Features
OUR FINANCIAL MESS
by Dr. Upatissa Pethiyagoda
We are constantly reminded of the sorry state of our Economy. This is simply to say that we are broke. We are also told that the accepted criteria, requiring some sophisticated computations are necessary to really understand the position. One trouble is that the figures from two or more such sources, often do differ substantially (for example the Central Bank and the Census and Statistics Department are often at variance). No amount of massaging can convert bad data into good conclusions. As the saying goes, figures cannot lie, but liars can certainly figure. What the ordinary citizen feels is that things cost so much more than they did within one’s memory.
My family teases me by saying that I am talking “Wolseley prices (1959)”, (A payment of Rs 9,000/= at Faleel’s in Kandy, secures a brand new Wolseley ‘1500’ collected in Harpenden, UK). They aver that salaries are much higher now than they were then! Probably so, for example our gardener is paid for a single day, about one quarter of the monthly salary I drew as Director of the CRI! My family are not impressed. It is doubtful that the 9,000 /= that yielded a full Wolseley then would buy them a set of tyres for it now! I hold that there are many things that I can quote (with an admittedly impaired memory) where unit prices have increased several hundredfold and some a thousand times, far outstripping concurrent income increases!.
There is also no national mention about one of the most immediate reasons – unbridled growth of population, exceeding expectations and leakages of Government assets (e.g Central Bank, EPF and NSB). And while we are about it, what happened to that currency deal of some 20 million (in currency notes) that changed hands in the Car Park of the Taj Hotel as the first tranche of a 50 million deal? Taken together this is a toxic mix. During World War II, one directive given by wartime Prime Minister Sir Winston Churchill, was to ensure that nothing (good or bad) should be hidden from public knowledge. In addition to the legendary reputation for British honesty, there was also the readiness of the people to suffer deprivation and hardship, in the solid faith that everybody was suffering equally.
Money takes meaning when it rewards genuine improvement, in productivity of materials or service. Here outlay is justified by output. The worst cases are bribery, corruption, smuggling, narcotics and similar acts of criminality and cheating, where cost comprehensively outstrips return. For example, MP’ voted themselves, a payment of Rs. 200,000/= per month purportedly “for electoral work,” while at the same time, denying estate labour their request for a daily wage of Rs.1,000/=. This is a quaint way of Division of Labour – one earning foreign exchange through hard sweat and toil, while the other is spending it equally strenuously in the “flesh pots” in various cities in different parts of the World. What could be fairer?
The twin processes that Government could take are obviously to:
(i) ensure that unnecessary expenditure is curtailed and
(ii) seek new means of raising revenue.
Managerial skill is to try, as far as possible to balance these two goals. The easy solution is to increase duty imposed on imports. This leads to price escalation. Populist measures have then to selectively grant subsidies or doles to keep the low income groups happy, thus leading to sizable increases in welfare costs. This is dangerous and further widens the gap between State income and expenditure. The Welfare State, it has been stated, can be the immediate prelude to the Farewell state!
In considering the local predicament, the need is for steps designed to alleviate immediate needs of our people. External issues concerning international trade, State debts, balance of payments and other high level verbiage, is beyond the ken of non-specialists and is sensed by the majority only when scarcities and price increases begin to bite.
Consequently, the Government has to seek new sources of income. I see at least six major opportunities:-
(i) Re-examine the VAT imposition to ensure that all collections are correctly reported and settled. This is hardly possible in a country where only some 200,000 income tax files exist, which relate to annual incomes (and Tax Returns), but many are still in severe default. Can such an inefficient system cope with monitoring of perhaps many million transactions per day? This has to be reformed to ensure that all VAT collections are properly managed. This is very unlikely. It is possible that VAT serves only to fleece the public and to aid fraudsters. I seized an opportunity to express this to a Deputy Minister of Finance at that time. He did not visibly shrug, but nothing has probably happened!
(ii) e did not shrug bat All Duty Free vehicles of MP’s which were hawked, should be recovered. Real Estate here and abroad, should be tracked. Like the Ownerless “Malwana Mansion” and probably many more. Where the public is able to track evidence of inexplicable wealth, there should be a method for rewarding them appropriately. (Customs detection from attempted smugglers could serve as an example). Constant mention is made about mega frauds, most leading to some political bigwig, the obvious remedy is to call for periodic declaration of assets by MP’s, if not annually, at least upon entering and exiting the “hallowed” Parliament. Why not? Does the “Cahoot Theory” apply and explain?. It is compulsory for Public Servants to declare their assets annually. Goose, Gander and Sauce! Nomination of candidates is an appropriate point at which to make such declaration mandatory. We understand that a very small number have made declarations, which are safely stacked away we are told, in somebody’s safe, away from public scrutiny. What is the point?
Here then is another source of income for our beleaguered State.
(iii) During the LTTE conflict, Mr. K.Pathmanathan (KP) was portrayed as the main Fund Manager of the vast wealth amassed by the LTTE. This was said to include a fleet of some seventeen ships, many Petrol Pumps, much Real Estate and every conceivable type of investment. This was how the LTTE ran its affairs professionally and effectively. Thus, when “KP” was captured in Malaysia and brought back to Sri Lanka, our entire nation was jubilant. By his (KP’s) own disclosures, when he faced Mr Gotabhaya Rajapaksa, Defense Secretary at the time, he fully expected to be eliminated. To his surprise, GR was very cordial and friendly – even offering a handshake and an inquiry about his health. After this, the public lost interest. After a while he “materialized” and is supposedly engaged in some “social work” in the Vanni.
If the Government recoups the virtual Gold Mine that he (KP) managed and was reputed to have been in charge, the Government will possibly be able to meet a substantial part of its deficit.
Whatever happened to this money if KP was captured along with this loot?
(v) A massive collection of Official vehicles was left to decay in a site just next to “Mumtaz Mahal” which was at one time, the official residence of the Speaker. They were mostly of luxury models and lay covered with creeper weeds. I learned that these awaited dumping in the sea – despite the existence of a “Marine Pollution Protection Agency”! Only the grave-yards for vehicles in the Arabian Desert which is part of Iraq, presented a similar sight, where oil-rich Kuwaitis abandoned their posh vehicles (eg Mercedes, Volvos etc), because it was more costly to junk them in Kuwait itself. It is probable that the Kollupitiya junk yard, said to be one of three around Colombo alone, once belonged to the Presidential fleet (Said to have been over 200). No one has been held accountable for this criminal waste.
(vi) As an index of our moral decay, when some 70 odd MP’s were found to have sold their vehicles or duty free permits, not only was nothing done, but someone had the brazen cheek to say that this was permissible because MP’s had to recover election costs! This great tolerance apparently did not apply where a poor woman who supposedly stole a few milk powder packets to feed her hungry children, one also recalls that a young child was persecuted for “stealing” a few coconuts! It was cynically claimed that those who framed laws were entitled to break them! Evidently, these little baskets (Printer’s Devil) think that we are all “Buth Kana Harak” – rice eating cattle!
So, as an interim measure, get all of the blokes who profited from this caper to pay back the ill-gotten profits they earned. There was also a display of documents in the social media, relating to two permits one of which was issued to one “Sirisena” who identified himself as “the MP for Polonnaruwa” and with a Polonnaruwa address!. On the very same day, it was alleged a “Mr Mahinda Rajapaksa, MP for Kurunegala” also had his “Land Cruiser”!. This was legitimate if the letters of the rule are sufficiently elastic. The duty waivers for these two vehicles was some 38 Million (?). If these revelations are not true, there should have been an official denial and perhaps even legal procedures instituted against the publishers of these malicious fabrications. There is no evidence of any such action. While at it, the fate of some 38 top flight “Jaguars” imported by the State, should be made known. Some very damaging and ugly rumours are afloat and should be countered. There is also the matter of a large number of vehicles held up at the Hambantota Port and released by a Ministerial fiat, which caused a heavy loss of some r a billions to the exchequer. As a general rule, rather than attempting to strangle the “social media” would it not be better for official denials of the sometimes outrageous allegations be met with convincing details from official records? Let us face it – the word MP is synonymous with corruption. This is grossly unfair by the several who are not crooked. But they should pluck up enough courage to challenge the crooks, and so take themselves out of the “Guilty Register” Among those who have succeeded at the recent polls are those who have emitted more than a mere stink of criminal misdemeanours. This does not promise well for the future.
Dear Mr President, you are reputed to be a strict disciplinarian. Retore our faith that you will cause action on this critical matter. Do not betray the trust reposed in you. Letus “Wait and see”.
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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