Sep 17, 2019 (LBO) – Sri Lanka’s Finance Minister, Mangala Samaraweera says State Owned Enterprises (SOE) management has become political rather than professional, resulting in waste and corruption.
“For example, my personal view is that Sri Lankan Airlines is a vanity we cannot afford,” the Minister said while addressing the Ceylon Chamber of Commerce Economic Summit 2019 in Colombo, Tuesday.
“Keeping an airline flying for a misplaced sense of national pride, when that money could be used to heal the sick, educate children, or improve nutrition is criminal.”
In fact, the minister said since re-nationalization Sri Lankan Airlines losses have been 2.5 times the size of the education budget.
Speaking further he added that two urgent reforms are necessary.
First, the state needs to cease to have operational control over SOEs operating in competitive markets.
“Chinese reformers often used to say “The state guides the markets, the markets direct the enterprises.” The state can remain an owner of assets without having operational control,”
“It can list SOEs operating in competitive markets, and use the listing proceeds to settle Sri Lanka’s debt. Or invest in funds that track the Colombo Stock Exchange.”
Second, he said in the case of natural monopolies, like railways, the state needs to create a holding company with a de-politicized board.
“For example, by subjecting board appointments to Constitutional Council approval.”