Business Times

New beginnings, just like in 1977

As the newcomers to high office in state corporations and government agencies began taking up their appointments this week, it was evidently clear that the big guns of Sri Lanka’s business community have turned pro- United People’s Freedom Alliance (UPFA) from being pro-United National Party (UNP).
For over three decades, Colombo’s powerful business community was seen as friendly towards the UNP primarily after UNP leader J.R. Jayawardene led his party to a sweeping victory in 1997 and opened the economy to the world, hugely benefitting business in addition to the rest of society.

Events and developments thereafter have shown that the Sri Lanka Freedom Party and its coalition alliance, the UPFA, have been less accommodative of a completely, free open market economy given the combination of its partners – CP, LSSP, JVP and the nationalist JHU. In 1994, Chandrika Kumaratunga’s-People’s Alliance government brought in academics like Prof. G.L. Peiris and Lakshman Kadirgamar, and a few business professionals like Rajan Asirwathan. Subsequently, a few others also came on board but SLFP-led coalitions have been unable to rope in the cream of the Colombo’s business community, for one reason or the other.

This seems to be changing judging by the experience, power and influence of the new team President Mahinda Rajapaksa has brought in as Sri Lanka enters a new phase. It’s almost like the country is set for a new beginning similar to the likes of the major reforms in 1977 which saw Sri Lanka turned upside down from a closed market, queues-filled-for-basic-goods economy, to a free-for-all economy where you can get anything as long as it’s affordable to the family budget.

In many ways, this appears to be the case as peace has finally dawned on Sri Lanka after 27 years or more of battling the LTTE, and there is no other way that Sri Lanka is heading other than on the road to economic success and political stability. Senior government officials including Defence Secretary Gotabhaya Rajapaksa have cautioned against being complacent against remnants of the LTTE backed by sections of the Tamil Diaspora trying to revive the group, either as a political force or a violent outfit. No doubt, Sri Lanka needs to be on alert but it is most unlikely that the ugly head of the LTTE will rise, or allowed to rise, again unless the leaders (the opposition included) of this country fail to provide a reasonable political solution to the Tamils and other minorities in an issue that has dogged the country since independence.

Thus judging by the way most Sri Lankans have viewed the end of the war, Sri Lanka is on the threshold of a new era: Lifting the economy, enhancing the quality of life and reducing poverty - similar to what we saw in 1977.

This is one of the reasons why a large segment of the business community (the influential ones) are queuing up to support the Rajapaksa government, sensing business opportunities like in 1977, and furthermore, realising that the UNP (for the moment) is all but dead! The sad state of the main opposition party, battling over a leadership crisis after failing to win more than a dozen elections under Ranil Wickremasinghe’s stewardship, has disillusioned many of the UNP’s loyal business supporters (one of the reasons why business supported General Sarath Fonseka in the big way) and turned them to the other side where opportunities are growing. As this happens, governance, transparency and accountability – serious issues the government is facing and which business has also raised in the past – is likely to be thrown out of the window.

The corporate team that is running part of Sri Lanka – Harry Jayawardena at CPC, Jayampathi Bandaranayake at BOI, Susantha Ratnayake at the Tea Board and Ashrof Omar at the Tourism Promotion Bureau among others – represent the cream of the business community but issues on conflict of interest are being raised in these appointments.

Issues are being raised over Jayawardena’s companies having contracts with the CPC; Bandaranayake’s private sector interests vis-a-vis the BOI and also being a director along with Susantha Ratnayake at the Ceylon Tobacco while dealing with the recent tax issue at JKH-firm SAGT; and Ratnayake’s involvement in tea through JKH. Another issue that Ratnayake would be confronted next year is when assuming office as Chairman of the Ceylon Chamber of Commerce in mid-2011, where he is currently the deputy chairman.

But a senior business leader rejects the usual concerns over conflict of interests saying this happens in all societies, particularly in small societies like Sri Lanka, and it’s up to the individual or company to manage it, just like the related-party disclosures reported by companies.

“This happens all the time. It is upto the individual to manage it and show transparency in the management and decision-making to ensure there is no influence or connection in a particular transaction,” one corporate leader said.

That in essence is our message today. While acknowledging the wide experience of the team of corporate veterans to run state institutions efficiently, clear transparency in all their transactions (similar to the annual reports’ model) and ensuring there is no conflict of interest will be the ultimate test. Having run their companies efficiently, these veterans could also have a report card system which should be available for public scrutiny, just like the annual reports that are in the public domain.

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