Competition will make public enterprises more profitable:Eran W

Delivering the keynote address during the inauguration of a Master of Science Degree program bythe Faculty of Graduate Studies at the Ratmalana General Sri John Kotelawala Defense University (KDU) for the academic year 2016,on 18 March, Deputy Minister of State Enterprise Development Eran Wickramaratne stressed that in orderforpublic enterprises to be more profitable, competition needs to be introduced to the sector through public private partnership.

Deputy Minister Wickramaratne made this observation while pointing out the recent failures of some public enterprises to provide continued service to the people. 

“We have had three blackouts since September 2015. It was a single event that caused in system failure.  It is unacceptable to have any kind of blackout in the modern world that we live in. Competition has to be the principal and the driving force in these kinds of spaces, whether it be within public enterprises or across the public enterprise or between the public enterprise and the private sector. The process of competition has to be subject to effective sector specific  regulations,”Wickamarathne charged.

Taking successful stories from the telecommunication sector in the country,the Deputy Minister said that the underperformance of the Sri Lanka Telecom (SLT)had been diminished by introducing competition into the sector.

“Our telecom sector success story is not just one of privatisation; it is one where competition was introduced into the fixed line telephony segment before SLT was privatised with the entry of Suntel and Lankabell. So in effect competition and contestability grew in the sector,” he pointed out. 

Further clarifying his views Wickramaratne asserted that an effective performance oriented public sector management was an integral part in improving the quality of these services. 

“At present the public service in Sri Lanka is mostly evaluated and funded on the basis of how much spent, rather than on actual outcomes on performances. These services are financed with tax payers’ money. So it is important that information on actual benefits is made available to the public and budgetary allocations are tied to outcomes,” he added.

The Deputy Minster also opined that a system needed to beintroduced which links wages to key performance indicators that promote and bind accountability in the public sector.

“Public enterprise losses are linked to a workforce whose wages are not linked to performance. That is the fundamental problem. Successive governments that come into power announce wage hikes for public sector workers for obvious popularising reasons. Structures and processes are paramount to the success of public enterprise reforms. Separation of the functions of police operations and regulations needs to be institutionalised. We need better consumer welfare through economic efficiency and positive growth both for producer welfare and consumer choice,”the Deputy Minister added.    

The minster further mentioned that public enterprises should focus on empowering people to make better performance in the sector.  He said significantly the subsidies given to the people should be a demand side decision instead of a supply side decision where the government decides what people should consume. 

“When the people received subsidies through the co-operate shop, the government decided what we should eat. There are many subsidies that we were given that way. When we give cash instead of fertiliser we empower the farmer and let the farmer decide whether he should apply chemical fertilisers or compost fertiliser,what quality and quantity should he apply or if he doesn’t need the fertiliser,” the Deputy Minister pointed out. 

The event was attended by the Vice Chancellor Rear Admiral Jagath Ranasinghe, Deputy Vice Chancellor (Defense and Administration) Major General J. R. Kulatunga, Deputy Vice Chancellor (Academic) Professor JayanthaAriyaratne and academic staff of the University.