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CERTIFIED MANAGEMENT ACCOUNTANT 41

these entities and then sell off the started making massive losses. This
assets rather than actually continuing shows that renationalization of the
with the operations. These could harm airline has not been able to provide the
the interests of the economy as well as specific economic outcomes that were
the employees. This could prove to be expected.
challenging for the parties.

On many occasions, the private sector However, owing to some of the decisions
has not been able to efficiently manage taken to privatize state enterprises in
the state enterprises. As a result, the the 1980s and 1990s, the country has
quality of the services has deteriorated, lost many production facilities as the
and many other issues were identified private sector only had short term goals
to be in place. The private sector of taking over the assets and selling
sometimes does not have the required them at a higher margin. This shows
knowledge to manage these state that privatization has not been a total
enterprises and has failed to provide success story in the context of Sri Lanka.
the required capital and improvements Successive governments have changed
to the work areas. These are some of the their policies related to the privatization
main issues that require attention when from time to time. The governments
the privatization is taking place. from 1977 to 2005 have been maintaining
different policies of privatization of
the state enterprises. However, after
The results 2005, a limited renationalization drive
was initiated. Thus, the consistency of
There are a number of cases where the privatization policy of the country
privatization has been identified as a is in question with the change of
success story; one of the best examples governments every five years.
is the telecommunications sector in
Sri Lanka. Prior to the privatization
and deregulation of the sector, the
state telecommunications giant had Conclusion
Key issues the monopoly in the area. However,
the operation was so inefficient that
customers had to wait for many years in The privatization of state enterprises
Nevertheless, there are many issues that order to obtain a telephone connection. has become a part of the neoliberal
should be considered before making Thus, the customers were always economic policies of the world. The
the final decision to privatize a certain inconvenienced without being able to policies were devised with the view that
enterprise. This is due to the fact that receive high-quality service from the the government has to move out of the
private enterprises are highly focused state-owned company. After allowing commercial activities and provide the
on generating profits and operating in a privatization and deregulation, many private sector to manage these activities.
competitive environment. They rapidly players entered into the market and the The Sri Lankan governments from 1977
amend the prices of their products competition has resulted in improved to 2005 continuously followed this
or the services according to market efficiencies as well as better quality of policy with mixed success. While some
indicators with the intention of making services. areas such as the telecommunications
more profits than their competitors. sector has seen a higher degree of
This might highlight the fact that they The same can be identified with the success due to privatization, the other
will not be able to provide certain Sri Lankan Airlines; when a part of the sectors such as textiles, chemicals and
services to the lower income generating company’s shares were sold to Emirates other industries have suffered adversely
people of the country. The quality of life Airlines, they had been able to provide due to privatization. The production
of the lower income generating group the company with the management facilities were either left to deteriorate
might be negatively impacted due to knowhow and technical expertise. The due to the lack of knowledge by the
these issues. improvements related to the quality private sector or they only had short-
of the operations have benefited term targets with these facilities.
There are many instances that highlight Sri Lankan Airlines immensely. The Thus, it is important in the future to
the short-term financial goals the private eventual result was that the company identify as to how the privatization
sector might have. Sometimes the state has been able to generate profits and policy can be developed and what
enterprises are very large organizations achieve beneficial outcomes. However, results are expected to maximize the
and have many undervalued assets. The after the government has taken over beneficial results to the public through
private sector will be able to purchase the operation, Sri Lankan Airlines has privatization.

www.cma-srilanka.org | Volume 06 -No. 2 - September 2021