Sri Lanka Economic Acceleration Framework 2020-25
- The Ceylon Chamber of Commerce recently launched a working draft of ‘Sri Lanka Economic Acceleration Framework 2020-25’ towards building a $ 135 billion economy by 2025. Today we feature the Legislation, Regulations and Governance Working Group proposals from the document
Dilani Alagaratnam – President, Group Legal & HR, John Keells Holdings
Members of the working group:
Prof. Rohan Samarajiva – Founding Chair, LIRNEasia & Chairman, ICTA
Dr. J.C. Swaminathan – Partner, Julius & Creasy
Dr. Arittha Wikramanayake – Precedent Partner, Nithya Partners
Sabrina Esufally – Business Development, Senior Manager, Morrisons PLC
Aruna Samarajewa – Partner, Nithya Partners
Keerthi Pathiraja – Company Secretary & Legal Counsel, Nestlé Lanka PLC.
Trinesh Fernando – General Counsel/Vice President - Group Legal and Regulator, Dialog Axiata PLC
Interventions and implementations
1.0 Stability of the nation
Preservation of national security and law and order
(1) Establish a body that is responsible for the security and safety of the nation akin to the National Security Council, which should include as its members the president, the prime minister, the relevant minister and deputy minister tasked with the responsibility for defence and law and order. The body should also be responsible, inter alia,
(a) to identify a single source of communication relating to matters of national security, preferably a member of the body established as aforesaid;
(b) set up a national level threat level indicator which is updated, as determined by the aforesaid body, from time to time and in a timely fashion.
(2) Ensure effective enforcement of the applicable laws especially, and in particular, towards eliminating terrorist and violent extremist content online in a manner consistent with the rule of law and the obligations the country has undertaken internationally. In this connection we would like to draw reference to the Christchurch Call to Action, which sets out a well-considered basis for stakeholder engagement and action.
2.0 Creation of a nation with a Sri Lankan identity
There is a need to integrate diverse groups defined by religion, language, cultural, social or economic groupings to create a Sri Lankan identity, if the nation is to prosper. The Constitution must guarantee all groupings and communities equality, power sharing whilst preserving the supremacy of the Parliament. This is the relevant context to the Constitution being acceptable to all groups of people in the country, which no doubt will result in the stability and prosperity of the country.
In this connection sections 291A and 291B of the Penal Code, which relate to two offences dealing with religious feelings should be extended to capture any ethnic group or a community.
3.0 Efficient government administration
(I) It is important that there is a system of governance, enshrined in the Constitution, which would not result in a duality with respect to decision making. There must be a single source of definitive/authoritative information and thus one centre of power as dual power centres in the Government is a hindrance to development.
(2) Minsters of the government, by whatever name they are called, should be made accountable for the delivery of the key objectives of a government.
We recommend that performance indicators, in line with government objectives, which are specific and measurable be set up for each ministry and made public at the beginning of every fiscal year and the performance against the same be considered in allocating funds and allocating ministries in the ensuing years. The desire is that the ministers’ annual performance against goals is available to the public and that the incumbent government will allocate funds and ministries based on performance.
To this end it is recommended that all ministers agree with the prime minister their scope of work and their deliverables, which are specific, time bound and measurable. The ministers must sign a contract at the time they take over the portfolios and it must be made public. This measure seeks to ensure that the policy of the government in power is executed in an orderly fashion, in line with the expectations of the voting public.
(3) There should be national policies formulated with respect to key areas such as education, health, foreign investments etc. and these policies should not change with changes in government.
(4) National policies, once formulated, should be administered by a set of people who are fit and proper and who do not change roles based on change of governments or ministers. Ensure that secretaries to ministries are competent and the national policies are carried through, untouched by changes to the subject ministers. It is envisaged that the ministers’ role would be a facilitative role and hence will not detract from this principle.
(5) Allocating subjects to ministers should be based on merit (fit and proper for the delivery of the expectations of the portfolio) and not based on seniority in the governing party, in parliament or otherwise. This will result in more efficient use of available resources.
(6) In determining ministerial portfolios, similar subject matter must come within the scope of one minister. This will assist in making decisions that impact the subject matter by taking into consideration all relevant matters/interests and in a holistic fashion. Subjects which are totally unconnected should not be assigned to a minister.
4.0 Certainty as to the operating framework
National Budget: Announcements made in a National Budget, which require changes to the regulatory regime, should be enacted within a time-frame of 30 to 90 days of the passing of the National Budget to ensure that there is certainty.
To facilitate this draft bills/gazettes incorporating changes to tax legislation that are to be announced during the budget should be compiled and ready for submission to cabinet no sooner the Budget is passed by Parliament. This would ensure that the time lag between the budget being presented to Parliament and necessary changes to legislation to support same is minimised.
Retrospective application of laws: As a general rule enacting laws and regulations with retrospective operation should be avoided.
5.0 Creation of new types of jobs
Creating an environment in which e-commerce thrives
(1) Introduction of a di minimis scheme to enable SMEs and e-commerce markets as this would encourage and support new trading options and reduce transaction costs.
(2) To abolish the requirement for manual submission of Form 1 and 2 under Direction 1 of 2017 under the Foreign
Exchange Act as it hinders trade transactions under documentary credits and documentary collections. This obligation should be placed on the banks to obtain, maintain and report the required details.
(3) Ensuring that the data protection law is enacted at the earliest.
(4) Ensuring that cyber security related measures are in place.
(5) Inward remittances for online payments
There is an opportunity loss due to the lack of availability of international online payment platforms in Sri Lanka that will enable businesses to directly receive money for goods and services provided overseas. This is a low-hanging fruit that will help the digital economy and SMEs in Sri Lanka to scale and grow their businesses.
6.0 Investment Law regime
It is important to rationalise the following laws towards realising the objectives of these statutes.
(1) Amending Schedule B of the Board of Investment Act to list the Foreign Exchange Act of 2017 in place of the abolished Exchange Control Act of 1953.
(2) Board of Investment Act and Strategic Development Acts should be amended to include, in the relevant schedules, the Inland Revenue Act No. 24 of 2017.
7.0 Intellectual Property Law regime
(1) Enabling legislation consequent to Sri Lanka’s accession to the Madrid Protocol must be put in place.
(2) Provisions relating to registration Geographic Indications should be enacted.
8.0 Competition Law
Sri Lanka presently does not have a law for the regulation of competition. When the Consumer Affairs Authority Act No. 9 of 2003 was enacted, it repealed the Fair Trading Commission Act No. 1 of 1987 which had substantive provisions on the regulation of mergers and monopolies. These provisions were excluded from the Consumer Affairs Authority Act with the intention that the Government would subsequently enact a special law to deal with mergers and monopolies. However, this was not followed up thereafter, resulting in a lacuna in the regulation of competition.
Consequently, there is no law to deal with mergers and monopolies. This poses severe threats to maintaining a fair market and a level playing field. There are several instances where large entities have deliberately violated basic principles of competition law and engaged in overt anti-competitive behaviour due to this failure. We believe that this could be aggravated in the future with increasing competition from large overseas conglomerates entering the market.
Foreign investors are concerned when they learn that we have not competition law in the country since such laws are standard feature in every market even in the region. It is therefore imperative that laws be enacted for the purpose of protecting consumers by creating a balanced framework for market behaviour.
9.0 Labour Law regime
Amending the Labour Law regime to capture the following in the main based on a recognition of the need to generate employment, bring women into the work force and create a meritocracy. Labour laws must promote flexible work and current work arrangements such as sub-contracting and also strengthen the employer-employee relationship.
(1) Enable night work for women in a controlled environment
(2) Encourage child care facilities based on what has been proposed by the Government in the recent Budget
(3) Regulate ‘contract labour’ providers as any other employer, being providers of a valuable service.
(4) Facilitate diverse forms of employment such as part time work, work from home / distant locations arrangements, flexible hours of work.
(5) Enable a five day work week, so as to permit businesses to determine the hours of work suited for their respective businesses.
(6) Ensure that the safety net envisaged at the time of the enactment of the
Termination of Employment (Special Provisions) Act is put in place and permit businesses to lay off employees based on the current compensation formula, without a requirement of having to obtain the consent of the Commissioner of Labour.
(7) Amend the Payment of Gratuity Act, Shop and Office Act, etc. so as to accommodate concepts such as ‘part time work’.
(8) Ensure that the proposed Employment Law, currently in draft form, be enacted at the earliest, after consulting with the stakeholders.
(9) Provide an efficient mechanism by which foreign labour required in the country is permitted work visas.
(10) Amend existing regulations which prohibits spouses of foreign employees from working and obtaining facilities such as a driving license, as this serves as a deterrent to technology transfer to locals.
10.0 Land Law regime
Amendment to the Registration of Title Act 21 of 1988: Sections 33 and 59 of the Act should be amended as it provides that no court can question the title and change the register if possession has been established, unless the title has been obtained through fraudulent means. This limitation is too restrictive and acts to the detriment of the affected persons.
Apartment Ownership Law: Express provision for horizontal condominiumisation should be set out. Currently the Condominium Management Authority does not recognise the ability to use the Apartment Ownership Law in this manner is a hindrance to better utilisation of land parcels.
Real Estate Investment Trusts (REITs): Legal recognition for establishment of REITs is required to grow and develop our property market and realise its full potential.
Recording of interests of the State in land: Until such time the registration of title across the country is completed, which at its current pace is likely to take a very long time, it is important to have a mechanism for recording of State interests, if any, with regard to land parcels. Lack of this creates many issues to the public at large.
11.0 Company Law regime
(1) Provisions akin to Chapter 11 in the USA are put in place to assist companies in distress.
(2) Any modification necessary to Winding Up procedure and Administrations procedure.
(3) Registration of beneficial owners in the case of trust to prevent money laundering and other illegal activities following trends in company legislation in Europe.
12.0 Access to information
Ability to access and download documents from a computer system with respect to documentation available to the public and maintained by Government bodies should be facilitated. The requirement is acute particularly in relation to court records, company registry and Intellectual Property Office documentation and Land Registry documents. The ideal solution is a comprehensive automation of the courts. Sri Lanka must be an e-driven country with ‘linked databases” which enable process-driven “transacting” with minimal human interaction. This will reduce corruption. It is important to proceduralise as many transactions as possible, particularly day to day transactions, as it will make the Government efficient and leave less room for corruption.
13.0 Environmental Law regime
The law should be strengthened to encourage the public to Refuse, Reduce, Reuse and Recycle plastic. In this context enabling legislative changes to be introduced to permit supermarkets to charge for the issue of plastic bags, a model that has been tested and found to be successful in substantially reducing the demand for plastic bags by consumers worldwide. Currently this is not possible due to a regulation issued by the Consumer Affairs Authority (CAA) in 2008 that prevents the same, which the CAA is unable to withdraw due as it was a regulation made pursuant to a commitment made to the Supreme Court of Sri Lanka.
14.0 Alternative dispute resolution mechanisms
An effective dispute resolution mechanism for commercial disputes is essential for economic development. Government assistance is requested to make Colombo a centre for alternative dispute resolution. Governments in the region such as Hong Kong, Singapore and Maldives, for example, support this endeavour by providing infrastructure including a suitable venue and resources for staffing for the development of the dispute resolution centres in their relevant countries.
Accordingly, we request that CCC-ICLP ADR Centre, established with the participation of the Ceylon Chamber of Commerce, be provided with assistance especially in obtaining from the Government a venue for holding mediations/arbitrations. The proposed rules of mediation and arbitration of the CCC-ICLP ADR centre seek to address the main obstacles for corporates and individuals from seeking ADR solutions, including the reduction of the time taken to resolve disputes and also keeping the costs within agreed limits.
15.0 Laws and regulations currently in draft form
The Chamber also recommends that the Government takes an inventory of laws and regulations
i. drafted and awaiting submission to the cabinet of ministers for approval;
ii. approved by the cabinet of ministers but awaiting final drafts from the Legal Draftsman;
We believe that work already done should be resurrected and expedited, as these are low hanging fruits and would clearly benefit the Ease of Doing Business Indices.
There is value in identifying the laws that are currently in the statute books, but are obsolete or have not been used in decades and repealing them.