National policy on law and order urged
Law and order, or the lack of it, remains a nagging concern for the business community and the general public alike. Despite repeated reassuring noises made by government leaders from time to time, there appears to be no visible improvement in the law and order situation. This has serious implications for the economy, particularly with regard to the investment climate in which perceptions and appearances perhaps matter more than reality.

The fact is there are serious lapses in maintaining law and order and doubts about the ability and willingness of state agencies in charge of implementing the law and ensuring justice to do their job effectively and impartially.

Among emerging markets, Sri Lanka has a good reputation for having the required laws and regulations to protect investments and settle business disputes. But if these are not implemented properly and impartially, investors, particularly foreign ones, are not likely to look favourably at investing in the island. Even existing enterprises would naturally feel jittery about continuing their business or expanding into new areas if they have no confidence in the law enforcement agencies.

This lack of confidence in the state machinery, particularly the police and the judiciary, has led to a situation where the public simply does not bother to complain because they believe, sometimes based on previous experience, that nothing comes of it. Sections of the police, along with other related state agencies, are known to be in cahoots with criminals, as are ruling party politicians.

For example, in the Free Trade Zone, police say they are often unable to proceed with investigations into complaints by investors for lack of evidence. Witnesses are reluctant to come forward because they know criminals have links with police or ruling party politicians who can intervene to get them off the hook. The rate of crime remains unchanged, according to official police figures, and only 22 percent of cases that go to court end with the culprits being convicted. This is partly because of the reluctance of witnesses to give evidence.

Police say civil society is not doing its part to help fight crime. On the other hand it is well known that sometimes people are even reluctant to report crime because of the unholy alliance between the underworld, police and politicians. Crime affecting the business community must be treated with more seriousness if the country wants to succeed in attracting the investment required to speed up economic growth.

Earlier, the war was made a convenient excuse for the inability of the police to maintain law and order and fight crime better. The police maintained that they were under-strength with many of their cadres deployed on anti-terrorist work in the north and east and that they did not even have enough manpower to conduct that most basic of police duties - the beat or neighbourhood patrol.

But there has been no fighting for over a year now and the pressure on the police would surely have eased. It is high time the police resumed their normal police work and did it more effectively. A welcome development, and indication of what can be done if the will is there, is the manner in which the corporate world has worked with the law enforcement authorities in raising police strength in tourist resorts to prevent harassment by the pimps, touts and petty criminals who prey on visitors.

There is an urgent need for the government and police to get together with civil society and come out with a national policy on law and order, which has the support of all political parties, as suggested at a panel discussion organised by The Sunday Times last week on this subject. This should include measures to tackle corruption in the police force and to prevent political interference in their work. The business community can play its part by cutting off the supply of funds to politicians known to have links with criminals or to be prone to interfering with police inquiries. Perhaps this could be included in a code of conduct for businessmen.

Revenue generation in a federal structure
Professor Willie Mendis, Senior Professor of Town and Country Planning University of Moratuwa Background
A recently reported study by a researcher attached to the International Centre for Ethnic Studies estimated "that the LTTE was earning Rs. 2.34 billion through its domestic taxes". However, it "criticised the LTTE for not undertaking any development work with the revenue".

The latter highlighted the dichotomy of a reverse position in the areas elsewhere in the country wherein the elected Local Authorities who are statutorily empowered to frame By-Laws for revenue generation from authorised sources in its areas of jurisdictions were not fully utilising such provision. Consequently, they too have not undertaken any development work and should be equally criticised but for a different reason of lack of capacity for performing its functions. On the other hand, it is to overcome same that the Sri Lanka Institute of Local Governance was established by Act No: 31 of 1999.

Nevertheless, the finding of this research study provokes further insight into the whole area of `Revenue Generation by Local Authorities and Provincial Councils'. The lack of revenue has been the cause of the Centre-Periphery dependance which has adversely affected the democratic ideals expected from a process of devolution.
Consequently the demand for power-sharing rises at the periphery often causing conflicts of incredible proportions at high cost to life and property. Its spill over across the entire nation forces its own development to retreat to the backwoods.
This in turn puts the country into the spin of the vicious cycle of poverty and further conflict.

It is in the above context, that it has become significant to note the agreement reached between the government and the LTTE to negotiate at its next round of Peace Talks, the issue of the fiscal aspects of the already agreed Federal Structure of governance. It's underlying principles being power-sharing and self-determination, within a united Sri Lanka. The former implies the delineation of powers and functions between the Centre and the Periphery.

The latter comprises the political ideology of democracy in electing a representative leadership at the periphery. In this connection it is pertinent to note that the findings of the ICES research study constitute the core of the conflicting situation in the northeast wherein the `revenue-collector' is not a democratically elected leadership in a defined structure of governance at the periphery. Consequently, it does not have

the legitimate privilege of revenue collection from any source until it enters the democratic mainstream and it's powers & functions are delineated. On the other hand, until then, it cannot also be held accountable for the lapse in not undertaking any duties of development in the said area.

It is in this backdrop that research was undertaken into the already permitted sources of revenue generation by democratically elected bodies which have also been empowered with the duties of undertaking development from same in its areas of jurisdiction at the periphery.

It may provide a beacon to what works and also to what does not work. The system of democratically elected government at the periphery comprises the Provincial Councils & the Local Authorities. The former was established by the Provincial Councils Act No: 42 of 1987. The latter comprises three types of Local Authorities, each established under its own respective statute as follows: -

Municipal Councils ……Municipal Councils Ordinance (Chapter 252)
Urban Councils …………Urban Councils Ordinance (Chapter 255)
Pradeshiya Sabhas …… Pradeshiya Sabhas Act No: 15 of 1987

The statutory powers, functions, and duties of the Provincial Councils have been set out in the Ninth Schedule - List 1 of the 13th Amendment to the Constitution of the Democratic Socialist Republic of Sri Lanka. It is supplemented by those in List III of the same Schedule, which has `Concurrent Subjects' on any of which "every Provincial Council may, subject to the provisions of the Constitution, make statutes applicable to the Province for which it is established ……. after such consultation with Parliament as it may consider appropriate in the circumstances of each case" (Section 154 G 5b of the constitution).

The statutory functions of each type of Local Authority are identical and are provided as follows, in Section (4) of the MC Ordinance, Section (4) of the UC Ordinance, and Section (3) of the PS Act, respectively.

"…the regulation, control, and administration of all matters relating to public health, public utility services, and public thoroughfares, and generally with the protection and promotion of the comfort, convenience and welfare of the people and the amenities."

In order that these bodies at the periphery can perform its mandated functions, the enabling powers to generate revenue in its respective areas of jurisdiction have been statutorily provided as follows:

Provincial Councils: As per the Ninth Schedule - List 1, of the 13th Amendment to the Constitution. Municipal Councils: As per Part XII of the MC Ordinance and the framing of By-Laws under its Part XIII. Urban Councils: As per Part VII of the UC Ordinance, and the framing of By-Laws under its Part VI.

Pradeshiya Sabhas: As per Part V of the PS Act, and the framing of By-Laws (Section 186) or by Resolution (e.g. Sections 151 & 152) The above peripheral bodies are also entitled to receive funds by transfer from the Centre, under the following statutes: Provincial Councils: As per the Section 154(R) of the Constitution
Municipal Councils: As per Part IX (Section 185(2) (f) and (g) ) of the MC Ordinance, in conjunction with its Part XIV on Central Control.

Urban Councils: As per Part VII (Section 158(2) (h) ) of the UC Ordinance, in conjunction with its Part VIII on Central Control. Pradeshiya Sabhas: As per Part V ( Section 129(2) (i) ) of the PS Act, in conjunction with its Part VI on its Supervision and Control. The experience to date indicates that the above powers are not wholly utilized at the periphery in order to raise revenue needed to carry out its mandated functions.

Consequently, the elected bodies therein are always in a resource-scarce environment and dependant on transfer from the Centre to meet the needs of its Constituents. It will therefore be relevant to contrast the same with the reported actions of the LTTE.

The contrast of the reported sources of revenue generation at the Periphery by the LTTE indicate a parallel with the statutorily permitted sources at the periphery by elected bodies, as follows:(see table) It is also interesting to contrast how violations are prosecuted in respect of the above:

Municipal Council: As per Section 168 of the MC Ord. by the Municipal Magistrate conducted & governed by the rules, forms, & procedure prescribed for and observed by the Magistrate's Court and no appeal shall lie from any judgement or order of a Municipal Magistrate, except as provided for by the Code of Criminal Procedure Act.
Urban Councils: As per Section 163(9) of the UC Ord. by the Magistrate's Court.
Pradeshiya Sabhas: As per Section 212 of the PC Act, every offence shall be trial-able summarily by the Magistrate having local jurisdiction.

A parallel reportedly exists in the LTTE areas, which has its own assembled Courts conducted & governed by its own rules, forms and procedures. Meanwhile, it will also be appropriate to contrast the means of promoting development between the two parties, which could lead to revenue generation.

Contrast of Statutorily Permitted Means for Promoting Development as per the Mandated Functions at the Periphery, and the Corresponding Reports on Same in the LTTE Areas: The means by which development is promoted at the Periphery is principally by the formulation and implementation of `Development Plans' as per the various Statutes, as follows:

a) Housing and Town Improvement Ordinance:Empowers the MCs, UCs and PSs to formulate schemes for better housing and the improvement of towns.
b)Town and Country Planning Ordinance and its Amendment Act No: 49 of 2000:Empowers the formulation & implementation of the `regional physical plan' in a Province, and an `outline physical plan and detail plan' in a Local Authority area, by the Provincial Planning Committee and the Local Authority respectively.

c) Urban Development Authority Law No: 41 of 1978:Empowers the formulation and implementation of an `integrated urban development plan' by a Local Authority under delegated authority of the UDA. d) Southern Development Authority of Sri Lanka Act No: 18 of 1996:Empowers the SDA to be responsible for `co-ordinating the planning & implementation of development projects within its designated area'.

e) Board of Investment Law of 2002. (Appointed day not yet gazetted):Empowers the BOI & the Regional Economic Development Commissions to formulate and implement an Investment Promotion Plan to `foster and generate the economic development of each region', acting in consultation with the Provincial Councils.
The Development Plans are envisaged to broaden the revenue base which were mentioned previously.

In this connection it is in the formulation of such plans that it will become possible to accommodate the following principles set out in Section 154R (5) of the Constitution which shall be taken into account by the Finance Commission in effecting Centre-Periphery transfers:

The population of each Province;
The per capita income of each Province;
The need, progressively, to reduce social and economic disparities; and
The need, progressively, to reduce the difference between the per capita income of each Province and the highest per capita income among the Provinces.

The above are important considerations because as per Section 154R (3) of the Constitution it is on the recommendation and in consultation with the Finance Commission that the government shall allocate from the Annual Budget, `such funds as are adequate for the purpose of meeting the needs of the Province'.

In these circumstances, the nexus of the Statutory Functions of the Elected Peripheral Bodies - Development Plan - Revenue Generation constitute the process by which the periphery can prosper and thereby mitigate social conflict.
With the enactment of the BOI Law 2002 it may be mentioned that the `regions' in the periphery have become co-terminus for undertaking economic development and in the formulation of its corresponding Development Plans.

Meanwhile, it is relevant to note from recent reports that the Chairman of the Ceylon Chamber of Commerce has stated that the LTTE "has prepared a Development Plan for Sri Lanka's north and east with the help of the Tamil Diaspora". The latter suggests that the LTTE too is creating a similar nexus.

Salient Issues on the Fiscal Asprcts of a Federal structure of Governance within a United Sri Lanka: The overall goal in conflict resolution is to bring the LTTE and its aforementioned actions on fiscal matters, into the democratic mainstream. In this connection, the government's Chief negotiator in the Peace Talks with the LTTE has stated that the government "has requested a halt to the illegal taxation by the LTTE." Consequently, what has become essential is the formulation of a blue -print for a commonly applicable legitimate framework for revenue generation by authorised devolved bodies.

In the same way it is important that revenue transfers also take place at the tier of Local Authorities which have the statutory mandate for ensuring the protection, comfort & convenience of the citizen in his or her habitat on the ground. Democracy will be further strengthened if this transfer process can involve the revitalized Gramodaya Mandalayas, under a new law of its own as indicated in the Regaining Sri Lanka policy framework.

In the above connection, it is encouraging to note that the Regaining Sri Lanka policy framework has also made specific reference on reforms to local governance, inclusive of the following: Issuance of a single code of local governance law;
Improvement of local government strategic planning, M & E and financial management capacities;

Publication and dissemination of local government revenues and expenditures through modern means of communication such as the Internet. Expansion of Partnerships between Provincial Councils and local government bodies; and
Implementation of improved fiscal equalisation measures to insulate it from any political interference and to ensure transparency and accountability.

In operationalising the fiscal aspects of a Federal Structure, the Centre-Periphery relations need to be harmonious. The latter should however not be conceived as a continuum of policy planning and implementation. On the other hand it implies that it is essential to ensure the synergy between the systems that will benefit the citizens in the periphery. In this connection, as previously mentioned the groundwork may be available in the new BOI Law which has not yet been assigned an `Appointed Date' for its enforcement.

It provides for the establishment of Regional Economic Development Commissions; the objects of which, in consultation with the Provincial Councils, offer a platform for further progress on the fiscal aspects of a federal structure. It's linkage to the Local Authority Statutes, the Urban Development Authority Law, and several other allied enactments given in the Schedule of the new BOI Law, consolidates the desired synergy between the Centre and the Periphery. The reinforcement of the same is inherent in Section 154R of the Constitution.

Concluding observation
The fiscal aspects of a federal structure comprise the inventory of enabling instruments for a sustainable system of devolved governance. Consequently, in the recent past the Finance Commission had commissioned a Consultancy assignment supported by the United Nations on "Fiscal Devolution".

The latter could offer substantial guidance at the forthcoming negotiations. Its complement of security is what will ensure confidence and trust between the different levels of governance. Both form the twin pillars for moulding a stable and developed United Sri Lanka.

Back to Top

Back to Business

Copyright © 2001 Wijeya Newspapers Ltd. All rights reserved.
Webmaster