Most SOEs incur losses today- Prof. Samarajiva
Sri Lanka Telecom that was not providing a good service to the public and making losses was then privatised and is now providing a good service and employing more than double the employees it had previously.
It also provides a dividend revenue to the government, said Prof. Rohan Samarajiva, advisor of the Advocata Institute, on the topic “The Urgency of State- Owned Enterprise Reforms “at a recent media briefing held at the BMICH Colombo.
He said Sri Lanka’s stateowned enterprises (SOEs) have placed a significant burden on public finance while also being a major source of inefficiency to the economy. The present economic crisis along with Sri Lanka’s current debt crisis makes reforms on SOE’s a national priority to emerge from the present economic challenges.
Prof. Samarajiva said the Telecommunication Regulatory Commission was able to collect various license fees today and millions of rupees as revenue to the government. Referring to the Ceylon Electricity Board which is one of the largest entities in the country, he said this state monopoly is plagued by tremendous inefficiencies such as imposing blackouts on the entire nation periodically.
“This is quite insane as it has happened over and over again. When we looked into the problem in 2002 we found that the Biyagama Sub Station was vulnerable and caused blackouts. Even today it is causing problems and a solution has not been found. They are inept and the government enterprises are not responsive to our needs,” he said.
Answering a question from the media, Prof. Samarajiva said when former President J.R. Jayewardene inquired from the former Singapore Prime Minister Lee Kuan Yew whether it is advisable to start an airline, his reply was to improve the airport instead of starting an airline. But President Jayewardene went ahead and started SriLankan Airlines.
Dr. Sarath Rajapatirana, Academic Chair, Advocate Institute, said that most of the state enterprises had poor productivity for 30 years or so. This was the ideal time to start reforming state enterprises. On earlier occasions loss- making state institutes had access to banks that salvaged them during difficult times. “Today we have to reform such enterprises or perish altogether,” he said.
Ms. Anarkali Moonesinghe, Advisor Advocata Institute, said most state enterprises in India, and Europe were able to thrive by removing subsidies granted to them. A strong regulator is important to keep a tab on state enterprises along with competition from other sectors to prevent losses. Access to technology too was important to overhaul pubic enterprises.