Prof. Amal Kumarage, Dr. Saman Widanapathiranage and Mr. Sarath Jayatilaka's insights on $480 million MCC compact projects

The Advocata Institute hosted a public forum on the MCC compact “එම්.සී.සී. ගිවිසුම ගැන ඇත්ත නැත්ත” on the 19th of September, with the aim of separating fact from fiction around this hotly debated topic.

By 2030, the number of vehicles on our roads will triple. Prof. Amal Kumarage, the Head of the Dept of Transport and Logistics Management of the University of Moratuwa, emphasizes the immediate need to improve our public transport systems.


Colombo’s traffic problem has become a serious issue in the past few years. Dr. Saman Widanapathiranage, Deputy Director, Highway Designs at the RDA explains that by 2030, our average speed around Colombo will fall to at least 10 km/h.


Mr. Sarath Jayatilaka, Former Deputy Surveyor General, explains the $67 million land component of the MCC Compact.


Link to full video: https://youtu.be/FZKveXeXQJU

MCC ගිවිසුම ගැන ඇත්ත නැත්ත - Event Video

The Advocata Institute hosted a public discussion on the MCC Compact with technical experts, MCC representatives and the Government to separate fact from fiction around the Compact.

The event was held on the 19th of September at the Lighthouse Auditorium and Lawns.

Local experts offer insights on $480 million MCC compact projects

First appeared in Sunday Morning, Sunday Observer, News First, Daily Mirror and Economy Next

The Advocata Institute hosted a public forum on the MCC compact “එම්.සී.සී. ගිවිසුම ගැන ඇත්ත නැත්ත”  on the 19th of September, with the aim of separating fact from fiction around this hotly debated topic. 

Since 2015, Sri Lanka was engaged in a competitive selection process for the  Millennium Challenge Corporation (MCC) grant. In April 2019, Sri Lanka was awarded a grant from the Millennium Challenge Corporation (MCC) for USD 480 million. Since the awarding  of the Compact, concerns around the agreement had gone unaddressed.

To help provide a public platform for the addressal of these concerns, The Advocata Institute convened an open discussion with experts involved in designing the projects for the MCC Compact, Prof. Amal Kumarage (Head of the Department of Transport and Logistics Management, University of Moratuwa); Dr. Saman Widanapathiranage (Deputy Director, Highway Designs at the Road Development Authority (RDA) and Mr. Sarath Jayatilaka (Former Deputy Surveyor General); MCC representatives, Ms. Jenner Endleman (Sri Lanka Resident Country Director - Millennium Challenge Corporation) and the Government, Dr Jagath Munasinghe (Chairman, Urban Development  Authority). 

The experts highlighted the technical details of the Land and Transport Management projects in the grant followed by a Q&A with representatives of the MCC and the Government. 

Prof. Amal Kumarage explained that out of USD 350 million allocated to the Transport Project, USD 50 million would be spent on Bus Services Modernization. He stated that by 2030, the number of vehicles on our roads will triple and it is crucial for our transport system to reflect this. 

Dr. Saman Widanapathiranage (Deputy Director, Highway Designs at the Road Development Authority (RDA) discussed the Advanced Traffic Management System component in the Transport Project. He stated how average speed in Colombo will reduce to 10kmph by 2030, communicating the urgency of improving the city’s traffic management. 

Mr. Sarath Jayatilaka (Former Deputy Surveyor General) detailed the Land Project in the compact which amounts to USD 67 million of the total grant. Since the Sri Lankan government owns 82% of all land and the remaining 18% land is privately owned, he emphasised the importance of developing a State Land Bank to improve land administration policies. 

Joining the Q&A, MCC Sri Lanka Resident Country Director Ms. Jenner Endleman answered some concerns around the compact. To the question of whether the MCC Compact is linked to military agreements, she answered that MCC has no relation to ACSA or SOFA and that the MCC Compact was ready for signing before the renewal of these military agreements. Another question posed was why the Compact was not available in the public domain and that she stated that itis the MCC’s policy to not share the document prior to it being signed by the recipient government. However, she urged concerned citizens to reach out to the Government to release these documents, as they are in a position to share the agreement. 

“In our 15 year history, we’ve never had a situation where an eligible country has come to us and proposed a grant, our board has accepted it, and that same partner country has not approved it” stated Mr. Endleman addressing questions from the audience. 


69th Anniversary Oration of the Central Bank of Sri Lanka by Prof. Razeen Sally

Prof. Razeen Sally, Associate Professor of the Lee Kuan Yew School of Public Policy of the National University of Singapore delivered the 69th anniversary oration at the Central Bank of Sri Lanka.

Inviting media to COPE meetings will help increase accountability of COPE and SOEs: Advocata

State owned enterprises are a vehicle of large scale corruption in Sri Lanka that hasn’t caught public attention. Advocata’s latest report on SOEs highlights some of these abuses documented by COPE.

Adocata’s 2019 report on The State of State Owned Enterprises, highlights some of these abuses documented by COPE. Opening meetings to the public is a good first step to ensure that people understand the massive abuses by SOEs done by using taxpayer money! We urge the government to consider further reform to strengthen COPE and promote accountability of SOEs
— Dhananath Fernando, Chief Operating Officer Advocata Institute

In an attempt to promote transparency and accountability, the hearings of the Committee on Public Enterprises (COPE) will be open to the media. The government has enforced this timely initiative in a greater attempt to promote accountability of State Owned Enterprises. The Speaker, Hon. Karu Jayasuriya MP has officially announced the ceremony to mark the opening of the COPE sessions to the media, and should be commended for this decision.

The COPE is a key committee that oversees State Owned Enterprises (SOEs) in Sri Lanka.  The duty of the Committee is to examine the accounts of the Public Corporations and of any business undertaking vested in the government. Although their reports thus far have lacked comprehensiveness, they have examined a limited number of issues in a few institutions, and are a devastating critique on the state of governance. 

Advocata Institute’s 2019 report, “The State of State Enterprises: Systemic Misgovernance”, highlighted the imminent need of strengthening the COPE and COPA (Committee on Public Accounts; the second financial committee whose duty is to examine the accounts showing the appropriation of the sums granted by Parliament to meet the public expenditure). The report recommended that COPE and COPA proceedings be opened to the media and the public in efforts to enhance the transparency of financial management of public institutions and hold state institutions to account. 

Advocata Institute urges that further reform be considered seriously in efforts to improve structural failings and misgovernance that promote a breeding ground for corruption in Sri Lanka’s state sector. We insist that the government opens committee proceedings to non parliamentarians;  specifically for technical experts, to bring in industry knowledge and scrutiny. 

Key Points:

  • Advocata welcomes the decision to open COPE meetings to the media.  

  • The duty of the COPE is to examine the accounts of the Public Corporations and of any business undertaking vested in the government.

  • Advocata Institute’s 2019 report, “The State of State Enterprises: Systemic Misgovernance”, highlighted the imminent need of strengthening the COPE and COPA.

  • The report recommended that COPE and COPA proceedings be open to the media and public in attempts to promote transparency and accountability.

  • Advocata urges the government to further consider reform to strengthen COPE and COPA.

Aneetha Warusavitarana on pension reform

Advocata Research Analyst, Aneetha Warusavitarana joined Biz 1st In Focus to discuss the window of opportunity for pension reform, given that new labour reforms are in dicussion.

We all know that the government sector pension is non-contributory – the entire burden of payment is shouldered by the government – and given our fiscal position, this is an area where reform should be seriously considered.

However, with new labour reforms in discussion, there is now a window of opportunity for the government to bring in a much needed contributory pension scheme!

Aneetha Warusavitarana on the fiscal implications of state sector pensions

Advocata Research Analyst, Aneetha Warusavitarana joined Biz 1st In Focus to discuss the fiscal implications of providing pensions for state sector employees. Unlike private sector EPF/ETF payments, government sector employees do not contribute a single rupee towards their pensions. In 2018 itself, the Finance Ministry spent Rs. 194 billion on pension payments. She explores the question of rewarding inefficiency that plagues the government sector with a guaranteed (tax-money funded) pension.

Advocata commends the government’s decision to shut down SaluSala - a State Owned textile Enterprise

First appeared in Daily News, Daily Mirror, Daily FT, Lanka Business Online, Economy Next, Republic Next, Colombo Page and Sunday Observer

Advocata Institute commends President Maithripala Sirisena’s directive to shut down the loss-making, state-owned handloom enterprise Salu Sala. While we commend this decision, we are also anticipating the official gazette enacting this statement.

The SaluSala, now a white elephant to society, was once the only state textile trading enterprise in the country. As the only provider of textile during the closed economy, SaluSala received heavy protection.

In 2011, the First Committee of Public Enterprises Report (COPE) revealed that for the year 2009/2010, Lanka SaluSala Ltd. has made a loss of Rs. 30 million. The reason for this loss, as identified by the report, was due to salaries paid to staff who had been sent on compulsory leave during the restructuring process of the organisation. However, Advocata has been unable to track the financials of Lanka SaluSala thereafter as there has been no Annual Reports or Performance Reports published and available to the public.

‘A lack of accountability is leading to flagrant abuse within SOE’s. The government must act urgently to prevent it spiraling out of control. Salu Sala is only one of many examples”
— Ravi Ratnasabapathy - Resident Fellow, Advocata Institute

Advocata Institute strongly believes that the state should have no role in running business enterprises using taxpayer money,  particularly in industries with enough private investment and competition. Advocata encourages the government to look at other ‘white elephant’ State Owned Enterprises (SOEs), and divest and exit industries that serves no strategic purpose. Out of 527 SOEs identified by Advocata’s 2018 State of State Enterprises report, only 54 are classified as being ‘strategic’ by the government.

Whilst the policy debate in Sri Lanka on SOEs has focused on ‘privatisation’, many of  Sri Lanka’s SOEs have no commercial purpose, riddled with corruption and mismanagement and, in the core justification of existence, is not attractive to private investors looking for profit making ventures. Advocata urges the government to exit enterprises of  this nature and release the valuable resources they occupy into more productive sectors of the economy, while awarding fair compensation to public sector employees of these enterprises.

In the case of Sal Sala, the Treasury has allocated Rs. 340 million to pay compensation for 217 employees under a voluntary retirement scheme. This is a model the government should consider adopting in cases where paying a compensation is more economically viable than continuing to keep a loss making enterprise afloat. Lanka SaluSala is not the only State Owned Enterprise (SOE) that is a fiscal strain on Sri Lanka’s Economy. Non Strategic SOEs like Sri Lankan Airlines, Lanka Sathosa and Agriculture and Agrarian Insurance Corporation are in need of immediate reform.

Source: Department of Public Enterprises, Performance Reports (2015-2017) and Ministry of Finance - Annual Report (2018)

Source: Department of Public Enterprises, Performance Reports (2015-2017) and Ministry of Finance - Annual Report (2018)

Key Points

  • Lanka SaluSala, a state owned handloom enterprise will be shut down as per orders by the President.

  • Advocata Institute commends this decision and is anticipating the gazette formally enacting this order.

  • The Treasury has allocated Rs. 340 million to pay compensation for 217 employees of SaluSala under a voluntary retirement scheme.

  • SaluSalu has been a “white elephant” for years, and the government has failed to keep track of the financials for this enterprise.

  • The first COPE report in 2011 revealed that Lanka SaluSala Ltd. has made a loss of Rs. 30 million for the year 2009/2010. Annual Reports have not been published thereafter, and the Ministry of Industry and Commerce, which is the designated line ministry has also not published any information on the performance of Lanka SaluSala thereafter.

  • SaluSala is only one of the many SOEs fiscally straining Sri Lanka’s economy, and it is only one of the many SOEs that the government has failed to monitor financials for. Out of the 527 state owned enterprises identified by the Advocata Institute, the government regularly tracks the financials of only 54.

  • While the Advocata commends the government’s decision to close SaluSala, it is equally important that the government conducts a survey of all state owned enterprises in order to establish a comprehensive system of financial monitoring.

  • Other non-strategic loss making State Owned Enterprises in need of immediate reform includeSri Lankan Airlines, Lanka Sathosa and Agriculture and Agrarian Insurance Corporation.

Ability of Parliamentary Committees questionable – Advocata

Republic Next mentioned Advocata in a recent article on misgovernance of SOEs in Sri Lanka.

The Advocata Institute, a Colombo-based think tank, is questioning the ability of various oversight committees set up by Parliament to look into governance issues in Sri Lanka.

The report, which looks at the State Owned Enterprises (SOEs), is highly critical of these institutions that are draining the Treasury of billions of rupees each year.

Advocata says the way Members of Parliament are elected is an issue. MPs align with wealthy election backers who provide campaign support in return for political protection or rewards. Thus, those elected are politicians with “access to cash and manpower – not intellect or ability.”

Although politicians will pursue their own interests, an effective governance system should apply the brakes on the worst of those impulses. Parliament, through the aforementioned committees, should be doing this, but is seriously underperforming, the report says.

Although Parliamentary Committees such as the Committee on Public Enterprise (COPE) and the Committee on Public Accounts (COPA) conducted investigations that shed light on important issues – including the much talked about Bonds Scam – Advocata says these committees could do more to scrutinise public funds. These committees do not appear to have sufficient expertise to make concrete recommendations to right the wrongs in Government.

The report notes that “serious deficiencies exist.” With the current political uncertainty, it says that “engineering crossovers in return for political office reduces parliament to a rubber stamp and the committee system is weak.” The report commends the current government for the major overhaul of the committee structure, which it says makes them “much better geared to scrutiny and accountability.”

Structures aside, the report says that the performance of these committees depends on the calibre of the MPs.

Advocata recommends that experts who are not MPs be added to these committees so that they could function better. “Unfortunately, it does not seem as if we have the necessary quality of MPs in sufficient numbers to make the reformed system perform. Aside from capacity, there is little incentive for MPs to take committee work or parliament seriously. Many don’t even attend,” it says. Publicly available information shows that less than half the MPs attended at least 75% of the sessions. Even those who attended remained in the house only for the first hour.

Advocata also found that “COPA/COPE are under-resourced; their reports complain of a lack staff (particularly audit) and proper IT systems. Further, the government is not required to respond to the recommendations of these committees within any stipulated period of time, leaving the accountability loop open.” Advocata also adds its voice to the clamour to make the COPA and COPE hearings open to the media.

The picture that emerges from the Advocata report is bleak. It concludes that the “political process incentivises corruption. A weak governance regime means there is little accountability and few checks on government spending. In addition, limited technical capacity means policy is open to “capture” by special interests. The combination is deeply dysfunctional: a parasitic system that transfers wealth to the politically connected through corruption and rent-seeking.”

Download full report: https://www.advocata.org/state-enterprise-srilanka

Media mention on Reuters of Advocata on taxes on sanitary napkins

Thomson-Reuters Foundation mentioned Advocata in a recent article on period poverty and sanitary napkin affordability, published on April 04, 2019.

An excerpt from the article:

“Should a country tax women on something they have no control over? As the world celebrates International Women’s Day, in Sri Lanka women’s health as well as education is in jeopardy due to high taxes on women’s sanitary products, say activists.

“Period poverty has hit global headlines in recent years, with statistics showing that even in a wealthy Western country like Britain, one in 10 girls have been unable to afford sanitary products. …In Sri Lanka, the problem is particularly acute because sanitary products are so heavily taxed - until last September, the levy on imported pads was more than 100 percent. It has since been reduced to about 63 percent and Sri Lanka’s finance minister, Mangala Samaraweera, told the Thomson Reuters Foundation he was looking into how taxes on sanitary products could be reduced further.

But Anuki Premachandra, head of research communication at The Advocata Institute, an independent policy think tank, said the issue still wasn’t being given the importance it deserved. “People are enraged about the cost of carrots, but when it comes to taxes on sanitary napkins, they dismiss it as a women’s issue,” she said.”

Corruption and patronage culture rampant

Republic Next mentioned Advocata in a recent article on misgovernance of SOEs in Sri Lanka.

State Owned Enterprises (SOEs), which have cost the state mammoth amounts of state funds over the past few decades, are victims of a patronage culture fostered by corrupt politicians, says a new report on the state of these organisations released by Colombo-based think tank Advocata.

The report quotes Finance Ministry Secretary Dr R.H.S. Samaratunga as saying that successive Sri Lankan governments have pumped a colossal Rs.1, 150 billion into the upkeep of these SOEs up to 2017.

This is money that could have been spent on developing schools and hospitals as well as maintaining much-needed infrastructure.

The report says that lifting limits on political campaign spending and abolishing transparency of those money trails in 1978 opened the floodgates of corruption.

The report points out that “wealthy backers, some connected to the underworld, provide labour and fund campaigns in return for political protection or rewards.” Because of this culture, the people who end up getting elected to office are those with “access to cash and manpower – not intellect or ability.”

Naturally, this means that the state’s technical capacity to formulate policy and implement them are insufficient. The report notes that “the concept of independent policy analysis does not exist, leaving a vacuum vulnerable to capture by special interest groups.”

After the Member is elected, they try to recover their “investment” in the political venture or start building up a war chest to be re-elected. He or she also has to provide jobs and wherewithal to their supporters and for this, SOEs provide opportunities for the politicians to stuff these enterprises with staff that exceed requirements. In one egregious incident, the State Engineering Corporation recruited a mind-blowing 451 persons to fill 41 vacancies in December 2015. That is more than ten times the required number of persons, according to inquiries conducted by Parliament’s Committee on Public Enterprise (COPE).

The reason why the SOEs are a soft target for the corrupt is weak governance practices, the Advocata report says.

The report suggests that adopting “comprehensive corporate governance practices is a route that many countries have taken to strengthen the accountability of SOEs. These governance practices strengthen the governing bodies that oversee and control (shareholders or owner meetings, board and management, internal monitoring structures), define clear rules of engagement between the different actors, and increase transparency and accountability towards the stakeholders.”

Download full report: https://www.advocata.org/state-enterprise-srilanka

Media mention of Advocata on taxes on sanitary napkins for IWD 2019

Sunday Observer mentioned Advocata in a recent article on sanitary napkin taxation for International Women’s Day, 2019.

An excerpt from the article:

“Should a country tax women on something they have no control over? As the world celebrates International Women’s Day, in Sri Lanka women’s health as well as education is in jeopardy due to high taxes on women’s sanitary products, say activists.

“In a country with 4.2 million menstruating women and a population that is 52 per cent women, you’ would think wewould know better than to tax a woman on something that is beyond her control; but we do not’’ said Anuki Premachandra of the Advocata Institute. Anuki who serves as the Manager-Research Communication at Advocata had been canvassing on the sanitary pad problem during the past couple of months.

“Import taxes on sanitary napkins in Sri Lanka are as high as 62 per cent and what our policy makers fail to realise is that this is a tax on a woman’s biological process that she has no control over. Are we still a society that fails to provide a woman access to a basic necessity? Is it not time we said times up Sri Lanka?” said Anuki.”

Ignorance and corruption bedevils state enterprises

Republic Next mentioned Advocata in a recent article on misgovernance of SOEs in Sri Lanka.

The Sri Lankan state does not know how many enterprises it runs, reveals a report on State Owned Enterprises (SOEs) released by the Colombo-based think tank Advocata.

Titled “Sri Lanka’s state-owned enterprises Systemic Misgovernance: A discussion”, the report delves into the state of these organisations and proposes policy reforms to improve governance.

In the foreword, the researchers point out that a “major roadblock identified in the report is the lack of an official, all-encompassing list of SOEs, their subsidiaries and sub-subsidiaries. The Advocata Institute has found references to over 400 SOEs, but this cannot be verified against any government source.” The Department of Public Enterprise has the most comprehensive list, consisting only 127 SOEs. Some 50 of these SOEs are considered “strategic” and are closely monitored by the Treasury.

The report also found that enumerating SOEs was problematic and says “this problem is compounded by the fact that the government has a very loose definition of SOEs. To address the problem, this report provides a working definition of what an SOE is, for the sake of clarity.”

The report goes on to explore the structural issues at the core of Sri Lankan SOEs. Elaborating on these issues, the report illustrates how structural issues lead to poor governance, which allows SOEs to continue to function as loss-making entities.

The report points out that unlike private enterprises, SOEs are run with taxpayer money and when they incur losses, the Government – or in effect the taxpayer – has to pay for it. Because of this, SOEs are a drain on the Treasury.

Mismanagement and outright looting bedevils these enterprises as they are crammed with workers who are supporters of politicians and not staffed with professionals who could make them efficient and profitable, the report finds.

“SOEs are ultimately owned by citizens but run by managers who are controlled by politicians. Politicians determine or otherwise influence the appointment of key management and must hold the managers accountable”, the report adds.

The report compares SOEs to private sector companies, where shareholders have invested their own money in a venture. “Unlike shareholders, the politicians have not invested their money in the business. As they have no stake, there is no particular interest in ensuring it is well run. However, politicians do have incentives to direct SOEs to achieve economically inefficient objectives for political purposes, giving rise to political costs. These may be benign if policies enhance social welfare at the cost of shareholder value. However, more often than not, they are malign and favour political allies at the expense of public welfare”, it points out.

Download full report: https://www.advocata.org/state-enterprise-srilanka

Media coverage on Asia Liberty Forum 2019

The Advocata Institute co-hosted Atlas Network’s Asia Liberty Forum earlier this month from the 28th of February - 01st of March at the Hilton Colombo. The event was graced by 250+ academics, intellectual and leading economic and policy thinkers from over 30 countries. The Freedom Dinner on the 28th of February saw the presence of leading political dignitaries as well. The forum focused on economic challenges facing the Asian region and way forward.

Sunday Observer - Advocata Institute to host Asia Liberty Forum

“Over 200 leading academics, policymakers and intellectuals from over 30 countries will participate in the Asia Liberty Forum 2019 in Colombo to discuss challenges facing the Asian region and to learn from each other on how to advance free-market reforms. The Asia Liberty Forum is an annual event by the United States based Atlas Network, co-hosted in partnership with the Advocata Institute.”

Read full article

Lanka Business Online - Advocata Institute to host Asia Liberty Forum 2019 in Sri Lanka

“Over 200 participants, comprising leading academics, policy makers and intellectuals from over 30 countries will come together in Colombo, Sri Lanka for the 2019 Asia Liberty Forum to discuss challenges facing the Asian region and to learn from each other on how to most effectively advance free-market reforms.”

Read full article

Daily News - Asia Liberty Forum co-hosted by Advocata Institute, Atlas Network today

“The Asia Liberty Forum brings together over 50 speakers, over 275 thought leaders and intellectuals from 40 different countries to discuss challenges facing the region and to learn from one another how to effectively advance market-oriented reforms. The annual Asia Liberty Forum is hosted by the Atlas Network and co-hosted by Advocata Institute in Sri Lanka this year.”

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Daily FT - Public events at Asia Liberty Forum announced

“The annual Asia Liberty Forum is hosted by the Atlas Network and co-hosted by Advocata Institute in Sri Lanka this year. With the objective of making this year’s forum affordable and accessible to all, Advocata Institute is opening up two sessions to the public, with free admission.”

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Business World - Capitalism and freedom in Asia

“The annual Asia Liberty Forum (ALF) 2019 conference is held this week February 28 to March 1 in this South Asian country. To discuss and promote capitalism and free market policies may look ironic in a country that is officially named “Democratic Socialist Republic of Sri Lanka.” Yet this country has more pro-market policies than many supposedly capitalist Asian economies.”

Read full article

Sunday Observer - Expert advocates economic reforms for five years

“Sri Lanka needs to implement much needed economic reforms at least for the next five years, particularly to address the debt burden. It is the responsibility of governments to place the economy on a sound footing to revive growth and to accrue benefits to the people, Executive Director, Lakshman Kadirgamar Institute of International Relations and Strategic Studies, Dr. Ganeshan Wignaraja told the first ever Asia Liberty Forum in Colombo last week.”

Read full article

Daily FT - Recipe for SOE reform

“Speaking at the launch of the ‘State of State Owned Enterprises 2019’ report compiled by local think-tank Advocata, Resident Fellow Ravi Ratnasabapathy recapped the significant role played by SOEs in the Sri Lankan economy. He pointed out they were vulnerable to mismanagement and corruption because of potential conflicts between the ownership and policy-making functions of the Government and undue political influence on their policies, appointments, and business practices.”

Read full article

What is the state of Sri Lanka's state enterprises?

Sri Lanka has a total of 527 State Owned Enterprises out of which regular information is only available for 55. These SOE's accumulate billions of losses annually due to sheer mismanagement. The precedence of corruption in the highly bureaucratic systems that govern SOEs are also a case for alarm. What is the state of our state owned enterprises?

At this year's Asia Liberty Forum, 2019, we are explored this topic in a discussion and public talk by Ravi Ratnasabapathy, Suresh Shah, Thilan Wijesinghe and Dr. Malathy Knight; moderated by Dr. Nishan de Mel.

Report out now: https://goo.gl/XogBvY

How can Asia embrace its urban future?

Many Asian countries vastly underestimate the levels of urbanization in their countries. Yet Cities are the engines of growth and prosperity. How can we embrace our urban future? What are the issues and challenges? 

A panel discussion by Pritika Hingorani, Hon. Dr. Harsha de Silva and Iromi Perera; moderated by Anushka Wijesinha at the Asia Liberty Forum, 2019.

What are the consequences of a depreciating currency?

The past few months have witnessed rapid currency depreciation across Asia, causing a significant amount of concern across economic sectors. What are the reasons behind these changes, what is their real impact on Asian economies and its people? A panel discussion by Dr. Ross McCleod, Dr. Cris Lingle and Dr. Ajay Shah; moderated by Murtaza Jafferjee at the Asia Liberty Forum, 2019.

Is Sri Lanka afraid of opening up to trade?

Sri Lanka was one of the first countries in South Asia to open up it’s economy in 1978. Four decades later however, it’s one of the least open economies in the region. At this year's Asia Liberty Forum, 2019, we are explored the question "Are we afraid of opening up?" in a public talk and panel discussion by Prof. Rohan Samarajiva, Lakshman Athukorala, Dr. Charitha Herath and Chandi Dharmaratne; moderated by Nisthar Cassim.

Perverse incentives and a lack of accountability lead to rampant corruption in State

A new report by The Advocata Institute, titled “The State of State Enterprises in Sri Lanka: Systemic Misgovernance” identifies the systemic issues that plague state-owned enterprises (SOEs) leading to substantial losses. This flagship publication builds on the analysis and data from the first ‘State of State-Owned Enterprises’ report which was released in 2016.

The essays in the report attempt to analyse the causes for the structural weaknesses and propose simple recommendations to establish basic central government control over SOEs and improve accountability.

Figure 1

Figure 1

The report identifies the lack of an official government definition of state-owned enterprises as a point from which many systemic issues arise. The lack of a definition means that the government does not have an authoritative list of all SOEs. To fill this information gap, the Advocata Institute has compiled a list of all known state enterprises, their subsidiaries and their subsidiaries.

Figure 1 provides a quick overview of the data, emphasizing the excessive number of state enterprises.

The structural problems of state-owned enterprises emerge from the problem of multiple actors (bureaucrats, politicians and citizens) with conflicting interests. This makes state owned enterprises vulnerable to mismanagement and corruption because of potential conflicts between the ownership and policy-making functions of the government, and undue political influence on their policies, appointments, and business practices.

The report finds that internal control, monitoring and governance frameworks appear inadequate to deal with these problems – of the 527 entities regular information is only available for 55. Even obtaining a complete list of entities proved to be a challenge. Financials are routinely late and only a minority obtain ‘clean’ audit reports. In 2017, the total losses incurred amounted to LKR 87.78Bn. To put this value in context, the government budget allocated LKR 44Bn for Samurdhi payments in the same year.

Extracts from reports of COPE and the Auditor General which are included in Advocata’s report highlight repeated instances of fraud, mismanagement, corruption and negligence. The issues no longer appear to be isolated incidents of opportunistic behavior by individuals or occasional lapses in control but point to deeper, structural weaknesses. While internal control and accountability mechanisms are important in checking abuses, they are insufficient in themselves.

The report elaborates on how a trend for SOEs to be incorporated as limited liability companies allows politicians to bypass treasury or budget restrictions and evade parliamentary accountability. Complex corporate structures provide a convenient shroud for abuse. A review of the reports of the Auditor General and the Committee on Public Enterprises paints a dismal picture of systemic failures of governance leading to gross misappropriation of public funds.

The reports concludes with three main recommendations:

  1. Compiling a comprehensive list of all SOEs and setting basic reporting procedures

  2. Strengthening COPE and COPA

  3. Implementing the OECD Principles of Corporate Governance

“A lack of accountability is leading to flagrant abuse within SOE's. The Finance Ministry must act urgently to prevent it spiraling out of control” says Ravi Ratnasabapathy, Resident Fellow of Advocata and co-author of the “State of State Enterprises in Sri Lanka” report.

The immediate antidote to corruption is increasing and improving transparency and accountability. The ideal reform of the recommended three to address the problems that plague are SOEs is to introduce and enforce the OECD Guidelines on Corporate Governance.


Sri Lanka has a total of 527 State Owned Enterprises out of which regular information is available for only 55. The inefficiencies and mismanagement which riddle our SOEs are explored in the Advocata Institute's new report  “State of State Enterprises in Sri Lanka- 2019"

To read more on SOEs and download full report visit www.advocata.org