Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
T.R. PRIME MINISTRY Undersecretariat of Treasury Ownership Function and Strategic Management of State Owned Enterprises in Turkey Ayşe YİĞİT 06.09.2011 [email protected] Outline I. General Outlook for Turkish SOE System SOEs in the Turkish economy Classification of public enterprises Major aspects of SOEs II. Setting the Strategic Objectives:Budgetary and Strategic Documents General Investment and Financing Program for SOEs Mid-Term Program for General Government Sector Strategic Plans 5 year Development Plans III. Responsibility for Achieving the Strategic Goals Responsibilities and Limitations of the SOE Management Efforts for new SOE legislation IV. Current Outlook and Future Expectations Current Outlook: Problems and Opportunities Vision and Future Prospects of Treasury in Terms of SOE Management T.R. Prime Ministry Undersecretariat of Treasury I. General Outlook for Turkish SOE System T.R. Prime Ministry Undersecretariat of Treasury SOEs in the Turkish Economy In the 1990s... More than 60 different SOEs Significant share in GDP and public investments 660 thousand employees now reduced to... 27 SOEs A lower share in GDP and public investments 186 thousand employees as a result of mergers and privatizations. T.R. Prime Ministry Undersecretariat of Treasury SOEs in the Turkish Economy Significant drop in gross sales... 18,3% Gross Sales as % of GDP 8,1% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Treasury P. 8% 9% 9% 11% 11% 10% 6% 5% 6% 5% 6% 7% Privatization P. 5% 6% 5% 7% 7% 7% 8% 3% 3% 3% 3% 2% Total 14% 15% 15% 18% 18% 16% 14% 9% 9% 8% 9% 9% T.R. Prime Ministry Undersecretariat of Treasury SOEs in the Turkish Economy Lower share of public investments... 35% 1,4% 1,3% 30% 1,2% 25% 1,0% Share of SOE 20% Investments 0,8% 15% 0,6% 10% 0,4% 0,3% 5% 0% 0,2% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 SOE/Total Public 29% 24% 14% SOE/GDP 1,2% 1,3% 1,0% 0,9% 0,8% 0,6% 0,3% 0,6% 0,5% 0,4% 27% 29% 20% 19% 9% 17% 0,0% 13% T.R. Prime Ministry Undersecretariat of Treasury SOEs in the Turkish Economy Lower levels of employment Treasury P. 666 Th. Privatization P. Total 186 Th. 1985 1990 1995 2000 2005 2010 T.R. Prime Ministry Undersecretariat of Treasury Classification of Public Enterprises Public Enterprises Financial Enterprises Non- Financial Enterprises Central Bank State Owned Enterprises Public Banks Enterprises in Privatization Program (Former SOEs) Other Institutions (Lottery C., Housing Inst. etc.) Municipality Enterprises Enterprises of Savings Deposit Insurance Fund Enterprises of Housing Inst. Enterprises of Turkish Armed Forces Foundation T.R. Prime Ministry Undersecretariat of Treasury Some Major SOEs General Directorate of State Owned Enterprises Transportation Energy Agriculture Turkish Railways (TCDD) Electricity Production (EÜAŞ) Grain Board (TMO) Turkish Post (PTT) Electricity Transmission (TEİAŞ) Tea Company (ÇAYKUR) Airport Authority (DHMİ) Natural Gas Distribution (BOTAŞ) Agricultural Enterprises (TİGEM) Coastal Safety (KEGM) Oil Extraction (TPAO) State Supply Office (DMO) Hardcoal Mining (TTK) Arms Manufacturer (MKEK) Electricity Transmission (TKİ) Boron Mining (Eti Maden) T.R. Prime Ministry Undersecretariat of Treasury Major Aspects of SOEs 100 % Treasury share (SOE), (Privatization Administration portfolio not accepted as SOE) Ownership represented by Treasury Subject to a special decree rather than Commercial Code Capital injections and duty loss payments by Treasury Investment approval: High Planning Council (secretariat performed by Ministry of Development) Audit: Turkish Court of Accounts, inspection of certain issues by Treasury and line ministry Similar personnel and procurement legislation with general government units Members of board appointed by a joint decree (Line Minister, Prime Minister and President) Approval of financial statements: Grand National Assembly T.R. Prime Ministry Undersecretariat of Treasury Major Aspects of SOEs Composition of the Board (SOEs) Composed of 6 members one of whom is both chairman and the CEO 5 of the members (including the chairman) are appointed upon the nomination of the line minister 2 members must be selected from the deputy CEOs of the company upon the nomination of the line minister 1 member is appointed upon the the nomination of the minister responsible from the Treasury Composition of the Board (Privatization Portfolio) Appointed upon the nomination of Privatization Administration and consent of Prime Minister Privatization Administration: Attached to Ministry of Finance T.R. Prime Ministry Undersecretariat of Treasury II. Setting the Strategic Objectives: Budgetary and Strategic Documents T.R. Prime Ministry Undersecretariat of Treasury General Investment and Financing Program for SOEs Prepared in October by Treasury and Ministry of Development, Privatization portfolio: Prepared by Treasury and MoD, Approved by Privatization Administration A financial forecast of the next year, prepared for budgetary purposes Council of ministers decree Next year’s budget allocations of SOEs Main elements of SOE policy Financial targets (Sales, operational P/L, labor productivity etc.) T.R. Prime Ministry Undersecretariat of Treasury General Investment and Financing Program for SOEs Compulsory framefork for SOE budgets Recruitment caps Procurement procedures & Outsourcing caps Investment limits and programs Budgetary transfers Dividend payments Some operational issues (i.e. price changes) T.R. Prime Ministry Undersecretariat of Treasury Mid-Term Program for General Government Sector Under the responsibility and coordination of Ministry of Development A basic evaluation of the budget and investment proposals of SOEs Investment decisions made by Ministry of Development Covers strategic issues: Mainstream expectations and policies Future investments and developments Necessary financing T.R. Prime Ministry Undersecretariat of Treasury Mid-Term Program for General Government Sector Framework for general investment and financing program Mainly a financial forecast Covers next three years, renewed every year Prepared in May Includes short term risks-exposures and plans Council of ministers decree Budgetary relations of SOEs with central government units, i.e. capital injections, duty loss payments, dividend payments etc. T.R. Prime Ministry Undersecretariat of Treasury Strategic Plans Introduced in 2003, first prepared in 2009 In line with mid-term programs and development plans Under the responsibility of each government agency, MoD acts as a check point for harmony with budgetary and strategic objectives Aims to Explicitly state a mission and vision Create strategic priorities and measurable targets Performance evaluation via predetermined indicators Covers a 5 year period, can be modified after 2 years of implementation Can be modified by a government agent in case of a change in management Responsibility: The minister and upper management Strategic document rather than a financial forecast T.R. Prime Ministry Undersecretariat of Treasury 5 YEAR DEVELOPMENT PLANS Prepared since 1963 by Ministry of Development 9th development plan covering 2007-2013 is in force Primary area of focus: Strategies for economic sectors in the long run Reflects the economic spirit of the era, i.e. import-substition, export-oriented, increasing competitiveness May contain specific targets for SOEs like privatization, restructuring T.R. Prime Ministry Undersecretariat of Treasury III. Responsibility for Achieving Strategic Goals T.R. Prime Ministry Undersecretariat of Treasury Responsibility for Achieving Strategic Goals Responsibilities and Limitations of the SOE Management SOE Management Limited with Recruitment caps Procurement procedures & outsourcing caps Investment limits and programs set by Ministry of Development Independent in other operations Free in determining prices Intervention in prices: Duty Loss State covers loss and %10 forgone profit General Manager Chairman Appointed by the nomination of line minister Accountable to Grand National Assembly No responsibility for SOE performance T.R. Prime Ministry Undersecretariat of Treasury Responsibility for Achieving Strategic Goals Efforts for new SOE legislation Preparation phase Best international practices Full responsibility to management No interventions to management Independent auditors Performance evaluation Sanctions for lack of performance Determination of strategic objectives in coordination with SOE management Ending multi tasking and ambiguity in administration SOEs subject to commercial code A pool of nominees for the board from private sector and public administration T.R. Prime Ministry Undersecretariat of Treasury IV. Current Outlook and Future Expectations T.R. Prime Ministry Undersecretariat of Treasury Current Outlook Problems and Opportunities Political intervention in pricing of energy SOEs High theft/loss ratio and low collection rates in energy SOEs Need for high infrastructure investments in the railways Agricultural subsidies High losses of SOEs which are important in local economies, inability to restructure High cost and rigidity of employment Liberalization of several markets, i.e. Postal sector, railways, energy distribution and production Possibilities of coordination with private sector, public-private partneship projects (Airports, railway stations) Outsourcing in tertiary services (cleaning, security) Privatization T.R. Prime Ministry Undersecretariat of Treasury Vision and Future Prospects of Treasury in Terms of SOE Management State’s new role in the economy: A strong regulatory and supervisory role No production & trade activity in the long run Strengthened ownership of the State Adoption of corporate government principles for public enterprises (best practices) Creating more autonomous managerial environment Clear distinction between financial and policy objectives Linking appointment processes to institutional and executive performance T.R. Prime Ministry Undersecretariat of Treasury