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Sri Lanka’s state-owned enterprises:

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Figure 1 Source: Ginting, Edimon et al, 2020, Reforms, Opportunities, and Challenges for State-Owned Enterprises, Asian Development Bank

A major crisis in the making

By Migara Rodrigo

Sri Lanka has a whopping 527 state-owned enterprises1 (SOEs). The 55 SOEs classified as “strategically important” alone employ 10% of the public sector workforce2, or about 1.9% of all workers. Such a large number of SOEs are not the norm globally3; many other countries (such as India) have been reducing their stakes in SOEs and, in some cases (e.g. Air India), have been privatizing them entirely. SOEs – particularly many in Sri Lanka – tend to be grossly inefficient, loss making, and a burden on the taxpayer. The time is ripe for major SOE reforms.

What is an SOE?

A SOE is traditionally defined as a commercial entity that has majority ownership/control by a nation’s government – in Sri Lanka, this can include statutory bodies, regulatory agencies, promotional institutions, educational institutions, public and limited companies. While Sri Lankan SOEs have traditionally been incorporated by an Act of Parliament, in recent years these entities have also been incorporated under the Companies Act instead. Sri Lankan SOEs can be divided into three categories: 55 Strategic SOEs, 287 SOEs with commercial interests, and 185 SOEs with non-commercial interests. Unlike nations such as India which mandate internal audits of their SOE’s business activities and publish an annual overview with a balance sheet of each individual business, the majority of Sri Lankan SOEs do not reveal this pertinent information to the public; financial information is available for just 10.4% of SOEs.

Fundamental Problems with Sri Lankan SOEs

Contrary to what some believe, low quality of talent is not the most significant issue with SOEs; many employees are eminently qualified and capable. Unfortunately, these organizations fall victim to government mismanagement and corruption. In addition to excessive employment to fulfill their political ambitions, there have been allegations that some SOEs have been formed purely to facilitate corruption – for example, the Lanka Coal Company engaged in fraudulent deals to purchase coal causing a loss of over Rs. 4 billion (allegedly with the knowledge of the minister in charge)4. SOE financials are late and few obtain ‘clean’ audit reports. Investigations have revealed repeated instances of fraud, mismanagement, corruption and negligence. Furthermore, the internal control, monitoring and governance frameworks seem inadequate to deal with these problems – of over 500 SOEs, regular information is only available for 55. Even obtaining a complete list of entities proved to be a challenge. Public access to information is limited – the PED has not released an annual report since 2018, and right-to-information requests often go unanswered.

Moreover, SOEs have few budget constraints and shareholder (public) accountability, and therefore have limited incentive to control costs. Unlike with private sector enterprises, which have a need to make a profit, many SOEs (particularly in Sri Lanka) can simply borrow from other state organizations/banks or the government when they require additional funds, which undermines the threat of bankruptcy as a source of discipline5. Some recently established SOEs have found a new way of bypassing budgets and oversight: by incorporating as companies rather than through an act of Parliament, they are excluded from Parliamentary accountability and allowed to rack up unsustainable debts and surpass budgets more easily. This has led to SOEs burning through taxpayer rupees: the cumulative losses of the 55 strategic SOEs from 2006-20 amounts to Rs. 1.2 trillion.

Finally, while some SOEs do manage to make a profit this is, more often than not, due to the advantage that these companies have in an uneven playing field. In addition to lax budgetary requirements and ability to rack up unsustainable debts, these companies are supported by the government through direct subsidies and state-backed guarantees; by regulators through exemptions from antitrust policies and preferential treatment; and by the justice system through an ability to sidestep parliament. This has led to private sector organizations being crowded out of the industries that SOEs operate in. Instead of having private firms in the market-place with efficient and high-quality services, the Sri Lankan taxpayer is beset with SOEs with total liabilities of 4-5% of GDP6.

Potential Reforms

Given that the nation has reached an economic tipping point, with serious questions about debt sustainability and government solvency, it is clear that immediate action must be taken. Advocata proposes a short term policy solution consisting of privatization, restructuring and disinvestment, and listing on the Colombo Stock Exchange. None of these solutions are particularly radical in the global or local context. According to Anarkali Moonesinghe, CEO of CIMB Sri Lanka, the two main policies of both Western and Eastern governments when reforming SOEs are to reduce subsidies and increase efficiency, forcing SOEs to compete more equitably with private enterprises. Alternatively, full or partial privatization is a possible solution: SLTMobitel’s service has markedly improved following its 1997 privatization and the entrance of competitors such as Dialog Axiata, all held accountable by the broadly competent Telecommunications Regulatory Commission. Listing on the CSE would allow these firms to have broad-based direct ownership, while also improving the growth of the CSE and capital markets. Importantly, these firms would have to be ‘corporatized’ before listing, an opportunity to improve productivity and eliminate bloat. There are, unfortunately, firms that will essentially have to be given away due to their huge debts and poor reputations. A prime example of this is SriLankan Airlines, which has racked up Rs. 316 billion in losses7 since control was taken from Emirates in 2008. While some will regard this as a blow to our national pride, Sri Lanka would not be alone in taking such a pragmatic step to improve government finances and customer experience; Air India, the Indian national carrier, is currently in the process of being sold to the Tata Group for the relatively small sum of INR 18,000 crore. This would also inspire confidence in Sri Lanka amongst foriegn investors as it would show the country’s commitment to meeting its upcoming debt servicing obligations.

Furthermore, long term solutions include strengthening governance/limiting corruption & influence, improving efficiency, enacting cost-reflective pricing, and finally unbundling key sectors. This applies particularly to firms like the Ceylon Electricity Board which, as a natural monopoly, cannot be broken up and privatized without losing efficiency. A 2006 study by the Japan International Cooperation Agency recommended breaking up CEB into three parts: “making the generation, transmission, and distribution divisions…independent”8. Despite the 15 years and multiple nationwide blackouts that have occurred since, GoSL continues to drag their feet on the issue, as it is politically unpopular. Cost-reflective pricing (also prevented due to political unpopularity) is another essential reform. The existing system of having electricity tariffs priced below cost is a public subsidy whose cost will be borne by future generations. It is also inequitable, as the government could provide low cost services to those who need it by giving them direct cash transfers, instead of subsidizing the wealthy who can afford to pay. A similar situation is evident with the Ceylon Petroleum Corporation, which currently makes a loss of Rs 23-38 per litre of fuel9; again, a public subsidy to those who can often afford to pay the market price. Finally, greater accountability, by means of annual internal audits and the availability of SOEs’ financial information to the public, is also important to ensure these firms stick to the targets they are given.

A successful and thriving market, in most industries, will only occur with the presence of three crucial factors: competition, a good framework, and competent regulation. By reforming Sri Lanka’s SOEs to meet these criteria, we will ensure a good customer experience, a reduction in the government deficit, and general prosperity for all key stakeholders.

Migara Rodrigo is a Researcher at the Advocata Institute. He can be contacted at migara.advocata@gmail.com. The Advocata Institute is an Independent Public Policy Think Tank. Learn more about Advocata’s work at www.advocata.org. The opinions expressed are the author’s own views. They may not necessarily reflect the views of the Advocata Institute.



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From Manifesto to Action without delay

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The prison violence in Negombo has become the first major crisis to confront the government since it came to power. The government may or may not be responsible for creating the conditions that have accumulated over decades and made the prison system a powder keg. The fact is the government’s Ratama Ekata anti-drug crackdown boosted the countrywide prison population from 28,000, in late 2024, to 41,000, in 2026. The conditions of imprisonment include chronic overcrowding, poor infrastructure, inadequate staffing, the penetration of organised crime and drug networks into prisons, and the long neglect of prison reform by successive governments. The Negombo Prison was housing approximately 2,600 inmates at the time of the clashes although it was built for only about 650. By the time order was restored, 29 people, including seven prison officers, had lost their lives and more than 100 others had been injured.

Justice Minister Harshana Nanayakkara accepted responsibility before Parliament, visited the Prison and announced immediate measures, including legislative changes to facilitate bail and alternatives to remanding prisoners. The NPP government needs to accept responsibility for its failure to anticipate the danger, to respond with sufficient speed and competence once the problem had erupted. A dangerous situation can be observed countrywide with more than 42,000 prisoners being held in prisons designed to accommodate about 10,000 inmates. The magnitude of the Negombo Prison tragedy needs to be understood not merely as an isolated incident but as a warning that the government cannot postpone structural reforms indefinitely. A government elected on the promise of changing the system cannot justify repeating the failures of its predecessors on the basis that it is sincere and uncorrupt unlike them.

The failure to move beyond promises has become evident in several other sectors as well. Farmers continue to agitate over unresolved problems. Plantation workers continue to seek meaningful integration into national life. Many of them, who were victims of Cyclone Ditwah, continue to live in miserable conditions due to the government’s slowness in dealing with their problems of their lack of ownership of lands and homes. The Mylathamadu cattle farmers of Batticaloa have issues once again even after two presidents, President Ranil Wickremesinghe and now President Anura Kumara Dissanayake ordered evacuation of intruders in terms of court orders. But the local police and the Mahaweli Authority officials seem slow to take any actions, even to the extent of not complying with judicial decisions. Victims of past human rights violations and thousands of families of missing persons are still waiting for justice. The promised repeal of the Prevention of Terrorism Act has yet to materialise. Prison reform has now joined this growing list of deferred commitments.

NPP Pledges

The National People’s Power election manifesto promised not merely honest government but systemic transformation. Under the section dealing with prisons, it pledged to restructure the prison system, reduce overcrowding, expand open prison facilities, strengthen rehabilitation through education, vocational training and psychological support, establish a formal parole system and transform prisons from places of punishment into centres of rehabilitation and reintegration. Those promises reflected international best practice and recognised that a humane prison system is essential to a democratic society. Yet nearly two years into its term little visible progress has been made in implementing these reforms.

Sri Lanka has witnessed different types of prison violence. Some have erupted spontaneously because of intolerable prison conditions, overcrowding and frustration. Others have occurred under circumstances that raised alarming questions about state complicity. The massacre of 53 Tamil political prisoners inside Welikada Prison during the anti-Tamil violence of July 1983 remains one of the darkest chapters in the country’s history. Those prisoners were not protected despite being under state custody. The Mahara Prison violence of November 2020, in which 11 inmates were killed after protests over Covid conditions, similarly generated serious allegations regarding the targeted use of weapons and led to widespread calls for an independent investigation.

Following the deadly violence at Mahara Prison during the Covid pandemic, then Opposition party leader Anura Kumara Dissanayake declared in Parliament that “those who are remanded and imprisoned are under the custody of the state. Therefore, the primary responsibility for the safety of the lives of the prisoners and detainees who are in state custody lies with the government.” He further said that “it is entirely unacceptable in a democratic nation that upholds human rights for prisoners, who are under the protection of the state, to be gunned down while in government custody.” But in the Negombo tragedy once again the state, with President Dissanayake at the helm, was unable to protect the inmates though there is no evidence that the government orchestrated the violence. Being in power for two years there is a rightful expectation that it could have taken better preventive action.

Urgency Needed

There are two special conditions, however, that make the Negombo Prison tragedy a possible turning point rather than merely another episode in Sri Lanka’s long history of prison violence. The first is that until these events the country had enjoyed an extended period without major organised political or communal violence. This improvement was recognised internationally when Sri Lanka rose 30 places in the 2025 Global Peace Index to rank 67 among 163 countries. The Index measures countries on three broad indicators, namely the level of societal safety and security, the extent of ongoing domestic and international conflict, and the degree of militarisation. The improvement reflects the country’s recovery from the years of political upheaval and economic collapse and suggests that Sri Lanka is moving towards a more peaceful future.

The second distinguishing feature is that the present government has no known links to organised crime or the underworld that has so often been associated with sections of the political establishment in the past. This is one of its greatest strengths. President Anura Kumara Dissanayake has spoken publicly about the nexus between organised crime, drug trafficking, money laundering and politics, and has challenged political parties to take action against members who maintain links with criminal networks. That willingness to confront organised crime gives the government a credibility that previous governments lacked. But integrity by itself is not enough. Honest intentions must be matched by administrative competence and political will. A government that seeks to change the system must demonstrate that it can reform and manage the institutions of the state more effectively than those who came before it. The Negombo tragedy suggests that this remains a major challenge.

The government’s greatest asset remains the trust that the public has placed in its sincerity. Unlike many previous governments, it is not burdened by allegations of protecting organised crime or profiting from corruption. That gives it a unique opportunity to undertake reforms that others could not credibly pursue. But it must not rest on its laurels in the belief it is superior to the rest. The Negombo Prison tragedy should become the catalyst for implementing the wider programme of reform promised in the election manifesto. Prison reform cannot be viewed in isolation. It is part of the broader commitment to change the system, strengthen public institutions and ensure that the state serves the people with competence as well as integrity. The reforms promised to rice farmers, cattle herders, plantation communities, victims of past human rights violations and all those who looked to the government for a new beginning deserve the same sense of urgency. Other priorities cannot justify postponing the structural changes that the NPP promised and the country has waited for decades.

by Jehan Perera

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Chandi: The one-tusked rebel who defied captivity and became a symbol of Sri Lanka’s wild spirit

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The story of Chandi (T081), the legendary one-tusked elephant of Galgamuwa, is not merely the tale of a wild tusker. It is the remarkable chronicle of an animal whose lifelong struggle for freedom challenged conventional wildlife management, captivated conservationists and villagers alike, and ultimately became one of the most inspiring chapters in Sri Lanka’s wildlife history.

Known affectionately as “Chandi”—a Sinhala name signifying courage, toughness and fearlessness—the iconic tusker earned his place among the country’s most celebrated wild elephants through sheer determination rather than physical grandeur. Born with only one tusk, he repeatedly demonstrated that true strength lies not in appearance but in resilience.

Wildlife photographer and conservationist Chandika Lakmal, founder of Wild Tuskers of Sri Lanka, believes Chandi’s life offers valuable lessons for wildlife conservation and the management of human-elephant conflict.

“Chandi was much more than an elephant.

He became the embodiment of freedom. Every chapter of his life reflected an extraordinary determination to return to the forests where he was born. He showed us that elephants possess deep memories and emotional connections to their homeland that cannot simply be erased through translocation.”

Lakmal said Chandi’s story deserves to be preserved not only as wildlife history but also as a reminder that conservation strategies must be guided by science and compassion.

Unlike most Sri Lankan tuskers, Chandi possessed only his right tusk after being born without the other. Yet that single tusk became an extraordinary tool in his battle against electric fences and other barriers erected across his traditional range.

For decades, Chandi roamed the forests and agricultural landscapes surrounding Galgamuwa, including Mudiyannegama, Ehatuwewa, Kaduru Wewa and Siyambalangamuwa. As cultivation expanded and natural habitats became increasingly fragmented, his encounters with people became more frequent.

Authorities first captured him around 2009 and transported him nearly 200 kilometres away to the Somawathiya National Park in an attempt to reduce conflict between villagers and wildlife.

Many believed the relocation marked the end of Chandi’s association with Galgamuwa.

They were mistaken.

Displaying one of the most extraordinary examples of elephant navigation recorded in Sri Lanka, Chandi travelled through unfamiliar forests and settlements before eventually finding his way back to his birthplace.

“His return astonished everyone,” Lakmal recalled. “Very few animals could accomplish such a journey. Chandi demonstrated the incredible navigational abilities of elephants and their unwavering attachment to familiar landscapes.”

Years later, renewed crop-raiding incidents resulted in another decision to remove him from his home.

This time, he was sent to the Horowpathana Elephant Holding Ground, where elephants considered troublesome are kept under confinement.

For many wildlife observers, Horowpathana represented a final destination.

Numerous elephants transferred there had struggled to adapt to restricted movement and limited access to natural feeding grounds.

Few expected Chandi ever to return.

Yet the fearless tusker once again surprised the nation.

He escaped.

Breaking through barriers that were believed to be secure, Chandi returned to Galgamuwa, reclaiming the forests that had shaped his life.

His remarkable escape became one of the most talked-about wildlife stories in Sri Lanka.

As Chandi aged, deteriorating eyesight increasingly drove him towards cultivated lands in search of food.

Concerned about renewed conflict, authorities captured him once more around 2018 and transferred him back to Horowpathana.

This time, however, every conceivable measure had been taken to prevent another escape.

Massive reinforced concrete pillars were embedded deep underground. Heavy steel cables linked the posts while multiple rows of electric fencing surrounded the enclosure. Steel spikes were fixed atop the pillars.

It was considered escape-proof.

Nevertheless, within months Chandi once again appeared in Galgamuwa.

To this day, nobody knows exactly how he managed to escape.

“That second escape has become one of the greatest mysteries in Sri Lanka’s wildlife history,” Lakmal said. “Despite all the engineering, Chandi proved once again that the desire for freedom can never be underestimated.”

Lakmal believes Chandi’s repeated returns challenged long-held assumptions about elephant translocation.

“His life clearly demonstrated that moving elephants away from their traditional home ranges is not always an effective long-term solution. Many elephants attempt to return, sometimes travelling hundreds of kilometres and creating even greater risks for themselves and people.”

In his twilight years, Chandi became noticeably calmer.

Poor eyesight reduced his movements, and instead of covering extensive distances he remained within a relatively small range around Galgamuwa.

Villagers frequently encountered him standing quietly in reservoirs, resting beneath trees or walking peacefully along rural roads.

Despite his formidable reputation from earlier years, he rarely displayed aggression toward people.

His calm demeanour transformed him into one of Sri Lanka’s favourite photographic subjects.

Wildlife enthusiasts travelled long distances simply to witness the legendary one-tusked giant.

According to Lakmal, Chandi developed an almost mythical status among elephant lovers.

“People admired him because he represented resilience.

He survived repeated captures, difficult relocations and confinement, yet never surrendered. His determination inspired thousands who followed his story.”

Local folklore added another colourful chapter to Chandi’s reputation.

Villagers often joked that the giant tusker occasionally developed a taste for “goda”, the illicit liquor brewed near remote village tanks.

Whether fact or folklore, the tale only strengthened his legendary status among local communities.

Towards the end of 2023, proposals surfaced once again to relocate Chandi, this time to Maduru Oya.

The proposal was met with strong opposition from conservationists, wildlife photographers and local residents.

Many argued that after spending a lifetime defending his homeland, Chandi deserved the dignity of living out his final years where he belonged.

Fortunately, the relocation never took place.

Instead, Chandi remained in Galgamuwa until the end.

His final battle came not against humans but against nature itself.

In late 2024, he suffered fatal injuries during a confrontation with another dominant tusker, Ratta (T079), near Kaduru Wewa.

He was believed to have been approximately 55 years old.

His death marked the end of an extraordinary life that had captured the imagination of wildlife lovers across Sri Lanka.

Lakmal says Chandi’s greatest legacy extends far beyond his individual story.

“Future generations should remember Chandi as the elephant who repeatedly chose freedom over captivity. His life teaches us that conservation is not simply about fencing animals or relocating them.

It is about understanding their behaviour, respecting their natural movements and protecting the landscapes that sustain them.”

He added that Sri Lanka’s escalating human-elephant conflict requires more scientific planning, habitat restoration and landscape-level conservation rather than relying solely on translocation.

For many conservationists, Chandi will forever remain one of the greatest symbols of the island’s wild heritage—a fearless survivor whose determination inspired a nation.

His story is ultimately one of resilience, belonging and freedom.

Long after his footprints have faded from the dusty roads of Galgamuwa, the legend of Chandi—the one-tusked rebel who refused to surrender his homeland—will continue to echo through Sri Lanka’s forests, reminding future generations that the spirit of the wild cannot easily be confined.

By Ifham Nizam

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Rethinking retirement ages: A case for judicial and public sector reform

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The current debate on increasing the retirement age of judges has attracted considerable public attention. While some people support the proposal as a means of retaining experienced members of the judiciary, others argue that extending the tenure of senior judges would unfairly delay promotional opportunities for younger judges.

This argument, though frequently repeated, overlooks a far more important question. The issue is not whether promotions will be delayed. The real question is whether Sri Lanka should deprive itself of the services of highly experienced professionals simply because they have reached a predetermined age.

The judiciary exists to serve the people, not to provide a career ladder for judges. Every decision relating to judicial appointments and retirement must therefore be guided by one overriding principle – the public interest.

Sri Lanka currently requires Supreme Court judges to retire at the age of sixty-five, Court of Appeal judges at sixty-three, High Court judges at sixty-one and Magistrates and District Judges at sixty. These retirement ages are considerably lower than those found in many developed countries.

Canada requires federally appointed judges to retire at seventy-five. Australia, New Zealand, Belgium, Denmark, Ireland, Japan, the Netherlands, Norway and Spain generally prescribe retirement at seventy, while Germany and France have retirement ages around sixty-seven. The United States goes even further by granting life tenure to federal judges, including Supreme Court Justices, subject to good behaviour.

These countries have adopted such policies because they recognise a simple reality. The value of a judge lies not in physical strength but in wisdom, maturity, independence, integrity and decades of accumulated legal knowledge.

Unlike many occupations where physical ability may decline with age, judicial competence often improves through experience. Every constitutional interpretation, every commercial dispute and every criminal appeal benefits from the judgment of individuals who have spent decades applying the law under diverse and often difficult circumstances.

Life expectancy has increased significantly throughout the world. Advances in healthcare have enabled many professionals to remain mentally alert and physically active well into their seventies. Society has readily accepted this reality. Distinguished surgeons continue to perform complex operations. University professors continue to teach and conduct research. Engineers continue to supervise major infrastructure projects. Senior accountants, architects and consultants continue to advise governments and multinational corporations. There is no convincing reason why judges, whose principal contribution is intellectual rather than physical, should be treated differently.

Opponents of extending judicial retirement often argue that doing so would reduce promotional opportunities for younger judges. While understandable from an individual career perspective, this argument should not determine national policy.

Promotions are not an end in themselves. Nor should vacancies be artificially created merely to accelerate career advancement.

No successful private corporation dismisses its most capable Chief Executive Officer simply because younger executives are waiting for promotion. Universities do not ask distinguished professors to retire to create vacancies for lecturers. Hospitals do not remove highly respected consultants because junior doctors are ready to advance. International engineering firms do not compel their most experienced engineers to leave office solely to facilitate promotions.

The objective of every successful institution is to retain capable people for as long as they continue to perform effectively. The judiciary should be no exception.

Indeed, experienced judges provide an invaluable service beyond deciding cases. They mentor younger judges, preserve institutional memory, maintain consistency in judicial standards and uphold the traditions and independence of the courts. Their guidance helps shape the next generation of judges and contributes directly to the quality of justice delivered to the public.

Another important consideration is Sri Lanka’s substantial backlog of litigation. Delays in the disposal of cases continue to frustrate litigants and undermine public confidence in the justice system. Retaining experienced judges for a few additional years could contribute significantly to reducing these delays while ensuring continuity and stability within the courts.

Naturally, extending the retirement age should not mean automatic continuation in office. Every extension should be subject to periodic medical examinations, continued professional competence, impeccable ethical standards and satisfactory performance. Those who are no longer able to discharge their responsibilities effectively should retire regardless of age.

More importantly, this discussion should not be confined to the judiciary.

Sri Lanka should undertake a comprehensive review of retirement policies throughout the public sector.

Our country has invested enormous public resources in educating and training doctors, engineers, university academics, scientists, accountants, administrators and numerous other specialists. Many of these professionals remain exceptionally capable long after reaching the current retirement age. Yet the nation often loses their services at precisely the stage when their knowledge, judgment and experience are at their highest.

This represents not merely a loss to the individual concerned but a significant loss to the country.

The argument that senior officers should retire simply to create promotional opportunities for juniors is equally unconvincing in every sector.

Promotions should be based on merit, competence, leadership and organisational need, not merely on vacancies created by compulsory retirement.

A well-managed institution should be capable of retaining outstanding senior professionals while simultaneously identifying, training and promoting younger officers on merit. Effective succession planning, mentoring and professional development are the proper solutions, not the premature loss of experience.

Public institutions exist to serve the people. Their primary responsibility is to deliver efficient, impartial and professional services. Every policy decision relating to retirement should therefore be assessed according to one simple question: Will this improve the quality of public service?

If the answer is yes, reform should be seriously considered.

If Sri Lanka wishes to strengthen its institutions and improve governance, it must make better use of one of its greatest national assets—the experience of its senior professionals.

Retirement should no longer be viewed simply as a matter of chronological age. It should increasingly be based on continued competence, medical fitness, integrity and the ability to contribute meaningfully to national development.

Such a policy would strengthen the judiciary, improve public administration, preserve invaluable institutional knowledge and ensure that Sri Lanka benefits fully from the wisdom and experience of those who have dedicated their lives to public service.

The objective should never be to retain people because they are senior.

The objective should be to retain the best people for as long as they remain capable of serving the nation with distinction.

by K. R. Pushparanjan

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