Suitable people at key positions:
SOEs will have to show return-on-assets and return-on-equity:
State-Owned Enterprises (SOEs) will be restructured to reach optimal performance levels, Public Enterprise Development Deputy Minister Eran Wickremaratne told the Sunday Observer. He said the ministry hoped to introduce a ‘Public Enterprise Act’ to Parliament soon. The Act – still in preliminary stages – will set up a ‘Public Enterprise Board’, tasked with overseeing the boards of individual State-owned enterprises, Wickremeratne said,
“The Public Enterprises Board will, for one, ensure that fit people are placed at key positions in each of the enterprises,” he said. The ministry’s primary goal is to de-politicize and commercialize State-owned enterprises.
“The political and social objectives of a State-owned enterprise will be separated from the commercial. This will ensure that state-owned enterprises prioritize the commercial aspects of running the business. “State-owned enterprises will also soon have to show return-on-assets (ROA) and return-on-equity (ROE) like any commercial establishment.
Funds for SOEs political or social objectives will no longer come out of a SOEs operational budget, but will instead need prior request.
The SOE will be required to quantify their social objective and present it to the Finance Minister to be included in the national budget,” he said.
This will prevent an SOE from making arbitrary concessions or decisions to subsidize, which loss is typically absorbed by the SOEs operation budget.
Deputy Minister Wickremeratne expressed confidence that these measures will increase the operational efficiency of SOEs.
He also highlighted what Finance Minister Ravi Karunanayake had said when presenting the budget to Parliament on Thursday.
“Honourable Speaker, since taking office, our government has been proactive in improving the performance of these SOEs. And in fact, instead of becoming a drain on government coffers, they have contributed Rs. 65 billion in levies and dividends so far in 2016 - an increase of almost 50% over 2014,” Karunanayake said.