Govt. to step up SOE governance and legislation

Mahinda Siriwardana

• Efforts underway to ensure risk of recurrence of financial vulnerabilities of SOEs remain low
• Treasure Secretary asserts there is no room for poor performance and productivity, going forward
• Says it is crucial to address deeper governance issues in these entities
• Expresses confidence in upcoming legislation improving standards of SOEs
• Calls for greater public understanding of need for SOE reforms

By Shabiya Ali Ahlam 
Sri Lanka is stepping up efforts to improve the governance and legislation framework of state-owned enterprises (SOEs), with the primary goal of significantly enhancing their performance and simultaneously mitigating the adverse impact of certain loss-making SOEs on the overall state finances.

Treasury Secretary Mahinda Siriwardana this week announced that plans are taking shape to have in place dedicated legislation for SOEs, an effort towards ensuring there is little or no room for poor performance and productivity. 
“It becomes crucial to address deeper governance issues in these entities. Most importantly, this applies to the appointments of board members and senior management, regular publishing of audited financial statements and procurement and taxes, amongst others,” Siriwardana told the Serendipity Knowledge Programme of the Asian Development Bank, in Colombo, on Tuesday. 
While the government has already implemented several measures in this regard, the SOE legislation would be drafted to provide a legal framework, he said. 
Siriwardana expressed confidence in the proposed SOE legislation and Public Financial Management Act providing an overarching legal framework, going forward. 
The government is also in the process of establishing a holding company that will eventually take ownership of government or corporate assets, similar to that of Temasek in Singapore.  

The setting up of the holding company, which is accountable to the Finance Ministry, is expected to help better manage the assets and ensure corporate governance standards are maintained.  
Commenting on the ongoing efforts to restructure Sri Lanka’s failing SOEs that have been a severe burden on the national economy for decades, Siriwardana noted that given the extremely challenging conditions, the government has no space to provide bailout funds any longer. 

“Ideally, the government should receive more revenues or dividends from each SOE. Therefore, the business-as-usual approach is no longer possible in Sri Lanka. We need to provide efficient services to the public, going forward,” he said.
“It is essential that there is greater public understanding of the need for reform and why reversal of the same would be detrimental to the public interest in the long run, either directly or indirectly,” he added.