Management practices, key to reviving Government bodies

Ramani Kangaraarachchi

EXECUTIVE FORUM: For the first time in Sri Lanka, some 1,800 senior and middle level executives and various stakeholders gathered at the BMICH on Tuesday at an executive seminar on Public Enterprise Reform which was opened by President Mahinda Rajapakse.

The discussions were led by an Australian investment banker and development strategist Guy de Fontgalland and Dr. Mukesh Aghi, a Singapore-based corporate high flyer and CEO of Universitas21 Global, a consortium of 18 top universities from around the world.

Fontgalland shares some views on strategies for making public enterprises profitable and viable. He is a Harvard graduate who currently heads ASARIM and is International Advisor to Entrepreneurship Development Institute of India in Ahmedabad.

Q: Is there a hope for public enterprises to be profitable and viable?

A: Yes. There are brilliant examples from countries like Singapore. A large number of vital businesses in Singapore like Singapore Airlines, Singtel, Sembawang Shipyard, Intraco, Housing Development Board, Development Bank of Singapore and a host of other government owned and government-linked companies operate highly successfully.

Q: What is the secret of their success?

A: There are many. First is the quality of management. Singaporeans, with limited resources, were taught the art of survival first. Then they were introduced to world class management practices throughout their independent years. International expertise was tapped successfully and Singapore developed a system of meritocracy which rewarded the achievers and punished the weak-links.

Q: What is essential to get public enterprises moving forward?

A: There are some serious issues with a number of public enterprises which are under-performing and which are on the brink of bankruptcy. We need highly clinical managers with knowledge, skills and experience to perform total surgical operations on most of the enterprises which have become a burden on the nation.

No single enterprise should be allowed to continue without becoming profitable, at some point in time. Each enterprise needs a diagnostic analysis of where it is now in terms of resources, manpower, budget and profit/losses. It is an enormous task to turn a sick corporation around, but it needs to be done.

Q: Do we have enough management capacities to revamp, restructure and make public enterprises profitable?.

A: Public enterprises in emerging economies like Sri Lanka need to set their own profit goals which will take into account the wider social benefits to the people. If you take transport as an example, it is not necessary for the Railways to make surplus profits and import luxury wagons.

Railways operation must reach a break-even position first, while providing adequate comforts and better service to all passengers. Each enterprise must set its own goals which may be different from the other.

There is a great deal of management talent in Sri Lanka. Best people command very high prices and are often sucked into the private sector, unlike in Singapore where public enterprise managers command equal or greater benefits. One needs to create a new culture where management, discipline, commitment and hard work become a norm rather than an exception.

To answer your question, there is a huge shortage of management capacity at the top, at the middle and at the lower rungs of management.

Q: Why do we have such a shortage what has gone wrong?

A: A number of factors. Sri Lanka's education system, for a long time, has not focused on management. Lack of adequate knowledge of English has prevented a number of students from having direct and intelligent access to a large body of knowledge available.

Rules and regulations here, from the Central Bank for example, do not encourage global play by Sri Lankans and thus our economy has always been an inward looking economy. Mainly on account of these factors, and the political uncertainties Sri Lanka has had for over 25 years now, a large number of top Sri Lankan brains have left the shores. It is an enormous task to begin to rebuild. But it can and should be started immediately.

Q: How do you assess Mahinda Chintana as a viable economic programme with your long term international experience?

A: Although it was tailored to meet voter aspirations, I view it as an intelligent approach to alleviate poverty and give the people of Sri Lanka adequate quality of life. It is a people's programme and certainly has great value. I would think it is a major starting point.

The biggest asset behind Mahinda Chintana is the President himself. It carries his name and his heart. He is fully committed to translate Mahinda Chintana into a major national programme and lift off to a higher plane later requires a brilliant organisation which will have total communication, command and control of the programme, at all levels.

Q: How do businesses overseas view the Sri Lankan situation as far as the north-south divide is concerned?

A: Most people overseas, including some governments, do not really understand the dynamics of the problems and issues here. They are often confused as to why such a beautiful island of 20 million should waste so many years fighting among themselves.

Political uncertainty and the north-south crisis during the last several years have deterred investors and local businesses from venturing. Right now, there is a strong sense that, may be, the nation is about to turn the corner. There is a wait and watch atmosphere. On the investment grade scale, Sri Lanka is still at a low rung.

Q: As a keen watcher of South Asian affairs how do you read the next 10 years for Sri Lanka?

A: I have more than an investment banker's interest in the region. Sri Lanka, as far as my own judgement is concerned, is the most under performing asset on this side of the Suez Canal.

It's a country blessed with so much land based, water-based, sea-based and people-based resources. It is also a small and highly manageable country.

It's inability to crisis-manage the north-south conflict, its acceptance of status quo in a fatalistic manner and the lack of a strong national will and desire to develop and sustain an accommodative approach to all races and religions in this country have pushed it back by a many years.

There are two major issues to be addressed in order that Sri Lanka can lift its head with pride: first and uppermost is a political solution where all races and people can live in dignity as a nation. The other is the adoption of an economic policy where the people are not always regarded as an unthinking mass which needs to depend on Government assistance, but valued and treated as a productive force whose capacities can make Sri Lanka an economic powerhouse.

The future for a very small island with limited land mass cannot lie in an inward looking economy and range of subsidies. Sri Lanka must position itself to become a clever country, a skills and knowledge based hub in the South Asian region.

Politics and Government must reach a state of maturity where people count and are not counted in the number of votes.