ECONOMYNEXT - Sri Lanka plans to give more freedom for plantations to diversify and use their land and other resources for more productive uses, a top official said, relaxing some of the state controls that have prevented the country's progress.
"Today we had a discussion on diversification in regional plantations companies," R Paskaralingam, advisor to Prime Minister Ranil Wickrmesinghe told a business forum at Sri Lanka's Finance Ministry in Colombo on October 01.
"Four committees will identify tea and rubber land that are not productive. We are going to release these plantations for other crops."
He said a committee report is expected to be submitted to the Prime Minister within three months.
Finance Minister Ravi Karunanayake noted that plantations firm were under some financial difficulty due to depressed commodity prices and they should be allowed to diversity.
Sri Lanka's large tea and rubber farms were formed mostly by foreign investors during British rule, expropriated by the state, run down and given back to private citizens with the land still in long term state control.
Paskaralingam was responding to a question from W Bogstra, from Malwatte Valley Plantations, a privatized and listed 'regional plantations company' who had been struggling to gain approvals to convert an old tea factory to a tourist hotel for more than 18 months.
Long years in state control has prevented the land from being used productively and in Sri Lanka state control and interventionism is so strong that even freehold owners of rice and coconut farms cannot put their ancestral land to better use due to a control mindset among rulers.
Malwatte Valley Plantations had also moved to fruit and spice cultivation.
Lack of economic freedoms is a key reason for Sri Lanka lagging behind the rest of the world. Plantations firms in Malaysia (some of which raised capital in Colombo stock market during British rule) and vastly improved cultivation practices and worker productivity.
Meanwhile many plantations were also uprooting some export crops and growing 'import substitution' oil palm.
Oil palm prices are artificially kept up by import taxes, supposedly to 'protect' coconut farmers at the expense of the welfare of the general population and the poor which analysts say is a classic perverse unintended consequence of state interventionism.
Sri Lankan rulers and interventionist put a great stress on 'saving foreign exchange' a problem that began after a money printing central bank replaced a low inflation 'hard currency' style currency board in 1951.
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