Plans to renegotiate the lease agreements of Regional Plantation Companies (RPCs) before they expire could set a damaging precedent for security of tenure and discourage foreign direct investment in state-owned land, the Advocata Institute has warned, Hiru News reported.
The statement follows President Anura Kumara Dissanayake’s announcement that the government is reviewing the existing RPC leases, which run until 2045, and intends to replace them with new agreements containing provisions on estate worker rights.
Advocata said arbitrary or ad hoc renegotiation could undermine private sector confidence and dampen both domestic and foreign investment in state assets. High-performing RPCs need, at a minimum, a credible guarantee that their leases will be renewed beyond 2045, the institute said.
It argued the current uncertainty is already costing productivity: many RPCs are withholding capital investment such as replanting and infilling because they cannot recover the cost before their leases run out. Advocata cited its 2023 report Market Competitiveness of the Tea Industry of Sri Lanka, by Dr Sudaraka Ariyaratne, which found that weak tenure security is severely hindering the productivity of state-owned plantation land.
Three options proposed
The institute set out three mechanisms. The government could issue a credible assurance on lease extensions for high-performing companies. Preferably, Advocata said, the state could create a framework allowing the private sector to buy state-owned plantation land outright when current leases end. Failing that, existing leases could be amended to compensate leaseholders for unrecovered capital investment at the end of the lease period.
Wage model and worker housing
Advocata also proposed two reforms on estate worker welfare. It called for scrapping the attendance-based minimum wage, arguing the model inflates production costs for RPCs while capping worker earnings and creating an abusive supervision structure.
In its place, the institute proposed a revenue-sharing model paying workers a share of auction earnings based on their yield — an arrangement it said would let workers operate more like smallholders, raising total earnings while lowering unit production costs.
The institute further urged the government to speed up the granting of freehold title to estate workers for the houses they occupy, which remain state-owned. Initial titles were issued under the previous administration’s Urumaya programme; Advocata called for transfers to be accelerated through the current government’s Himikama initiative, allowing one of the country’s most economically vulnerable communities to build generational wealth.
