Jan 26, 2016 (LBO) – The mandate of Sri Lanka’s new Public Enterprise Development ministry is restructuring rather than running the country’s large portfolio of state-owned enterprises, Kabir Hashim, Sri Lanka’s minister of Public Enterprise Development, told the publishing and consultancy firm Oxford Business Group.
“The main objective is to reduce the burden SOEs place on the treasury as fast as possible,” he said. “We have a large number that are major liabilities and cause a drain on the budget every year. We feel that most of that can be changed.”
In the past, SOEs have been hijacked for political gain, resulting in a lack of fiscal discipline, Hashim acknowledged.
“There has, in the past, been intervention from government, the ministry and sometimes the minister, leaving little room for technocrats to manage these enterprises,” he said. “Even though the ministry has only recently been established, we are already trying to encourage these enterprises to make changes and do things differently.”
Hashim acknowledged that key social challenges had, at times, stalled reform efforts, pointing, in particular, to the public’s dependence on the government for employment and the country’s pension scheme.
“Only under the recent budget have we made the first moves towards a contributory pension scheme for both public and private sectors,” he said. “With the pension now available in both [sectors], we feel people will start naturally gravitating towards the private sector. Since it is unsustainable for the public sector to keep absorbing people, this is an essential step forward.”
On the subject of employment, the minister said he was optimistic that public-private partnerships (PPPs), increased foreign direct investment (FDI) and the emergence of more high-value industries linked to technology in the economy would lead to job growth. “The 1m jobs that the prime minister talks about will come from both sides of the equation,” he told OBG.
The full interview with Hashim will appear in The Report: Sri Lanka 2016, OBG’s first report on the economy.