Introduction

Sri Lankan experience in PPP’s

As stated in the Medium-Term Development Policy Framework (2011 – 2016) of the Government based on Mahinda Chinthana, the privatization of state owned business is not considered as a sole strategy of economic reform. (Page84)  Nevertheless, in uplifting the management and the workmanship of the government owned business ventures, the government is paying attention to apply alternative strategies to get private sector involved. In this context, the government is paying its attention to the fact that the private sector has a social responsibility in addition to earning profits and as such, the private sector needs to be involved in implementation of government ventures and projects. As further described in the above Policy Framework, depending on Treasury funding for the government ventures should be under a minimum level and their capital base should be strengthened through different investment methods. The policy framework emphasizes PPP as a successful alternative funding method. At national level, strategic plan adopted for uplifting of infrastructure has gained considerable progress in PPP approach. For example, in the Colombo-South Harbour improvement project, the government has undertaken the work including construction of Brake-water (with foreign funding) while private sector has been allowed to do the work like construction of terminal. Also the government has initiated the construction of Second Coal Power Plant Project at Trincomalee with public sector involvement in transmission roots and a terminal for importing of coal. It is expected to obtain private investment for the power generation. Among the future projects where the PPP investment approach is expected to be widely used, the areas of Transport, Aviation, Milk and Dairy Farming, Tourism and Drinking water supply are mainly important. However, in Sri Lankan context, there is a common belief especially, at the regional level, almost all the projects which are financially feasible or not are to be implemented through government funding. The main reason for this is that after independence, all successive governments implemented “welfare state” concept, irrespective of their different political ideologies. Although, the country has gained many economic and social benefits under the “welfare state” concept, it is accepted the fact that it has created many unfavorable conditions in progressing the country as a middle income state.  The main factor to be considered is that a considerable amount of government funds that would have been utilized for infrastructure development have been spent on social capital, rather than incurring them on selected targeted groups. This has resulted in slowdown the annual growth rate of the country comparatively at a lower level after the independence; (5%-6%) Although, a 30 year period has gone after introducing a neo-liberal economic policy, a considerable   investment gap is prevailed due to lack of foreign and private investments to the county.  When the Government tries to maintain investments at 7% of GDP, the private investment rate needs to be increased at 22% by year 2016 to maintain a high economic growth rate (about 10%).  Presently, this rate is at about 16%.  Under this situation, it is clearly revealed that the necessity of increasing private investments through alternative means of strategies. When looking at the South Asian countries like Malaysia and Thailand which have moved into the speediest development drive, private investments and PPP investments have increased tremendously. The main reason being the respective governments have created the required conducive environment for the same. Although, Sri Lanka is not maintaining hard privatization policy like these countries, it has become essential to create a conducive investor friendly environment, particularly at sub national level.  Some of the actions that can be taken in this regard are as follows.

1. 
   Amendments to the existing enactments enabling to encourage the private investments. Particularly the Acts connected to institutions at national and provincial level needs to be amended taking into account the present day needs.
   
2. 
   Carrying out awareness programs for political leadership and officials (specially provincial and local). The alternative investment methods and the new plans and programs carried out by the foreign countries should be brought in to their attention.
   
3. 
   The attitude in the society that the private sector is always looking for earning profit (profit motive) while they are irresponsible in undertaking social responsibility. This needs to be eliminated and create a debate to show its positive contribution.
   
4. 
   Carrying out awareness programs among the business community regarding private sector contribution in the present context.
   
5. 
   An integrated approach should be adopted at provincial level with a view to creating a wide debate between the state sector and the private sector. The political leadership should take the lead role in this regard.
   
6. 
   Undertaking awareness programs for the general public regarding the capital market and its functions. In this regard, the stock market, role of the unit trusts and of broker companies, issuance of debentures and joint ventures should given due attention. Audio visual media and conferences can be widely used for this purpose.
   

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