By: Staff Writer
March 03, Colombo (LNW): The government is to set up a state holding company to manage its state-owned commercial enterprises (SOEs) and list it on the stock exchange. This strategy aims to consolidate and streamline SOEs, reducing the financial burden on the state
President Anura Kumara Dissanayake revealed this at an economic forum organised by the Ceylon Chamber of Commerce, indicating that a fair number of those corporates and agencies are problematic in terms of finance and in need of new management.
The model to be established will set up a super-holding company, which works well in most countries such as Malaysia and Singapore, for instance, to manage state commercial ventures.
This model allows the government to be more at arm’s length in managing the SOEs, allowing greater independence for the holding company in operational decision-making.
This would free up the government to concentrate its resources on other more pressing areas such as public services and infrastructure.
According to a senior finance ministry official, countries with comparable holding company arrangements had seen better performance of their SOEs.
This is especially to be expected because, by allowing for more autonomy, the government can reduce its direct oversight while SOEs remain commercially viable.
For Sri Lanka, this model is seen as an opportunity to improve governance and operational efficiency within state-run enterprises.
The idea of using a listed holding company to manage SOEs is not new; Sri Lanka has attempted similar efforts in the past.
It has had successful divestments through selling shares of some SOEs to employees, mitigating resistance to privatisation, and generating commitments among employees in the privatised companies during 1989-2000 period
Now, Sri Lanka has 527 state-owned enterprises with 85 commercial entities. The previous regime had already initiated a State-Owned Enterprises Restructuring Unit, SOERU, to take the lead in divesting a number of SOEs, with Sri Lankan Airlines and Sri Lanka Telecom among the most notable.
However, the restructuring processes were put to a stop by President Dissanayake after winning the presidential election in 2024 until the general election and it si still on
Success of the SOE reforms in Sri Lanka rests on the results from ongoing assessments and policy decisions from the government.
Thus, this proposed holding company model would significantly reshape the management of state-owned enterprises and give improved performance while reducing fiscal burden on the government.
