Reforms to improve SOE performance and reduce losses and liabilities are critical for Sri Lanka’s recovery and the sustained growth and it’s heartening to see the government’s ongoing commitment to reform and to hear their ambitious plans going forward, Takafumi Kadono, Country Director Sri Lanka Resident Mission ADB told the Serendipity Knowledge Program held yesterday in Colombo.
He said there need to be real reforms to enable SOE to be much more commercial and professional and as a first step establishing the SOE restructuring unit under the leadership of Suresh Shah in Sri Lanka and introducing new legal and regulatory frameworks including a SOE Policy, SOE Act and plans to establish a SOE holding company were bold steps taken by the government. Kadono said as the panelist presented the country needs to have data on its public commercial assets, including real estate, understanding their values and knowing the potential of how much yield that such commercial assets can produce if managed commercially and professionally. He urged the importance of creating an institution like a holding company to protect and professionally manage those assets under strong professional government and oversight.
“They need to look, feel and smell like the private sector. I guess if all is done well, these public commercial assets can generate substantial resources for the government to address other priorities for the prosperity of the country and its citizens.”
Tomasek Singapore is one of the successful examples of SOE holding companies and it was interesting to see that they are making a 14% return. He said it was vital segregating policy from professional management of public commercial assets and the need for political will and political stability, which is essential for SOE transparency, including the importance of implementation of internationally accepted accounting and auditing standards and disclosure of the country’s SOE liabilities to the public and with state banks etc.
“Of course they need to have professional oversight, not only at the holding ownership level, but also at the individual SOE level with board members and managers with private sector backgrounds understanding corporate governance.”
He said stakeholder consultation and communication are important in this process and to convey what the benefits are to the society. “As we undergo our own reforms in ADB, we will be providing our first support to Sri Lanka’s SOE reform. Currently we are already working or supporting the government led power sector reform, which involves the restructuring of the Ceylon Electricity Board. But going further and prompted by this session, I hope we can partner with the government and all stakeholders to support more broad reforms in the area of state owned enterprises and beyond and of course.”
He said this will be done in close collaboration with the IMF, World Bank and other development partners and with passionate experts like Dag Detter and as part of their wider support to Sri Lanka’s recovery and strong, sustainable and inclusive growth.