2 June, 2023


Urban Development: Where The World Bank Leads, Sri Lanka Follows

By Collective for Economic Democratisation

Contrary to the claims of the present regime, its urban development agenda is neither autonomous nor a product of indigenous thinking, rather it follows the well trodden though hazardous path carved out by powerful global financial interests and institutions. In this article, we look at two World Bank reports –Turning Sri Lanka’s Urban Vision into Policy and Action (2012) and Sri Lanka: Reshaping Economic Geography Connecting People to Prosperity (2010) -to underline how the interests of the state and a major global financial institution converge in ways that may limit the space for political engagement and alternative views regarding the unequal effects of the policies they advocate.

Secretary to the Ministry of Defence and Urban Development Gotabaya Rajapaksa

According to the Bank’s reports, policy measures must focus on removing restrictions on land markets and promoting financing of low-income housing, identifying and solidifying the economic functions associated with different regional centers across the country, and address inefficiencies in “overlapping functions” of government bureaucracy by streamlining local government, especially in Colombo. We question these prescriptions not only because they are not grounded in a sound analysis of economic and spatial inequalities in Sri Lanka but also because they promote a convergence of state and market interests in ways that are politically problematic.

Misplaced stress on ‘freeing’ urban land and market instruments

The World Bank sees land market restrictions as a major impediment to urban development. In, Reshaping Economic Geography, the World Bank argues that the Land Development Ordinance (LDO) of 1935, preventing sale of state owned land given for various purposes, along with restrictive tenancy laws inhibit market “diversification.” What this means in practical terms, however, is unclear. It also argues that by removing slums and providing clear title to the land and loans in new settlements, people will be able to buy and sell freely. What such a shift ignores is the class character of those who will benefit from an allegedly freer market.

The Bank papers over these issues, arguing that the resulting “beautification” of Colombo coupled with a boost in private land development will automatically benefit everyone. The stress in the Mahinda Chintana on improving “underserved settlements in the city of Colombo through private developers and liberate prime lands for commercial activities” already echoes this.As argued in our previous column, major investments in Colombo are geared towards enhancing its appeal as a destination for global tourism and capital rather than challenging urban inequalities.

The Bank’s Urban Vision report argues that existing banking agencies have focused too much on “commercially viable groups,” to the neglect of the poor and calls for expanding private housing finance to low-income households. Clear titles and secure tenure, a pre-requisite for such financing, are thus no longer entitlements but pathways to enhancing“bankability”. Moreover, what such financial inclusion means in the context of broader socio-economic and political exclusion and dispossession, which result in poverty and low incomes in the first place, remains unexplored. The Bank also calls for the promotion of a private mortgage-default insurance market but the pitfalls of such financialisation in a broader economic context geared toward financial speculation in urban land are not addressed.

Beyond questioning the tensions papered over and issues ignored in the reports, we also want to emphasize those areas in which the World Bank appears to contradict itself by arguing that land market restrictions and state-owned land are severe issues for urban development. The Bank acknowledges that the Colombo Metropolitan Region contains only 10-20% of such land. Moreover, the LDOaffects less than 2% of Colombo’s population.Finally, the Bank notes that rural commuters and migrant laborers in particular are unaffected by current land market restrictions such as the LDO. For example, according to the Bank, Colombo currently has about 400-500,000 commuters. Thus its misplaced emphasis on cutting land restrictions,signals the underlying project at work in the Bank’s reports on urbanisation.

Spatially apolitical, historically blind

On a national level, attention is paid more generally to linking together the economic functions of different regions. Following the National Physical Plan, the Bank identifies cities in five metro regions (Colombo, North-Central, Southern, Eastern, and Northern) and nine metro cities (Ampara, Anuradhapura, Batticaloa, Colombo, Dambulla, Hambantota, Jaffna, Polonnaruwa, and Trincomalee). Reshaping Economic Geography focuses on the concentration of 50% of GDP in the Western Province with the regional primacy in manufacturing.

The World Bank report argues that in spite of the apparent imbalance indicated by these statistics, the government should promote“spatially blind” approaches that increase national welfare in order to encourage migration “by choice.” The report recognizes that these approaches will not lead to actual economic transformation of the regions by redistributing industry. As the Bank puts it, instead of relocating industry and manufacturing to ease regional imbalances, the government ought to “identify what investors perceive as opportunities and constraints” for each specific region.

What this approach ignores however is precisely why different regions are associated with different economic functions in the first place. Given the historical importance of global capital in directing Sri Lanka’s economy, first through the impact of tea plantations in the Central Province in colonial times to the emphasis on Free Trade Zones in Western Province since the late 1970s, it’s telling that the Bank doesn’t “operationalise” factors involving uneven development in its report. Excluding this basic reality means that the report ends up legitimating existing regional imbalances along with Sri Lanka’s position as a dependent export-oriented economy.

More pertinent to the current political situation, the report renders invisible the effects of war on the North and East, translating the grave consequences to trauma-affected and displaced communities into a question of access to markets. Because of facts of “ethnolinguistic or religious heterogeneity,” which remain unproblematised, the Bank argues that the state should administer “spatially targeted” policies to improve access. As the report puts it, “Language, ethnicity, or religion may divide one part of a country from another, effectively reducing market forces of migration and interregional trade”.

This contorted description of the situation in war-affected areas completely ignores not only the flow of displaced persons but also the different spaces in terms of political access and power that have been carved out in the North and East by the LTTE and militarisation by the state. Moreover, it reinforces the government’s position that the current political issues can be reduced to that of “development” while negatingthe deeper political roots of the conflict.

Putting market‘efficiency’ over deepening democracy

To touch on our last theme, the Bank’s report on urban policy, in particular, concentrates on the overlapping regulatory functions of existing government institutions. It provides a brief history of the creation of the National Housing Development Authority, Urban Development Authority, and other important institutions pertaining to urban development with liberalisation under the Jayawardene regime after 1977. It then asks how these institutions have currently been reconfigured through the amalgamation of the Ministry of Defense and Urban Development. This narrative however ignores questions of political access, such as attempts to sideline local government, particularly the municipal councils, in current urban development projects, particularly in Colombo. Instead the report calls simply for increased efficiency.

While the Bank doesn’t explicitly state its preference for the current political and administrative setup, arguing that current government hierarchy is indeed both “centralised and fragmented,” the language used in its report on urban policy seems to effectively disable broader questions of political engagement. With people affected by major economic transformations such asinsertion of theurban poor into speculative real estate markets, and implementation of regional development projects that seem to reinforce uneven patterns of development,urbanisation policies promoted by the World Bank and the regime will have serious political and economic consequencesespecially for poorer sections of society.

*The Collective for Economic Democratisation contributes to this column hosted by the Centre for Poverty Analysis as a guest contributor.  The Centre for Poverty Analysis (CEPA) is an independent, Sri Lankan think-tank promoting a better understanding of poverty related development issues.  The Collective for Economic Democratisation strives for a historically grounded and socially relevant political economic analysis in solidarity with progressive struggles. 

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Latest comments

  • 0

    World Bank is the LEader and Sri Lanka is the follower ?

    World bank is a Credit Card company. They are for big profits. Their hidden objective is helping their masters.

    • 0

      Excellent analysis – keep it coming. World Bank and IMF should be SHUT Down like the irrelevant Commonwelath of Clowns and (CHOGM)

      These Breton Woods institutions are useless and like the Sri Lanka Central Bank under the clown NIvard Cabraal generate SPIN (which they call knowledge) to cover up the gross Poverty and INEQUALITY and conflict in the world today that their policies promote.

      Nobel prize winning economists like Sen and Stiglitz have over an over pointed out that these institutions are part of the problem and not the solution.

      • 0

        Aid and LOANS are FUNGIBLE and transferable across sectors.
        At the same time the World Bank preaches GOOD GOVERNANCE..
        it is bankrolling and supporting the Sri Lanka military by making huge loans to the Urban Development Authority (UDA) which is under the Ministry of Defense which is a totally un-transparent institution.
        We all know that Gotabaya,accused of war crimes, is consolidating a DEEP STATE or state within a state as a precursor to military dictatorship to secure Rajapassa family rule in Lanka.
        The issue of the World Bank aiding BAD GOVERNANCE and CORRUPTION and the growing military dictatorship in Sri Lanka should be taken up in Washington DC and the Diaspora MUST PROTEST the World Bank’s support the to Rajapakse military dictatorship which is a violation of all the principles of GOOD GOVERNANCE.

  • 0

    Can anybody tell me who was the secretary of defence in the CBK terms ?

    and who were defence secretaries in the govts of D B Wijetunga and Premadasa ?
    I heard about the position -minister of defence in SL, but secretaries of this kind are new to me. Is that at all given in the E constitution ?

  • 0

    Good Stuff! A Chinese company is tipped to reclaim land and build a port city in Colombo but no environmental assessment has been done and we have NO idea where the ALL the SAND and earth is going to come from. They will destroy sand dunes in other parts of the country to build the proposed Formula 1 Race track on reclaimed land so that the Rajapassa thug brats can have their CAR RACES..

    Citizens groups must demand information on this since filling one part of the island could lead to erosion in another part and may endanger other parts of Colombo. The Hambantota white elephant port and airport WHITE ELEPHANT PROJECTs funded by Chinese which are environmental and financial disasters should be a warning here.

    Colombo city dwellers must organize and demand ENVIRONMENT AND SOCIAL IMPACT ASSESSMENTS before any contracts are signed. Time for Colombo to wake up and take back the city from Rajapassa brothers whose cronies have cut down all the old timber rich tress on the roads and in the parks of the city. The stripping of historically and economically valuable tree cover in the city is a scandle.

  • 0

    Urban development is a local program implemented under a national policy.

    Until the business guilds started dominating the urban space it was dominated by either the seats of governance at national or regional scales and the seats of religious establishments or both. Therefore infusion of capital for both development and maintenance was a state responsibility and the taxes levied went straight to the state coffers.

    Trade and commerce added value to urban space and the advent of local governments changed the taxation mechanisms drastically. It gradually became a local affair. Now there are two levels; tax on land transactions at national level and property tax at local level. Key to generating income from land transactions and property taxes is increasing the value of land. However the trend in Sri Lanka is to increase the percentage, which is not citizen and business friendly.

    In regard to property taxes Local government statutes introduced during the British period remained unchanged in spite of H&TI Ordinance providing statutory support for increasing the value of land. To strengthen the local initiatives for increasing the value of urban land, the UDA Law was introduced in 1978. section 3 (3) of the UDA law provides for developing the areas declared as urban development areas for better physical and economic utilization of such areas.

    This entails professional inputs for determining what is urban in the first place and planning and development of urban infrastructure. At present only Colombo MC has the professionally qualified human resources to handle it locally but all local authorities lack the knowledge and the institutional capacity to generate local incomes through urban development. Moreover the local councilors have no idea of what out sourcing and Public Private Participation means. Most of the local technical staffs are not professionally qualified to plan, design, conduct feasibility studies and implement. They can only do basic estimating for repair and maintenance.

    “In, Reshaping Economic Geography, the World Bank argues that the Land Development Ordinance (LDO) of 1935, preventing sale of state owned land given for various purposes, along with restrictive tenancy laws inhibit market “diversification.” (Collective for Economic Democratization)

    It is not only the limitations but the lengthy acquisition and vesting process also inhibits the development of state lands for market diversification. When Prez Premadasa launched the 200-garment factories program the investors could not set foot on state land without them being vested. He used a simple strategy of getting the Divisional secretaries to issue a note stating that the state has no objection to the investor commencing construction and business operations until the vesting order is issued. It saved nearly 70-weeks for the investor.

    As regards the question of what is urban there is no yardstick for Sri Lanka but The country has made headway in identifying locations suitable for urban development from national and regional contexts. The WB and the UNDP have accepted the national Physical Plan of 2007 as the basis for investment in urban and regional development until 2030. national Physical Plan is 100% Sri Lankan and what the WB is doing is providing capital for infrastructure development. WB is a business institution and it is up to GOSL to use the agreed funds productively because at local level the institutions do not have the capacity to plan, design and implement with private sector participation.

  • 0

    As revealed by Dr Harsha de Silva yesterday and reported in FT to day

    “UNP National List Legislator and Economist, Dr. Harsha de Silva exposed a ruling party decision to exclusively lease a highly valuable 29 acre property in Maradana to Chelina NEB Lanka (Pvt.) Ltd, a company with only three share holders and a share capital of
    Rs. 30. “According to the Cabinet Memorandum 13/0949/561/011, Chelina NEB Lanka will be leased a land of 29 acres, which now leased to Sri Lanka Railway. BoI will be the middle men in this transaction. This is an unsolicited proposal,” De Silva charged.”


    MOD is playing fast and loose with govt lands in colombo under the cloak of urban development. MOD has been allocated a budget of 290 Bn much of which is unaccounted and unaudited. Can we have more transparency from the govt please?

    • 0

      When the war raged high in March 2007, Harsha type of pundits disseminated that the government is broke and it has no money to pay the government servants for the coming-up Sinhala new year. Its six years since, the government servants were paid without delay up to date. Not just that; MR has brought the war to an end and the country is witnessing a tremendous growth. Colombo and other cities are being beautifying, Canals are being cleaned and no rubbish are seen in its streets. Not just that, apartments are coming up for all the slum dwellers. All in all the standard of living of the mass is increasing rapidly. That is why, Dayasiri has abandoned the sinking ship.

  • 0

    I agree with Jim Softy on one point – They have hidden objectives, set and directed by those big brothers of the UN. If you agree to be lead by them and follow like fools as this govt seem to be doing, of course they’ll lead you to their circus ring where there is no escape – they sit around and dictate what you should do and you’ll have no alternative but to succumb. And dont forget – the ticket income will be collected by them no by the actors.

    This is well explanied citing real life stories in the book launched a decade back ” Confessions of an economic hit man” which was translated in to sinhlala by our red brother Wimal who was all out those days to attack WB/ ADB funded projects. Little wonder why he keeps mum about same projects and more new ones that are being implemented by the omnipotent, omnipresent Secretary of Defence & ha ha Urban Development.( ever heard of a ministry that handles both military matters and civil society’s development work under the same roof? what is the relationship between the two – perhaps the use of military power to suppress the civil society to implement their plans )

    He has a collection of goons and morons to operate his WB projects – a group that just dances to his tune and stand to attention, salute & say Yessir any time that is demanded of them. Its a very sad fact that even the senior professional who have held high govt posts who are posted as Consultants, let alone those inexpereinced underqualified young goons who are placed in high posts,just dance to the masters tune without a trace of conscience. None of them seem to have the back bone to say NO to the shameless acts of stupidity being staged at public expense.

    All that seem to matter are the big 4WD vehicles they get, the 10% commissions, free rented mansions with security guards and the future possibilities of better more lucrative business with the powers that be.

    • 0

      Dear Citizen Silva,

      The professionals who are posted as Consultants in this WB funded Colombo Metro Region Program do not dance to the master’s tune. They have planned, designed, prepared contract documents and are in the process of contract administration without foreign consultants.

      Go to the project office at Sethsiripaya Stage II, Battaramulla and see what has already been done and what is planned to be done.

      Please do not criticize true sons of soil as bribe takers if you are a true “citizen” of mother Lanka. Encourage them with constructive criticism of the content of their projects.

  • 0

    Interesting debate building up. I thought of contributing something which came out of presentations during the Annual Sessions of Young Planers’Forum held today (28th July)at Water. A lengthy presentation on the WB funded Colombo Metro Region caught the eye of the audience. During the panel discussion the following issues were raised;
    1. Sustainability and inclusiveness;
    2. The role of the local authorities of Colombo metro region;
    3. Capacity of Local Authorities to look beyond property taxes;
    4. An alternative spatial strategy for city of Colombo;
    5. Role of the private sector in project planning;

    Comparison of livable cities in the world indicated that it was the strong local leadership supported by strong governments that mattered in all the cases excepting South Korea and Singapore.

  • 0

    Dear Professional, all this big talk is fine and your professional review too – guess you are one of the team.

    Look at it like this – its good for a middle class family to buy a small car – it will be useful for their day to day work, attending to family matters and in general can contribute to quality of life.
    but if they spend money to go to country of manufactur of that car to check on the quality of the vehicle and get a training to use this small car, meet at a five star hotel to sit and discuss how to buy the car, which forms to purchase from and then appoint a concultant at a thumping salary to prepare an advertisement to buy the car – can we still call it good?

    Isn’t that what you professionals are doing? Is it GOOD given that its public money that you spend?

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