The Bhutan Livestock Development Corporation closing its sales outlet and laying off a few employees has caused some inconveniences among those in the State-owned enterprises. The call is to shut down most of the enterprises, especially those depending on government subsidies and in direct competition with the private sector.

There are genuine reasons and concerns regarding the performance of State-owned enterprises, particularly those suffering huge losses even with government subsidies and those that the private sector sees as a competitor. The private sector cannot compete with enterprises supported by the government. 

However, it would be wiser to remind ourselves why SoEs are established in the first place. While the primary objective of SoEs is to operate as a successful business, they also have a social mandate to produce or deliver goods and services that may not be profitable. The social mandate comes at a huge cost whether it is securing food security or informing the nation.

Of late, those heading SoEs are confused. On one hand, the pressure is on making money (this gets worse when the government coffer is getting emptier by the day). On the other hand, they have to fulfill unprofitable goals.

Since the transformation exercise, the end goal is clear- be sustainable, cut cost and not depend on subsidies. State enterprises are asked to diversify and make a profit to be sustainable if not contribute to the government coffer. There is no question or concern about killing the private sector. The so-called private sector will not bother about areas that are not profitable. They are solely driven by profits. 

That said, SoEs should reshape themselves in line with the priorities and concerns of the people, expressed through the elected representatives. The livestock corporation, for instance, should invest and focus on research and development (RND) to help farmers produce dairy products and not compete with farmers. Focusing on RND will not bring revenue. Therefore, the government should support them without hesitation. If the RND can result in improved production or quality products, it will benefit farmers (producers) and consumers.

Today, only a few  SoEs are doing well. They contribute handsomely to the government coffer. But how are they benefiting the ordinary citizens? The answer is there for all to see. If profit is the ultimate target, all state enterprises will start making it within the next one or two months. 

While private sector development, the so-called engine of growth, should be supported,  we need to look at the private sector. The sector is still a handful of big businesses after decades of recognising its importance.  We will still need state enterprises to help achieve the plans and programmes of the government and the expectation of the larger population. 

State enterprises could do better if they are given the freedom to fulfill both the business and social mandate aspects. While the government is questioning the performances of SoEs, it would be wise to see how their own policies or regulations are impeding SoEs’ growth.