Features
Sri Lanka’s development and big businesses
Anila Dias Bandaranaike, Ph.D.
There is universal agreement that Sri Lanka is in an economic mess on several fronts. Even those in government, playing ostrich until recently, are beginning to articulate this reality. We cannot get out of this mess in a hurry. It will take prioritisation, commitment and time. It will require government, Big Businesses, small businesses and the people, working together in the national interest, to pull us out of it. As to whether that will happen, remains to be seen.
Qualified professionals with knowledge, acumen and experience, have spoken and written in the public domain on addressing our macro-economic problems – slow economic growth, low government revenue, wasteful expenditure, misaligned interest, exchange and tax rates and parlous levels of foreign earnings, reserves and debt. Some have suggested a clear macro-economic path to start the recovery process with debt restructuring. Is anyone listening?
Development Goals vs. Indicators
When the mess gets critical, we lose sight of the forest for the trees. We forget what these economic terms (trees) and statistics are really about. So, focussing on the forest, this article attempts to connect those terms to the human and environmental aspect of this mess.
Sri Lanka has 2 key resources – its people and its environment.
In that context, economic indicators used to measure development – GDP, FDI, export earnings, inflation, exchange and interest rates, foreign reserves and debt – are merely means to an end. That end goal is to improve human well-being, through sustainable development, which protects the environment for future well-being. Economic indicators are just measures of whether Sri Lanka provides adequate jobs, incomes and domestic and foreign goods and services, at reasonable prices, to its people, to improve their well-being. In that process, if all goes well, corporates grow their businesses and shareholders get better returns on their investments.
However, all households have to earn living wages to feed, clothe, house and educate their families and keep secure and healthy. If the majority are struggling to make ends meet, they will leave Sri Lanka, or take to the streets, or plunder the environment for short term gains. Then, businesses suffer from labour shortages, strikes and social instability, governments from low revenue and overall instability and everyone from environmental degradation and inadequate goods and services for their well-being.
In addition to the problems identified by economic indicators (trees), focussing on the forest conveys that Sri Lanka has two more problems. First is Sri Lanka’s severe brain drain. Professionals, skilled and unskilled workers are leaving the country in frustration and despair. Second is under-valuing our fragile biodiversity, resulting in ill-conceived projects destroying it all over Sri Lanka? One example is the Minneriya “Gathering” of elephants. This can earn massive tourism dollars.
Currently however, high water levels, from excess water being diverted from the Moragahakanda irrigation project into Minneriya tank, threatens the “Gathering”. Tourism earnings and other economic benefits from the “Gathering” are estimated to be several orders of magnitude higher than from the irrigation project’s agricultural output. Does government care? Reducing Sri Lanka’s spectacular St. Clair’s waterfall to a trickle, for hydropower, is another example.
So, just as important as regaining macro-economic stability, is the need to value and grow our human and environmental resources.
Environmental Resources
We must recognise and prioritise our incredible marine life, beaches, rainforests, mangroves, wetlands, water-bodies, and the flora and fauna they hold. We must protect them from ill-conceived and damaging construction, landfills, waste-dumping and sand-mining, as well as from over-using, poaching, illicit-logging and deforestation.
Let’s take tourism as an example. Sri Lanka has two strong competitive advantages. First, its biodiversity, just described. Second, its diverse, sophisticated, cuisine – upcountry and low country Sinhala; Northern, Eastern and upcountry Tamil; and Muslim, Malay and Burgher specialities. However, most roads leading to our environmental and culinary treasures cannot handle large coachloads. So, we should target tourist earnings, rather than numbers, and strategise to attract smaller numbers of high-end, high-spending tourists, who love nature, food and new experiences. We should show-case and promote our unique, local cuisine and brews, rather than serve them imported cheese, salmon and wines, which they can get elsewhere. That way, we raise value addition, reduce imports and promote backward linkages.
Innovative entrepreneurs, including foreigners who operate under the radar, are doing just that – offering community and nature-based tourism and local food, from small, exclusive hideaways, at various price levels. But what of our corporates? They build large hotels in resort areas, catering to coachloads of two-week package holidays for Europe’s low-spending workers. When bombs, tsunamis and pandemics occurred, they begged a debt-riddled government for handouts to recoup their ill-thought investments.
Our wild life parks suffer from irresponsible over-crowding and undisciplined safari vehicles. Yet, has the collective corporate voice raised these issues adequately? Government has even sanctioned baby elephants in private captivity for the influential, with little protest from collective Big Business. Tourism is one example, among many.
Human Resources
We urgently need labour market and education system reforms. Labour market reforms must address labour shortages, low wages and inflexible labour laws that hurt both employers and employees. Big Business has not put adequate collective effort into reforming archaic labour laws for longer term benefits, rather choosing, with a short-term horizon, to forever work around them. Education system reforms must address inadequate skills in problem-solving, in language and communication, and in computer use. Big Businesses complain about employee quality, but only some put their money where their mouth is.
Let’s take private company wages as an example. Salaries of the few who meteorically rise, are phenomenal. But for the bulk of qualified young executives, salaries are just about enough to live with their parents and take public transport to work. Can we blame brain drain to greener pastures? What about cutbacks during the pandemic? Many businesses were hit by it. But some – health care, online consumer sales and other online activities – thrived. Although social life was curtailed, none at high income levels suffered any material change in their levels of creature comfort. The worst hit were lower income workers, especially daily wage earners. Some had no work and no income at all. Yet, some big companies, even those which thrived, prioritised their bottom lines, and cut wages and benefits to the most vulnerable.
Big Businesses changing gear and thinking in the longer- term interests of their human resources could mean less focus on the immediate bottom line, as well as paying higher non-regressive taxes and higher living wages, training costs and social security benefits to their employees, if they wish to retain them. There is no easy way out.
Big Business Input
Published national data, on the output and employment structure of the Sri Lankan economy, show that large formal businesses total less than half of Sri Lanka’s economic output and about a third of employment. However, their collective voice wields much more influence than their share of those pies. Government and Big Business need each other to survive and to move forward for their own and the national interest. Hence, the collective voice of Big Business can, if they choose to do so, push for better governance and informed investment and development decisions.
But do they? The last 2021 Budget was clearly a disaster, and later proved itself so. However, at a public webinar, along with corporate leaders, a senior EDB official praised it highly. Yet, he resigned his post very soon thereafter. I was once at a formal reception of big business leaders, where some, who had been poking fun at the Central Bank Governor, fawned over him when he joined their group. I may not have agreed with the Governor’s policies, but he did not deserve such blatant hypocrisy. In the last 15 years, I have not seen the Chambers take a strong collective stand against any ill-conceived government decision on any issue.
One example was the Act allowing government takeover of “Non-Performing” companies. Another is the current foreign exchange debacle. The Central Bank Governor cited exporters not converting their earnings to rupees as the reason why banks are facing exchange shortages which, in turn, affects their ability to open LCs. Export groups publicly denied these allegations, but none bluntly stated the real reason – Central Bank’s unofficial directive to banks to artificially hold the exchange rate at Rs. 203/dollar, when it should be much higher! This ill-conceived directive has also affected migrant worker remittances to Sri Lanka. They now resort to alternate unofficial mechanisms to ensure a realistic conversion rate for their hard-earned dollars sent to Sri Lanka. Will business Chambers speak out, before the Governor cites migrant workers too, like exporters, of being unpatriotic?
If Sri Lanka is to get out of this mess, there has to be a paradigm shift in thinking and action among the Big Business community, away from rent-seeking, to pushing for longer-term collective development that will benefit, not just them, but all stakeholders. Straight talk from Big Business may be the only way to get governments to listen and act. If companies fear to speak out individually because of retaliation from government, they must do so collectively, disagreeing and providing constructive criticism, when necessary, through their various Chambers and other business groups. No government can penalise Big Business working together, without detrimental consequences to itself.
Sri Lanka should focus, in the shorter term, on macro-economic stability, and, as importantly, in the longer term, on safeguarding and growing our human and environmental resources. The Big Business community must collectively push for this, in their own longer-term interests.
The “Road Map” presented recently for Sri Lanka to get out of this mess, was definitely a map – it showed us ALL roads to ALL places. Its presentation of 85 colourful slides, each crammed with graphs, charts and words, only conveyed utter, obfuscating, confusion. If meant to show the way forward, 20 succinct slides could have done it. I sympathise with the officers who were commissioned to prepare that “Road Map”. I hope members of the Big Business community, including business chambers and relevant organisations, will use their influential, collective voice for some straight talk, to help the architects of that “Road Map” find their way back into the light and lead Sri Lanka out of the darkness we are currently in.
(The author retired as Assistant Governor of the Central Bank of Sri Lanka (CBSL) in 2007. As Director of Statistics, CBSL, she spearheaded the compilation of Provincial GDP data and the collection of survey data on living conditions in all nine provinces, following a lapse of 20 years since 1983. From 2015 to 2020, she was a member of the three-member Independent Delimitation Commission)
Features
Trump’s tariffs, AKD’s gazette and Sri Lanka’s diplomatic slumber
“We are rather respectable in Colombo. We go to bed fairly early, and we remain there till morning. “
According to Sri Lanka’s diplomatic folklore, the late S.W. R. D. Bandaranaike uttered these words while explaining the reasons for Sri Lanka’s abstention on the UN resolution condemning the Soviet invasion of Hungary. Apparently, SWRD’s foreign ministry officials were asleep at home when the diplomatic cable seeking instructions was received from New York. In those days, there were no cell phones, Internet, or even fax or telex machines. The diplomatic cables were sent through post offices. Decoding them was a slow and time-consuming process. Thus, the government could not provide appropriate instructions to our mission in New York in time, and the Sri Lankan delegation abstained on that sensitive UN vote.
Sri Lanka’s Absence from Section 301 Consultations
But then, how does one explain Sri Lanka’s absence from the crucial bilateral consultation held in Washington by the Office of the United States Trade Representative (USTR) during March-April on “Forced Labour” under the Section 301 of the US Trade Act of 1974? Didn’t our foreign and trade ministries send appropriate instructions to Washington in time? Even if the instructions from the foreign ministry were transmitted to our embassy in Washington by pigeon carriers, there was enough time for Sri Lanka to participate in those meetings.
In March, the USTR initiated these 301 investigations on 60 trading partners, and invited all of them for confidential consultations. Out of the 60, 46 participated in these consultations. Sri Lanka was not one of them. Other countries that didn’t participate in these consultations included China, Russia, and Venezuela! In addition to that, the Section 301 Committee conducted a public hearing with interested parties on April 28 and 29. Washington-based diplomats, representatives from few trade ministries as well as representatives from many foreign trade associations and chambers participated in these hearings. Sri Lanka was once again conspicuously absent.
As a result, when the USTR published the proposed forced labour tariffs on June 2nd, Sri Lanka ended up with a 12.5% duty. Pakistani and Indonesian diplomats participated in these consultations and took appropriate follow-up measures, and managed to enter the 10% duty category. As even a threat of a modest tariff hike could disrupt supply chains and reduce competitiveness, particularly in an industry such as garments, I discussed this issue on 15 June and underscored the importance of Sri Lanka’s participation at the next hearing, which was scheduled to be held from July 7th .
Awakening from Diplomatic Slumber and AKD’s Gazette
Fortunately, Sri Lanka finally awoke from weeks of diplomatic slumber, and Ambassador Mahinda Samarasinghe participated in the public hearing on 9 July, and promised, “…. · We have agreed to the text in our negotiations with the USTR on forced labour, …. The gazette as we speak is being printed and I’m getting the gazette tomorrow morning, and the gazette will be shared with USTR as I get it“.
As promised, President Anura Kumara Dissanayake issued a gazette on 10 July banning the imports of goods produced by forced labour. These new regulations are very similar to what Pakistan and Indonesia enacted in April, after their consultations with USTR in March. Why couldn’t we do it in April? Why did we wait till the very last minute?
Challenges ahead
“War is too important to be left to generals alone,” is a famous saying attributed to former French Premier Georges Clemenceau. Similarly, monitoring our main markets is too important to be left to diplomats alone. The United States is the largest single-country market for Sri Lanka. Therefore, Sri Lankan trade chambers and associations should become more proactive in these markets and participate in these events. For example, the chairman of the Pakistani apparel exporters association participated in the April hearings. Similarly, representatives from the Indian Agricultural and Processed Food Products Export Development Authority, the Federation of Indian Chambers of Commerce and Industry, the Confederation of Indian Industry, and Reliance Industries also participated in July hearings. At an event where each speaker is given only five minutes (strictly enforced), having a number of speakers from a country is an advantage. The presence of industry representatives in these kinds of events also help them understand the market dynamics and the future challenges. This is important, particularly because there will be many more challenges with Trump’s tariffs.
With the gazette issued on 10 July, Sri Lanka has imposed a prohibition on the importation of goods produced with forced labour. Now, the challenge will be to effectively enforce the prohibition. And what are the goods produced with forced labour? The USTR list only focuses on aluminum, cotton, electronics, lithium-ion batteries, rice, and tobacco. However, according to the U.S. Department of Labour, the list is much longer. Hence, this list may change continuously during the next two years and tariffs may fluctuate once again.
So, this is definitely not the time to slumber.
(The writer, a retired public servant, can be reached at senadhiragomi@gmail.com)
by Gomi Senadhira ✍️
Features
Tales of Mystery and Suspense 10 Casino for Sale
After the overwhelming grotesquerie of J K Rowling’s latest Cormoran Strike novel (written, I should have noted, as the others were, under the pseudonym Robert Galbraith), I thought I should return to the world of fun, and also a much shorter description since this thriller moves quickly without the layers of detail that Rowling engages in.
I then move to the second comic thriller by Caryl Brahms and S J Simon. This, their second story to feature Vladimir Stroganoff and Adam Quill, was Casino for Sale, as lunatic a romp as the first, though without the emphasis on the ballet that characterized A Bullet in the Ballet.
This one begins with the impresario Stroganoff buying a casino cheap from Baron Sam de Rabinovich, only to find that it was a rundown place, not the grand casino of La Bazouche, a resort on the Frenc+h Riviera, as he had initially thought. The grand one belonged to Lord Buttonhooke, and Stroganoff could not compete, until he thought of bringing the Ballet Stroganoff to the casino – which of course leads to Buttonhooke deciding to have ballet performances in his Casino too.
Stroganoff invites Quill to visit him, which Quill decides to do since he has left Scotland Yard, having come into a legacy. No one believes this, and he has to face questions as to what he did to have been sacked, with sympathy for having been found out.
The day he arrives in La Bazouche there is a murder, of a vitriolic critic called Citrolo, in Stroganoff’s office. He had been going to write a damning review of the opening night of the ballet and Stroganoff, when he realizes Citrolo cannot be swayed, drugs him and dictates the review himself to the papers. He leaves Citrolo sleeping and finds him shot the next morning, whereupon he decides to muddy the waters and leave a suicide note and lots of other murder weapons. So much overkill, as it were, of course ensures that he is arrested.
But the excitable French detective who makes the arrest follows up his suggestion that Buttonhooke was also involved, and so the two casino owners find themselves in cells next door to each other, with the detective Gustave quite happy to provide creature comforts for a fee.
Quill decides he must investigate, and finds Gustave most cooperative, since he has a laid back attitude to work. So it is Quill that finds a notebook which makes it clear Citrolo is an accomplished blackmailer, and that there are lots of possible murderers, including Stroganoff’s croupier, who was crooked, Rabinovich, who was now working for Buttonhooke, a confidence trickster called Kurt Kukumber, whose prospectus for a dud gold mine was found in the office and Prince Alexis Artishok who was engaged in a deal to buy diamonds from the ballerina Dyra Dyrakova.
Stroganoff had been trying to get Dyrakova to dance for him, but having done so previously she had refused. But then to Stroganoff’s chagrin she agreed to dance for Buttonhooke. The clearly crooked Artishok had told Buttonhooke’s mistress Sadie Souse, who was not very bright, that Dyrakova possessed diamonds she was willing to sell cheap, and Sadie was determined to have them.
Quill meanwhile finds out that there was a secret passage to Stroganoff’s office, the obvious solution to what had begun as a locked room mystery, and that this was known by almost everyone apart from Stroganoff himself. And then Rabinovich is murdered, just after Gustave had released his two original suspects, leading him to blame Quill for having insisted on that and thus allowing them to kill again.
Soon afterwards Dyrakova arrives, and the town is full of posters announcing that she will appear in the casinos, elaborate posters for either one, since Stroganoff is determined that she will dance for him, and if she does not come willingly, he has devised a scheme to make her do so unwillingly. So, though Buttonhooke has her taken off to his yacht immediately she arrives at the station, Quill along with Arenskaya gets her into a launch and to Stroganoff’s casino, where she performs to tumultuous applause, not knowing for whom she is dancing.
When Quill asked her about the diamonds, she said she had sold them long ago, and that gave Quill the solution to the mystery. Rabinovich had known about this, and Artishok had killed him to prevent Sadie learning it from him, he had killed Citrolo who had recognized him for an accomplished card sharper, not a Russian prince at all. But before he is arrested, he gets away in a boat, and the police launch that pursues him is on the point of catching him up when it runs out of petrol.
Again, lots of excitement, and entertaining references – Gustave grows marrows – and if not quite as brilliant as its predecessor, Casino was certainly a delightful read.
Features
The challenge of being positive about SAARC
It was a few years back that a former President of Sri Lanka took it on himself to pronounce SAARC ‘dead’. Since then there have been other sections of Sri Lankan opinion that have joined the critics of SAARC and taken the solemn stance that SAARC has indeed died what may be called a natural death.
Their fatalism is understandable. SAARC has failed to meet at heads of government or state level for the past several years to take the SAARC process notably forward. Regional cooperation has more or less been only an appealing idea. No substantive concrete projects have taken off to make the idea a hard reality. ‘Inner paralysis’ seems to be SAARC’s lot. Hence the fatalism in these circles.
However, being one of the worst cash-strapped regions of the world and a teemingly populated one with people virtually left to their devices, what choices do the ‘SAARC Eight’ have other than to try their best to band together and continue with their cooperation efforts, however small they may be?
There is no escaping the mounting debt trap for many of these countries and bankrupt Sri Lanka is a glaring example, but ‘throwing in the towel’ and abandoning themselves entirely to the diktats of the strongest economies and their agencies will prove a ‘living death’ for many countries in the SAARC fold.
The gains may be meagre but giving-up on SAARC cooperation in full would prove self-defeating for the organization and South Asia. Right now, the collective intention ought to be to salvage what the region could from the tenuous cooperative efforts. Moreover, such initiatives could go some distance to generate a degree of goodwill among the Eight and help in sustaining a dialogue process.
Given this backdrop it proved ‘a stich in time’ for the Regional Centre for Strategic Studies (RCSS), Colombo, to recently host the SAARC Secretary General Ambassador Md. Golam Sarwar to a round table discussion on the unifying potential of SAARC and its future possibilities, besides other related issue areas.
Held on June 24th and moderated by RCSS Executive Director and former ambassador Ravinatha Aryasinha, the forum brought together a vibrant, wide ranging audience comprising academicians, diplomats, senior public servants, civil society activists and many others. Following the presentation by Ambassador Golam Sarwar titled, ‘Reigniting SAARC: Achievements, Challenges and the Way Ahead’, a lively Q&A followed.
The above forum could be described as an act of lighting the proverbial ‘candle’ rather than ‘cursing the darkness.’ It surely is a ‘darkness’ that could be seen as daunting considering that the region’s pivotal powers, India and Pakistan, are failing to act in a spirit of accord but are engaged in bitter finger-pointing on a number of questions of vital importance to SAARC.
On the other hand, what is the rest of the region doing to bring the above sides together? It is disappointing that to date the rest of SAARC has failed to launch a major diplomatic drive to bring peace between the feuding regional heavyweights. It needs to act without delay and establish its earnestness and this effort would need to prove SAARC’s staying power in the unfolding months and even years.
In assessing SAARC’s seeming failure local opinion in particular has failed to factor in what could be described as weak leadership. Since Sheikh Mujibur Rahman of Bangladesh, the founding father of SAARC, the region has failed to produce a visionary leader who could advance the SAARC cause with charisma and drive.
Among other reasons, weak leadership accounts considerably for the faltering and stuttering status, as it were, of SAARC. Badly needed are leaders who could go the extra mile, think less of narrow national interests and work diligently towards the collective well being of the region but SAARC’s millions of ordinary people have been made to wait in vain for leaders of such stature. Instead, they have been burdened with politicians who seem to be relishing the apparently moribund state of SAARC.
Looking back, it could be said that it was the dynamic leadership factor that led to the launching of the Non-Aligned Movement and for its sustenance for a few decades. True, it could be seen in some quarters that NAM is no more, but as in the case of SAARC, the former too has been unfortunate to be burdened over the years with politicians who lack the vision and drive to unflaggingly advance the fortunes of the South. NAM and SAARC lack the dynamism and vision of leaders of the stature of Jawaharlal Nehru, for example, to give them the required guidance and intellectual depth.
The reasons are complex for there not being among us currently political leaders with the vision and the steadfast commitment to advance the legitimate interests of the South. However, it could be stated with conviction that the majority of Southern leaders have too easily caved in to the demands of the global North and its financial agencies.
These leaders have failed to see, for instance, that the largely market economy oriented Northern governments would not view with favour a centrist economic model that attaches priority to the interests of the dis-empowered publics of the South. This realization ought to have dawned on the current government in Sri Lanka, for instance, some while ago but it has no choice but to abide by IMF dictates since economic survival at present is unthinkable without the latter’s succour.
Accordingly for SAARC this should be the time for some soul-searching. Priority needs to be attached to ending the feuding between India and Pakistan since at present the material fortunes of the region hinge largely on these regional giants giving peaceful relations among them a try. This is no easy challenge to meet but some daring, visionary diplomacy needs to take hold among the rest of SAARC.
There is some sense in SAARC bringing the peoples of the region together through programs that address their best collective interests. A meeting of minds among SAARC nations could enable SAARC and its agencies to build a region-wide people’s movement for progressive political and economic change that could in turn lead to the region’s political leaders sensitizing themselves more to the neglected needs of their publics.
However, the time is ‘now’ for the initiation of these progressive changes and the voice of SAARC well wishers would need to drown out those of their critics.
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