Law on state assets frustrates reformers

PUBLISHED : Wednesday, 29 October, 2008, 12:00am
UPDATED : Wednesday, 29 October, 2008, 12:00am

A law to better protect and manage state-owned assets was passed on the mainland yesterday. But to the disappointment of reformers, the final version, which state media claimed ended a 15-year debate, seemed to lack the teeth that could protect stakeholders' interests.

Details of how to protect people's assets from unlawful erosion and, in good times, ensure some modest gains in value in the free market will not be officially available until President Hu Jintao enacts the law in May.

But according to experts familiar with the legislation, it was little more than a stack of regulations that were already in force.

An Jian , deputy director of the legal work committee of the National People's Congress Standing Committee, yesterday admitted that the law was full of compromises and had not justified lengthy speculation that it would cover all state-owned assets.

'We had considered making a big and comprehensive state-owned asset law, but after long discussions, we found that 'asset' was a very broad concept,' Mr An said. 'So the law, for the moment, will only oversee assets of state-owned enterprises [SOEs].'

This means the immense assets owned by the government - including coal, oil, forests and all other natural resources - will remain subject to ever-changing government regulation.

In addition, the law strengthens the legitimacy of high salaries and bonuses paid to senior management at some SOE monopolies, adding to the fury of many, who feel such executives are overpaid.

The law also allows a board member of an SOE to take the post of general manager, which, according to a source from the state-owned Asset Supervision and Administration Commission of Guangdong, recognises the legitimacy of a huge management black hole.

'In most of the large Guangdong state-owned enterprises, the director of the board is also the general manager and the chief party secretary,' the source said. 'There is no division of power, no supervision, and no democracy on decision-making.

'But what can you do? Most SOE bosses have iron-clad relations at the top. Some of them were offspring or relatives of the leadership.

'See how the once-ambitious law turns out to be rubbish?'

The law does include financial assets in its jurisdiction but says that if there is a conflict with existing or future administrative regulations, those regulations would take precedence.