ADB pledges more support for Lankan SOE reforms
By: Staff Writer
Colombo (LNW): Reforms to improve SOE performance and reduce losses and liabilities are critical for Sri Lanka’s recovery and the sustained growth and it’s heartening to see the government’s ongoing commitment to reform and to hear their ambitious plans going forward.
This was stated by Takafumi Kadono, Country Director Sri Lanka Resident Mission ADB at the Serendipity Knowledge Program held yesterday in Colombo.
“As we undergo our own reforms in ADB, we will be providing our first support to Sri Lanka’s SOE reform.
Currently we are already working or supporting the government led power sector reform, which involves the restructuring of the Ceylon Electricity Board. But going further and prompted by this session,
He said there was a need to be real reforms to enable SOE to be much more commercial and professional.
He also stressed the importance of creating an institution like a holding company to protect and professionally manage those assets under strong professional government and oversight.
Tomasek Singapore is one of the successful examples of SOE holding companies and it was interesting to see that they are making a 14% return.
He said it was vital segregating policy from professional management of public commercial assets and the need for political will and political stability, which is essential for SOE transparency, including the importance of implementation of internationally accepted accounting and auditing standards and disclosure of the country’s SOE liabilities to the public and with state banks etc.
And as a first step establishing the SOE restructuring unit under the leadership of Suresh Shah in Sri Lanka and introducing new legal and regulatory frameworks including a SOE Policy, SOE Act and plans to establish a SOE holding company were bold steps taken by the government.
Kadono said as the panelist presented the country needs to have data on its public commercial assets, including real estate, understanding their values and knowing the potential of how much yield that such commercial assets can produce if managed commercially and professionally.
Sri Lanka has about 80 state commercial entities that need not be in state hands based on several criteria, Director General of State Enterprise Restructuring Unit, Suresh Shah said.
There are about 130 commercial state-owned enterprises in Sri Lanka out of which 15 are non -operational and have to be closed.
There were another 80 commercial entities that did not meet the conventional arguments for being kept in state hands.
There are about 20 which could remain under government control for various reasons, but could be candidates for public private partnerships, Shah said.