Sick State ventures revived soon - Kabir Hashim

by Dhaneshi Yatawara

Public enterprises which are white elephants and a huge burden on the Treasury will be revived soon according to Public Enterprise Development Minister Kabir Hashim

In an interview with the Sunday Observer he said the government will revive all ailing public enterprises with the objective of putting them back on their feet instead of depending on the Treasury for bail-outs.

Many public enterprises are a huge burden on the Treasury. These loss making entities will be revived with sound management.The Minister said of the 95 institutes under the ministry 36 have gone bust. Around 447 public enterprises are listed. The Public Enterprise Division of the Finance Ministry monitors and funds 53 institutes.The ministry will outline a criteria to select professionals to manage these institutions, he added.

Excerpts:

Q: What is the purpose of setting up a new ministry for public enterprise development?

A: Public enterprises are scattered all over. No one knows the exact number of public enterprises operating in the country. The Public Enterprise Division of the Finance Ministry funds and monitors these public enterprises. This is a vital segment of the economy and it needs to be managed well. Its turnover in last year was bigger than all listed companies in the Stock Exchange. This is why the Prime Minister decided to set up a new ministry with a special mandate.

Q: How many public enterprises come under the Ministry?

A: There are 129 institutions under the Finance Ministry's Public Enterprise Division but only 53 are monitored.

Around 447 public enterprises are listed and most of them are either bankrupt or have shut down operations.

Around 95 institutions come under the per-view of the Ministry of Public Enterprise Development. Of which 36 have closed down and some do not have a proper location.

Q: The Government has realised the importance of the public enterprise sector. What is its plan to develop this sector?

A: The ministry's job is not to run these institutes but to restructure them.

These institutions face many problems. The main objective is to prevent them from becoming a burden to the state and the people.

The government has to find funds in every budget to support loss making enterprises - be it the SriLankan Airlines, the Petroleum Corporation or the Ceylon Electricity Board.

Even certain profit making public enterprises are today loss making such as the BCC Lanka Ltd. and the Sri Lanka State Plantation Corporation.

We are considering various models adopted across the world such as in Singapore to restructure these enterprises.

Temasek Holdings (Pvt) Ltd. which is owned by the Singapore Government became the holding company of all the public enterprises and it is comprised of top specialists and experts in the field undertook the task of restructuring.

The Government only provided policy direction. We are looking at new trends in China and Malaysia that would suite Sri Lanka.

Q: Do you mean a massive privatisation drive?

A: No, not at all. Rather we are focusing on a private public partnership. The Government alone cannot do everything. We need private capital to invest. The treasury cannot pump money to support sick enterprises always.

Q: Despite the fact that the Government has identified the importance of the sector there were reports stating that the Public Enterprise Development Ministry was not given full powers to implement its mission. What is the correct situation?

A: I was entrusted with a task and I needed people who could do a proper job of work. Normally when a new government is formed a new board of Directors is set up.

This time, most of the Boards of Directors refused to accept this request sent by the Secretary to the Ministry of Public Enterprise Development.

The proper practice is to appoint the Board of Directors under the sign of the Ministry Secretary.

There seems to be a confusion over as to who has the powers. This decision lies with the Government and without a final decision on this matter I can not carry out my work.

Q: What is the budgetary allocation for the Ministry?

A: The Ministry has a small budget. I need people who are committed. We would need funds to solve the problems inherited by public enterprises.

Q: How is the Ministry planning to restructure the public enterprise sector?

A: We will obtain the views of experts. We will have a Government body similar to Temasek of Singapore. Enterprises without public obligations will be shut down.

We will consider institutions with a social obligation to revive them. We have to be careful in selecting.

Particular with institutes such as the Sri Lankan Airlines. Some state institutions have invested in the EPF/ETF and state banks investing in private banks.

In the past certain companies were forced to by shares of other companies. We need to rationalise activities and make them to focus on the core business.

Q: What is the time-line set to fulfill this task?

A : We will succeed if we have a solid team. We will find restructuring methods within a year and will save funds and in two years down the line we can make a real change...

Q: Corruption and malpractices are the main reasons for public enterprises to go bust. What are the plans of the ministry to revive them?

A: Mismanagement in these institutes need to be rectified. Appointments to Boards of Directors, Management of these institutes were based on friendships, relationships, party kinsman-ship and not on professional capabilities.

We will bring in a standard criteria to appoint professionals to positions of these institutes.