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DOOM FOR DEMOCRACY AND THE ECONOMY

[The Sunday Leader.lk, Sunday, 6 November 2011 13:19 No Comment]

The Revival of Underperforming Enterprises and Underutilized Assets Bill that is to be presented to parliament soon has in it economic and political objectives that spell doom for Sri Lankan democracy as well as the economy.

It would vest in the Sri Lankan government Hotel Developers (Lanka) PLC which owns the Colombo Hilton that has been described as an ‘Underperforming’ enterprise and 36 other business establishments that have been called ‘Underutilized’ assets in the government under the administration and control of a Competent Authority. This Competent Authority is to ‘ensure effective management and administrative revival of such enterprises or assets through alternative means and measures of utilization such as restructuring and management controls’.

Those Sri Lankans who have had experience with government appointed ‘Competent Authorities’ who were justly called ‘Incompetent Authorities’ in the days of nationalisation under socialist regimes, will recall with much  horror how once prosperous private enterprises such as the plantations were reduced to black holes in the economy sucking up public funds under these government commissars. Now it appears that in a fit of insanity we are to go back to state controlled management. The pundits of the Rajapaksa regime have obviously not read history and want to repeat the blunders in history at great cost to the country.

It will be recalled that after 1977, the Jayawardena government was able to resurrect the Sri Lankan economy by privatizing the white elephants in the state sector such as the Tyre Corporation, Steel Corporation and many other loss making state corporations.  The Rajapaksa government may justly claim that they do not have any desire to follow the capitalist policies of the UNP, but they must be sure that dependence on the public sector will work.

The latest report of the Parliamentary Committee on Public Enterprises (COPE) headed by  a minister of this government D.E.W. Gunasekera released last week, does not justify placing any such faith in the public sector. The report of COPE says that the losses incurred in 249 government ventures during the period 2007 to 2009 exceed a staggering Rs 19 billion!

Some of the colossal loss-making state institutions were The Ceylon Electricity Board, Ceylon Petroleum Corporation, Sri Lanka Cricket, The State Timber Corporation, Rupavahini, Lanka Puthra Bank and Mihin Lanka.

Gunasekera has said that he hoped to hand over the COPE report to Speaker Chamal Rajapaksa so that the report could be discussed in the budget debate.

The lackadaisical attitude of state bureaucracy, inefficiency of the system of administration and perhaps underlying corruption can be inferred from some of his comments.  He had told the media that certain establishments had even failed to submit their annual reports for two to three years.

Some of the other strictures were that the appointment of unqualified people to top managerial posts on political grounds and the lack of financial administrative disciplines had ruined many of the public enterprises. The Rupavahini Corporation had recruited nearly 100 employees violating the accepted procedure, Finance Ministry guidelines and without approval of the Board of Directors. Most of these appointments were unnecessary, it is said.

The pathetic state which Sri Lanka Cricket had descended to from being the World Champion is revealed in its financial record having incurred a loss of Rs 2 billion. Queries by the Auditor General have gone unanswered and cricket officials have no clue how to answer them!

This is the alarming state of public administration in the country and now President Rajapaksa in his wisdom wants to make Underperforming Enterprises and Underutilized Assets perform to his satisfaction and realise their utility by vesting them in the Treasury and appointing a Competent Authority to run them. He may resort to recruitment of some from the private sector but often incompetent private sector rogues creeping into  places quite foreign to them have cost this country billions not of rupees but billions of dollars!

The public is justified in entertaining grave doubts about this Bill. It was hatched in secrecy being drawn up not at the Legal Draftsman’s Department but by a private firm which some commentators have described as being a ‘bizarre’ move. No one could have access to the Bill till the Supreme Court conveyed its decision to parliament. Why oh why was it considered an Urgent Bill – to hide it from the public?  The net result was there could be no discussion on this Bill with draconian implications before it went before the Supreme Court.

What could be the future implications of this Bill? Could it be a Sword of Damocles hanging over business communities? A donation to a political fund or unpopular cause could automatically result in one’s business establishment being declared underproductive! Owners of some of the business establishments to be victimized such as the Hingurana and Pelawatte sugar companies have declared that their establishments have recovered and were making profits while others claim that they are victims of political vengeance.

With this Bill Mahinda Rajapaksa may be kicking into his own goal. He wants the world beyond to view Sri Lanka as the Miracle of Asia and for foreign investors to come in. The UNP had already condemned this Bill saying that it would drive away would-be foreign investors.

Whether the new legislation would apply to foreign investors or not, the very idea that a business venture could be taken over for underperformance or underutilization would give any investor the jitters.

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