Ceylon Today Editorial

Investment roadblocks

30 December 2016

The Development (Special Provisions) Bill seeks to address the impotence caused to the Board of Investment (BoI) by the Thirteenth Amendment (13A) to the Constitution which has vested powers over land and other key areas such as approvals, especially in relation to investment work, to the Provincial Councils (PCs).

Another institution that has disabled the BoI to a 'great' extent is the Central Environment Authority (CEA) set-up by an Act of Parliament in 1981. Whereas the Centre may be able to control the CEA, PCs may be a little more difficult to tame due to politics.

Local Government institutions, whether they be Municipal Councils (MCs), Urban Councils (UCs) or Pradeshiya Sabhas (PSs) are all subordinate to the PCs, the establishment of the latter, which, as one recent editorial said, 'was forced down the throat of the old man (J.R. Jayewardene) by the Indians.'

Prior to the establishment of PCs, the BoI's predecessor, the Greater Colombo Economic Commission (GCEC) instituted in 1978 by an Act of Parliament, virtually had powers to cut through all red tape that hindered development work, investments and job creation.

But, with the institution of the PCs, these powers of the BoI were seemingly nullified. The genesis of the erosion of the BoI's 'development powers', however, may not have had taken place in November 1987, the period where the 13A to the Constitution, wherewith the establishment of PCs, as a measure to devolve power to the provinces, was passed.

Therefore, the curtailment of BoI's powers, vis-à-vis the implementation of investment approvals, may have had taken place much earlier, i.e. seven months previously, with the passing of the Pradeshiya Sabha Act (PSA) in April 1987. PSs, under the PSA was vested with alleged land powers and laws concerning the utilization of lands, which, not even its predecessor, the Village Councils, nor the MCs nor the UCs were empowered with, other than that which pertained to public property.

Approval of projects by the BoI is only one part of the investment story. The next chapter, which is its implementation, and which is the most important chapter, is where the bottlenecks surface, where the likely culprit, more often than not is the PSs and/or the PCs in question.

'Investment approval, without approval to invest,' sounds contradictory, but that is what the introduction of the PCs, sometimes, does. Therefore, the sum total of 'Investment approval', 'without approval to invest,' adds up to zero. Nonetheless, with the enactment of 13A, all Local Government institutions, whether they be MCs, UCs or PSs, were made subordinate to the PCs. And this is where the alleged bottlenecks, vis-à-vis the implementation of investment proposals by investors, come into play by these provincial/local authorities.

It's this red tape that the Development (Special Provisions) Bill, expected to be tabled in Parliament soon, seeks to address. The Provincial Councils were set up in 1987 at the instigation of India. They were set up to give a measure of autonomy to the Tamils in the North and East (NE), virtually at gunpoint by New Delhi. And, as a result, the PCs came into being under the 13A to the Constitution.
The institution of PCs under the 13A passed in November 1987, however, was not confined to the NE only, but also embraced the rest of the island's seven provinces.

Nonetheless, it was the minority Tamil problem or Tamil question that resulted in the birth of the PCs. But by a strange quirk of fate or law, the PCs, and their establishment, encompassed the whole of the island's nine provinces, originally comprising eight PCs, but subsequent to the demerger of the NE, to nine.

Perhaps, by hindsight, Jayewardene who instituted the PCs at the behest of the Indians, should have had placed a clause, saying that the establishment of a PC is applicable only to the troubled NE of the country. He could have had easily got the two-thirds majority in Parliament if required, to make this Bill, applicable, only to the NE, if needed by law, passed. Jayewardene at that time had a five-sixths majority in Parliament.

But the problem may have had been if the Court had ordered for a referendum to make such a Bill valid. At the time the 13A to the Constitution was passed in Parliament, the country was literally burning. The Indian troops were in the NE of the country ostensibly to keep the peace, much to the chagrin of Sri Lanka's armed forces who had virtually bearded the Tamil terrorists in their own den previously, before India's military threat to Colombo, if the attacks continued, were therefore forced to put a stop to Colombo's military operation.

On top of the consternation that befell the armed forces due to the premature end of the terrorist war caused by the Indian intervention, it also struck a wrong chord among the majority Sinhala population of the country, angered by this a forced settlement on Colombo, of the Tamil terrorist question, due to India's arm twisting. This, with the JVP fishing in troubled waters, led to bloodshed in the South of the country as well.

The PCs are also not self-sustaining. They require funds from the centre for its operations. This creates further burdens on the already beleaguered exchequer. Then, who's right....?