Comment: Will SEMA plan see the light of day?

Strategic Enterprises Management Agency (SEMA) last week unveiled an extensive plan to develop the Sri Lanka Railway (SLR). The plan is amazing and was like a dream when the SEMA officials demonstrated with graphics of skyscrapers, super metro train, cargo handling facilities and many more.

However, the press conference ended with a heated exchange between journalists and officials, not on any shortcomings of the plan but on its timely implementation.

This is not the only plan that SEMA has prepared. It has planned to convert 20 state owned strategic enterprises under its perview to profitable ventures. Over two to three decades ago various government bodies such as PERC similar to SEMA presented various proposals for the same purpose.

Since 1977, all governments have attempted to sell these enterprises, under the guise of reform but failed due to public and trade union protests. This is a victory of the people if we consider the scenario that took place in reforming many state enterprises such as Sri Lanka Insurance Corporation, (which was revealed by a recent report). Most of the early privatisations were corrupt deals by which politicians earned millions of rupees as commission.

However, preserving public ownership had not shown any advantage to the country's economy in general. It has been the greatest stumbling block for rapid economic growth. If we consider the CEB, its inefficiency is the main obstacle to industrial development of the country.

All businesses and individuals are paying for the inefficiency of the CEB, as we have to pay the highest price for electricity in the Asian region. SLR is no different and commuters spend over ten hours to travel to work an eight-hour shift. People travel even on the rooftops of the carriages.

When long distance trains such as the Senkadagala Menike arrive at the Fort station, the biggest hurdle is to find space even in the toilet solely for comfortable travel. People who come to Colombo by train to work from Digana start their day at 3.00am and reach home at 10.00 pm. The journey from Matara is also similar. This is the price ordinary people pay after preserving the public ownership of these institutions.

The dialogue on the public Vs private sector has been taking place for many decades. However, people increasingly believe that the private sector can provide a better service. Government institutions are being privatised or state monopolies are ending by permitting private sector players to enter. Sri Lanka too have recorded success stories in this regard.

The telecommunication sector is the ideal example and the Colombo Port also succeeded after private players came in. Countries such as China, Vietnam and India opened state monopolies for private investment.

There is a debate and resistance against this move in those countries. For instance Indian left parties oppose to increase private sector FDI cap on insurance and telecom industries.

There is a maxim that says states can't do business and some politicians insist on this when they want to sell state enterprises. However, some countries have proved that this is a myth. When the CPC was incurring losses we sold our best filling stations to Indian IOC. IOC is an Indian state owned enterprise.

However, the general trend is to permit the private sector to engage in business. More recently, much has been said and done of China's privatisation or closing down of a number of the 300,000 public enterprises that existed as recently as 1995.

However, the fact is that the 160,000 public enterprises that remain in China today are vibrant, generate significant profits, and account for 35% of the country's huge exports. The world media that talks more about China's economic reforms conveniently ignores this.

Critics who argue for the state sector involvement in business take Singapore as the ideal example. Singapore PM Lee Kuan Yew in an interview with TIME Magazine once explained the real situation faced by Singapore. He said, "Free enterprises were not working for us because we did not have enough entrepreneurs. Hong Kong started with successful businessmen from Mainland China.

They were the business elite of the costal regions. They were not merely merchants. They knew how to run a shipping line, how to start a textile factory, run a bank and so on. We had traders, not manufacturers.

Why did the government start a shipping line? Because we did not have Y.K.Pao (Hong Kong's first businessman who started a shipping business) or C.Y.Tung (Chinese shipping business tycoon) as in Hong Kong. The same with Singapore Airlines and so with iron and steel mills. How do we move out of these companies now? To move out we've got to find a buyer who can provide management to take over.

We produced excellent officers who are good at numbers and who learned on the job. They did a great job. We don't want to do that any more. If some corporate group can run Singapore Airlines, we want to get out of it. But who is in Singapore? Have we got Li Ka-Shing (Hong Kong business tycoon, the Chairman of Cheung Kong (Holdings) Limited and Hutchison Whampoa Limited.)?

This is all about the Singapore public sector story. What happened to us? Will all these SEMA dreams come true allowing ordinary people to live a more decent life? Will they be fortunate to travel in a railway compartment, at least standing comfortably, but not in toilets? We are uncertain.

Since we have neither a Lee Kuan Yew nor Y.K.Pao, C.Y.Tung or Li Ka-Shing. History compels us to think so. But hope springs eternal and we have hope in the future of this country and keep our fingers crossed that the SEMA plan will be implemented soon.