Four years on from the end of a bloody civil war whose wounds refuse to heal, Sri Lanka’s victorious government is looking anxiously to resort casinos to attract the foreign investment it needs to rebuild.
But opposition to gambling runs deep on this picturesque island of 21 million, the “Pearl of the Indian Ocean”, as it’s known, as deep as its religious and ethnic divisions. Last month (October 2013), the government chose to withdraw a bill authorizing an expansion of the industry rather than face an outcry in Parliament over the generous tax breaks it contains for casinos planned by Australian tycoon James Packer’s Crown Resorts and local hospitality giant John Keells Holdings. Upwards of US$1 billion in investment could go by the boards.
This is not something to which strongman Mahinda Rajapaksa is accustomed. In his eight years as president he has constructed around himself and his family an all but unassailable and swiftly moving policy machine.
In regard to the latter especially this doesn’t bode well for government initiatives aimed at doubling foreign tourist arrivals to 2.5 million by 2016 and elevating tourism as the country’s largest source of foreign exchange earnings. Indians figure prominently in this, having returned to the island en masse only in the four years since the war ended. They are now Sri Lanka’s primary source of visitors.
It’s with one eye on the subcontinent’s hugely underserved gambling market, the other on the current boom in travel out of China, that the Rajapaksas hope to attract $3 billion in tourism-related FDI over the next three years.
This in itself is radical by Sri Lanka standards. The handful of small casinos of the type run by Wijeratne have been content for years to operate under the radar of the powerful Theravada Buddhist clergy as “recreation clubs” catering to the tourist trade in and around Colombo.
Officially, the Crown and John Keells projects aren’t casinos at all but “mixed developments” of a type identified in broad-based legislation that aims to lure similar projects with 10-year exemptions on corporate income tax and other incentives. But as the Rajapaksas are learning there is no euphemizing investments of this scale. The United National Party, the main opposition in Parliament to the Rajapaksas’ governing coalition of secular and religious parties, have been trying for months to force a debate on the tax breaks. They consider the Crown and Keells projects, along with the existing industry, to be illegal. It’s not certain how far they’re prepared to push this. Earlier this year, Rajapaksa had the nation’s chief justice unceremoniously booted from office in a move the courts have declared unconstitutional. Her offense was to issue a ruling that delayed a major development bill floated by Basil Rajapaksa.
It’s with respect to the religious parties that the Rajapaksas know they must tread carefully. The monks have no desire to undercut their leader, fearful as they are of a resurgent Tamil separatism, but they’re not comfortable either with a gaming industry of the size the Rajapaksas say the economy needs. They’ve succeeded in legislating limits on the sale of alcoholic beverages, which is heavily taxed, and have forced the country’s liquor stores to close. In a similar vein they’ve warned the administration not to get too promiscuous with its casino favors.
One of these parties, the influential Bodu Bala Sena, or “Buddhist Strength Force,” has railed against the “so-called democrats” it says are destroying the Sinhalese race, whose “unofficial police” it claims to be. The BBS was implicated in anti-Muslim riots earlier this year in which thousands took part. Mosques were firebombed, Muslim businesses attacked. It was reported in some instances that the official police stood by and did nothing.
Packer, who can do nothing but watch and wait, has remarked only that he is “hopeful” a bill will make its way to Parliament to allow his project to proceed.
“Sri Lanka is a beautiful and unique country,” he has said, “it has overcome a great deal of adversity and is growing strongly. I am confident it has a very bright future.”