The Government signed the Statement of Corporate Intent (SCIs) with ten selected State Owned Enterprises (SOEs) on 10th June 2019 at 5.00 p.m at the “Randora” Auditorium, Ministry of Finance. The Department of Public Enterprises (PED) introduced the concept of SCI in 2017 with a view to enhance the performance of SOEs. This concept was approved by the Cabinet of Ministers on 7th February 2017 and was initiated by signing SCIs with five Key SOEs; Ceylon Petroleum Corporation (CPC), Ceylon Electricity Board (CEB), Sri Lanka Ports Authority (SLPA), Airport and Aviation Services (Sri Lanka) Limited (AASL) and National Water Supply and Drainage Board (NWS&DB) on 15th March 2017.
Subsequently, followed by the approval of the Cabinet of Ministers, it was planned to sign SCIs with another 10 selected SOEs, Sri Lanka State Plantation Corporation, Urban Development Authority, Lanka Sathosa (Pvt) Ltd, Central Engineering Consultancy Bureau, State Timber Corporation, Kurunegala Plantation (Pvt) Ltd, State Pharmaceuticals Corporation, Milco (Pvt) Ltd, National Livestock Development Board and Geological Survey and Mines Bureau.
SCI is a tripartite Agreement, signed among the Secretary to the Ministry of Finance (MOF), Secretary of relevant line Ministry and the Chairman of the respective SOE on behalf of the Board of Directors with the mission of creating a platform for SOEs to operate in a commercially viable manner in order to achieve macroeconomic objectives of the country. SCI possesses following objectives; to operate SOEs in a budgetary independent and commercially viable manner, to improve Corporate Governance Practices, to strengthen the Financial Management, to strengthen the Human resource management, to change the operational culture and reengineering the business process, to improve the transparency and accountability in operations, to ensure efficient and effective business operations and to generate reasonable Return on Investment. Moreover, SCI contains key performance indicators linked to Corporate Plan, Action Plan and Annual Budget of the SOEs spreaded over three years’ time horizon. In addition, the impact of all noncommercial operations of the SOEs are also taken into account and included in the SCI.
The SCI would enable to contribute positively to the strategically important SOEs towards achieving Sri Lanka’s economic goals by enhancing the contribution making to the GDP of the country. In achieving the set objectives of these SOEs, the key expectations of the government are to encourage and to facilitate these SOEs to improve the operational and financial efficiency through improved corporate practices, innovative financing, strong and prudent financial management, exposure to competitiveness and international best-practices and effective human resource management while enhancing public accountability. The effectiveness of the SCI process will depend fundamentally on to what extent the SCI will be used as their own management tool by the selected SOEs and the Line Ministries. Progress of SCIs are monitored by PED and the PED submits a progress report to the Cabinet of Ministers periodically.
On the success of the implementation of this program, the government is expecting to extend this move for the other 400 SOEs as well by time to time.
Table 1: Some of the Medium term objectives of SOEs to be achieved through the SCI
National Livestock Development Board
§ To increase the number of issuance of breeding materials to the local livestock farmers by the following rates from 2019-2021;
o Cattle male -2\%
o Cattle female- 28\%
o Buffalo Male- 7\%
o Buffalo Female 12\%
o Goat - 42\%
o Sheep -11\%
o Swine- 13\%
§ To increase the sale of livestock, agriculture and processed products through the NLDB, franchise outlets and as well as supermarkets from 2019-2021 by 17\%.
Milco (Pvt) Ltd
§ To increase the market share of milk-based products from 25\% to 35\% by the end of 2021.
§ To increase the production capacity from the current 400,000 liters per day to 600,000 liters per day by the end of 2020.
State Timber Corporation
§ To increase Gross Profit from furniture up to 33\% by 2021
§ To increase contribution to total revenue from furniture sales by 15\% by 2021
Urban Development Authority
§ To Prepare Comprehensive Development Plans for all Declared Urban Areas by 2021.
§ To introduce a strong enforcement mechanism for the implementation of development plans by 2020.
Geological Survey and Mines Bureau
§ To rework legislative framework for transparent, safe, scientific, sustainable and competitive regulatory climate.
§ To pursue excellence in geoscience research by promoting studies, projects and collaborations.
State Pharmaceuticals Corporation
§ To achieve open market sales revenue growth of 45\% by 2021 based on the 2018 sales.
§ To ensure on time delivery of pharmaceuticals by achieving 80\% success rate by 2021
Central Engineering Consultancy Bureau
§ Increase revenue by 10\% each year
§ Development of in house ERP System by 2020
Lanka Sathosa (Pvt) Ltd
§ To expand the retail network up to 520 outlets by 2021
§ To turnaround LSL is in to a profitable venture by 2020 and grow the profit thereafter
Sri Lanka State Plantation Corporation
§ To increase made tea income by 42\% by 2021
§ To maintain the cost of production increment within the range of 4\%-5\% by 2021