SOBEs to be transformed into profit centres

Sanjeevi JAYASURIYA

State owned business enterprises (SOBEs) are to be transformed into profit centres with openings for business expansion and income earning opportunities by structuring the national budget to be able to generate revenue surpluses.

New income earning opportunities have emerged to the private sector and households so that these entities could face new challenges effectively, the Ministry of Finance and Planning Annual Report 2012 said.

Food security and affordable food prices will be the source of stability in the economy. Fiscal and monetary policy actions alone are inadequate to deal with inflationary pressures, considering the structural rigidity of the economy.

The success witnessed by implementing the integrated rural development strategy embracing a bulk of the households and thereby creating a strong social security network need to be consolidated to promote food and economic security, the report said.

The performance of the SOBEs requires considerable innovation to improve their finances.

The performance of most of the SOBEs continue to reflect operational deficiencies such as the limited capacity to adjust output prices to reflect market conditions and profitability, inadequate competencies in corporate management, rigid outlook in addressing structural deficiencies in the organization to position them in the middle income country policy framework, inability to separate the business focus from the welfare objective and lack of proper business models with a long term vision.

The Committee on Public Enterprises (COPE) of the seventh Parliament after examining the performance of all 229 state entities including the SOBEs , has identified a number of issues that have undermined their performance.

These include the non compliance of statutory obligations, lack of capacity of the Chairman and Board of Management, absence of corporate/business plans, annual budgets, procurement plans, non- submission of annual reports, non- response to audit queries and COPE recommendations, procurement violations, financial misappropriation, unsatisfactory recovery of debts and receivables and inadequate treasury control and supervision.