Tag Archives: economy

growth

Towards an economically viable Sri Lanka

Let’s face it.  Close to 70 years after gaining independence, Sri Lanka is still nowhere.  Part of the blame can be laid on the LTTE and their separatist war, but that only accounts for 30 years.  We still have 40 years where the politicians have to take the blame for most of the problems that we have now.

Free economic principles definitely have merit, but let’s be realistic when we say that they haven’t totally worked out for us.  Our country title has the word “Socialist” in it as well, but again what has that achieved for us?  We are not 100% socialist, nor can we be (and of course even Russia and China are not 100% socialist, and now more towards capitalist)

But maybe there are a few things that we can do as a country, where we mix and match and enforce policies with the short term and long term future in mind.

So here’s a set of proposals that I think have some merit and could go some way in solving some of the problems that we have in this country.  If any politician would like to take me up on this, cheers.  If not, it would be up to the voters to make the politicians understand.

Economic Growth

Public Private Partnership

People in government administrative services will know how to run public enterprises, but would not have the commercial expertise that we desire, in order to run an efficient service.  I don’t say that public enterprises such as the transport board or the railways department have to make profits, but they do have to generate sufficient revenue to cover the costs and also to invest in new equipment and to expand the services.

Get the top 20 minds in the corporate sector and put them to work as an overseeing committee to advise the government on how these departments can be re-structured and modernised, in order to give the public the service that they deserve.  Some services  should continue for free such as basic healthcare, whilst others can see needed revisions done to the rates (such as railway tickets)

Transportation

Improve the enforcement of laws and regulations

An investor who gets off a place and comes onto the Sri Lankan roads will be greeted with nice views and general good driving as long as they are on the airport expressway.  As soon as they get off the expressway and join the highway however, they will see something completely different.  Heavy vehicles that go on the right-side lanes, three wheelers that weave in and out of lanes, constantly blaring horns, and much more.  There goes that positive view about investing in this country.

Get the police to enforce the laws without turning a blind eye.  When they see people coming in the wrong lane, disregarding lane markings and safety, some of the cops just look the other way, since they cannot be bothered to write out a ticket.  How about changing the regulations, so that the cops also get a percentage from the fines that they write?  Bye bye bribes, since they get paid anyway, and hello discipline.

Put those shiny new Yamaha bikes to good use, chasing after wrong-doers on highways, rather than using them as glorified transport to get a cop from A to B.

Improve the public transport

What happened to those Volvo and Yutong buses that were running as a pilot project?  Haven’t seen them recently.  People will definitely pay extra for air conditioned comfort.  Yes, these buses are more expensive, but there are cheap alternatives in India and China that we can bring down, and the government can give the CTB a duty concession.  If you can give permits to MP’s, doctors, state workers, teachers, etc why not use those duty concessions to improve the national transportation fleets?

Also make it compulsory to have closed doors on the old buses, to stop people from falling out.  Remember how many people have fallen off and then getting run over by the same bus?

Look at the next point and eliminate the competition between the CTB and the private buses.  This competition leads to races and crashes and ultimately injury and death.

Hopefully, with the Megapolis project, we will see the re-introduction of LRT (tram networks) that operate on the road with a higher right of way.  This means that although cars in traffic would be waiting, the trams would operate with minimal waiting meaning that people get from A to B much faster.  This will create an incentive for people to use trams instead of their own cars to get to work.

No more Private Buses

The competition between SLTB buses and individual private buses is killing people, and that’s no good.  Road rules are bent, broken, and murdered in plain sight and most of the time the traffic police turn a blind eye towards them as well.

Form a public-private corporation where all private buses will be “invested” into it by their owners.  The SLTB will manage and administer the corporation.  Existing private drivers will be given employment in the new corporation.  All buses will be uniformly painted so that there is no distinction for the public.  Owners will receive a rental and a fair share of the profits.  The bus networks will be in better harmony, service levels will increase, safety will improve. Win Win situation for all concerned.

No more three-wheelers

The fact that this is a small vehicle leads to the following:

  1. Allows them to creep from all sides, leading to more traffic congestion.
  2. Creeping from unseen places leads to more accidents
  3. Survivability after an accident is poor due to the minimal safety standards in these vehicles.

Pack them off to countries where there is still a demand for them, like Bangladesh, Pakistan, African region, etc and replace them with compact cars.  Keep in mind that a Bajaj Tuk now costs about 700,000 rupees and a Tata Nano is 1,700,000.  That same Nano will cost 140,000 INR in India which is approx 300,000 LKR.  Don’t say it can’t be done.  Three wheelers  can be replaced by small cars effectively.

Safety would be much higher, and people can travel in better comfort, and the living standards of the drivers / owners would increase.  Traffic would actually be better managed as well, since we will not have three wheelers filtering through small gaps and lanes and creating blocks.

No more Vehicle Permits – equality for all

Why should one group of society such as MP’s, Doctors, Government Servants receive permits to buy vehicles at zero duty or lesser duty, compared to another segment that has no such privilege? Even the Prime Minister stated that no group is above another.  Then let’s abolish this much abused permit system and introduce a fairer duty calculation mechanism, to enable better equality.  India which has bigger problems than Sri Lanka has a fairer pricing policy when compared to Sri Lanka.

One way to do this would be to immediately stop issuing all permits, but consider giving concessionary loans to those same people.  Government would still get an income from the duties paid.  Eventually, the duties can be reduced gradually making vehicles more affordable.  Yes, this may lead to more traffic but this can be managed via proper regulations and enforcement of laws.

No more “super” luxuries for MP’s and Ministers.

MP’s should not forget that they are public servants, elected from among the common man to serve man.  Why do they need massive luxuries such as SUV’s that cost a hefty bill to the tax paying public?  H.E. the President, who is a “sarala” (simple) man should enforce policy on his Ministers.  Specify a simple vehicle for government service that meets the requirements and has a bit of luxury for comfortable travel, and say no to the extravagant expenditure.  We are not a oil rich country with a massive income to justify what we spend on our elected officials.

Mihin Lanka

For a number of years now, I have been saying that 1) it was wrong to setup a separate airline, and 2) it should be merged with SriLankan airlines.

If the requirement was to offer budget travel for pilgrims that could have easily been done using the existing national carrier by giving subsidised tickets on a quota system for deserving people.  Creating another airline was a massive waste of money, and it affected SriLankan airlines too.

Glad to hear some news that there are plans now to merge Mihin with SriLankan and to create one airline under the SriLankan brand.  Better late than never. Learn a lesson and move on.

Education

Educational Reform

We need to re-examine what we teach and how we teach it.  Maybe we should consider reducing the number of years we spend for primary and secondary education and consider sending students to college and university at a younger age.  Maybe we should consider re-examining what we teach in university, and what streams are on offer?  Maybe we should look at an employability-skills matrix and design our courses around that?  Maybe we should limit the number of general Arts degrees that we offer, and divert those students to other streams? Otherwise, students will graduate with degrees that give them no employable skills and they would be unemployed.  More time and money would have to be spent to re-train them on other skills, where they would then obtain a job which has nothing to do with what they learnt in university.  Consider that in 2013, we admitted 7,396 students into Arts degrees.  Shouldn’t we ensure that they learn and acquire skills of an employable nature.

Access to Higher Education

In 2013, a total of 143,740 students passed their advanced level exams and became eligible to enter state university and pursue their higher education.  Of this, 25,200 students were admitted, of which 15,694 were female (very interesting, but not relevant).

So what happened to the 118,540 other students?  Who cares about them?  What’s their future like?  Don’t they have rights?  Anyone in the “Anthare” who likes to talk about them?

Some will say that the solution is to build more state universities, but all of us know that Sri Lanka does not have the funds or the resources to build more of such mammoth facilities, and then there’s the problem of maintaining them.

For the year 2016 alone, the Govt of SL has allocated a total of 44,923 Million Rupees for a total of 35 universities and institutions.  UGC source available here.

How many of you noticed that when the last government gave approval for the private medical college, one thing they did was to offer some scholarships to students who were unable to enter state universities.  I propose that this should be taken further, and that full and partial scholarships can be given to deserving students to study at institutions such as NSBM, NIBM, SLIIT, etc and that this can even be extended to private institutions at a discounted rate so that more people have access to higher education.  If the Govt were to ask us to offer a bulk discounted rate for a couple of hundred students, I would gladly work out a win-win arrangement.  I get students, people get a recognised educational qualification and then into employment, and the Govt gets the credit.

Having more people being qualified with reputed and recognised qualifications is never a bad thing.

Pay back to Society

Since state sponsored / free higher education will continue into the future, we need to make sure that the people who get this benefit, then pay it back to society.  As graduates, if they work in the state sector or private sector, they serve the Sri Lankan public.  If however, after qualifying as a Doctor or an Engineer or whatever at the state’s expense, they then decide to migrate to some other country within 10 years, they should not be allowed to go unless they pay back to the State, whatever the money that was invested in them.  No payment = no immigration clearance stamp.

Healthcare

Doctors are an essential service

Personally, I think there are too many strikes and trade union actions going on in this country.  Yes, there are problems which need to be solved, but I don’t think it’s right to go on strike for everything.  The Doctors as an example, had a lot of sympathy from the general public but the fact that they went on strike over a schooling matter seems to have caused a backlash, and people were not impressed.

Stop taking the patients hostage.  The service of Doctors should be declared as an “essential service” and no strikes should be allowed.  Instead, they can work and resolve their issues via labour tribunals and the courts.  If they need to show their power, they can do so via work-to-rule.

More will be added as I think them up, but some of these may go a long way if they get implemented.  Let me know what you think, in the way of comments.

Sri Lanka: a nation suffering from ‘Enforced’ Poverty

It is now 66 years since we gained independence, and what do we have to show for it?  Nothing much, really.  In part, this is due to a bloody war that lasted for 27 years and brought development to a standstill. No one in their right mind would invest in this country.  Those days are now behind us and we are on the path of development with foreign investments tricking in.  But, I opine that we could do much, much better as a Nation.

What is Enforced Poverty?  It is a phrase that I coined whereby the masses of the country have been indoctrinated by those in power into believing that the life they lead is unchangeable and that their younger generation will have a greener, more luxurious, brighter future.  They will strive on, firmly entrenched in poverty or the borderlines of it and will not challenge the status-quo.

Let us take as an example the typical family.  The father is a teacher or a government servant.  The mother is a housewife.  They have a son and a daughter who are both schooling.  Let us say one is studying for the ordinary level exam, and the other for the advanced level exam.  Let’s estimate the monthly household income to be Rs. 40,000.

With the cost of living as it is, rent and electricity would be at least 10,000 for someone in a suburban area. Monthly bill for essential groceries would be at least 7,500. Milk powder alone is now 386 for a 400 gram packet.  Fees for extra classes for the kids would be another 5,000 and transport for the kids and the parents via bus and the occasional three wheeled taxi would be another 4,000 maybe?  Father would probably have a mobile phone for emergencies and would cost him at least 500 a month.  A gas cylinder for the kitchen would be 2,500 every two months, and the miscellaneous expenses would also add up such as clothing and shoes, medical bills, and etc.

Buying a motor cycle let alone a car for this family is all but a dream. An average motor cycle is 150,000 and the cheapest car would be the Tata Nano, and it costs 1,400,000 here in this country.

Now we get to my point about enforced poverty.  Even if this family earns just 40,000 does that mean that they cannot have a reasonable quality of life? Poverty is enforced on them simply because of our notion of the greater good. More on that later.

Let’s see if we can get this family to buy a Tata Nano.  The cost is 1,400,000. Assume the upfront payment is 200,000 and that the balance 1,200,000 goes on a lease.  Car leases are on average 2250 per 100,000 borrowed over 5 years, which comes to 27,000 per month.  Insurance would be 20,000 per year, and we would have to add on the cost of fuel and maintenance as well.  As you can see, our teacher cannot afford this, due to enforced poverty, due to government policy.

A brand new Tata Nano 2014 model costs 234,000 in India. At an exchange rate of 2.08 that comes to 486,720 locally.  A Maruti 800 costs 238,000 in India, which is 495,040 locally.  A Fiat Punto is 500,000 and a Fiat Linea is 600,000.

Tata Nano, Starting at 100,000 when launched

Tata Nano, Starting at 100,000 when launched

Fiat Linea, Starting at 599,000 INR

Fiat Linea, Starting at 599,000 INR

If the Indian price were to be taken for the calculation above, the Tata Nano could be bought for a 100,000 down payment and the balance as 8720 in 60 months.  Wouldn’t that enhance the quality of life, and also lead to a happier nation? Now for what I said about the “greater good”.  There would be those that counter my argument by saying reduced taxes and duties resulting in lower prices for vehicles will mean more congestion on the roads and more pollution.  Maybe.  But where’s the alternative in that case? Has adequate planning and funding gone into our public transport system? Going in the morning and coming in the evening via the bus is a circus act and a battle with death, when we see the people packed in and also hanging from the foot-boards and doorways of the buses.  Do the buses run on time and as scheduled? Let’s not even talk about the mess with private and public buses operating on the same roads therefore resulting in deadly races.

If vehicle prices are being kept at these extraordinarily high levels for the sake of reducing pollution and congestion as suggested by some, then why is it that Vehicle Permits are issued to politicians, ministry secretaries, doctors, etc?  Why should they receive a benefit that the common citizen does not?  Don’t they work as hard? Don’t they pay their taxes too? Isn’t that considered to be discrimination and a violation of their fundamental rights?

Let’s take another example.  In the beginning of February we saw the price of Dhal coming down due to the reduction of import duty of Rs. 15 per kilo.  Few days later, import duty on Potatoes were increased by Rs 15 per kilo.  Powdered milk was in short supply in January as the importers were saying that the duties are too high and that they cannot sell and make a profit.  The Government is refusing to reduce the taxes and duties and allowed the prices to be hiked up.  The justification given by the Minister of Consumer Affairs was that the duties are kept at a high level to protect the local milk farmers.  But, do we have an effective mechanism to distribute fresh milk in this country?  Can’t we be self sufficient in milk without having to import from New Zealand?

Here’s another example.  The leader of the JVP, Anura Dissanayake was recently giving an example and stating that construction of the Mattala Airport took 25000 Million Sri Lankan Rupees, which is 25 billion Rupees, or 209 million USD.  The cost to maintain our world record setting battalion of Ministers is 27 billion Rupees per year!  There are 67 Cabinet Ministers and 37 Deputy Ministers which is a total of 104 for a population of 22 million.

India with a population of 1.1 billion people has got a cabinet of just 35 ministers.  China with a population of 1.3 billion has just 20 ministries.

Just imagine the type of development that could take place in Sri Lanka each year if we cut the number of ministers by half.

I’m not a professor of economics, nor do I pretend to know everything there is to know in finance, but I do believe that there is a lot of room for improvement in our country and in our quality of life.  Meanwhile, the teacher in my story and his family are destined for a life of hardship.  The mother and father will accept their standard of living and strive to give a better education to their children with the hope that they will have a better life than them.