The Sirisena-Wickremesinghe coalition government is planning to privatize all public sector enterprises under their regime irrespective of them making profits or losses as they believe they will make more profits under private sector management.
To this end, the government has already set up a ‘Public Enterprise Board’ consisting of top private sector chief executives. Representatives from the trade unions and left-wing political party, Janatha Vimukthi Peramuna have also been invited to take a seat in the board.
According to Development Strategies and International Trade Minister Malik Samarawickrama, they expect to run the board similar to Singapore’s Temasek model or Malaysia’s Khazanah, an investment company set up under the government to run all state-owned enterprises (SoEs) on behalf of the state.
“We are looking at some of the profit-making enterprises. Although they are making profits, they are not run as efficiently as it should be. So, in the hands of the private sector, they can earn more profits,” said Samarawickrama, speaking at Sri Lanka Economic Summit 2016, which concluded last evening.
According to the minister, a top corporate sector CEO has also been appointed to lead the Public Enterprise Board but fell short of disclosing who the official was. The minister said he was in the audience leaving the participants to guess.
According to Advocata, an independent policy think tank, 55 strategically important SoEs in Sri Lanka have made a cumulative loss of Rs.636 billion during 2006 and 2015.
The cumulative profit of the profitable SoEs during the same period has been Rs.530 billion, excluding the Employees’ Trust Fund.
The statement by the minister suggests that the government is ready to go the whole hog in privatizing both the strategic as well as non-strategic SoEs despite the immense political risk forthcoming.
Speaking at the final session under the theme titled, ‘The Future of Public Enterprises’ Samarawickrama said the government had reached the final leg of entering into a public-private partnership (PPP) to restructure the loss-making national carrier, SriLankan Airlines but did not disclose the party involved.
Meanwhile, Chief Opposition Whip and Janatha Vimukthi Peramuna Leader Anura Kumara Dissanayake said if the government could take over the liabilities of SriLankan Airlines prior to the sale of the carrier to a private party, they should also be able to take over the assets and run the airline.
With regards to the proposed PPP for SriLankan Airlines, the government has indicated its willingness to write off the liabilities burdening the tax payer to make it look better in an apparent attempt to dress up the bride.
Disagreeing with Minister Samarawickrama on their policy of washing their hands off from running the SoEs, MP Dissanayake reiterated the significance of the state continuing to own a share in the market economy in every sector to avoid possible cartels by a few rogue traders to manipulate markets.
“Therefore, especially in a small economy like ours, the government must protect its share in the markets to the best interest of the people and also to uplift their living standards, which is a standard of measure in economic development,” emphasized Dissanayake.
He said apart from the privatization of Sri Lanka Telecom, all other privatization programmes have failed in the past and therefore, there was a reasonable fear among the people on the privatization as they have not delivered the desired results expected by them.
However, he said he was ready to co-oporate in selling those SoEs, which do not have a direct impact on the public lives.
PM’s economic plan gets further delayed
The much-awaited five-year economic development master plan expected to be announced by Prime Minister Ranil Wickremesinghe now appears to be further delayed till late August or early September.
This plan is long overdue as it was initially planned to be announced in June but later delayed till July and now it does not appear to be announced even during August.
“I believe before end of August or early September, the five-year economic development plan will be announced by the prime minister,” Minister Samarawickrama said.
Economists have pointed out that the government had no credible economic plan or a stabilization package to emerge out of the crisis it is currently in.
Sri Lanka’s investor community has been waiting for direction from the premier’s economic plan for several months as the high level of uncertainty surrounding policies has gripped the markets.
It was only recently an economist said Sri Lanka’s tax policy had now become a virtual deal breaker