Laksala sets example in profit making

Thursday, 22 August 2013 00:28 - - {{hitsCtrl.values.hits}}

By Jagath Manukulasuriya Inefficiency, corruption, fraud and wastage have been the hallmarks of 244 state institutions that annually come under the scrutiny of the Committee on Public Enterprises (COPE). Its second report, presented in Parliament recently, exposes these institutions as burdens on the national economy. As usual, a big noise was made attributing their losses to red tape, political meddling and nepotism, but people remain very sceptical about any follow up action. Like other documents of a similar nature, the public see the COPE report making little or no impact; although a democracy undoubtedly needs such committees to monitor the performances of state organisations. At present the COPE comprises 31 Government and Opposition Parliamentarians including Minister D.E.W. Gunasekera. In addition to the main committee there are three subcommittees chaired by MPs Susil Premajayantha, Lasantha Alagiyawanna and Karu Jayasuriya. Sometime back Opposition MP Wijedasa Rajapaksa headed COPE. This time too, the rudderless Opposition, supporters of the pro-LTTE Tamil Diaspora, NGOs (serving dubious foreign agendas) and their lapdogs made an attempt to use the COPE report to discredit the Government. They however conveniently forget the fact that misdeeds of a number of ministers were exposed even when Wijedasa Rajapaksa was COPE Chairman. Within 17 days after Chairman Rajapaksa presented his COPE report 18 UNP Parliamentarians joined the Government, saying they wanted to strengthen the President’s hand. Rajapaksa’s COPE report cited corruption which had occurred in the Power and Energy Ministry when Karu Jayasuriya was the Minister in charge, though now he is back in the UNP. Today apparently he has forgotten the contents of that report though he is currently a Subcommittee Chairman of the present COPE. This is a mockery to say the least. COPE was formed in 1979 to ensure the compliance of financial discipline in public corporations and other semi-Governmental bodies. In 2010, 229 state institutions came under its scrutiny. The following year, COPE investigated 211 such organisations. The Ceylon Electricity Board, Petroleum Corporation, Sri Lankan Airlines and Mihin Air have come under criticism this year too. The latest COPE report reveals that 14 institutions have been continuously suffering losses since 2009. The CPC had lost nearly Rs. 200 billion in the years 2011 and 2012. The CEB too has faced similar losses.

Some humbugs however try to hide the fact that the CEB’s losses are the result of security, health and educational institutions failing to pay arrears due to the board. The CPC is in trouble because of supplying oil on credit to Sri Lankan Airlines, the Railway Department, the Transport Board and the CEB among others. Consequently the CEB and CPC, being unable to repay bank loans, have been compelled to pay interest by the billions to the People’s Bank and Bank of Ceylon. These are the consequences of trying to shoulder the burden of the Government’s public welfare measures. The Government’s target is ‘Electricity for all’. Providing every household with electricity by 2015 is the objective as cited in the Mahinda Chinthana vision. But due to protests and demonstrations the Opposition and other organised groups staged under various pretexts, the plans for increasing power supply could not be implemented in time. The construction of power plants were delayed. The loans which the CEB and CPC took from state banks in 2012 amounted to $ 200 million at 15% interest. These two institutions now have to pay around Rs. 30 billion annually to the banks. This is twice the amount paid as Samurdhi relief assistance. Fifteen state institutions have been facing losses. Compared to 2010 the number of institutions the losses of which have increased is 12. The institutions which began running at a profit since 2011 are nine. Also, compared to 2010, the number of institutions which made increased or less profits in 2011 are 38. Out of them, the number of institutions which made less profits stands at 18. The number of those which have continuously suffered losses since 2009 are 14. In stark contrast to them, Laksala has set a striking example on how to run a state enterprise profitably. Its Chairman is Anil Koswatte, who has proved that even if the head of an institution is a political appointee he can make it a successful enterprise if he is efficient and capable. What is required is the right man for the right job. Laksala was able to include itself among the 55 state enterprises recognised in the Finance Ministry report for 2012. Among them, Laksala has also become the 33rd institution making profits, although previously it suffered losses continuously. It was established in 1964 with a capital investment of Rs. 2.5 million under former Prime Minister Sirimavo Bandaranaike’s guidance. The purpose was to sell to tourists the products of Sri Lanka’s traditional craftsmen. By 1994 Laksala began making profits but when disputes occurred between the staff and the management and LTTE terrorism intensified in the country, the institution began to crumble. By 2008, Laksala was virtually bankrupt and the following year the Treasury stopped funding its training programs. Payments for the staff were irregular and they were deprived of increments and EPF. A decision was about to be made for the closure the establishment in 2010. However as a last resort, Anil Koswatte was appointed Chairman of Laksala in January 2011. He unhesitatingly faced the huge challenge of rebuilding the establishment on a loan of Rs. 100 million taken from the Bank of Ceylon. Today, Laksala is a stable organisation which can stand on its own feet, thanks to the steps Chairman Koswatte took to meet the requirements of both employees and customers. This is the very organisation which was facing the threat of closure 30 months ago. Today Laksala is open 365 days of the year. It has exhibition 14 stalls countrywide displaying traditional Sri Lankan handicrafts open from 9:00 a.m. to 9:00 p.m. The newest stall was opened on the premises of the National Museum on 2 August. Laksala is associated with the Divineguma social development program. In 2011, Laksala earned a net profit of Rs. 49 million. Last year it was Rs. 73 million. Thousands of traditional craftsmen today owe their livelihood to Laksala, which sells 17,000 types of products. Soon this number will increase to 30,000 as a means of boosting the traditional crafts industry. According to the COPE report, state institutions should be highly competitive and should function continuously in a strong business environment. They should work for national progress and prosperity. All governments have appointed party supporters as heads of state institutions. It is the bitter truth. The Mahinda Rajapaksa Government’s duty should be to appoint far-thinking, capable persons as chairmen of state enterprises. If not, COPE reports would serve absolutely no purpose.