Features
A massive mill becomes a mini-city
by Sumi Moonesinghe narrated to Savitri Rodrigo
Believing strongly in the Premadasa ideology of sustainable development long before it became a buzzword, I began working even more closely with him once he was elected President. I had erected a statue in memory of Dr. C W W Kannangara, the Father of Free Education in Sri Lanka, in Matugama. It was Kannangara, as the Minister of Education in the State Council in the 1940s, who introduced extensive and very progressive reforms to the education system which included universal education. I was one who had benefited from his free education policy from my primary and secondary schooling, all the way until earning my degree at a prestigious university. This statue was a debt of gratitude to him.
I had been working on the Trincomalee Development Plan, my pet subject then and now. When the statue was ready in April 1993, I invited President Premadasa to unveil it and also presented him with the Plan. Having read the plan, he summoned me for a meeting on Monday morning at 9 am at his home, Sucharita. Chairing the meeting, he introduced me to everyone in the room and then asked his long-time confidante and Secretary R. Paskaralingam to continue the meeting, while he left to administer his political agenda.
The President’s methodology in running the country was to leave the administration of the Government to the bureaucracy. He never interfered with daily operations. Paskaralingam was the perfect foil for the President’s strategy as, having bees a civil servant all his life, he was well versed in administrative procedures and was known to take immediate decisions.
Just before leaving the meeting, the President told Paskaralingam to appoint me Chairman of the National Development Bank (NDB). NDB was a State-owned development finance institution founded in 1979 but changed course in early 199L The bank was privatized and debuted on the Colombo Stock Exchange in February 1993 with a very successful IPO. It was while NDB was on the cusp of this change that President Premadasa wanted me appointed as the bank’s Chairman.
However, prior to my appointment being made official, President Premadasa was killed on May 1. With the various administrative changes that ensued, I was instead appointed a Director of the Board. The CEO of NDB was Ranjit Fernando – who had been at the bank from its inception in 1979 – and by 1989, had gained a seat on the Board of Directors as well. Into our board formula was added a mix of Government and private sector experts. From the private sector were industry captains S K Wickremesinghe, Sri Nagendra, Hemaka Amarasuriya and Ravi Thambiayah, and Central Banker Manik Nagahawatte and Treasury Secretary Baku Mahadeva representing the Government. As is evident, I was once more the only woman in that male-dominated boardroom.
It was at an NDB Board meeting that I first met Dhammika Perera, who through the years built one of the largest business conglomerates in Sri Lanka, and is one of the richest men in country today. NDB was one of his initial forays into Sri Lanka’s corporate boardroom.
While the IPO had been successful, sometime in 1993, the NDB share dropped to Rs. 45 and Dhammika approached General Manager of Seylan Bank Rohini Nanayakkara with a request for a loan to purchase 10% shareholding in NDB. The loan was granted and as a result, he became NDB’s largest shareholder. However, despite being the single largest shareholder, there was no move to appoint him to the Board. I found this unfair and vociferously campaigned to get him a seat on the NDB Board. It was an uphill task fighting the old boy’s club but I appealed to the principle of being just and fair and Dhammika was appointed to the Board.
When he arrived for his first Board meeting, I went up to the door, welcomed him and gave him a seat next to me. After the meeting, I invited him home for a meal and on the way, relived the time he came to Colombo as a very poor young man. “There were days I had no money to buy lunch and I walked miles because I had no bus fare.” We struck a chord because his hard life and his hard work to climb the ladder, resonated with me.
We shared stories and developed a cordial friendship that lasted far beyond our days at NDB. A very smart man who absorbed information like a sponge, he read every single board paper before he came for a meeting, knew the list of debtors by heart and would come up with practical solutions for various problems. Many years later, when he moved to his home at Albert Crescent, he telephoned me and said, “I am now your neighbour. Come over for dinner.” Anarkali and I joined his wife and three daughters for dinner one evening.
Dhammika is a man with no airs, speaks his mind and is a wealth of information. I was very impressed by him, because he is a person who, though amassing plenty of wealth, knows the value of education and hasn’t forgotten what it’s like to go hungry. He has worked on that promise he made to himself to make education accessible to everyone, very similar to Kannangara’s policy, by adding various initiatives into the education system. DP Education which he launched as an educational television channel is one such.
Although I was occupied with various projects, I did have bad days when I realized that Susil was no more by my side. Sri Lanka held many memories for me and my escape route was London. After our separation, I spent an inordinate amount of time in that city, because it was my second home, embracing me with a familiarity that made me feel secure.
Having relied on Susil for nearly every major decision in my life, the shock of the separation and consequences had sapped some of my confidence. Ranil Wickremesinghe, who was by then Prime Minister and knew me from J R’s days, may have had some intuition about how I vacillated from good days to bad days, and that my confidence teetered more often than not. He also knew my capabilities and my educational background. He asked me to take over as Chairman of the Ceylon Electricity Board.
I’ll always be grateful to Ranil for the offer because it really did give me a confidence boost.
I was well qualified for the job, there was no doubt about it and the engineers at the CEB wanted me to take on the post of Chair. The CEB was a loss-making entity and I was very confident that I could turn it around. I didn’t waste a day after I was offered the job and started reading up the various plans and papers to get myself up to speed.
In fact, I even met the Country Head of the IMF at the time, Nadeem Ul Haq, and had some informal discussions with the trade unions about turning the CEB around. The plan was to connect the Indian and Sri Lankan grids, with funding of USD 75 million from the IMF. We would purchase electricity during peak hours, but sell our excess to India. Plans were in motion and I assumed my appointment was a done deal.
However, what I didn’t realize was that cogs had begun turning elsewhere to halt my appointment. The General Manager of the CEB at the time, who was a batchmate of mine in the university, was not in favour of having me as his boss. There was no reasoning, just that he didn’t want me there. I didn’t know about this spoke in the wheel and was readying to sign on the dotted line no sooner I returned from my holiday to Prague and Budapest with Rohini Nanayakkara.
It was Karu Jayasuriya who was tasked with confirming my appointment but when I did meet Karu on my return, he explained the conflict that had arisen. I was truly surprised because I didn’t think any of my batchmates would have a problem having me there. Karu made excuses for the GM’s inanity and I walked away thinking, “What a shame. The country could really benefit if this plan was brought into play.”
Ranil had obviously been informed of the developments because a few days later, his close friend Malik Samarawickrama telephoned me. “The Prime Minister wants you to take over the chairmanship of Bank of Ceylon,” he said. I wondered if this would be yet another CEB fiasco and asked him so, to which he replied that the appointment was already official.
I had been on the Board of NDB since 1993, something I thoroughly enjoyed and reluctantly resigned from that due to a conflict of interest. In December 2002, I took over as Chairman of Bank of Ceylon reporting to President’s Counsel K N Choksy who was Finance Minister. When I met the Minister, he made one thing clear. “Mrs. Moonesinghe, this is a non-executive post but I want you in the bank full time, which means the whole day. I need someone to be hands-on.”
As was my habit, I always did my homework on any undertaking. When I walked into my office at BOC, I had already studied the workings of the largest State bank in the country with its 525 branches. There were anomalies I wanted to rectify. The first was efficiency. I commissioned a tender to network all 525 branches around the country. I wanted the whole process to be open and transparent.
After the bids were called, I shared all the proposals with each bidder. I was also aware of how tenders worked, having been in the tender business most of my life. I let it be known to the bidders that while the software was cheap, companies charged high for ownership and maintenance. So the evaluation process had to be done with great clarity. The tender was awarded to Fiserv Inc, a Fortune 500 company renowned for their cutting-edge technology in financial services.
When the minutes of the previous meeting were read at my first Board meeting, the minutes stated that the BOC non-performing loans from the Government amounted to a considerable Rs. 13 billion. After some discussion, the Board had decided to sue the Government. I was quick to point out however that this would be a futile exercise.
“How can we sue the owner?” I asked. “The Government owns the BOC.” But I also had a solution. “The Wellawatte Spinning & Weaving Mills land is lying abandoned and has not been used for 20 years. Shall we try and recoup our money using that?” I had a multi-pronged plan.
I spoke with Prime Minister Ranil Wickremesinghe and told him about the Rs. 13 billion NPL in our portfolio owed to us by the Government, as well as the Rs. 1.5 billion which the Shipping Corporation owed BOC. I suggested that the Spinning & Weaving Mills land be handed over to BOC in lieu of the Rs. 1.5 billion. We had already done the valuation of the land and although it was worth only Rs. 750 million, I surmised it was something better than nothing. He gave the green light and I put the next phase of my plan into place.
I wanted to develop the land, which meant I needed a real estate developer. From our days in Singapore, I had always kept abreast of that country’s developments and an individual who continually showed up on my radar was real estate developer Tao Shing Pee or S P Tao as he was known. I had followed his career primarily because he was a keen investor in Sri Lanka. S P Tao is internationally renowned in real estate development and founded Singapore’s Shing Kwan Group.
When the Singapore government encouraged Singaporeans to invest outside of their country, S P Tao was the only investor who saw potential in Sri Lanka. He is famously known to have said that he looked for two ingredients in the countries he invested in: “The rule of law applies and there is freedom to express oneself. And in Sri Lanka that is the greatest sovereign value.” This was S P Tao’s rationale for setting his investment roots down in Sri Lanka way back in the 1960s when he shipped rice from Burma to Sri Lanka, fell in love with Sri Lanka and made his first million in US Dollars, in that order.
He also had a 25% stake in the Ceylon Shipping Corporation. Unfortunately, Finance Minister N M Perera in Mrs. Bandaranaike’s Cabinet told Tao he was not suited to the workings of a socialist set up. Tao didn’t hesitate. He got rid of his 25% stake and left Sri Lanka for a while.
On President Premadasa’s diktat, his trusted emissary Paskaralingam was dispatched to Singapore to persuade Tao to return. Tao’s love for Sri Lanka was so strong that despite a raging war, he needed little persuasion. Shin Kwan acquired Overseas Realty Ceylon and began the development of the World Trade Center in Fort.
S P Tao was also a customer of BOC. He had placed USD 6 million, his family’s cash assets, in a fixed deposit at Bank of Ceylon which was earning a very high interest rate. The Bank had structured an RCCPS loan — Redeemable Convertible Cumulative Preferential Shares against that FD – which was a first for Sri Lanka at the time. The structure was such that if there was no capital repayment or interest for the tenure of this instrument and the loan remained unpaid on maturity, BOC would receive ORCL preference shares, valued on the day of conversion. When I checked, the share price was less than Rs. 5 and ORCL owned 95% of the shares. In the larger scheme of things, the RCCPS loan was useless to BOC.
I asked the General Manager to arrange a meeting with S P Tao, who flew down from Singapore for the meeting with me. I introduced myself and with my usual forthrightness said, “Mr. Tao, I’m a businesswoman; not a banker. I don’t want your stocks and shares. Your loan is a distressed loan and it is non-performing, which means we can take over your property. But I’m not going to do that. My inquiries reveal that you are selling your floors at the World Trade Center at USD 160 per square foot. So here’s how we’ll move forward.” I told him I want the floors at the distressed value of half the price – USD 80 per square foot.
The amazing characteristic of great business leaders is they take calculated risks, which was evident in how Tao had invested in Sri Lanka. These leaders also know when to cut their losses and make a deal to trigger a win-win formula. He agreed to my price of USD 80 per square foot and BOC took over eight floors of the WTC in lieu of the loan. We rented it out to the Board of Investment. I also had plans to open a Premier Centre for BOC on the ground floor.
I knew S P Tao was a man I could work with and it wasn’t just the floors at the World Trade Center that I wanted. It was now time to set the next phase of my plan in motion. I telephoned him again, this time with an investment prospect for the Wellawatte Spinning & Weaving Mills land which was an idle asset, unused for over 20 years and not even used as a car park.
“The BOC has 18 acres of undeveloped land in an excellent location in Wellawatte,” I said. “Would you like to take it over for a mixed development project like those projects in Singapore? Sri Lanka doesn’t have any project resembling one and yours will be the first.”
I had does my homework and knew the visibility Tao had in property development in Singapore, specifically having developed famous hotel complexes including the Marina Mandarin and Pan Pacific. This was his strength. He accompanied me to see the land and once he saw the location, I knew he was in and thus began the genesis of Havelock City.
Unfortunately, my tenure at BOC ended rather abruptly. The uneasy alliance between President Chandrika Kumaratunga and Prime Minister Rand Wickremesinghe’s government ended in 2004 when Chandrika hijacked the government with JVP support, resulting in all Ranil’s appointees vacating their official posts.
However, I learned much from my discussions with S P Tao a visionary human being whose thought process was way ahead of his time. Even though he left an indelible presence in the landscape of Colombo with the World Trade Center and Havelock City, his business path in Sri Lanka was not easy, continually fraught with challenges. In 1997, he had weathered his World Trade Center towers being blasted by two truck bombs detonated by the LTTE, but the quality of workmanship and construction was proven when the towers showed minimal structural damage.
Much later, long after my tenure as Chairman of BOC, he also had issues with the subsequent management of BOC which owned 40% of Havelock City. Continued spokes resulted in the project being unduly delayed. As a last resort, he acquired the BOC shares so he wouldn’t be encumbered with continuing problems, although that buy-out gave BOC a hefty profit, way above market value.
He wrote a letter to me once, stating, “Sumi, had you remained the Chairperson of BOC, I would have completed the entire project in three years. Instead it took over a decade to complete.”
An investor of lesser grit would not have remained in Sri Lanka but he did. Such was his loyalty and love for this island. China, Hong Kong and Singapore had so much more to offer with an enabling policy and environment. In fact, Tao’s first foray into China was in Nanjing, the capital city of China’s Juangsu province where he developed the 800-room Jinling Hotel, and this city conferred on him the status of Honorary Citizen of Nanjing for his business achievements and philanthropic initiatives. It was also in this city that Tao spent his last days before his demise on August 24, 2021. He was 105 years old.
My heart was filled with sorrow when I heard of him passing away. Besides being the Chairman of Shing Kwan Group at the time of his death, he was also the founder and patron of Jiangsu Tao Shing Pee Education Foundation and Jiangsu Charity Foundation. This grand old man had lived his life to the fullest, doing what he loved best and being in places he loved, dark times notwithstanding. I felt truly blessed to have known a man of his stature in my lifetime, a man who was a true friend to Sri Lanka, who took a gamble on a war-ravaged underperforming country and created wealth and iconic real estate value.
by Dr Gotabhya Ranasinghe
Senior Consultant Cardiologist
National Hospital Sri Lanka
When we sought a meeting with Hon Dr. Ramesh Pathirana, Minister of Health, he graciously cleared his busy schedule to accommodate us. Renowned for his attentive listening and deep understanding, Minister Pathirana is dedicated to advancing the health sector. His openness and transparency exemplify the qualities of an exemplary politician and minister.
Dr. Palitha Mahipala, the current Health Secretary, demonstrates both commendable enthusiasm and unwavering support. This combination of attributes makes him a highly compatible colleague for the esteemed Minister of Health.
Our discussion centered on a project that has been in the works for the past 30 years, one that no other minister had managed to advance.
Minister Pathirana, however, recognized the project’s significance and its potential to revolutionize care for heart patients.
The project involves the construction of a state-of-the-art facility at the premises of the National Hospital Colombo. The project’s location within the premises of the National Hospital underscores its importance and relevance to the healthcare infrastructure of the nation.
This facility will include a cardiology building and a tertiary care center, equipped with the latest technology to handle and treat all types of heart-related conditions and surgeries.
Securing funding was a major milestone for this initiative. Minister Pathirana successfully obtained approval for a $40 billion loan from the Asian Development Bank. With the funding in place, the foundation stone is scheduled to be laid in September this year, and construction will begin in January 2025.
This project guarantees a consistent and uninterrupted supply of stents and related medications for heart patients. As a result, patients will have timely access to essential medical supplies during their treatment and recovery. By securing these critical resources, the project aims to enhance patient outcomes, minimize treatment delays, and maintain the highest standards of cardiac care.
Upon its fruition, this monumental building will serve as a beacon of hope and healing, symbolizing the unwavering dedication to improving patient outcomes and fostering a healthier society.We anticipate a future marked by significant progress and positive outcomes in Sri Lanka’s cardiovascular treatment landscape within the foreseeable timeframe.
by Fr. Emmanuel Fernando, OMI
Jesuit Fr. Aloysius Pieris (affectionately called Fr. Aloy) celebrated his 90th birthday on April 9, 2024 and I, as the editor of our Oblate Journal, THE MISSIONARY OBLATE had gone to press by that time. Immediately I decided to publish an article, appreciating the untiring selfless services he continues to offer for inter-Faith dialogue, the renewal of the Catholic Church, his concern for the poor and the suffering Sri Lankan masses and to me, the present writer.
It was in 1988, when I was appointed Director of the Oblate Scholastics at Ampitiya by the then Oblate Provincial Fr. Anselm Silva, that I came to know Fr. Aloy more closely. Knowing well his expertise in matters spiritual, theological, Indological and pastoral, and with the collaborative spirit of my companion-formators, our Oblate Scholastics were sent to Tulana, the Research and Encounter Centre, Kelaniya, of which he is the Founder-Director, for ‘exposure-programmes’ on matters spiritual, biblical, theological and pastoral. Some of these dimensions according to my view and that of my companion-formators, were not available at the National Seminary, Ampitiya.
Ever since that time, our Oblate formators/ accompaniers at the Oblate Scholasticate, Ampitiya , have continued to send our Oblate Scholastics to Tulana Centre for deepening their insights and convictions regarding matters needed to serve the people in today’s context. Fr. Aloy also had tried very enthusiastically with the Oblate team headed by Frs. Oswald Firth and Clement Waidyasekara to begin a Theologate, directed by the Religious Congregations in Sri Lanka, for the contextual formation/ accompaniment of their members. It should very well be a desired goal of the Leaders / Provincials of the Religious Congregations.
Besides being a formator/accompanier at the Oblate Scholasticate, I was entrusted also with the task of editing and publishing our Oblate journal, ‘The Missionary Oblate’. To maintain the quality of the journal I continue to depend on Fr. Aloy for his thought-provoking and stimulating articles on Biblical Spirituality, Biblical Theology and Ecclesiology. I am very grateful to him for his generous assistance. Of late, his writings on renewal of the Church, initiated by Pope St. John XX111 and continued by Pope Francis through the Synodal path, published in our Oblate journal, enable our readers to focus their attention also on the needed renewal in the Catholic Church in Sri Lanka. Fr. Aloy appreciated very much the Synodal path adopted by the Jesuit Pope Francis for the renewal of the Church, rooted very much on prayerful discernment. In my Religious and presbyteral life, Fr.Aloy continues to be my spiritual animator / guide and ongoing formator / acccompanier.
Fr. Aloysius Pieris, BA Hons (Lond), LPh (SHC, India), STL (PFT, Naples), PhD (SLU/VC), ThD (Tilburg), D.Ltt (KU), has been one of the eminent Asian theologians well recognized internationally and one who has lectured and held visiting chairs in many universities both in the West and in the East. Many members of Religious Congregations from Asian countries have benefited from his lectures and guidance in the East Asian Pastoral Institute (EAPI) in Manila, Philippines. He had been a Theologian consulted by the Federation of Asian Bishops’ Conferences for many years. During his professorship at the Gregorian University in Rome, he was called to be a member of a special group of advisers on other religions consulted by Pope Paul VI.
Fr. Aloy is the author of more than 30 books and well over 500 Research Papers. Some of his books and articles have been translated and published in several countries. Among those books, one can find the following: 1) The Genesis of an Asian Theology of Liberation (An Autobiographical Excursus on the Art of Theologising in Asia, 2) An Asian Theology of Liberation, 3) Providential Timeliness of Vatican 11 (a long-overdue halt to a scandalous millennium, 4) Give Vatican 11 a chance, 5) Leadership in the Church, 6) Relishing our faith in working for justice (Themes for study and discussion), 7) A Message meant mainly, not exclusively for Jesuits (Background information necessary for helping Francis renew the Church), 8) Lent in Lanka (Reflections and Resolutions, 9) Love meets wisdom (A Christian Experience of Buddhism, 10) Fire and Water 11) God’s Reign for God’s poor, 12) Our Unhiddden Agenda (How we Jesuits work, pray and form our men). He is also the Editor of two journals, Vagdevi, Journal of Religious Reflection and Dialogue, New Series.
Fr. Aloy has a BA in Pali and Sanskrit from the University of London and a Ph.D in Buddhist Philosophy from the University of Sri Lankan, Vidyodaya Campus. On Nov. 23, 2019, he was awarded the prestigious honorary Doctorate of Literature (D.Litt) by the Chancellor of the University of Kelaniya, the Most Venerable Welamitiyawe Dharmakirthi Sri Kusala Dhamma Thera.
Fr. Aloy continues to be a promoter of Gospel values and virtues. Justice as a constitutive dimension of love and social concern for the downtrodden masses are very much noted in his life and work. He had very much appreciated the commitment of the late Fr. Joseph (Joe) Fernando, the National Director of the Social and Economic Centre (SEDEC) for the poor.
In Sri Lanka, a few religious Congregations – the Good Shepherd Sisters, the Christian Brothers, the Marist Brothers and the Oblates – have invited him to animate their members especially during their Provincial Congresses, Chapters and International Conferences. The mainline Christian Churches also have sought his advice and followed his seminars. I, for one, regret very much, that the Sri Lankan authorities of the Catholic Church –today’s Hierarchy—- have not sought Fr.
Aloy’s expertise for the renewal of the Catholic Church in Sri Lanka and thus have not benefited from the immense store of wisdom and insight that he can offer to our local Church while the Sri Lankan bishops who governed the Catholic church in the immediate aftermath of the Second Vatican Council (Edmund Fernando OMI, Anthony de Saram, Leo Nanayakkara OSB, Frank Marcus Fernando, Paul Perera,) visited him and consulted him on many matters. Among the Tamil Bishops, Bishop Rayappu Joseph was keeping close contact with him and Bishop J. Deogupillai hosted him and his team visiting him after the horrible Black July massacre of Tamils.
Sri Lanka-Singapore Free Trade Agreement
By Gomi Senadhira
senadhiragomi@gmail.com
“You might tell fairy tales, but the progress of a country cannot be achieved through such narratives. A country cannot be developed by making false promises. The country moved backward because of the electoral promises made by political parties throughout time. We have witnessed that the ultimate result of this is the country becoming bankrupt. Unfortunately, many segments of the population have not come to realize this yet.” – President Ranil Wickremesinghe, 2024 Budget speech
Any Sri Lankan would agree with the above words of President Wickremesinghe on the false promises our politicians and officials make and the fairy tales they narrate which bankrupted this country. So, to understand this, let’s look at one such fairy tale with lots of false promises; Ranil Wickremesinghe’s greatest achievement in the area of international trade and investment promotion during the Yahapalana period, Sri Lanka-Singapore Free Trade Agreement (SLSFTA).
It is appropriate and timely to do it now as Finance Minister Wickremesinghe has just presented to parliament a bill on the National Policy on Economic Transformation which includes the establishment of an Office for International Trade and the Sri Lanka Institute of Economics and International Trade.
Was SLSFTA a “Cleverly negotiated Free Trade Agreement” as stated by the (former) Minister of Development Strategies and International Trade Malik Samarawickrama during the Parliamentary Debate on the SLSFTA in July 2018, or a colossal blunder covered up with lies, false promises, and fairy tales? After SLSFTA was signed there were a number of fairy tales published on this agreement by the Ministry of Development Strategies and International, Institute of Policy Studies, and others.
However, for this article, I would like to limit my comments to the speech by Minister Samarawickrama during the Parliamentary Debate, and the two most important areas in the agreement which were covered up with lies, fairy tales, and false promises, namely: revenue loss for Sri Lanka and Investment from Singapore. On the other important area, “Waste products dumping” I do not want to comment here as I have written extensively on the issue.
1. The revenue loss
During the Parliamentary Debate in July 2018, Minister Samarawickrama stated “…. let me reiterate that this FTA with Singapore has been very cleverly negotiated by us…. The liberalisation programme under this FTA has been carefully designed to have the least impact on domestic industry and revenue collection. We have included all revenue sensitive items in the negative list of items which will not be subject to removal of tariff. Therefore, 97.8% revenue from Customs duty is protected. Our tariff liberalisation will take place over a period of 12-15 years! In fact, the revenue earned through tariffs on goods imported from Singapore last year was Rs. 35 billion.
The revenue loss for over the next 15 years due to the FTA is only Rs. 733 million– which when annualised, on average, is just Rs. 51 million. That is just 0.14% per year! So anyone who claims the Singapore FTA causes revenue loss to the Government cannot do basic arithmetic! Mr. Speaker, in conclusion, I call on my fellow members of this House – don’t mislead the public with baseless criticism that is not grounded in facts. Don’t look at petty politics and use these issues for your own political survival.”
I was surprised to read the minister’s speech because an article published in January 2018 in “The Straits Times“, based on information released by the Singaporean Negotiators stated, “…. With the FTA, tariff savings for Singapore exports are estimated to hit $10 million annually“.
As the annual tariff savings (that is the revenue loss for Sri Lanka) calculated by the Singaporean Negotiators, Singaporean $ 10 million (Sri Lankan rupees 1,200 million in 2018) was way above the rupees’ 733 million revenue loss for 15 years estimated by the Sri Lankan negotiators, it was clear to any observer that one of the parties to the agreement had not done the basic arithmetic!
Six years later, according to a report published by “The Morning” newspaper, speaking at the Committee on Public Finance (COPF) on 7th May 2024, Mr Samarawickrama’s chief trade negotiator K.J. Weerasinghehad had admitted “…. that forecasted revenue loss for the Government of Sri Lanka through the Singapore FTA is Rs. 450 million in 2023 and Rs. 1.3 billion in 2024.”
If these numbers are correct, as tariff liberalisation under the SLSFTA has just started, we will pass Rs 2 billion very soon. Then, the question is how Sri Lanka’s trade negotiators made such a colossal blunder. Didn’t they do their basic arithmetic? If they didn’t know how to do basic arithmetic they should have at least done their basic readings. For example, the headline of the article published in The Straits Times in January 2018 was “Singapore, Sri Lanka sign FTA, annual savings of $10m expected”.
Anyway, as Sri Lanka’s chief negotiator reiterated at the COPF meeting that “…. since 99% of the tariffs in Singapore have zero rates of duty, Sri Lanka has agreed on 80% tariff liberalisation over a period of 15 years while expecting Singapore investments to address the imbalance in trade,” let’s turn towards investment.
Investment from Singapore
In July 2018, speaking during the Parliamentary Debate on the FTA this is what Minister Malik Samarawickrama stated on investment from Singapore, “Already, thanks to this FTA, in just the past two-and-a-half months since the agreement came into effect we have received a proposal from Singapore for investment amounting to $ 14.8 billion in an oil refinery for export of petroleum products. In addition, we have proposals for a steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million), sugar refinery ($ 200 million). This adds up to more than $ 16.05 billion in the pipeline on these projects alone.
And all of these projects will create thousands of more jobs for our people. In principle approval has already been granted by the BOI and the investors are awaiting the release of land the environmental approvals to commence the project.
I request the Opposition and those with vested interests to change their narrow-minded thinking and join us to develop our country. We must always look at what is best for the whole community, not just the few who may oppose. We owe it to our people to courageously take decisions that will change their lives for the better.”
According to the media report I quoted earlier, speaking at the Committee on Public Finance (COPF) Chief Negotiator Weerasinghe has admitted that Sri Lanka was not happy with overall Singapore investments that have come in the past few years in return for the trade liberalisation under the Singapore-Sri Lanka Free Trade Agreement. He has added that between 2021 and 2023 the total investment from Singapore had been around $162 million!
What happened to those projects worth $16 billion negotiated, thanks to the SLSFTA, in just the two-and-a-half months after the agreement came into effect and approved by the BOI? I do not know about the steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million) and sugar refinery ($ 200 million).
However, story of the multibillion-dollar investment in the Petroleum Refinery unfolded in a manner that would qualify it as the best fairy tale with false promises presented by our politicians and the officials, prior to 2019 elections.
Though many Sri Lankans got to know, through the media which repeatedly highlighted a plethora of issues surrounding the project and the questionable credentials of the Singaporean investor, the construction work on the Mirrijiwela Oil Refinery along with the cement factory began on the24th of March 2019 with a bang and Minister Ranil Wickremesinghe and his ministers along with the foreign and local dignitaries laid the foundation stones.
That was few months before the 2019 Presidential elections. Inaugurating the construction work Prime Minister Ranil Wickremesinghe said the projects will create thousands of job opportunities in the area and surrounding districts.
The oil refinery, which was to be built over 200 acres of land, with the capacity to refine 200,000 barrels of crude oil per day, was to generate US$7 billion of exports and create 1,500 direct and 3,000 indirect jobs. The construction of the refinery was to be completed in 44 months. Four years later, in August 2023 the Cabinet of Ministers approved the proposal presented by President Ranil Wickremesinghe to cancel the agreement with the investors of the refinery as the project has not been implemented! Can they explain to the country how much money was wasted to produce that fairy tale?
It is obvious that the President, ministers, and officials had made huge blunders and had deliberately misled the public and the parliament on the revenue loss and potential investment from SLSFTA with fairy tales and false promises.
As the president himself said, a country cannot be developed by making false promises or with fairy tales and these false promises and fairy tales had bankrupted the country. “Unfortunately, many segments of the population have not come to realize this yet”.
(The writer, a specialist and an activist on trade and development issues . )
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