State-Owned Enterprises (SOEs) still play a significant role in many economies around the world despite considerable privatization efforts during the last twenty years. SOEs do not only constitute a significant part of the economy, but often also represent strategic infrastructure sectors with a considerable effect on the overall competitive environment and economic performance of many countries in Eastern Europe, Asia, South America and Africa.

Sweden’s SOE reforms represent a valuable experience for many governments today with important portfolios of SOEs including India, China and Brazil. Not only was Sweden the first European government to systematically address the ownership and management of government enterprises, but more importantly the reforms clearly demonstrated the importance of managing SOEs more professionally. One of its many successes was reflected in the value of the portfolio that outperformed the local stock market for more than six quarters between 1999 and 2001.

Conclusions

Having pioneered in deregulating several sectors and shunning privatization as a short-term solution, Sweden and its State Portfolio was in strong need of a more efficient corporate governance model. Not least since the Portfolio is several times the size of its private equivalents. The Private Equity sector provided such a model, making a clear distinction between the money and the governance function. This distinction is perhaps even more important to make in a political environment, where the ultimate shareholder is the rather distant taxpayer. The importance of political insulation cannot be underestimated as a pre-condition in making any reforms. A clear objective and transparency are also fundamental for success with SOE reforms, as well as in making the relevant sectors more competitive and the consequently the economy as a whole.

According to many observers including economists and financial analysts, the restructurings and improvements in the corporate governance of the Swedish SOEs did not only improve Shareholder Value for shareholders and taxpayers, but also led to a more efficient use of capital and resources and as such enhanced competition in several important sectors. Being such a substantial part of the local economy, it was also said to have contributed to economic growth for Sweden .
Inspired by the reforms in Sweden, the OECD initiated the work with creating an international benchmark to help governments assess and improve the way they exercise ownership of SOEs. As a result the Guidelines on Corporate Governance of SOEs were published in 2005. These guidelines will no doubt set a benchmark for how to manage SOEs globally as well as help improve competitiveness in many countries, including India, China, and Brazil just to mention a few countries where SOEs still play a significant role in the economy.
The Swedish experience has already been helpful to several governments in Europe as well as in Asia and in the Middle East. With many significant portfolios of SOEs still playing an important role in countries around the world, this experience will keep acting as an inspiration to these countries. Although each country is unique and has its own special issues it needs to address, there will always be something to take away from these successful reforms, given that the knowledge is tailored to the specific needs of each situation and country.

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