
87-661: A public objective. For that reason, SOEs primarily operate in the domain of infrastructure (e.g., railway companies), strategic goods and services (e.g., postal services, arms manufacturing and procurement), natural resources and energy (e.g., nuclear facilities, alternative energy delivery), politically sensitive business, broadcasting, banking, demerit goods (e.g., alcoholic beverages ), and merit goods (healthcare). SOEs can also help foster industries that are "considered economically desirable and that would otherwise not be developed through private investments". When nascent or 'infant' industries have difficulty getting investments from
116-489: A regular enterprise, state-owned enterprises are typically expected to be less efficient due to political interference, but unlike profit-driven enterprises they are more likely to focus on government objectives. In Eastern Europe and Western Europe , there was a massive nationalization throughout the 20th century, especially after World War II . In the Eastern Bloc , countries adopted very similar policies and models to
145-585: A train disaster in Africa (the highest being the Awash rail disaster ). In 2007 RITES Ltd of India won a contract from the Parastatal Sector Reform Commission (PSRC) to operate passenger and freight trains on a concession basis for 25 years. The concession agreement was signed on 3 September 2007, to begin on 1 October 2007. The railway will be run as Tanzania Railway Ltd, with the government owning
174-562: Is a viable argument for SOEs is debated. SOEs are also frequently employed in areas where the government wants to levy user fees , but finds it politically difficult to introduce new taxation. Next, SOEs can be used to improve efficiency of public service delivery or as a step towards (partial) privatization or hybridization. SOEs can also be a means to alleviate fiscal stress, as SOEs may not count towards states' budgets. Compared to government bureaucracy, state owned enterprises might be beneficial because they reduce politicians' influence over
203-753: Is approximately 70% of total employment. State-owned enterprises are thus a major factor behind Belarus's high employment rate and a source of stable employment. In most OPEC countries, the governments own the oil companies operating on their soil. A notable example is the Saudi Arabian national oil company , Saudi Aramco , which the Saudi government bought in 1988, changing its name from Arabian American Oil Company to Saudi Arabian Oil Company. The Saudi government also owns and operates Saudi Arabian Airlines , and owns 70% of SABIC as well as many other companies. China's state-owned enterprises are owned and managed by
232-886: Is difficult to determine categorically what level of state ownership would qualify an entity to be considered as state-owned since governments can also own regular stock , without implying any special interference). Finally, the term "enterprise" is challenged, as it implies statutes in private law which may not always be present, and so the term "corporations" is frequently used instead. Thus, SOEs are known under many other terms: state-owned company, state-owned entity, state enterprise, publicly owned corporation, government business enterprise, government-owned company, government controlled company, government controlled enterprise, government-owned corporation, government-sponsored enterprise , commercial government agency, state-privatised industry public sector undertaking, or parastatal, among others. In some Commonwealth realms , ownership by The Crown
261-602: Is highlighted in the predominant local terminology, with SOEs in Canada referred to as a " Crown corporation ", and in New Zealand as a " Crown entity ". The term " government-linked company " (GLC) is sometimes used, for example in Malaysia , to refer to private or public (listed on a stock exchange) corporate entities in which the government acquires a stake using a holding company . The two main definitions of GLCs are dependent on
290-706: Is the first phase of a larger 2,560km railway designed to link Tanzania with neighboring countries such as Burundi , Rwanda, and the Democratic Republic of Congo . TRC inherited ferry and cargo ship services on Lake Tanganyika and Lake Nyasa and some ships on Lake Victoria . TRC introduced MV Bukoba on Lake Victoria in about 1979, MV Mwongozo on Lake Tanganyika in 1982 and passenger and cargo ship MV Serengeti on Lake Victoria in 1988. On 21 May 1996 Bukoba sank in 25 metres (14 fathoms) of water about 30 nautical miles (56 km) off Mwanza . She had many more passengers aboard than she
319-703: The State-owned Asset Supervision and Administration Commission (SASAC) . China's state-owned enterprises generally own and operate public services, resource extraction or defense. As of 2017 , China has more SOEs than any other country, and the most SOEs among large national companies. China's SOEs perform functions such as: contributing to central and local governments revenues through dividends and taxes, supporting urban employment, keeping key input prices low, channeling capital towards targeted industries and technologies, supporting sub-national redistribution to poorer interior and western provinces, and aiding
SECTION 10
#1732851876312348-833: The Minister of Finance II, the Minister in the Prime Minister's Department in charge of the Economic Planning Unit, the Chief Secretary to the Government, Secretary General of Treasury and the heads of each of the GLICs (the Employees Provident Fund, Khazanah Nasional Berhad , Lembaga Tabung Angkatan Tentera (the armed forces pension fund), Lembaga Tabung Haji and Permodalan Nasional Berhad . Khazanah Nasional Berhad provided
377-791: The Tanga line a line to Kenya is disused. There is a break-of-gauge at Dar es Salaam to the Tanzania-Zambia Railway Authority (TAZARA) 1,067 mm ( 3 ft 6 in ) line to Zambia . A second link is at Kidatu , where the TAZARA line meets the Kidatu branch. In 2024, Tanzania inaugurated a new railway terminal in Dar es Salaam as part of its ambitious Standard Gauge Railway (SGR) project. The railway, powered by electricity, connects Dar es Salaam to Dodoma in under four hours. The 460km route
406-1003: The USSR. Governments in Western Europe, both left and right of centre, saw state intervention as necessary to rebuild economies shattered by war. Government control over natural monopolies like industry was the norm. Typical sectors included telephones , electric power , fossil fuels , iron ore , railways , airlines , media , postal services , banks , and water . Many large industrial corporations were also nationalized or created as government corporations, including, among many others: British Steel Corporation , Equinor , and Águas de Portugal . A state-run enterprise may operate differently from an ordinary limited liability corporation. For example, in Finland, state-run enterprises ( liikelaitos ) are governed by separate laws. Even though responsible for their own finances, they cannot be declared bankrupt ;
435-500: The form of Public Sector Undertakings (PSUs). The Malaysian government launched a GLC Transformation Programme for its linked companies and linked investment companies ("GLICs") on 29 July 2005, aiming over a ten-year period to transform these businesses "into high-performing entities". The Putrajaya Committee on GLC High Performance ("PCG"), which oversaw this programme, was chaired by the Prime Minister , and membership included
464-653: The government terminated the contract and resumed control. In 2007 the Deputy Minister for Infrastructure Maua Abeid Daftari proposed conversion to standard gauge . In 2008 tenders were sought for 1,000 mm ( 3 ft 3 + 3 ⁄ 8 in )-gauge steel sleepers convertible to 1,067 mm ( 3 ft 6 in ) gauge and for concrete sleeper plant for dual 1,000 mm ( 3 ft 3 + 3 ⁄ 8 in ) and 1,435 mm ( 4 ft 8 + 1 ⁄ 2 in ) gauges. State corporation The terminology around
493-567: The hinterland were built under colonial rule as German East Africa : the Central Line runs from Dar es Salaam to Kigoma , and the Tanga Line from Tanga to Arusha . A north-south connection, from Korogwe to Ruvu , links the two lines. The main line runs to Lake Victoria where a connection operates via Lake Victoria train ferries with the Uganda Railway and Kenya Railways . From
522-407: The inland shipping division became a separate company. In November 2021, TRC received the three modern locomotives (H10 series) worth Sh22 billion to strengthen their Metre-gauge railway (MGR) line, ordered from Malaysia. TRC's gauge is 1,000 mm ( 3 ft 3 + 3 ⁄ 8 in ) and the length about 2,600 kilometres (1,600 mi). Two east–west lines linking the coast and
551-412: The leading application of the incomplete contract theory to the issue of state-owned enterprises. These authors compare a situation in which the government is in control of a firm to a situation in which a private manager is in control. The manager can invest to come up with cost-reducing and quality-enhancing innovations. The government and the manager bargain over the implementation of the innovations. If
580-592: The negotiations fail, the owner can decide about the implementation. It turns out that when cost-reducing innovations do not harm quality significantly, then private firms are to be preferred. Yet, when cost-reductions may strongly reduce quality, state-owned enterprises are superior. Hoppe and Schmitz (2010) have extended this theory in order to allow for a richer set of governance structures, including different forms of public-private partnerships . SOEs are common with natural monopolies , because they allow capturing economies of scale while they can simultaneously achieve
609-399: The private sector (perhaps because the good that is being produced requires very risky investments, when patenting is difficult, or when spillover effects exist), the government can help these industries get on the market with positive economic effects. However, the government cannot necessarily predict which industries would qualify as such 'infant industries', and so the extent to which this
SECTION 20
#1732851876312638-428: The proportion of the corporate entity a government owns. One definition purports that a company is classified as a GLC if a government owns an effective controlling interest (more than 50%), while the second definition suggests that any corporate entity that has a government as a shareholder is a GLC. The act of turning a part of government bureaucracy into a SOE is called corporatization . In economic theory ,
667-451: The question of whether a firm should be owned by the state or by the private sector is studied in the theory of incomplete contracts developed by Oliver Hart and his co-authors. In a world in which complete contracts were feasible, ownership would not matter because the same incentive structure that prevails under one ownership structure could be replicated under the other ownership structure. Hart, Shleifer, and Vishny (1997) have developed
696-516: The secretariat to the PCG and managed the implementation of the programme, which was completed in 2015. As of 2024, Philippines Amusement and Gaming Corporation (PAGCOR) is the most profitable state-owned enterprise in the Philippines. It is the third largest contributor to government revenues, following taxes and customs. Maua Abeid Daftari Maua Abeid Daftari is a Member of Parliament in
725-469: The service. Conversely, they might be detrimental because they reduce oversight and increase transaction costs (such as monitoring costs, i.e., it is more difficult and costly to govern and regulate an autonomous SOE than it is the public bureaucracy). Evidence suggests that existing SOEs are typically more efficient than government bureaucracy, but that this benefit diminishes as services get more technical and have less overt public objectives. Compared to
754-465: The state answers for the liabilities. Stocks of the corporation are not sold and loans have to be government-approved, as they are government liabilities. State-owned enterprises are a major component of the economy of Belarus . The Belarusian state-owned economy includes enterprises that are fully state-owned, as well as others which are joint-stock companies with partial ownership by the state. Employment in state-owned or state-controlled enterprises
783-493: The state's response to natural disasters, financial crises and social instability. China's SOEs are at the forefront of global seaport-building, and most new ports constructed by them are done within the auspices of the Belt and Road Initiative . As of at least 2024, an Ethiopian SOE is Africa's largest and most profitable airline, as well as Ethiopia's largest earner of foreign exchange. In India , government enterprises exist in
812-439: The term state-owned enterprise is murky. All three words in the term are challenged and subject to interpretation. First, it is debatable what the term "state" implies (e.g., it is unclear whether municipally owned corporations and enterprises held by regional public bodies are considered state-owned). Next, it is contestable under what circumstances a SOE qualifies as "owned" by a state (SOEs can be fully owned or partially owned; it
841-507: Was certified to carry and at least 800 people were killed. After the disaster criminal charges were brought against nine TRC officials including Bukoba' s master and the manager of the Marine Division. In 1997 the Marine Division became a separate company, Marine Services Company Limited . On 24 June 2002 the Igandu train disaster killed 281 people, the second highest number of deaths in
#311688