Features
From colonial economy on track to a broken economy on tuk-tuk
by Rajan Philips
Last week I called Bangladesh burgeoning and Sri Lanka backsliding. Domestic demand has become the most important driver of Bangladesh’s rapid economic growth. Not that Bangladesh is not facing challenges, but it is in a better position to face them because of domestic demand. Sri Lanka does not have the advantage of size and domestic demand, but it is not the lack of size that has led to today’s broken economy. The hopes that President Wickremesinghe will fix the broken economy, at least will start its basic repairs, are also being broken with the government’s botching of the conduct of local government elections. So, now it is worse than backsliding.
The stunning Supreme Court ruling ordering a total compensation payment of Rs.311 million to the victims of 2019 Easter Sunday bombings should be sending shivers up and down the spines of decision makers in the echelons of power who have gotten accustomed to doing anything or nothing (never some good thing) and getting away with it. The Court has elevated individual responsibility by an astonishing 300 times over state responsibility. The State is ordered to pay Rs. One million for relying on the unreliables. Rs. 310 million will have to be coughed up by Maithripala Sirisena (Rs. 100M), Pujith Jayasundara (Rs 75M), Nilantha Jayawardene (Rs 75M), Hemasiri Fernando (Rs 50M) and Sisira Mendis (Rs. 10M). The Court ruling is in effect an order the government to stop making Nilantha Jayawardene the next IGP.
It remains to be seen if the long arm of the Court will reach Ranil Wickremesinghe when he is no longer President. For now, he is emptying his bag of political tricks to no effect and the IMF is keeping him waiting with no moneybags in sight. For others who made decisions in the Gotabaya Administration, whether on the economy or on security, it could be open season for litigations against them. If the Canadian government sanctions were to infect other governments as well, there will be no place to hide for those hounded by justice. Specific to our discussion involving LRT and tuk-tuk in Sri Lanka, what will be the fallout from the Supreme Court decision for those who made the decision to unilaterally terminate the Colombo LRT project that had been started based on a very favourable bilateral agreement with Japan for a very sensible project?
There is on record an Auditor General report dated 23 November 2022 (Special Audit Report on the Unilateral Termination of the Light Rail System by the Government of Sri Lanka). Will any action flow from it? We have to wait and see. It is now enough to say that the Special Audit Report is scathing in its censure of the government’s decision to unilaterally terminate “without formal, logical and justifiable grounds … a project proved to be environmentally, technically, economically and financially productive after incurring heavy costs on preliminary activities including feasibility studies conducted by foreign experts.” Be that as it may.
Colonial Economy on Track
“The Colonial Economy on Track” is the main title of Dr. Indrani Munasinghe’s pathbreaking historical study of the development of rail and road infrastructure in colonial Ceylon from 1800 to 1905. Roads came first; between 1800 and 1867 2,344 miles of road had been constructed, criss-crossing the island, with a concentrated radial network in the Central Province, the only mountainous region of the island. Rail construction came later beginning in 1858 with the Colombo-Kandy line. By 1905, Colombo was connected by rail to Kandy and Bandarawela upcountry, south to Galle and Matara, and north to Maho, Anuradhapura, Medawachchiya and Jaffna. The lines from Maho to Trincomalee and Batticaloa, and from Medawachchiya to Mannar would be added later.
Dr. Munasinghe calls the 100 year development of the road and rail network under colonial rule “remarkable achievements” for the plantation economy, but a “modest success story” for the large areas of the island left untouched by the new facilities. Yet, for Sri Lanka’s size and compactness, the colonial road and rail networks were relatively extensive compared to larger countries with more challenging geography. The location of the plantations also forced the new infrastructure to be concentrated in the challenging areas of the island.
Both roads and railways were owned by the government and the railways were run profitably to become a significant source of government revenue (29%) that enabled the expansion of social infrastructure in education, health and sanitary services. The tradition of colonial government (not quite public) ownership of transport infrastructure in Sri Lanka and other colonies is in contrast to the role played by private capital in the colonial centres in western countries.
The 19th century political economy of laissez-faire in Britain, Europe and the US facilitated the development of toll roads run by private trusts, and railways and urban transit operated by private companies. Of course, they depended on huge government subsidies, a feature that was not encouraged by governments in the colonies. Government interventions became necessary and increasingly extensive in the twentieth century to deal with the over-provision of rail lines by private investors, cutthroat competition between service providers, market failures, and the poor levels of service to the travelling public.
The 1930s depression experience and World War II imperatives also strengthened the role of government and the public sector in providing transport services in otherwise free market countries. In contrast, Sri Lanka and some of the other former colonies would seem to have moved in the opposite direction after independence. After inheriting a salutary colonial tradition of government ownership of public transport, Sri Lanka moved backward by privatizing its inheritances. That is a more recent development and there were other developments before we got to the point that has brought us to the pits now.
The Oldsmobile and the Omnibus
The two main transport developments in the early twentieth century were the arrival of motorized vehicles – cars and buses. The first to arrive, in 1902, was a two-seater steam car that ran on kerosene. The motorcycle followed in 1903, and two years later the first petrol car. Englishmen were of course the early importers and improvisers. Ceylonese were not late in joining the exclusive club and soon there were more auto-enthusiasts than auto-owners. E.L.F. de Zoysa of Moratuwa is credited with being the first Sri Lankan to own and drive a car – a black and blue one cylinder Oldsmobile imported from the US. A General Motors brand, Oldsmobile started production in 1897 and within ten years there were buyers in Sri Lanka.
The arrival of the private car on public roads marked the beginning of the private use of public infrastructure with practically little or no direct user-pay. The car was soon joined by private buses used for public transport. The first bus was imported in 1907 and bus services were provided by private owners. There were no regulations and the travelling public who depended on the bus had to survive the chaos of competing bus companies. Government regulations started in 1940 and 18 years later and 10 years after independence came the nationalization of bus transport, on January 1, 1958.
What is commonly known is the politics of nationalization. That the first non-UNP Prime Minister, SWRD Bandaranaike, nationalized the bus industry that had become a bulwark of the UNP. What is not generally known is that there were government commissioned studies (the 1948 Ratnam Survey, the 1954 Sansoni Survey, and the 1956 Jayaratna Perera Survey), all of which had recommended the nationalization of the private bus companies. The 1958 nationalization was certainly a political act but it was also predicated on sound policy. Nationalized bus transport was brought under a single institution, the Ceylon/Sri Lanka Transport Board, and the new system for all its shortcomings provided mobility to those who needed it most and who had no alternative mode of travel. Over time, it proved to be viable and improvable.
Significant improvements were made between 1970 and 1977 under the leadership of Anil Moonesinghe, which some have called the ‘golden age’ of public bus transport in Sri Lanka. Whether golden age or not, public bus transport had certainly come of age by 1977, and Sri Lanka was at a point where it could have focused its energies towards introducing bus-rapid-transit and rail-transit technologies for mass urban transport. There is no single modal solution for urban transport other than vigorously limiting the use of the private car in peak times and peak traffic conditions. And there is no private sector solution to public transport, although there are many areas in which the private sector can make efficient contributions but only as part of a public transport system.
The so called economic liberalization that began in 1977 was not without economic and political justifications. But some of the choices that were made were not motivated by good or bad economics but by corrupt politics. One of the worst choices was the privatization of bus transport beginning in 1979, along with the reckless neglect of rail transport. What was even worse was the manner of implementing bus privatization, later caricatured as ‘peoplization!’ It was an exercise that was bound to crash and its massive crash has been our national experience. World Bank officials were early cheerleaders of the Sri Lankan experiment, but were later forced by the experience to admonish that the bus story in Sri Lanka after 1979 was a model for not what to do, but what not to do in private/public transport. The bus blunder in Sri Lanka was and is unique among other Asian and South Asian countries. Burgeoning Bangladesh is its resounding proof.
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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