PM wants demutualisation fast -tracked
Prime Minister Mahinda Rajapaksa has urged the Colombo Stock Brokers Association (CSBA) to fast-track demutualisation (the process through which a member-owned company becomes shareholder-owned) of the Colombo Stock Exchange (CSE) which has been discussed for more nearly a decade.
He had stressed this at a meeting with the stock brokers on Monday.
This process has been protracted and is now at the Attorney General’s Department, owing to dissent between the Securities and Exchange Commission (SEC) and brokers over the percentage that the latter should own after demutualisation. The stockbrokers want more than 60 per cent in CSE (which is what the SEC is willing to part with) and argued that they deserve more as they started the CSE more than three decades ago without any assistance. But the regulator was adamant that 60 is the number. Each broker will get a maximum of 5 per cent if they agree to the 60 per cent.
“Mr. Rajapaksa wanted demutialisation to be expedited and said not to worry too much about the percentages,” a CSBA member told the Business Times.
Going public with State Owned Enterprises (SOE) was ruled out by the PM saying that his government will not do it. But many economists are skeptical. They say that in the publicly-listed universe there’re ways of establishing true value. “There’ll be a need to produce accounts. This is what’s called peopalisation,” an economist noted.
There’re SOEs without budgets, accounts, etc and most of them do not have proper financial data (data is publicly available for 55 out of 255 SOEs). For 95 per cent of the losses which adds up to Rs. 605 billion -Ceylon Petroleum Corporation, Ceylon Electricity Board, SriLankan Airlines, Mihin Lanka and Sri Lanka Transportation Board are responsible. Sri Lankan which recorded a profit of Rs. 4.4 billion in 2008, saw an atrocious nosedive having suffered a whopping loss amounting to Rs. 107 billion, in 2014.
The PM had pledged to support the revival of the stock market with an immediate action plan.