Cabinet approves State Enterprise Restructuring Policy

•  Move aims to improve quality, price, accessibility of goods and services provided by SOEs by reducing financial burden on Treasury
•  Move aspires to create competitive and market-based business environment to attract private investors
•  Cabinet Co-Spokesman and Minister Bandula Gunawardena says implementation of policy is key to restructuring SOEs, moving out of ongoing economic crisis

By Charumini de Silva

Cabinet Co-Spokesman and Minister Bandula Gunawardena

The Cabinet of Ministers approved a State Enterprise Restructuring Policy to strengthen the Government finances and reduce the overall burden on the economy and create a more competitive business environment. The policy aims to improve the quality, price and accessibility of goods and services provided by public enterprises, by reducing the financial burden of such enterprises on the Treasury, whilst creating a competitive and market-based business environment to attract private investors.

“The policy›s objective is to proceed with the restructuring of public enterprises based on the policy proposal to restructure State-owned enterprises so that they won›t be a burden on the nation or the Treasury and make the enterprises more focused on the market,” Cabinet Co-Spokesman and Minister Bandula Gunawardena said at the post-Cabinet meeting media briefing.

He said the policy aims to attract both domestic and foreign investors while attempting to promote a competitive and market-based environment.

“State enterprises need to be restructured to boost finances, economic factors, and the balance of payments (BoP). Some agencies may have to be divested and invested productively. The process might be necessary to close some divisions,” Gunawardena explained.

On 5 September, the Cabinet of Ministers approved the establishment of the Public Enterprise Restructuring Unit under the Finance, Economic Stabilisation and National Policies Ministry to provide necessary guidance and assistance regarding the restructuring of public enterprises.

“If you examine the pricing strategy historically, any company that imports products and sells them below cost would go bankrupt. Therefore, the State enterprises have to go for a cost-reflective policy. State enterprises have to be restructured to improve finances, economic variables and balance of payments,” Gunawardena stressed.

He said putting this into action quickly and restructuring State enterprises are important steps in getting the country out of the ongoing economic crisis.

The proposal to this effect submitted by President Ranil Wickremesinghe in his capacity as the Finance, Economic Stabilisation and National Policies Minister was approved by the Cabinet of Ministers at its meeting on Monday.