The attention given to the massive losses incurred by State-Owned Enterprises (SOEs) in Sri Lanka and the new government’s commitment to make SOEs profitable is to be commended. Distancing politicians from SOE boards is a good first step towards improving accountability and independence in SOEs, the Advocata Institute said in a media release.
Excerpts of the release:
“Sri Lankan SOEs are in dire need of reform. The country has an excessive 527 enterprises, a list that covers a convoluted web of subsidiaries and sub-subsidiaries. Tracking the financials of these enterprises is a mammoth task that is yet to be undertaken. The Ministry of Finance tracks the financials of only 55 ‘Strategic SOEs’ and the losses accumulated by what is only 10.4% of all enterprises amounts to a staggering Rs. 156,734 million, only for 2018.
“These losses are facilitated by weak governance systems where SOEs have limited checks and balances placed on them. The lack of oversight and accountability has meant that these SOEs are vehicles for corruption. Politicians are able to use SOEs as an opportunity to grant jobs and distribute perks for political capital.
“Screening appointments to State enterprises by an independent panel is a step in the right direction, and would hopefully translate into responsible management of taxpayers money in these SOEs. The Advocata Institute welcomes further SOE reform detailed in the President’s manifesto to consolidate State enterprises and set up a National Enterprise Authority.
“We hope the government would turn its attention to further reforms that strengthen SOE governance, such as compiling a comprehensive list of entities through the Department of Census and Statistics, establishing a framework for monthly reporting on key performance indicators, and incorporating the internationally accepted principles of corporate governance in the management of these entities. The Advocata Institute also urges the government to open the committee meetings to the public to increase scrutiny and accountability.
“The Advocata Institute wishes to extend its congratulations to the newly sworn-in President Gotabaya Rajapaksa, and Prime Minister Mahinda Rajapaksa. We wish the President, the Prime Minister and the new government the best in their efforts to establish meritocracy, improve government efficiency and promote prosperity. The Advocata Institute looks forward to engaging with the new government with public policy ideas to ensure economic freedom and prosperity for all Sri Lankans,” the statement further added.