On 24 January, the Rajapaksa government officially approved Australian billionaire James Packer’s plans to build a $US 450 million hotel complex in the heart of Colombo. However, the government failed to mention the controversial casino component of the five-star 450-room hotel development, maintaining that Mr. Packer is still in “discussions with the government on the gaming side of the project”. Lanka's deputy investment promotion Minister Faizer Mustapha stated that while it is the government’s policy not to issue any new casino licenses, he was quick to point out that there is a separate mechanism for opening a new casino in Sri Lanka through existing casino licenses. Considering that Mr. Packer’s proposal has the full support of Lankan casino tycoon Ravi Wijeratne – the current owner of two casino licenses – it seems highly likely that the hotel and casino complex will go ahead as planned.
The refusal of the Rajapaksa government to officially confirm or deny the construction of Mr. Packer’s casino is nothing new. Ever since the project was first put before parliament on 18 July 2013, the government has failed to make clear what form Mr. Packer’s casino development would take, or even if the project would include a casino at all. Soon, a number of political organisations adopted firm positions against the casino, including members of Rajapaksa’s own ruling coalition (such as the Jathika Hela Urumaua (JHU), National Freedom Front and Sri Lanka Muslim Congress). While most of these groups took issue with the proposed tax exemptions being offered to Mr. Packer, other Sinhala nationalist groups – most notably the JHU – also asserted that Lankan culture should not allow casinos at all. The government responded on October 21 2013 by withdrawing the proposed Casino Bill from parliament. The next day, Minister Yapa Abeywardena explained that the Rajapaksa government withdrew the bill in order to make some minor adjustments, particularly on the tax arrangements. While JHU general secretary Ven. Athureliya Rathana Thera celebrated the government’s back-down as a significant victory for those opposing the casino, it is clear that the government’s plan to create a gambling and resort district in Colombo will not be threatened. Indeed, despite the governments alleged “back-down”, it appears that the bulk of the proposed tax exemptions offered to Mr. Packer – including a 10 year exemption from all corporation taxes – will still be on the cards. On 20 January 2013, Minister of Special Projects S. M. Chandrasena finally put the matter beyond doubt when he stated that while “certain parties are carrying out a massive opposition to casino these days…we, as a government, will overcome all opposition to casinos from these parties.”
The reason that the government can make such arrogant claims is simple – each and every one of the parliamentary groups who have voiced opposition to Mr. Packer’s casino – with the sole exception of the JVP – have over the past decade continually pledged support to the Rajapaksa government’s campaign to open up Lanka’s economy to foreign investment. Indeed, the Rajapaksa government have been repeatedly handing out extensive tax exemptions (of up to 25 years) to billionaire capitalists ever since it passed the Strategic Development Project Act in 2008. Where were the opponents of the proposed tax exemptions then? Seeing as a number of parliamentarians seem to have conveniently forgotten about their continued support for Rajapaksa’s subservience to foreign capital, it seems appropriate to briefly run through Sir Lanka’s shameful love-affair with foreign investment.
In 1977, Sri Lanka opened up its economy to the world market. Falling in line with the global trend toward economic deregulation, the newly elected UNP government initiated a sweeping campaign to dismantle the government’s long-standing institutions of economic intervention and control. It was at this time that Lanka’s first ever casino was opened. Under the leadership of Prime Minister Jayewardene – known as ‘Yankee Dicky’ for his subservience to American interests – Lanka was quickly transformed into a haven for foreign investment. Within two years, the Jayewardene deregulated foreign trade, removed import and export controls, modified labour legislation, deregulated credit markets and devalued the exchange rate by 43 per cent. Jayewardene also opened Export Processing Zones (EPZs) that were exempt from corporation tax for 7 to 10 years.
Just as the captains of foreign capital were licking their lips at the prospect of making billions off the backs of the Lankan working class, the country imploded into a bloody civil war. The 30-year long campaign of terror waged by the LTTE – as well as the socialist insurrection of the JVP in 1987-1989 – discouraged many foreign capitalists from investing in Sri Lanka. While the subsequent governments of Premedasa, Kumaratunga and Wickremasinghe proudly carried on Jayewardene’s campaign of economic deregulation throughout the 1980s, 1990s and early 2000s, the persistent threat posed by the LTTE continued to drive foreign investors away. However, with the bloody conclusion to the civil war in 2009, Lanka was finally ready to receive the foreign investment Jayewardene first hoped for way back in 1977. Mahinda Rajapaksa was only too happy to carry out Yankee Dicky’s vision.
The election of Mahinda Rajapaksa’s Sri Lanka Freedom Party in 2005 revitalized the Lankan bourgeoisie’s attempts to attract foreign investment. Between 2005 and 2008, Foreign Direct Investment (FDI) into Sri Lanka increased from around US$ 220 million to just under US$ 700 million – an increase of over 300%. With the eventual annihilation of the LTTE in 2009, a second – and much bigger – wave of foreign investment descended on Lanka. By 2012, Foreign Direct Investment had reached a record US$ 1.2 billion, only to reach even higher levels in 2013. Lanka had truly become a paradise for foreign investment.
Lanka’s 27-year love affair with foreign investment has severely undermined its political and economic independence. By continually offering foreign billionaires like Mr. Packer economic incentives to operate in Lanka, successive governments have relinquished their control of the national economy. Consequently, today the Lankan economy is failing to produce for the needs of its population and has instead become increasingly dependent on foreign imports. For example, in 2011 Lankan imports cost the country US$ 20.27 billion, while its exports brought in only US$ 10.56 billion. The resulting trade deficit of US$ 9.71 billion was the highest ever seen in Sri Lankan history, and marked an increase of 248% from the 2010 deficit. When these astronomical figures are compared to the minimal trade deficits of the early 1970s, the trend towards foreign dependence is striking. As a true representative of the capitalist class, President Rajapaksa has attempted to plug the massive whole in the Lankan economy by increasing taxation on ordinary working Lankans while simultaneously offering foreign billionaires extensive tax exemptions. This unfair taxation system has made Lanka one of the most unequal countries in the region even despite its recent economic growth. It is the task of every working Lankan to demand that their economy be run not in the interests of foreign billionaires, but in their own interests. Only then will Lanka become a truly humane society.