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| Sunday, 24 February 2002 |
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"Eliminate regulations impeding economic advancement" by SUREKHA GALAGODA The first deregulation conference in Sri Lanka was held at Marawila recently where over 200 delegates including ministers, government officials, business people from the private sector and heads of donor agencies gathered to discuss ways and means to make the process of regulation simpler and geared towards achieving higher growth and productivity. The participants believed that all regulations must be put to the test to eliminate the bad ones while improving the good regulations as over-regulation has resulted in the country wasting money and time. Over-regulating the economy has cost Sri Lanka to the extent of the country not being able to secure the funds it has been allocated by donor agencies. The conference was attended by Ministers G.L. Peiris, Rohitha Bogollagama, Lakshman Kiriella, Ravi Karunanayake and Milinda Moragoda. Among the high officials of the government who attended the conference were Treasury Secretary Charitha Ratwatte, R. Paskaralingam, Ranjith Fernando and Daham Wimalasena. Six papers were presented on deregulating the sectors of tea, ports and Customs, taxation and energy while papers on comparative studies of financial and investment regulatory frameworks of Singapore, Hong Kong, United Arab Emirates, Mauritius and Sri Lanka and regulatory impediments and transaction costs of enterprise development in Sri Lanka were also included. Minister of Enterprise Development, Industrial Policy and Investment Promotion and Constitutional Affairs Professor G.L. Peiris said: "Deregulation is not a panacea to all problems as some regulation is needed. However, regulations hampering economic activity which are counter-productive should undoubtedly be eliminated." He said although we have much to learn from other countries, no two situations are alike. "Therefore, do not reinvent, but extract the elements which are relevant to Sri Lanka". Minister of Industries Rohitha Bogollagama said that we regulated at a time when we thought it necessary. "Now, since we have moved to a liberalised state, we have to eliminate regulations that hold down economic advancement," he said. Minister Bogollagama assured the participants that he will create a cell in his Ministry to implement the solutions recommended by the Deregulation Committee for the Ministry of Industries. Minister of Economic Reform, Science and Technology Milinda Moragoda said that deregulation is not easy. "Therefore, to ensure that the process works, we politicians have to stop lying and talk to the people about the benefits it can bring them." The system should change to empower people to take decisions because politics have broken the back of public servants, he added. Senior Resident Representative of the International Monetary Fund (IMF), Dr Nadeem Ul Haque said: "Since ideas drive humans in developed countries, let us be flexible and innovative and try to be original as funding follows innovative ideas. Do not worry about funding; it will start flowing in once innovative ideas are introduced." When people are regulated, they do not have domestic ownership of reform, and even today, the state sector will not allow growth through privatisation, he said. Managing Director, Resource Management Associate Ltd., Dr Tilak Siyambalapitiya, presenting the paper on the energy sector, cautioned everybody that "If we do not take the decision to implement the five proposed large power plants, we will pay the highest prices in the world for electricity." The country will also have to experience more power cuts starting 2004 as all the projects to generate electricity are behind schedule at present, some by as much as three to four years. "Therefore, taking major simultaneous decisions urgently is a necessity," he said. Dr Siyambalapitiya said that at present there are about 300,000-350,000 customers using electricity without meters due to over-regulation of the system. There were sub-group meetings and presentations and the workshop was concluded by the Chairman of the Deregulation Committee, Dr Bandula Perera, who summarised the proceedings of the workshop and the follow-up action to be taken. He said that deregulation is not total elimination of regulation, but fine tuning existing regulations by eliminating the unnecessary and improving the other regulations. Deregulation not only benefits the businessman, but the common man as well as everyone has to pay the additional costs on the economy due to regulation. He said that large companies can survive even in an environment of over-regulation, but the average person and the small and medium industries will get wiped out. He said the objectives of the conference were to examine major areas where such impediments exist and reach a common understanding of the actions needed to be taken on a priority basis to eliminate or improve such impediments and think hard about how the key stakeholders are to go about the task of reviewing and improving regulations. Dr Perera said that the process of deregulation should be one of review and consultation among those affected by regulation and those who draft and implement regulations. "This is because our ultimate goal is to effect a cultural change among regulators as well as a change in mindset that helps government officials see that there are costs that can result from their actions," he added. There is a fundamental responsibility for the government officials to think of simpler ways and means to achieve more efficient outcomes to help consumers and businesses achieve growth and sustainability. The sector recommendations will be presented to the government in the form of a white paper. The workshop was organised by the Permanent Committee appointed by the Advisory Council for the Ministry of Enterprise Development, Industrial Policy and Investment Promotion. It was supported by the IMF, World Bank, Asian Development Bank and the USAID. The programme was also supported by the Ministries of Finance, Economic Reforms, Employment and Labour. Sector Recommendations Tea * Dollarisation of tea auctions. * Industry to decide whether or not to import tea. * Developing the Ceylon Tea brand as well as other brands. * Improving volumes and productivity. * Cess should be directed to the industry. * Linking wages to productivity. * Permitting private sector to engage in rail cargo to reduce costs. * Eliminating unauthorised sales through incentives. * Establishing industry standards. * Doing away with the green leaf formula. Customs and Ports * Recommending a new Customs Law; the draft of the law will be ready by June 1. * Private sector to identify areas where it wants 24-hour operations. * Retaining water-based activities in the port while land-based activities are moved out within six months. * Appointing an Interim Commissioner for Appeals by March 1. Land and Labour Land * Sale of government-held land except environmentally-sensitive areas at commercial prices. * Abolishing the Rent Act of 1972. Labour * Amending termination laws to allow employers to lay off staff with adequate compensation. * Stopping state intervention in fixing private sector wages. * Ensuring accountability of employees. * Streamlining holidays. * Retraining and retooling employees to suit modern day needs. Taxation * Widening the tax base. * Simplifying and codifying legislation. * Moving towards a lower tax regime. Energy * Moving ahead with the plans to establish the coal power plant. * Establishing the five suggested plants as soon as possible. Starting environmental assessments for another three plants immediately. |
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