17 October, 2021

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Port City Debate Is Riven By Hypocrisy

By Rohan Samarajiva

Prof. Rohan Samarajiva

Hypocrisy

It is hypocritical for a political coalition that demonized the then government and minorities by vigorously promoting the principle of “one country, one law” to then propose to carve out the Port City development as a geographical area exempt from many of the laws and practices prevalent in the country. Those who sow the wind, reap the whirlwind. Because of this hypocrisy, the government has great difficulty doing the right thing for the country.

It is hypocritical for members of the dominant party in the previous government (now split) to protest vociferously against the special treatment proposed for investors by the Colombo Port City Economic Commission Bill. They full well know the dysfunctions of the investment environment in Sri Lanka. The then government was working on a bill on the same lines. There was discussion on placing the financial city within the jurisdiction of the English courts then.

Since Sri Lankan politics is all about short-term political games, there is not much point in getting hung up about hypocrisy. Our politicians will say one thing in opposition and do another when in government. We should hope that the electorate will punish the worst hypocrites. But the country’s economic progress cannot be held hostage on account of hypocrisy alone.    

Private interests over national interest

It is not hypocritical for the Bar Association and other intervenors to object to the proposal to establish an International Commercial Dispute Resolution Center and to the associated legal workarounds. But it is wrong and self-serving. Members of the legal profession, more than anyone else, should know how dysfunctional the country’s legal system has become. 

At the 47th Annual Convocation of the Bar Association, the Minister of Justice said that the average time to enforce a commercial contract in this country is 1,318 days (3.5 years). It takes 9.5 years on average to conclude a criminal trial in the High Court. It is said to take one year to get a date for an appeal to be fixed for hearing a criminal matter. 

All of us who worked on improving Sri Lanka’s rank in the Ease of Doing Business Indicator know that legal-system-related factors are a main reason for Sri Lanka being relegated to the back of the class. Poor performance in resolving insolvency and enforcing contracts are major contributors to Sri Lanka being ranked 99th out of 190 countries. On enforcing contracts, we are ranked 164th

So, the previous government was right when they considered placing contracts of investors in the Port City under English commercial courts. The experts who crafted the present bill were right in making arbitration by the International Commercial Dispute Resolution Center mandatory and allowing for a fast-track engagement with the Sri Lankan courts as needed. Commercial arbitration is nothing new in Sri Lanka. To argue that it violates our Constitution is a little farfetched. 

One may quibble about why it need be mandatory. But if not, a party may choose to approach the Sri Lankan courts as part of a delaying strategy. I was once asked for Sri Lankan decisions on regulatory matters for inclusion in a compendium. The editors were surprised when I said there were none. I explained that there were plenty of cases, but no decisions. The cases were filed to get stay orders.  After that there was not much interest or progress.

But of course, professional associations rarely allow logic and the national interest to come in the way of the financial and related interests of the members. The Sri Lankan legal system is dysfunctional, partly because the interests of legal professionals are given priority over the interests of litigants and the country. It is not in their interest to admit how broken the system, they profit off, is. 

Section 63(2) of the bill is an indictment of that system:

“In order to foster international investor confidence in the ease of doing business and in the enforcement of contracts, in the national interest and in the interest of the advancement of the national economy, the inability of a particular attorney-at-law to appear before the Court on a particular date for personal reasons (including engagement to appear on that date in any other court or tribunal) shall not be a ground for postponement of commencement or continuation of the trial or be regarded as an exceptional ground warranting such postponements.”

Lawyers, individually (as a prominent politician/President’s Counsel so vividly demonstrated) and collectively, are likely to oppose it. What tragedy it would be if such a rule were to be the norm in the legal system?  How could the juniors get batting practice?    

Workarounds

The Port City bill is a workaround.  It is needed because our systems are broken. President JR. Jayewardene established the Greater Colombo Economic Commission (predecessor to the Board of Investment) as a workaround solution, by Act No. 4 of 1978 because our systems were a barrier to the attraction of needed foreign investment. We have the Katunayake and Biyagama zones and the various value-added manufacturing industries that are keeping our economy afloat, thanks to that workaround. 

The tragedy is that 43 years later we are still doing workarounds. We need these stopgap measures, but we need to give the highest importance to fix all the systems that affect all our citizens, not just the foreign investors. Specific mention is made of the doing business indicator in the Port City Commission Bill, but the indicator is not designed for enclaves but for the country as a whole. Improving the key systems across the country is what others are doing.  India is now more than 30 places ahead of Sri Lanka, thanks to dedicated task forces. China is ranked 31st, more than 30 positions ahead of India and more than 60 ahead of Sri Lanka. I invite the readers to look at how well our competitor, Viet Nam, is doing. 

If we do not improve the ease of doing business for all, we will be overtaken by Pakistan soon. They are taking concerted action to improve performance on the components and are now just nine places behind. The workaround should not detract from the focus on system improvements throughout. Define threshold levels in the Port City Bill itself when the workarounds can be discontinued. Then we can celebrate living in a country where the legal and other systems do not require bypass.    

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Latest comments

  • 9
    1

    An excellent analysis of the Port City situation and the dishonest political motives of those opposing it. The main Opposition would do exactly the same if they were in power, and the Pohottuwa lot would scream treachery. The fact is, we have been living beyond our means for a long time. The Rajapaksas are mainly responsible for wasting money on pointless projects, all named after themselves. They did this to show their baiya supporters that they were actually doing something. Now the naive patriots must realize that selling off the family jewels is the only option. Talking about sovereignty is pointless when the wolf has got you by the b..ls.
    Neither the government of SL or its citizens are known for living within their means. They studiously avoid World Bank loans that can’t be spent on Rajapaksa monuments. In popular imagination, our big neighbour is scoffed at for having no toilets, but nobody seems aware that the Indian Rupee has appreciated 600% (yes!) against the LKR in 30 years.

    • 2
      0

      Thank you for the well reasoned essay and helpful comment by OC

      • 1
        0

        S.J,
        I think , of the objectors, only the JVP has been consistent.

    • 2
      1

      “The main Opposition would do exactly the same if they were in power, and the Pohottuwa lot would scream treachery.”
      old Codger,

      I agree with you and the author that the opposition (now UNP-SBJ) will do the same and it is the same did by (SLFP-SLPP). but it is not only in solving the economic problem but also with other main national problems. It is not only after Rajapaksas but it is from the so called independence in 1948 or even before but it is accelerated or intensified after Rajapaksas.
      I don’t blame Rajapaksas but the blame should go to the educated professionals and the high ranking Buddhist Priests who failed to think about people and country beyond power, religion and race.What a shame that a Buddhist Monk encouraging or supporting violence against other faith or other language people!

      • 0
        1

        Ajith,
        The politicians used the monks to come into power. Now the government can’t do anything without the approval of the ignorant monks. Even the UNP used monks for its purposes. Remember Glyphosate Ratana who single- handedly brought commercial agriculture to its knees? Why on earth were his pretensions taken seriously over the advice of real scientists?
        At least Port City will be a place to run to when the rest of the country is taken over by the idiots in yellow.

  • 1
    0

    I agree. Sri Lanka has to see the ability to invest as a competition, not some god-given right. The Red tape of the govt sector is a complete turn-off. also so is this political nonsense. Say if for some reason another govt comes into power they will suspend and sabotage all the previous govt projects. This kind of nonsense is the antithesis of what an investor wants.

    I remember the days when the CTB buses were all painted the color of the new ruling party..Who wants to invest in a place like that.

    the Majority of the CT contributors ofcourse want no investment in Sri Lanka for their own political reasons

  • 2
    1

    If we do not improve the ease of doing business for all, we will be overtaken by Pakistan soon.
    ======
    we are already taken over by Bangladesh and they done have a Port City
    Chennai attracts more foreign inward investment than rest of India and they don’t have a port city
    =====
    Port City will make rest of Sri Lanka irrelevant.

  • 0
    0

    The government has great difficulty doing the right thing for the country.

    Are the right people in the government all knows the history in the goverment.

  • 2
    1

    Sri Lanka is in the midst of a destructive debt trap. Massive foreign Direct Investment is a way out. It will become a reality unless ease of doing business is considerably improved and Sri Lanka becomeS much more competitive.

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