Govt. determined to resurrect loss-making state companies
The Sri Lankan Government is determined to resurrect loss-making state-owned enterprises (SOE) by way of a combination of restructuring and listing of non-strategic SOEs in the Colombo Stock Exchange (CSE) as well as selling some of those assets, Development Strategies and International Trade Minister Malik Samarawickrama said at the final session of the Sri Lanka Economic Summit 2016 in Colombo on Wednesday.
The minister was of the view that a strong Public Private Partnership (PPP) framework is essential for the restructuring of SOEs.
This framework should clearly lay out policy, legal and institutional obligations for contracting PPPs and it would enable the government to attract investors to resurrect SOEs, he pointed out.
The government is working with the Asian Development Bank (ADB) and the World Bank towards this end, he disclosed.
The practice of shifting parts of the government budget deficit to the balance sheets of SOEs and state banks should be halted, he said, adding the financial situation of these enterprises could also be improved by recovering dues that are owed to them from other state institutions.
The Public Enterprises Development Bill aimed at improving the management of state-owned enterprises (SOEs) is to be presented in Parliament next month, he disclosed.
The Bill, providing provisions for efficient governance of state owned institutions and the setting up of a Public Enterprise Development Board (Board), has been prepared by the Ministry of Public Enterprises Development, he added.
This ministry comes under Minister Kabir Hashim and Deputy Minister Eran Wickramaratne.
This new board comprising top officials of the public and private sectors, representatives of trade unions and professionals of the relevant fields will handle the managerial appointments of SOEs and the monitoring of the progress of the institutions constantly, he said adding that it will be set up following the model of Singapore’s Temasek and Malaysia’s best practices (Kaza model).
Meanwhile Foreign Minister Mangala Samaraweera, in his presentation at the meeting, said that as Sri Lanka embarks
The minister was of the view that a strong Public Private Partnership (PPP) framework is essential for the restructuring of SOEs.
on its third wave of reforms, a tripartite reform framework would command the confidence of all stakeholders and stand the test of time regardless of the government that comes to power.
Elaborating, he said, “First, introduce competition. Second, limit conflicts of interest by decoupling operational control from policy-making and regulation. Third, ensure competitive operations by bringing in professional, independent management through management contracts and by listing stakes.”
The cumulative losses of the largest five public enterprises are over 600 billion rupees, more than the entire Health Ministry and Education Ministry budget combined, he revealed.
Chief Opposition Whip and JVP Leader Anura Kumara Dissanayake noted that the government should put the country’s economy in order as it is running without a budget for seven months amidst heavy debt burden, trade and fiscal deficits.
Almost all tax proposals in the 2016 budget have been amended by the President and the Prime Minister and no one knows as to how the revenue collection is being carried out by the authorities, he said adding that even cabinet ministers were not aware of it.
Revealing the current economic reality amidst applause of the fully packed audience, the JVP leader emphasised that the government should immediately tackle the massive debt burden, reduction of exports, income inequality, trade deficit, lack of production and politicisation (of the economy).
After settling these issues we would be able to find redress for ailing SOEs, he said adding that the government should stick to its share in SOEs mainly catering to the public needs.
He said, “Sri Lanka has a small economy and in such a set-up monopolies could emerge negatively impacting the poor. Therefore state intervention in some key sectors such as agriculture is essential to regulate the market.”