Chandra J writes to President on strategic development projects

Wednesday, 20 November 2013 10:32 - - {{hitsCtrl.values.hits}}

17 October 2013 H.E. Mahinda Rajapaksa, The President & Hon. Minister of Finance & Planning, Presidential Secretariat, Janadhipathi Mawatha, Colombo 1. Your Excellency, Strategic development projects This intervention is made in a spirit of democratic engagement in pursuit of transparency and good governance Sri Lanka. I write with reference to the Government policy on identification of viable Foreign Direct Investments (FDIs) for the promotion of strategic development projects in Sri Lanka and the Cabinet’s rationale and basis for assessing the viability of such projects for the grant of tax benefits and concessions, in terms of the Strategic Development Projects Act No.14 of 2008. Current economic models advocate the importance of a more holistic approach to FDI. It is believed that sustainable FDI can only be achieved through projects that yield profits sufficient to maintain effective corporate engagement without harming vital host country interests while

producing positive net benefits for the country’s long-term development goals, all as evaluated on prioritised economic, environmental, social and governance indicators. In this context, it is considered vital to identify an effective approach to attract prospective investors and to assess a suitable methodology for seeking sustainable FDI to maximise the benefits and minimise the costs to the host country. Additionally, it is also considered essential to ensure broad participation and transparency in selecting national and regional development priorities to evaluate an FDI which is in keeping with the government’s inclusive approach to development. In context of the above parameters for the evaluation of FDI, it would be incumbent upon the government to provide the public with the rationale and basis for evaluation of the proposed FDI funded ‘mixed development project to set up an operate an Integrated Resort’ and a locally funded ‘ICONIC integrated resort’ referred to in the government gazettes No. 1829/24 and 1829/23 of 23 September 2013 (now withdrawn), both of which include the approval for operation of casinos. They are identified as strategic development projects justified on the grounds of earning foreign exchange through tourism promotion. Although casinos are operated in many countries such as Australia, Singapore, Malaysia, and China, they are strictly regulated and monitored to minimise negative social effects while maximising economic benefits. The Government of Sri Lanka must consider adopting similar rules and best practices, regulations and monitoring mechanisms for the control of and compliance by the operating casinos in Sri Lanka. The Sri Lankan public seeks Government assurance that the harmful social effects of such enterprises will be minimised by effective regulation, control and compliance mechanisms, while maximising the sustainable long term economic benefits. In responding to public concerns, I appeal to you to ensure that prior to the announced re-gazetting of Orders under sub section (4) section 3 of the Strategic Development Projects Act, No. 14 of 2008, that the under noted information and clarifications be transparently placed before the public;

The justification and rationale supporting the approval by the Cabinet of the covered projects, classified as “Strategic Development Projects in the national interest and which is likely to bring economic and social benefits to the Country and which is likely to change the landscape of the country, primarily through

* Strategic importance to the goods and services of benefit to the public; * Substantial inflow of foreign exchange to the country; * Substantial employment generation; * Enhancement of income earning opportunities; * Transformation in terms of technology.”

What steps the Cabinet proposes to adopt in re-gazetting these projects, in view of the conflict in laws with the provisions of the Casino Business Regulation Act No 17 of 2010, which specifies that “No person shall, from and after January 1, 2012 engage in the business of operating a casino

1. other than under the authority of a valid license issued in that behalf by the Minister, and 2. within a specific area to be designated by the Minister”

The details of the regulatory framework under which these casino and gaming centres will be allowed to operate specifying inter alia ;

a. the restrictions, if any, to be placed on the participation of Sri Lankan citizens, especially vulnerable persons, in gaming activities, b. Control and compliance mechanisms in place to ensure that the revenue from gaming activities of the casinos are settled in Sri Lanka in full and are channelled via authorised and duly supervised foreign currency dealers registered in Sri Lanka c. Measures in place to minimise illegal and economically and socially harmful activities such as: * black money and money laundering * underworld and mafia operations * prostitution and related vices * illicit trading in narcot ics, drugs, liquor and cigarettes I further appeal that transparent demonstration and due consideration be given, during project negotiations leading to the re-gazetting, in ensuring the following; a. optimising state revenue, including applicable levies, taxation, other charges and entry costs comparable to setting up similar operations in other comparable countries, b. assessing and optimising the national socio-economic benefits, net of any revenue lost on account of the waiver of competitive entry costs, tax exemptions and negative social costs, c. assessing and optimising the national foreign exchange benefits d) In pursuit of (a) to (c) above place before the Parliament and the public, computations of long term net national economic benefits and long term net foreign exchange benefits. I appeal to your Excellency one again, to take full account of public opinion and the concerns expressed herein, in proceeding with the re-gazetting above projects. In that context, I trust that careful consideration will be given to the need to ensure maximum transparency and full disclosure and further ensure that accountability mechanisms will be set up and in place before re-gazetting in order to effectively address the key economic and social issues highlighted in this appeal. Yours sincerely, Chandra Jayaratne cc. Hon Minister of Investment Promotion, Hon Minister of Economic Development, Hon Deputy Minister of Finance & Planning, Secretary to the President, Secretary Ministry of Finance & Planning