New laws, policy changes to make SOEs accountable to public soon

The Government is about to bring about a series of new laws and policy changes that will make Sri Lanka’s state-owned enterprises (SOEs) more accountable and responsible to the public, said Director General of the SOE Restructuring Unit, Suresh Shah at an Advocata hosted event.

He said that under these new laws it will firstly shut the door for political appointments which has caused tremendous damages to the SOE’s in most instances.

Shah said that some that are against delisting SOE’s say that the three main reasons for it are: the profitability argument, the revenue argument and concerns over national assets and security.

“However the profit or loss is not the yardstick to it and the correct rationale behind privatization and more in-depth analysis should be done in this regard.”

As for national security the main example was Sri Lanka telecom and though many talked against the delisting of this no proper debatable points were raised about a national threat and all followed the same slogan, He said that any loss making SOE can be turned around with good management while any profit making entity can also become an insolvent entity due to bad management.

He once again stressed that the government should engage in forming policies, providing national security, welfare, health education and similar benefits to the public and not engage in business. When government does businesses also done by the private sector the State entity in most cases enjoys unethical advantage.

“When legislation was introduced that private insurance companies should segregate life from General and have two separate entities the government allowed Insurance Corporation doing the same business to have both verticals in the same entity for nearly 10 years. This gave a very unfair playing field for the private sector and it was only changed in 2024.”

If the government wants to get more finances they increase taxes and impose them on various sectors like tax on salaries, import and export duty, VAT and there is also provision to even take money from dead people via Death Duty!

He also said the private sector should be given more freedom to do business and if the private sector is not doing the business well, the government can intervene. He voiced concern against proving items such as fuel at subsidiary rates for the past 40 years which resulted in Ceylon Petroleum Corporation making huge losses.

“To compensate for some of their losses the CPC which enjoys the jet fuel monopoly charged high premiums from airlines making Colombo the highest for aviation fuel in the region. This also had a negative effect on SriLankan as 30% operating expenditure had to be borne for fuel!”

“The CPC and SriLankan to make up for their losses then asked the treasury for handouts but instead the treasury provides these entities government guarantee. And armed with this guarantees these two losses making SOE’s borrow from State banks where they have mostly people’s savings.”

“When State banks fund and have no returns the banking sector almost crashes putting the entire financial system into risk. Hence the subsidy is not a good tool. He also requested the government to pay more attention towards nursing and funding true national assets like youth which can be groomed to create a better and more prosperous Sri Lanka. Also another huge asset is irrigation which can give water farming, drinking and also provide electricity.”

He also identified Marine resources as another huge asset which should be used more productively.

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