All property included in this draft bill is public property which belongs
to the people and not private property. This should be stated
categorically. These public properties have been vested in private
industries or enterprises under various conditions at various terms in the
past. This has even happened during the British period. Landless peasants
in Giruwappatuwa had been given land on an annual permit on the condition
that they should use this land for chena cultivations. Later they were
given land for on the basis of a land tax. There was a condition that they
could not transfer them to their sons or relatives without the express
permission of the DRO. They could not use the land for any other purpose
either. For instance, if they set up a boutique in it, the land would be
acquired by the Government.
Middle class land were given from time to time for the cultivation of
various crops. When former President, the late J.R. Jayawardene was a State
Minister in the Dudley Senanayake Government, he established Tourist Zones
and gave land under conditions to people engaged in the tourist industry.
The first such land was given in areas such as Bentota. The conditions was
that they should be used for setting up tourist hotels and for nothing
else. If any attempt was made by a person to build a house in that land and
occupy it, steps were taken to acquire the land by the Government.
Other conditions included the extent of the buildings they should put up
and the investment which should be made within a given period. When
Maithripala Senanayake was Minister of Industries, in the Sirimavo
Bandaranaike Government, he set up industrial zones and gave away State
land for setting up varous industries. Many old indigenous industrialists
who received this privilege have today achieved a lot under this process.
Later during the Jayawardene era, several investment zones were set up and
land given, not only for locals, but for foreigners as well for investment
on certain conditions. A large amount of public funds was used to develop
infrastructure in those zones which included roads, security fences and
provision of electricity.
Privileges not available for an ordinary factory owner outside the
investment zone were given to those investors by using State and public
funds to develop infrastructure. When State or public property is given
away, it is done with a host of conditions attached. Not only when leasing
out State or public property conditions were attached even when relief or
privileges were given to an individual. For example when the President
assumed office, the fertiliser subsidy was given to farmers at a rate of
Rs. 350 per bag which actually was continuously given for six years, which
meant 13 cultivation seasons. For example, a bag of fertiliser now costs
around Rs. 3,500. When the farmer buys Rs. 350 per bag, the Government
subsidises it to the tune of Rs. 3,150.
Then we imposed a condition that it should be only used for paddy
cultivation. Through this subsidy, we hoped attain self-sufficiency in rice
which is the staple food of the people of this country. People not only
fulfilled their duty, but also followed the stipulated conditions.
However, when some breached this condition and got caught selling the
fertiliser to gain an instant profit, they were taken to Court and jailed,
and the fertiliser confiscated. This shows that even the fertiliser subsidy
given to the poor was on certain conditions.
Furthermore, we had a target to make the people self-sufficient in food.
The honour of this august assembly should go to the farming community who
fulfilled their duty. They have almost doubled or trebled rice production
by using that fertiliser correctly.
Apart from this, not only land, but ‘Mini Moke’ vehicles were also given
for cultivation purposes during the Dudley Senanayake era. When those
vehicles were seen parked near prestigious Colombo 7 schools, pictures were
taken of them and the owners were asked why these vehicles were being
misused. There were instances when vehicles given for tourism purposes were
seized when they were being misused.
Similarly, MPs were given tax-free vehicle permits on the condition that
they could not sell the vehicles purchased for a specified period. If this
condition is breached, sometimes there is a probability of MPs breaching
it, there is a law to acquire the vehicles. Therefore, it should be
categorically stated that through this Bill, we only become temporary
trustees of State property belonging to the people. Under the Constitution,
we have a duty by the people to acquire such things if they are misused by
breaching the conditions under which they were given.
What this Draft Bill means is that none of these enterprises are private
property. I wish to reiterate that these are public property given to these
entrepreneurs under on certain conditions. If these conditions have been
violated, we should categorically state that the same law applicable to the
poor should be applicable to the capitalists too.
I saw certain people clamouring that they have a history of maintaining
prosperous enterprises. A Business Acquisition Act was first presented in
1971. It was called the Business Acquisition Act No. 35 of 1971. That power
was available during the time of Mrs. Sirimavo Bandaranaike. It was tabled
in Parliament by the Minister of Finance. It stated that “2 (1) The
Minister of Finance of his own motion or at the request of any other
Minister. (a) may direct in writing the Secretary to the Treasury to
acquire on behalf of the government by agreement any such business
undertaking shall be specified in such a direction....”.
Not only that. There after, the J.R. Jayewardene Government brought the
Urban Development Authority Act. This also enabled the acquisition of
fixed assets at any time. During Black July, a special Act was passed which
was called the Persons, Property and Industries Rehabilitation Authority
Act. Under this, a large extent of land and buildings in Colombo were
acquired by the private sector.
Thereafter, the Public Enterprises Reforms Act No.29 of 1990 was passed.
This too was a similar Act. Then during the time of President Chandrika
Bandaranaike, an Act was brought to acquire vested State lands.
This was drafted during the tenure of former Chief Justice Sarath N. Silva.
The Opposition has expressed diverse views on this draft Act. The
Constitution has clearly laid down the directive Principles of State Policy
and Fundamental Duties in Chapter VI. Section 27(2)(d) of the Constitution
states as follows: “the rapid development of the whole country by means of
public and private economic activity and by-laws prescribing such planning
a contracts as may be expedient for directing and coordinating such public
and private economic activity towards social objectives and public wealth”.
This means we are bound by the Constitutional provisions to bring in laws
for the development of the country.
Section 28 (e) states, “To preserve and protect public property and to combat misuse and waste of public property”. It is in keeping with this that we are presenting this Bill today. There is no such urgency associated with this Bill. The President during the last
budget said that all investment projects of which no work had been
commenced or remain closed would be annulled. A Cabinet paper based on the
report of a Expert Committee was submitted and on receipt of Cabinet
approval of August 3, the matter was referred to the Legal Draftsman. The
Cabinet finally approved it as an emergency Act in terms of Section 122 of
the Constitution. What necessitated this course of action? There are those
who oppose these moves. Ruwanwella MP, Hon. Y.G. Pathmasiri may be aware
that the machinery in that institute which remained closed for some years
were dismantled and removed in these vehicles in the night. Not all, but
most of the businessmen rob State property.
Mrs. Sirimawo Bandaranaike wanted to give effect to the Land Ceiling Act
from the date of Cabinet approval. Many people tried to defeat the purpose
of this Act by subtle means. The urgency associated with the Bill is
justifiable due to the need to protect public property. It took almost two
weeks for the Bill to be passed. A number of emergency acts were passed in
terms of Section 122 of the Constitution. So there is nothing new as such
associated with this Act.
There was the allegation of political victimisation. Every institution was
gone into and only after careful scrutiny, the Bill was presented in
Parliament. Had we been bent on political victimisation, we could have
taken recourse on arbitrary action!
I would like to mention the case of three institutions. One of them belongs
to a government MP, but we did not exempt him. Then there is a very
powerful Corporation Chairman. His institution too has been listed. There
is also the property of our individual who is closely related to the
President and to us. If we go on the basis of party affiliations or close
relationships, we should not have listed his property. We have never done
that.
We have the list of institutions which had vested under BOI, free trade
zones or outside them – which have enjoyed special facilities provided by
the government. Cynotex (Pvt) Ltd was closed down on 18.02.1996 and the
agreement was annulled. Their Kebitigollewa establishment was closed down
in 1996 and the one at Katunayake FTZ on 14.01.2009. Those institutes have
defaulted EPF payments to the tune of Rs. 3.5 million. There were 346
employees working at Jaka Lanka at the FTZ. None of them are working today.
No compensation has been paid to them. A sum of Rs.77.8 million has to be
recovered from the employers. The situation with regard to many more
institutes is as follows:
Plymouth Industrties (Pvt) Ltd – EPZ Closed on Under Arbitration Katunayake 31.03.2004 EPF Payment gratuity and compensation defaulted. Cosmos Mackie Industries Katunayake 26.09.2004 Holiday pay not paid. EPF Rs. 5.9 million gratuity Rs.7.2 million, Compensation Rs. 6.9 million Seethas Fashion (Lanka) (sacked 35 employees) Garment (Pvt) Ltd, Wewagama, Polonnaruwa. D.C. Apparel (Pvt) Ltd, Legal action instituted by Labour Commissioner closed on 30.09.2008. Kandy EPF payments defaulted. 86 employees sacked.High Pashion Garment (Pvt) Ltd, Machinery dismantled and removed. Remains
closed from 05.12.2007. All 200 employees sacked . Ruwanwella Collins Internatonal (Pvt) Closed from 05.11.2005 – Padaviya,Ruhunuputha Apparels (Pvt) Ltd Bibile, Moneragala and Lunugamweherabranches closed on 31.10.2004, 31.10.2005 and 01.11.2005
Sanjaya Garments (Pvt) Ltd, Kalawana - closed on 30.06.2011 Maefa Apparel - closed since 2005 Yobida Associates (Pvt) Ltd, Gonawila - closed since 2000 Dynomic Clothing (Pvt) Ltd. - closed since 12.06.2008 Cosmopolymer Lanka (Pvt) Ltd, Seithawaka, BOI Zone - closed since 31.07.2008 Great Wall Thread Manufacturies (Pvt) Ltd. - closed since 22.06.2009 Labour Commissioner has filled action for compensation Adanjee Extractions (Pvt) Ltd, Grandpass - closed since 01.09.2008 Data Foods - closed since 10.05.2008 Tendon Lanka (Pvt) Ltd, Pallekele EPZ - closed since 15.03.2010 Recon Lanka (Pvt) Ltd, Malwatte EPZ/Nittambuwa - closed since 15.03.2005 Composite Trower Solutions (Pvt) Ltd - closed since 24.03.2009 Health Food Products (Pvt) Ltd - closed since 24.03.2007 Sri Virag (Pvt) Ltd - closed since 30.11.2006 Royal Export (Pvt) Ltd, Mirigama - closed since 30.09.2008 Continental Vanaspathi (Pvt) Ltd - closed since 30.04.2008
Most of these institutes are in Export Promotion Zones. Huge public funds
have been invested in there zones. Since these institutes remain closed, no
optimum use could be made of them. Ventures that remain closed not only in
EPZs, but even the mere sight of two or three shops remaining
non-functional in a supermarket, has its impact on the others.
In many countries such premises will be acquired by the State. The law is
such that a Pradeshiya Sabha would not hesitate to vest with it any of its
meat stalls selling fish.
The present position relating to Hilton Hotel needs no elaboration. It is
known to all how it acquired its land, revalued it and transferred this to
others, and the litigation it entailed. Last year, it recorded a loss of
Rs. 10.3 billion. The hotel is in a very expensive land. Where the former
Fort Police Station had been located. It has become unproductive today
after various irregulaties. This is one of the prime hotels in Sri Lanka.
Repairs to rooms have not been effected for a number of years. The hotel
has to be freed from its encumbrances. The hotel land is about 6.6 acres.
Cornel Perera was selected on 7.2.1984 to invest in the hotel project. The
UDA valued the project for Rs. 136 million on the same date. On the 15th,
after a lapse of eight days, Cornel Perera transfers the project to Hotel
Developers (Lanka), having valued the property for Rs. 250 million - the
value having increased by Rs. 114 million within seven days by reducing the
previous value.
Subsequently, shares were purchased, but the sum of Rs.136 million was not
paid. He paid only Rs. 28 million, the balance was to be paid in
instalments. However, no instalments were paid thereafter. Later several
transactions followed.
A loan was obtained from a Japanese company. The amount pledged to invest
was not forthcoming. Later, since the Government guaranty was not honoured,
the responsibility fell upon the Government to settle the deal. Mr. K.N.
Choksy appeared in the case.
We have taken back the land. This is public property which is economically
important to the country. The Government is definitely committed to project
it and that is why we have listed it. I believe no representative of the
people could raise objection to this.
There are several proprietors to the Sevanagala Institute including the
husband of a Member of Parliament.
I never wanted to speak on Sevenagala due to may personal reasons. However,
in view of the matter raised here, even with reluctance, I shall speak a
few words.
During its privatisation, two preliminary agreements were entered into -
the Privatisation Agreement and the agreement with the BOI for tax relief.
In the privatisation agreement, the investor will include such conditions
as the sum of money to be invested, areas of development, employment
opportunities to be provided and the anticipated returns on the national
economy.
The project proposal and the financial proposals will be examined by
separate technical boards before the transaction is okayed. What has been
projected under phase I and phase II should be completed before the
specified dates.
When there are other commitments such as modernisation of distillery,
establishment of new bottling plant, waste water management system and
nuclear plantation with irrigation facilities. It was stated that Rs. 929
million would be invested in phase I and Rs. 1,268 million in phase II,
totalling Rs. 2,808.11 million.
Regrettably, none of these have been implemented. There is also the
Agreement No. 7328 signed with the BoI, according to which the initial tax
relief period is eight years, and 15 years thereafter. All machinery had
been declared tax-free. The investors affirmed their project as an
export-oriented industry.
According to the agreement, the investor is required to cultivate the total
acreage of the land. The investment of the full amount as agreed, provision
of employment opportunities numbering 1,599 are other conditions of the
agreement. The current strength of the employees cadre is only 157. All
these have to be complied with to be eligible for exemption from tax.
Since the investors had failed to fulfil these conditions, no tax-free
certificate was issued to them by the BoI. Neither have they paid income
tax, according to my sources.
Some people said that molasses too are manufactured during the sugar-making
process. The investors have requested permission from the Excise
Commissioner to import 250 metric tonnes of cane molasses. When the Excise
Commissioner conveyed to the Sugar Research Institute, the investors’
request to import molasses, the latter ruled it out as completely wrong and
cannot be allowed at any cost. The investors’ case against the Excise
Commissioner is pending in the Court of Appeal.
Land was released to the investor only for cultivation and not to import
molasses and manufacture arrack. The institute was set up for the benefit
of the sugar cane cultivators - which is a public property. The Ven. Maha
Sangha should know that the industry does not benefit the sugar-cane
cultivators - instead moonshine is manufactured. I do not know how the Ven.
Maha Sangha speak on this issue. All conditions stipulated in the agreement
have been violated.
I should clarify this too. There are Mahaveli lands. Despite the delay in
handing over the deeds of transfer, the beneficiaries of State land have
taken over the possession of their allotments. Over 200,000 awardees of
Mahaveli lands have not still been issued the deeds.
As provided for in the Mahinda Chinthana, all deeds have since been
released to the land beneficiaries. About 250,000 deeds will be released
soon. That the deed for this land had not been issued is not acceptable.
The President obtained a Court Order within a day to have the deed released
immediately. The President could have remained silent, but he acted with
due deference to judiciary.
The Lanka Tractor Company which remains closed for a number of years was
not a loss-making venture. It was privatised in 1994. It earned a profit of
Rs. 25.5 million in 1989, Rs. 55.2 million in 1990, Rs. 29.3 million in
1991, Rs. 20.2 million in 1992 and Rs. 37.4 million in 1993. Such a
profitable venture was privatised causing the ruin of a national property.
There were 550 employees there who lost their jobs. The corporation had
been appointed local agents to Massey Fergusan Kubota Tractors, and Taffa.
The employees were denied their gratuities. This Corporation was privatised
for a sum of Rs. 148 million. We would not have taken this step had at
least the two valuable blocks of land at Pettah and Narahenpita been made
use of.
There is the allegation that State Enterprises are running at a loss. Some
have incurred losses due to mismanagement attributable particularly to the
UNP governments. The Electricity Board is run not solely for profit. It is
a service. We have programmed to supply electricity for all by July 2012 in
keeping with the concept, Electricity For all - under the guidance of
President Mahinda Rajapaksa. To reach this target, we have commissioned
rural electrification schemes, power generation ventures, new generation
profits at Norochcholai, Kerawalapitiya and Upper Kotmale. Without solely
depending on thermal power, we have used alternate sources such as
hydro-electricity and coal-fired energy. We purchase electricity from some
companies at the rate of Rs. 120 per unit and sell it to the consumers for
Rs. 4.50. We are providing a transmission line to the North - from Vavuniya
via Kilinochchi to Chunnakam and till such time we have to depend on the
two private companies in the North for the supply of electricity at the
rates determined by them.
The Petroleum Corporation incurs a loss of Rs. 20 per litre of diesel. We
could show profit by merely increasing the price which we don’t do. We do
not follow the ‘price which we don’t follow the ‘price formula’ practised
earlier. The loss from kerosene is Rs. 30 and it’s Rs. 45 from furnace oil
in the process of electricity generation.
With regard to SLTB, I should say that we have deployed SLTB buses in
difficult areas. There are separate school buses. The private buses play
ply on profitable routs.
Therefore in accordance with Mahinda Chinthana even with losses, their
services will be maintained in the interest of the public.
We have institutions such as Kurunegala Plantations, Chilaw Plantations and
Lanka Phosphates which were incurring losses, but now run on a profitable
basis. Institutions were privatised to share the private sector managerial
skills in the development of the national economy. I would like to ask the
Opposition what alternative is there for us to resort to other than taking
over these assets, if they are not properly managed and have failed to earn
profits?
You have also made the allegation that we might acquire temples, private
houses, and business enterprises as well. We have never acquired any
temples, but really developed them. It was the UNP which, acquired and
barricaded the Getambe temple and the Gampaha Saama Maha Viharaya of Ven.
Daramitipola Rathanasara Thera.
Then it was Ranasinghe Premadasa who acquired the residence of Minister
Mervyn Silva. The entire stretch of land from the residence of Veteran
Ayurveda Physician Pandit William Alwis upto the Duplication Road was taken
over by the UDA to put up the Lucky Plaza.
Not only such properties, they also acquired the land where Premasiri
Stores was housed, Andrew Donald’s premises where Unity Plaza is located
and the die-hard UNPer Jinadasa Mudalali’s land at Warakapola, alleging
that he displayed only the photographs of D.S. Senanayake, Duddly
Senanayake and Rukman Senanayake but not that of J.R. Jayewardene.
Who took over the media? Did they not take over the media institute of
Ranil Wickremesinghe’s brother Shan Wickremesinghe? All these were taken
over by the UNP.
On behalf of the President, the Cabinet would like to give you an
undertaking that we will never take over any private assets. Private sector
includes even the pavement hawkers for whom we have provided
self-employment to protect them as part of the private sector.
Here are a few facilities provided to the private sector by the Government.
Recently, when the entire global banking system collapsed, it was imminent
that we would face the same danger faced in Sri Lanka. Thousands of Seylan
Bank employees were kept on agonising suspense due to the fear of loss of
employment. The depositors were equally affected. However, due to the
direct intervention of the President, within 24 hours the Bank, its
employees and depositors were relieved and protected.
The entire banking system was strengthened. That was the biggest relief
provided to the private sector. People know that so long as the President
is in power, their investments in banks are quite safe.
What was the fate of Pramuka Bank? The depositors were in an imbroglio. We
reconstituted the bank as “Sri Lanka National Savings Bank” and won the
confidence of all depositors.
We gave the fertiliser subsidy to the farmers. When the tea industry was in
dire straits, we provided the fertiliser subsidy to the tea small holders
of less than five acres. We also reduced their electricity tariff and
wrote off the interest on their loans.
They were also benefited by the increased tea prices due to the application
of fertiliser. Since May 1 this year, the fertiliser subsidy was extended
to rubber and coconut estates as well. Sugar cane cultivator and
sugar-cane companies too were benefited by the fertiliser subsidy.
What was the relief package provided to the tourist industry when it was in
perilous straits? The Government directly intervened and reduced their
electricity tariff; loans were written off; special interest-free loans
were given to them.
Wide tax reforms were introduced for the first time after 1977. Thirteen
items were deleted from the list of taxes since April this year. Interest
rates were also reduced to 14 percent to help them wriggle out of the
crisis. One doctor remarked that he could save Rs. 7,000 on the interest
of his housing loan alone.
We have also ensured the security of investments as well as foreign aid by
an Act of Parliament.
We have also provided relief to rice-mill owners. Four years ago, the
small-scale rice mill owners at Marandagahamula in the Gampaha electorate
were in turmoil when their industry collapsed. As a relief measure, their
loans were written off and fresh looans on low interest were provided to
strengthen storage facilities.
We also improved the lot of local construction companies having
de-monopolised the field dominated by a few foreign construction companies.
Consequently, today, our local construction companies are in a position to
tender for World Bank, Asian Development Bank and JEBIC-funded projects.
Then there is the World Bank-sponsored system of Business Ranking to judge
whether the environment in a country is conducive to investment. Sri Lanka
ranked 98 in 2011 from 104 and today it is 89 in the overall ranking. In
the sector-wise ranking such as starting a Business, Dealing with
construction permits, Getting Electricity, Registering Property, Getting
Credit, Protecting Invertors, Paying Taxes, Trading Across Boarders,
Enforcing contracts and Resolving Insolvency, Sri Lanka has advanced to 46
from 74 in protecting investors.
The inflation rate too has drastically come down from 26 to a simple digit,
5 during the previous month. We have also narrowed down the budget deficit. No country in South Asia, except Sri Lanka, has been able to supply electricity throughout 24 hours,
seven days of the week and 365 days of the year!
Under the President’s Mahinda Chinthana, not only the mega entrepreneurs,
but the small-scale trader, owner of a tea kiosk, three-wheeler driver,
‘DIMO Butta’ driver and even the pavement hawker were equally guaranteed of
security of business.
Restoration of peace after the liberation of the country by the Mahinda
Rajapaksa Government is the biggest achievement which benefited the
business community. We have ensured the right of every citizen for free
movement from Dondra to Point Pedro irrespective of ethnic, religious or
caste differences. Our war heroes made the biggest investment with the
sacrifice of their precious lives. From the supreme legislature, I would
like to assure the private sector of this country that the Mahinda
Rajapaksa Government would do its utmost to safeguard honest businessmen
and their investments as well as their future progress. We will provide
maximum support to our local investors while encouraging them to ensure
high-level foreign investment into the country. We shall protect our
people, the country’s environment, national heritage and customs and
provide full protection to the investors.
On behalf of the Government, I would like to appeal to you to extend your
support to this Draft Bill. This Bill aims at protecting the under-utilised
and underperforming public property and utilising it for the well-being of
the people of this country. Your support is necessary to make use of such
assets to provide employment and ensure the country’s development.
