Sri Lanka to re-examine statist, nationalist land laws that block investment

COLOMBO (EconomyNext) – Sri Lanka will re-examine land laws which prevent people from owning larger tracts of lands and foreigners and investors from using them to create higher value, officials said.

R Paskaralingam, special advisor to Sri Lanka’s Prime Minister said the government would look at the land use ceiling as well as foreign ownership.

"The government is looking at the ceiling on land… and also foreigners owning land," Paskaralingam told a business forum organized by the Ceylon Chamber of Commerce. "It is being addressed."

He was speaking after an investor said he had a partner who needed 500 acres for a commercial agricultural project but was stumped by a 50 acre ceiling as well as a block on foreign ownerships.

Large tracts of land have been given on long-lease in the case of privatized plantations companies, but new nationalist laws that prevented foreign investors from owning land had created confusion and uncertainty among even existing entities including listed firms.

Deputy Economic Policy Minister said there were ‘many genuine cases’ which had created confusion after a land alienation law was brought, which could be looked at.

Under European rule ordinary Sri Lankans got freehold land which earlier belonged mostly to the King, but after independence from British rule some of those rights were taken away in East-European style ‘rural nationalism’ as well as socialist expropriation of ordinary citizens by a coercive state, analysts say.

While nationalist laws discriminate against foreigners and minorities leading to war and misery, statist laws give privileges to the state including land ownership or monopolies, re-creating conditions of the feudal or Mercantilist eras and undermining individual rights of the citizen.

Under the latest laws, freehold which should give absolute right for anyone to sell to anyone they wish, if the citizen was free was taken away by the elected ruling class, critics say.

Analysts say in Hungary, one of the original countries in the world where vicious nationalism emerged after the break-up of the Austro-Hungarian Empire, there had been resurgence of rural nationalism and Neo-Nazism in recent years and laws enacted against foreign ownership of land.

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Some foreigners who had invested in farms in Hungary where productivity had zoomed to very high levels with new farming methods were hurt by the new law. Re-emerging nationalism has also created problems for Hungary on European integration.

Through various regulations, including price controls, under-mining property rights, discriminatory laws against various citizens, or even tax incentives that mis-direct capital based on the ‘omniscience’ of rulers and bureaucrats, a state can retard a citizens’ initiative and innovation, and make them lagging nations.

Sri Lanka’s International Monetary Fund representative, Eteri Kvintradze said her own country dismantled Soviet controls and created one of the freest economies in the world.

The country also had a neutral investment environment. But she said even Georgia had placed some restriction on land ownership but it was much less restrictive than in Sri Lanka.

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