Reforming Swedish
Government-Owned
Companies
Richard Woodworth
+44 20 7867 2621
richard_woodworth@ml.com
19 September 2000
Points to Cover
1. Background to Policy Change
2. Assess Government’s Objectives
2. Assess Progress to Date
3. Is the Swedish Experience Applicable?
Background to GOC Policy Change
• Early 1990s Economic, Financial Problems
• EU Accession
• Globalization
• Information, Communications Technology
• OECD Privatization
• EMU and Industry Consolidation
• Knowledge Economy
Swedish Government Objectives
• Transparency
• Value Creation
• Accountability
• Flexibility
Means to Achieving Objectives
• Transparency
• Corporate Governance
• Capital Structure
• Incentives
• Internet
Greater Transparency
• Regular Quarterly, Annual Reports
• Increased Public Scrutiny, Expectations
More Focused Corporate Governance
• Set Guidelines for Directors
• Hire More Outside Directors
• Increase Accountability
Leaner Capital Structure
• Realize True Economic Cost of Capital
• Pay Dividends
• Borrow on Private Capital Market
Worker Incentives
• Offered to All Employees
• Determined Company by Company
• Manager Has Broad Discretion
Internet Strategy
• Reduce Costs of Sales, Customer Support
• Purchase On-line
• Control Inventories
• Forecast Consumer Demand
Assessing the Progress to Date
• Government Portfolio Large and Diverse
• Experience So Far Limited
• Scorecard:
– Transparency
A
– Corporate Governance
[B]
– Capital Structure
?
– Incentives
?
– Internet Strategy
?
Is the Swedish Experience Applicable?
• Sweden on Established Reform Path
• Strong Institutions
• Tradition of Openness
• Considerable ‘New Economy’ Potential