Thursday, July 12, 2012
Udith Lokubandara MP– Crazy to think the Govt. Sector is profitable!
He was citing that Government entities were profitable, mentioning only Bank of Ceylon and People's Bank, in defending the record of the Government as a super manager of enterprises!!
The young 27yr old MP can be forgiven for thinking that all Government companies are profitable, when he sighted the only two that had been able to run under Govt. patronage for a long time, Bank of Ceylon and People’s Bank. It is true that both these humongously big Banks were able to make profits, but that is after years of pumping funds into them, which no private entity would have been able to do. No wonder they are now profitable.
Under private ownership one could argue it could be far more profitable, so that was totally lost on him. Does he not know that despite the tremendous efforts to get rid of the dead wood these two banks still carry a very unproductive workforce when compared with their private competitors? The private banks love to have these two because they can have a hugely profitable spread (difference between borrowing and lending rates) as the banks need to keep it that way to be highly profitable.
In reality for Sri Lanka’s companies to be more competitive they need a much thinner spread, which can be imposed only when these two banks become more efficient, however as bankers they are not concerned about the country only about their profits so the private and public banks live very happily together at the expense of business and the higher growth of the economy.
This comment was made as a panelist at the Sri Lanka Economic Summit held at the Cinnamon Grand held earlier today, in the concluding sessions. I do not wish to insult the poor man by going through the list of unprofitable government companies, suffice to say that Harsha de Silva MP noted that after the Appropriation Act, Parliament had just released a further Rs550M to both Sevenagala and Pallewatte Sugar companies as they were running at a loss. This would not have to be paid if they were still under private ownership, making poor Udith a the jonah in the pack and not the joker, as that would be too kind.
It is nice to have a young MP, but he should I hope decide that backing this horse of a UPFA is not his future and he came into parliament purely as a result of his father and not as a result of any of his personal accomplishments. In order for him to have an after-life he may as well join the UNP as otherwise he will be shortly consigned to history.