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PPP SOLUTION FOR AILING SOES

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According to Advocata Institute, introducing Public Private Partnerships (PPP) would be an effective strategy to revitalize the ailing State-Owned Enterprises (SOEs). Sri Lanka has 245 SOEs, out of which 55 are considered strategic by the Treasury, and the government has allocated Rs 126 392 million for these institutions in 2014. The number was Rs 27 777 million in 2012 and Rs 67 465 in 2013.

Although successive governments have attempted to run these institutions as viable enterprises, such attempts generally do not bear positive results for many reasons including; politicization of SOEs, lack of competent leadership, lack of transparency, bad financial management, near nonexistence of a culture of accountability and meritocracy.

PPP mechanism could be a fruitful way to introduce competent leadership and cultural make over, and market orientation which are essential making these ailing SOEs competitive enterprises.

Introducing and promoting PPP projects depends to a great extent on, said. 

According to Thilan Wijesinghe, Chairman and Acting CEO of the newly established Public Private Partnership Unit of the Finance Ministry, organization structure of the implementation body plays an important role in successfully enabling Private Public Partnership.

He added that Sri Lanka has a successful history of implementing “Public Private Partnerships” (PPP) and that in the 1990s the Bureau of Infrastructure Investments (BII), which was set up by the BOI to structure PPPs, "successfully implemented PPPs valued at USD 800 million at a time when the country was faced with a war risk premium."

This is essential in a world where SOEs are an influential and growing force globally. According to PWC the proportion of SOEs among the Fortune Global 500 has grown from 9% in 2005 to 23% in 20142, driven particularly by the growth of Chinese SOEs.

Eran Wickramaratne, State Minister of Finance, emphasizes the Government’s commitment to bolster the performance of SOEs through PPP mechanism.

   "In 2016 the World bank prepared a Diagnostic Note for Sri Lanka on PPPs. They noted us with eight key actions, which included the establishment of a PPP unit, improve policy environment, mobilize long term infrastructure finance and improve public awareness. The government has implemented most of them or are working on them, so that we can ensure that SOEs are no longer a burden to the economy and tax payer,", Eran Wickramaratne said.

 

The Ceylon Chamber of Commerce

Economic Intelligence Unit

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