Sri Lanka mulls reforms to punish ‘errant’ plantation companies
Saturday August 10, 2019
ECONOMYNEXT- Errant Regional Plantation Companies (RPCs) in Sri Lanka need to be punished under new reforms to be brought in the future, Plantations Minister Navin Dissanayake said, while estates stil under the state are eating up hundreds of millions of rupees in tax money.
"Unfortunately, RPC reforms could not be done while I was in office," Dissanayake said at the Annual General Meeting of the Colombo Tea Traders’ Association, which celebrated its 125th anniversary.
He said that the ministry had graded all 24 RPCs according to their tea making practices as A, B and C.
"Most RPCs were in the A and B groups, but some were in C; those that broke rules," Dissanayake said.
"Unfortunately for me, there is no way to penalize them. There is a lacuna there."
"Hopefully in the future, we can look at this," he said.
Dissanayake said that reforms need a consensus form the industry and cannot be implemented top down by one policy maker.
However, he also said that the tea industry is highly regulated and requires deregulation in certain areas, which the industry must also collectively decide upon.
Sri Lanka’s RPCs have 50-year leases to tea land and the government is the golden shareholder, with veto powers.
Tea is Sri Lanka’s second largest merchandize export, earning 1.4 billion US dollars in 2018.
Two plantation companies in state hands including Elkaduwa Plantations are making losses in the hands to the state and are propped up with peoples’ tax money.
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It is not clear what penalties will be charged on the state and bureaucrafts to help tax payers.
Before Sri Lanka expropriated plantations of private citizens, the state had no role in deciding what they did. Plantations owners transformed an entire coffee sector to tea with no interference from the then rulers.
It is not clear how the state which is lost money on the entire sector before privatization, has now come to claim a right to ‘punish’ private leaseholders. But the state has a golden share which could be to block and delay reforms and innovation and there is also a finite lease. (Colombo/Aug08/2019)