Persistent concerns have often revolved around the role of state owned enterprises (SOEs) in driving a nation’s economic growth. In a recent LMDtv interview, Suresh Shah – the Director General of Sri Lanka’s State Owned Enterprise Restructuring Unit – shed light on the country’s ongoing efforts to reform and restructure its SOEs.

“What you’re seeing through the press and media are those entities that are being divested,” he stated, referring to the visible aspect of Sri Lanka’s SOE restructuring plans. Behind this prominent aspect lies a multifaceted reform process targeting various categories of state enterprises.

Shah outlined a threefold classification: SOEs that no longer require government control; nonoperational entities that may need to be dissolved due to their lack of operations; and those that require sustained government oversight.

Currently, the State Owned Enterprise Restructuring Unit is focussing primarily on commercial enterprises, which encompasses around 130 such entities, emphasising their importance in generating revenue and ideally, profitability.

Commenting on the process of bringing investors on board, Shah stated that it involves two critical stages – viz. expression of interest (EOI) and request for proposal (RFP).

Elaborating on this, he added that two independent committees – a special project committee and negotiating committee – evaluate proposals, ensuring transparency and credibility. Shah emphasised that the “cabinet plays a crucial role in approving the process and making the final decisions.”

“Transparency means keeping stakeholders aware of what’s happening,” he affirmed, underlining the government’s commitment to keeping the public and other stakeholders apprised of ongoing developments.

The government has actively engaged with political parties and trade unions, conducting meetings to elucidate the process and garner their support.

This process of restructuring SOEs in Sri Lanka is primarily aimed at providing citizens with high quality products and services at affordable prices. Some enterprises are shifting to the private sector as the Director General highlighted: “Such reforms allow government resources to be allocated to essential services like healthcare and education.”

And as Shah pointed out, “the ultimate aim is to ensure that citizens have access to good quality products and services at reasonable prices.”

Consequently, these reforms are a crucial step towards not only improving economic efficiency but also uplifting the living standards of Sri Lankans.

“Entrenched interests in bureaucracy and politics can hinder reforms,” Shah noted. These vested interests often create formidable obstacles in the path of meaningful reform efforts, requiring a comprehensive and strategic approach to navigate.

Furthermore, he articulated that “misunderstandings and misinformation about SOEs pose a significant challenge.”

Additionally, Shah asserted that “political stability and commitment to long-term reforms are crucial to avoiding past cycles of reforms and setbacks.” He believes that in doing so, the nation can chart a course towards sustained economic growth and prosperity.

“The real assets that can transform a country are our human capital – particularly the youth,” he stressed, noting that “retaining our human talent is essential. We must create better living standards, promote economic and social development, and build a more inclusive society.”

Regarding civic-mindedness, he acknowledged the challenges posed by economic difficulties: “Being civic-minded can be challenging especially for those facing personal hardships. Economic difficulties can make people prioritise immediate needs.”

Nevertheless, Shah emphasised the need for a shift in governance, asserting that “people must realise that Sri Lanka’s governance needs significant change after the past 75 years. Economic reforms alone won’t be enough; go­vernance reforms are crucial.”