Revival Bill and responsible governance

The Revival of Underperforming Enterprises and Underutilized Assets Bill has been passed in total. All the last ditch efforts of the private sector, opposition members and even Buddhist monks failed to move the Government or make it reconsider the amendments proposed.

Suggested half way points such as providing the owners a chance to present new business plans for revival was ignored and all opposing views went unheard.  The Government only changed the name of the Bill.

What is worrying here other than the obvious disregard the top echelons of the government has for the sentiments of other stakeholders in the country’s economy. At a basic level the Bill outlines 39 enterprises where the government has a majority stake or were relatively recently privatized or those who enjoyed BOI concessions to be taken over because they are “underutilized” and “unprofitable.” Though the Government is insistent that the Bill is beneficial to the country, what is disconcerting is that this takes away the power from the people and enterprises to make decisions regarding their investments. 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.

Though the Government assured that the powers of the Bill will be confined to the listed enterprises the new legislation and the way it was brought about has given enough meat for suspicion and distrust over the advent of similar draconian laws. Moreover there are also clear indications that the Bill can be used to squash opposition to the government and indeed the inclusion of the Sevanagala Sugar factory points at exactly 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.  

Moreover there has been no attempt by the government to consciously focus on other loss making state owned enterprises such as the Ceylon Petroleum Corporation and Ceylon Electricity Board. At this point the government has to really pledge themselves to ensure that the currently profit making companies at least do not descend to their earlier apathy. So the Government at present has a terrible track record in terms turning around existing state enterprises.

For the people and the business chambers of commerce both big and small which fought against the Bill, it is now a choice of making the best out of a bad situation. If the Government is genuine in their intention to “utilize” these assets better then they have to prove that the State can do more than collect taxes and take loans for large scale projects. Despite carrying the burden of a largely efficient public sector, the Government needs to prove efficiency and management, commitment to contracts and implementation of clear business strategy.

Via this Bill arguably the Government is trying to prove that it can do business better than the private sector though Economic Development Minister Basil Rajapaksa had assured private sector would be engaged in the revival process. For while most governments would unburden themselves and encourage the private sector to take over enterprises or at least form private public partnerships this government has done the opposite. So now the Government has a greater responsibility to ensure that all the adverse results from this move is not felt by the larger economy.

Abstaining themselves from politicisation, improving governance and reducing the impact on both foreign and local investment would be a good place to start.