The Expropriation Act

By J.C. Savanadasa

We consider it unfortunate not only from the point of view of the private sector, the backbone of the country’s economy, but also the entirety of the country that the Revival of the Underperforming Enterprises and Underutilised Assets Act was passed in Parliament despite widespread protests.

The act is a worrisome piece of legislation and brings with it grim forebodings. Enterprise development and expansion are key to this country’s economic progress. But the act will only inhibit initiative and the will to establish an enterprise, since there will be a fear lurking in the minds of investors that the possibility exists of a takeover of their businesses.

We need to emphasise the fact that with the end of the 30 year war in May 2009, Sri Lanka seemed set on the path to create an environment and atmosphere conducive to development. But two and half years after a restorative period, we seem ready to go back to a time of fear and uncertainty for the business community and foreign investors.

A few weeks ago the World Bank’s annual analysis in doing business in different countries noted that Sri Lanka had reached a better position than last year in this regard. However State authorities felt that we should strive to achieve even a better ranking this year. The idea was to attract more foreign investments.

Quite apart from peace and security, legislation supportive of business are among the key fundamentals to attract investors. But what has occurred as a consequence of the act in question is to the contrary.

This chamber regrets to state that the legislation in question has been hastily enacted. If wisdom and pragmatism prevailed it would have been possible to avoid the situation that has emerged and the adverse publicity that the country has earned for itself.

The Government, we wish to submit, could have asked the underperforming entities as to why they had not come up with positive results in their operations.

Rather than rushing for legislation it could have adopted a more acceptable procedure and given those enterprises a fair warning that their businesses would be taken over if positive results are not forthcoming within a reasonable period.

Such a procedure and process in our view could have been equitable to the business community as well as the civil society which too has now joined in raising objections to the legislation.

It is important for the State authorities to note that a developing country like Sri Lanka needs to maintain goodwill and also show the world that it has balanced investor friendly laws and policies. Also that commercial legislation is totally non-discriminatory and consonant with accepted international legislation.

We believe that kind of legal framework will lead to creating a favourable investment climate and earn positive responses. Also Sri Lanka like some other Asian and African countries requires foreign participation to elevate itself to a different plane of development not only in terms of capital but also technology expertise and markets. The last named because of the limitations in the local market for our products.

All these desirable goals could be reached with the help of an equitable and fair climate in respect of both macro and micro investment.

This chamber is sincerely hopeful that the Revival of the Underperforming Enterprises and Underutilised Assets Legislation is a once and for all instrument used with extreme caution and care for the common good of the nation and its business interests.

(The writer is Secretary General of the Business Chamber of Commerce.)