The former Managing Director of the State Trading Organization (STO), Hussein Amr, has said that claiming an inability to pay private parties for contracted work due to a lack of funds by government-owned companies is an act of irresponsibility, and that it is, in reality, a sign of weak company governance.
Amr's comments were made in a post on X following reports that the Road Development Corporation (RDC) had told the court it could not pay MVR 7 million owed to a private company due to its poor financial situation.
While companies often cite "cash flow issues" as the reason for non-payment to private parties, Amr argued that the underlying problem is one of mismanagement. He stressed that work should only be contracted to private parties within the limits of the company's approved budget and available resources.
"When projects are started without considering these factors, the burden falls on contractors and suppliers," Amr stated.
"Inability to pay is not an excuse accepted even in court. It demonstrates that the work was agreed upon and contracted without the necessary funds to cover the costs."
Amr highlighted that such actions by state-owned enterprises (SOEs) are causing significant cash flow difficulties for small businesses, leading to some companies facing bankruptcy. Furthermore, he noted that this situation reduces market competition, paving the way for a few parties to take on projects at inflated prices.
"This is one of the reasons why state-owned companies are getting work done at exorbitant prices that do not match the task," he added.
Calling for major and immediate changes to the management of government-owned companies, Amr urged SOEs to stop competing with general businesses and instead focus on promoting and supporting private businesses.
