June, 13, 2018
Whilst Sri Lanka’s State Owned Business Enterprises (SOBEs) continue to play a significant role in the country’s economy with its presence in key sectors such as Ports, Energy, Banking, Insurance, Water,…etc, and the total asset base of SOBEs had grown by 13.6 percent in 2017 over 2016.
And it accounted for almost 56.8 percent of the Gross Domestic Product (GDP) of the country. However 16 key SOBEs had made net losses amounting to Rs. 87 billion during 2017, the latest report from Ministry of Finance outlines.
Report highlights that during 2017, key 55 SOBEs alone have recorded a total turnover of Rs. 1755.55 billion which is almost 13.22 percent of the Gross Domestic Product (GDP). Out of the 55 SOBEs 39 had recorded a net profit amounted to Rs.136 billion
At present, Out of 400 State Owned Enterprises (SOEs), 264 SOEs are monitored by the Department of Public Enterprises while 136 SOEs fall under the supervision of the Department of National Budget. Of the SOEs under the purview of the Department of Public Enterprises, 55 SOEs, have been identified as key strategically important State Owned Business Enterprises (SOBEs) representing crucial sectors of the economy. SOBEs include Ceylon Electricity Board (CEB), Ceylon Petroleum Corporation (CPC), Sri Lanka Ports Authority (SLPA) etc.
“Although, SOE’s occupy a significant space in the economy, it is by no means a reflection of its potential or capacity” report point out adding that in fact the Return on Assets (ROA) amounting to only 0.64 percent of the 55 SOBE’s is a rough indication that the SOBE’s have not been performing to its full potential.
Finance Ministry report stresses that the reasons for such performance ranges from lack of good governance practices including lack of a clear accountability mechanism, policy and legal framework to a weak supervisory role being played by institutions etc.
- Reporting by Devendra Francis