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| Tuesday, 15 June 2004 |
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| Strategic Enterprises Management Agency: Key national institutions under one umbrella Twelve enterprises which are vital to the national economy will be brought under the proposed Strategic Enterprises Management Agency (SEMA) to revitalise them without resorting to privatisation, the Government announced yesterday. The 12 enterprises which will be managed as independent enterprises with commercial autonomy under the purview of the SEMA are: Bank of Ceylon, People's Bank, National Savings Bank, State Mortgage and Investment Bank, Ceylon Electricity Board, Ceylon Petroleum Corporation, Sri Lanka Ports Authority, Airports and Aviation Authority, Ceylon Government Railways, Ceylon Transport Board/regional cluster bus companies, National Water Supply and Drainage Board and the State Pharmaceutical Corporation. "Our aim is to improve the efficiency, effectiveness and financial viability of these vital institutions without privatising them. We will not be selling our [the Government's] shares. Its a policy decision of the UPFA government. The Cabinet has fully endorsed it," SEMA Chairman and Chief Executive Officer Mano Tittawella told the media. The other members appointed to SEMA are B. R. L. Fernando, Lalith de Mel, Nihal Fonseka, J. Bandaranayake and Rajan Britto. Tittawella said the 12 enterprises will work according to a strategic business plan to be prepared in consultation with and endorsed by the SEMA. Each enterprises will assess its employment needs and work together with SEMA for achieving optimum results. However, none of the 27,000 graduates to be recruited to the government sector will be employed by these 12 institutions. A special agency has been set up through powers vested in the President under Article 33 of the Constitution for the purpose of formulating an organisational structure to ensure the efficient functioning of SEMA, recognising the urgency of revitalising these public enterprises. He expressed confidence that legislation on SEMA would receive bipartisan support. The 12 establishments will still be under the line ministries, but they will not be involved in their day-to-day affairs, Tittawella pointed out. The Ministers and officials will be involved in the formulation of business plans. He cited SriLankan Airlines (under the Ministry of Ports and Aviation) and Sri Lanka Telecom (Ministry of Posts and Telecommunications) as two examples for such an arrangement. "If managed well, they will be able to expand operations. Professional management and best business practices will be introduced to these enterprises. We will ensure their accountability. The Government has decided to use strategic public enterprises as the engine of rapid economic growth," Tittawella added. He said the Public Enterprises Reforms Commission (PERC) will continue its role, as there are non-strategic public enterprises which may come under its purview. Referring to the third player in the petroleum market, Tittawella said negotiations would continue. There will be some amendments and different conditions may apply. He disclosed that the Finance Ministry would make a statement on the overall economic policy of the Government in the coming days. A news release issued by the President's Office on the SEMA stated: As enunciated in the United People's Freedom Alliance (UPFA) Manifesto, the new UPFA Government is committed to manage Strategic Public Enterprises as independent commercial enterprises with commercial autonomy, instead of privatizing them. In order to streamline this process and create the appropriate institutional framework, as articulated in the UPFA Manifesto, the setting up of the Strategic Enterprise Management Agency (SEMA) under the purview of the President has been done. The objective of the UPFA government is to improve the efficiency, effectiveness and the financial viability of these strategic enterprises in a manner that will ensure greater benefits to the general public. Though the creation of competition between these enterprises and their counterparts and introduction of professional management into them, it is proposed to improve the commercial viability of these enterprises to make them globally recognized entities. The consequential benefits to the National Budget will enable the government to better address the social agenda in an effective manner as opposed to privatizing these enterprises, thus creating private monopolies. The main functions of the Strategies Enterprise Management Agency will be the following: * To ensure improved efficiency, effectiveness and the financial viability of the said strategic enterprises through appropriate supervision and facilitation. * To ensure effective management of the Balance Sheets of the said strategic enterprises through their respective Boards of Directors. * To set up industry benchmarks and appropriate regional standards to be achieved by the said enterprises over the next 3-5 years. * To ensure that each of the said enterprises will obtain a local/global rating and pursue them to improve their initial rating. * To motivate the management of the said strategic enterprises to effectively compete with their counterparts, while being mindful of the expectations of the general public and social welfare. * To ensure that the said enterprises will work with a long-term vision, according to a strategic business plan to be prepared in consultation with and endorsed by the SEMA. Although it is proposed to create the SEMA through the enactment of a statute, considering the time frame involved with the drafting and the approval process of a statute and recognizing the urgency to revitalize the said public enterprises to perform their respective tasks in the national economy in the near term a Special Agency has been set up in pursuance of the powers vested in Her Excellency the President under Article 33 of the Constitution of the Democratic Socialist Republic of Sri Lanka, for the purpose of commencing and undertaking inter alia the following initial work. * Formulation of an organizational structure to ensure the efficient functioning of this Special Agency/SEMA. * Formulation of a criteria based on which any other Public Enterprise could be classified as strategic in the national economy, to be appropriately brought under the purview of this Special Agency/SEMA. * Formulation of an effective coordination mechanism to interact with relevant line ministries with regard to the overall policy strategies of the Government and to operate within the relevant regulatory environment. * To ensure that each of the said strategic enterprises will produce a 3-5 year business plan for itself in consultation with this Special Agency, which business plan shall be first endorsed by the said Special Agency/SEMA and be implemented in a timely manner. * Formulation of appropriate strategies pertaining to procurement, human resource planning, technology use and such other aspects relevant to commercial operations of strategic enterprises and implementing them with appropriate approvals. * To draft a bill for the enactment of the Strategic Enterprises Management Agency as be a corporate body with autonomy with regard to its financial, administrative and organisational matters with extended authority to manage and supervise the said Strategic Enterprises or any other strategic enterprise which may be brought under the purview of SEMA as may be determined by the Cabinet of Ministers from time to time, and to present such bill to the Parliament. Administratively, the said enterprises will continue to be under the purview of the line ministries as already gazetted, similar to SriLankan Airline being under the Ministry of Ports and Aviation and Sri Lanka Telecom being under the Ministry of Posts and Telecommunications. However, the line Ministries will not get involved in day-to-day administration and business operations of the said enterprises by instead concentrate on policy formulation and development in relation to the overall area coming under their purview. The said enterprises will continue to operate within the relevant Constitutional provisions ensuring their public accountability. An autonomous commercial operation with a strategic business vision pertaining to each public enterprise has been the key to success in Singapore. Public enterprises in Singapore are managed by professionals as independent commercial entities free from political interference and they generate and contribute vast surpluses for national economic development. They said enterprises, which have been identified, if managed well will be able to raise capital both locally as well as internationally to expand their business plans. Commercially sound business strategies will encourage banking and financial institutions to provide them the required financial resources on medium and long-term basis without needing government guarantees. In addition to their investments, commercial profits and dividend can also become a main source of government revenue. As we know, the success of an enterprise depends not very much on ownership but on management. As such, professional management and best business practices should be introduced to these enterprises. In addition, the human resources as well as financial and physical resources of these enterprises will have to be effectively and efficiently managed. Policies pertaining to pricing, procurement, investment planning, recruitment, marketing use of technology and competition, should be formulated with focused management objectives. It is in this background that the government decided to use strategic public enterprises as the engine of rapid economic growth. Therefore, Presidential Directive in terms of Article 33 of the Constitution to set up a Strategic Enterprise Management Agency has been issued." |
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