Promoting Private Sector Development as
a tool for Economic Recovery in the Post-Conflict North & East of Sri Lanka
By Eranga Amunugama
Why
is Private Sector Development Important?
The end of the armed
conflict in Sri Lanka in 2009 has brought in a new wave of optimism within the
country, sparking hopes for new found economic stability and prosperity,
especially in the conflict affected North East. However 5 years later, the
economic performance of these regions has been poor, The Private Sector, both
domestic and foreign, is expected to play a key role in the promoting the long
term economic resurgence and development of conflict affected societies. As the World Development Report (2011) cites,
long term development and peace in post-conflict societies rely on a healthy
and vibrant private sector, "especially if creating jobs and incomes is to
out-last donor-funded, short-term emergency works[1]."The
DCED Report on Private Sector Development in Post Conflict Countries claims “The private sector is a
powerful and adaptable vehicle for reconstruction and regeneration in even the
most difficult of situations[2],
Similarly Suresh De Mel formerly of Business for Peace Alliance, Sri
Lanka is a clear proponent of Business’s
role in helping to usher a peaceful and stable country. He contends,
“The
Private Sector can
foster peace, stability and good governance by, “maintaining fair and competitive markets, ensuring that
all segments of our society has easy access to economic opportunity, productive
employment and credit, nurturing enterprises that generate the most jobs and
opportunities, attracting investment and
helping to transfer knowledge and technologies, playing by the rule of law,
providing incentives for human resource development, and protecting the
environment and natural resources”.
It
is clear the Private Sector has a role to play in economic recovery and
development. This article looks at prospects and challenges facing private
sector development in the North-East regions of Sri Lanka, proposing ways to
further improve and facilitate further private sector development so as to better
benefit the macro economy and populations in these regions.
Prospects for private sector development
The
government has taken some steps to open up the North- East to private
investors: The Sri Lankan Government for its parts has taken many
measures to encourage Private Sector ventures in these districts to generate
much needed employment and capital infusion. State led projects, Public Private
Partnerships, PPPs and Private ventures have begun to take root in many of the
district hubs especially in Jaffna. Special infrastructure and trade
incentives, concessions are on offer to investors willing to come in to support
Post War Development. Infrastructure development
of utilities such as electricity and roads have been ongoing and penetrated
many areas in this region, however more time is needed for completion. Demining
progress has been accelerated to clear areas for community resettlement. The state
security apparatus has taken steps meanwhile to consolidate their foothold in
these districts by establishing bases and more high security zones[3].
Protests by large number of people and organizations in Courts has led to
certain high security lands being given back to legitimate owners however many
cases still remain unresolved.
Large
scale projects by companies have taken place some of which have been supported
by donor agencies. These projects have been supported by USAID with technical
support and funding to generate employment for youth. Various initiatives on
Vocational Training of youth are taking place by various service providers to
develop the human skill capital in the region to engage with such
opportunities. INGOS and NGOs are working with some Private Actors to support
marginalized youth and communities to benefit from such ventures by mobilizing
community based structures and facilitating discussions. The skills training
received has enabled diffusion of technology and created value chains in
Colombo and with export markets particularly in sectors such as Fisheries and
Agriculture. A large number of new projects and establishments have sprung up
in the Tourism Sector particularly in the Eastern Province in areas such as
Passikudah, Nilaweli etc. The Military for its part has also been setting up
Tourism ventures run by forces personnel in the North & East which has
raised issues by certain quarters. New
Industrial zones have been setup in Jaffna and upcoming ones in Sampur are
expected to generate employment options. The Sampur zone however has come in
for criticism due to displacement of local families.
Challenges to Private Sector Investment in
the North-East
Certain
private firms and chamber associations while supporting this endeavour have
raised number of concerns with the authorities that should be addressed if
economic growth is to be sustainable. The underlying issues of Land Ownership, Militarization,
Local Political maneuvering by government henchmen for area biased projects
have compounded fears of private enterprises of a level playing field. Firms
remain wary of not aggravating ethnic and economic sensitivities of the region
which is suspicious of investments originating from the South.
The
Political Economy of the North remains closely linked to land issues which was
a major tipping point in creating and aggravating the three decade long war. As
such the surge of state and private sector ventures in the North have raised
tensions with local communities who have concerns for their livelihoods and
land entitlements. The Fisheries sector has seen a number of instances where
private projects supported by State have had mixed reactions. Another pressing
issue is fishing rights of coastal fishers having to compete with larger well
resourced fishing vessels from Southern Sri Lanka and Indian Trawlers. At a governance perspective the Provincial
Council election results have meant a political stalemate for the Central
Government whose representative the Governor, continues to operate despite
protests by the Provincial Government. This policy incoherence has sent mixed
messages for any Private Sector investor keen on setting up in the Northern
province.
The
selection of communities and households for private sector and development
projects are also clouded by some actors who sometimes override the decisions
of civilian officials appointed for these tasks. The divergent policy and
political objectives of stakeholders on the future has meant that a holistic
view and collective action is unlikely to take place anytime soon.
Buthpitiya,
2013 in a LST position paper claims
“Despite
acknowledging the importance of holistic development in the National
Development Framework, Sri Lanka’s development trajectory continues to
inadvertently contribute to the exclusion and marginalisation persons in the
name of achieving economic targets”.
The
Local Chambers of Commerce are still establishing themselves and need to work
in cohesion with the socio political governance systems and actors to claim a
more vigorous involvement and contribution of their members for regional
economic development.
The
Way Forward
The need for the government to strengthen
institutions (institutional reform) and establish legal frameworks and
governing bodies to create an enabling environment for private sector
development
The need to strengthen local cooperatives and
chambers so they are equipped to engage with large private sector actors.
Regulated access to finance and credit, with
proper financial counseling. Private sector partnerships with donors and
government work.
Resolving the land issues of communities to
engage in desired livelihoods and partner with enterprises for this purpose.
Government action is key in this regard.
References
Buthpitiya, V, 2013, Reconciling Rights Responsibilities and
Disjunctures: An Assessment of Sri Lanka’s Post-War Development Drive, LST
Position Paper, PP 13http://www.lawandsocietytrust.org/PDF/resource/srilanka_post_war.pdf
http://www.ft.lk/2010/11/10/big-guns-go-north/
(Last accessed on 17/09/2014)
De Mel, Suresh. Role of Business Community in Post-conflict
Rebuilding Efforts: Lessons and Challenges, Full Paper for Business for Peace
Alliance, PP 1 http://webcache.googleusercontent.com/search?q=cache:QSGiHxbwYRMJ:www.bpa-srilanka.com/files/Full_Paper_Role_of_Business_Community_in_Rebuilding_Presentation.doc+&cd=1&hl=en&ct=clnk&gl=lk
SRI LANKA’S NORTH II: REBUILDING UNDER THE MILITARY, ICG
Report, March 2012 http://www.crisisgroup.org/~/media/Files/asia/south-asia/sri-lanka/220-sri-lankas-north-ii-rebuilding-under-the-military.pdf
Mr Eranga who is selected very important fax for the country development. Especially In Mahinde Chinthena says this area under discussion.
ReplyDeleteSri Lanka as a government of democracy socialistic & republic. Private sector such necessary by participate development for the country. According to this fact ppp is a main concern in the present government.
Newly development country of Asia, such as Singapore, Malaysia, South Korea, Thailand hongkong & Taiwan those countries are mainly focus for develop by participate private sector.
Mr Erange describe well about this matter. This is very urgent requirement factors of the development in Sri Lanka.
Thank You
Upul Weerawardana
Register no 2014/MDS/03/C-06
Article is very interesting and appropriate since it has spoken the role that private sector can be played in redevelopment of deprived regions of the country in broader perspective. As my belief, this is the efficient and strategic solution for redevelopment in the countries like Sri Lanka that are having series issue with investment capabilities for redevelopment.
ReplyDeleteAs article highlighted in the article, one of the key challenge in private sector development is the sustainability or long time survival. We have seen that few of infrastructure projects that have implemented now have issues in management. No one is there to take the responsibilities for failures. Even in housing projects, there are some generational impacts that can be arisen after 10/15 years. As example the residences of one of IDB implemented housing project in Northern Province is now facing to real difficulties in matters like ownership of land, taking electricity and water, etc. Government officials are not taking responsibilities due to several reasons. Therefore integration of relevant provincial, local government authorities and respective institutions (UDA, RDA, Irrigation, SLRDC, NHDA, and ect.) is need in implementing a development project by private companies or by donor organizations. Very importantly, collaboration of Local authorities, (Urban councils, MCs, and Pradeshiya Sabhas) their involvement in decision making, planning stage and their acceptance is need to take over any action because finally they will be the party that experiencing effects (especially like infrastructure development projects). With the common agreement of the government projects can run the process smoothly with fewer circumstances.
In consistent to author, the government should have to play an important role in contributing private sector for development. Proper Public - Private partnerships (options like BOO, BOOOT, BOT, etc.) can be adopted further with clear agreement over the development attempt. But a transparent process and a TOR should be maintain in order to inform it to general public otherwise the benefit transferring process will be a question for particular people. Then this will create mutual and absolute benefits to country as well as to the private sector investors. Objective of the development to be understand and achieved to the best by the private sector while maximizing their profits.
In other hand government can make unbiased environment to both community and private sector by interfering with land use restrictions, zoning and use tools like Community responsive projects, environmental licenses, etc. to have some control over acts of private sector.
W.P.U.K.Perera
MDS – 20 (2014/2015)
(S C Bastiansz - PgDs).
ReplyDeleteThis is a good article that focused on the role of the private sector in post-war development, which has been one of the main highlights since the conflict ceased. The sector has felt the pressure to step up and make a bigger impact, in lagging regions, as Eranga correctly points out. He has also made mention of the dire need of institutional reform, securing property rights and easing the bureaucratic red-tape is a must, if more private sector stakeholders and businesses are to expand to these areas. It must be acknowledged that the government has made a noteworthy effort to attract foreign and local investments to the North East particular through fast-tracked infrastructure development. However, attention must also be paid to more deep-seated issues such as securing the property rights and dignity to life for the citizens of this area, if they a conducive environment is to be created for investment and operational expansion. Eranga has made reference to such occasions where initiatives from private sector actors have been met with defiance in this article.
The content brought by the author,Eranga is important at this point to the country. As my point of view and according to other reliable experiences, countries get both bad and good outcomes from private sector involvement in economic development. Is this is the most appropriate way is still a question. A study carried out by UNCTAD, the Indian Government, and the UK Department for International Development (DFID) found that the most significant reductions in poverty have been a result of private sector activity. Since private sector has capacity to create new jobs and additional income. But the same time the World Bank has estimated that the global financial crisis between 2007 and 2010 pushed 64 million people back into poverty. The ultimate target of engaging private sector to redevelopment activities is to invest into community and social objectives. That target should be achieved else the process will be not successful at all.
ReplyDeleteCapital, Technology and knowledge can be transformed through this, but private sector involvement in operation and management of services such as health, transport, education and etc. some times can make inconveniences to the community. Since private sectors operate on market approach, service quality will be good but the poor can suffer due to affordability matters (vulnerable communities will suffer at first) because in private sector involvement nothing will come without a cost.
As a suggestion, continuous monitoring by government and at least periodical evaluation on private sector redevelopment attempts are essential to carried out to make sure that community is getting benefits as expected.
L.P.Gangabada
MDS -10
Over three decade long conflict in Northern and Eastern province had damaged not only the private and public properties but the mind and soul of the people living in the areas too. Therefore, the development of a devastated area is not an easy task and will need a considerable time to restore. It is indeed un-debatable that military camps should be removed from the respective areas. Yet, it is a matter of fact that ought to be taken into reconsideration as removing of military camps may also create several other critical issues with respect to the security of the area. Currently, removing of military camps from private properties in the areas and shifting them to the government properties are in process. Further, there are certain areas between Jaffna and Kankasanthurai where demining activities are still in process.
ReplyDeleteGovernor of the Northern Province is an officer appointed by the ruling party. Yet, the Northern Provincial Council is governed by another political party. However, this fact is not a matter of disparity to go ahead with the development in the area. A good example for this is the moving hand in hand the Colombo Municipal Council with the ruling party. Colombo Municipal Council work together with the Urban Development Authority in harmony to expedite the development process to achieve the government development targets. This fact is visible when looking at the emerging beauty of the Colombo city. Therefore, it is evident that if political leaders wish to serve for the people of the country no matter if he or she is in the ruling party all what he or she needs is the commitment.
K.A.W.Fernando
MDS - 08 (2014/2015)
The articles bring out several important factors for consideration and action. However, I do not agree on the point raised by the author on the state of Local Chambers of Commerce in the North and East. While it may be somewhat true for Kilinochchi and Mulativu which saw total breakdown of the economic activities during the final stages of the war, Mannar, Vavuniya, Jaffna and the Eastern Districts have a very strong presence of Chambers of Commerce and Trade Unions. These organizations have already established platforms for constructive engagement with local authorities and the political structure. While there are regular consultations taking place through these platforms, it is questionable how far the discussions effects the final outcomes as decided by final authorities. An additional flaw in the system is that often these chambers and unions are structured with racial or political affiliations that are used to pit them against each other by different parties.
ReplyDeleteThis is a solidly analysed t;opic and the writer has done well in justifying his statements and claims pertaining to the role of private sector in rural development. I agree that the role of the private sector in Sri Lanka is vastly pretentious when in comes to so called corporate citizenry. However, a few industries do stand apart from the stereotypical showy do-gooding. The apparel and plantation sectors have made giant leaps toward rural integration and development.
ReplyDeleteWhat has stood out here is that these sectors embrace rural and post-conflict communities as partners and not recipients. This dynamic shift in approach has helped to breakdown stigma, fear, opposition and provided greater power sharing. This shift of balance of power that used to lie predominantly with private sector entities has meant that rural communities have the right to voice their opinion and discontent in a non-violent manner. In the north and east it is common to see private sector representatives from the capitol sit together with communities under a tree or in a kachcheri. Positive signs amid a shrinking civil society space. One must not be too optimistic though; the private sector is always about profit and it is toward this endeavour they will strive irrespective of rural development participation and cooperation. In this light NGOs and the govt. must adopt due diligence evaluations on corporate entities who they approach for rural community integration.
Amenthi Jasinghe-Dabare
MDS 2014/15
This is a very interesting topic which expresses the need of the private sector intervention on the economic recovery in the post conflict areas. As we know the ongoing development of roads and other infrastructure encourages the private investment. And there are massive ongoing projects in tourism and industrial sector which builds the economy. But sometimes these projects may not be beneficial to the local community. This might generate the feeling that they are pushed away from the development. Especially in the case of resettlement and ownership of lands. Therefore there should be some projects which focused on community driven development process in which these communities could engaged. Then we can ensure that the benefit of development is reserved them. The improper interventions of the private sector without a proper agenda may feel that they are discriminated in development process, which might cause for another conflict.
ReplyDeleteM.J. Fernando
MDS 12
It’s a very interesting and apposite topic discussed by Mr Eranga. Since the private sector has very clearly identified as the “Engine of the Economic Growth”, the contribution of the private sector is most essential specially in this post conflict areas to boost the economic development and recover the economic stability of these war affected areas. The private sector has to take the lead role in capacity building to trigger significant cash inflow to the war affected community in north and east provinces. Although the country has won the ‘war’ its main challenge is to win the confidence of all communities alike. National reconciliation and nation building need to be a cooperative effort, one that the government alone cannot achieve. Active support and partnership of the private sector, civil society and the international community is very much needed in the process - to ensure that the country sustains it’s hard won peace. In this process today, the necessity has arisen to ascertain if the private sector plays a correct role on their part towards development in these post conflict areas. Most of the investments in the north and east are yet to be matured to make financial outcome and support to the economic enhancement in this area. Therefore the question is “are private sector investments correctly directed towards economic enhancement of the post-conflict areas?”
ReplyDeleteAs Mr Eranga highlighted, it is most crucial of the Government intervention to establish legal framework and governing bodies to create an enabling environment for private sector development in order to achieve healthy private sector and to achieve lasting peace and stability trough equal economic growth across all provinces in the country. As a result, policymakers need to factor private sector concerns into their calculations at every stage of post-conflict recovery.
M.P.K De Silva (PgDDS)
(Madushanka De Silva)
In a post conflict situation where it takes time to build trust within a community, where still 5 years on the area is highly militarized and as mentioned by Eranga in his article that the region is suspicious of investment originated from the South, promoting private sector development as a tool for economic recovery of the region may have greater buy-in if there is more pre-implementation consultation with all stakeholders in the local community. i.e. disclosing the nature of the investment, parties involved, benefits to the community and an opportunity for doubts and questions to be addressed. This would aid in the development initiative to be accepted rather than being seen as something alien and forced upon the community.
ReplyDeleteAlso, as a way forward the government could consider tax-breaks for firms that invest in the region and employ large number people from the region.
A. Manisha M. Ruwanpathirana - MDS 24
This interesting article written by Mr. Eranga gives a very clear idea about why the private sector intervention is more important for the post-war development in Sri Lanka, especially in the areas of North-East, which were mostly effected by the civil war we had to face fort about three decades. Also, this article gives an idea about the prospects and challenges facing by the private sector in North-East regions. We can identify the private sector as a powerful and adoptable vehicle for reconstruction and regeneration the economy in a country even in most difficult situations.
ReplyDeleteAs a nation the time has come to stand up in our own feet to develop the country with the joint corporation of the Sri Lankan Government and the private sector entities. We can identify the private sector as a powerful and adoptable vehicle for reconstruction and regeneration the economy in a country even in most difficult situations.
The setting up the economy, social conditions and the lives of people in North-East are the major challenges that have to be faced by the government at the post-war period as the Nort-East areas are the most effected areas from the civil war we had. The private sector intervention is essential for the Government of Sri Lanka to fulfil all the development needs and to ensure the economic stability and the prosperity of the said regions and the private sector entities could be either foreign or local.
By opening up the Nort-East for foreign investors, we’ll be able to get the foreign financial aids, technological support, employment opportunities, vocational training facilities and etc which will develop the economic conditions as well as the living standards of people in the North-East regions and in the country.
Sri Lankan government, legal entities and the relevant authorities have taken necessary steps to ease the rules and regulations in a more favourable manner which could attract more foreign investors into the country. Not only by easing the rules and regulations but with the proper direction and guidance provided by the relevant authorities will be able to promote the investors to grab the investment opportunities and will not mislead the investors. Also, as most of the private sector investors are more profit oriented, they should be closely monitored by the government, legal bodies and the other relevant authorities to gain the maximum benefits out of these investments for the development of the economy and social conditions of the country by ensuring the protection of environment and the natural resources.
I.A.T.D.Wanniarachchi (PgDDS)
Private sector too has a much bigger role to play in the development process in the N & E of SL. Inclusive institutions can create bigger incentives, innovative technical changes, equal profit distribution and finally contribute to sustainable economic development if smartly managed by unbiased well-established institutions and policies. The limitations with the exclusive institutions are serious e.g. Resources are controlled by few narrow elites; hence no efficient allocation of resources, authority cannot create the required incentives & innovations, stagnation and finally face the roadblock.
ReplyDeleteSumudu Hewawasam (2014 / MDS / 16)
Mr.Eranga’s article arises important facts regarding the development of North & East of Sri Lanka. We had been suffering 30 years of war. After ending the war many projects have been started in different fields to uplift the living standards of the people who are living in the North & East. As well as we can utilize the land and Human Resources to reach to Miracle of the Asia. To achieve this goal both sectors (Private & Government) are important.
ReplyDeleteManjula Rajapaksha (MDS/2014/2015/15)
This is very important issuing in Sri Lanka, I read it well and I got lots of Information for my knowledge
ReplyDeleteThank you
Upul Weerawardana
2014/MDS/03/C-03
While stressing the necessity of achieving economic development in the North and Eastern provinces the writer point out the importance of private sector participation in this endeavour. He pays more attention on the frequently hearing popular factors. However he has not paid attention on concealed factors in the carrying out of other development activities. E.G- Nothern Provincial Council’s conflicting attitude with the central government, seeking international community’s meditation on the internal affairs of the country.
ReplyDeleteSisira Ekanayaka 2014 / MDS / 06
This article fundamentally provides awareness on the private sector intervention, which was most important part in the post-war development of Sri Lanka. Especially about the areas of North-East. Here I would like to confer the author’s perception about the North and East privet sector role of development. There was an educational based society in Northern Province before the war. Most of the careers for government officers, Doctors and Engineers were based on Jaffna. There were less career opportunities for other sectors such as tourist, agricultural and in privet companies. But after the period of war , there were many opportunities to improve other sectors such as tourism, agricultural and production except education. Thereafter, one of the major responsibilities of government was to maintain a good environment for investment with in the country. As the author and some other pointed out, there is no such healthy condition for privet companies to build up as the land ownership and the military activities still going on over the country. Investment for improving infrastructure is essential prospect and largely we have to concern about the privet sector, especially for the development of North and East. But overall, I think that the freedom and the opportunities to investment in North and East is not that enough for virtuous development.
ReplyDeleteS M A Surendra
From PGDDs
This comment has been removed by the author.
ReplyDeleteWhile high levels of efficiency, competitiveness, corporate knowledge and innovation are benefits of private sector economic activities, disrespect of public interest, regulatory issues, loss of government ownership stand out to be causes of increased private ventures. However, new investments, especially FDIs are needed in the corporate sector of the country for it to move forward.
ReplyDeleteMarian Fernando
MDS 28 (2014/15)
It’s this article main focus on private sector development through establishing private factories then they can work as labors. It is a solution for unemployment issues. But it is not the answer for the empower the people. We try to create own capabilities and mechanism for sustainable livelihood development.
ReplyDeleteTHAVARASA THARSHAN
MDS/2014/22
The writer brings in the important logical ideas one should focus on in a post-conflict nation. The role of the private sector mostly neglected is well highlighted and the importance of education in ensuring that the youth and children of the areas are well equipped to handle their financial futures is a point to ponder on for not only government but educational institutes as well. Well written article.
ReplyDeleteA.P Abeyrathne (MDS/2014/26)