 during Chinese Academy of Social Sciences, I would like to ask Peter Brexons. Could you explain a little bit more about who supervised the state on the enterprises about the salary setting and social welfare distribution within the state-owned enterprises? Thank you. Good. I think this session will do it one by one, so Peter, you can answer this question. Yes, thank you. Under supervision of the state on enterprises, it's basically divided through the ministries. I think today there are primarily free ministries that own or has a responsibility for state ownership, and they have then the responsibility of supervising them and having discussions. In terms of salary, I think the ministers primarily has to look into sort of board remuneration, so and then also to some extent the pay to the top management, so that's typically the CEO and maybe one or two more of management. And then it's basically left for the board of directors and management to decide on the level of wages for the rest of the companies. And then we have an overarching principle that's saying that the state on enterprises should pay market-based wages, but they should not be leading in the wage scheme, so they should be quite conservative in how they set wages. And it's more or less the same when it comes to sort of social protection, the companies just basically follow general Danish rules on labor protections and stuff. So I think that's sort of the legal framework, but of course we have an expectation that they should probably be best in class when it comes to protecting workers' social benefits and behave sort of as a better of the private companies. Yeah, in the back here. Thank you. I'm Dona Lumari from Repoa Tanzania. My question is not directed to any specific speakers, but more general in terms of, it seems to me from the experience of Vietnam and also from Nordic countries that selective state ownership, which is more strategic, is good for the economy. But there has been increasing concern and of course advice from the World Bank and the other organizations for blanket privatization. Just privatize everything, including utilities, transportation on the ground that the state ownership is inefficient. My question is what is your take on that and what should you, what would you have advised the developing countries if you were the World Bank? Let's start with John. Thank you. Yeah. Thank you for your question, that's a tough one. But I think it's tougher when you look at Denmark with what is it, 3% of GDP associated with the SOEs than when you look at a country that has several thousand big SOEs and maybe firm performance and economic efficiency are not the only criteria. So it's complicated and those other things need to be thought about. But I actually did not interpret either of the two other speakers on this panel as suggesting that retaining large numbers of the state enterprises is a good long-term policy. That was not my interpretation, but maybe I'll put the ball in their courts to answer that. Dr. Ko? For Vietnam, I think it is quite easy to identify which enterprises is strategic. And nobody advised us to privatize Holy network industries and industries, strategic industries. But we think about how to increase the efficiency of these enterprises. And for the first thing we have to do, we should create the market institutions to industries. For example, nowadays, what I mean market institutions is we should separate the policy makers, market regulators and enterprises and owners and enterprises. But nowadays, for example, electricity in Vietnam and many three of the industries and commerce. They are the policy makers and regulators and also state owners. So when I think that we should separate an avian, avian here is Vietnam Electricity Corporation. They dominate, that is dominant buyers that monopoly, they are the monopoly in the buyers of electricity from the other producers. So I think that this is no market because it is only buyers. And secondly, in the regulatory framework here is that policy makers and state holders and regulators is the same. So here I think it's not appropriate institutions for the market to work. So we firstly think to the set up market institutions and then open the industry to more investors. So that is our strategy. Peter, do you want to add? I'm just add a few things. I think what I said was kind of the official line. And I think there was one question I didn't really try to answer. And that is, when are the reasons for the state to own something sufficient? I just said they had to be very strong. And I think if you ask me personally, I think in Denmark we could easily privatize at least half of the 20 odd state-owned enterprises that we have. I don't think the majority of the politicians in Denmark would agree with me on that one. So I don't think it's going to happen. And therefore, of course, you can always find some reasons why you shouldn't privatize. But if you really analyze the reasons, it's not really, it doesn't make sense. So that was one thing. And I think of course it will always be trade-off because if the state-owned enterprises are extremely inefficient or very inefficient, then privatization might be one of the means that you can actually do something about it. So of course if the cost of having state-owned enterprises is big enough, then you ought to go down the privatization route even though you might find less strong argument for not privatizing things. Just one small follow-up point. The excuse that an industry is strategic, I don't want to discount entirely, but it can also be misused. Let me give you one example. In Moldova, wine production was a strategic industry that was intended to be retained as a state monopoly because it was so important to exports principally to Russia and Ukraine. So the state ownership of the wine industry meant that they forewent all of the kind of restructuring and new entry vineyards and winemakers, foreign and domestic, technological change, et cetera, which has really improved the quality of wine in Eastern Europe, of which I can assure you it's happened. We have two speakers in front here, a good second. Hi, Emilio Arrobre from Federal University of Rio de Janeiro, Brazil. I would like to ask Peter, if you could please further elaborate on what you name as the state acting as no most shareholder because actually if you take, for instance, say energy sector or your companies or utilities, of course they are very key tools for governments to implement some economic policy. So I would be curious if you could tell us a little bit about the experience in other countries. We know they've been experimenting with carbon tax and of course removal of fossil fuel subsidies has been long due and recommended by the IMF and a lot of reports. So how can you reconcile this kind of new governance model that you propose with this strategic role of these companies for meeting these governmental targets? Peter. When I'm speaking as the state acting as a normal shareholder, it's very much the ownership role and as Mr. Chung has said, what we are trying to achieve all the time is to make a clear division that of course the state have other interests in terms of being a public authority. So take energy policy, for example, it's for the Ministry of Climate and Energy. They must set their rules so they meet the objectives in energy and climate policy, but we in the Ministry of Finance in our role as owner of the largest energy company in Denmark should only act as though we are a normal shareholder and only concerned about getting a return on our investment. So that's why what we try to achieve and I think we have done in most cases. So it's in that context we should see the state act as a normal shareholder. Peter, come on. Thank you. My name is Le Deng Thuan from Vietnam. I have a question for three speakers in the state-owned enterprises. They are all in all countries a problem of vested interest, an interest group, no transparent financial relation. I wonder how do you evaluate what for progress has been made by reforming the SOE and whether after reforming, after privatization, the vested interest has been really eliminated and no more interest group, hidden interest group has been could exist and there are no more non-transparent financial relations between state officials and the CEO of the Equitize or privatize state-owned enterprises. Thank you. I think we will start with Dr. Kung this time because I would like to hear that answer. My observation is that even after equalization or privatization, there is still vested interest because even when we equalize large shares of state enterprises, there is still connection between government officials and the managers. Previously, the government officials, they are friends. Therefore, and second observation is that the mother company and subsidiaries, when subsidiaries privatize, even privatize 100% of state ownership, there is still very strong connection and even some opportunities, business opportunities, the private mother company, they do not share with their subsidiaries but they share totally to the friends of the companies. I think that what is my observation and therefore I don't think that only privatization we abolish the vested interest. It's also, can I just turn the words to you, John, because in Russia, we hear a lot of stories about this as well with vested interests in state-owned companies. So do you have... I guess I'm next. Of course, privatization is not a panacea. So to some extent people's interests are going to remain the same but it's also possible that their interests change somewhat. So the managers of the company may take a greater interest in the firm's performance subsequently. And I think the... I don't want to say the fact but the very strong evidence that firm performance does tend to systematically improve following privatization suggests that behavior has also changed. So those vested interests may still be there. Of course, in every country around the world there are problems of special interests and corruption. So these are not going to go away because of privatization but the fact that firm behavior is changing has some evidence that it's also having an effect on those vested interests which are otherwise very hard to observe. The nice thing about firm performance is we can estimate it and measure it. Just a few additional comments. I think looking at the state-owned enterprise that we have, I think the most important thing in dealing with vested interests is actually dividing the roles of the states. So you have an ownership function and you have an authority function because it naturally gives a competition between the different lines in the civil service that the... I can see it clearly with our energy company in the old days, 15 years ago, they always came and saw all of us at the same time and said we have to solve their problems. But now they can't do that and the Minister of Climate and Energy is very firm that they wouldn't be seen as granting favors to the Danish energy company in particular not because it's owned by the Minister of Finance. So it actually creates a good sort of structure for dealing with this. And I'm also sure the same goes, we should take the state further and privatize the company. It would naturally... any vested interests would tend to go away gradually or at least be to a more normal level of what you will see from other private companies that always... that also pursues vested interests to some extent. Thank you. My name is Witness, I'm from African Economic Research Consortium in Kenya. So I have, I think, two questions to the first presenter. So the first, I think, is... I don't think I got the explanation of why the effect of foreign ownership on productivity is so huge. And then the other thing that I also wanted to get a sense of is why there's a big difference between 100% private ownership and having a... what I would call a passive or a minority state ownership because I don't know to what extent that small ownership would influence the performance of the company or should influence the performance of the company in making. And the last thing that I wanted to check with you is whether you looked at sectoral differences in the productivity effects of privatization because it could be that certain sectors maybe there could be larger gains than in other sectors and if you compare across the five countries maybe the sectors are different. So it might actually sort of bias the outcomes. Thank you. I actually counted three questions. So I'd like to be careful to distinguish what the econometric analysis of the data tell us from speculation. And actually you're primarily asking me to speculate but there's been lots and lots of discussion about particularly the first issue of foreign versus domestic. And so the speculations involve the possibility that foreign investors are bringing access to new technologies to international markets, new ways of management and international quality standards and things like this that they are already familiar with. But those are speculations because in these data sets we don't actually observe what the managers are doing. What we do observe is a very clear difference in the implied effective privatization on productivity and some other performance measures. Why is 100% better than majority? This was actually that it's so much better twice as much across all our specifications and outcome variables was actually a bit of a surprise. This is actually a very recent result. We'd always been looking at majority into some extent majority versus minority before. And a speculation here would be that the private owners even if in control may worry that the 10% Danish owner that wants to limit them from moving their... So the Danish state owner wants to prevent them from moving their headquarters or doing something else. This is still some leverage over the company. And that it is so important is surprising, but the data is speaking very clearly on that. Finally, on the sectoral differences. There are sectoral differences. Maybe just a big one that I would mention is that it turns out that we estimate larger effects on the manufacturing than in non-manufacturing. And a speculation as to why that is is that it's the manufacturing sector that maybe can benefit more from technological change, from access to finance. That's another issue actually for foreign investors. And those other advantages that private including both domestic and foreign investors might be able to bring. And we have done a kind of a decomposition analysis looking at the different industrial composition of these economies and say, well, what if we applied the average industrial composition of all of them and re-estimate, so re-weighting our results? It doesn't affect the results materially. So they're essentially the same. But it's a really interesting question. What's the source of those cross-industry differences is an area of active research, may I say? Okay. Final? Justin? My question can be either to John or Dr. Kwong. We are talking about the ownership of steel-owned enterprises. But are we looking at the right questions? Because we know a lot of the steel-owned enterprises now exist in Russia or in Vietnam. In general, are too capital intensive compared to their state of development. And under the kind of situation, they are not viable. And they need to receive subsidies from the government in order to survive. And under this kind of situation, even if you privatize them 100%, they are still receiving government subsidies, protection in order to survive. And if we compare the incentive structure or ransomware, whether it's have a high incentive to ransomware in the form of the state ownership or the private ownership. I think that might be a more relevant question just to talk about the ownership reform or property right reform. So that's my comment. I'd like to have your reaction to that comment. Dr. Kwong. I think that for the first thing we think about is the separation that status owners and status policies, makers. Maybe policy makers want us to subsidize. But that is clear. If that is subsidized for the social benefit, or the country benefit, it is clear what is the price we have to pay and where the society accepts that price. I think that the ownership I talk about is that it's clear objective and transparent, especially financial aspect between the state budget and state shareholders. So whether we should pay the price to give some subsidized and many other objective that is what I concerned. So if I understand your question, Justin, isn't the soft budget constraint the bigger problem? And possibly, but one of the possible advantages of privatization is, in fact, that it may reduce that softness. Certainly, the continued role of the state is a very important issue in these countries and some more than others. Transparency is always going to be hard to achieve whether the state is a shareholder or not because there are so many different ways that support and subsidies can be provided. So I guess, I think there are a lot of questions here. They're interrelated. Since arguably privatization may be a tool, you may regard it as a tool for reducing the softness of budget constraints, but it's just one of many. And improving the functioning of the state sector is certainly another one. Okay, we have went over time, but I think we should thank the three presenters for excellent presentations and thank you to all of you.