Malaysia and S’pore to offer insight into restructuring SoEs

The Sri Lankan government will be entering into discussions with two of the world’s largest sovereign funds over the next two weeks to strategize the restructuring of the ailing stateowned enterprises (SoEs).

“We’ll be looking at what Malaysia has done through Khazanah. Khazanah officials are coming here next week and we’ll discuss that,” Public Enterprise Development Deputy Minister Eran Wickramaratne told a breakfast forum in Colombo yesterday.

He added that a fortnight from now, his ministry officials would travel to Singapore to engage with Temasek Holdings as well. “There was a proposal that we have an institution like Temasek,” Wickramaratne said. Gross mismanagement, nepotism and corruption have caused losses to SoEs, which have taken up debt worth over 6 percent o f th e gro s s domestic product to stay afloat.

Prime Minister Ranil Wickremesinghe had said last year that all SoEs would be restructured under the Temasek model and governed by a Public Wealth Trust. While some SoEs in Sri Lanka fall under the Public Enterprise Development Ministry under the Cabinet portfolios created last October, many other SoEs have been handed out to different ministries. The recent budget said that some SoEs would be listed on the Colombo Stock Exchange and the government would fully or partially relinquish ownership in non-strategic investments.

Wickramaratne said that the private sector could contribute heavily to turn around the SoEs if corporate personalities sit on SoE boards. “We also need a management restructuring but the salaries are too low for the private sector to come in. So we may need to liberalize and open up the doors,” he said. He added that since the government was restricted in the amount of capital that could be injected into SoEs, local and international private sector capital would be required for reforms.

SoEs in Malaysia and Singapore—owned by the US$ 36 billion Khazanah Nasional and US$ 190 billion Temasek Holdings, respectively—are managed in a professional and profitable manner. They have expanded to hold equities in key companies in Asia and the world, with Temasek being the largest shareholder of British banking giant Standard Chartered with 18 percent of shareholding. Khazanah has a more direct influence in Sri Lanka, through its ownership of Axiata, the parent of local telecom giant Dialog Axiata PLC, and the 10.4 percent stake—the largest direct ownership by a single shareholder—in the country’s largest conglomerate John Keells Holdings PLC. (CW)