Listen to the people

Criticism can only be heard by those that bother to listen. The list of people protesting the expropriation bill is growing but the question is whether the government will bother to listen.

The latest protests have been lodged by the country’s influential Buddhist clergy. They have joined an extensive list of private sector representatives including top chambers representing a range of industries as well as 15 regional chambers. In addition, the case has been lodged at the Supreme Court and the Bar Association of Ceylon has joined the chorus. Good governance activists are also among these numbers but the pleas continue to fall on deaf years.

The government, headed by President Mahinda Rajapaksa and his brother have reiterated to the private sector that they are adamant the bill will go through. One of the few concessions given is that they will allow the owners to make presentations of how they will make these enterprises successful again but the details are undefined to say the least.

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 37 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.

Even though only 37 companies are figured in the bill, it is possible for the Government to take over other firms simply by bringing amendments once it is passed into law.  An assurance has been given that the Bill will be confined to the specified enterprises but fears are that the Government could come up with a different bill yet again. Another concern is 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 people have that the Government can convert these companies into profit-making ones? Rather, is it 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 State-run enterprises.

Recently the Government released a roadmap to imporove 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 loss-making enterprises and do not require new ammunition. It’s time the Government listens, but the prognosis does not look good.