Treasury Secy. reveals shocking state of State-owned enterprises
„Says successive governments have pumped in Rs.1, 150bn up to 2017 „Sri Lanka has 400 SOES and out of that only 55 strategicallyimportant „In 2017, Treasury channeled Rs.41bn to the 55 strategicallyimportant SOES „Out of this, only 39 made profits, while
Successive Sri Lankan governments have pumped in a colossal Rs.1, 150 billion for the upkeep of the strategically-important State-owned Enterprises (SOES) up to 2017, the Finance and Mass Media Ministry Secretary DR.R.H.S. Samaratunga said.
He said this during a conference held for the chairmen of SOES organized by the Public Enterprise Department of the Finance and Mass Media Ministry and the Australian High Commission in Colombo, yesterday.
Sri Lanka has about 400 SOES of which 55 are considered strategically-important and are generally referred to as State-owned Business Enterprises (SOBES).
The secretary said during 2017 alone, the General Treasury had to inject Rs.41 billion to these 55 SOBES. In 2017, they recorded a turnover of Rs.1, 755 billion, which is about 13 percent of Sri Lanka’s Gross Domestic Product (GDP), while their total asset base grew 13. 6 percent over the previous year— about 57 percent in GDP terms.
But only 39 of these SOBES made profits, which amounted to Rs.136 billion, while the remainder 16 made a cumulative net loss of Rs.87 billion.
Dr.samaratunga, noted that although the SOES occupy a significant presence in the economy, as reflected by the figures presented by him, the return on asset of these 55 SOBES is merely 0.64 percent.
“This is a good indication that they are not performing to their full potential,” he said.
According to Dr.samaratunga, reasons ranging from the general lack of governance practices, lack of accountability mechanisms, issues associated with lack of clear policy and legal frameworks and weak supervisory roles played by the management and board of directors of these entities have contributed to the current plight of the SOES.
He mentioned that Committee of Public Enterprises (COPE) has many a time pointed out the need to address the critical issues relating to recruitment, procurement of goods and serves, lack of governance practices, absence of annual reports that are plaguing the SOES.
Improper financial planning, lack of cost accounting systems, unsatisfactory debt management, violation of advanced payments and overstaffing are a few other concerns expressed by COPE members had highlighted over and over in their reports. Another peculiar practice by the SOES has been the practice of incorporating subsidiaries without Treasury approval.