When the Cabinet decided in September last year to liquidate 33 non-functional State-Owned Enterprises (SOEs), the move was rightly welcomed. Few could argue for keeping alive entities such as Mihin Lanka, Selendiva Investments or the company set up for the Hambantota Commonwealth Games bid, many of which, by the Government's own admission, existed only as name boards. It was the low-hanging fruit of State-sector reform.

Fourteen months on, the Ministry of Finance, Planning and Economic Development tells us that the liquidation process is "currently underway". That is welcome, but it also raises a fair question: why has it taken so long to pick fruit that was hanging so low?

Part of the answer lies in the Ministry's own timeline. The specialised unit overseeing the closures was set up only in March this year, some six months after Cabinet approval. Moreover, the record on the ground suggests that the State has moved even more slowly than its announcements. In August, the Auditor General reported that, despite a Cabinet directive of 3 September 2025, no substantive action had been taken to appoint liquidators for eight inactive enterprises under the Industry Ministry as of 31 May this year.

The most telling example is Kantale Sugar Industries. Production there stopped in 1994, yet 32 employees, every one of them past the retirement age of 60, were still on the payroll, costing the public about Rs 1.7 million a month. Put plainly, the taxpayer has been paying for a sugar factory that has not produced sugar in over three decades.

None of this is to deny the progress made. The Treasury's move, under the 2026 Budget, to settle long-outstanding EPF, ETF and gratuity liabilities at selected SOEs is overdue and deserves credit. Workers who served these institutions should never have been left waiting, in some cases for two decades, for money that was legally theirs. Even so, the numbers merit scrutiny. When presenting the Budget last November, the President said Rs 11 billion was needed to clear such arrears at 10 institutions, yet only Rs 5 billion was allocated for this year, of which Rs 2.8 billion had been disbursed by the end of August. In other words, much of this debt will roll into next year. The Government should state clearly when it intends to close that gap.

Likewise, the headline that 51 major SOEs earned a combined profit of Rs 259.3 billion in the first half of 2026, up Rs 31.5 billion year-on-year, should be read with care. For one thing, last year's comparison figure was originally reported for 52 enterprises, not 51. For another, the first half of 2025 was a weak base, as profits had fallen from Rs 280.7 billion a year earlier. Hence, this year's result, while better, still trails where the sector stood two years ago. More importantly, paper profits are not cash in the Treasury. The Ministry's own Budget, Economic and Fiscal Position Report 2026 showed that levies and dividends paid by SOEs nearly halved in 2025.

The Ministry rightly notes that the conflict in the Middle East has hurt the sector through dearer raw materials, disrupted supply chains and cancelled orders. Yet external shocks are precisely why reform cannot wait. Lean, well-governed enterprises run on commercial lines absorb such blows far better than those weighed down by politicised boards and decades of accumulated losses.

Ultimately, closing 33 dormant entities was always meant to be the opening act, not the whole play. Sri Lanka has more than 400 SOEs, and the real fiscal risk lies not in empty shells but in large operating enterprises that still lean on the Treasury. The Public Commercial Business Management Bill, which was due before the Cabinet by April, is therefore the more meaningful test of the Government's resolve.

We would urge the Ministry to do three things. First, publish the full list of the 33 entities, as was promised last year, with the status of each. Second, set out a timetable for completing both stages of liquidation, including how outstanding debts, such as Mihin Lanka's dues to State banks, will be settled. Third, report SOE performance in terms the public can judge, including cash returned to the Treasury and not merely profits.

The Government has taken a sensible first step. However, reform that moves at the pace of Kantale Sugar will not rescue the public finances. If the State cannot bury its dead swiftly, it will struggle all the more to reform the living.