- Full speed a head for privatisation -
Significant private funding over the past five years has led to dramatic growth in both the manufacturing and service sectors
The death last year of Sirimavo Bandaranaike, Sri Lanka's - and the world's - first female prime minister, brought to a close a momentous chapter in the country's history. Now her second daughter, Chandrika Kumaratunga, 54, elected as president for a second term in December 1999, has embarked on a radical programme of privatisation. It is in marked contrast to the nationalisation plans followed by her prime minister father before he was assassinated in 1959, which were subsequently continued by her mother.
Colombo Port was nationalised by her father. Now Mrs Kumaratunga has embarked on the partial privatisation of the port. The government has also opened up its liquefied petroleum gas (LPG) market, effectively ending a monopoly by Shell Gas Lanka, in which it holds a 49 per cent stake. The local LPG market is estimated at 135,000 tonnes annually and is forecast to grow rapidly. The government, which hopes to raise between 10 and 15 billion rupees (£82.7and £12.4 million) from privatisation this year, has already invited expressions of interest in its stakes in three sugar companies.
The state Public Enterprises Reform Commission (PERC) says the government plans to sell Sevanagala Sugar Industries and Hingurana Sugar Industries which it fully owns, and its majority stake in Pelwatte Sugar Industries. The three sugar companies have combined plantations of more than 20,000 hectares. They cater for about 15 per cent of the domestic market. The government has already received interest in the sale of a strategic stake in the National Insurance Corp (NIC). It had initially proposed selling 39 per cent of the firm which it wholly owns, but is now hoping to sell up to 51 per cent of the shares. Nadeem ul Haque, the International Monetary Fund's senior resident representative, says: "There needs to be an acceleration in the privatisation process. The war has taken over to throw the fiscal situation way off course."
Analysts say the sale of part of the government's stake in Sri Lanka Telecom, which was postponed last year, is crucial to bridging the budget deficit, improving the country's reserves and easing interest rates that have jumped with heavy government borrowing to fund the war against the Tamil Tigers. The Asian Development Bank has said it will lend Sri Lanka $610 million over the next three years to finance around 15 projects, including some to speed up privatisation. Some of the funds are going to develop Colombo's South Harbour, and agriculture, transport, infrastructure and natural resources will also receive investment.