Underperforming government brings a bill to acquire underperforming private enterprises
(October 25, Colombo, Sri Lanka Guardian) Today’s media, based in Colombo has reported that the government has placed before the Supreme Court a bill for a new law to acquire underperforming enterprises and underutilised assets. The president has placed this bill before the Supreme Court for approval. According to the report this bill was taken before the Supreme Court on October 24, 2011. During the proceedings then the Chief Justice asked the Deputy Solicitor General whether the bill had been drafted by the Legal Draft Men’s Department, the DSG answered that it had been drafted by a private law firm.
|Who will want to invest in any enterprise when such laws exist? Any investors here will have to be absolutely certain that at all times his enterprise will be performing at maximum levels and gaining maximum profits.|
The details of the draft are not available at the moment. However, the very idea of the government acquiring underperforming enterprises and under utilised assets raised many important questions. At first glance one question that comes to mind is that almost all government enterprises are ‘underperforming’ and government assets are under utilised. For example there are the Ceylon Electricity Board, the Sri Lanka Railways, the government hospitals, the police and the like. Under these circumstances what justification does the government have to interfere with privately owned enterprises that it might think is underperforming?
This proposed law is a clear indication of the government interfering into the very basis of free enterprise. The problems of various enterprises are those that the owners of those enterprises and the shareholders and workers must solve for themselves. It is in the very nature of the market economy that it has a way to deal with underperforming enterprises by way of various loses that they will suffer. No government, however, powerful is able to undertake all underperforming enterprises and to make them perform better. The general argument in economics is that it is the state enterprises that tend to perform less than private enterprises.
Under the Sri Lankan Constitution the right to private property is a fundamental right. This bill will violate this basic right and therefore it is against the Constitution.
The law may give rise to many suspicions that the government is intending to acquire some private properties under the guise that they are underperforming. For example what will obstruct the government from taking over Sirasa TV which is a media outlet that the government has always disliked under the pretext that it is underperforming? Particularly the media enterprises will be seriously threatened by this law.
Now the next most vital question is as to what the criterion for assessing underperformance is and who will be authorised to make such criteria to be applied. Will it be also done on the basis of a two thirds majority in parliament or by the power of the executive president? What role will the law and the courts have in such assessments? Will it all be an arbitrary exercise by those in the government dealing with those that the government is not in favour of?
Another more serious aspect is that if anyone objects to the enterprise or asset being taken over by the government he could be subjected to ten years rigorous imprisonment on conviction after a summary trial by a magistrate. The use of penal laws to deal with property matters is in conflict with international law. It is also against the Constitution. This punitive action will allow police officers to arrest anyone objecting to their property being acquired by the government and thereafter they will be punished purely on the basis that they have opposed an acquisition order by the government. If private properties can be acquired by such draconian measures accompanied by such harsh punishments the future of private enterprise in Sri Lanka is very bleak.
Who will want to invest in any enterprise when such laws exist? Any investors here will have to be absolutely certain that at all times his enterprise will be performing at maximum levels and gaining maximum profits. However, no private enterprise is capable of doing this all the time. It is in the very nature of any enterprise that at times they perform well and under some circumstances they may not be able to perform at the same level. Often, the circumstance under which an enterprise underperforms is beyond their control. For example bad government policies may be a cause for the underperformance of enterprises. Also other circumstances such as civil unrest or military conflicts can also cause similar problems. For example, during the period of the internal warfare in Sri Lanka hotels throughout the country were underperforming. Once this situation changed they started to pick up business.
In a lighter vein one may also point to the problems of illness or other tragedies that lead to underperformances. Let us take the case of whatever enterprises Duminda Silva must have been running before he was wounded at the Muleriyawa incident. He is lying in bed with brain injuries. Under these circumstances will the government acquire all his enterprises and assets on the grounds of underperformances or under utility?
The widespread lawlessness in the country is a result of the government’s non performance or underperformance. The government assets, which are being made available through budgets for the purpose of law enforcement and the protection of individuals have been misutilised or underutilised. Under these circumstances what moral right is there for the government to meddle with enterprises or assets on the basis of underperformance?