“Privatisation is a necessary evil that we have to face”, said the Minister for Economic Reforms, Science and Technology and Deputy Minister for Policy Development and Implementation, Milinda Moragoda at the 36 th Annual General Meeting of the International Chamber of Commerce (Sri Lanka Chapter) at the Galadari Hotel recently.
We are all in danger of forgetting that governments do not have any money of their own. They are the keepers of tax payers’ money and the conduits of international aid. Businessmen understand the dynamics of the market place in a way that governments never can.
Equally government-owned enterprises are rarely able to compete in the open market place. So monopolies are built around them. But monopolies stagnate as they have no competition.
“A graphic illustration of where this has happened is the Ceylon Electricity Board”, he said.
For future managers the world will be different where competition for jobs will be acute, as will be the need to earn a profit. Governments do not understand profit the way private companies do. Even in China, they have had to sell off state-owned enterprises as reality sets in.
“But in Sri Lanka past privatisations have not been a huge success”, he said.
The Minister said that we have two choices. We can try to find Sri Lankan owners who will take on this burden or hope that international investors will come in and take the risk. There is also a third choice. That is to sell off parts of the industry and accept that some parts will never succeed and can never be sold.
The Finance Minister had explained that the interest repayment alone of past debts has now reached 31 cents for every rupee. “Life in the next few years will be tough for us. But the potential rewards are huge. If we take tough decisions today then we might hope to save some of our State-owned enterprises”, he added.