ECONOMYNEXT – Sri Lanka President Ranil Wickremesinghe has called out the main opposition Samagi Jana Balawegaya for rejecting the privatization strategy of R Premadasa in favour of Rajapaksa policies.
He said the leader of the opposition Sajith Premadasa and Lakshman Kiriella had said to privatize loss making state enterprises but not to sell profitable ones.
“Privatization or peopleisation was started under President Ranasinghe Premadasa,” Wickremesinghe said.
Under ‘peopli-sation’ up to 10 percent of the company shares were given free to workers of the organization, on a formula based including on their service.
“I also started it as industries minister,” Wickremesinghe said. “The first company that was privatized was United Motors. That was profitable. Second Ceylon Oxygen. A profitable company. Leather Corporation – profitable. Tyre Corporation – profitable. Lanka Milk Foods – profitable.
“Lanka Distilleries – profitable. Then we did plantations. Some were loss making.
“In 77 J R Jayewardene opened the economy. President Premadasa took the next step in 1989.
“That was to remove some of these from government control. Some areas were given to the private sector.
“We took China as an example. The program started by Deng Xiaoping. We took it forward. So we thought of doing the profitable ones.
Usually a 60 percent stake was sold to a strategic investors and 30 percent, after giving 10 percent to workers was sold to the public in an initial public offer.
The secondary market prices soared above net asset value if investors judged the strategic buyer to be able to add value, giving large profits to workers. Ceylon Oxygen’s 15 rupee share hit 125 rupees.
The strategic stake of Distilleries was sold on the stock market an an all or nothing stake allowing investors to bid. Harry Jayewardene’s Stassen group bought a 10 rupee share for 110 rupees. In the IPO shares were split for 1 rupee to make it accessible for small investors.
The stock market boomed and foreign investors and investment banks set up broking houses while market capitlization went up. Similar strategies have been followed in Vietnam where state banks and other listed firm drove the Ho Chi Minh City stock market.
“Yesterday, Mahinda Rajapaksa, our ex-President said only the loss-making ones should be sold,” President Wickremesinghe said.
“Today the opposition leader is also saying to his support that only loss-making ones should be sold.”
Looking at Rajapaksa and smiling. “Here is a good follower for you.”
Sri Lanka’s elected ruling class use state enterprises are used to get extra vehicles, flout financial regulations, put henchmen as chairman and directors and for procurement fraud, critics say. (Colombo/Nov23/2022)