Sri Lanka to tackle military business in sensitive way: Eran

ECONOMYNEXT- Sri Lanka is mulling alternatives to scaling back military business, amid warnings that milibiz not only stifles private entrepreneurs but that it has been a slippery slope to authoritarianism in other countries.

Sri Lanka’s military runs an airline, restaurants, and even a whale watching ship, following the expansion of armed forces into civilian space during the last administration.

The military also built a hotel chain braded Laya with tax payer money.

"These issues are being tackled in a very sensitive way," State Minister for Finance Eran Wickremaratne told an economic forum in Colombo, Thursday.

"The government is very clear of the role of the military, we are very clear what their roles should be in the future and we are also very clear of what we should do for those who fought for the country."

Sri Lanka government has also come under fire for using the soldiers for construction work, along with military business.

Soldier have no freedom to strike, refuse to work or go home, and using them for routine economic activities from military business to construction, is forced labor and close to slavery, liberty advocates have pointed out.

Leaving the job is considered ‘desertion’ a ‘crime’ that is subject to court martial.

That is why free countries only use the military for emergency rescue work, which most soldiers are happy to engage in, and not for other routine economic activities such as military business or construction.

In Sri Lanka there is no conscription, or ‘national service’, where salaries are always below market.





In theory, a volunteer army could be paid market or near market salary, economists say, but which still does not take away fact that soldiers are in effect forced labour, as they have to serve long enough to be ‘allowed’ to retire, once they sign up.

"Slavery, even for a limited time, is an atrocity," explains, Donald J Bourdreax, professor of economics at George Mason University.

"One of the greatest advances in human freedom was the commutation of taxes in kind to taxes in money," economist Milton Friedman once said.

Sri Lanka abolished ‘taxes in kind’ known as wedawasam or service tenure, during British rule. Slavery was also abolished during British rule.

Anushka Wijesinha, Chief Economist at Ceylon Chamber of Commerce said military business crowded out opportunities for private sector expansion, and gave rise to economic distortions.

"They have fantastic service," Wijesinha. "There are Air Force flights to Jaffna. They are extremely polite and you forget that Air Force officers are cabin crew. But that is the only flight."

"In a country that is trying to promote tourism, promote better connectivity across regions, the fact that we have very limited domestic aviation options and that the military only runs it is problematic."

"The service is fantastic, vessels fantastic (in whale watching) and we don’t know if it is really the best in the business."

The Air Force started carrying civilians during a long-running civil war. The hotels were built amid a tourism boom after the war.

Expanding military business in other countries has put them above the law, and led to authoritarian rule as well as corruption.

Sri Lanka’s Navy had a joint venture providing piracy protection to foreign ships which is currently being probed for possessing illegal weapons and corruption.

"Military involvement in the economy is a huge long term danger," Fred McMahon, Michael Walker Chair of Economic Freedom Research of The Fraser Institute said.

"When the military gets involved in the economy they become politicized, corruption rises.

"And in the long-term what occurs is you give men with guns a reason to support a corrupt system." (Colombo/Oct14/2017)

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