Sri Lanka must continue with the State owned enterprise (SOE) reform program and the common argument that profit making SOE’s should not be divested doesn’t hold water, said Senior Economist World Bank, Richard Miller in Colombo recently.
He said that though one may say that Sri Lanka TelecomMobitel should not be privatized as its making profits is not a sound debate. “If this entity is privatized, new capital would be infused by the new investor which in turn will increase profits by bigger folds.”
In addition through privatization telecom infrastructure would improve and the new company would bring in the latest technology to Sri Lanka. Similar sentiments also go towards the privatization of Sri Lanka Insurance.”
The cumulative losses of key 52 SOE’s in 2022 amounted to Rs.744.6 billion costing Rs. 1.7 million per registered taxpayer, Rs. 33,949 per citizen and Rs. 141,809 per household. Despite the sharp increase in tax collection, estimates of tax collection for 2024 cannot cover the losses incurred by these 52 SOE’s for the year 2022.
He also said that by divesting SOE’s the government will also get revenue which in turn could be ploughed back to infrastructure projects like health, housing and transport. As for the loss making SOE’s companies that take over them will reinvest and make them profitable.
When this happens the government can make a huge saving as the money that was pumped to them for salaries and other expenses can stop. (SS)
Shirajiv Sirimane