The shareholder state is making a comeback
The question confronting policymakers is no longer whether governments should own corporations, but how they should govern them.
In an unexpected turn, governments around the world are reevaluating their role as shareholders within corporations. The prevailing consensus that privatization and shareholder primacy define economic reform is giving way to a new notion: governments should actively govern corporations as strategic shareholders. This shift marks a significant reversal from the post-Cold War era when privatization and market liberalization were the dominant economic policies.
Countries like the United States, China, Indonesia, and Singapore are increasingly viewing ownership as a strategic instrument for economic development, national security, and industrial policy. The US, for instance, is leveraging its ownership stakes in critical industries like semiconductors through acts like the CHIPS and Science Act, which combine public investment with significant oversight.
At the same time, China continues to corporatize strategic enterprises, retaining ultimate state control while introducing market incentives to separate ownership from day-to-day management. Meanwhile, Singapore's Temasek Holdings exemplifies a model of professionally managed state-owned enterprises, demonstrating that institutional separation between political leadership and investment management can ensure commercial discipline.
The challenge for governments lies in effectively governing their corporations. This dual role as shareholder and regulator necessitates clear separation of responsibilities to prevent political objectives from overshadowing commercial judgment. International standards such as the OECD Guidelines on Corporate Governance of State-Owned Enterprises advocate for this separation to maintain accountability and promote commercial decision-making.
As geopolitical competition intensifies, the focus is shifting from whether corporate governance systems will converge to how governments will harness ownership as an instrument of economic policy. This trend signifies a move away from the outdated model of privatization and towards a new era where state ownership is strategically employed to advance long-term national interests.
Written by urgent.news from The Jakarta Post's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
