Advocata calls for urgent reforms to address inefficiencies plaguing Sri Lanka’s SOEs

The Advocata Institute launched its latest report, "Getting the State Out of Business: The Compelling Case for Privatisation of State-Owned Businesses," which featured a high-profile panel discussion, calling for urgent reforms to address the inefficiencies plaguing Sri Lanka’s state-owned enterprises (SOEs). The event featured a keynote address by Mr. Suresh Shah, Director General of the SOE Restructuring Unit, and insights from prominent industry experts.

The event began with a presentation by Rehana Thowfeek, Research Consultant at Advocata Institute. She emphasised the dire need to redefine SOEs, noting that current state enterprises, such as those in telecom, banking, ports, petroleum, and power, have become a major hindrance to the economy. Thowfeek highlighted the inefficiencies, corruption, and market distortions caused by over 400 SOEs spread across 33 sectors, employing approximately 250,000 workers.

"Our SOEs are an inefficient, bloated bureaucracy," Thowfeek stated. "The IMF has identified these entities as high-risk for corruption due to weak management, shoddy oversight, and significant political interference."

Dhananath Fernando, CEO of Advocata, set the context in Sinhala, emphasising Advocata's mission and its commitment to advancing economic reforms in Sri Lanka."One main reason for advocating privatisation i s the growing debt problem, with government businesses accumulating 6 trillion rupees in debt by 2023, compared to a tax revenue of 3 trillion rupees and interest payments of 2.5 trillion rupees."

Suresh Shah, the Director General of the SOE Restructuring Unit, in his keynote address, stressed the need for the government to focus on its fundamental responsibilities rather than engaging in business activities. He outlined three main push backs against the current privatisation process: the profitability argument, the revenue argument, and concerns over national assets and security.

"Sri Lanka has missed out on investing in its true national assets, such as education and the younger generation," Shah remarked. "The government should prioritise national security, economic development, education, and health. There i s no need for the government to be in business."