12 August 2024 01:30 am Views - 141
By Nuzla Rizkiya
The privatisation of Sri Lanka’s State-Owned Enterprises (SOEs) poses no risk to the country’s revenue or assets, as the government can maintain control through its regulatory and legislative powers, according to Suresh Shah, Director General of the State-Owned Enterprises Restructuring Unit (SOERU).
The government’s core responsibilities—such as national security, foreign relations, economic development, and social services—demand its full attention, rather than the management of commercial businesses, the SOERU head reiterated.
“When it comes to the objectives and responsibilities of government, it does not need to run commercial businesses to fulfil them. It has many ways it can bend the private sector to its will for the need of the citizens. It has the power to regulate, the power to legislate, the power to tax anything it wants, and to incentivize,” Shah said.
He highlighted the fact that the primary responsibilities of government such as national security, maintaining foreign relations, economic development and social services are far more pertinent issues that need immediate attention than the role of managing commercial enterprises. Therefore, privatisation would allow the government to focus on these critical areas while leaving business operations to private entities.
“Why do we want the government to look at something so insignificant as running a commercial business when it has got all these much bigger issues to deal with? Think about it, national security compared with running a commercial business—it’s very insignificant.
“Why do you want to put a responsibility to government of such insignificant when it has to deal with far greater issues? So let the government focus on those big issues and let these commercial enterprises be run by somebody else,” Shah said.
Moreover, he went on to point out the conflict of interest that arises when government entities come forward to both regulate and operate businesses.
He cited the example of Sri Lanka Insurance Corporation, which under the influence of politicians did not comply with the Insurance Act for as long as 10 years, resulting in the SOE benefitting unfairly compared to the private sector, which was obligated to follow the legislature under the law enforcement.
“The government has to look after the interests of citizens. The main way it does this is through legislation, regulation and other ways. But, when the regulator, who forms the legislation, is also running a commercial business, how do you know that the regulation is for your benefit or for the benefit of that company? ” he questioned.
However, he acknowledged that there are instances where government involvement in commercial enterprise operations is necessary. This includes situations where market failures should be addressed or the supply of essential goods to the people has to be ensured.
In such instances, the government needs to manage these enterprises in a way that it doesn’t become a burden. For this, he noted that the recent approval and implementation of the SOE reform bill, as a favourable move that would assist the reduction of political interference and ensure better management in SOE practices.
As part of its SOE restructuring process, the SOERU finalised the processes to divest seven key SOEs, which included Hotel Developers Lanka Ltd., Canwill Holdings Pvt Ltd., Lanka Hospitals Corporation PLC, Sri Lanka Telecom PLC, Litro Gas, Sri Lanka Insurance Corporation Life Ltd., and Sri Lanka Insurance Corporation General Ltd.