Expropriation Bill spells disaster

BILLS that are prepared to be rushed through Parliament are almost always suspicious and the latest Expropriation Bill is no different. There are many arguments that can be made against it and as vehemently as the Government would assert that it is for the national good, facts speak otherwise.

Despite repeated opposition from good governance activists, economists and the United National Party (UNP), the Government is unwavering in its plans to table it next week before Parliament. The tragedy of this is that since there is a two-thirds majority, there is every possibility that the members will forget their duty to the nation and simply pass the bill into legislation.

At a basic level the bill outlines 39 companies where the Government has a majority stake or were relatively recently privatised to be taken over because they are “underutilised” and “unprofitable”. What is disconcerting is that this takes away the power from the people and enterprises to make decisions regarding their investment. This loss of economic rights means that the Government can take over any enterprise it wishes with minimum notice since the criteria outlined in the bill is very hazy.

Even though only 39 companies are fingered in the bill, it is possible for the Government to take over other firms simply by bringing amendments once it is passed into law. Moreover, there are also clear indications that the bill can be used to squash opposition to the Government and indeed the inclusion of Sevanagala Sugar Factory points exactly to this.

Even though the clauses of the bill empower the Government to take over underperforming enterprises, it does not guarantee that the Government has the power to make them profitable. According to the latest Committee on Public Enterprises (COPE) report findings, the Government lost Rs. 19 billion from 249 Government ventures and this does not include many other institutions that are under the State, bringing the actual loss to much higher levels.

Therefore, what confidence can the people have that the Government can convert these companies into profit-making ones? Rather, it is an attempt to spread its power and reduce the footprint of free enterprise. The almost random selection of companies in the bill leaves out crucial companies that have been loss-making for far longer than reputed companies such as Pelwatte Sugar, which as a listed company is more transparent than many of the State-run enterprises.

Only a few days ago the Government released a roadmap to increase Sri Lanka’s Ease of Doing Business Rankings to be among the top 30 by 2014. In addition the State Resources Ministry is looking to forge Private-Public Partnerships with international companies to return to profitability a slew of loss-making State-owned enterprises. It is self-explanatory that legislation empowering the State to take over private assets will scare off any foreign direct investors, except of course the robber barons that will bribe their way to the best deals.

There is already adequate legal power for the Government to deal with the loss-making enterprises and do not require new ammunition. This bill can also set the precedent for the Government to take over private assets as well. So it time for the people to wake up. This single bill can erode all levels of good governance, transparency and empowerment that the country has, but sadly it is getting almost no coverage among the vernacular media, which means that most people will find out about it only when it is too late.