The delay in reforming State Owned Enterprises (SOE) has the risk of moving Sri Lanka towards unsustainable growth, said Advocata Institute, Senior Research Analyst Rehana Thowfeek.
She was speaking at a media briefing on “Burden and The Urgency of State Owned Enterprise Reform” organised by Advocata Institute at the BMICH on Wednesday.
She said that SOEs have become a vehicle for corruption and state capture in Sri Lanka.
“Although we are led to believe that SOEs exist for the benefit and betterment of citizens, if you look at the evidence presented, it’s quite easy to dispel this belief,” she said.
“Often, state intervention in the markets has led to the creation of under-competitive markets. It has crowded out private investments, had a negative impact on consumer welfare and created highly extractive state institutions. State owned enterprises primarily serve political agendas and they have become a vehicle for corruption in Sri Lanka.
“There are little to know checks and balances or fiscal constraints on state owned enterprises.
At Least not until maybe two years ago. This has led to the accumulation of large amounts of debt and losses and the cost of this inefficiency is that the debts and the losses are all borne by the citizens.” It was said that there are several reforms underway but they are moving very slowly.
“Restructuring SOEs and privatisation, divestment is all part of sort of dismantling this power structure and dismantling these levers of state capture. It’s very urgent and very necessary as we talk about SOE reforms and keep pushing for some movement on the needle,” Thowfeek said.
