Features
Minister Perera’s plan to face forex crisis
by Chandre Dharmawaradana,
chandre.dharma@yahoo.ca
Prime Minister Ranil Wickremesinghe and President Gotabaya Rajapaksa say the situation remains grim and will become worse. Yet, the JVP leader claims that the crisis is exaggerated! He probably has no shortages as even ‘biriyani or kottu” are available from the Aragalaya?
Meanwhile, the President, finally forced to admit his mistakes, is shedding his Pohottuva political baggage that put him in power. Getting rid of the old Cabinet, bringing back the beleaguered Wickremesinghe, as PM, and getting rid of Basil Rajapaksa, have cost the President a month of precious time. Wickremesinghe has assembled a dubious set of minsters, instead of brining competent outsiders into an interim Cabinet. Sri Lanka’s adversity has become an opportunity for the PM.
The resignation of Basil Rajapaksa paved the way for the appointment of business tycoon as a National List MP. Dhammika Perera is said to have paid the most taxes in Sri Lanka. He may also be the largest donator to political parties. Even the Aragalaya may be on such a gravy train!
Perera has publicised a plan to mitigate the foreign exchange crisis. Ex-Central Bank Governor Ajith Nivard Cabraal, too, had a development plan, heavy on building high-speed motorways – projects highly favoured by commission-seeking politicos. This writer pointed out the absurdity of such projects, in articles published in September 2019, as public transport, via high-speed trains, is what is needed. Perera’s proposals have the merit of simplicity and targeting the forex crisis. However, he too has forgotten that Sri Lanka’s economy is a complex system driven by global factors beyond Lanka’s control. Are its planners and economists unaware that small nations need energy and food sovereignty to achieve any semblance of independence?
Perera’s plan is for an additional USD 8 billion per annum from 12 key strategies (see: ).
The 12 strategies are inconsistently arranged, with items 1), 2), 8) applying to tourism; 3), 4), 7) pertain to educational services; 5) deals with expat worker remittances; 6), 10) deal with increasing foreign investments, and 9),11), and 12) deal with energy and agriculture! We give representatives of his proposals from each category.
Tourism:
1). Increase Lanka’s foreign currency holdings by USD5 billion in the next five years by issuing 10-year residence visas for foreigners who hold USD100,000 for 10 years. Establish budget airline hubs to generate USD2 billion to increase arrivals of “budget” tourists, by creating new international airports and a domestic air network. Why not fast “bullet trains” instead of planes?
Education
: 3). Reduce the current outflow of USD2.5 billion to students studying abroad by 20% while also earning USD2.5 billion inflows by attracting international students.
Ex-pat workers:
5). Increase foreign worker remittances from USD7 billion (pre-Covid) to USD24 billion per annum by forming a 10 – year plan.
Investments:
6). Increase foreign direct investments.
Energy:
11). Save USD1 billion by allowing the private sector to invest in new power plants powered by solar or coal in Norochcholai (ancient name: Horagolla) and Sampur (Somapura).
Agriculture:
9). Generate USD600 million income with coconuts.
12). Save USD200 million on Palm oil.
Mr. Perera has not made the mistake of proposing to drill the Mannar seabed for oil and gas but makes a mistake even in mentioning coal. He is right on the potential of the coconut industry, and regarding palm oil cultivation, an environmental plus in the context of Sri Lanka (See: https://dh-web.org/place.names/posts/cdw-Palmoil-0.pdf).
Nevertheless, the main thrust of his proposals is quite questionable within current global realities. We look at IMF data on commodities prices (see Chart 1) used recently by the Nobel Laureate Paul Krugman in discussing US and EU inflation.
The commodity prices in the world market were quite favourable during the Yahapalanaya period. It was an opportunity wasted by the Sirisena-Wickremasinghe-JHU-TNA-JVP yahapalanaya cabal, unified only by their opposition to the Rajapaksa clan rule. Forex debt had grown by 65% and debt servicing costs by 400% during Yahapalanya.
The change of government back to the Rakapaksas led a change of economists and advisors. The new “Roadmap” presented by Ajith Cabraal in October 2021 ignored the dangerous trend in the primary commodities indices seen in Chart 1 or the impact of the Pandemic on world trade. The huge economic costs of the plunge into organic farming were clear but ignored in the Roadmap. Indeed, even after the collapse of harvests, the lyrical performances of the Viyathmaga Prof. Saman Weerakkody is enough to understand the blinding appeal of the agricultural mythology sold to politicians and the innocent public.
Perera’s solutions to the forex crisis are also based on assumptions similar to those of Cabral’s 2021 October Roadmap. Thus, Perera hopes that tourists, even budget tourists, will return; that foreign investors will return; that ex-pat workers will have money to send, and that Lankan academic institutions controlled by radicalized students will earn money like the private Universities of the West.
While economics enables incisive post-fact analysis, it notoriously fails to predict economic outcomes. Friedrich von Hayek candidly asserts (in his Nobel price acceptance speech) that quantitative economics is mostly a pretense to knowledge. Bernard Show claimed that economists seeking to exit a crisis would point in wildly different directions. So, while a Cabraal or a Lakshman may point one way, a Weerasinghe or a Coomarswamy will point in another.
However, what seems to matter for the market is not empirical truths, but the clout and connections of the men at the helm.
So, the appointment of Perera was welcomed by the Colombo stock market. However, in our view, the stark facts of the global economy are starkly against his plan especially in the short term. The Ukraine war will drag on painfully. The price index curve (Chart 1) is unlikely to drop anytime soon. The foreign investors Perera hopes to attract will come only for fire-sales of assets. Long-time visitors will not reside in countries without top medical care. Rising prices of coal and LNG will make Norchcholloi and Sampur utterly unaffordable. Budget tourists will find no budget flights. Student turmoil and labour unrest will push the government to authoritarianism.
Given Sri Lanka’s low investment in education, standards have fallen low. Many new agriculture professors teach folklore instead of science, and pharmacology professors go on TV in support of occult cures! Would international students register, given disruptions to university education? Talk of ‘rapid industrialisation’ is a chimera. Where it has been achieved, the sine qua non had been exploitable labour, neglect of the environment, authoritarianism and favourable markets. None of this is possible in the current context.
So, if the Perera Plan is in the same class as that of Cabral’s failed Roadmap, is there a tractable and FAST way out for Lanka? Yes.
Sri Lanka’s largest forex drain has been in buying fuel and food. The country can be self-sufficient and even become an exporter of both. Sri Lanka has a very high density of water reservoirs, and natural aquatic bodies ideal for floating solar installations where power during sunshine can be stored (without batteries) for night use in the form of the equivalent amount of head water. These can be setup within a short time (see: https://island.lk/sri-lankas-power-supply-blackouts-and-how-to-prevent-them/). It has two incredible monsoons and two planting seasons. This writer has explained in many previous newspaper articles and presentations (e.g., https://dh-web.org/place.names/posts/dev-tech-2009.ppt) going back to at least 2009 how these objectives may be achieved at little cost by following modern science rather than folklore however hallowed they may be.
Crash food production can be implemented on a ‘war footing’ (authoritarian implementation) within one planting season. Self-sufficiency in, say, diesel fuel may also be achieved within one year! Castor is a fast-growing ‘weed’ that is not attacked by pests or livestock. It can be grown among coconut trees or on infertile lands. Its seeds yield a clear oil directly usable in most diesel engines. The shells, and twigs of the plant, can be used as fuel. The oil can be easily adapted for motor car engines, or as an industrial solvent. A pilot-study on this by this writer many decades ago during his time as a Vice-Chancellor and Professor of Chemistry at the Vidyodaya University may still be in the arches in the Ministry of industries.
When faced with an emergency, time is of the essence. The government has a public service with too many employees. One business year can be converted into two by running two sessions of the government – one from 8am to 3pm, and another from 3pm to 9 pm., splitting the excess work force in two, clearing the backlog in issuing passports, in courts, in dealing with administrative matters, in the timely marketing of farm products, business and industry. Then Sri Lanka might be able to leapfrog over its impending calamity and move towards self-sufficiency in quick time.
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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