Monday, November 7, 2011

A climb down by the Federation of Chambers representing Business - shame on you scared suckers!!

The hastily prepared Bill to expropriate 37 legal entities has been somewhat endorsed by the body representing all employers in Sri Lanka. They have only requested that the two Sugar companies be excluded, but they being the most controversial are the ones that the President for reasons unclear refuses to budge on. The only grace at Saturday’s meeting was that he said he would permit them to put an alternative proposal regarding their future. Whether that means before or after the takeover is unclear. The government spokesmen are hiding behind the statement made a year earlier, in the budget speech that under-performing entities will be taken over if not satisfactorily managed.

They government wants to take over the two sugar companies and the Colombo land bank of the other two companies for personal gain. Apparently one of the Principal’s of Hingurana acts as a surrogate to rulers, and if the aforesaid has the monopoly of producing the by product alcohol from the sugar refining, they will be able to make super profits in addition to the profits on sugar once the taxes are further increased which will make even this activity supremely profitable.

The government will also increase the import duty of the alcohol that all other distilleries will have to import, or buy the local from this company at the then inflated price. In a simple word it is ultimate protection of an import substitute given to one company that is a surrogate of the rulers who are making these very rules and laws misusing the authority vested in them by the people. This hugely unpatriotic act is something not readily apparent to the rather slavish electorate, which the government does not wish to be aware of the true state by suppressing all media and information sources critical of their actions.

The increased duty on the necessary alcohol will enable the local operation now created to earn billions in profits. This company can also be sold to a foreign country such as China for billions as it is a typical company they would like to buy and the sale proceeds will directly vest to the owners and to their Swiss Bank accounts.

Any person with common sense will realize that there is something very insidious going on with regard to new laws that make no sense in terms of the objectives laid out by the government and instead are contrary both to business ethics and norms of objectives in high growth countries. These spurious laws that at best are short term solutions for quick profits and long term disasters for the economy must be challenged and prevented from being passed if we are to safeguard the future of the country for its citizens. It is apparent from the detailed analysis of the Chief Justice on this issue that it is clearly unconstitutional and the interpretation by the Kangaroo Court of the Country that it is acceptable and not in contravention of the constitution is but a travesty of the abuse of the legal system.

A leading businessman said it is perception that is most important at this stage in the next stage of economic growth, and if this is stifled by government edicts and policies then it is a waste of time pretending this government and by extension the country is in fact investor friendly. No matter how hard the government tries to wish this away as an isolated matter that will only relate to the 37 companies, the complete lack of definitions of what is meant by the various terms in the bill cause concern that mere platitudes will not satisfy.

It is significant that there is not a word from Mr Harry Jayawardene, a long time supporter of the SLFP with billions of rupees to be so targeted, and after losing SLIC and the ire with which the courts criminalized the Secretary to the Treasury in that matter, and now it seems this very same person is taking it out on Harry Jayawardene. He has more to lose. If with the vesting of Pelwatte Sugar, the whole new billion plus rupee dairy project, that is hugely capital intensive and includes a milk powder processing plant, is also vested in the government, then for economies of scale and to ensure the full capacity of the huge plant is utilized will probably re vest the LMF assets with all the Ambewela and NZ dairy Farms up country as well as the largest asset in LMF which is the huge holding in Distilleries to effectively remove him from control of the Distilleries too, and in one swell swoop take over The Distilleries prize again for their personal use with a few tidbits to their friends for helping them in this process.

The hijacking of private property in this insidious way by passing laws will serve to convince everyone in business in Sri Lanka and overseas to take their capital and runaway as fast as they can. We will lose what business and entrepreneurs we have to other countries, starving the people out of employment and completely ruin this economy. These lawmakers have no clue, having never managed or run any company in their lives who have spent a lifetime sponging off the state to realize how incredibly foolish this act is in fulfilling the objectives of the government as well as the plans of the people in Sri Lanka to improve their living conditions.

Let us sincerely hope there can be a sufficient number of parliamentarians who are prepared to go against their rulers in doing what is right for the country than behave like slaves who can be bought for a few crumbs and prevent the bill from becoming law. It is what the country expects of you, putting “COUNTRY FIRST”.

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