Advocata Institute yesterday welcomed the newly-appointed selection board to screen appointments for State-Owned Enterprises (SOEs).
The attention given to the massive losses incurred by SOEs in Sri Lanka and the new Government’s commitment to making SOEs profitable is to be commended. Distancing politicians from SOE boards is a good first step towards improving accountability and independence in SOEs, Advocata said in a statement.
“Sri Lankan SOEs are in dire need of reform. The country has an excessive 527 enterprises, a list that covers a convoluted web of subsidiaries and sub-subsidiaries. Tracking the financials of these enterprises is a mammoth task that is yet to be undertaken. The Ministry of Finance tracks the financials of only 55 ‘Strategic SOEs’ and the losses accumulated by what is only 10.4% of all enterprises amounts to a staggering Rs. 156,734 million, only for the year 2018.”
These losses are facilitated by weak governance systems where SOEs have limited checks and balances placed on them. The lack of oversight and accountability has meant that these SOEs are vehicles for corruption. Politicians are able to use SOEs as an opportunity to grant jobs and distribute perks for political capital.
Screening appointments to State enterprises by an independent panel is a step in the right direction, and would hopefully translate into responsible management of taxpayers’ money in these SOEs. The Advocata Institute welcomes further SOE reform detailed in the President’s manifesto to consolidate state enterprises and establish a National Enterprise Authority, the statement added.
“We hope the Government would turn its attention to further reforms that strengthen SOE governance, such as compiling a comprehensive list of entities through the Department of Census and Statistics, establishing a framework for monthly reporting on key performance indicators, and incorporating the internationally accepted principles of corporate governance in the management of these entities. In addition to this, the Advocata Institute urges the Government to open committee meetings to the public to increase scrutiny and accountability.”