Nationalization by stealth

The current Sri Lankan government made it clear from the start that it was opposed to the privatization of government owned enterprises. “The policy of the government was to retain ownership and management of ‘strategic’ enterprises such as state banks, electricity and utilities and make them profitable”, reported the Sunday Times, commenting on the government stance. That making public enterprises profitable has been a difficult – if not impossible – task in the past has not stopped the government trying. As the Sunday Times report noted, “losses in public enterprises reached a record level last year and this year’s losses are likely to be larger”. But now the government has extended the policy further, moving from holding on to state enterprises to actively acquiring (privatizing) other ‘strategic’ enterprises to ‘manage them in the national interest’.

Shell quits Sri Lanka gas business amid state price control

Sri Lanka’s government is buying back Royal Dutch Shell's stake in the part privatized gas company, Shell Gas Lanka. Shell’s decision to sell follows long running quarrels with the Government over the price at which the company could sell gas in the country. The $63 million sale returns the LP gas business in Sri Lanka to 100% state ownership. President Mahinda Rajapakse’s populist government had been at loggerheads with the oil and gas giant over the price at which gas is sold: the government has been insisting gas be sold at less than international market prices.

Corrupt or not?

Transparency International (TI) has released its report for 2010. With a score of 3.2 points Sri Lanka is ranked 91 out of 178 countries, up from 97th position last year. Of interest is how the news was reported. The government Sunday Observer interpreted this to mean that Sri Lanka was “low in corruption”, while ColomboPage reported a “marginal” improvement in tackling corruption but noted that “based on the criteria used by the TI Sri Lanka is not among the countries shown improvement from 2009 to 2010”. The Sri Lanka Guardian on the other hand pointed out that “Sri Lanka continues to be...

Profiting from Northeast disinvestment

The Sri Lankan mobile operator Dialog Axiata made a net profit of 1.69 billion rupees in the September 2010 quarter compared with a loss of 439 million rupees a year ago, Lanka Business Online reported . While this was partially due to cost cutting, the main driver was a huge increase in sales (16.2% or 10.56 billion rupees) and the main area in which sales have increased is mobile – both phones and broadband, according to the report. Tamils across the Northeast, lacking the infrastructure for fixed line access to telephones and internet, have been turning in increasing numbers to mobile...

PR and development

Sri Lanka’s fees for UK public relations firm Bell Pottinger (£3m) is greater than the amount pledged for development in Jaffna (£2.85m), the Sri Lanka Guardian reported today. The amount pledged for Jaffna, moreover, is uncertain to be followed through.

Stocks: foreign investors sell, state buys

Whilst Sri Lanka makes much of Colombo’s soaring stock market, trading figures show foreign investors are systematically exiting the island's market. Foreign investors have so far this year sold a net 23 billion rupees' ($200m) worth of shares, Reuters reported Monday. Moreover, the main stock index (CSE) is being pushed up by state-owned funds. The Sunday Times reported this week that the government has directed government agencies such as the EPF (Employees' Provident Fund), ETF (Employees' Trust Fund), state banks and other government controlled institutions to invest in the stock market.

Watts passes to Indian group

An Indian conglomerate has completed the acquisition of Watts Lanka PvT, a solid industrial tyres manufacturing company in Sri Lanka owned by European partners, trade press reported . Sun Tyre & Wheel Systems, part of the $6 billion TVS Group of India bought Watts Lanka (which will be renamed shortly), which was a joint venture between Watts Tyres Limited of Britain and KVK Invest JSC of Bulgaria.

Sri Lanka's military budget is 100 times that of resettlement

A year and a half since declaring victory over the Liberation Tigers, Sri Lanka’s proposed military expenditure for next year (almost $2bn) is an increase of 20% over 2009's and will dwarf the proposed budget for resettlement ($16m). Meanwhile, the development budget is $680m, according to figures reported in the state media . The government will unveil the budget in Parliament on Nov 22. Sri Lanka’s armed forces, including police, number 500,000 and are overwhelmingly Sinhala . Meanwhile, hundreds of thousands of Tamils remain displaced from large tracts of territory occupied by the armed...

Problem in Houston

Bye bye undies?

The Sri Lankan government is apparently abandoning the garment sector if press reports pver the weekend are to be believed. Given that the EU has withdrawn its GSP+ concession and the US is investigating its version of GSP, this is perhaps just the government accepting that garments are going to be hard to sell if the country's human rights record is not improved. But given that garments remain Sri Lanka's top export earner (despite a 13% fall in the first quarter of 2010 alone) the repercussions for foreign exchange will be significant.