Last week at OECD headquarters in Paris, business representatives highlighted the importance of avoiding market distortions and maintaining a level playing field between public and private companies.
Two OECD workshops on state-owned enterprises (SOEs) focused on the twin challenges of preventing corruption and of SOEs as global competitors. BIAC/Business at OECD, part of USCIB’s global network, arranged for private-sector participation and released key messages for the discussions.
In the workshop on SOEs as competitors, Eva Hampl, USCIB’s director of investment, trade and financial services, discussed where the gaps remain and what can be done about them. She emphasized the importance of addressing the challenges presented by SOEs in a world that is hungry for investment — including foreign direct investment — and economic growth. To the extent that SOEs are now operating on a global scale, they can crowd out private FDI in a way that may hamper competition, including in third markets.
Because SOEs can take on many forms, one important issue is increased transparency on SOE governance structures, as well as any advantages they enjoy which tilt the playing field in their favor versus private companies. Increased transparency alone, however, does not resolve many of the underlying systemic issues of SOEs competing, and does not automatically level the playing field, business representatives said.
Transparency is important since SOEs can be a prime vehicle for corruption. “Many SOEs operate in sectors with high corruption risks,” the BIAC messages note. “The 2014 OECD Foreign Bribery Report identified state-owned or state-controlled enterprises as the single biggest category of foreign officials who were bribed.”