Financial Times

Elkaduwa plantation privatisation to continue

The privatisation of plantation firms already in the pipeline such as Elkaduwa Plantations will continue but remaining assets will not be divested but be improved instead, Minister of Plantation Industries Anura Priyadharshana Yapa said.

"The government's policy is to improve quality and productivity in the plantations sector and introduce better management techniques," he said in an interview.

"The government and private sector will work together."

Efforts will be made to protect domestic industries such as coconut oil millers, he also said.

Yapa said he plans to visit Russia with Trade Minister Jeyaraj Fernandopulle to discuss with their Russian counterparts a sharp import tariff hike which has reduced exports of Ceylon tea.

Yapa held talks with the Russian envoy in Colombo last week at which the issue was taken up.

"We are very concerned as Russia is the biggest market for Ceylon tea," Yapa said.

The 20 percent import tariff hike by Russia has reduced exports of value added Ceylon teas to 30 percent from 90 percent between 1996 and 2002.

The government will encourage new plantings and replanting to replace senile tea, rubber and coconut plantation holdings.

New management will be introduced in state sector organisations such as the government-owned plantations companies and organisations like the Tea Board and Tea Small Holders Development Authority to make them more efficient, Yapa said.

"We also will make maximum use of the cess on exports to help small holders and, if necessary, increase existing subsidy schemes."

The State Plantations Corporation and the Janatha Estates Development Board will not be privatised he said, adding that previous efforts to sell them failed because of their poor condition.

Instead they will be placed under new management and their performance improved.

But he said the planned divestiture of 51 percent of the shares of Elkaduwa Plantations by the Public Enterprises Reform Commission would go ahead.

A government negotiating committee is currently negotiating with the only bidder for EPL which is East West Properties Limited.

Asked about opposition to edible oil imports and a proposed Indian edible oil processing plant using imported raw material, Yapa acknowledged the need to maintain high enough import tariffs to protect local oil millers.

"The coconut oil industry needs to be improved. We're happy with the existing tariff rate. We are against lowering it," he said.

"We must find a balance between the needs of the desiccated coconut industry and coconut oil millers."

Asked about efforts to revive the tea machinery manufacturing industry, Yapa said the government will make an effort to protect local industry while honouring commitments under the liberal economic policy and free trade deals with other countries.

"We agree in principal that we need to help local manufacturing industry. We have no intention of destroying our industries."

Land owned by the Coconut Cultivation Board and the Coconut Research Institute, slated to be handed over to the private sector for building factories, have been taken back and will be used for research and experiments.

Such land will not be divested in future, Yapa said.

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