Mangala sounds warning bells over dismal performance of SOEs

Speaking at a Conference for the Heads of the State-Owned Enterprises (SOEs), Finance and Media Minister Mangala Samaraweera said that the cost of inefficiency of SOEs cannot be passed down to the general public.

Despite their strategic importance, SOEs have not achieved full potential, which is reflected by its low Return Over Assets (ROA) ratio at 0.64 percent, he said. 

Identifying the reasons for such under performance which ranges from lack of good governance practices, including lack of a clear accountability mechanism, policy and legal framework to a weak supervisory role, Samaraweera told the Heads of SOEs in attendance to immediately address these difficult, but serious issues.

Samaraweera also said that during 2017, 55 SOEs recorded a total turnover of nearly LKR 1800 billion which was almost 13.22 percent of the GDP.

Out of the 55 SOEs, 39 recorded a net profit that amounted to LKR 136 billion while 16 made net losses that amounted to LKR 87 billion in 2017.

The Minister also noted that the performance of some SOEs in recent years has been a source of concern for the fiscal balance.

“In 2017, four of the main loss making SOEs i.e. Ceylon Electricity Board, Sri Lankan Airlines, Sathosa and Agriculture and Agrarian Insurance Board combined in losses amounting to LKR 84 billion. I may say this as a dismal performance that creates public outcry over the mismanagement of our national resources”, he added.

Samaraweera pointed out that the government’s strategy is to encourage and facilitate SOEs to be self-sufficient through improved corporate practices, management reforms, innovative financing, strong and prudent financial management, exposure to competitiveness and international best-practices and effective human resource management, while enhancing public accountability.

“As the key players in our national ventures, you may have to relook at your operations seriously to achieve reasonable management improvements in the interest of our fellow citizens”, he said.