AKD outlines industrial policy of the NPP/JVP
- Claims party is not opposed to privatisation, but that the State must not try to ‘do it all’ either
By Sumudu Chamara
Even though Sri Lanka has paid great attention to privatising loss-making public institutions with the hope that it would turn such institutions into profit-making ones, privatisation does not necessarily result in economic or institutional growth. While privatisation is portrayed and viewed as the best path to achieve economic development, there are many other areas apart from privatisation the country should look into in order to make the public sector profitable and efficient.
At the same time, the Government should strengthen and streamline the private sector by breaking monopolies and supporting small and medium-scale enterprises (SMEs), which will play an important role in developing the country’s economy and the stability of the domestic market.
These sentiments were expressed by National People’s Power (NPP) and Janatha Vimukthi Peramuna (JVP) Leader MP Anura Kumara Dissanayake, speaking at a forum about privatisation and the sale of State enterprises held last week titled “The truth behind privatisation”. He pointed out several key steps that are necessary to strengthen the public and private institutions, especially with regard to the national economy.
Stabilising and strengthening domestic markets
During his speech, Dissanayake underscored that, unlike the private sector, the Government has a social responsibility that needs to be fulfilled, which involves providing goods and services at a fair price, ensuring their quality, and ensuring their availability. To achieve that, he said, it is important to regulate certain sectors that can be regulated in order to reduce the pressure on the people by agencies such as the Consumer Affairs Authority (CAA) and the Public Utilities Commission of Sri Lanka (PUCSL).
Noting that despite being considered an old system, certain sectors can actually thrive through the co-operative model, Dissanayake added: “The co-operative society system is a good system, and it is still widely used in the world. It is used as a tool to monitor the market’s behaviour too. What has been achieved through it? It has helped make interventions to control a fair price, good quality, and availability, especially in paddy and rice markets. When it comes to our country’s rice market, only 23% is owned by mainstream rice mill owners. The rest of 77% is owned by small and medium-scale rice mill owners. However, it has been possible for 23% of rice mill owners to completely dominate the paddy and rice market. That is because 77% of rice mill owners are not organised. They do not have brand names, stable quality, and an uninterrupted supply of products. However, the said 23% of rice mill owners have those qualities, and it has made it possible for them to create a rice monopoly.”
Reminding that former Agriculture Minister Mahindananda Aluthgamage had said that the Government was planning to set up eight rice mills to change the status quo, Dissanayake said that it would not be the approach his party/a government under his party would choose.
“We are not advocating for the Government trying to control everything and trying to do it all. We will not do that. Instead, we will provide technology and capital for small and medium-scale entrepreneurs and organise them through some form of society/union, to ensure that their products enter the market under one brand name and have the same quality. That could break this monopoly.”
Another approach he said is important, especially when it comes to breaking monopolies, is increasing competition. Taking the Government’s decision to impose import restrictions on tiles, he said that in a context where Sri Lanka’s tile market is dominated by just three companies owned by two owners, import restrictions could create a tile monopoly in the country. He also noted that tile prices have already skyrocketed.
“We will not allow monopolies to be created in the market. If we were to take that decision, we would have identified and invited several businessmen to enter this business. We would have taken measures to provide the capital they need through the banking system at a lower interest rate. In addition, in such a situation, we would provide technical knowledge when necessary and would establish the confidence that their businesses would be supported. Only then would we stop importation.”
He stressed that his party/a government under his party would accept market behaviour based on competition created by more manufacturers.
Privatising, restructuring public sector
Dissanayake went on to say that even though privatising is often portrayed by various parties as a solution to save loss-making institutions, which the general public, too, believes due to the burden of the economy they are experiencing, it is not the best solution in many cases. He questioned the rationale behind selling (to the private sector) only selected public institutions, not inefficient or loss-making public institutions in general.
He emphasised that the economy should be handled by the Government in line with national economic strategies and that one of the main obstacles hindering the country from reviving the public sector is unwarranted political interference.
Dissanayaka pointed out several instances where relatives of a Minister in charge of ports were appointed as Chairman of Lanka Ports Authority (SLPA), relatives of a Minister in charge of petroleum oil were appointed as Chairman of Ceylon Petroleum Corporation (CPC), and unqualified and connected persons were appointed to top posts of SriLankan Airlines. He stressed that such appointments are usually made to public institutions pertaining to ports, petroleum, and SriLakann Airlines and that appointments made under political interference are generally made to institutions that have huge amounts of wealth.
“In this context, first of all, institutions of economic strategic importance should be kept under the Government and should not be politicised,” he opined.
Dissanayake said that when he was serving as the Minister of Agriculture, he depoliticised public institutions that were under him, and that when it comes to top positions in those institutions, priority was given to expert and experienced professionals. He claimed that such steps have borne fruit. He further added that some institutions that suffer losses made profits when political interferences were prevented (when appointing officials).
Moreover, according to Dissanayake, one of the main steps necessary to strengthen the public sector is eradicating corruption in public institutions. He opined that it is an achievable objective, as there is a large number of people who wish to support the country by doing their job properly. Unnecessary appointments, political appointments, and the recruitment of unsuitable persons, he said, are among the main factors that have nourished corruption as well as a culture that supports corruption.
With regard to public institutions that have more employees than they need, he explained: “For example, the Ceylon Electricity Board (CEB) has around 26,616 employees, which is an excessive number of employees. The CPC has around 2,300 employees. Every day, five buses travel from Matara to the Colombo Port carrying port employees, and this is because there was a Port Minister from Matara. Every day, two buses travel from Kuliyapitiya to Isurupaya in Colombo carrying employees, and this is because there was an Education Minister from Kuliyapitiya. Every day, two buses travel from Ratnapura to Sri Lanka Bureau of Foreign Employment (SLBFE), and this is because there was a Minister in charge of SLBFE who hailed from Ratnapura.”
“We are told that this (the public sector) is a burden; who created this burden?” he questioned, adding that it is not at the top level but at the bottom level of the public sector hierarchy that an excessive number of employees could be seen.
“They are political appointments. Appointing too many employees is not just a matter of salaries, it is also a matter of the culture created by too many appointments. Some employees such as drivers act as if they are more senior than their superior officers because the former’s appointment was made by a Minister. The whole system has been destroyed, and it is this culture that started the collapse of the public sector.”
Dissanayake further said that even if public institutions are sold, it may be difficult to save them under the existing political system and that Sri Lanka’s public sector, which at one point was one of the most efficient public sectors in Asia, has now been completely destroyed by politics.