Sri Lankan nationalisation law criticised

Yahoo! News

 COLOMBO — Sri Lanka's new law to nationalise "under utilised" private firms could shatter investor confidence and push the country into authoritarian rule, according to the opposition and press.

The main opposition United National Party (UNP) said the controversial law that came into effect from Friday would discourage investors in a country that is recovering from decades of ethnic war.

"Any foreign investor with a modicum of intelligence will re-think of investing in Sri Lanka for fear of their ventures being arbitrarily appropriated," UNP deputy leader Karu Jayasuriya said in a statement.

Under the new law, the government earmarked 37 companies for takeover, including several owned by businessmen supporting the opposition.

Japanese, Singaporean and United States investments are at stake, but the government is yet to spell out how they would be compensated.

Lawmakers voted 122 to 46 in favour of the "Revival of Under-performing Enterprises and Under-utilised Assets Act" on Wednesday.

The bill was signed into law on Friday by parliamentary Speaker Chamal Rajapakse, the eldest brother of President Mahinda Rajapakse.

The president, who is also the minister of finance, has defended the act saying it targeted companies which had received state land or tax breaks but which had failed to live up to expectations.

The local Sunday Times warned that businesses supporting the opposition was in danger of being taken over by the government.

"This Act, we believe, smacks of a heavy dose of political vindictiveness and carries the venom to weaken opposition parties and may drag the country to a virtual one-party state," the Sunday Times said.

Sri Lanka's decades-long civil war between government forces and Tamil Tiger rebels ended in 2009 with a military offensive that wiped out the guerrillas.