An abysmal failure of the business lobby

When there was widespread allegations of corruption and financial mismanagement at Air Lanka Ltd. (as SriLankan Airlines was then known as), the JRJ Government appointed a Commission of Inquiry into the causes and circumstances that led to such a situation.

The first thing the Commissioners requested from the late President JRJ was to dismiss the Board of Management. Some of the key figures were close colleagues of then Defence Advisor to the late President JRJ, yet the request was promptly executed.

If not for this the Board would have thwarted the efforts of the Commissioners. That was the pragmatism demonstrated by the then UNP Government though it was tainted by other misdemeanours of astronomical proportions.

The UPFA Government rushed through legislation titled ‘Revival of Underperforming Enterprises and Underutilised Assets’. The intention of the bill was to take over such underperforming enterprises. This is a marked contrast to the various Government institutions, which are underperforming at an alarming rate.

Take for example the Ceylon Petroleum Corporation and the Ceylon Electricity Board and other institutions which need careful scrutiny. It is ludicrous to take over assets of private enterprises or ‘assets of enterprises since privatised’ whereas there is massive scale revamping required in public sector institutions.

Some of the burden of these institutions has been shouldered by the general public without a murmur. People have made mammoth sacrifices to win the war against brutal terrorism and no doubt the President, Defence Secretary and former Army Commander deserve the highest commendation for that. However, people have not as yet felt the economic benefits from the peace dividend.

Proper scrutiny required

The intention of the bill would have been meaningful had there been a proper scrutiny of such enterprises by a panel of experts. Press reports indicate that some of the Government ministers and coalition partners shied away from defending the legislation in the Parliament and this is reflective of the popular mood in the country.

Of course the Government has the necessary numbers in the Parliament and any legislation could be chartered through without much hassle as long as the numbers factor comes into play. By the same token, a citizen cannot find fault with the Government’s position as it enjoys the majority in Parliament and it still carries the ‘gratitude’ card over the war victory among the general populace.

Any Government with such numbers in Parliament would have resorted to such draconian measures, as is the case in our Parliamentary history. There have been court cases annulled through legislation (Court of Appeal judgment in favour of late Prime Minister Srimavo Bandaranaike).

The only countermeasure for excessive Government action is to build a strong public opinion and applying lobbying techniques. The business lobby could have undertaken a much more vigorous approach in curtailing legislature, but this writer notes with alarm the abysmal failure of the business lobby.

The business lobby

There are quite a number of business chambers in this country and none could mount an audible voice against such legislation. The chief protagonists of the Government too would have had a secret laugh over the state of affairs of the civil society and the business lobby.

Even after the legislation has been passed through Parliament, there are still ample opportunities for the business lobby to finetune the legislation through yet another amendment so that the Government too would be willing to augment its standing in the wake of negative credit ratings.

Expropriation is considered as the first level political risk indicator for investors. No doubt this move by the Government must have been well noted by International Political Risk Insurance analysts and would certainly appear in their reports.

What the Government should have done was to have appointed a study committee and allowed wider public participation, thus ensuring that this measure was for the public benefit. Rushing through legislation only meant to send a bad signal over the issue to the very detriment of the Government.  

Harmful measure

Expropriation is a measure harmful to the very meaning of the nature of the Government. Sri Lanka is known as ‘Socialist and Democratic Republic of Sri Lanka’ and the Preamble to the Constitution clearly introduces the nature of the State to which we all belong.

Expropriation is resorted to when there are social revolutions and when there is large-scale involvement of multinationals, landlords and feudals who resort to unscrupulous methods and deprive the workers of their due wages and other social factors.

This term appears under Marxist theory and it is called Expropriation of Expropriators (the ruling class) and also as the slogan ‘Loot the Looters’ during October Revolution in Soviet Russia. There is hardly any such phenomenon in Sri Lanka.

Indian experiment

The Government of India experimented with the SICA Act (Sick Industries Companies Special Provisions Act) two decades back and we should have had a lesson or two from the Indian experience.

The SICA Act was meant to assist the sick industries over various adverse consequences on the economy as a whole. Some of which may be enumerated as (1) loss of substantial revenue to the Government and enhances its public expenditure (2) when it locked up necessary resources and funds in the sick unit. This also increased the non-performing assets of banks and financial institutions (3) it led to loss of production and productivity in the national economy (4)it also aggravated the problem of unemployment in the economy (5) it adversely contributed to the industrial atmosphere and lead to worker-management disputes, strikes, lockouts, etc. (6) it undermined the public confidence in the functioning of the organised sector in the country, which in turn affected the overall investment climate of the economy.

There were also other external factors that affected the industries such as energy crisis and shortage of raw materials, market recessions and power outages.

Political advocacy

Rather than resorting to expropriation, the Government should have initiated an incentive package for such industries and demanded certain milestones to be achieved jointly by the industry and Government.

It is unfortunate that the role of the business lobby was not up to its obligations towards the very concept of expropriation. There should have been more active interactions with the legislature by the business chambers.

Lobbying does not necessarily mean political action but political advocacy could have allowed the Government to have another look before rushing through legislation. Political advocacy is about talking sense and logic to the very individuals who shape the policy of the Government.

(The writer is a freelance journalist and a political lobbying and government relations consultant.)