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Opinion

Daytime robbery called DDO

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by Sumanasiri Liyanage 

Last Friday, the organisers of ‘UNITE’ convened a meeting of all the oppositional parties, trade unions amd civil society organisations at the Public Library in Colombo. UNITE is an umbrella organisation comprising some leading trade union organisations like Ceylon Bank Employees Union, United Federation of Labor, Ceylon Teachers Union, FTZ unions, Postal Union and other several leading trade unions, and the collective of multiple social movements.

At the outset, Jagath Gurusinghe, General Secretary of the UFL explained briefly but eloquently the principal focus of the meeting. He informed the gathering that the meeting was a just one more step in the on-going protest and agitation against Ranil-Rajapaksea government and its proposal for domestic debt restructuring. The steps that have been already taken was lucidly explained. The focus of the meeting is three-fold. 1. A brief critical analysis of the CBSL proposals and their implications to the working people (awareness building); 2. The work done so far to counter and stop the implementation of DDO (auditing the past work); 3. Prepare a joint action plan that includes all the oppositional political parties, groups and social movements (the front formation). As Jagath Gurusinghe of the Telecom Union has informed that the campaign against the government’s DDO proposals by the united action front has been tentatively fixed for August 28.

Revisiting CBSL proposal to the Parliament 

Based on many an analysis of DDO, this article is focused on a different dimension, here the methodology that been adopted is a simple calculation based on available and projected data. The release of the annual report of the Employees Provident Fund (EPF) is unusually and invariably delayed so that we have to base ourselves on two to three-year old data. Secondly, our analysis is on the general EPF and not on specific sector or company run superannuation funds. Notwithstanding the fact that the devaluation of the principle fund that may be attributed to price inflation, the negative influence brought down by it is bracketed in the context of this article. Nonetheless, it is important to note that the adverse impact of inflation is substantial and continuous.

The current value of the EPF is Rs. 3,460 billion, making it the most lucrative single capital resource in Sri Lanka. The fund has been growing annually. Its main injections and withdrawals are plotted in Figure 1: Domestic Debt Restructuring ex ante.

The main injections to the pool of resources has been two-fold. The are: 1. Monthly contributions of the members of the fund that comprises private, corporate and the state-owned enterprises; and 2. Annual earnings of the fund that comes from myriad forms of fund’s investment. As the Figure 1 shows that while the first amounted in 2022 to Rs 193 billion, the second was to Rs. 285 billion. Both totaling Rs. 478 billion. Let me now turn to annual withdrawals form the pool that are also two-fold, namely, 1.

Total annual payments to the members of the EPF when they are retired; and 2. Tax payments to government that ow stands at 14 per cent. Hence, the total withdrawals are Rs 211 billion (Rs. 163 plus Rs 48 billion). It is interesting to note that the EPF tax payments are calculated as Dr W. A. Wijewardana has shown in his excellent article on the subject on gross income not and not on net income (Gross Income – Interest Payments). Balancing total injections with total withdrawals, it is not difficult to calculate the annual net receipts to the resource pool that amounted to Rs 267 billion (say in 2002) that we call the total annual net returns of the pool. What does it mean? EPF account holders’ social security savings increased on average by 7.71% approximately. That amount may vary with the rate and the amount of earnings, tax rate assuming membership of the EPF remain unchanged. (See Figure 2)

Now comes the so-called debt restructuring. The objective of the debt restructuring is to reduce the total government financial needs (hereafter GFN) from the current 34.5 percent of the GDP to annual average of 13 percent of GDP between 2027- 2032. The Governor of the Central Bank says the government has already adopted stringent measures that are economically and socially costly in order to reduce it. These measures include revenue enhancing measures, and expenditure rationalisewasation. Moreover, many more taxes would come in near future. What are the perimeter and parameters of domestic debt restructuring? What has Ranil- Rajapakss government proposed?

The Impact of DDR on Superannuation Funds

To make the argument as simple and less complicated as possible, as indicated above, some assumptions are made. For example, it has been assumed that the ratios between the total value of the EPF and its constituent elements remain unchanged. The proposals say that the superannuation funds will not face a haircut. However, they include exchanging its funds to long-term bonds, interest reduction after 2025 to 9 percent, and increase of tax rate from 14 percent to 30 percent to some superannuation funds. According the CBSL calculation, reduction of GFN by 0.05 percent of the GDP is projected. In simple language, as Figure 2 shows, this means that Rs. 113 billion would be involuntarily taken away from the EPF to DDR. As a result, the total withdrawals from the fund increases from Rs. 211 billion to Rs. 324 billion. Having assumed that other factors remain unchanged, the net annual receipts to the resource pool would be in the vicinity of Rs. 154 billion. A significant reduction from Rs. 267 billion prior to the DDR. Hence, the net annual rate of return would be lowered to 4.45 percent.

In the absence of the DDR, the total value of the fund at the net return of 7.71% will increase to Rs 9,396.74 billion in 2035. With the domestic debt restructuring the total value of the EPF would increase only to Rs 6,124.81 billion in 2035. Rs. 3,271.93 will be robbed from the EPF in the coming years. This is approximately a 34.8 percent capital loss.

The writer is a former teacher in political economy. E-mail: sumane_l@yahoo.com



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Opinion

Education needed about people not feeding wildlife

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Being wildlife enthusiasts and bird watchers we took a river “safari” during a recent family trip to Bentota. We were dismayed to see that it seems to be the standard practice to feed the monkeys, I think they were the purple faced langurs, that were encountered on the river banks. Each boat that passed by stopped with boxed fruit, coconut and other odds and ends to feed them.

We managed to stop our guy from doing so but faced derision and laughter that we shouldn’t be afraid of monkeys. We tried to explain to him that this is a plague affecting Sri Lanka; elephants being fed on road sides and even in national parks, monkeys being fed from hotel balconies and apparently during river boat rides, birds being fed on hotel terraces etc.

This was met with further mockery and amused dismissal. An effort to make them understand that this was their livelihood that they were destroying it in this manner sailed over their heads. They even have a picture of a baby crocodile on the shoulders of a tourist on their billboard.

We need to consider the following:

Educate such tour operators about the importance of not interfering with the environment and the behaviour of wild animals.

Include education and training in the hotel school, and in schools in tourist resort towns about their duty and responsibility to the environment and the ecosystem on which we all depend.

If it is not already the case such operators should have licenses that should be revoked and fined if found to be engaging in such destructive acts.

Tamara Nanayakkara

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Opinion

Capt. Dinham Suhood flies West

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A few days ago, we heard the sad news of the passing on of Capt. Dinham Suhood. Born in 1929, he was the last surviving Air Ceylon Captain from the ‘old guard’.

He studied at St Joseph’s College, Colombo 10. He had his flying training in 1949 in Sydney, Australia and then joined Air Ceylon in late 1957. There he flew the DC3 (Dakota), HS748 (Avro), Nord 262 and the HS 121 (Trident).

I remember how he lent his large collection of ‘Airfix’ plastic aircraft models built to scale at S. Thomas’ College, exhibitions. That really inspired us schoolboys.

In 1971 he flew for a Singaporean Millionaire, a BAC One-Eleven and then later joined Air Siam where he flew Boeing B707 and the B747 before retiring and migrating to Australia in 1975.

Some of my captains had flown with him as First Officers. He was reputed to have been a true professional and always helpful to his colleagues.

He was an accomplished pianist and good dancer.

He passed on a few days short of his 97th birthday, after a brief illness.

May his soul rest in peace!

To fly west my friend is a test we must all take for a final check

Capt. Gihan A Fernando

RCyAF/ SLAF, Air Ceylon, Air Lanka, Singapore Airlines, SriLankan Airlines

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Opinion

Global warming here to stay

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The cause of global warming, they claim, is due to ever increasing levels of CO2. This is a by-product of burning fossil fuels like oil and gas, and of course coal. Environmentalists and other ‘green’ activists are worried about rising world atmospheric levels of CO2.  Now they want to stop the whole world from burning fossil fuels, especially people who use cars powered by petrol and diesel oil, because burning petrol and oil are a major source of CO2 pollution. They are bringing forward the fateful day when oil and gas are scarce and can no longer be found and we have no choice but to travel by electricity-driven cars – or go by foot.  They say we must save energy now, by walking and save the planet’s atmosphere.

THE DEMON COAL

But it is coal, above all, that is hated most by the ‘green’ lobby. It is coal that is first on their list for targeting above all the other fossil fuels. The eminently logical reason is that coal is the dirtiest polluter of all. In addition to adding CO2 to the atmosphere, it pollutes the air we breathe with fine particles of ash and poisonous chemicals which also make us ill. And some claim that coal-fired power stations produce more harmful radiation than an atomic reactor.

STOP THE COAL!

Halting the use of coal for generating electricity is a priority for them. It is an action high on the Green party list.

However, no-one talks of what we can use to fill the energy gap left by coal. Some experts publicly claim that unfortunately, energy from wind or solar panels, will not be enough and cannot satisfy our demand for instant power at all times of the day or night at a reasonable price.

THE ALTERNATIVES

It seems to be a taboo to talk about energy from nuclear power, but this is misguided. Going nuclear offers tried and tested alternatives to coal. The West has got generating energy from uranium down to a fine art, but it does involve some potentially dangerous problems, which are overcome by powerful engineering designs which then must be operated safely. But an additional factor when using URANIUM is that it produces long term radioactive waste.  Relocating and storage of this waste is expensive and is a big problem.

Russia in November 2020, very kindly offered to help us with this continuous generating problem by offering standard Uranium modules for generating power. They offered to handle all aspects of the fuel cycle and its disposal.  In hindsight this would have been an unbelievable bargain. It can be assumed that we could have also used Russian expertise in solving the power distribution flows throughout the grid.

THORIUM

But thankfully we are blessed with a second nuclear choice – that of the mildly radioactive THORIUM, a much cheaper and safer solution to our energy needs.

News last month (January 2026) told us of how China has built a container ship that can run on Thorium for ten years without refuelling.  They must have solved the corrosion problem of the main fluoride mixing container walls. China has rare earths and can use AI computers to solve their metallurgical problems – fast!

Nevertheless, Russia can equally offer Sri Lanka Thorium- powered generating stations. Here the benefits are even more obviously evident. Thorium can be a quite cheap source of energy using locally mined material plus, so importantly, the radioactive waste remains dangerous for only a few hundred years, unlike uranium waste.

Because they are relatively small, only the size of a semi-detached house, such thorium generating stations can be located near the point of use, reducing the need for UNSIGHTLY towers and power grid distribution lines.

The design and supply of standard Thorium reactor machines may be more expensive but can be obtained from Russia itself, or China – our friends in our time of need.

Priyantha Hettige

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