by Amrit Muttukumaru
We are indeed an amazing people for the wrong reasons. Our capacity to absorb virtually without murmur all the rubbish being dished out in the name of governance by successive governments must surely be unique. If not for its tragic consequences to this country and its people who are being steadily led on the road to anarchy, the antics of our governments could constitute excellent material for a block buster comedy series. The UNP dominated UNF government seems to have made a crude art of deception in passing sensitive legislation. With some assistance from an irresponsible opposition, they were able to pass legislation for the VAT Bill virtually without debate. Fortified with this experience and with the confidence of an ineffective and pathetic leadership of civil society, the government has the audacity to attempt to introduce legislation for no less than 36 Bills fundamentally affecting the country and its people virtually in the absence of any tangible public exposure and debate. It is reported that these Bills will be presented to parliament this month for approval within a month! All the hogwash about a non-existent "coup" largely being lapped up by a compliant media has virtually made the 36 Bills critically affecting the lives of the people into a non-event.

Perverse privatisation

It is also reported that according to the proposed schedule of the government, 28 of the 36 Bills will be drafted within a space of a mere 12 days while even the meagre 5 days allotted to cabinet ministers and MPs to study the same has not been without a hiccup due to their preoccupation with other "pressing" issues such as the presidential handbag! Under these circumstances, the stipulated parliamentary procedure for enacting legislation which includes the three readings of a proposed Bill is subverted similar to everything else in this country. Given the fact that these Bills are largely with reference to fundamentally altering the manner in which we are governed which includes far reaching changes to economic policy in pursuance of the goal of globalization where privatization is at its core, it is critical that ample time and space is given for public debate within a reasonable time frame.

What is at stake includes the whole gamut of deregulation in favour of the private sector both local and foreign. Under the proposed deregulation, even sensitive infrastructure essential to the life of the community such as water, power, energy, railways, ports, roads and our rain forests will be handed over to the private sector for "development." Even land and other natural resources such as our precious non-renewable ilmenite and phosphate will be up for sale. What is strongly objected to is not globalisation and privatization per se, but its mindless application carte blanche due to external pressures and in the absence of the required checks and balances to prevent abuses. Have we learnt nothing in the past 25 years since liberalization commenced in the post 1977 era? Have we learnt nothing from the tragic experiences of other countries which followed the dictates of the Bretton Woods twins, Argentina being the latest casualty in a long list?

By now everyone is familiar with the ugly side of unbridled capitalism as manifested by the antics of Enron, WorldCom, Xerox and others as well as their ever supportive auditors, investment bankers and others. Although the objectives of some of the Bills may well be laudable, such as the "Freedom of Information" and others, the public must be given an opportunity to scrutinize the same with a view to ensuring that their objectives are truly met since through bitter experience we are aware that somewhere along the line it is political expediency that always wins. It must also be appreciated that once they become law, the scope for subsequent change is limited due to reasons which include the severe time limit imposed by the constitution.

Inequitable fiscal/monetary policies

An existing obnoxious feature where the country’s fiscal policies inclusive of tax concessions, tax holidays, subsidies and monetary policies already favouring the rich and reprehensibly resulting in its burden falling more heavily on the disadvantaged sections is expected to be exacerbated as a result of the proposed Bills. This means that the poor already contributing substantially to the ostentatious and vulgar life-styles of some of the affluent will be further marginalized. This is an ideal recipe for social discontent. Added to this are already prevailing instances of alleged large scale tax evasion, under invoicing, retention of export earnings abroad, the default amounting to billions of rupees in loans particularly from state banks and other anti-social activities.

Irresponsible private sector

Since the thrust of the proposed Bills are to do with positioning the private sector as the prime driver of the economy, the question arises as to whether our private sector has the competence and social responsibility to fulfill this mandate. It will be patently clear to any discerning observer that our private sector at present, mainly due to the absence of the required checks and balances to prevent abuses, is most unsuitable for such a role. In fact it will be tragic to give them such a role. Why do we say this? It is apparent that our private sector is not at all keen on a level playing field. They in fact thrive on state patronage. This is the main reason for their servility to political and bureaucratic leaders, whatever the government.

Sri Lanka’s largely small trader mentality and "tender" driven corporate sector seems to be a haven for conflict of interest. A shocking feature is the impunity surrounding it. The conduct of some leading professional entities inclusive of legal and audit firms not to mention regulatory bodies such as the Central Bank and the SEC leaves much to be desired. This can be amply substantiated. Although auditors and other regulators always cite the "impressive" local laws and regulations to promote corporate governance, it is clear that the problem is also in regard to poor enforcement - this is the bane of Sri Lanka in almost all fields.

We have to accept the fact that we really do not have the checks and balances to prevent abuses. Under the circumstances, it is not surprising that the business community has turned to the relatively untested and obscure New Zealand company law for inspiration in formulating a new company law for Sri Lanka. It is noted that the proposed law have features which are clearly retrogressive since they do away with even some of the positive attributes of the present 1982 company law. The bottom line is that we need to have in place a law which while promoting the entrepreneurial spirit will provide the effective checks and balances to prevent abuses. Major lessons to be learnt from the current corporate turmoil in the US include the critical need to also ensure the independence and objectivity of auditors resulting also in timely and honest financial reporting.

Private sector - incompetent?

The absence even after 25 years of liberalisation of at least one regionally recognized business school let alone a world class institution, with internationally recognized personnel, does nothing to improve the competencies of our private sector. In its place we have a multitude of largely half baked institutions with highly limited facilities mostly affiliated to relatively obscure foreign entities charging exorbitant fees. Sri Lanka has also become a haven for various individuals of even mediocre background and sometimes even with preposterous claims of expertise conducting 1-2 day courses mainly in "leadership" and "human resources" also in 5-star hotels charging mind boggling fees. General ignorance and the absence of a regulatory agency to ensure standards and credibility allows this to take place.

India’s widely acclaimed impressive growth particularly in IT and management was underpinned by its world class IITs (technology) and IIMs (management) institutions inaugurated over 4 decades ago in several Indian cities. We have nothing even remotely comparable in this country. The private sector must share the blame for this. These are matters that should interest our policy makers prior to deregulation. Under these circumstances, inviting people of the calibre of Infosys N. R. Narayana Murthy at this point of time, may well prove to be counterproductive. Such people will grasp our mediocrity in an instant.

Conclusion

It is of the utmost urgency that the government immediately refrain from introducing any of the proposed legislation without first prominently exposing them to public examination and comment. This has to be within a reasonable time frame — at least 2-3 months. In the absence of the required checks and balances, the government has obviously put the cart before the horse by assigning responsibilities to our private sector which they are most ill-equipped to shoulder. The interim 2-3 months should be made use of to have in place the necessary laws and regulations to ensure the much needed checks and balances which must precede any deregulation. In any event, our precious natural resources must be preserved for future generations.

It is ironic that these measures supposedly to mitigate poverty and promote social justice will result in the opposite with the additional "bonus" of worsening social discontent. If the government as expected does not heed this request, an appeal is made to the Constitutional Council (CC) to exert the necessary pressure towards this objective. If the CC is reluctant to do so, some of our well funded and resource rich NGOs or any other appropriate source should petition the Supreme Court for a stay order on the government. Given the nature and constitution of our regulatory bodies, it is hoped that at least this step will bear fruit! This is the tragedy of this hapless nation.