Land diversification at Sri Lanka’s privatized plantations stuck at state ‘Golden Shareholder’
ECONOMYNEXT – A so-called ‘Golden Shareholder’ in for the state is blocking sub-leasing of privatized plantations, making it more difficult for estates to diversify out of the traditional tea and rubber, to better use of the land, an economist has said.
The ‘Golden Shareholder’ in the form of the Treasury Secretary, was put in to allay concerns over the mis-use of land in the mid-1990s when the estates were privatized and given back to private hand through 22 companies which had long term leases.
The farms, called plantations in Sri Lanka were originally expropriated from the people and companies by the elected ruling class, through a Venezuela and Zimbabwe style exercise, which helped Sri Lanka lag behind the rest of Asia with results that echoed those of the two countries.
"The Golden Shareholder’s has to approve sub-leasing of land. Now the system has broken down it is now clear why," Romesh Dias Bandaranaike an economist involved in the privatization of the plantations told a business forum organized by the Ceylon Chamber of Commerce in Colombo.
"People put in requests, satisfy all the requirements, it goes to the Ministry of Finance, the officers look at it, they approve it and they sent it to the Secretary to the Treasury, and then it sits here.
"For months and months it sits there nobody knows why it does not get pushed. Something needs to be done where once the officials clear it approval is automatic where the Secretary to the Treasury signs it."
"But he doesn’t."
During the privatization process, the leases had got progressively tighter he said.
Bandaranaike said he understood government was looking at making the leases more flexible to allow innovation and make all the leases the same.
Some firms however have gone into limited crop diversification and others into mini-hydro and tourism.
Government interference in wage negotiations had also blocked productivity based wages, he said.
However privatization of plantations had probably saved the people billion of rupees, he said. At the time they were privatized tax-payers were forking out 1.2 billion rupees a year, which could have been about 10 billion rupees now, he said.
About 20,000 hectare of plantations land left in the hands of the state now required 1.5 billion rupees in retirement areas to be paid. An official had said the Treasury was paying about 60 million rupees a month (720 million rupees a year) to supplement wages of remaining estates
Roshan Rajadurai who represented privatized plantations said the firm now had only 81 percent of the land originally assigned to them and only 53 percent of the workforce.
Production volumes were up 14 percent. Yields were up 36 percent he said, though it was not clear how it was measured.
Rajadurai said political pressure during wage negotiations had prevented productivity based wages from being implemented.
The estates were stuck with a ‘150 year old Colonial era’ structure based on attendance, he said. (Colombo/Aug09/2016)