Sri Lanka has created a State-owned limited liability company to incorporate its network of 18 Dedicated Economic Centres (DECs). So far, seven directors have been appointed to the newly incorporated institution in order to address any lapses in the current management model.
Speaking to The Sunday Morning Business, Minister of Trade, Commerce, Food Security, and Cooperative Development Wasantha Samarasinghe said that operations under the structure were already underway following the establishment of the committee.
This work of National Agri Marketing Service Ltd., the incorporated company which has already been established, is underway.
Lack of information as the biggest concern
However, when The Sunday Morning Business spoke to several stakeholders within the DECs, they highlighted the need to spread more awareness regarding this structure and include them in necessary discussions.
Former Secretary and present member of the Working Committee of the Dambulla Economic Centre Trade Association I.G. Wijenanda noted that the former management structure had carried out administration successfully, managing the revenue and investing independently as needed.
However, according to him the issue is the lack of awareness regarding this newly proposed company. Thus, they are unable to assess the potential implications of this move for economic centres. He noted that the vast majority of traders preferred the system that was already in place prior to this proposed change.
Furthermore, Wijenanda said that this initiative was being implemented without adequate discussions involving the industry.
“We requested discussions to inquire about the process and how it will be implemented. Although meetings were promised, they did not take place. Further, although the officials assured that this would only bring about positive outcomes, we are yet to properly learn about the constitution of this programme. If necessary discussions were carried out, there wouldn’t have been many concerns,” he said.
Further, as the segment that is directly engaged in the economic centres, he stated the need to discuss these matters with traders first.
On mismanagement claims regarding the existing structure, Wijenanda said that the management could have been changed by the ministry itself if needed, without moving to a new company. Hence, the industry hopes for proper information, awareness, and discussions. He also noted that there was currently pending legal action taken by economic centre stakeholders against this move.
Information gaps that must be addressed
Meanwhile, Keppetipola Economic Centre Trade Association Chairman S.A.R. Bandusena noted that the system currently in place had worked well with no issues for decades, with the necessary regulatory steps being implemented.
He stated that this management unit was typically responsible for tasks such as discarding garbage, billing entrance charges, and maintaining other necessary infrastructure including washrooms and canteens, as well as ensuring utility charges and taxes, among other duties.
Bandusena also noted the traders were unaware of most of the members who were leading the new committee. “We are yet to be properly informed about this and most members are unaware of the process. Our view is that the management should be carried out by the economic centre itself,” he said.
Addressing concerns regarding the funds collected being reinvested in the economic centres themselves when the management changes, Bandusena noted that specific economic centres were planning on redirecting any collected funds from the centre for the purpose of executing renovations, such as building new roofs. However, he noted that these implementations had also been stalled at present.
“The economic centres have collectively and separately taken legal action against moving into a limited liability company structure. As mentioned, we are yet to be informed about the specificities while the committees have been established,” he said.
The need for clarity regarding structure
Speaking to The Sunday Morning Business, University of Peradeniya (UOP) Department of Economics and Statistics Professor M.B. Ranathilaka stated that there was a lack of clarity regarding the proposed structure at present, especially regarding its ownership, composition, and governance structure.
He further noted that its institutional structure, including membership, management hierarchy, and operational framework, must be disclosed far more effectively in order to reach all stakeholders.
Prof. Ranathilaka explained that without such clarity, it was difficult to properly assess the feasibility or economic implications of the proposed company, as its liabilities, institutional mandate, and accountability mechanisms would depend largely on its structural design. He added that a clearly defined structure was necessary to ensure proper functioning and oversight.
Prof. Ranathilaka also highlighted the importance of consulting qualified experts from universities, Government departments, and the private sector, especially those with expertise in business, agricultural economics, marketing, trade, and transport.
“The authorities should ideally organise forums and establish dedicated committees including such experts to study and recommend an appropriate structure for the proposed company. Such a committee could engage with relevant stakeholders, observe institutional and market conditions, and submit recommendations to the Government on the most suitable governance and operational framework,” he said.
Prof. Ranathilaka added that without a properly designed institutional and regulatory structure, the proposed entity had a possibility of becoming another ineffective corporate body that failed to address the welfare of those involved. He also noted the need to develop effective legal and regulatory frameworks to maintain accountability and responsibility among officials managing the company.
“There are many practical and legal constraints in markets. First, these need to be addressed. If they are addressed effectively, improved conditions and prices can be maintained fairly while improving overall market efficiency,” he said.
Thus, as a first step, he believes that authorities must clearly define the ownership structure, governance framework, and accountability mechanisms of the proposed company more comprehensively, including the roles and powers of its management and board of directors.
He added that a proper expert committee could develop and submit a structured proposal to the relevant minister, while also allowing informed decision making and ensuring that the company was established on a proper institutional and economic foundation.
“The main objective of this initiative should be to improve market efficiency, providing fair prices to both farmers and consumers, reduce post-harvest losses, and address structural constraints in agricultural marketing,” he said.