My thoughts on Private companies and Privatization in Sri Lanka

This is my thought on privatization in Sri Lanka,

Sri Lankan government spends large amounts of money for welfare, free education and free healthcare services. But is it the role of the government to sell clothes, run groceries and maintain dairy farms at the expense of taxpayers’ money?

State commercial enterprises are not run by market based principles and State owned companies are known for corruption, inefficiency, mismanagement and political appointments instead of recruiting based on qualifications. This has resulted in these state-owned companies taking massive losses and the ones who have to pay for the damages are the taxpayers of Sri Lanka.

Private cooperation’s aim to make profits as much as they can but they also need to keep their customers satisfied. Workers and officials can’t do as they please in Private companies and mismanagement and inefficiency reduce profits and this is not tolerated by the company. The profits of private companies depend on how much their customers are satisfied. This not only makes them efficient but friendly to society as well.

Another advantage of privatization is competition.
When a sector of economy is monopolized by the government it is stagnant and it is up for the government to improve it or not as the people have no other options. When we add private companies to that place they try to increase their profits as much as possible and for that they need to attract customers and keep them satisfied or another company will attract those customers away from you. In order be competitive the companies use innovative methods and try to improve themselves as well as their services and products. This way that sector will keep improving and changing with the companies bringing something and unique to counter their rival. But wait! Does that mean that the state owned companies need to leave from that sector? The answer is NO. With private companies giving a lot of competition the state owned companies if they decide to say in that sector will have to reform and improve themselves as well. This way they also become competitive and will be profitable.

One of the best examples of successful privatizing in Sri lanka is SLT which is almost half owned by Global Telecommunications Holdings N.V. of Netherlands and the other half is owned by Government. The small balance is traded publicly.And SLT has been much more profitable than other non-privatized companies.

By taxing these really profitable companies the government can earn a lot and save a lot of money that were spend on loss making enterprises. It allows the government to allocate more money towards welfare and public infrastructure and development.

However private cooperations should be monitored and their actions should be always within the law. The government should also take actions to stop politicians interfering in them and bringing crony capitalism.

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Comments 3

  1. Profile photo of admin

    It’s a good thought . However privatization is like a bad word in srilankan vocabulary. Also privatizing is bit 90s I guess. but what you said was correct. with this insufficient and miss-managed Government organizations are wasting lot of public resources. Privatization may solve these for a while. then they will start to make decision only based on profit. Like what’s happening now in most of capitalized countries. They don’t care about the people anymore. Too much of anything is really bad as well. I believe if we follow a socioeconomic model with moderated capitalism then probably we may solve some of these issues. And of-course gov should be the watch dog and shouldn’t be a corrupted one, then it may work.

    1. Profile photo of Kappiya Post

      Yes, that is why government needs to be present. Selling nearly half of the company while keeping a slightly bigger part like they did in SLT would keep tne government in control. and with more private companies competition against it there can’t remain lazy.

      But some things should be under government control like railways and water.
      Sri Lanaka’s failed privatization did affect the peoples minds a lot

      but as long as the government regulates them then the problems with privatization can be minimized.

  2. Profile photo of Noor123

    I think Only Privatization is not good. I think they must open for private sector but keep the government sector as well. this way they can create competition with that there will be efficiency.

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