the efficiency of public enterprises and to improve the allocative efficiency of resources between public enterprises and other sectors of the economy. Basically, it is about maximizing utilization of resources and directing them where they are needed most.

Improving profitability of public enterprises has been a difficult task. Even after 10 years since Government started with the programme, profitability levels of Government Commercial Companies (GCCs) and Commercial Statutory Authorities (CSAs) have remained at 3 per cent, well below the aggregate level of 10 per cent returns on shareholder's funds.

Research has shown that Companies that practice good governance are more profitable. The Ministry will continue to closely monitor performance of these entities and will work closely with Boards of relevant entities to improve performance and explore other avenues such as privatization to ensure that resources are better utilized.

The Ministry is currently working with GCCs and (CSAs) on the costing of these functions which are deemed uneconomical over the years. The exercise will streamline and provide transparency on the costs of undertaking these obligations.

Another way of promoting productivity is to review individual processes to ensure that costs of operations are reduced. This has been a difficult area for the Ministry to monitor, as Boards focus on the longer term of the operation sustainably. This trend appears to be that the more income received, the more operational costs incurred. This trend does not generate growth and needs to stop. More emphasis needs to be placed on strengthening the capital base to ensure sustainability.

Under the Public Enterprises Act, 1996, directors are responsible for the commercial direction of their respective entities and must be responsible for ensuring that Board decisions are fully complied with. A range of training opportunities identified by the Ministry has been organised to ensure that Boards of GCCs and CSAs are able to perform their roles with competence.

The Ministry also formulates appropriate policies for the better management of public enterprises and uphold good governance practices in these boards. Work in this area will continue in the coming years.

Therefore, I wish to reiterate that Government as the shareholder of GCCs and CSAs requires at least a 10 per cent return on investment from all public enterprises by 2011. The Ministry is committed to ensuring that this is delivered. We will achieve this objective through working together with our stakeholders to ensure that relevant policy are addressed in a timely manner and that Boards concentrate on directing resources to ensure maximum utilization to achieve improved profitability.