The government has set up a new public body, the Public Assets Supervision and Planning Office, to oversee the publicly funded firms and public autonomous funds in the territory with calls for more details for the new office.
Heeding the public calls for more transparency regarding the operational and financial details of companies and subsidiaries, in which the government has direct or indirect interests, the city’s new Chief Executive promptly inaugurated the new public body to oversee these firms with billion-dollar investments of public coffers.
While hailing the government’s efforts, public observers are calling for more details on the role and functions of this newly established Public Assets Supervision and Planning Office.
Right after assuming office as the city’s top leader on December 20, Ho Iat Seng announced the set-up of this new office, which is headed by Sonia Chan Hoi Fan, the outgoing secretary for administration and justice. The government explained the public body will carry out a review of the regulatory regime for the city’s public assets and formulate the relevant rules and legislation.
In a public occasion in January, Ms. Chan said that the office — directly reporting to the Chief Executive — now had about 10 staff, with the headcount to be expanded to about 25 by year-end. A total of 23 publicly-funded companies in Macau and 21 public autonomous funds – except the Pension Fund and the Social Security Fund – now fall under the scrutiny of her office, she added.
According to the latest financial information regarding government-invested companies unveiled by the administration, the SAR Government has invested MOP9.3 billion (US$1.16 billion) in 12 companies as of end-2018. The investment represented a 13.6-percent hike from about MOP8.19 billion by end-2017.
However, this set of figures does not include all of the publicly-funded firms here, and not all of these companies, especially the first-tier, second-tier and more subsidiaries, publicise their financial reports regularly.
Flexibility and scrutiny
Legislator and scholar Agnes Lam Iok Fong thinks the latest move by the government as a new attempt to better supervise the publicly-funded companies. “There are a lot of problems now concerning the supervision over these firms, for instance, the public company managing the land plots of the airport had been bankrupt for some time, the fact that the Legislative Assembly and the public had only been aware of since last year,” she illustrated.
And a balance should be struck between supervision and flexibility. “Publicly-funded companies are now run as ordinary private companies, so that they don’t have to completely follow all the administrative procedures and could have more flexibility in operation,” she remarked. “However, as these companies use public coffers, they should be subject to more supervision and stricter rules than private firms.”
The lawmaker suggested mandating government-invested companies to publicise their financial report every year, including the accounts of their subsidiaries, could be the first step in strengthening the scrutiny over these firms.
Before the establishment of the new office, the government has indeed been working to enhance the supervision over the public firms, namely drafting a guideline for more transparency over these firms. According to the previous statements by the Financial Services Bureau, the guideline — covering all firms in which the government has a direct or indirect stake of 50 percent or more — would require the companies to publish their basic information — namely corporate structure, financial information, procurement information and latest news — on their official website.
Following the formulation of the guideline, the bureau has also noted that it would optimise the internal control of these companies; for example, listing out the principles and regulations for the internal operation.
Ms. Sonia Chan noted in January it has worked hand in hand with the Financial Services Bureau in regard to the guideline after inception in December, which could be published in February.
With the ongoing endeavour by the government to tackle these companies, some wonder about the necessity of setting up the new office, when the new-term administration pledges to streamline the government structure and put a cap on the size of the civil service force.
“Comprehensive reviews of all the government-invested firms and autonomous funds, and more measures to enhance the transparency [of their operation] and publicise the salaries and other information of their executive board, are indeed one of the urgent tasks the new-term government has to tackle,” said political commentator Ron Lam U Tou, adding, for instance, the total expenditure of autonomous funds here, excluding the Pension Fund and the Social Security Fund, amounted to over MOP20 billion a year.
“But does the government have to set up a new office to do so? There have been many new public bodies in the past when the authorities claimed to streamline its structure,” Mr. Lam, who is president of the Association of Synergy of Macau.
As the new office is only a “temporary” government department now and is subject to renewal in three years’ time, he believes the authorities have to come up with a detailed blueprint — including the working schedule and key tasks of the office — to determine whether it would be renewed or dissolved three years later.
No competence now
Legislator Leong Sun Iok is concerned that the new office now does not have the capacity to scrutinise the publicly-funded companies, which are run like private companies, and the Commercial Code and relevant legislation do not mandate they have to be subject to additional scrutiny. “Without the adequate legal foundation, it is difficult for the Public Assets Supervision and Planning Office to supervise these public companies, which have been set up under different government secretaries and departments, and might even be headquartered beyond Macau,” he emphasised.
The lawmaker also underscored the problem of these companies now is the lack of transparency. “There has been a lack of specific laws and rigid supervision mechanisms for publicly-funded companies, which involve the usage of a large amount of public coffers,” Mr. Leong said, “The public have no idea whether the operation of these companies have matched their expected goals and aligned with the socioeconomic interests, and whether their recruitment, procurement and investment practices meet the principles of prudent financial management and fairness.”
“Thus, the key is for the government to optimise and formulate a supervision regime as soon as possible, to ensure the appropriate usage of public coffers,” he noted.
Meanwhile, as the authorities will publish a guideline for publicly-funded companies to publicise their basic information soon, Mr. Leong noted there should be more guidelines on their operation, from investment to procurement to recruitment. “All have to be done to ensure the public interests won’t be compromised,” he said.
Big-spending autonomous funds
The latest financial information unveiled by the authorities shows that the Sport Fund has had the highest expenditure among other public autonomous funds in the territory — except the Macau Foundation, Pension Fund and the Social Security Fund.
According to the execution report of the government budget for fiscal year 2018, which was submitted to the Legislative Assembly for deliberations, the expenditure of the Sport Fund, which provides financing for the city’s sport development and sport infrastructure, totalled MOP741.97 million (US$92.75 million) in 2018, up by 6.1 percent from a year earlier.
The Industrial and Commercial Development Fund, which sponsors activities and programmes that are beneficial to the economic development of the territory, closely trailed behind with MOP633.78 million in 2018. The expenditure represented a huge decline of 84.8 percent from MOP4.16 billion recorded in 2017.
Next is the Tourism Fund, which provides subsidies for activities promoting the image of Macau and tourism events, with the 2018 expenditure at MOP620.66 million, inking up slightly by 0.8 percent from the previous year.
The Education Development Fund, which aims to support and promote all types of non-tertiary educational programmes and events, spent MOP607.24 million in 2018, declining by 22.1 percent from MOP779.49 million in 2017.
Providing financing and subsidies for local cultural activities, the Cultural Fund forked nearly MOP424.31 million in 2018, down by 20.3 percent from MOP532.52 million in 2017.
It’s noteworthy that besides the Industrial and Commercial Development Fund, which is under the scope of the Secretary for Economy and Finance, the other top-four spending funds fall within the competence of the Secretary for Social Affairs and Culture.
Other public autonomous funds with significant expenditures in 2018 included: MOP342.75 million for the fund that provides subsidies for tuition fees and others of students here; MOP227.37 million for the Science and Technology Development Fund; and MOP125.38 million for the Cultural Industries Fund.