A new country through Megapolis

 

By Gamini Abeywardane

With the onset of the new government, Megapolis has been a much used term, almost like a panacea for all economic ills of our country, but unfortunately ordinary folks seem to be at a loss where its true economic significance is concerned.

Probably this fact in mind, the ministry in charge of the subject last week organized an event mainly for the media heads where the subject minister Champika Ranawaka himself made a comprehensive presentation on what the ministry has been doing up to now in this regard.  He presented the salient features of the official blue print which we understand will be presented to the President and the Prime Minister shortly.

According to the project’s master plan, the Western Megapolis is envisioned and conceptualized as Sri Lanka’s Grand Strategy to propel the country’s drive to achieve the status of a ‘high income developed nation’ by 2030. It is expected to provide a holistic solution to some of the long standing ills of our country particularly in the sphere of urban infrastructure.

This development Plan will provide solutions to many problems such as poor mass transport, lack of urban housing, shanty dwellers, absence of garbage disposal systems, environment pollution, road congestion, inadequate leisure and recreation facilities and urban flooding.

Once these problems are sorted out in the Western Province there are plans to extend its scope to other major cities as well. If the Western Province can be developed as a major economic hub in the region, the benefits will accrue to the whole country while development prospects will spill over to the surrounding areas as well, catalyzing economic development in the whole country.

The new opportunities in terms of income generation will reduce unemployment while discouraging migration of qualified youth to developed countries. Insufficient infrastructure in education, transport, housing and lack of opportunities for high income generating employment are main reasons for migration of youth.

Among its ambitious goals is the plan to make the Megapolis one of the top 10 most livable cities in Asia attracting entrepreneurs and professionals, reversing the brain-drain and building upon the pre-existing conditions of absolute peace and guaranteed security.

It also envisages achieving ‘Housing for All’ with water, sanitation, electricity, waste management and other urban services and amenities while reducing poverty and unemployment rates to less than 1 per cent by 2030.

It will also create the digital infrastructure necessary for a smart city enabling transformation of the national economy into a predominantly knowledge-based innovation-driven economy,

Overall, it appears that a lot of progress has been made in this regard by way of planning, undertaking studies, research, approvals, negotiating necessary funding and effecting legal infrastructure. Although these are not visible to the eyes of ordinary people, some serious work has already been completed.

The project, when completed, is expected to change the face of the entire western province and provide the required infrastructure for investors to look at our country. Once Sri Lanka has in place, proper transport systems both mass transit and goods transport, enhanced port and airport fallibilities, better housing infrastructure and less road congestion, the country should be able to realize the full potential of its locational advantage of being on a major sea route.

Some significant infrastructure projects planned by the previous government such as Colombo Port City now termed Colombo Financial City and relocation of shanty dwellers have been incorporated into the new Megapolis Development Plan while vital new additions such as further development of the railway transport network to include a monorail system and extending it to cover new areas in the city such as Town Hall, Kirulapone and Borella also have been included in the project.

There will also be a network of elevated roads running through the city which will substantially cut down the travel time and reduce road congestion. There are plans to introduce a new ferry transport system through the Beira Lake further reducing road congestion, while providing a comfortable and pleasurable mode of transport. For example, people getting off at the Fort Railway Station will be able to use this lake based transit system to reach the National Hospital in a short period such as four to five minutes.

Learning from major cities in the world like London, Berlin, Seoul and Singapore which have used rivers flowing through them for economic development, the Megapolis project has plans to develop Kelani river for goods and passenger transport, sports and recreation which is a far cry from the present situation where the river is being used for disposal of waste material and its banks are illegally occupied by shanty dwellers.

The project will considerably enhance the attractiveness of Sri Lanka as an investment destination as it will remove some of the present disincentives through major infrastructure developments.

When our economy was liberalized as far back as late seventies we had some competitive advantages such as liberal environment, cheap labour, political stability and reasonably educated workforce. Over the last few decades many countries have opened their economies eroding our competitiveness while we no longer have cheap lablour.

By defeating terrorism we have removed one of the biggest obstacles, but there are so many other negatives in areas such as infrastructure, labour, environment and economic and political stability. The proposed Megapolis, if successfully completed will remove most of these obstacles and will give the country many competitive advantages.

The project which is a brainchild of Prime Minister Ranil Wickremesinghe was first mooted in 1994 during the time he was the Minister of Industries, Science and Technology and he attempted to revive it at least partially, through the Regaining Sri Lanka programme in the 2001-2002 period and none of these worked due to unforeseen political changes.

Now some of the post war plans of the previous Mahinda Rajapaksa government also have been incorporated into the new Megapolis Project with appropriate changes, while the peace prevailing in the country has provided a new platform for the implementation of this vital project which can change the future of Sri Lanka as a trade and investment centre.

Unfortunately, ours is a country where politics takes precedence over everything else and economic priorities were not given the place it deserved in our national agenda and as a result many countries in Asia which were far behind us fifty years ago have overtaken us in the run for economic development.

The ensuing frustration resulted in civil strife both in the south and the north and now it’s time to reverse some of those negative tendencies and there is no other project which can do this transformation better than the Western Province Megapolis.  The success of the project will depend on the support it receives from all political parties as it cannot be completed within the period of one government.

As pointed out by Minister Ranawaka its effective implementation will require some apex body like the Mahaweli Development Authority with adequate legal powers to deal with problems that may crop up from time to time during its implementation. However passing of a law to establish such an institution has still not been possible because of opposition from various institutions whose powers will be affected by such developments.

However, the fact remains that during the last several decades our country has missed many opportunities to develop its economy and our failure to address the infrastructure issues in time has contributed to this situation in a major way. With Japan, ADB and many internationally reputed private sector organizations having already come forward to assist the process Megapolis seems to be the grand strategy through which the country can rectify some of the past mistakes in the area of economic development.

 

 

 

 

 

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Politicians may oppose, but SOEs need reform

A state entity in our country can never achieve that kind of efficiency because of some inherent issues such as political interference, mismanagement, corruption, wastage, inefficiency, indiscipline and lack of incentives. With whatever plans and restructuring efforts we have failed to produce any positive results in these state enterprises and all know they have the potential of becoming profit making institutions under right management


By Gamini Abeywardane

On the occasion of the 45th commemoration of Phillip Gunawardena, the architect of Sri Lanka’s Socialist Movement on Tuesday former President Mahinda Rajapaksa echoed a popular socialist sentiment when he opposed the government’s policy of divesting state owned enterprises (SOEs). He was critical of the idea of privatization and advocated reforming loss making entities while they are in state control. The idea is fine, but our experience is such ideas have not worked under any of the past governments including his own administration, despite much talk about converting such entities into profitable institutions.

On the contrary, we could see how SriLankan which was a profitable airline under Emirates management became a monumental loss under state control. At the other end is Sri Lanka telecom which had poor performance as a state entity which now has not only become a top performer, but has also revolutionized the entire telecom sector in the country after its partial privatization. Many years ago one had to be a Member of Parliament or a top government official, if one were to obtain a home phone line, that too after being in a waiting list for quite some time. But now it is a matter of one or two hours and just a phone call away – there are enough and more telecom players competing with one another to come home and fix it.

Then take the case of garbage disposal and cleaning of the city of Colombo. Anyone would remember how untidy the city was with dumps of garbage strewn here and there, stray dogs often feeding on them while the municipality had a large number of excess employees among those dedicated to keep the city clean. It’s no secret that most of them were supporters of various politicians and many of them were drawing their salaries even without being physically present at work while attendance were marked through proxies. Now as a result of outsourcing such work to well organized private sector companies we see a clean city with garbage being removed on daily basis at the correct time. These companies are no doubt making a good profit. It’s because they manage their workers well and do the work with the minimum number of people ensuring maximum utilization of the resources.

A state entity in our country can never achieve that kind of efficiency because of some inherent issues such as political interference, mismanagement, corruption, wastage, inefficiency, indiscipline and lack of incentives. With whatever plans and restructuring efforts we have failed to produce any positive results in these state enterprises and all know they have the potential of becoming profit making institutions under right management.

What we have witnessed in our country is that governments at popular demand keep stuffing all institutions under them with their supporters irrespective of whether there are vacancies or not, especially when elections are around. Politicians generally do not work like businessmen. They have no idea about efficiency or return on investment. They only think of how to remain in power. Therefore the general tendency is to do whatever is within their powers to remain in power and that is how most of the state controlled enterprises became white elephants.

Always there is a vast gap between what is economically right and what is politically feasible. Politicians themselves often do not have the necessary discipline to make these institutions work as they themselves are corrupt. As far as we see making state enterprises profitable under government control is a near impossible task with our political culture. 

Divestiture of assets belonging to the state to private sector is a method adopted in many countries as a means of converting lossmaking enterprises into viable entities. Any structural changes in these entities are generally resisted by the workers and their trade unions as they feel insecure with reforms while they are happy to continue with the existing state of affairs. However, these institutions are a burden on the economy and the people in the long run as ultimately they are sustained with taxes from the people.

The situation is made worse when politicians, especially when out of power start backing the wrong side for political gain and try to undermine any efforts at reforming these institutions. Even any form of restructuring is viewed by the workers as a first step towards privatization and therefore generally opposed.

In countries where there is no such political culture like China, Singapore and UAE state enterprises have often produced good results under proper management. Even in neighbouring India there are  well-run state enterprises. Some popular examples of such entities are Emirates Airline, Singapore Airline, Indian Oil Corporation and Sinopec in China. It’s worth finding out why such achievements are not possible in Sri Lanka. Merely opposing privatization is not going to solve this problem and if privatization is not acceptable then we should go for Public Private Partnerships.

As already suggested by the current government this can be achieved by setting up a government owned holding company on the model of Temasec Holdings in Singapore or Investment Corporation of Dubai (ICD) with a mandate to consolidate and manage all government portfolios in state enterprises brought under them. It could provide strategic oversight by developing and implementing strategy and corporate governance policies for the long term benefit of the country.

It is vital to get the private sector into these entities, if we are to reform them in any meaningful manner. Without introducing good corporate governance and discipline they can never be reformed. How much of the shareholding should be divested can be decided depending on the strategic importance of each enterprise. It is understood that the state should have a greater say in certain vital areas, nevertheless it is futile to have that say if these enterprises are only adding burden to the economy. 

It is important to have a dialog on this issue and explain to the public the gravity of the situation and the urgent need for reforming these entities, so that all political parties can contribute by suggesting ways and means of depoliticizing the management of these entities and improving profitability without merely opposing reforms for petty political gain.

  

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