Of socialism, social media, social capital, and public private partnerships

We have to be innovative at this particular time, and examine the potential of PPPs that have strong elements of the shared economy concept

As we look at the state of our economy and the news headlines it makes these days, there is one thing that becomes clear i.e. we have failed badly on the State Owned Enterprise (SOE) model. This formula, which was considered to be the panacea for our economic ills post-independence, was built on an incestuous formula which carried the banner ‘whatever is state owned can bolster economic growth.’ Today, due to the failure of this very system, vital parts of the country’s economy have come under threat and the sustainable lives of citizens thrown under the bus.Some prominent politicians have now taken to being the vanguard of reforms, which point towards one thing — the old model that was derived from a socialist ideology must move aside to make way for a more inclusive one.

Although the reformists are seeking a clear path out of the mess, the subject requires careful consideration, because if it is privatisation we are looking at as the next step, we are probably not going in the direction the world is moving.

Social capital

Currently, there is much discussion about social capital and its connection to everything. Which brings us to the question, what is this social capital? Is it much like social media? It is more so; social capital is about accessing benefits from social relationships. It has been described both as the glue that holds together the structure of networking and a lubricant to facilitate ‘getting things done.’

For individuals it is a source of power and influence. We can see this primarily in social media. However, when it comes to harnessing efficiency for groups and organisations or even for that matter the state, it is all about collaboration and cooperation.

Social capital helps to create networks of relationships that empower societies to function effectively. This is enabled by the improved performances of various groups, growth of businesses, infrastructures that enhance performance and supply chains, and the value derived from strategic alliances to make all that happen. And herein lies the progression from state owned enterprises to public private partnerships.

Today’s PPPs

Modern day Public Private Partnerships, unlike the old traditional model, should help to form synergies between the public sector and private capital, which must connect to the social capital element. Governments can create alliances for major projects which have a high positive impact on the social capital factor. However, it is vital for governments to properly evaluate social capital indicators in choosing the most suitable one for a PPP project, in order to ensure its success and its benefit to communities.

In Sri Lanka there have been a few successful PPPs in recent times such as Lanka IOC, the Colombo Port’s South Asia Gateway Terminal, Colombo International Container Terminal, the Port City Colombo and the Hambantota International Port.

Some potential State enterprises that can benefit in the future from the PPP concept are SriLankan Airlines which is seeking a private sector partnership, the Oil Refinery, and the CEB. As for the CEB, in unbundling it there is potential for PPPs not only in the production of electricity but also in its distribution and transmission.

Time to be innovative

Some development projects that have met a stumbling block due to the current economic conditions in the country are in the road infrastructure area, which is directly connected to one of our key foreign exchange earners — tourism, leaving aside the logistics factors of our export industries and the vital bloodlines of the local consumer economy. Therefore, one has to start thinking on how some of the planned projects can get off the ground or reach completion.

That we cannot borrow anymore for infrastructure development is a foregone conclusion; which leaves us with the option of looking closer at the possibility of PPPs in this area. Having said this, we also need to look at how we should support existing PPPs to enable their success. For example one would assume the ring roads and connecting highways to the city of Colombo, which would definitely benefit the port of Colombo and the Port City, must happen. In addition the upgrading of the refinery and setting up solar energy farms are projects that can be potential PPPs. A system needs to be developed with a formula where transparent, open bidding is put in place for such projects, in line with necessary good governance practices.

It goes without saying that we have to be innovative at this particular time, and examine the potential of PPPs that have strong elements of the shared economy concept. The Government, as the lead player in this field, needs to look at suitable social capital elements for the respective projects and develop the appropriate playbook for Public Private Partnerships.

Next best concept to socialism

Socialism is a political and economic theory of social organisation which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole. At the time of its implementation to the Sri Lanka’s policies over 70 years ago, there was a firm belief that governments and the state will act for the common good of all the people. But time erodes good ideas and intentions, and as the State Owned Enterprises (SOE) turned into gigantic institutions, the original intentions have got diluted and derailed. Be that as it may, acting for the common good of society still holds out as a very good idea. It is from this maxim that the concepts of good governance, transparency and level playing field have come into play. If the SOEs are becoming a redundant formula then the next best option would be public private partnerships.

PPPs may not have a single common formula written in stone, but individual countries can take into account their partners and those who collaborate with them, local norms and conditions, cultural similarities and differences, etc., to formulate guidelines that attract investments. Today, it is not countries or governments that have the big bucks but the mega multinational corporations. Given that, how do we attract investment from this sector? Finding the answer to that, should be the next brainstorming session for our local policy makers.

Anything is possible

Can we make it big with just an idea? It is best to look at some case studies like Airbnb and Uber which were just startups that have now become unicorn companies. We already have examples of local organisations in the digital arena that emulated some of these big corporates and are currently moving towards being highly successful. What this proves is that anything is possible, if the good idea is supported with the drive to follow it through. However, timing is everything, and we need our lawmakers and policymakers to make a quick study of understanding the new terrain we are operating in. They can then create proper laws and regulations to protect and open up the Sri Lankan system to do business with the right partners.

(The writer has worked as a journalist in print, radio and television. He is currently a Public Relations specialist and an influencer for policy change.)