Prime Minister Dr Keith Rowley says many state enterprises are failing in achieving their mandates and some are in need of serious governance reform.
In the feature address at the Ministry of Finance's annual State Boards Corporate Governance Seminar at the Hyatt Regency in Port-of-Spain yesterday, Dr Rowley said while state enterprises have a critical role to play in delivering goods and services to the country, too many of them were missing the mark in terms of performance.
"We also need to face the harsh reality that, generally, 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."
The prime minister added that though a challenge, Government had dedicated itself to treating with the performance related issues at all state enterprises.
"This government is committed to addressing the performance issues of all our state enterprises, defaulting or 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," he said.
Dr Rowley added that to combat the issue of poorly performing state enterprises, a shift in attitudes is a necessary step in the corporate governance strengthening process with the Ministry of Finance taking the lead.
"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 saw 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."
The prime minister said the level of inefficiency of state enterprises had manifested itself in different ways.
"Most of the commercially-oriented state-owned enterprises have accumulated significant losses, requiring large transfers of cash support from the Central Government. Additionally, 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.
"Instances of weak project planning, questionable procurement procedures and poor financial management practices are all too prevalent in the sector " he said.
Dr Rowley added that extracting the best performance from state enterprises required the alignment of all the players involved in the corporate governance process.
He said: "The experts will tell you that n the state enterprise sector good governance starts with a clear definition of the respective roles of the major players: the minister (and by extension, his ministry); the board of the enterprise and the management of the business."