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| Sri Lanka public enterprises eating development capital: Dr. Sarath Amunugama |
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(Lanka-e-News 30.June.2009 1.15PM) Sri Lanka's state enterprises are eating capital that could have been used for the country's growth, while some workers are getting a salary and not even reporting to work, a senior government minister said.
"For almost 50 years our state enterprises have stolen from the treasury," deputy finance minister Sarath Amunugama told a seminar on poverty organized by the Institute of Policy Studies, a think tank in Colombo.
"All the money has been pocketed by the state entities' chairmen, directors and employees.
"How will we have money for growth?"
In 2008, the Treasury had given 12.4 billion rupees as subsidies to state enterprises. The Treasury has also given 506 million rupees to defunct enterprises.
Departmental enterprises like the railways had lost 4.5 billion rupees in 2008. The state bus service had lost 4.0 billion rupees.
Tax Twist
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This year a new twist was added to the equation. The government had brought a new law allowing tax payments from badly managed loss making state enterprises to be waived, ostensibly to stop Treasury subsidies to cover defaulted taxes.
But critics say the move will reduce fiscal transparency and hide the true extent of losses made by these institutions in the future.
By showing a lower volume of money as subsidies to mis-managed state institutions, the true cost of the state enterprises to the people of Sri Lanka will be hidden from parliament and the country.
Mis-managed firms and their managers may also get an advantage over better managed state firms that continue to pay their taxes.
Amunugama says China is being developed from the surpluses generated from state institutions.
"In China if the state enterprise kept running deficits the chairman gets sacked," Amunugama said.
"If they continuously make losses the company is privatized."
Amunugama says Chinese state enterprises are privatized if they cannot generate a 15 percent return for three years running.
Returns
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A finance ministry report said the government has invested 31.6 billion in 92 companies with varying degrees of state control, between the period 2000 to 2008.
The firms had given an accumulated return of 9 billion rupees or 28 percent over an 8-year period.
The government had invested 13.2 billion rupees (or 42 percent of total investments) in 29 fully government controlled companies from 2000 to 2008. They had paid 431 million rupees in dividends.
Fourteen companies with less than 100 percent control of the government had received 14.2 billion rupees from the Treasury. They had paid 6.5 billion rupees in dividends.
Fourteen companies with less than 50 percent government control had received 3.7 billion rupees in investments. They had paid 2.0 billion rupees in dividends.
The government had also invested 407 million rupees in 20 plantation firms with residual stakes. They had paid 69 million rupees in dividends.
"Out of 92 companies, on average, 75 percent of the companies have not paid dividends during the last eight years which is not an acceptable situation, given the large investments that the Government has made," the Treasury report said.
One of the high profile loss-making state firms which had attracted public ire was Mihin Lanka, a start-up budget airline that burned more than three billion rupees in the first year of its operations.
The Treasury report did not say whether the numbers included Mihin Lanka. |
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Good Returns
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Some enterprises, including those incorporated under special acts of parliament, had paid substantial dividends to the government.
Sri Lankan Airlines which was under Emirates Airline management until last year had paid 1.7 billion rupees in dividends.
Sri Lanka Telecom, which was under management from NTT until last year, had paid 3.78 billion rupees over the 8-year period.
Bank of Ceylon, People's Bank and NSB had also paid dividends. But the three banks had received a 47.9 billion rupee bailout in 1993 and 1996 through re-structuring bonds, on which the Treasury had to pay interest. |
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| Courtesy: LBO |
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