Losses In Public Enterprises: However Much They Are Justified They Are A Violation Of Public Property Rights

June 7, 2012

By W.A. Wijewardena  -

Dr. W.A. Wijewardena

The Annual Report of the Ministry of Finance and Planning for 2011, just released, has, among many others, one important positive message for the nation. It has reiterated the Government’s commitment, as it had done earlier too, to improving the performance of what it calls State Owned Business Enterprises or SOBEs to ensure their sustainability, social responsibility and strategic role in the economy. There is a four – fold strategy which the Government will pursue to attain this goal: management reforms, corporatisation initiatives, best corporate practices and higher investments (p 16). All these solutions are what a private company will do in a similar situation. Later in the report, it has diagnosed several ailments from which these SOBEs are suffering. These ailments, reproduced below, have been known all along to the country’s policy authorities. Though several attempts have been made in the past under such reform programmes as privatisation, peopleisation, placing them under a public enterprise reform commission or PERC and later replacing PERC with a strategic enterprise management agency or SEMA to do the same job and so on, these ailments have not answered to any of the medicines prescribed for them previously.

Diagnosis of ailment: Incompetency of those in control       Read More