Sri Lanka should divest remaining plantations in 3,000 acre parcels: economist

ECONOMYNEXT – Sri Lanka should divest the remaining plantations of those expropriated from the people in 3,000 acre parcels for commercial agriculture to domestic and foreign investors and retain forested areas in the state for conservation, an economist has said.

Although Sri Lanka privatised the bulk of state plantations in the mid-1990s, about 20,000 hectares were retained in the original Janatha Estate Development Board and Sri Lanka State Plantations Corporation, two firm built with expropriated land.

The two state firms are now being subsidised with people’s money to the tune of about Rs1.5 billion a year, and there are unpaid retirement fund payments.

Elkaduwa Plantations, a firm structured for sale, was also retained mostly because there were no takers.

The privatised regional plantation companies had about 10,000 hectares each.

The remaining land was now ‘very much more run down’, requiring much more capital for the land to be made productive and viable, Romesh Bandaranaike, who was involved in the original privatisation, said.

"You need to make them into smaller units, mabe around 3,000 hectares," Bandaranaike told an economic forum in Colombo, organised by the Ceylon Chamber of Commerce.

"People (now) have to pump in much more money to get them going. You need to do new things. Not even as (traditional) plantations but whatever commercial agriculture. So you need to make the size smaller."

Most old plantations had tea, rubber and coconut, with some estates moving to oil palm, tourism and hydro power after privatization.

But a ‘golden shareholder’ in the form of the state was preventing the sub-leasing of land for more radical transformation of the lands, Bandaranaike said.





He said the remaining land should not be restricted so that innovative new crops and other ideas could be tried out.

Bandaranaike said, in the 1990s, the staff and labour went with the estate with their existing employment contracts. Only about 60 percent of the original workforce are now in the privatized estates, an official said.

"But now you have to make it free and clear," he said.

While labour could be assigned to the 3,000 acre plots Bandaranaike said their provident funds and gratuity should be paid and if possible another Rs100,000 or similar amount be offered as compensation.

He said most workers may opt to take the money realising that they can again find work in the privatised firms, since they will need workers.

He said the land could be sold under leases like the original plantations, with an annual rent.

"But more importantly it is time to let foreign companies to come in to this story," he said.

"Without a doubt you should allow foreign companies to come into it."

"The other is to provide complete flexibility. People should be allowed to do whatever they like."

Bandaranaike said domestic firms up to now had not done enough and specialist foreign firm possessed agro technology and capital.

Once somebody started a new thing, others will follow, since Sri Lankans were very good at copying, he said.

After Tom Ellawala started growing a species of mango, many had started to copy him, he said. He said areas covered by forests should be retained in the state for conservation either in the Forest Department or the Department of Wildlife.

There were 2,000 acres of forests, which should be conserved and given to the Department of Wildlife, he said.

People with political influence, who do not have the expertise or capital will then try to get the land and simply strip the timber he said.

Sri Lanka’s plantations privatisation has been a big financial success with the state getting cash up front through privatisation, lease rents every year but diversification was limited due to restrictions in the lease and foreign participation, he said. (Colombo/Aug16/2016)

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