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The health of the private sector in Sri Lanka
11 Nov, 2013 07:28:35
By Rohan Samarajiva
Nov 11, 2013 (LBO) I was in Fiji a few weeks back. Opening the morning paper, I was struck by a news story which said that the productivity of the Suva and Lautoka container terminals had increased by 35 percent, even before the new shore cranes had arrived.
Good

The cause: Sri Lanka’s Aitken Spence PLC, which had won the contract to operate the ports.

I was in Samoa a few months back and was impressed that the Platinum Sponsor of the reception I was invited to was Informatics, a Sri Lankan company. I bumped into Tony Weerasinghe, the founder of Millennium IT (now a part of the London Stock Exchange), in Port Louis, Mauritius. He was in town talking to the Mauritius Stock Exchange, which uses MIT software.

In Bangladesh, a leading bank favored by the elite is the Commercial Bank of Ceylon. In India, marketing peopletold me that MAS Holdings’ Amante was one of the most successful brand launches in recent times.

From these random examples, one could conclude that the Lankan private sector is doing very well. They are battling it out beyond our shores, and winning.

Bad

But perhaps, that may not be the explanation. Perhaps, things are so rough in the home country that our companies have been compelled to venture abroad. This is one narrative in play about the increasing tendency for Indian companies to venture abroad.

The bleakest thing I can think of is the Underperforming Enterprises Act of 2011 that saw the expropriation of a significant number of specified enterprises, including those belonging to a major entrepreneur who also happened to be an opposition politician. I proposed the government should suspend the legislation and use it to compel the owners of the underperforming enterprises to remove the blockages to development (http://www.lankabusinessonline.com/news/sri-lanka%E2%80%99s-expropriation-bill-as-batna/425025906).

Sadly, this was akin to serenading a deaf elephant, to translate a colorful Sinhala aphorism.

Or, the favoritism toward government-owned or controlled companies. SLT getting the contract to build the national fiber optic backhaul network even after the World Bank pulled out the cheap money they had offered. The military running golf courses, restaurants, hotels and private medical colleges.

Or the blatant unfairness of Rathupaswala. The factory that makes most of the latex gloves shipped out of the country ordered to be closed down by Presidential Fiat even when the scientific evidence refutes the allegations leveled against it. If this is how a crown jewel of Sri Lanka’s value-added export agriculture is treated, what hope for others?

What can be done?

Rathupaswala was educative on another dimension. A few experts spoke up in its defense. But where were the Chambers? Where was the voice of the small business man or woman who should have found it easy to empathize with Hayleys?

I was shocked by the lack of solidarity in the Sri Lankan private sector.

As I showed in a column written in the midst of the crisis, 72 percent of all the rubber exported from Sri Lanka goes out value-added (http://www.lankabusinessonline.com/news/sri-lanka%E2%80%99s-anti-corporate-band-wagon/1603013516). This is a massive private- sectorachievement.

But how little gratitude was shown for this contribution to the national good?

Why?

It seems that the private sector has not communicated its contributions effectively.It seems the country is still in the thrall of the socialist rhetoric of my youth, rife with rapacious companies and pristine villages ravaged by industry. Thirty five years after we were released from the socialist straightjacket, our thinking is still in its clutches.

Why are the captains of industry, so good at marketing their wares, unable to market the virtues of private enterprise and decentralized innovation? Why are they unable, at least, to build solidarity among their own?

Why not?

Rohan Samarajiva heads LirneAsia, a regional think tank. He was also a former telecoms regulator in Sri Lanka. To read previous columns go to LBOs main navigation panel and click on the 'Choices' category.

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READER COMMENT(S)
6. Rohan Samarajiva Nov 14
@Kosala. Agree with with Nishantha on the ravulayi kandayi conundrum, but not entirely with your central claim.

You are correct that some who live on this fair isle desire the quiet, mediocre life. But not all. There are others who wish for something better; who are dissatisfied with the status quo. I do. I think you do too.

We live here too. The mediocre do not have a monopoly on this land. How do we reconcile our differences and move forward. That is the question.

5. Kosala Nov 13
Prof. RS has again highlighted an excellent point. Also @ Nishantha a great post. But I believe all are asking the wrong questions.

The questions I would ask from all Sri Lankans is this .

Do you want to be great? or Do you want be mediocre ? The answer is ..... Sri Lankans want to be a peacefully mediocre country who would like to be forgotten by history at its first possibility.

Why do I, say it so ?

I have been to few developed countries such as Germany , Australia and USA . What are the differences between those countries and Sri Lanka other than the usual drivel people like to highlight like economic indicators?

It’s the attitude of their citizens. They don’t want to go hand and foot begging for this and that from politicians. They want to earn a living on their own terms. Governments are elected for that. They are decisive in their action.

They don’t vacillate between this and that. They know what they want in life. They want to be better than they were yesterday. Last but not least they do NOT aspire to be mediocre. They want to be remembered for generations. They want to WIN!

Sri Lanka with it current mind set has come to its peak prosperity. It is high time that everyone comes to their senses and acknowledges this sad and obvious fact. There is no point in blaming anyone. This is far as any mediocre thinking people can go.

4. Nishantha Kamaladasa Nov 13
Most institutions in SL are in a predicament. Not knowing what to do exactly; to be or not to be. It is same with the Government and the private sector. Government is not sure whether to allow private sector to take reins or promote state sector. Private sector is not sure whether they should oppose the non-friendly (or part friendly) government or to get its patronage, ignoring what bad government does.

UNP is not sure whether it is Ranil or any other who can lead them. We are not sure whether we want to devolve power or not. We are neither here nor there. We like to enjoy both "Kanda" and "Ravula".

3. Jack Point Nov 11
Excellent piece.
2. seberet Nov 11
If you take the views of the public sector, you would be shocked to find out that the majority of the public sector still has the socialist mind set. For them, the govt sould be in business and private sector is bad.
1. fuss-budget Nov 11
The problem is justice and rule of law have been destroyed in Sri Lanka. That is to say it is not a question of whether Dipped Products should be allowed to pollute simply because they are exporting, but that they should be allowed due process and the case should be proven with evidence before action is taken and the same right should also be available to a manufacturer catering to mostly domestic customers.

But as Prof Samarajiva says this is a high profile case and it should open the eyes of businessmen.

The quality of standing up for justice and what is right has been destroyed in all our citizens, not just the 'private sector'.

The 'private sector' itself has been relegated to second class citizenship by the elected ruling class and statists. The elected ruling class who live off the sweat and toil of what they call the 'private sector' and state worshipers have made them feel like second class citizens by coming up with a word called the 'private sector' and insidious tainting it with a pejorative slant. In fact there is no need to call economic activity of the citizens 'private sector' if this was a free country.

In virtually no country has true privately-owned free enterprise (who were called capitalists in Europe by their critics) who do not depend on the state and police power for profits have been able to effectively make a case. In a country like Sri Lanka with a high degree of statolatry where the state education system brainwashes children from a young age in both nationalism and statolatry this is almost impossible.

Protection seeking nationalist businesses of course do this and appears as the great saviors of the nation against foreign domination. That is how they make profits. Companies that make profits by pleasing customers in freedom have to take the hit.

It must be said also that Hayleys has benefited from state interventions - tax holidays, vicious currency depreciation which generate poverty and destroys investible capital whic is the very foundation of 'capitalist' endeavor - which inherently undermine rule of law and justice and condition the minds of the ordinary citizen to accept arbitrary rule and injustice as a matter of course.