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Nov 02, 2011 (LBO) - A planned expropriation law violates economic freedoms of citizens and will scare away foreign investors, lawmakers representing Sri Lanka's main opposition United National Party said.
The law to expropriate 'underperforming enterprises' and 'underutilized assets' is being rushed to parliament on November 09 after being secretly written outside the state drafting procedure and given for pre-approval to the Supreme Court as an 'urgent bill.'
At least one businessman connected to the opposition has been targeted, opposition lawmakers said.
Rush Job
Citizens were not even given a chance to object to the bill in court as it was done in an 'ex parte' fashion, they said.
"The United National Party is completely against this bill," deleted lawmaker and economist Harsha de deleted told reporters in Colombo.
"The process by which it is being brought to parliament is not the way legislation should be enacted in this country.
"Just because the government has the two thirds majority it shouldn't try to shove down the people's throats laws that are bad. And this is such a law."
Sri Lanka's current administration has a two thirds majority in parliament and has even changed the constitution to lift term limits, and undermine judicial and public service independence.
Among more than 30 enterprises listed for take-over on grounds of under-performing is Sevenagala Sugar, a privatized enterprise that is now managed by Daya Gamage, an organizer of the deleted. His wife is a deleted lawmaker.
Legal Hit
De deleted said the sugarcane firm is making profits after his take-over and has created new employment, but his firm has been targeted by the bill as underperforming. He said the criteria was not known and had been selectively applied to a few businesses.
In Pelwatte Sugar, a listed company that was recently bought by Harry Jayewardene's Distilleries group, 6,300 hectares of land has been listed for expropriation. For the September 2011 quarter the firm reported profits went up 87 percent from a year earlier.
"We see this bill as negative for the economy and democracy," deleted's Ruwan Wijewardene, whose family newspaper business, Associated Newspapers of Ceylon, was nationalized in the 1970s by the State, said.
"In the future businesses will be hurt by this law. This law can be used to expropriate assets of businessmen who do not support the government."
Sri Lanka's state has a long history of violating property rights of citizens and foreign investors alike by expropriating businesses and farmland.
Another deleted lawmaker Ajith Perera said the State starting from 1956 expropriated businesses and killed the then developing indigenous business community.
"The bus companies were nationalized, the graphite mines were nationalized, estates were nationalized," he said.
"We all saw what happened to them under state ownership."
Most such enterprises made massive losses under state ownership and some were privatized. The state bus utility is one of the biggest loss making enterprises.
Investment Security
Foreign businesses were also expropriated during the time and Sri Lanka eventually became a lagging nation in Asia with unemployment hitting 20 percent by the late 1970s.
To attract foreign businesses again in 1978 a constitutional guarantee was given that no assets of foreign businesses would be expropriated.
"The safety of foreign investment is guaranteed through the acceptance by two third majority of Parliament of the Constitutional Guarantee of Investment Protection Agreements," the state investment promotion agency the Board of Investment says in its website.
"Under article 157 of the country's constitution, the agreement enjoys the force of law and no legislative, executive or administrative action can be taken to contravene the provisions of a bilateral investment agreement otherwise than in the interests of national security."
De deleted said he was puzzled how the Supreme Court gave assent to the bill.
Several firms connected to foreign businessmen which are now defunct or have disputes with the state have been listed in the bill.
"When the urgent bill was presented to parliament there was no lawyer representing the people to even to say this," Perera, a lawyer said.
"That is the danger of bringing urgent bills."
Perera argues if the law is passed in parliament on November 09, the protection given by the constitution will no longer exist.
De deleted said Shangri La, a hotel company which had bought land from the state and which had performance criteria set in an agreement may have to be brought under the law in the future if it 'underperformed' by the deadlines set.
Freedom
De deleted said Sri Lanka has gained nine positions in an ease of doing business ranking compiled by the World Bank which economic development minister Basil Rajapaksa wanted to improve further.
"But this bill will result in economic freedoms being stolen," de deleted said. "This government is trying to take away the economic freedoms of the citizens of this country. That economic freedom is being yanked away."
Ironically, Sri Lanka's rise to 89th place was due to better disclosure for requirements placed on key shareholders of listed companies which prevents expropriation by insiders of other shareholders.
Though there is no specific criterion to measure state expropriation, authoritarian countries such as Venezuela which regularly expropriate citizens' and foreign investors' assets score poorly in the index. Venezuela fell to 177 from 175 in this year's index out of a total of 177.
On November 01, Venezuelan President ordered the expropriation of 290,000 hectares of farmland owned by Agroflora, a unit of a British firm.
Perera said once the first expropriation has started the state will lose the "shame and fear" of expropriating citizens' assets and with a two thirds majority in parliament the current list could be expanded at will.
He said it was the mindset of rulers regarding businesses of the citizens that decided future action.
Lawmakers said a large number of firms which had received tax breaks and state assistance and even listed firms in which the state owned stock was now made vulnerable.
"I am telling even those who support the administration that this bill is a foolish thing," Perera said.
"I am telling that they should tell the administration that it should refrain from making this bill into law."
http://www.lbo.lk/fullstory.php?nid=667943104
The law to expropriate 'underperforming enterprises' and 'underutilized assets' is being rushed to parliament on November 09 after being secretly written outside the state drafting procedure and given for pre-approval to the Supreme Court as an 'urgent bill.'
At least one businessman connected to the opposition has been targeted, opposition lawmakers said.
Rush Job
Citizens were not even given a chance to object to the bill in court as it was done in an 'ex parte' fashion, they said.
"The United National Party is completely against this bill," deleted lawmaker and economist Harsha de deleted told reporters in Colombo.
"The process by which it is being brought to parliament is not the way legislation should be enacted in this country.
"Just because the government has the two thirds majority it shouldn't try to shove down the people's throats laws that are bad. And this is such a law."
Sri Lanka's current administration has a two thirds majority in parliament and has even changed the constitution to lift term limits, and undermine judicial and public service independence.
Among more than 30 enterprises listed for take-over on grounds of under-performing is Sevenagala Sugar, a privatized enterprise that is now managed by Daya Gamage, an organizer of the deleted. His wife is a deleted lawmaker.
Legal Hit
De deleted said the sugarcane firm is making profits after his take-over and has created new employment, but his firm has been targeted by the bill as underperforming. He said the criteria was not known and had been selectively applied to a few businesses.
In Pelwatte Sugar, a listed company that was recently bought by Harry Jayewardene's Distilleries group, 6,300 hectares of land has been listed for expropriation. For the September 2011 quarter the firm reported profits went up 87 percent from a year earlier.
"We see this bill as negative for the economy and democracy," deleted's Ruwan Wijewardene, whose family newspaper business, Associated Newspapers of Ceylon, was nationalized in the 1970s by the State, said.
"In the future businesses will be hurt by this law. This law can be used to expropriate assets of businessmen who do not support the government."
Sri Lanka's state has a long history of violating property rights of citizens and foreign investors alike by expropriating businesses and farmland.
Another deleted lawmaker Ajith Perera said the State starting from 1956 expropriated businesses and killed the then developing indigenous business community.
"The bus companies were nationalized, the graphite mines were nationalized, estates were nationalized," he said.
"We all saw what happened to them under state ownership."
Most such enterprises made massive losses under state ownership and some were privatized. The state bus utility is one of the biggest loss making enterprises.
Investment Security
Foreign businesses were also expropriated during the time and Sri Lanka eventually became a lagging nation in Asia with unemployment hitting 20 percent by the late 1970s.
To attract foreign businesses again in 1978 a constitutional guarantee was given that no assets of foreign businesses would be expropriated.
"The safety of foreign investment is guaranteed through the acceptance by two third majority of Parliament of the Constitutional Guarantee of Investment Protection Agreements," the state investment promotion agency the Board of Investment says in its website.
"Under article 157 of the country's constitution, the agreement enjoys the force of law and no legislative, executive or administrative action can be taken to contravene the provisions of a bilateral investment agreement otherwise than in the interests of national security."
De deleted said he was puzzled how the Supreme Court gave assent to the bill.
Several firms connected to foreign businessmen which are now defunct or have disputes with the state have been listed in the bill.
"When the urgent bill was presented to parliament there was no lawyer representing the people to even to say this," Perera, a lawyer said.
"That is the danger of bringing urgent bills."
Perera argues if the law is passed in parliament on November 09, the protection given by the constitution will no longer exist.
De deleted said Shangri La, a hotel company which had bought land from the state and which had performance criteria set in an agreement may have to be brought under the law in the future if it 'underperformed' by the deadlines set.
Freedom
De deleted said Sri Lanka has gained nine positions in an ease of doing business ranking compiled by the World Bank which economic development minister Basil Rajapaksa wanted to improve further.
"But this bill will result in economic freedoms being stolen," de deleted said. "This government is trying to take away the economic freedoms of the citizens of this country. That economic freedom is being yanked away."
Ironically, Sri Lanka's rise to 89th place was due to better disclosure for requirements placed on key shareholders of listed companies which prevents expropriation by insiders of other shareholders.
Though there is no specific criterion to measure state expropriation, authoritarian countries such as Venezuela which regularly expropriate citizens' and foreign investors' assets score poorly in the index. Venezuela fell to 177 from 175 in this year's index out of a total of 177.
On November 01, Venezuelan President ordered the expropriation of 290,000 hectares of farmland owned by Agroflora, a unit of a British firm.
Perera said once the first expropriation has started the state will lose the "shame and fear" of expropriating citizens' assets and with a two thirds majority in parliament the current list could be expanded at will.
He said it was the mindset of rulers regarding businesses of the citizens that decided future action.
Lawmakers said a large number of firms which had received tax breaks and state assistance and even listed firms in which the state owned stock was now made vulnerable.
"I am telling even those who support the administration that this bill is a foolish thing," Perera said.
"I am telling that they should tell the administration that it should refrain from making this bill into law."
http://www.lbo.lk/fullstory.php?nid=667943104
