Insolvent SOEs to go public – Prez
Sri Lankan President Anura Kumara Dissanayake noted that his government is doing a study on loss-making State-Owned Enterprises (SOEs) which may eventually go public on the Colombo Stock Exchange (CSE).
Noting that the government is ready for a structural change in these enterprises, he said they are not looking at the entities from the old perspective. “We are ready to make structural changes. There is a study to see whether it is possible to merge these enterprises and issue a certain number of shares on the stock market through a holding company. We are also ready to reconsider corporations and boards,” Mr. Dissanayake said addressing an audience of business leaders at the recently held Colombo Economic Summit organised by the Ceylon Chamber of Commerce.
At the fireside discussion with Bingumal Thewalathanthri, CEO of Standard Chartered Bank, he said that some entities that were needed during the time they were established are now rendered obsolete because there are better entities which do the same functions in the private sector. As an example, he noted that the government owns many construction entities. “When the construction industry wasn’t strong, it was needed for the government to establish this many entities at the time. But now there are many construction companies which are strong, efficient and way better at what they do as opposed to the government entities. We need to rethink about carrying on with these types of institutions. So, we are ready to close them,” he said.
Noting that some enterprises perform the same functions, such as the building authorities, he said that some of them have to be closed and some merged, and in some cases, the scope of certain enterprises will have to be changed. These entities are now being identified, he added.
“Multiple state institutions are operating within the same sector, which leads to inefficiency. Therefore, these institutions must be consolidated to ensure better management and resource allocation.”
Echoing the president’s sentiments, Deputy Minister Finance and Planning Dr. Harshana Suriyapperuma, a panellist at the ‘Plan for Economic Transformation’ session, on day two of the Economy Summit stated that the government does not view SOE as a burden to the country.
“Our strategy is a balanced one. We do not view SOEs as a burden but rather as potential value creators. Some SOEs will continue under government ownership, while others will be privatised or transitioned into hybrid ownership models such as public-private-people (PPP) partnerships,” Mr. Suriyapperuma said.
He further explained that the goal is to evaluate well-managed SOEs and investigate if their worth can be enhanced through investments from the private sector. While certain SOE might already be generating profits, he noted that they may not have completely tapped into their potential regarding operational size, profitability or market growth.
Finance Ministry data said that 52 SOEs in Sri Lanka recorded a financial turnaround, from a loss of Rs.740 billion in 2022 to a profit of Rs.340 billion in 2023 after implementing key reforms.
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