To focus on strategic assets both locally and abroad next year
The Colombo Stock Exchange (CSE) will be getting a slew of new state-owned listings next year, while government shares on them will be divested, the Budget 2016 revealed.
Prime Minister Ranil Wickremesinghe, during his medium-term economic policy direction announcement on November 5, said that several non-strategic investments held by the state would be released.
“As such, as stated by the Prime Minister in his address on this floor, the government is keen to streamline its portfolio of investments and will therefore exit partially or fully from those non-strategic investments,” Karunanayake said.
Karunanayake said that the stakes in Hotel Developers (Lanka) PLC which operates Colombo Hilton and The Lanka Hospital Corporation PLC will be sold off, while the Grand Hyatt, Waters Edge, Grand Oriental Hotel, Ceylinco Hospitals and Mobitel will be listed on the bourse.
The new listings would be welcome at CSE, since many companies are delisting, or have already delisted due to mandatory public float regulations that will be enforced by December 2016, while the CSE has not attracted large initial public offerings (IPOs) in recent years.
Karunanayake said that the funds generated from the divesture of shares will be used to retire the high-cost debt accrued during the past regime.
He noted that state-owned enterprises maintaining and controlling key strategic infrastructure in sectors such as power generation, transmission, ports, airports and water supply will remain under the government.
During the United National Party regime in 2002-2004, the party’s attempts to privatize several such key enterprises, which accounted for a large number of state-sector employees had led to protests and contributed hugely towards the fall of the regime.This may have led to Karunanayake insisting that privatization is a banned word.
Meanwhile, he said that the government will observe the capital markets and will not hesitate to invest in strategic assets both locally and abroad if they align with the country’s economic policy.
However, he assured that the new regime will not be one-sided.
The past government had forcefully taken over many businesses under the Revival of Underperforming Enterprises or Underutilised Assets Act, including profitable businesses such as Pelwatte Sugar Industries PLC. (CW)
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