The principles elaborated in the reform policy advocated by the International Monetary Fund broadly align with good practice and, if realised, should result in improved fiscal and governance outcomes from commercial SOEs.

While commercialisation should help in removing line ministries from management of state-owner firms, the success of the approach is very much reliant on the independence, capability and diligence of the holding company board and its management and the oversight of the holding company itself, it added.

It is essential that the holding company set appropriate governance policies and performance-oriented governance arrangements for its subsidiaries but not engage in their operation.