PORT OF SPAIN, Trinidad, Jan 19, CMC – Prime Minister Dr. Keith Rowley Wednesday said too many state-owned enterprises have been under performing even as he reiterated that Trinidad and Tobago’s economy is undergoing a difficult period.
Addressing the annual State Boards Corporate Governance Seminar here, Rowley said his administration firmly believes that that the State-owned Enterprises (SOE) have a critical role to play in the supply of economic goods and services in the country.
But he told the seminar that there is need also to “face the harsh reality that, in general, too many of our state-owned enterprises have been underperforming – some much more than others.
“Some might even have deviated so far from their original purpose as to become the problem they were created to solve. This government is committed to addressing the performance issues of all our state enterprises, defaulting and otherwise.
“We do so, in part by reforming the way they are governed – in other words, we need to re-examine our corporate governance structures, as they relate to the state sector,” Rowley said.
But he acknowledged that this is a difficult task because it means addressing a host of complex issues.
“It is indeed likely that the Government is part of the problem and that we need to examine how Parliament, Ministers and Ministries interact with the state enterprises, under their charge.
“We accept that there are legitimate questions, for example, as to whether some state enterprises have sufficient autonomy; or whether the roles and responsibilities of the state enterprise Boards and the supervising Ministries are sufficiently clear.”
Rowley said that while appropriate laws, regulations and codes are needed, his government is under no illusion that these are a panacea.
“For certain, the problem also involves attitudinal changes to our duties. It is against an understanding of this aspect of our challenges in this sector why only recently the Minister of Finance has seen it fit and very necessary to issue a stern circular memorandum to all management and boards in the state enterprise sector that the timely submission of financial reports, whether audited or otherwise, is an uncompromising demand, going forward.
“Government employees, as well as employees of state-owned corporations, must be committed to executing government policy and dedicated to serving the public by operating their businesses using best practice models. This objective includes proper oversight and reporting as well as eliminating opportunities for waste, abuse and corruption.”
Rowley said that the government is committed to making the state enterprise sector more efficient and more effective, saying that it believes that part of the solution rests with reforming the present governance model.
“We also believe that the reform process could benefit from a detailed and dispassionate analysis of what the main issues are. And we honestly want to hear your views. That in short, is the main reason for the symposium.
“We acknowledge that many of you are volunteers doing yeoman service at your respective stations but let us not forget that wherever we serve we are first and foremost citizens of this country and as such we are shareholders with equity in every investment of the state.”
In his address, Rowley said that since the 1960’s government has become involved in various aspects of the local economy to the point that this policy has brought “us to our present situation where we have about 100 state enterprises and their subsidiaries.
“Not all of them necessary and not all of them well run,” he said, adding “to put it mildly, performance of the State-owned Enterprise sector has fallen far short of what we expected.
“Most of the commercially-oriented state-owned enterprises have accumulated significant losses, requiring large transfers of cash support from the Central Government,” Rowley said, adding that the state-owned enterprises have contracted sizable debts, which they have not been able to service, leaving the burden as permanent liabilities to the Central Government.
He said too many state enterprises have circumvented financial constraints by accumulating arrears to Government or other state-owned enterprises particularly the public utilities.
“Subscribing to the dubious principle of “Massa bull, Massa cow” the accounting entanglements have resulted in nothing short of a financial mess among some major state entities,” he said, adding that instances of weak project planning, questionable procurement procedures and poor financial management practices are all too prevalent in the sector;
“Ladies and gentlemen, it’s no secret that over the last two years or so our economy has been going through a difficult period, caused, for the most part, by the dramatic fall in energy prices. The revenue squeeze has meant that the Central Government has had to exercise tight control on Government spending. You, as directors and managers of the state enterprise cannot be unmindful of the macro-economic station.’
Rowley said that current fiscal realities “demand that you treat responsibly with resources of your various institutions by carefully reviewing their spending plans, taking a stand against waste, over spending and corruption and insisting on value for money”.