(LBO) - Sri Lanka passed a law to expropriate assets of dozens of enterprises despite protests from trade chambers, religious and opposition groups who warned that it will scare off investors. Ministers said the law was needed to take back land from enterprises that were not fully utilizing what was given or were not using resources as agreed upon.
For example one sugar mill listed for take-over was producing spirits and not making enough sugar.
"When state land was given for chena cultivation it was given on a license," economic development minister Basil Rajapaksa told parliament.
"Later they were allowed to build a house, but if even a shop was built they were taken back.
"These lands belong to the people. So the condition that applies to the poor farmer will also be applied in the same way to the capitalist."
The administration had insisted that the expropriate law would be a one-off and it would not nationalize other firms in the future.
Despite the assurance Sri Lanka's main trade chambers in a statement on Tuesday asked the government to halt the bill saying it will hurt investor sentiment at a time when the country is seeking 1.5 billion US dollars a year in foreign direct investment.
A 30-year war ended in 2009, but expected foreign direct investment had not materialized.
"[W]e believe that the proposed Bill may impact investor sentiment negatively and will thus be counter-productive...," the key chambers said in a joint statement.
"Further, the expeditious manner in which the legislation is being enacted is likely to heighten such negative sentiments."
The bill was rushed to parliament as an 'urgent bill' with a Supreme Court nod being received within 48 hours with no chance for citizens or the affected to protest or have their views heard.
Shibly Aziz, the President of Sri Lanka's Bar Association, which represents the island's lawyers called for the bill to withdrawn saying there was no need for an 'urgent bill' to take-over firms, some of which had been in the same state for years.
He also said there was no opportunity for people to make representations to Court.
In Sri Lanka a law that is passed in parliament cannot be referred to the Supreme Court again for review.
LBO
