Privatisation of public data: Sri Lanka...

Data collected and held by government agencies is a valuable ‘public asset’. Properly utilised, such data can help the private and public sector better contribute to Sri Lanka’s economic growth. These datasets are compiled at public expense, using public funds. The justification for doing so is that the data can be deployed to serve the public interest. Providing information to guide economic success is perhaps the most important public interest that can be served by many such data sets at the present time.

This Insight shows that this public interest of promoting the economic success of Sri Lanka is currently being undermined by an extremely narrow set of private interests held by government officials attempting to profit personally from the data. These narrow interests are, unfortunately, being fostered by the incentive policies of the Finance Ministry.

The privatisation of public data by government officers in Sri Lanka is facilitated by an incentive scheme set up by the Finance Ministry. This Insight evaluates these incentive schemes and finds that they lead to adverse outcomes, which suggest that the schemes should be revisited and changed.

‘Public good’ case for making data public

The economic theory of public goods explains why it is important for the government to use tax money to create certain assets and make them available freely. The main criteria for making an asset freely available is the condition of ‘non-rivalry’ – that is, when the use and benefit of it by one person does not take away the ability for another person to use it and benefit from it as well. Simple examples are streetlights and public parks.

Data sets compiled by the government are very much a public good. Attempting to disseminate them, as if they were a private good, is like attempting to charge drivers for streetlights – it does not make social or economic sense. The social/ economic benefit of a public good is measured by its usage, not by the revenue it generates because the marginal cost of added benefit is effectively zero.

Therefore, for public goods, the basic condition for economic optimisation (i.e. producing up to the point where marginal benefit equals marginal cost) means maximising beneficial usage at zero cost – that is, making it accessible freely and easily to achieve as high a usage as possible.

Examples of such ‘public good’ data sets include statistics on health, education, agriculture, international trade, population and employment. Access to such data is vital to design evidence-based policies, help those in the productive sectors of the economy make better decisions, induce public research on economic and social issues and improve overall social and economic outcomes in the country.

The way to make datasets function as a public good is to make them available as easily and freely as possible. In Sri Lanka, government agencies have failed to apply the economic theory of public goods to public data sets. This Insight shows the gravity of the problem, by taking the data dissemination policy of Sri Lanka Customs (SLC) as a case study.

SLC and failure to see data as a public good

SLC is the primary organisation that collects and holds export and import statistics on Sri Lanka. The SLC data dissemination policy is currently at odds with seeing the data it collects as a public good. It is not easy to find or access updated export and import data and it is not free.

This failure to treat data as a public good also makes Sri Lanka a laggard on the global stage. Most countries in the world and even most in South Asia have moved ahead in recognising the economic case for making trade data freely and easily accessible as a public good, while Sri Lanka has lagged behind. Some of the benefits of trade data in supporting Sri Lanka’s economic success are set out in Box 1.

In comparison to regional and global trends, SLC’S policy on trade

Sri Lanka lags behind in updating trade statistics of the country in these international databases. For example, Sri Lanka’s annual trade data in COMTRADE database is outdated by three years as of February 2020. In comparison, 41 countries/ territories (including neighbouring countries like India and Pakistan) have annual data up to 2020. Monthly data for Sri Lanka as of February 2021 is outdated by 107 months. By contrast, 54 countries have monthly data up to at least October 2020 and this includes India and Pakistan.

Second, Sri Lanka is the only South Asian country that is failing to provide data free of charge, online. That is, even Afghanistan is more advanced than Sri Lanka in this regard.

Accessing trade data from SLC still requires people to physically visit the premises and make a cash payment to obtain the soft copy of the trade data. As a result of this practice, as of end-2019, Sri Lanka remained the only South Asian country that did not provide online access to trade data free of charge.

It is only with the Export Development Board (EDB) coming greater benefit of having free online access to the data generated using public funds.

Starting point might be a selfperpetuating bad idea

There is much sympathy in government for fee-based provision of data, on the basis that the government departments would like to depend less on the treasury. This represents a poor understanding of the economic calculation, which is a bad idea.

One of the fundamental purposes of governments is to generate revenue through general progressive taxation to provide public goods without user fees. But when governments get desperate for revenue, there is a temptation to exert monopoly power over public assets and charge fees for goods that are best provided as public goods – streetlights, parks and data. This kind of practice works to undermine the economic success of a country rather than promote it. The resulting lack of economic success in turn reduces tax revenue and makes the government more desperate. It is a vicious cycle. It is a familiar problem that bad ideas create vicious