State owned Enterprises (SOEs) are to undergo further reforms and consolidate under the present administration headed by President Gotabaya Rajapaksa with the establishment of National Enterprise Authority, the new president’s vision for prosperity divulged.
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 the year 2018.
These losses are facilitated by weak governance systems where SOEs have limited checks and balances placed on them.
In this context, 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,an independent Public Policy Think Tank, Advocata Institute highlighted.
Issuing a statement Dhananath Fernando, Chief Operating Officer of Advocata expressed the hope that 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.
The institution has suggested 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.
In addition to this, the Advocata Institute urges the government to open committee meetings to the public to increase scrutiny and accountability.
The attention given to the massive losses incurred by SOEs in Sri Lanka and the new government’s commitment to making SOEs profitable is to be commended. Distancing politicians from SOE boards is a good first step towards improving accountability and independence in SOEs.
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, Advocata said.