Chandra Jayaratne on the State Takeover Bill

Good governance activist and former Chairman of the Ceylon Chamber of Commerce Chandra Jayaratne has expressed concerns over the Government’s proposed bill to takeover under-performing enterprises and under-utilised assets. Here are excerpts from his written representations to Secretary to the President Lalith Weeratunga:

1. The Bill appears to have been certified by the Cabinet on 20 October 2011 as an Urgent Bill and was presented to and reviewed by the Supreme Court during the last week.

2. The Bill has reached the Media and Citizens only towards the end of last week i.e. after the review by the Supreme Court and possibly after its verdict had reached the Speaker of Parliament

3. The need for this bill to be deemed an Urgent Bill needs to be properly justified by the Executive and unless so justified it appears to be so classified with mala fidei interests to bypass democratic good governance expectations of society

4. The secrecy surrounding the bill and its reported compilation outside the purview of the usual drafting sources adds further grounds to the belief outlined in 3 above

5. The selective criteria as defined for the application of the classification of underperforming enterprises and underutilised assets being capable of application to many other listed and unlisted private sector entities whose enterprise names and assets can easily be added in the future as a part of the schedule by simple majority approved new enactments raises amber lights in the eyes of investors, entrepreneurs and business decision makers locally and overseas and will lead to lower ranking of Sri Lanka as a attractive destination for investment, do business and operate in

6. This bill will raise significant risks linked signals and country profiles in the minds of business leaders, decision makers and entrepreneurs, both local and foreign of the much feared Business Acquisition Act applied viciously in the past till it was removed from the statute books

7. The specified businesses and assets and asset owning entities listed in the schedules and impacted by the provisions not being the only such business enterprises and asset owning enterprises that can be so classified raises amber lights and significant potential risks in the eyes of investors, entrepreneurs and business decision makers locally and overseas and will lead to lower ranking of Sri Lanka as a attractive destination for investment, do business and operate in

8. Investors, entrepreneurs and business decision makers locally and overseas will fear to invest in new businesses in Sri Lanka after this experience, especially start up businesses, green field operations and long gestation period investment businesses and businesses subject to and impacted by global economic factors, seasonality factors, commodity price fluctuation linked business, business with high risks and businesses even with more than moderate risks

9. Investors, entrepreneurs and business decision makers locally and overseas will question as to why this type of legislation was given priority when a long felt need pressed on by investors and businesses in the form of a Chapter 11 type restructure provisions were left out of the statute books including at the time the Company Law was reformed.

10. Unless all stakeholders including the Executive, business chambers, professional associations, media and civil society watchdog institutes begin immediately an earnest intellectual debate on the need for this bill, the associated secrecy and urgency, the rationale for the selectivity, risks associated and seen by investors and business decision makers, other options and risk mitigation strategies analysis, sustainable national economic benefits, in the longer term interests, the nation, business and people may eventually be sorry that this bill was adopted in haste.