All discussions on improving ease of business ranking is a discourse with no purpose
The Daily Mirror on Thursday 21 March, carried a very detailed and exhaustive analysis on Sri Lanka’s Free Trade Agreements (FTA) and their returns in terms of economic gain titled Sri Lanka FTA debate: What have we gained and what can we achieve.
This was by two eminent personalities. One an academic, Prof. Prema-Chandra Athukorala and the other Dr Dayaratna Silva a diplomat, very familiar with the WTO.
Their conclusions included:
“The available evidence on the role of FTAs in attracting FDI is mixed, at best. The only policy inference one can make from this evidence is that FTAs can play a role at the margin in enticing foreign investors provided the other preconditions on the supply side are met.”
The same day the Daily FT carried an article titled Diplomats show the way forward for Sri Lanka.
This news story said, “….the envoys also highlighted the need to reduce taxes, improve governance, develop infrastructure, expand labour force diversity, uplift wealth creation in the rural economy, improve ease of doing business ranking and tackle corruption including e-procurement.”
That same day, the Daily FT also reported on the Fireside Chat organised by them on Tuesday before, highlighting PM Wickremesinghe’s Vote of Confidence.
“You have done well. We are for a market-oriented economy and we are looking for a larger role for the private sector to play and no doubt in the coming years that role will expand. You have to learn to compete with the world and that is what we want you all to do,” the PM was quoted.
Just three days before on 18 March, a very short essay by IPS on Alleviating Poverty in Sri Lanka: Take a Broader Look at Poverty Measures said, “Although only 1.9 per cent of the population in Sri Lanka is in multidimensional poverty (MDP), 9.5 per cent are near MDP.”
"Ease of business ranking means, Foreign Investors being given easy, quick access to establish as they please"
And then the IPS having compared many calculations on poverty says:
“These estimates of the poor and the near-poor, based on different measures show that at least 11.5 per cent of the population in Sri Lanka is either poor or near poor in some form. (emphasis from original)”
The “near poor” is as vulnerable as the “poor”, according to IPS.
Reading through all these economic reviews, critiques, explanations and propositions with promises for the future, one is confused as to where the “11.5 per cent poor and near poor” are placed in these discourses.
Everyone talking about FTAs, governance, labour force diversifications, wealth creation in the rural economy, infrastructure development is not talking about the 11.5 per cent “poor and near poor”.
Nor are they about the 70 per cent of rural people, outside the free market economy.
Talk about FTAs and FDIs is not about improving schools, improving hospitals and healthcare, not about public transport, not about creating an economy the rural people can afford to have a decent life.
They are talking of a big city economy that creates diverse and large markets- an economy that leaves the whole rural economy as worthless and a cashless entity. Thus, all discussions about improving “ease of business ranking” of Sri Lanka is a 40-year-old discourse with no purpose.
In plain English here, ease of business ranking means, Foreign Direct Investors should be given easy and quick access to establish their businesses as they please. That has two major aspects. One is bureaucratic red tape they want reduced. For many reasons it is impossible.
Bureaucracy in State agencies is manipulative and corrupt in free market economies. They work in tandem with powerful political elites responsible for policy making. It becomes more difficult, as investors are the new rich nomadic dealers in global free markets running after quick and big profits. They are obviously corrupt. They would not exist otherwise.
Within this corrupt State and irresponsibly inefficient agencies that approve, regulate and monitor all FDIs, corruption and investments bed together.
Often incoming Investors raise local funds using collaborators.
Close to 200 such foreign investors have closed factories and fled the country during the past decade, without paying wages and gratuities, defaulting on EPF and ETF contributions of workers and also on massive loans borrowed from local banks.
"Bureaucracy is manipulative and corrupt in free market economies"
BOI had never taken any legal action against any of those illegal closures. They are not spoken about when talking of “ease of business ranking”.
The second is to have free unorganised labour with no conditions attached to workers’ and democratic rights.
That has absolutely nothing in common with Labour force diversifications touted around in business forums. Atomising of the labour force is being practised even now, with employers allowed to bust trade unions, sack workers who initiate forming trade unions and using everything from thuggery to bribing State officials.
Meanwhile, this Government is ready with a new law titled Employment and Service Contracting Rights Act proposed as one that incorporates all existing 53 Acts related to labour and industry. In September 2017 the Ministry of Development Strategies and International Trade handling this USAID funded project titled Support for Accelerated Investment in Lanka (SAIL) made efforts through the Labour Ministry to have the consent of trade unions for the project.
That failed when the National Labour Advisory Council (NLAC) member unions protested against USAID handling labour reforms in Sri Lanka.
Yet, this UNP Government proceeded with USAID to draft the new Act. It creates a legal status for the Employer to lay down employment conditions and leaves space for impermanency in employment.
Wages Board Ordinance and the Shop and Office Act would be deemed invalid under the proposed Act and with that goes the Eight Hour working Day.
It leaves ILO Conventions 87 and 98, something to which Sri Lanka is a signatory, very much irrelevant.
This private sector engine for growth seems to run with over 2.5 million Citizens stripped of their Fundamental Rights guaranteed in the Constitution.
Continuing with this insanely competitive economic freedom what have FDIs and FTAs provided Sri Lanka in terms of national development?
We live with a fatal break down of law and order, a judiciary questioned in society, almost defunct State services including power and energy, public transport, formal education, public health and hospitals.
Forty years that led to rampant corruption in every nook and corner in daily life besides mega corruption.
Totally dependent on FDIs and FTAs added, no government has ever paid any serious attention to the lives of People.
This private sector that is geared for export manufacture can never be an engine of growth in terms of national development to address people’s needs.
This does not contribute to the quality improvement in standard of living and does not regenerate new Capital for growth.
This compels every Government to offer more and more concessions to attract FDIs. With all incentives, FDIs have never been able to bring the revenue brought in by stranded rural people, who go as migrant labour and plantation workers who demand a mere Rs.1,000 per day.
In 2017 migrant worker remittances totalled USD 7.2 billion and tea exports USD 1.5 billion, while the most proudly spoken apparel exports earned close to USD 5.0 billion (without cost deductions on raw material imported) and tourism USD 3.9 billion.
The irony is worker remittances accounted for 96 per cent of the foreign trade deficit in 2017. Providing massive concessions for FDIs through four decades have not helped us at least to bridge the foreign trade deficit.
"Worker remittances accounted for 96 per cent of the foreign trade deficit in 2017-not FDIs"
This irrational craze for FDIs with massive loads of incentives that have never been totalled to date has good reasons to be stopped forthwith.
Good reasons to have a regulated market to keep out wheeler-dealer business with FDIs and instead promote a decent, responsible private sector with rural economy given importance.
Money pumped into rural projects under whatever label within this free consumer market has always ended up in Colombo.
Heavily funded Integrated Rural Development Projects (IRDP) from 1978 to 2000 have left no rural development that can be showcased.
The free market is a wastebasket of Dollar revenue. Import of vehicles (USD 813 million on personal imports in 1st six months 2018) allowed for Rupee revenue from Custom’s duty and taxes should be stopped immediately and import of fuel (USD 17 billion in 2017 for transport) to burn in crazy traffic jams that adds nothing to improve public commuting should be regulated. All that’s good money wasted on urban life. Rural development needs a more open approach. The old system of land tenure and land use with subsidies doled out for political patronage have led to a dependency syndrome in rural life. Self-sufficiency in rice is a paradox not accounting for underutilised land and labour and also the import of wheat that was worth Rs.54 billion in 2017.
From Gal-Oya to accelerated Mahaweli Scheme second and third generations had to move out searching for the income they could not earn in their own area.
It is a proven fact FDIs and FTAs cannot make life better for the people though this Government keeps saying it would.
Clearly the problem today is rural life that is left out from this city-based free market economy.
It is about young women going out as housemaids to the Mid-East to slog for a pittance. It is about youth who leave their villages in search of employment in towns and cities.
It is about improving the quality and efficiency of health facilities, education, public transport, housing within planned cities and towns and most importantly safeguarding the environment. It is about the life of 70 per cent or more of the people living outside the Megapolis demarcated by this government that Experts keep ignoring.