Pitfalls of PPPs

Crisis brings the unlikeliest of people together. Privatisation and Private-Public Partnerships (PPPs) received much attention during the Sri Lanka Economic Summit 2016 organised by the Ceylon Chamber of Commerce this week. The platform brought together the Janatha Vimukthi Peramuna (JVP) and top Government ministers together on the thorny topic, with the former agreeing to support selling of non-strategic public assets. 

The JVP’s strong trade union presence in public institutions, especially universities, continues to be at the core of the party’s power. While it did not fare well in the recent general election, it has remained as key spokesmen for the poor and often engages actively in Parliamentary debate. A recent poll by Manthri.lk, a portal for evaluating lawmakers, found that three out of the top five spots for the most active Parliamentarians are occupied by the JVP. While ideological and language differences keep the JVP and the private sector apart, the summit provided a rare opportunity for the JVP to engage directly with the business community and display a deeper understanding of the economy than most people had hitherto given it credit for. 

Bringing a much-needed reality check to the summit, JVP Leader AnuraKumara Dissanayake brought his signature brand of eloquent logic to the stage, clearly identifying the major problems before the country and agreeing that radical change is needed to provide answers to the high budget deficit, declining public revenue, low exports and massive debt. He picked apart the shiny policy promises of the Government and backed the private sector calls for consistent decision making. Dissanayake was also bold enough to point out that the private sector itself is at times at fault for creating monopolies that disadvantage the consumer and using protectionism within certain industries to its benefit; a fact that does not get touched upon at conferences where the private sector prefers to heap condemnation on everyone but itself.

In a small economy such as Sri Lanka’s, Dissanayake pointed out it would be easy for privatisation to create monopolies and advocated that the State had a responsibility to ensure that poorer consumers are not left behind. Quoting the Prime Minister,the JVP Leader reminded participants that as much as 43% of Sri Lanka’s population lives on less than Rs.200 a day – adamning indictment of development policy. Fostering growth in such an environment is critical for the survival of the private sector and policies, rather than subsidies, have to reach out to this segment, he insisted.

Despite Government efforts to focus solely on successful privatisation efforts such as Sri LankaTelecom, Dissanayake pulled off the blinkers by recalling privatisation of a slew of State companies such as Ceylon Steel Corporation, Pugoda and Thulhiriya textile mills, Kanthale and Sevanagala sugar plantations, Valachcheni paper mill, and Kankansanthurai cement factory as examples of messed-up privatisation schemes where the companies went bankrupt shortly afterwards. He called on the Government to learn from the mistakes of the past and defended public suspicion of privatisation as stemming from valid reasons and past experiences.

PPPs, which is the politically-correct term for privatisation these days, is also a catalyst for crony capitalism, which has discredited many previous privatisation efforts. As the Government readies to offload several public enterprises in the coming months, it has a responsibility to be as transparent as possible to get the masses to buy-in to its plans for them to have any measure of success.