Kabir Hashim, Minister of Public Enterprise Development: Interview

Interview: Kabir Hashim

What are the immediate priorities when it comes to reorganising the state sector?

KABIR HASHIM: The most important thing is recognising that the very mandate of this new ministry is not just to run state-owned enterprises (SOEs) but to restructure them. The main objective is to reduce the burden SOEs bear upon the treasury. We have a large number that are major liabilities and cause leakages in the budget, but we feel most of that can be changed.

We also need to look at the balance between service and profit. Many SOEs have social obligations, however, most of the issues stem not from the fact that they are service-oriented, but that they are mismanaged, resources are not properly utilised, and there is a lack of fiscal discipline. So we are now engineering new management strategies for the SOEs.

What are the main constraints the state faces in being involved in commercial activity?

HASHIM: What we have seen up until now, across the board, is that there has been a lot of politicisation of these institutions. There has been intervention by government, the ministry and sometimes the minister, leaving little room for technocrats to manage these enterprises. This is what we envision as the key change. Right now, even as a newly established ministry, we are really trying to encourage these enterprises to make the necessary changes themselves. As a first step, we are setting up a management panel comprised of top people from the private and public sectors, and we will eventually form an advisory council to manage these institutions. The ministry will only have a supportive role and would be more hands-off.

Two models we are really looking at for some of the institutions are public-private partnerships (PPPs) and joint ventures. Where it is necessary, the government will retain control in areas with key social implications and in major utilities that require protection. This will all be examined on a case-by-case basis.

The enormousness of the problem has yet to be addressed, particularly in areas like state utilities. However, we have started off strong with Sri Lankan Airlines, which is fully supported by the treasury. We are looking for quick steps that can be taken, including working with other airlines and examining different models.

How can social complexities involved with making state institutions more efficient be addressed?

HASHIM: In the past, when the public sector was created and we introduced free education, it allowed less-privileged people from rural backgrounds to enter the mainstream. The public sector was one of the best avenues for people to get into top slots. This changed the social fabric of the country. Most of our public sector secretaries and government agents are people who have reached those great heights as a direct result of free education in the country. This is a good thing, and we need to keep it going, boosting inclusiveness among all levels of society.

However, it has also led to some biases in thinking. This culture has led to the belief that every young person has the right to a job in the public sector, with a good salary and a pension. The pension scheme, only available in the public sector, has always been one of our major challenges. Only under the recent budget have we made the first moves towards a contributory pension scheme for both the public and private sectors. With the pension now available in both, we feel that people will naturally start gravitating towards the private sector. This is essential because the public sector cannot keep absorbing people without limitations. So with PPP arrangements, more foreign direct investments entering the country and more high-value industries around technology arriving, we believe that we can create more employment opportunities for the public. The 1m jobs the prime minister speaks of will come from both sides of the equation.