The State cannot scale what it refuses to close

Core Argument

On September 3, 2025 the Cabinet issued a binding directive: the Ministry of Industry and Entrepreneurship Development was to appoint liquidators for a group of inactive state-owned institutions. By May 31, 2026, the National Audit Office found no substantive action had been taken. Eight state enterprises and statutory bodies remain in institutional limbo, producing nothing, delivering nothing, continuing to draw public money and hold public land. Every Asian economy that moved from crisis recovery into sustained growth built two mechanisms: an entry mechanism to bring investment in, and an exit mechanism to release capital and land that has stopped being productive. Sri Lanka has spent three years on entry. Exit barely functions. The list is instructive on its own: Sri Lanka Cement Corporation, Lanka Cement PLC, Hingurana and Kantale Sugar Industries, Wood-based Design Centre, Kahatagaha Engineering Services, Lanka Textile Mills Embilipitiya, and the Small and Medium Enterprises Authority, itself a dormant shell awaiting liquidation of the body meant to develop SMEs. Kantale Sugar makes the cost visible: manufacturing stopped in 1994, thirty-two workers past retirement age remain on payroll, and the plant costs roughly Rs 1.7 million a month to run while producing nothing for over three decades. The response so far, a voluntary retirement scheme, restructuring units, a draft Public Commercial Enterprises Management Bill, builds architecture around the bottleneck without clearing it. The bottleneck is coordination between the line ministry, the Department of Public Enterprises and the Treasury. The constraint locks up hundreds of acres of prime industrial land no SME can buy at any price, because it isn't on the market. India built a designated exit route in the 2010s: a dedicated asset-management department, published Cabinet timelines, and the Insolvency and Bankruptcy Code giving non-viable units a legal path to closure that didn't need fresh political consensus each time. Exit stopped being an exception and became a process with a queue.