On June 21, the Central Personnel Administration (CPA) issued new guidelines on the formation of committees that will be responsible for selecting new chairpersons for state-owned enterprises (SOEs). All government bodies that administer SOEs, including the Ministry of Finance, the Ministry of Economic Affairs, the Ministry of Transportation and Communications and the Veterans Affairs Commission, will be required to adhere to these guidelines when choosing new chairpersons for their SOEs. These guidelines will go into effect on July 1 for a one-year trial period, and will first be applied to the selection of a chairperson for the Taiwan Tobacco and Wine Monopoly Bureau when it becomes the Taiwan Tobacco and Wine Corporation.
The CPA's plan calls for 19 SOEs to be subject to the new guidelines for hiring board chairpersons. They include the Ministry of Finance's Bank of Taiwan, Land Bank of Taiwan, Taiwan Cooperative Bank, Central Trust of China, Export-Import Bank of the ROC, Central Reinsurance Corporation, and Taiwan Tobacco and Wine Corporation; the Ministry of Economic Affairs' China Petroleum Corporation, Taiwan Power, Taiwan Sugar, China Shipbuilding, Aerospace Industrial Development Corporation, Tang Eng Stainless Steel, and Kaohsiung Ammonium Sulfate; the Ministry of Transportation and Communications' Chunghwa Telecom; and the Veterans Affairs Commission's Retser Engineering.
According to Lee Yi-yang, director of the CPA, in the future the selection of chairpersons for SOEs will be based on the principles of transparency, professionalism and a clear delineation of rights and responsibilities. The selection committee will consist of 21 to 23 persons, to be convened by the vice premier. It will include the secretary-general of the Executive Yuan, the head of the Directorate-General of Budget, Accounting and Statistics, the chairperson of the Council for Economic Planning and Development, the chairperson of the Research, Evaluation and Development Commission, the head of the Central Personnel Administration, the head of the government department in charge of the SOE in question, and 14-15 scholars and experts.
In addition, in the future persons selected to head up these SOEs will be subject to the provisions of the legislation governing the operation of commercial or investment enterprises, and to "revolving door" laws. They will also be required to declare their assets and avoid conflicts of interest. These persons must be under the age of 65 at the time they take up their position, and must step down by the age of 68, whether or not their normal term is complete.
The CPA soon announced the membership of the selection committee. The convener of the committee is Vice Premier Lin Hsin-yi, and the 13 representatives from industry and academia include Jeffery Koo, chairman of Chinatrust Commercial Bank, Barry Lam, chairman of Quanta Computers and Ko Cheng-en, dean of the College of Management at National Taiwan University.
The recent changing of the guard at SOEs led to the mid-June decision to replace the chairman at CPC.
Former CPC chairman Regis Chen has been widely referred to as a model SOE administrator, who had turned the company around and was much admired by CPC employees. On the other hand, incoming chairman Kuo Chin-tsai's former company, Aurora, lost more than NT$3 billion last year, causing the CPC workers' union to doubt his suitability for the job. All three union representatives on the CPC board expressed their dissatisfaction with the choice of Kuo by voting against him.
Since Kuo is from Ilan, there has been speculation that he was selected to head up CPC because both he and Premier Yu Shyi-kun are members of the "Ilan Gang." However, industry figures have indicated that to better compete with Formosa Plastics, CPC needs someone at the helm with marketing and logistics experience. They suggest that Kuo's many years of experience with marketing in the information technology industry was a factor in his selection.
Since SOEs are the property of the citizenry, it is only natural that the government elected by the citizenry holds the reins. But viewed from another angle, because these firms belong to everyone, the managers selected by the government must be accepted by the public as being qualified for the job. It is sincerely hoped that the implementation of the guidelines for the formation of committees to hire the many SOE heads will shine a light on this selection process, making it more open and transparent to all.
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The ruling and opposition parties all agree that state-owned enterprises should be privatized, but care must be taken to avoid politicizing these privatizations. The photo shows China Shipbuilding's shipyard. (photo by Diago Chiu)
