Share your story of entrepreneurship to help to remove regulatory and legal barriers to small and micro businesses!

First appeared in Daily FT , and Daily News.

Advocata Institute recently launched a study on removing barriers to micro and small entrepreneurs (MSEs) through regulatory and legislative reform. The economic contributions of MSEs are seen as one of the major driving forces pushing economic growth. However, regulations that govern these businesses can be a deterrent. 

In order to gain a deeper understanding of the issues faced by Sri Lanka’s small businesses, Advocata is launching a story competition within this study. We invite individuals to submit their 600-800 word story, be it personal or about someone they know, on the barriers faced by MSEs today. The stories should also detail changes to the current system entrepreneurs think are needed, in order to overcome these challenges. Stories are accepted in Sinhala, Tamil, or English. The individual whose story wins first place will receive LKR 100,000. Second place will receive LKR 50,000 and third place will receive LKR 25,000. In addition to this, all shortlisted entries will receive valuable consolation prizes. The judges for this competition include Achala Samaradiwakara, Rukmankan Sivaloganathan, and Anushka Wijesinghe. 

Small businesses make up over 90% of the total businesses in Sri Lanka.  Not only do they employ close to 45% of total employment, they also contribute tremendously to our economy. A recent survey carried out by the Advocata Institute found that some of the main barriers to entrepreneurship are sourcing finance, sourcing raw materials, and low sales. Out of the businesses that had not been registered, 36% reported that they had tried to register but had failed due to the complex procedures that were involved.

Stories for the competition can be submitted through email to info@advocata.org, with the subject ‘My Entrepreneurship Story, Name’. Stories can also be submitted by sharing a public post on Facebook, Instagram or Twitter with the hashtag #MystoryLK, or by sending a direct message to @advocatainstitute on Facebook or @advocatalk Instagram. Further information can be found on the competition website 

More details: https://mystory.advocata.org/

57% of Sri Lankans unwilling to pay higher food bill to protect local industry - Advocata Survey

First appeared in Republic Next, Daily News, Daily Mirror, Daily FT , and Ceylon Times

A survey commissioned by the Advocata Institute in April 2019 revealed that 57% of Sri Lankans were unwilling to pay extra for food, even if it meant that the local agricultural industry would be protected. 

This survey covered 855 respondents in 18 districts within 8 provinces in Sri Lanka. The demographic variables considered were age, gender, educational qualification, socio-economic class, and monthly household income.

The survey also revealed that the lower the Socio-Economic Category (SEC), the less willing respondents were to pay extra for their food, to protect the local industry. SEC is the category an individual falls into based on their education and occupation. It was only in the highest SEC where 51% answered ‘yes’, agreeing to incur a higher cost of living at the cost of protectionist taxes. SECs following it were increasingly reluctant to pay more for food, even if it meant that local businesses were protected. 

Lower-income households spend most of their income on food according to the Household Income and Expenditure (HISE) Survey.  The lower the income level higher the proportion of their expenditure on food-related items. 

The survey also noted differences across provinces. Respondents from the North Central and Sabaragamuwa provinces were more willing to incur higher food costs, with 64% from the North Central Province and 61% from the Sabaragamuwa Province answering ‘yes’. In contrast, only 22% of respondents from the Southern Province and 24% from the North Western Province answered ‘yes’. 

Interestingly, 72% of males were unwilling to bear the burden of a higher cost for food according to the survey. To put this into perspective, Sri Lanka has 4 million male-headed households (Household Income and Expenditure Survey, 2016).

Below is a breakdown of tariffs on ingredients used everyday by Sri Lankans: 

Key Points:

• 57% of people were not willing to pay more for their food, even if it meant that the local industry is protected. 

• Socioeconomic classes B,C,D and E were less willing to incur higher costs for food, resulting from exorbitant tariffs.

“Sri Lanka has a high cost of living compared to its peers in the region. Tariffs and protectionist taxes on food items, some close to 100% mean that consumers will continue to suffer at the expense of ill-framed policy” - Dhananath Fernando, Chief Operating Officer, Advocata Institute.  

The complete survey can be accessed on our website. 

Survey reveals that 81% of Sri Lankans claim that state enterprises do not provide enough services to justify losses

Advocata Research Analyst, Aneetha Warusavitarana was featured on News 1st’s Prime Time English News where she explained the findings of Advocata’s latest public opinion poll on State Owned Enterprises.

855 respondents across 8 provinces were asked the question “Do you think the losses sustained by state enterprises are justified given the services they provide?” To which, 81% answered “No”.

Survey finds 81% of Sri Lankans claim that state enterprises do not provide enough services to justify losses

First appeared in Economy Next, Republic Next, Daily Mirror, Daily News, and Daily FT.

A door to door public opinion poll conducted earlier this year covering 855 respondents in 8 provinces of Sri Lanka reveal that an overwhelming majority of Sri Lankans believe that the losses sustained by State-Owned Enterprises are not justified, compared to the services they provide.

The poll found no significant differences among income, gender or socio-economic groups. Respondents from the Central Province were more likely to believe that the services provided justified losses, with 39% holding this opinion. Those from the Southern and Western Provinces were least likely to believe that the services justified losses, with only 6% from the Southern Province and 12% from the Western Province saying the losses were justified.

According to the Third Report of the COPE, the 18 SOEs with financial statements investigated in the report made a net loss in 2018 amounting to Rs. 61 billion. The report highlights that the Ceylon Petroleum Corporation alone made an enormous loss of Rs. 105 billion in 2018, while the National Water Supply and Drainage Board incurred a loss of Rs. 505 million, and Elkaduwa Plantation Ltd. incurred a loss of Rs. 33 million. Of the 23 institutions being examined, five were found to have annual losses over Rs. 2 million, while another five did not have end-of-year financial statements to present.

A recent report by the Advocata Institute “The State of State Enterprises in Sri Lanka - 2019” highlighted that SOEs are vulnerable to mismanagement and corruption because of potential conflicts between the ownership and policy-making functions of the government, and undue political influence on their policies, appointments, and business practices. The report recommended that the government actively engage in strengthening SOEs and their service delivery by compiling a comprehensive list of all SOEs and setting basic reporting procedures; strengthening COPE and COPA; and implementing the internationally accepted Principles of Corporate Governance.

The complete survey can be accessed here.

Advocata Institute welcomes new selection committee for State Enterprises

First appeared in Sunday Observer, Daily Mirror, Lanka News Web, Daily FT , Daily News and The Island

COLOMBO, Sri Lanka — Advocata Institute welcomes the newly appointed selection board to screen appointments for State-Owned Enterprises (SOEs). The attention given to the massive losses incurred by SOEs in Sri Lanka and the new government’s commitment to making SOEs profitable is to be commended. Distancing politicians from SOE boards is a good first step towards improving accountability and independence in SOEs.

Sri Lankan SOEs are in dire need of reform. The country has an excessive 527 enterprises, a list that covers a convoluted web of subsidiaries and sub-subsidiaries. Tracking the financials of these enterprises is a mammoth task that is yet to be undertaken. The Ministry of Finance tracks the financials of only 55 ‘Strategic SOEs’ and the losses accumulated by what is only 10.4% of all enterprises amounts to a staggering Rs. 156,734 million, only for the year 2018. 

These losses are facilitated by weak governance systems where SOEs have limited checks and balances placed on them. The lack of oversight and accountability has meant that these SOEs are vehicles for corruption. Politicians are able to use SOEs as an opportunity to grant jobs and distribute perks for political capital.

Screening appointments to state enterprises by an independent panel is a step in the right direction, and would hopefully translate into responsible management of taxpayers money in these SOEs. The Advocata Institute welcomes further SOE reform detailed in the President’s manifesto to consolidate state enterprises and establish a National Enterprise Authority. 

We hope the government would turn its attention to further reforms that strengthen SOE governance, such as compiling a comprehensive list of entities through the Department of Census and Statistics, establishing a framework for monthly reporting on key performance indicators, and incorporating the internationally accepted principles of corporate governance in the management of these entities.  In addition to this, the Advocata Institute urges the government to open committee meetings to the public to increase scrutiny and accountability. 

The Advocata Institute wishes to extend our congratulations to the newly sworn-in President Gotabaya Rajapaksa, and Prime Minister Mahinda Rajapaksa. We wish the President,  the Prime Minister and the new government the best in their efforts to establish meritocracy, improve government efficiency and promote prosperity. Advocata Institute looks forward to engaging with the new government with public policy ideas to ensure economic freedom and prosperity for all Sri Lankans. 

Book Launch: Return to Sri Lanka: Travels in a Paradoxical Land

Prof. Razeen Sally is an Associate Professor at the Lee Kuan Yew School of Public Policy at the National University of Singapore. He is also on the Board of Advisors at the Advocata Institute and is the Director of The European Centre for International Political Economy (ECIPE), which he co-founded in 2006. 

He was on the faculty of the London School of Economics for eighteen years, where he also received his PhD. He has held adjunct teaching, research and advisory positions at universities and think tanks in the USA, Europe, Africa and Asia. He is on the Global Agenda Council for Competitiveness of the World Economic Forum, and was awarded the Hayek Medal by the Hayek Society in Germany in 2011. He is a member of the Mont Pelerin Society.

Razeen Sally’s research and teaching focuses on global trade policy and Asia in the world economy. He has written on the WTO, FTAs, and on different aspects of trade policy in Asia. He has also written on the history of economic ideas, especially the theory of commercial policy.

His academic and advisory work has taken him around the world, but, in his early forties, he felt Sri Lanka calling him back for the first time since childhood. He has spent the last decade travelling all over the island. Sri Lanka seemed like a version of paradise to Razeen Sally as a child, but conflict was soon to follow, tearing the family apart and severing their bond with Sri Lanka. 

His latest book, ‘Return to Sri Lanka’ is the story of a twenty-first-century reconciliation between Sally, now an academic and political adviser, and the land of his birth.

Available for purchase: https://www.juggernaut.in/books/9789353450618

Advocata supports recommendation to allow AG dept representation at COPE proceedings

First appeared in Daily FT, Daily Mirror, Lanka Business Online, Daily News and Ceylon Today

Advocata welcomes the recommendation to include representatives of the Attorney General’s (AG) Department at Committee on Public Enterprises (COPE) proceedings and urges the government to prioritise this suggestion. The third report of the COPE was presented to the parliament on the 23rd of October, 2019. While presenting the latest report, its chair Hon. Sunil Handunetti MP requested the speaker to allow the AG department representatives to observe the proceedings of the COPE in efforts to expedite the accountability of those responsible. 

“With the current burden of debt Sri Lanka is holding onto, we cannot afford to continue to bail out loss making SOEs. The CPC loss of Rs. 105 billion needs to be inspected and COPE along with the government of Sri Lanka needs to ensure that our treasury does not continue to bail out these SOEs as our fiscal capacity cannot continue to sustain this.”

— Dhananath Fernando, Chief Operating Officer, Advocata Institute

Currently, Sri Lanka’s debt amounts to 82.9% of GDP (Ministry of Finance Annual Report, 2018, Provisional Data). With domestic debt amounting to 41.6% of GDP (Ministry of Finance Annual Report, 2018), our treasury cannot sustain annually bailing out loss making SOEs. Advocata strongly believes that Sri Lanka needs to reduce waste that happens by way of SOE losses, corruption and monumental investments with poor rate of return. 

The COPE is a key committee that oversees SOEs in Sri Lanka.  The duty of the Committee is to examine the accounts of the Public Corporations and of any business undertaking vested in the government. The third report of the COPE highlights that the Ceylon Petroleum Corporation made substantial losses of Rs. 105 billion in 2018. Furthermore, it also reveals that losses made by the National Water Supply and Drainage Board amounted to Rs. 505 million  and losses made by the Elkaduwa Plantation Limited amounted to Rs. 33 million. 

Since the opening of COPE proceedings to the media in August 2019, there has been a significant increase in scrutiny of the conduct and financials of loss making State Owned Enterprises (SOEs) in mainstream discussions. This has promoted the transparency of the hearings as well as accountability of the respective SOEs and the COPE to the final decisions of these sessions. 

Advocata Institute’s 2019 report, “The State of State Enterprises: Systemic Misgovernance”, highlighted the imminent need of strengthening COPE as a means of managing the losses and misconduct by SOEs. Ensuring that there is representation from the Attorney General’s department at COPE proceedings will fortify that the recommendations of the proceedings will be implemented. 

Advocata Institute urges that further reform be considered seriously in efforts to improve structural failings and misgovernance that promote a breeding ground for corruption in Sri Lanka’s state sector. Advocata urges that the government opens committee proceedings to non parliamentarians;  specifically for technical experts, to bring in industry knowledge and scrutiny. 

Key Points:

• Advocata welcomes the recommendation to allow AG department officials to observe COPE proceedings. 

• Opening COPE proceedings to the media brought about substantial scrutiny of SOEs conduct and losses which is essential to ensuring that the recommendations of the COPE reports are adhered to.

• The duty of the COPE is to examine the accounts of the Public Corporations and of any business undertaking vested in the government.

• Sri Lanka’s debt amounts to 82.9% of GDP. With domestic debt amounting to 41.6% of GDP, Sri Lanka fiscal capacity cannot sustain the bailing out of loss making SOEs, annually. 

• Advocata urges the government to further consider reform to strengthen the COPE. We recommend that COPE proceedings be open to non parliamentarians;  specifically for technical experts, to bring in industry knowledge and scrutiny.

Prof. Amal Kumarage, Dr. Saman Widanapathiranage and Mr. Sarath Jayatilaka's insights on $480 million MCC compact projects

The Advocata Institute hosted a public forum on the MCC compact “එම්.සී.සී. ගිවිසුම ගැන ඇත්ත නැත්ත” on the 19th of September, with the aim of separating fact from fiction around this hotly debated topic.

By 2030, the number of vehicles on our roads will triple. Prof. Amal Kumarage, the Head of the Dept of Transport and Logistics Management of the University of Moratuwa, emphasizes the immediate need to improve our public transport systems.

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Colombo’s traffic problem has become a serious issue in the past few years. Dr. Saman Widanapathiranage, Deputy Director, Highway Designs at the RDA explains that by 2030, our average speed around Colombo will fall to at least 10 km/h.

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Mr. Sarath Jayatilaka, Former Deputy Surveyor General, explains the $67 million land component of the MCC Compact.

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Link to full video: https://youtu.be/FZKveXeXQJU

MCC ගිවිසුම ගැන ඇත්ත නැත්ත - Event Video

The Advocata Institute hosted a public discussion on the MCC Compact with technical experts, MCC representatives and the Government to separate fact from fiction around the Compact.

The event was held on the 19th of September at the Lighthouse Auditorium and Lawns.

Local experts offer insights on $480 million MCC compact projects

First appeared in Sunday Morning, Sunday Observer, News First, Daily Mirror and Economy Next

The Advocata Institute hosted a public forum on the MCC compact “එම්.සී.සී. ගිවිසුම ගැන ඇත්ත නැත්ත”  on the 19th of September, with the aim of separating fact from fiction around this hotly debated topic. 

Since 2015, Sri Lanka was engaged in a competitive selection process for the  Millennium Challenge Corporation (MCC) grant. In April 2019, Sri Lanka was awarded a grant from the Millennium Challenge Corporation (MCC) for USD 480 million. Since the awarding  of the Compact, concerns around the agreement had gone unaddressed.

To help provide a public platform for the addressal of these concerns, The Advocata Institute convened an open discussion with experts involved in designing the projects for the MCC Compact, Prof. Amal Kumarage (Head of the Department of Transport and Logistics Management, University of Moratuwa); Dr. Saman Widanapathiranage (Deputy Director, Highway Designs at the Road Development Authority (RDA) and Mr. Sarath Jayatilaka (Former Deputy Surveyor General); MCC representatives, Ms. Jenner Endleman (Sri Lanka Resident Country Director - Millennium Challenge Corporation) and the Government, Dr Jagath Munasinghe (Chairman, Urban Development  Authority). 

The experts highlighted the technical details of the Land and Transport Management projects in the grant followed by a Q&A with representatives of the MCC and the Government. 

Prof. Amal Kumarage explained that out of USD 350 million allocated to the Transport Project, USD 50 million would be spent on Bus Services Modernization. He stated that by 2030, the number of vehicles on our roads will triple and it is crucial for our transport system to reflect this. 

Dr. Saman Widanapathiranage (Deputy Director, Highway Designs at the Road Development Authority (RDA) discussed the Advanced Traffic Management System component in the Transport Project. He stated how average speed in Colombo will reduce to 10kmph by 2030, communicating the urgency of improving the city’s traffic management. 

Mr. Sarath Jayatilaka (Former Deputy Surveyor General) detailed the Land Project in the compact which amounts to USD 67 million of the total grant. Since the Sri Lankan government owns 82% of all land and the remaining 18% land is privately owned, he emphasised the importance of developing a State Land Bank to improve land administration policies. 

Joining the Q&A, MCC Sri Lanka Resident Country Director Ms. Jenner Endleman answered some concerns around the compact. To the question of whether the MCC Compact is linked to military agreements, she answered that MCC has no relation to ACSA or SOFA and that the MCC Compact was ready for signing before the renewal of these military agreements. Another question posed was why the Compact was not available in the public domain and that she stated that itis the MCC’s policy to not share the document prior to it being signed by the recipient government. However, she urged concerned citizens to reach out to the Government to release these documents, as they are in a position to share the agreement. 

“In our 15 year history, we’ve never had a situation where an eligible country has come to us and proposed a grant, our board has accepted it, and that same partner country has not approved it” stated Mr. Endleman addressing questions from the audience. 

69th Anniversary Oration of the Central Bank of Sri Lanka by Prof. Razeen Sally

Prof. Razeen Sally, Associate Professor of the Lee Kuan Yew School of Public Policy of the National University of Singapore delivered the 69th anniversary oration at the Central Bank of Sri Lanka.

Inviting media to COPE meetings will help increase accountability of COPE and SOEs: Advocata

First appeared in Sunday Observer, Daily Mirror and Republic Next

“State owned enterprises are a vehicle of large scale corruption in Sri Lanka that hasn’t caught public attention. Advocata’s latest report on SOEs highlights some of these abuses documented by COPE.

Adocata’s 2019 report on The State of State Owned Enterprises, highlights some of these abuses documented by COPE. Opening meetings to the public is a good first step to ensure that people understand the massive abuses by SOEs done by using taxpayer money! We urge the government to consider further reform to strengthen COPE and promote accountability of SOEs”

— Dhananath Fernando, Chief Operating Officer Advocata Institute

In an attempt to promote transparency and accountability, the hearings of the Committee on Public Enterprises (COPE) will be open to the media. The government has enforced this timely initiative in a greater attempt to promote accountability of State Owned Enterprises. The Speaker, Hon. Karu Jayasuriya MP has officially announced the ceremony to mark the opening of the COPE sessions to the media, and should be commended for this decision.

The COPE is a key committee that oversees State Owned Enterprises (SOEs) in Sri Lanka.  The duty of the Committee is to examine the accounts of the Public Corporations and of any business undertaking vested in the government. Although their reports thus far have lacked comprehensiveness, they have examined a limited number of issues in a few institutions, and are a devastating critique on the state of governance. 

Advocata Institute’s 2019 report, “The State of State Enterprises: Systemic Misgovernance”, highlighted the imminent need of strengthening the COPE and COPA (Committee on Public Accounts; the second financial committee whose duty is to examine the accounts showing the appropriation of the sums granted by Parliament to meet the public expenditure). The report recommended that COPE and COPA proceedings be opened to the media and the public in efforts to enhance the transparency of financial management of public institutions and hold state institutions to account. 

Advocata Institute urges that further reform be considered seriously in efforts to improve structural failings and misgovernance that promote a breeding ground for corruption in Sri Lanka’s state sector. We insist that the government opens committee proceedings to non parliamentarians;  specifically for technical experts, to bring in industry knowledge and scrutiny. 

Key Points:

• Advocata welcomes the decision to open COPE meetings to the media.  

• The duty of the COPE is to examine the accounts of the Public Corporations and of any business undertaking vested in the government.

• Advocata Institute’s 2019 report, “The State of State Enterprises: Systemic Misgovernance”, highlighted the imminent need of strengthening the COPE and COPA.

• The report recommended that COPE and COPA proceedings be open to the media and public in attempts to promote transparency and accountability.

• Advocata urges the government to further consider reform to strengthen COPE and COPA.

Aneetha Warusavitarana on pension reform

Advocata Research Analyst, Aneetha Warusavitarana joined Biz 1st In Focus to discuss the window of opportunity for pension reform, given that new labour reforms are in dicussion.

We all know that the government sector pension is non-contributory – the entire burden of payment is shouldered by the government – and given our fiscal position, this is an area where reform should be seriously considered.

However, with new labour reforms in discussion, there is now a window of opportunity for the government to bring in a much needed contributory pension scheme!

Aneetha Warusavitarana on the fiscal implications of state sector pensions

Advocata Research Analyst, Aneetha Warusavitarana joined Biz 1st In Focus to discuss the fiscal implications of providing pensions for state sector employees. Unlike private sector EPF/ETF payments, government sector employees do not contribute a single rupee towards their pensions. In 2018 itself, the Finance Ministry spent Rs. 194 billion on pension payments. She explores the question of rewarding inefficiency that plagues the government sector with a guaranteed (tax-money funded) pension.

Advocata commends the government’s decision to shut down SaluSala - a State Owned textile Enterprise

First appeared in Daily News, Daily Mirror, Daily FT, Lanka Business Online, Economy Next, Republic Next, Colombo Page and Sunday Observer

Advocata Institute commends President Maithripala Sirisena’s directive to shut down the loss-making, state-owned handloom enterprise Salu Sala. While we commend this decision, we are also anticipating the official gazette enacting this statement.

The SaluSala, now a white elephant to society, was once the only state textile trading enterprise in the country. As the only provider of textile during the closed economy, SaluSala received heavy protection.

In 2011, the First Committee of Public Enterprises Report (COPE) revealed that for the year 2009/2010, Lanka SaluSala Ltd. has made a loss of Rs. 30 million. The reason for this loss, as identified by the report, was due to salaries paid to staff who had been sent on compulsory leave during the restructuring process of the organisation. However, Advocata has been unable to track the financials of Lanka SaluSala thereafter as there has been no Annual Reports or Performance Reports published and available to the public.

“‘A lack of accountability is leading to flagrant abuse within SOE’s. The government must act urgently to prevent it spiraling out of control. Salu Sala is only one of many examples””

— Ravi Ratnasabapathy - Resident Fellow, Advocata Institute

Advocata Institute strongly believes that the state should have no role in running business enterprises using taxpayer money,  particularly in industries with enough private investment and competition. Advocata encourages the government to look at other ‘white elephant’ State Owned Enterprises (SOEs), and divest and exit industries that serves no strategic purpose. Out of 527 SOEs identified by Advocata’s 2018 State of State Enterprises report, only 54 are classified as being ‘strategic’ by the government.

Whilst the policy debate in Sri Lanka on SOEs has focused on ‘privatisation’, many of  Sri Lanka’s SOEs have no commercial purpose, riddled with corruption and mismanagement and, in the core justification of existence, is not attractive to private investors looking for profit making ventures. Advocata urges the government to exit enterprises of  this nature and release the valuable resources they occupy into more productive sectors of the economy, while awarding fair compensation to public sector employees of these enterprises.

In the case of Sal Sala, the Treasury has allocated Rs. 340 million to pay compensation for 217 employees under a voluntary retirement scheme. This is a model the government should consider adopting in cases where paying a compensation is more economically viable than continuing to keep a loss making enterprise afloat. Lanka SaluSala is not the only State Owned Enterprise (SOE) that is a fiscal strain on Sri Lanka’s Economy. Non Strategic SOEs like Sri Lankan Airlines, Lanka Sathosa and Agriculture and Agrarian Insurance Corporation are in need of immediate reform.

Source: Department of Public Enterprises, Performance Reports (2015-2017) and Ministry of Finance - Annual Report (2018)

Key Points

• Lanka SaluSala, a state owned handloom enterprise will be shut down as per orders by the President.

• Advocata Institute commends this decision and is anticipating the gazette formally enacting this order.

• The Treasury has allocated Rs. 340 million to pay compensation for 217 employees of SaluSala under a voluntary retirement scheme.

• SaluSalu has been a “white elephant” for years, and the government has failed to keep track of the financials for this enterprise.

• The first COPE report in 2011 revealed that Lanka SaluSala Ltd. has made a loss of Rs. 30 million for the year 2009/2010. Annual Reports have not been published thereafter, and the Ministry of Industry and Commerce, which is the designated line ministry has also not published any information on the performance of Lanka SaluSala thereafter.

• SaluSala is only one of the many SOEs fiscally straining Sri Lanka’s economy, and it is only one of the many SOEs that the government has failed to monitor financials for. Out of the 527 state owned enterprises identified by the Advocata Institute, the government regularly tracks the financials of only 54.

• While the Advocata commends the government’s decision to close SaluSala, it is equally important that the government conducts a survey of all state owned enterprises in order to establish a comprehensive system of financial monitoring.

• Other non-strategic loss making State Owned Enterprises in need of immediate reform includeSri Lankan Airlines, Lanka Sathosa and Agriculture and Agrarian Insurance Corporation.

Ability of Parliamentary Committees questionable – Advocata

Republic Next mentioned Advocata in a recent article on misgovernance of SOEs in Sri Lanka.

The Advocata Institute, a Colombo-based think tank, is questioning the ability of various oversight committees set up by Parliament to look into governance issues in Sri Lanka.

The report, which looks at the State Owned Enterprises (SOEs), is highly critical of these institutions that are draining the Treasury of billions of rupees each year.

Advocata says the way Members of Parliament are elected is an issue. MPs align with wealthy election backers who provide campaign support in return for political protection or rewards. Thus, those elected are politicians with “access to cash and manpower – not intellect or ability.”

Although politicians will pursue their own interests, an effective governance system should apply the brakes on the worst of those impulses. Parliament, through the aforementioned committees, should be doing this, but is seriously underperforming, the report says.

Although Parliamentary Committees such as the Committee on Public Enterprise (COPE) and the Committee on Public Accounts (COPA) conducted investigations that shed light on important issues – including the much talked about Bonds Scam – Advocata says these committees could do more to scrutinise public funds. These committees do not appear to have sufficient expertise to make concrete recommendations to right the wrongs in Government.

The report notes that “serious deficiencies exist.” With the current political uncertainty, it says that “engineering crossovers in return for political office reduces parliament to a rubber stamp and the committee system is weak.” The report commends the current government for the major overhaul of the committee structure, which it says makes them “much better geared to scrutiny and accountability.”

Structures aside, the report says that the performance of these committees depends on the calibre of the MPs.

Advocata recommends that experts who are not MPs be added to these committees so that they could function better. “Unfortunately, it does not seem as if we have the necessary quality of MPs in sufficient numbers to make the reformed system perform. Aside from capacity, there is little incentive for MPs to take committee work or parliament seriously. Many don’t even attend,” it says. Publicly available information shows that less than half the MPs attended at least 75% of the sessions. Even those who attended remained in the house only for the first hour.

Advocata also found that “COPA/COPE are under-resourced; their reports complain of a lack staff (particularly audit) and proper IT systems. Further, the government is not required to respond to the recommendations of these committees within any stipulated period of time, leaving the accountability loop open.” Advocata also adds its voice to the clamour to make the COPA and COPE hearings open to the media.

The picture that emerges from the Advocata report is bleak. It concludes that the “political process incentivises corruption. A weak governance regime means there is little accountability and few checks on government spending. In addition, limited technical capacity means policy is open to “capture” by special interests. The combination is deeply dysfunctional: a parasitic system that transfers wealth to the politically connected through corruption and rent-seeking.”

Download full report: https://www.advocata.org/state-enterprise-srilanka

The Cato Podcast mentions Advocata in their podcast on 'The Outside Dilemma' with Matt Warner

The Cato Podcast hosted by Caleb Brown mentioned Advocata in a their recent podcast on Development Economics and ‘The Outsider’s Dilemma’ with Matt Warner, President of the Atlas Network.

Media mention on Reuters of Advocata on taxes on sanitary napkins

Thomson-Reuters Foundation mentioned Advocata in a recent article on period poverty and sanitary napkin affordability, published on April 04, 2019.

An excerpt from the article:

“Should a country tax women on something they have no control over? As the world celebrates International Women’s Day, in Sri Lanka women’s health as well as education is in jeopardy due to high taxes on women’s sanitary products, say activists.

“Period poverty has hit global headlines in recent years, with statistics showing that even in a wealthy Western country like Britain, one in 10 girls have been unable to afford sanitary products. …In Sri Lanka, the problem is particularly acute because sanitary products are so heavily taxed - until last September, the levy on imported pads was more than 100 percent. It has since been reduced to about 63 percent and Sri Lanka’s finance minister, Mangala Samaraweera, told the Thomson Reuters Foundation he was looking into how taxes on sanitary products could be reduced further.

But Anuki Premachandra, head of research communication at The Advocata Institute, an independent policy think tank, said the issue still wasn’t being given the importance it deserved. “People are enraged about the cost of carrots, but when it comes to taxes on sanitary napkins, they dismiss it as a women’s issue,” she said.”

Corruption and patronage culture rampant

Republic Next mentioned Advocata in a recent article on misgovernance of SOEs in Sri Lanka.

State Owned Enterprises (SOEs), which have cost the state mammoth amounts of state funds over the past few decades, are victims of a patronage culture fostered by corrupt politicians, says a new report on the state of these organisations released by Colombo-based think tank Advocata.

The report quotes Finance Ministry Secretary Dr R.H.S. Samaratunga as saying that successive Sri Lankan governments have pumped a colossal Rs.1, 150 billion into the upkeep of these SOEs up to 2017.

This is money that could have been spent on developing schools and hospitals as well as maintaining much-needed infrastructure.

The report says that lifting limits on political campaign spending and abolishing transparency of those money trails in 1978 opened the floodgates of corruption.

The report points out that “wealthy backers, some connected to the underworld, provide labour and fund campaigns in return for political protection or rewards.” Because of this culture, the people who end up getting elected to office are those with “access to cash and manpower – not intellect or ability.”

Naturally, this means that the state’s technical capacity to formulate policy and implement them are insufficient. The report notes that “the concept of independent policy analysis does not exist, leaving a vacuum vulnerable to capture by special interest groups.”

After the Member is elected, they try to recover their “investment” in the political venture or start building up a war chest to be re-elected. He or she also has to provide jobs and wherewithal to their supporters and for this, SOEs provide opportunities for the politicians to stuff these enterprises with staff that exceed requirements. In one egregious incident, the State Engineering Corporation recruited a mind-blowing 451 persons to fill 41 vacancies in December 2015. That is more than ten times the required number of persons, according to inquiries conducted by Parliament’s Committee on Public Enterprise (COPE).

The reason why the SOEs are a soft target for the corrupt is weak governance practices, the Advocata report says.

The report suggests that adopting “comprehensive corporate governance practices is a route that many countries have taken to strengthen the accountability of SOEs. These governance practices strengthen the governing bodies that oversee and control (shareholders or owner meetings, board and management, internal monitoring structures), define clear rules of engagement between the different actors, and increase transparency and accountability towards the stakeholders.”

Download full report: https://www.advocata.org/state-enterprise-srilanka

Media mention of Advocata on taxes on sanitary napkins for IWD 2019

Sunday Observer mentioned Advocata in a recent article on sanitary napkin taxation for International Women’s Day, 2019.

An excerpt from the article:

“Should a country tax women on something they have no control over? As the world celebrates International Women’s Day, in Sri Lanka women’s health as well as education is in jeopardy due to high taxes on women’s sanitary products, say activists.

“In a country with 4.2 million menstruating women and a population that is 52 per cent women, you’ would think wewould know better than to tax a woman on something that is beyond her control; but we do not’’ said Anuki Premachandra of the Advocata Institute. Anuki who serves as the Manager-Research Communication at Advocata had been canvassing on the sanitary pad problem during the past couple of months.

“Import taxes on sanitary napkins in Sri Lanka are as high as 62 per cent and what our policy makers fail to realise is that this is a tax on a woman’s biological process that she has no control over. Are we still a society that fails to provide a woman access to a basic necessity? Is it not time we said times up Sri Lanka?” said Anuki.”