In the world, countries have established and controlled different state owned enterprises /business sector to achieve certain objectives or goals such as reducing poverty and achieving economic development in general. Having this in mind, the main purpose of this paper is to analyze whether state owned enterprises are policy enterprises or else in Ethiopia. State owned enterprises may be policy enterprises or else depending upon different conditions on the aspect of Ethiopian Economic policy or legal/law aspects. But with regard to determining the policy or any other status of state owned enterprises in Ethiopia is not yet clearly determined. Now a day Ethiopia has adopted free market policy but the government has highly intervened in the economy and owned many state owned enterprises in different business sectors of Ethiopia. The government is the major player in the economic system of Ethiopia and this may endanger the private enterprises. Hence to determine whether state owned enterprises are policy enterprises or else, it must be checked in line with the free market policy and the government should act in accordance with the free market policy what the government adopted.