Sunset for State Enterprises

8/12/2019 Sunset for State Enterprises

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Sunset for State enterprises

July 15, 2014

The riddle of everlasting life

It is a sad phenomenon of our times that enterprises fuelled by taxpayersmoney have a tendency to act contrary to nature and go on forever andever It is the nature of all things in this !orld that change is the onlyconstant "othing, no entity !hatever, can survive, if it cannot adapt to thechanging environment in !hich it operates #he dinosaur is the primeexample
http://www.ft.lk/2014/07/15/sunset-for-state-enterprises/http://www.ft.lk/wp-content/uploads/2014/01/dft_logo.jpghttp://www.ft.lk/2014/07/15/sunset-for-state-enterprises/


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$e in %sia &no! !ell !hat happens to political and regal dynasties !hichset themselves up for eternal rule #he dustbin of history is !here they endup, !ith the occasional plaintive s'uea&, of a revival, once in a !hile, (ust toreinforce the point, that nothing is eternal) #he survival of the *ritishmonarchy is a case in point for adapting to change + a one time absolutemonarchy, imbibing strength from foreign royal houses, being forced tosurrender po!er to the -ords and .ommons through the /agna .arta, overtime becoming a classic model for a constitutional monarchy

#he ouse of $indsor dre! genes from the ouse of *attenberg ofermany, !hich deftly adapted and changed its name to the %nglicised

/ountbatten a direct translation of *attenberg3, and !hen *ritain foughtermany in $orld $ar II, a descendant of the ouse of *attenberg, a & a

$indsor ,!as on the *ritish throne + irony of ironies) #his is classic tale ofadapting to survive

acuum cleaners for tax money-osses ma&ing state enterprises, !hich have an access tounlimited taxpayer funds, sadly, do not abide by this rule

#he sunrise of the tate 6!ned 7nterprise 673 isheralded !ith great celebration, a steel mill, a tyrefactory, a coal po!er plant, and cement factories paperfactories, chemical plants, all symbols of the greatness of

the state + !hich in most developing economies, privateenterprise !ill not touch, due to the high capitalinvestment and huge ris&s, !hich !ill not give a return oninvestment for years, are started up by starry eyedstatist economic planners and politicians, using thetaxpayers money

adly over time, they are run do!n, not maintained, thetechnology is dated and the poor tax payers have to

pump in money to &eep the ine8cient and loss ma&ingplants and enterprises running It has been !ell provedthat government servants, especially politicised ones,

cannot run enterprises pro9tably uch 67 are vacuum cleaners for taxmoney, suc&ing it up and (ust tend to go on and on, for misbegottennational prestige or the po!er of trade unions, managers and politicians,!ho 9ght change or simply due to the lucrative nature of the s&imming o:


3/17

!hich ta&es place by the political masters #here is simply no change$e have the example of a extractor of minerals on ri -an&as east coast,!hich for over 40 years has done nothing more than extract and export thesand "o value addition, no do!nstream industry investment, no ne!technology + all ;ero 7 experience

o! taxpayers money is spent is in a democratic parliamentary set up ismonitored by elected representatives of the people, through !hat is calleda >ublic %ccounts .ommittee, of >arliament, to !hich the accounts of all

67s are submitted !ith a report of the %uditor eneral for scrutinyo!ever, it !as soon realised that a post expenditure compliance audit of

this nature !as utterly useless for a tate 6!ned 7nterprise, !hile it maybe useful for a overnment department

ome parliaments therefore set up a .ommittee on >ublic 7nterprises.6>73 or its e'uivalent to supervise the accounts of 67s ri -an&a has

done this *ut the results from the .6>7 experience are a parody 6nene!spaper editorial recently reported that the o8cials of the /edia /inistryhad been directed by .6>7 to remove the ead of the tate >rinting

.orporation over an alleged fraud #he 7ditor described this as amanifestation of +?the largely toothless .6>7 has been pushed toindividualistic and perhaps controversial action

#he 7ditor goes on to say that the .hairman of .6>7, a enior /inister noless, has repeatedly issued !arnings that the monitoring of public 9nancesis in a deplorable state and that it is high time that >arliament acted on.6>7 reports =urther the 7ditor points out that there are 1@ 67companies, established in the last 10 years, some loss ma&ing, and !hich

are not audited by the %uditor eneral #hey are serial loser /ihin -an&a, hipping and %viation InformationAesearch -td , >olipto -an&a -td , ri -an&a #hriposha -td , Aa&na %ar&sha-an&a -td , -an&a -ogistics and #echnologies, ri -an&a avings *an&,-an&aputhra Bevelopment *an&, ri -an&a Insurance .orporation, tate

#rading $holesale3 .o -td , -an&a athosa, tate 7nterprise /anagement%uthority, and al 6ya >lantations -td


4/17

al 6ya #he !ords al 6ya, rings a bell + indicating one of the possible credibleevolutions of a 67 in ri -an&a #he original al 6ya Bevelopment *oard!as set up as a statutory %uthority to develop one of .eylons 9rstmultipurpose big dam irrigation and po!er schemes, in the 7astern>rovince #his !as totally funded by the taxpayer no foreign aid3 and ahighly successful development pro(ect led by politicians and civil servantsof integrity-ater this 67 !as transformed into the Aiver alleys Bevelopment *oard,to underta&e the $ala!e development and later its salient parts !ereintegrated into the /aha!eli Bevelopment %uthority In this latest avatar,the body lives on and on, although the /aha!eli %ccelerated pro(ect !aslong ago terminated, the authority lives on, seeing repeated sunrises andsunsets !ith a cycle of unrelenting rebirths)

#here have been a number of ?golden handsha&es, some funded throughfunds borro!ed on concessional terms, to close up the authority, but !ithevery ministerial change, !hich happens on a regular basis in this ?$onderof %sia, there is a series of ne! recruitments)"o !ill to change%t a recent discussion on this 67 problem organised by the >ath9nder=oundation, >rofessor irimal %beyratne of the .olombo Cniversity

bemoaned ?the lac& of political !ill to reform and change 67s in ri -an&ae stated that ri -an&a has around @00 67s in various and varied guises,

some of recent origin in camouDage uniform too more of that later3 #he legal structures are an unmitigated (igsa! pu;;leE statutory authorities,companies, trusts, cooperatives, (oint ventures #he /inistry of =inance%nnual Aeport details the heavy reliance on taxpayer money for most ofthese serial losers to survive from day to day

#he six big boys are the .eylon >etroleum .orporation, the .eylon

7lectricity *oard, ri-an&an %irlines, ri -an&a #ransport *oard, /ihin -an&aand "ational $ater upply and Brainage *oard ome of these arecommercial operations in airline and ground transport in !hich the privateenterprise ma&es handsome pro9ts 6thers are suppliers of essentialutilities !hich in other (urisdictions are run at a surplus In this ?$onder of%sia, they are robbing the poor taxpayers poc&et)

#here is no !ill to change #here is no incentive to change #he poor


5/17

taxpayer, mu;;led by censorship, muddled by corruption and befuddled byimaginative accounting procedures, !hich are not ade'uately exposed by amere post facto compliance by overnment auditors, bordering on outrightfraud, has no voice, !hile his hard earned money is siphoned o: to &eep avariety of corrupt politicians and their incompetent acolytes happy

>rivate enterprises vs 67s.ompare a private enterprise #!o *ritish nationals cameto .eylon, in colonial times and set up a partnership tobuy co:ee, rubber tea and coconut and other ?.eylon>roduce from *ritish planters and local gro!ers andsupply them to the !holesale trade in -ondon #hey did!ell and Doated the company on the local stoc&exchange and gave their shareholders a good return oninvestment In time they expanded into management ofplantations-ater !hen they sa! the decline in these sectors on thehori;on + that the inevitable sunset !as coming + theymoved into the leisure business, to ta&e bene9t fromconcessions and incentives o:ered by the tate fordevelopment of tourism #oday, seeing that gamblingplays a huge part in the tourism industryE they are

moving into the casino business) %ll done, in order tochange !ith the times, be competitive and give theirshareholders a return for their investment If they did notdo that, they !ould have to fold up and li'uidate,

succumb to the inevitable sunset, not having tax money to &eep themarti9cially aDoat.ompare this !ith the 67 set up to bene9t from the tourism concessions,the .eylon otels .orporationE although it had some prime properties to

manage, it !as run to the ground and sold o: to the private sector, afterrepeated raids on taxpayers money failed to deliver a resurrection)

o also, a gentleman from !it;erland, !ho came to set up a business,sees an opportunity in supplying fertiliser to the plantation industry In timethis enterprise migrated into importing !iss pharmaceuticals, became the

eneral ales %gent for !issair, got into plantation management andtoday is one of the leading conglomerates in .olombo, proving regular


6/17

dividends to its !iss investors #he .eylon =ertiliser .orporation on theother hand bit the dust and is being propped up by taxpayer money for no&no!n and perceived bene9t to the taxpayer

#he list can go on and on istory is replete !ith 67s crashing to theground &ept on arti9cial life support by taxpayers money !hile privateenterprises in the same sectors adapt to changing conditions and ma&epro9ts and pay taxes) 6f course there are the exceptions !hich ma&e therule, the tate >lantations .orporation and the .#* !ere run pro9tably atone time, under professional and disciplined managers + but for ho! longF

#hey !ere made unsustainable due to corruption, do!nright theft of publicassets but &ept unchanged using taxpayers funds

unset clauseIn reality !e cannot hope for a !orld !ithout 67s #hey are needed and insome instances are classic examples of cutting edge management bestpractice and governance ingapores tate o!ned strategic investmentcompany, #emase& .orporation comes to mind *ut in a populistdemocracy, !here management of 67s are re!ards to political acolytesand cronies, rather than assignments to competent managers, the onlyviable !ay to protect taxpayers money is by building in !hat is &no!n as a?sunset clause into the originating document of the 67, be it a %rticles of%ssociation of a .ompany or a tatute or a .ooperative 6rdinance

In public policy la!, a sunset provision is a measure !ithin a statute,regulation or other document incorporating an entity that the la! shallcease to have e:ect on a speci9c date, unless further action is ta&en toextend the lifetime of the entity unset provisions have their root in theAoman la! of the /andate #heory % mandate !as issued by the enate inAome, to collect taxes, raise a legion, etc for a 9xed timeframe and expiredthereafter, and had to be rene!ed by the Aoman enate #he senators !ere!ary of the proconsul having an open ended, uncontrolled and unlimited

mandateo! do you translate this sunset theory into todays issue ri -an&a faces

!ith 67s !hich are loss ma&ing parasites living forever on taxpayersmoney and being + proverbially + ?no bloody use at allF #he most sensible!ay to do it !ould be build in a mandate say for 9ve year lifetime !hen the

67 is created and provide that the managers of the 67 at the expiry ofthe 9ve year period !ill have to come before a panel of peers and prove


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their !orth, the positive !or& they have done and (ustify the furtherextension of the mandate

#he panel of peers could be managers dra!n from private sectorinstitutions such as .hamber of .ommerce, the 6rganisation of >rofessional%ssociation and the Institute of Birectors, etc #he hearing should be publicand sta&eholders in the sector should be allo!ed to come and 'uestion themanagers of the 67 on their performance or underperformance #here!ould have to be rules of procedure for 'uestions to be raised, notice to begiven in advance, etc

#o give an example, say the 67 is the #ourist Bevelopment %uthority, theother sta&eholders in the sector + travel agents associations, hotel o!nersassociations, trade unions, professional groups such as hotel managersassociations, tour guides associations + should be allo!ed to come beforethe panel and 'uestion the performance of the 67 >ublic hearings andpublic participation !ill ensure transparency, and the managers of theentity !ill have to really ma&e a strong case for their future continuity>eer >anels6ften politicians are opposed to any 67 reform !hen they are in o8ce #oget around this problem the Aeport of the >anel, !hich should be a pubicdocument, should be submitted to a bipartisan >arliamentary elect.ommittee, !hich also should hold hearings on the >anels Aeport and

ma&e a recommendation to >arliament, on the extension of the life of the67 or its closure, i e implementation of the sunset clause

#he /embers of >arliament may be divided on party political lines, as theynormally are, in ma&ing their recommendation, but at least the taxpayingpublic and consumers !ill have before them a >eer >anel Aeportrecommending the future of the 67, based on its past performance, andalso a >arliamentary .ommittees recommendation on the >eer >anels 9nalrecommendation, !hether the 67, if it is loss ma&er gobbling up

taxpayers money, should be further funded by the taxpayer to continue %llthis !ill be in the public domain and the taxpayer !ill &no! !hat is beingdone !ith his money%t one time the /inistry of >olicy Bevelopment set up a prototype of these>eer >anels informally, had a process going for some months incollaboration !ith the /inistry of =inance !ith 67s being invited to presenttheir performance Cnfortunately the experiment !as later scrapped =or


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existing 67s a timeframe should be 9xed for them to appear before a >eer>anel %nother option may be to list on the toc& 7xchange a certainpercentage of shares of the 67, after converting it into a stoc& company

#he discipline of compliance !ith the regulatory rigour imposed by thelisting forces an 67 to reform and change India did this !ith the tate*an& of India.amouDage business

ri -an&a has a ne! phenomenon + .amouDage business Aecently therehas been a surge of enterprises by the military ervice men and !omen,most often in camouDage uniforms or in trac& suits, have ta&en to theconstruction industry, managing golf courses running air lines, managinghotels and resorts, !hale and dolphin !atching tours, !ayside teabouti'ues, selling vegetables, maintaining par&s and public spaces andmost recently eradicating dengue and reconstructing buildings destroyed in%luthgama by communal violence %re all these legitimate and authorisedmilitary activitiesF

#he .omptroller and %uditor eneral of India famously raised this 'uestionregarding the Indian %rmy maintained Aegimental olf .ourses) #he issue!as, does the >arliament of India, !hich votes taxpayers money to theIndian %rmy to defend /other *harath from external enemies, also permitthese funds being utilised to maintain golf courses for %rmy o8cers playing

golfF #he same 'uestion arises hereome of these may be laudable enterprises .ertainly it is conceded that a

victorious %rmy cannot be sent home, even though !ith full pension, after!inning a !ar 6ne recalls the infamous ?/arch on $ashington bydemobilised I Joes after $orld $ar II, protesting that they had no (obs #heC Befence Bepartment had to deploy armed cavalrymen to brea& up thedemonstrations *ut are these camouDage enterprises !hich results in thecro!ding out of private enterprise sustainable in the long runF

It !as reported at the >ath9nder seminar that the - %rmy has raised fourne! civil engineering regiments post !ar %nyone in the privateconstruction industry should sit up and ta&e notice) #here is a strongargument that there should be a sunset cause for all these militarycamouDage enterprises too It is conceded that private enterprises may notsee a viable return on investment in running hotels in post conDict regionsimmediately #he military might have to (usti9ably step in, in the immediate


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post conDict timeframe, to initially provide these facilities=or example if there is no place for local tourists visiting >rabh&aransdestroyed home, to buy a cup of tea, even, there can be no ob(ection to thenearby military camp opening a tea bouti'ue, temporarily *ut should themilitary step bac& at some time and let private entrepreneurs, !ho paytaxes, and are not subsidised by the taxpayer, step inFIt is claimed that in ermany after $orld $ar II, the %merican and *ritishand =rench forces had to set hospitality and utility services for visitors asthere !as no one else to do it in the ;ones controlled by themE ermanyseconomy had been bombed into the dust by the %llied *omber .ommandsair raids *ut their intervention !as time bound, and as soon as indigenous

erman entrepreneurs could set themselves up, the %rmy retreated to theirbarrac&s #he sunset &ic&ed in

iven the ri -an&a experience !ith loss ma&ing 67s, there is a strongcase for a sunset process, >eer >anel Aevie! and >arliamentaryrecommendations, and maybe listing on the stoc& exchange of all of such

67 and camouDage enterprises to avoid the haemorrhaging of taxpayersmoney

#he !riter is a la!yer, !ho has over @0 years of experience as a .76 inboth tate and private sectors e retired from the o8ce of ecretary,/inistry of =inance and currently is the /anaging Birector of the ri -an&a

*usiness Bevelopment .entre 3It is a sad phenomenon of our times that enterprises fuelled by taxpayersmoney have a tendency to act contrary to nature and go on forever andever It is the nature of all things in this !orld that change is the onlyconstant "othing, no entity !hatever, can survive, if it cannot adapt to thechanging environment in !hich it operates #he dinosaur is the primeexample$e in %sia &no! !ell !hat happens to political and regal dynasties !hich

set themselves up for eternal rule #he dustbin of history is !here they endup, !ith the occasional plaintive s'uea&, of a revival, once in a !hile, (ust toreinforce the point, that nothing is eternal) #he survival of the *ritishmonarchy is a case in point for adapting to change + a one time absolutemonarchy, imbibing strength from foreign royal houses, being forced tosurrender po!er to the -ords and .ommons through the /agna .arta, overtime becoming a classic model for a constitutional monarchy


10/17

#he ouse of $indsor dre! genes from the ouse of *attenberg ofermany, !hich deftly adapted and changed its name to the %nglicised

/ountbatten a direct translation of *attenberg3, and !hen *ritain foughtermany in $orld $ar II, a descendant of the ouse of *attenberg, a & a

$indsor ,!as on the *ritish throne + irony of ironies) #his is classic tale ofadapting to survive

acuum cleaners for tax money-osses ma&ing state enterprises, !hich have an access to unlimitedtaxpayer funds, sadly, do not abide by this rule #he sunrise of the tate6!ned 7nterprise 673 is heralded !ith great celebration, a steel mill, atyre factory, a coal po!er plant, and cement factories paper factories,chemical plants, all symbols of the greatness of the state + !hich in mostdeveloping economies, private enterprise !ill not touch, due to the highcapital investment and huge ris&s, !hich !ill not give a return oninvestment for years, are started up by starry eyed statist economicplanners and politicians, using the taxpayers money

adly over time, they are run do!n, not maintained, the technology isdated and the poor tax payers have to pump in money to &eep theine8cient and loss ma&ing plants and enterprises running It has been !ellproved that government servants, especially politicised ones, cannot runenterprises pro9tably uch 67 are vacuum cleaners for tax money,

suc&ing it up and (ust tend to go on and on, for misbegotten nationalprestige or the po!er of trade unions, managers and politicians, !ho 9ghtchange or simply due to the lucrative nature of the s&imming o: !hichta&es place by the political masters #here is simply no change$e have the example of a extractor of minerals on ri -an&as east coast,!hich for over 40 years has done nothing more than extract and export thesand "o value addition, no do!nstream industry investment, no ne!technology + all ;ero 7 experience

o! taxpayers money is spent is in a democratic parliamentary set up ismonitored by elected representatives of the people, through !hat is calleda >ublic %ccounts .ommittee, of >arliament, to !hich the accounts of all


11/17

67s are submitted !ith a report of the %uditor eneral for scrutinyo!ever, it !as soon realised that a post expenditure compliance audit of

this nature !as utterly useless for a tate 6!ned 7nterprise, !hile it maybe useful for a overnment department

ome parliaments therefore set up a .ommittee on >ublic 7nterprises.6>73 or its e'uivalent to supervise the accounts of 67s ri -an&a has

done this *ut the results from the .6>7 experience are a parody 6nene!spaper editorial recently reported that the o8cials of the /edia /inistryhad been directed by .6>7 to remove the ead of the tate >rinting.orporation over an alleged fraud #he 7ditor described this as amanifestation of +?the largely toothless .6>7 has been pushed toindividualistic and perhaps controversial action

#he 7ditor goes on to say that the .hairman of .6>7, a enior /inister noless, has repeatedly issued !arnings that the monitoring of public 9nancesis in a deplorable state and that it is high time that >arliament acted on.6>7 reports =urther the 7ditor points out that there are 1@ 67companies, established in the last 10 years, some loss ma&ing, and !hichare not audited by the %uditor eneral

#hey are serial loser /ihin -an&a, hipping and %viation InformationAesearch -td , >olipto -an&a -td , ri -an&a #hriposha -td , Aa&na %ar&sha-an&a -td , -an&a -ogistics and #echnologies, ri -an&a avings *an&,

-an&aputhra Bevelopment *an&, ri -an&a Insurance .orporation, tate #rading $holesale3 .o -td , -an&a athosa, tate 7nterprise /anagement%uthority, and al 6ya >lantations -td

al 6ya #he !ords al 6ya, rings a bell + indicating one of the possible credibleevolutions of a 67 in ri -an&a #he original al 6ya Bevelopment *oard!as set up as a statutory %uthority to develop one of .eylons 9rstmultipurpose big dam irrigation and po!er schemes, in the 7astern

>rovince #his !as totally funded by the taxpayer no foreign aid3 and ahighly successful development pro(ect led by politicians and civil servantsof integrity-ater this 67 !as transformed into the Aiver alleys Bevelopment *oard,to underta&e the $ala!e development and later its salient parts !ereintegrated into the /aha!eli Bevelopment %uthority In this latest avatar,the body lives on and on, although the /aha!eli %ccelerated pro(ect !as


12/17

long ago terminated, the authority lives on, seeing repeated sunrises andsunsets !ith a cycle of unrelenting rebirths)

#here have been a number of ?golden handsha&es, some funded throughfunds borro!ed on concessional terms, to close up the authority, but !ithevery ministerial change, !hich happens on a regular basis in this ?$onderof %sia, there is a series of ne! recruitments)"o !ill to change%t a recent discussion on this 67 problem organised by the >ath9nder=oundation, >rofessor irimal %beyratne of the .olombo Cniversitybemoaned ?the lac& of political !ill to reform and change 67s in ri -an&a

e stated that ri -an&a has around @00 67s in various and varied guises,some of recent origin in camouDage uniform too more of that later3

#he legal structures are an unmitigated (igsa! pu;;leE statutory authorities,companies, trusts, cooperatives, (oint ventures #he /inistry of =inance%nnual Aeport details the heavy reliance on taxpayer money for most ofthese serial losers to survive from day to day

#he six big boys are the .eylon >etroleum .orporation, the .eylon7lectricity *oard, ri-an&an %irlines, ri -an&a #ransport *oard, /ihin -an&aand "ational $ater upply and Brainage *oard ome of these arecommercial operations in airline and ground transport in !hich the privateenterprise ma&es handsome pro9ts 6thers are suppliers of essential

utilities !hich in other (urisdictions are run at a surplus In this ?$onder of%sia, they are robbing the poor taxpayers poc&et)

#here is no !ill to change #here is no incentive to change #he poortaxpayer, mu;;led by censorship, muddled by corruption and befuddled byimaginative accounting procedures, !hich are not ade'uately exposed by amere post facto compliance by overnment auditors, bordering on outrightfraud, has no voice, !hile his hard earned money is siphoned o: to &eep avariety of corrupt politicians and their incompetent acolytes happy

>rivate enterprises vs 67s.ompare a private enterprise #!o *ritish nationals came to .eylon, incolonial times and set up a partnership to buy co:ee, rubber tea andcoconut and other ?.eylon >roduce from *ritish planters and local gro!ersand supply them to the !holesale trade in -ondon #hey did !ell andDoated the company on the local stoc& exchange and gave theirshareholders a good return on investment In time they expanded into


13/17

management of plantations-ater !hen they sa! the decline in these sectors on the hori;on + that theinevitable sunset !as coming + they moved into the leisure business, tota&e bene9t from concessions and incentives o:ered by the tate fordevelopment of tourism #oday, seeing that gambling plays a huge part inthe tourism industryE they are moving into the casino business) %ll done, inorder to change !ith the times, be competitive and give their shareholdersa return for their investment If they did not do that, they !ould have to foldup and li'uidate, succumb to the inevitable sunset, not having tax moneyto &eep them arti9cially aDoat.ompare this !ith the 67 set up to bene9t from the tourism concessions,the .eylon otels .orporationE although it had some prime properties tomanage, it !as run to the ground and sold o: to the private sector, afterrepeated raids on taxpayers money failed to deliver a resurrection)

o also, a gentleman from !it;erland, !ho came to set up a business,sees an opportunity in supplying fertiliser to the plantation industry In timethis enterprise migrated into importing !iss pharmaceuticals, became the

eneral ales %gent for !issair, got into plantation management andtoday is one of the leading conglomerates in .olombo, proving regulardividends to its !iss investors #he .eylon =ertiliser .orporation on theother hand bit the dust and is being propped up by taxpayer money for no

&no!n and perceived bene9t to the taxpayer #he list can go on and on istory is replete !ith 67s crashing to theground &ept on arti9cial life support by taxpayers money !hile privateenterprises in the same sectors adapt to changing conditions and ma&epro9ts and pay taxes) 6f course there are the exceptions !hich ma&e therule, the tate >lantations .orporation and the .#* !ere run pro9tably atone time, under professional and disciplined managers + but for ho! longF

#hey !ere made unsustainable due to corruption, do!nright theft of public

assets but &ept unchanged using taxpayers fundsunset clause

In reality !e cannot hope for a !orld !ithout 67s #hey are needed and insome instances are classic examples of cutting edge management bestpractice and governance ingapores tate o!ned strategic investmentcompany, #emase& .orporation comes to mind *ut in a populistdemocracy, !here management of 67s are re!ards to political acolytes


14/17

and cronies, rather than assignments to competent managers, the onlyviable !ay to protect taxpayers money is by building in !hat is &no!n as a?sunset clause into the originating document of the 67, be it a %rticles of%ssociation of a .ompany or a tatute or a .ooperative 6rdinanceIn public policy la!, a sunset provision is a measure !ithin a statute,regulation or other document incorporating an entity that the la! shallcease to have e:ect on a speci9c date, unless further action is ta&en toextend the lifetime of the entity unset provisions have their root in theAoman la! of the /andate #heory % mandate !as issued by the enate inAome, to collect taxes, raise a legion, etc for a 9xed timeframe and expiredthereafter, and had to be rene!ed by the Aoman enate #he senators !ere!ary of the proconsul having an open ended, uncontrolled and unlimitedmandate

o! do you translate this sunset theory into todays issue ri -an&a faces!ith 67s !hich are loss ma&ing parasites living forever on taxpayersmoney and being + proverbially + ?no bloody use at allF #he most sensible!ay to do it !ould be build in a mandate say for 9ve year lifetime !hen the

67 is created and provide that the managers of the 67 at the expiry ofthe 9ve year period !ill have to come before a panel of peers and provetheir !orth, the positive !or& they have done and (ustify the furtherextension of the mandate

#he panel of peers could be managers dra!n from private sectorinstitutions such as .hamber of .ommerce, the 6rganisation of >rofessional%ssociation and the Institute of Birectors, etc #he hearing should be publicand sta&eholders in the sector should be allo!ed to come and 'uestion themanagers of the 67 on their performance or underperformance #here!ould have to be rules of procedure for 'uestions to be raised, notice to begiven in advance, etc

#o give an example, say the 67 is the #ourist Bevelopment %uthority, the

other sta&eholders in the sector + travel agents associations, hotel o!nersassociations, trade unions, professional groups such as hotel managersassociations, tour guides associations + should be allo!ed to come beforethe panel and 'uestion the performance of the 67 >ublic hearings andpublic participation !ill ensure transparency, and the managers of theentity !ill have to really ma&e a strong case for their future continuity>eer >anels


15/17


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regarding the Indian %rmy maintained Aegimental olf .ourses) #he issue!as, does the >arliament of India, !hich votes taxpayers money to theIndian %rmy to defend /other *harath from external enemies, also permitthese funds being utilised to maintain golf courses for %rmy o8cers playinggolfF #he same 'uestion arises here

ome of these may be laudable enterprises .ertainly it is conceded that avictorious %rmy cannot be sent home, even though !ith full pension, after!inning a !ar 6ne recalls the infamous ?/arch on $ashington bydemobilised I Joes after $orld $ar II, protesting that they had no (obs #heC Befence Bepartment had to deploy armed cavalrymen to brea& up thedemonstrations *ut are these camouDage enterprises !hich results in thecro!ding out of private enterprise sustainable in the long runFIt !as reported at the >ath9nder seminar that the - %rmy has raised fourne! civil engineering regiments post !ar %nyone in the privateconstruction industry should sit up and ta&e notice) #here is a strongargument that there should be a sunset cause for all these militarycamouDage enterprises too It is conceded that private enterprises may notsee a viable return on investment in running hotels in post conDict regionsimmediately #he military might have to (usti9ably step in, in the immediatepost conDict timeframe, to initially provide these facilities=or example if there is no place for local tourists visiting >rabh&arans

destroyed home, to buy a cup of tea, even, there can be no ob(ection to thenearby military camp opening a tea bouti'ue, temporarily *ut should themilitary step bac& at some time and let private entrepreneurs, !ho paytaxes, and are not subsidised by the taxpayer, step inFIt is claimed that in ermany after $orld $ar II, the %merican and *ritishand =rench forces had to set hospitality and utility services for visitors asthere !as no one else to do it in the ;ones controlled by themE ermanyseconomy had been bombed into the dust by the %llied *omber .ommands

air raids *ut their intervention !as time bound, and as soon as indigenouserman entrepreneurs could set themselves up, the %rmy retreated to their

barrac&s #he sunset &ic&ed iniven the ri -an&a experience !ith loss ma&ing 67s, there is a strong

case for a sunset process, >eer >anel Aevie! and >arliamentaryrecommendations, and maybe listing on the stoc& exchange of all of such

67 and camouDage enterprises to avoid the haemorrhaging of taxpayers


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money#he !riter is a la!yer, !ho has over @0 years of experience as a .76 in

both tate and private sectors e retired from the o8ce of ecretary,/inistry of =inance and currently is the /anaging Birector of the ri -an&a*usiness Bevelopment .entre 3

Documents

Sunset for State Enterprises