Substantial number of key legislative changes under way in Sri Lanka

The year 2016 saw significant developments in the legal reform sphere. The most fundamental development was without a doubt the enactment of the Right to Information (RTI) Act. Many commentators consider that the RTI Act will be transformational and will go a long way to making government properly accountable. Minimum wage legislation was enacted as well.

Another very important bill of Parliament was gazetted at the end of November 2016, the Development Special Provisions Bill, which will facilitate the formulation of a national policy on all subjects including the accelerated economic development of Sri Lanka. Other noteworthy policy developments included the publication of a draft Trade Policy.

A relaxation of the restricted categories of foreign investment in shares of companies incorporated in Sri Lanka occurred in 2016 when the following categories were removed from the list of categories in which foreign investment is not allowed:

• Money lending other than the business of providing of credit to investors to purchase securities of leased company by a company registered as a margin provider; and

• The provision of security services including security management, assessment and consolidating to individuals of private organisation. Generally, exchange controls are being relaxed and the Exchange Control Act is expected to be repealed and replaced by a Foreign Exchange Management Act.

If 2016 was the year of initiation of serious (non-Constitutional) legal reform, 2017 is already being viewed by some as also being a year of new beginnings characterised by the bringing into effect of those reforms.

Rti Act Made Operational

The RTI Act came into force on February 3, and further details of this important legislation are provided later on in this article. SRI LANKA REGAINS GSP+ STATUS: Another new beginning occurred on January 11, 2017, when the European Commission (EC) adopted a delegated act proposing to grant Generalised System of Preferences Plus (GSP+) status to Sri Lanka. The act was then considered by the European Parliament and the Council. In May 2017 Sri Lanka regained GSP+ status.

The government of Sri Lanka views the regaining of GSP+ status as an important step in furthering its agenda of enhancing Sri Lanka’s international trade and in particular its trade with Europe. The new GSP Regulation provides for continuous monitoring of the GSP+ beneficiaries’ obligations. Once a country is granted GSP+ status, the EC and the European External Action Service must monitor that the country abides by its commitments, namely to:

• Maintain ratification of the international conventions covered by GSP+;

• Ensure their effective implementation;

• Comply with reporting requirements;

• Accept regular monitoring in accordance with the conventions; and

• Cooperate with the EC and provide all necessary information. As a part of the process of a country complying with its obligation and the EC’s monitoring, the EC prepares a list of issues – known as a scorecard – for each GSP+ beneficiary, which serves to measure the GSP+ countries’ compliance with the commitments referred to previously. Beneficiaries receive their individual scorecards upon GSP+ entry or immediately thereafter. The scorecard is a clearly structured document highlighting salient shortcomings which should be addressed by the beneficiary in order to effectively implement the international conventions. The basic elements of the scorecard are the shortcomings identified by the monitoring bodies of the relevant core international conventions and which are set out by the EC in its assessment of the GSP+ entry applications.

New Trade Agreements

In furtherance to one of the key pillars of the trade policy of the government of Sri Lanka, an economic trade and cooperation agreement (ETCA) is under negotiation with India and, according to media reports, will be finalised by the middle of 2017. The version of the draft currently under negotiation has not been made publicly available.

In addition to the ETCA with India, free trade agreements are being negotiated with Singapore and China. No official details on these agreements are publicly available at the time of writing.

New Treaties & Conventions

During 2016 Sri Lanka became a state party to the UN Electronic Communications Conventions (UN ECC), thereby ensuring greater legal certainty for e-commerce and e-business ventures. The UN ECC entered into force on February 1, 2016 and with it Sri Lanka became the first country in South Asia to ratify this important ICT law treaty and the second country in Asia after Singapore. In addition, Sri Lanka started to fully implement the Budapest Cybercrime Convention during 2016 with a series of capacity-building initiatives for the judiciary, prosecution as well as law enforcement with the participation of experts from the EU, the US and the UK.

Other Aspects Of Proposed Legal Reform

undefined As per information available on the website of the Law Reform Commission of Sri Lanka, the programme of work of the Law Reform Commission for the 2013-15 period included:

• A study of the draft clinical trial bills;

• An examination of concerns regarding sentencing policy in the context of statutory rape; and

• A consideration of a proposal submitted by an Attorney-at-Law in April 2013 to amend the Apartment Ownership Act in connection with certain problematic areas in particular issues in connection with common interest developments. Other areas to be examined by the Law Commission were the regulation of medical termination of pregnancy in cases of rape, incest and congenital abnormalities. With regard to the much discussed problem of “laws delays”, the programme of work of the Law Commission states that the director of Sri Lanka Judges Institute had forwarded a report on amendments to the Civil Procedure Code together with a draft to the commission for observations.

The programme of work of the Law Reform Commission notes that the problem of laws delays in civil cases is recognised to be the most serious problem of the district courts requiring urgent reforms in Sri Lanka. It further states that “Considerable reduction in the delay in the disposal of civil cases has become possible in other jurisdictions due to various legislative and administrative reforms implemented by those jurisdictions with the cooperation of judges, court staff, lawyers, their associations and litigants.” A Bill of Parliament to amend the Civil Procedure Code has been published. Others areas of work include an examination of land acquisition and related legislation, principles relating to transfer, donation and alienation of lands in the light of judgments, an examination of constitutional and other provisions of law vis-à-vis the effective administration of justice, an examination of management of water resources, an examination of various aspects of commercial law (partnership law and limited partnership law, Sale of Goods Ordinance, Carriage of Goods by Sea Ordinance and Admiralty Act) and legislation on procurement procedure.

Significantly, the Law Commission notes that “today the principal provisions pertaining to procurement procedure is contained in the form of guidelines and not in the form of legislation”. The programme of work note further states that “although it was noted that the guidelines are by and large strictly adhered to by all the parties and that procurement procedure in Sri Lanka is for the large part proceeding smoothly and effectively, several cases brought before the various courts of law in Sri Lanka had demonstrated that there are occasional transgressions which are to some extent facilitated by the fact that the said procedure is not within the falls of legislation. Hence the Law Commission has identified this area as an important area for legislative reform as this area of the law will become more and more important and significant in the development structure of the country, especially in view of anticipated foreign investment.” Other topics include an examination of the adequacy of the current legislation relating to biodiversity and wildlife, an examination of the legal regime in relation to sports in Sri Lanka, an examination of laws relating to gender discrimination, the law of property, a review of licensing and enforcement provisions with regard to protection of environment as well as a review of some aspects of criminal law. A significant recent new Act – the Revocation of Irrevocable Deeds of Gift on the Ground of Gross Ingratitude – was recently enacted by Parliament.

Details Of Significant Legal Reform

The most fundamental legal development in 2016 was the enactment of the RTI Act. Karu Jayasuriya, the speaker of the Sri Lankan Parliament, signed the RTI into law on August 4, 2016, the law having been passed on June 24 by Parliament after a debate of two days. The RTI empowers the public to obtain information from government ministries, departments, state corporations and statutory bodies, local government institutions, non-governmental organisations, private universities, higher education institutes and judicial bodies. It provides for the appointment of information offices in government ministries and departments and also for the establishment of a Right to Information Commission. Exceptions include sensitive information in regard to national defence, international and trade agreements and other vital information on the financial sector.

According to information from international media sources, the government has included RTI implementation as one of the 12 international commitments that the government is obligated to fulfil as a part of the open government partnership, which will be subject to further international review. Regulations were gazetted in early 2017, and the act came into force in early February. The manner of implementation by some government institutions leaves much to be desired.

According to information from international media sources, information officers have been appointed across several public authorities. Three members of the RTI Commission – Mr Mahinda Gammanpila, Ms Kishali Pinto-Jayawardena and Mr S G Punchihewa – received their appointments from the president on September 30, while Mr N Selvakkumaran and Justice Saleem Marsoof declined the appointments. All members of the RTI Commission have now been appointed by the president.

On January 20 2017, by notification published in the government Gazette (Extraordinary), the minister ordered that the provisions of the aforesaid act should be “enforced in relation to following public authorities with effect from February, 3, 2017.” The said Gazette lists the various types of public authorities: a. A ministry of the government; b. Any body or office created or established by or under the Constitution, any written law, other than the Companies Act, No. 7 of 2007, except to the extent specified in paragraph e., or a statute of a provincial council; c. A government department; d. A public corporation; e. A company incorporated under the Companies Act, no. 7 of 2007, in which the state, or a public corporation or the state and a public corporation together hold 25% or more of the shares or otherwise has a controlling interest; f. A local authority; g. A private entity or organisation which is carrying out a statutory or public function or service, under a contract, a partnership, an agreement or a licence from the government or its agencies or from a local body, but only to the extent of activities covered by that statutory or public function or service; h. Any department or other authority or institution established or created by a provincial council; i. Non-governmental organisations that are substantially funded by the government or any department or other authority established or created by a provincial council or by a foreign government or international organisation, rendering a service to the public in so far as the information sought relates to the service that is rendered to the public; j. Higher educational institutions including private universities and professional institutions which are established, recognised or licensed under any written law or funded, wholly or partly, by the state or a public corporation or any statutory body established or created by a statute of a provincial council; k. Private educational institutions including institutions offering vocational or technical education which are established, recognised or licensed under any written law or funded, wholly or partly, by the state or a public corporation or any statutory body established or created by a statute of a provincial council; l. All courts, tribunals and institutions created and established for the administration of justice.”

The Development (Special Provisions) Bill

undefined In his October 2016 Economic Policy Statement, Prime Minister Ranil Wickremesinghe declared that the government had to “focus on large-scale foreign direct investment (FDI) and accelerated growth” and “creating a positive investment climate … Hurdles that stand in the way of achieving growth for business start-ups will be removed.” A year earlier in his November 2015 policy statement, the prime minister had stated as follows: “These reconstruction mechanisms will empower Sri Lankans to deliver globally competitive products and services to the international markets. For this, we need to: 1. Create the background needed to enter the global value system; 2. Encourage our small and large scale farmers and entrepreneurs to participate in the global economy; 3. Encourage competitive international organisations to invest in Sri Lanka; and 4. Bring about the digitisation of the economy. Under the new measures we will introduce, investments will be encouraged we will focus more on FDI.”

The bill was said to have been drafted with the intention to help expedite the approval process of FDI into the country without any administrative delays.

“This is to ensure that foreign investors can confidently invest in Sri Lanka without being worried about any delays on securing permits and reports from the relevant line ministries.”

Summary Of The Provisions Of The Bill

undefined According to the draft bill, the aim of the law is to facilitate the formulation of a national policy on all subjects including accelerated economic development of Sri Lanka. In terms of the provisions of the said proposed law, a Policy Development Office (PDO) will be established. The act, if passed, would come into operation on such date as the minister may appoint by order published by Gazette (hereinafter referred to as the appointed date). The provisions of parts II, III, IV, V, VI, VII, VIII and IX of the proposed act would be in operation for a period of three years from the appointed date.

The bill defines the “minister” as the minister in charge of the subject of national policy and economic affairs for the purposes of part VI of the act. The minister in charge therefore – in this instance – is Prime Minister Ranil Wickremesinghe, who is the minister of national policies and economic affairs. The functions of the PDO are as follows:

• To plan, formulate and develop draft proposals for a national policy and national policy framework on any subject including economic development for consideration by the cabinet of ministers, in accordance with the provisions of the act;

• To coordinate and assist where required to do so by the cabinet of ministers in the implementation of such national policies, assess the progress, facilitate and support delivery;

• To set realistic goals to be achieved by any economic or social sector and to monitor the progress in the achievement of these goals including reporting to the board for the formulation of a national policy on rural modernisation on the progress and review of rural modernisation; and

• To provide an independent view of the performance of any government institution and the provincial administration, to the president, prime minister and the chief minister on the matter relevant to such province. In carrying out the functions of the PDO, the duties of the PDO have been provide for as follows:

• Consult the relevant regional development board or the board on rural modernisation established under section 21 as the case may be;

• Review the global economic, political, social and environmental developments and their impact on Sri Lanka;

• Revisit the existing policy of Sri Lanka and critically analyse it with a view to revitalising it to meet new challenges; and

• Ensure that the policy is in consonance with goals set by the government. As stated, the objective of the national policy on economic development in Sri Lanka is the achievement of rapid economic development. In terms of section 12 of the proposed law, for the purpose of promoting rapid economic growth for one or more of the following development activities in accordance with the national policy framework, the minister may, (in consultation with the chief minister of the relevant province), by order published in the Gazette, designate any area as an area demarcated for economic development as an economic development area for the purposes of manufacturing, tourism, science and technology, logistics, business and service, high-tech fisheries and high-tech agriculture.

The proposed law also contains provision for the establishment of an agency called the Agency for Development (hereinafter referred to as the Agency) which has the functions of giving directions to the several boards that will deal with various areas of activity.

The Agency has 16 different objectives including “modernising the economy, promoting export of goods and services, ensuring consumer welfare and generating employment”. The Agency will be competent to exercise powers over economic development areas declared under the act, in accordance with the provisions of the act. In terms of the proposed act, an enterprise that is seeking to carry on any commercial activity in any economic development area must register itself with and obtain from the Agency a certificate to carry on such activity. The Agency would in turn maintain a record of all such certificates issued. The criteria for registration would be published by way of a Gazette notification.

It will be lawful under the proposed law for the Agency to give directions to the Board of Investment, the Sri Lanka Export Development Board, the Information and Communication Technology Agency, the Civil Aviation Authority, the Sri Lanka Ports Authority, the Water Supply and Drainage Board and the Sri Lanka Tourism authorities.

The proposed act specifically states that no power, duty or function under the National Environmental Act no. 47 of 1980 should be exercised, performed or discharged by the Agency except in consultation with and with the concurrence of the Central Environmental Authority established in terms of the said act.

Further, the proposed law contains provision that if the Board of Investment seeks to develop any venture in any such economic development zone, it shall make an application in that respect to the Agency.

Similarly, where the Sri Lanka Tourism Development Authority seeks to develop any venture in any such economic development zone, it shall make an application in that respect to the Agency.

The provisions of the Land (Restrictions on Alienation) Act no. 38 of 2014 would not apply to an investor registered under the proposed law. The proposed law also provides provision establishing a Rural Modernisation Board (hereinafter referred to as the Board) which would be headed by the president and comprising the prime minister, ministers in charge of the subjects of finance, the rural economy, land, development strategies and international trade, industries, agriculture, fisheries, plantation industries and animal husbandry, chief ministers of all provinces, seven members appointed by the president, the managing director and the director responsible for policies. In terms of the proposed law the expression “rural modernisation” includes high-tech agriculture, high-tech fisheries, marketing, connectivity and the relevant infrastructure.

There are also regional development boards which would be established for the purposes of the act. The objectives of the regional development boards would be to coordinate at the regional level the implementation of development plans, programmes and projects of the government and the provincial administration and to monitor oversight of such plans, programmes and projects; and to facilitate where necessary, the implementation of private sector investment projects in accordance with the decisions and guidelines issued by the Agency. Five different development boards for the Southern, Wayamba, Central, Eastern and Northern Provinces are being proposed under the new law.

The new law also envisages the creation of an Agency for International Trade to be managed by a board. The agency would comprise the director-general of commerce, the controller of imports and exports, the chairman of the Sri Lanka Export Development Board, the chairman of the Tea Board, the chairman of the Joint Apparel Exporters Federation, a representative of the minister of foreign affairs, a representative of the minister of finance, a representative of the Joint Apparel Exporters Associations and six others appointed by the minister.

The objectives of the Agency for International Trade would be to promote and develop international trade of Sri Lanka, to facilitate the growth of exports of Sri Lankan products and services, particularly the agricultural and fisheries products, to promote Sri Lanka as a major trade, business and logistical hub of the Indian Ocean region and to serve as the nodal agency for the formulation, implementation and coordination of international trade in Sri Lanka.

In the exercise of its functions the proposed new law envisages that the Agency for International Trade would implement the national policy on international trade and the relevant approved plans, programmes and schemes. The Agency for International Trade would also represent Sri Lanka at the World Trade Organisation.

Subsequent to the appointed date, certain powers and functions conferred on or assigned to the Board of Investment of Sri Lanka (under section 16) and the Sri Lanka Expert Development Board would be exercised and discharged by the Agency for International Trade and not by the respective boards.

However, the Agency for International Trade may also delegate any of its powers and functions under the Board of Investment of Sri Lanka any of its powers under the Sri Lanka Export Development Board.

Furthermore, once the law comes into effect, the draft makes clear, that the Urban Development Authority shall not exercise any powers “in such manner as will adversely affect the implementation of any plans, programmes or schemes approved”.

Similarly, the Mahaweli Development Authority Act will also not apply in such “manner as will adversely affect the implementation of any plans, programmes or schemes approved” under the new law. This also extends to the Sri Lanka Tourism Development Authority and the Ceylon Tea Board.

The proposed law has made provision to prevent prosecution against:

• The Agency, board or other institution for any act which in good faith is done, by such agency, board or other agency or other institution under this act; and

• Any member, officer servant or agent of such agency, board or other institution for any act which is done, or purported to be done by him in good faith under this act or on the direction of such agency, board or other institution, as the case may be.

Latest Developments In Regard To The Bill

undefined As noted, through this bill which is proposed to operate for three years, a mechanism would be introduced for the government and the provincial councils to work together for the economic development of the country and a mechanism would be introduced for coordination of several ministries and the institutions coming under those ministries which deal with economic development and the promotion of international trade.

On December 28, 2016 the bill was rejected by seven provincial councils. On December 29, 2016 it was rejected by the Western Provincial Council. The vote of the Eastern Provincial Council is pending as at the date of the submission of this article.

The bill has already been approved by the Cabinet and will likely be submitted to Parliament in February 2017. Under the Sri Lankan Constitution, the act must be approved by the provincial councils before it can be adopted by the Parliament.

There has been strong criticism of the Development (Special Provisions) Bill. Those who criticise the bill bring forward two issues. One concern put forward by some is the assignment of the powers of the provincial councils to a (so called) “super minister” and the other is the assignment of the power of the president and certain other ministers to this super minister.

Some have also raised issues that it infringes on the powers of the provincial councils. Parliament cannot pass a bill that infringes on the powers of the provincial councils.

The position of the chief ministers of the provincial councils is that the powers contained in the draft bill should be given to a special representative commission and not to a super minister.

The chief ministers have informed the prime minister that it is not appropriate to vest the powers in a particular individual. According to certain reports, in response, the prime minister has taken up the position that the Development (Special Provisions) Bill will not impinge on subjects of provincial councils but, on the other hand would actively involve them in the government’s development programme.

The Land (Restrictions On Alienation) Act

undefined An act has been passed which provides for the removal of the land lease tax, which was imposed in terms of the Land Restrictions on Alienation Act no. 38 of 2014. The amending act does not address the fundamental issue of the effect on inward investment, particularly inward FDI by small and medium-sized enterprises.

Rather than containing any bold measures of reform, the amending act simply provides that, notwithstanding anything to the contrary in any of the provisions of the said act, the provisions relating to the land lease tax shall not apply to a lease of any land:

• To a foreigner; or

• To a company incorporated in Sri Lanka under the Companies Act, where any foreign shareholding in such company, either direct or indirect, is 50% or above; or

• To a foreign company, under and indenture of lease executed on or after January 1, 2016, and accordingly the land lease tax shall not be charged, levied or collected from any such person or company on or after such date.

According to information available on the website of the Sri Lankan Parliament, the bill has yet to be passed by Parliament. This delay leaves room for legal uncertainty since administrative non-implementation of a tax mandated by law is hardly of comfort to foreign investors in the country who wish to confirm that they are compliant with Sri Lankan law.

The government policy appears to be that the prohibitions imposed on acquisition by foreigners of land in Sri Lanka as contained in the provisions of the Land (Restrictions on Alienation Act) would only be relaxed in the case of investments approved in terms of the Development (Special Provisions) Act.

Capital Gains Tax

From the year of assessment FY 2002/03, capital gains have not been taxed in Sri Lanka. A plan to reintroduce capital gains tax (CGT) was outlined in the 2017 budget speech, delivered by Ravi Karunanayake, then-minister of finance and current minister of foreign affairs. He stated, “CGT will be introduced with effect from April 1, 2017 at a rate of 10%. We consider this tax to be equitable, as it bridges the income gap and assists the government initiatives in poverty alleviation.” The draft legislation is not yet available, and there are many unanswered questions as to the base on which the 10% tax liability would be calculated and how the provisions would be implemented. It is anticipated that CGT would not extend to profits arising upon the disposal of shares.

Employment Law

2016 was also a significant year with two key new legislative enactments providing for a minimum wage and a budgetary allowance.

The National Minimum Wage of Workers Act no. 3 of 2016, which was certified by the Speaker of Parliament on March 23, 2016, imposes a minimum wage. The act provides that its provisions shall be deemed, for all purposes, to have come into operation on January 1, 2016. The act provides that the national minimum monthly wage for all workers in any industry or service is LKR10,000 ($68.19) and that the national minimum daily wage of a worker is LKR400 ($2.73).

The Budgetary Relief Allowance of Workers’ Act No. 4 of 2016 provides that with effect from May 1, 2015, every employer shall, in respect of each month, pay to every worker employed by him a budgetary relief allowance calculated on the following basis:

• A worker whose salary for the month of May 2016 is LKR40,000 ($273) or below – LKR1500 ($10.23);

• For a worker whose daily rate of pay does not exceed LKR1600 ($10.91) – LRK60 ($0.41) per day for each day worked during the month;

• For a worker employed in the relevant month on a piece-rate basis – an amount equivalent to not less than 15% of the total wages or salary payable to such worker for that month subject to a ceiling of LKR1500 ($10.23);

• In the case of a worker whose monthly wages or salary exceeds LKR40,000 ($273) but does not exceed LKR41,500 ($283), the allowance is the difference between LKR41,500 ($283) and the amount of wages of salary; and

• In the case of a worker who is paid a daily rate of a sum exceeding LKR1600 ($10.91) and not exceeding LKR1660 ($11.32), the daily allowance payable is calculated at the rate of one-25th of the difference between LKR41,500 ($283) and the total wages for the relevant month. The act also provides that from January 1, 2016, the allowances calculated as follows shall be payable:

• For workers earning LKR40,000 ($273) or below – LKR1000 ($6.82);

• For workers paid at a daily rate is not exceeding LKR1600 ($10.91) – an allowance of LKR40 ($0.27) per day for each day worked;

• In the case of a worker employed on a piece-rate basis – the allowance is calculated at the rate of 10% of the total wages and/or salary for that month; and

• Where an employer has increased the salaries of employees employed during the period October 1, 2014 to April 30, 2015, if such increases added together exceed the amount to be increased in terms of the act, such employer shall be exempt. In this case, wages or salary are defined to mean any increase of wages or of salary connected to budgetary relief allowance in terms of the act but this does not include any annual or periodical increments. The act establishes a competent authority and imposes duties on every employer of a worker in any industry or service to maintain and keep a register setting out the prescribed particulars.

The act provides for criminal liability in respect of non-compliance, and in addition specifically states that the allowance payable to workers under the act shall be deemed for all purposes to include contributions to the Employees’ Provident Fund, Employees’ Trust Fund and pension.

The allowance must be paid within a period within which the employer is required any written law to pay the wages or the salary of such worker.

Zoning Issues

Controversy in regard to two conflicting versions of the City of Colombo Development Plan (Amendment) 2008 issued by the Urban Development Authority led to writ proceedings being instituted in the Court of Appeal in January 2017.

The issue concerns whether high-rise buildings should or should not be permitted in a highly residential area of Colombo known as the special primary residential zone (which roughly corresponds to the postal district of Colombo 7 or the area known as Cinnamon Gardens). This area was traditionally, since the mid1980s, when comprehensive zoning regulations were introduced, classified as an area in which the maximum permitted height of buildings is ground plus two. By an amendment to the City of Colombo Development Plan of 1999, the permitted maximum height of buildings was increased to ground plus four.

Two versions of the Amendment Plan are in circulation. In one, the maximum height of buildings in the special primary residential zone is state to be ground plus four. In another version, an additional provision, clause 4.1 (e)(i), has been introduced which provides for constructions on sites of an extent exceeding 2500 sq metres to be arranged and governed in accordance with form C2 of the Amendment Plan which permits 21 storeys and above. Such provision is not found in the other version, which only permits a maximum number of five storeys (G+4) under provision 4.1(b)(ii).

The petitioners in the writ application argue that this discrepancy in the City of Colombo Development Plan (Amendment) 2008 itself casts a serious doubt in respect of the very fundamental legality and lawfulness of many condominium building developments proposed to be constructed on large lands within the special primary residential zone, and that there are two competing versions that are irreconcilable and mutually exclusive and they emanate from the very same source, i.e., the Urban Development Authority.

The Western Region Megapolis Master Plan (WRMMP) “From Island to Continent” states on page 76 as follows “as for the housing development, good-class low-density housing in Colombo 7 (Kurunduwatta Area) and around the parliament house is preserved.” The draft regulations under the Megapolis Act and the policy of the Megapolis planners state that buildings of only ground plus two would be permitted in the special primary residential zone.

The residents of the area who are the petitioners in the pending litigation argue that proposed high-rise developments within the zone are incompatible with the residential fabric of the area and that such developments would alter the nature and character of the area, resulting in serious and adverse affectation to the quality of the neighbourhood.

Megapolis Concept

Another key piece of legislation necessary to implement the Megapolis concept appears to have stalled. The concept was approved on April 23, 2015, when the cabinet of ministers approved the proposal to commence the drafting of plans for the Western Region Megapolis Planning Project.

The Megapolis concept contemplates sweeping reforms in the agenda and policies concerning the economy and industry, infrastructure development, city planning, housing and relocation, and social welfare in the Western Province. A draft bill of legislation – the Western Region Megapolis Development Authority of Sri Lanka Act (Megapolis Bill) – has been prepared.

The Western Megapolis is said to be envisioned and conceptualised as a “prudent grand strategy” for achieving two decisive inter-dependent transformations required in Sri Lanka’s movement to achieve the status of a high-income developed country, namely: the spatial transformation of urban agglomerations in the Western Region of the country and the structural transformation of the national economy as a whole.

The aim of the Megapolis Plan is stated to be to transfer informal urban development into formal urban development and thereby increase the happiness of the people. Beautification of the towns as well as boosting the living standards of the people is envisaged to be achieved through this development plan.

The Megapolis Development Plan identifies issues that should be given priority in the town development. It also focuses attention on traffic congestion, garbage disposal and housing facilities for slum dwellers as well as drinking water and sanitary facilities. The implementation of the development plan is planned to be carried out under three phases and would be completed by 2030. The president of Sri Lanka has stated that the plan aims at developing every mega town to a similar level and thereby reduce the number of people who are migrating to Colombo, seeking better facilities.

Patali Champika Ranawaka, the minister of Megapolis and Western Development, has stated publicly that Sri Lanka will be able to attract about $40bn worth of investments within next 10 years through the Mega-polis development project.

Although a draft bill of the Western Region Megapolis Development Authority of Sri Lanka Act (Megapolis Bill) has been drafted and is in circulation, it has not been possible for the author of this article to obtain a copy of said bill. According to available information, the Western Megapolis has three broad national goals:

• To address issues resulting from congestion pressures being exerted on urban physical infrastructure, urban services and amenities, and the environment, that have been brought about by “messy urbanisation”;

• To create an enabling environment for propelling the nation to the status of a high-income developed country bypassing the middle-income trap, by way of leveraging the economies of agglomeration, through development and transformation of the physical and institutional infrastructure and the national economic structure; and

• To optimally harness the benefits of a knowledge-based, innovation-driven global economic environment characterised by such developments such as the “new industrial revolution” and the emergence of “smart cities”. According to the WRMMP “From Island to Continent”, issued by the Ministry of Megapolis and Western Development, the Western Region Megapolis is planned to create a spatial transformation which will drive the nation’s grand strategy for overall development in three ways:

• Enabling the national economy to leverage the benefits of economies of agglomeration brought about by urbanisation;

• Eliminating the congestion pressures on urban infrastructure, services and environment brought about by messy urbanisation; and

• Reduced per-unit capital cost of infrastructure provisioning. The aforementioned publication states that the planning philosophy that guides the formation of objectives and strategies for realisation of those national goals is based on the four fundamental pillars, namely, economic growth and prosperity, social equity, environmental sustainability and individual happiness.

The “From Island to Continent” master plan refers to over 150 different development projects already identified for implementation under the Western Megapolis. A total of 10 mega-projects have been identified. The majority of the development activities that have been identified in the planning process are in transport, energy and water; housing and relocation of administration; environmental and waste management; the aero maritime trade hub, “The High Rise” – central business district, industrial and tourist cities – Miri-gama, Horana, Negombo and Aluthgama; science and technology city, “Eco Habitat” and “Plantation City”; “Smart Nation” – the smart city development project; and “Tranquility” – the spiritual development facility. The Centre for Policy Alternatives (CPA) has prepared a memo highlighting some of the key likely constitutional, legal governance and human rights concerns and implications arising from the WRMMP and Megapolis Bill which have been summarised here.

Constitutional Implications

According to the said memo, the WRMMP envisages the creation of the Western Region Megapolis Planning Authority ( Mega-polis Authority) by the Megapolis Bill.

In terms of the said bill, the Authority’s affairs will be controlled and administered by a board of management comprising of a chairman and director-general along with chairmen of several other government authorities. In terms of the clauses of the bill pertaining to the powers and functions of the Megapolis Authority as stated, it is evident that the Authority will have substantial powers concerning the planning, development and rehabilitation of the infrastructure of the Western Province, as well as powers to see to the rehabilitation and welfare of communities in the province.

In terms of Article 154G(1) of the Constitution authority is granted to all provincial councils to pass laws and policy in respect of any matter set out in the provincial council list. The CPA memo states that many of the powers that are vested in the Authority, given its role in the implementation of the WRMMP will almost certainly infringe on the powers vested in the Provincial Council of the Western Province under Article 154G of the Constitution. The bill can be enacted into law by Sri Lankan Parliament only after the Provincial Council of the Western Province is sent the bill and is permitted to express its views thereon.

Governance & Accountability

The CPA memo refers to the fact that there are concerns in regard to two aspects of the constitution and powers of the Authority, as established by the bill, which are the powers of the Authority and the finances.

Land Consolidation

The CPA memo argues that in terms of the WRMMP, the Western Province would be categorised into cities and zones, each of these earmarked for a specific purpose. Furthermore, tin order to achieve this, the WRMMP states that the Megapolis Authority will take steps to acquire “state and undeveloped lands” in specific areas. The CPA memo states that the WRMMP is silent with regards to its policy in determining how such state and undeveloped lands will be acquired, and that there is no clarity as to what the criteria would be to consider a land as ‘undeveloped’.

CPA is concerned that those who will be affected by land acquisitions due to the implementation of the WRMMP will have little or no redress. Given that many lands that are to be acquired are in areas where several low-income communities reside, it is difficult to contemplate how members of such communities will be in a position to seek redress, as the remedies available require both financial and legal assistance.

The draft planning, zoning, environmental and building regulations of the Western Region Megapolis Planning Authority of Sri Lanka comprise development regulations and guidelines for the Western Region. The draft regulations provide for the control, protection and/or abatement of pollution of air, water and noise. These draft regulations are said to contain provisions to assure the health, safety, security, equity and welfare of all citizens and their right to affordable housing.

While there will be general regulations applicable within the administrative limits of the Western region, there will also be specific regulation governing the particular development activities to be undertaken within respective planning area divisions.

OBG would like to thank John Wilson Partners for its contribution to THE REPORT Sri Lanka 2017