Mar 30, 2017 (LBO) – The Sri Lankan government is in the process of setting up a Public Enterprises Board to manage loss-making state-owned enterprises (SOEs), a senior minister said.
“The government will present this bill to parliament soon and it is now being studied by the Legal Draftsman,” Kabir Hashim, minister of public enterprise development said.
“The proposed board will help to depoliticise core public enterprises and make them financially viable. The board will also have the authority to appoint professionals to the institutions.”
The minister was speaking at the Sri Lanka-Malaysia Business Council meeting on ‘Public Private Partnerships in Sri Lanka – the way forward’.
State enterprises are defined as legal entities that undertake commercial activities on behalf of an owner government. Several SOEs pay salaries to employees through tax payers’ money and have incurred losses over the past decade.
According to data there were an estimated 245 SOEs in the island — several of them were facing financial difficulties, with 42 entities receiving 215 billion rupees in budgetary support in 2012 and 2013.
In 2014 it was 123 billion rupees which means each of the households in Sri Lanka were burdened with 24,000 rupees, the minister said.
“This is equal to building 60 hospitals of 300 beds each or supporting 100 schools.”
“However, overall SOEs make the largest contribution to the economy. For example the revenue of the top 10 SOEs, which is one trillion rupees, accounts for half of the turnover of all 295 listed companies on the Colombo Stock Exchange of 2.2 trillion rupees.”
The minister cited political interference, corruption and inefficiency as the causes for this situation.
“There is a huge challenge ahead of us to reform these SOEs but the government is committed. We need to build a national consensus for SOE transformation,” he added.
“We need to think beyond political lines and everyone, the President, Prime Minister, politicians, trade unions, officials – should work together towards transforming SOEs.”
Earlier this month Sri Lanka said they will introduce key performance indicators to five key state SOEs operating in the island for a period of three years commencing this year.
Enhancing oversight and financial discipline of SOEs was a major concern raised by the IMF in order to grant the Extended Fund Facility.