Barking up the wrong tree
Economic downturn due structural weaknesses and not ‘open economic’ policies
by Jayampathy Molligoda
This article makes an attempt to present few socio-economic factors and indicators reflecting Sri Lankan economic downfall and examine whether it has some bearing on our failure to address serious structural weaknesses in the economy for the last 45 years.
My view is it’s not the open economic policy that has contributed to the downfall of our economy. It’s due to the fact that successive governments have failed in undertaking much needed structural reforms in the economy. As a result, our export performance has drastically declined and thus widening the trade deficit. It should be clearly understood that large fiscal (government budget) and external ‘current account’ deficits, popularly known as the ‘twin deficit’, are the two key structural problems in Sri Lanka identified as core weaknesses of the economy for many decades. In addition, the socio-political issues also would have contributed to the deterioration of the quality of life of the majority of people and thus eroding ‘rich value systems’ prevailed in the Sri Lankan society for a long period of time.
The political analysts had been critically commenting on the manner in which President JRJ managed the country’s political system and governed the country during the initial period of the Presidential system under 78 Constitution. His governance style had created some kind of impression that JRJ government had made attempts to use tactics to undemocratically oppress the legitimate opposition by, first taking out the civic rights of the Leader of opposition, Mr Sirima Bandaranaike and suppress the trade union instigated general strike in 1980 and then postpone the Parliamentary elections by six years through a referendum, thus playing into extreme terrorism of LTTE, JVP and breakdown in law & order.
As a result, there has been a gradual deterioration of the economy of this country, although, both President JRJ and later President Premadasa were able to transform the socio-political system in the country and spur economic growth paving way for employment creation through private investments. Since 1978, the government of the day has been following an aggressive open economic policy framework and until 2014 there has been some progress in much needed infrastructure development with the participation of foreign and local enterprises in the private sector. However, no attempt has been made to evaluate the efficacy & effectiveness of such investments to the economy. Even after the war was successfully ended by 2009, we couldn’t establish trust & understanding among communities to establish a long- lasting peace and sound national security & defence system and political stability which are necessary pre-requisites for economic development on a sustainable basis.
Examine few key economic indicators:
(A) Government debt and depreciation of rupee:
Our total government debt was only Rs. 80 billion by end 1982, which includes some of the foreign loans obtained for the acceleration of Mahaweli development programme completed within six years. As for rupee depreciation- by end 1977, it was Rs 15.56, and by end 1982, it was Rs 21.32 for one US $. As can be seen, it was a gradual upward movement of the value of US $ and not very high rupee depreciation during the period-1977 to 1982. Since then, government debt had been increasing at a much faster rate and at the end 2014, it has gone up to Rs. 7, 486 billion, and by end 2019, it has further increased up to Rs. 13,031 billion. Our total external debt as a % of GDP by end 2010 was only 38% and it had increased to 67% by end 2019. As for rupee depreciation- by end 2004, it was Rs. 104.61 for one US$ and by end 2014 it was Rs. 131.05, now it’s Rs. 204/ but in the black market, it’s around Rs235-Rs 240/=.
(B) Poor export performance:
Compared to other regional counterparts, Sri Lankan export performance has been declining and it can be concluded that the investments made in infrastructure projects are giving diminishing returns. During the two decades in 1980’s and 90’s, we saw our export performance commencing from 1980 at one billion US$ (in the year 1980) going up to US$ 4.6 billion in the year 1999 and US $ 11.9 billion in 2019. The export performance reflects 26% of the GDP during the two decades ending 1999. However, the next two decades commencing 2000 to end 2019, the export performance of Sri Lanka has drastically declined to 16% of the corresponding GDP figures. (See table)
As can be seen, our trade deficit during the period 2010 to ‘19 has widened to 78% of total exports and our exports as a % of GDP has also decreased from 28% during the period 1990-99 to 14% during the ‘10 years period’ of 2010 to ‘19. In fact, it was an average of only 13% during the period 2015 to ‘19. The export revenue has been stagnating at an average of US$ 10. 9 billion and the trade deficit has widened to an average of US $ 8.5 billion during the period 2010 to ‘19. Repeated attempts to offset the trade deficit through tourism proceeds and remittances have not been successful without having corresponding forex inflows from export proceeds and FDI. Further, the exchange rate policy has created competitiveness issues for exporters, as external trade counterparts have become more competitive at the global market place due to their currencies are getting depreciated at a faster rate. Just to give an illustration, one cannot hold by his two hands four rubber ball in the water simultaneously for a long period of time; similarly, (i) our bank interest rates, (ii) inflation rate, (iii) rupee exchange rate and (iv) expecting large inflows of FDIs, cannot be held back for a long period of time – it’s a recipe for disaster in economic sense. These factors have adversely contributed to current macro- economic situation lowering the economic growth & development of the country.
From the above economic indicators, it can be seen that during the last seven years, the economic situation got badly affected, out of which during the last two years, it was mainly due to Covid-19 and the year-2019, it was partly due to Easter Sunday attack. Up to now, our economy would have lost nearly US $ 10 billion as opportunity cost on account of tourism proceeds from May 2019 to end November 2021. It is expected that tourist arrivals will pick it up, targeting some 100,000 arrivals per month for the next 12 months ending 2022. It’s unfortunate the ‘political party blame culture’ also contributed to the deterioration of society’s values. Because of these events, the international community lost confidence in supporting SL and even private sector FDIs have failed to come. One can also conclude that inward looking policies will not offer solutions to foreign exchange crisis, although there is nothing wrong in promoting domestic production, smart agriculture and industrial revolutions, which covers ICT development. We cannot find solutions by simply blaming the present government or previous governments, instead the key opinion leaders (KOLs) could get the government of the day to bring in much needed financial discipline through government budgetary process and instil new political culture and demand the government to bring in much needed structural reforms in order to reverse the declining trend.
Radical changes are needed to address structural weaknesses:
During the Presidential elections in November ‘19, a massive mandate was given by masses to the incumbent President, GR to undertake much needed ‘system change’. The economic situation would improve, if we are able to make some structural reforms in the economic front and undertake radical changes in the socio-political front which include changes to some areas of the foreign policy implementation. The solution lies with the Government taking some bold decisions – however they need to be mindful to the political realities and maintain policy consistency, until we are able to overcome difficulties and improve credit rating.
Key structural reforms and radical changes:
a.The present $$$ crisis needs to be resolved immediately.
i.Trade deficit for a long period of time has been around US 10 billion per year.
ii.Expected tourism earnings may not be sufficient to offset deficits in the short term.
iii.External foreign exchange reserves are low- US $1,6 Billion by end November.
iv.Banking system is faced with severe foreign currency shortage for essential items.
b.Under a revolutionary Land reforms and proper land use plan, we need to identify uncultivated land parcels, which includes Mahaweli land to fast track cultivation and development work which could be handled under PPP models by inviting private sector participation with proper monitoring of progress through an effective regulatory mechanism.
c.Use ‘National Sustainable Development Council of Sri Lanka’ as the institutional vehicle to drive green economic policy changes, whilst the Council continues to focus on 17 SDGs.
d.Existing guarantees given by Multilateral agencies for some credit lines may not be available for fuel, diesel, petrol, but only for renewable energy sources. Therefore, if we continue to have diesel plants, sourcing foreign exchange without such credit lines, that becomes a serious issue, that’s why it is necessary to focus more on renewable energy.
e.Structuring mega projects have to be in line with international trends i.e.; Sustainable development goals, COP 26 Glasgow- ‘Climate change’ to attract the right investors for our projects. Indirect costs in delaying our mega projects. Colombo East Terminal (ECT), 300MW convertible power plants, Northern/Central Highway, Port access road etc. are examples resulting from delays. However, there should be a mechanism to ascertain whether the investments made in infrastructure projects are yielding desired, expected returns.
f.Drive against drugs & underworld operations, action against corrupt practices and improve public sector service efficiency. Maintain government fiscal deficit around 7% by increasing direct taxes and restructuring SOEs, thus further reducing the burden of high expenditure.
g. Focus on FDI led ‘export oriented’ growth strategy coupled with increase in domestic production, light industries, SMEs, ICT applications.i.e.; Grama Niladhari tabs etc. and a mechanism to reduce cost of living rise, provide relief packages, and paddy/rice value chain.
h.Within the framework of non- aligned movement, Sri Lanka could slowly shift our foreign relations towards India Japan and the US. This would enable FDIs and bi lateral funds to flow in from these countries including UAE, South Korea, Vietnam to attract funds and resolve US sanctions imposed through western banks. Even the IMF will facilitate structural adjustments and rating will improve.
Therefore, it is suggested the government to appoint an ‘Expert Council’ to look into these areas mandating them to recommend a short- term solution within a set of ‘medium term’ strategic plans for the next three -five years.
Where are Sri Lanka’s economists?
By Uditha Devapriya
Asoka Bandarage’s Colonialism in Sri Lanka (first published in 1983) follows a long line of books on the impact of British land policies in Ceylon. The best of these books remains S. B. D. de Silva’s The Political Economy of Underdevelopment, first published by Routledge in 1982. De Silva, easily one of Sri Lanka’s finest economists – though he would have detested the genericness of such honorifics – died five years ago. His death went by almost unnoticed. But in every book that has been written and every effort that has been undertaken to appraise the country’s impoverishment at the hands of British colonialism, one notices his influence, his life’s work.
De Silva came from a generation of economists – among his contemporaries he counted were G. V. S. de Silva, H. A. de S. Gunasekara, and Gamani Corea – who remained, to their last day, profoundly concerned about the plight of their country and of the masses. They were all convinced – and none more convinced than S. B. D. – that Sri Lanka’s future lay in industrialisation, or more specifically production. Taking the famous example of the pin from Adam Smith’s The Wealth of Nations – a tract that is regurgitated in toto by Sri Lankan economists today – he contended that Sri Lanka had failed to grow: it made and sold garments, but did not even manufacture a pin. In every aspect and in every corner, Sri Lanka remained dependent on imports.
A small state located to the south of a regional hegemon, in an ocean that remains heavily contested by a wide array of superpowers and major powers, cannot thrive without industry. Contrary to those economists who offer solutions in the form of liberalising or liberating the economy – the question can be asked, liberated from whom, or what? – S. B. D. de Silva’s generation did not limit themselves to abstract theorising. They were moved, on the contrary, by practical considerations – as all thinkers and economists must – and they were convinced that before undertaking any major reform, they had to first ascertain their impact on all sectors. They did not shy away from attacking or critiquing policy orthodoxies, because they knew that before everything, policies must work. If they did not, or if they risked destabilising the country and its society, there was no point pursuing them.
Indeed, all of them questioned these orthodoxies, and none with as much zest as S. B. D. His work targeted two assumptions – that Sri Lanka’s plantation sector was modern, and that Sri Lanka’s capitalists were progressive minded – and effectively debunked both. That the country’s plantation sector is stagnating today is evident enough: the situation is so bad that when the previous regime mandated a Rs 250 hike in daily wages, no fewer than 20 companies went to courts, seeking to quash the decision. Value addition has declined in the sector since the 1980s, and much of the money spent by companies has been on marketing and advertising. Yet, instead of addressing and arresting these declines, Sri Lanka’s capitalists seem content in letting things continue. This is the gist of The Political Economy of Underdevelopment: that unless those who can reverse stagnation steps in, Sri Lanka will continue to shrink, to remain the economic basket-case it has been for a long time.
Unfortunately, for some reason – for some not entirely unknowable reason – Sri Lanka’s economic sphere has been penetrated by influential think-tanks and ideological interests which have strayed from this approach. To put it bluntly, we no longer find economic thinkers who are ready to question policy orthodoxy, who can point out the fallacies of pursuing it, who, indeed, can show just how incompatible the needs of the country are with the implementation of such orthodoxies. When the country was urged to reduce its food subsidies in the mid-1960s, Gamani Corea, then despatched to represent Sri Lanka at the World Bank, argued that given the tiny military the country possessed at the time, welfare remained an important stabilising influence: to reduce them now, he argued, would be to incur higher defence expenditures later. If it’s impossible to think of economists today, basking in their think-tank-doms, making such statements, it’s because there aren’t any.
In the foreign policy sphere, the likes of S. B. D. and Gamani belonged to that breed of intellectuals who were convinced that Sri Lanka’s future lay in the Global South. Both Corea and de Silva hailed from elite and middle-class backgrounds, yet both saw and accepted the practicality of following these principles. Their intellectual descendants today – if they can be called as such – remain, as S. B. D. himself observed, beholden to powerful interest groups, to external funding and patronage. In such a context, it is easy to understand why policies which have failed in the West, which the West is abandoning in favour of full-scale industrialisation, are still being touted, still being promoted, still being idealised, in countries like ours: because they are easier to market in places where intellectuals and policymakers, not to mention officials, accept them without question.
The solutions prescribed by these interest groups remain predictable and utterly bland: from tweaking labour laws to privatising State corporations, from floating the rupee to closing State-owned factories, these reforms have been promoted for as long as one can remember. Yet it remains intriguing, if not perplexing, as to the relevance of such policies to countries which have never, since independence, grown as much as they should have. How relevant, indeed, are they to the affluent economies of the West, which are rejecting them on the grounds that, in the words of a former US Economic Advisor, the State “had to step in” where benefits no longer flow from “the individualised decisions of those looking only at their private bottom lines”?
Or to restate the question: how relevant are these policies at all? Free market orthodoxy, or market fundamentalism, of the sort advocated by Colombo’s economic circles today, no longer holds ground. It was rightly critiqued by the likes of S. B. D. de Silva, who saw such reforms as serving the role of maintaining if not entrenching the financial establishment, with hardly any benefits at all for the key stakeholders who mattered: the people of the country.
There is an obvious paradox here. On the one hand the world is waking up to the harsh reality that austerity will not put food on their fable, that if a country is to survive it must pursue industrialisation and ensure self-sufficiency in critical sectors, food being an obvious priority. On the other hand, multilateral agencies, even those whose mandate is to provide aid and assistance, are selectively enforcing such measures in the Global South, while not bothering to pursue them in the more affluent Global North.
In this context, it is interesting to note what US trade representative said in defence of the Biden administration’s pursuit of protectionism and of a trade war in the chips and semiconductor sector with China. When asked by Foreign Policy magazine as to whether such policies were at odds with the US’s advocacy of free and open markets elsewhere, she replied,
“There is a direct through line between the state and expression in the economy. And that is a really important aspect of another shared challenge we have with our European friends and other partners around the world in terms of a sustainable path to economic growth and development. In a version of globalization where the field is not level, we are having to figure out how to adapt.”
Countries like the US will always tweak the rules and break with orthodoxy, because it serves their interests to do so. It is questionable as to why Sri Lanka cannot do the same. To rephrase that famous adage by Munidasa Cumaratunga, a country which does not produce even a pin cannot be said to prosper, and a country which excludes production from its priorities cannot hope to prosper at all. 70 years ago, Joan Robinson pondered whether Sri Lanka’s trade unions would ever witness capitalists willing to share the fruits of their enterprises with them. 70 years later. we ponder whether Sri Lanka will ever see economists and thinkers willing to think beyond policy orthodoxy, willing to think, not of external interests, but of the country they live in, and the people they live with.
Where are these economists? Where are these thinkers? Five years after the passing of Sri Lanka’s last great economist and one of its last great thinkers, these questions remain unanswered. The writing is on the wall, but no one appears to be aware of it. Not even those foundations and think-tanks which so ubiquitously display the names of these intellectuals, which claim to speak on behalf of their legacy, yet which end up maintaining the same narratives their forbearers tried so hard and valiantly to question, reform, and make more relevant to their people. This is what it is, and it should be called out as such: it is a tragedy, a national tragedy.
The writer is an international relations analyst, researcher, and columnist who can be reached at firstname.lastname@example.org
Hoffmann gets involved in the over 100-year old Wild Life and Nature Protection Society
Excerpted from the authorized biography of Thilo Hoffmann by Douglas. B. Ranasinghe
One year in the early 1950s the Wildlife Protection Society of Ceylon held its Annual General Meeting at the Galle Face Hotel in Colombo. ‘Thilo went as a visitor, and watched the proceedings. He met the President of the Society, C. E. Norris, and intimated to him that he wished to join the society.
Norris promised to send an enrollment form, but it never came. The Society had no office in Colombo, and without an address it was almost impossible to contact it. Both President and Secretary were up-country planters who ran its affairs from their estate offices.
After years of trying Thilo eventually managed to become a member. He was soon asked to join the General Committee, which at the time included several prominent personalities such as Dr R. L. Spittel, Sam Elapata Sr., E. B. Wikramanayake QC, R. L. Poulier and D. B. Ellepola.
Thilo Hoffmann became the Treasurer of the Society in 1961, then was its Honorary Secretary for seven years from 1962, and finally its President for a record continuous period of eleven years from 1968 to 1979.
Some of the last Britishers in the Society did not like him. It seemed that they resented his ascendancy. They referred to him as ‘the little Swiss’, where the adjective did not apply to his build, which was about the same as most of them. One was the editor of the Society’s magazine, Loris. When Thilo Hoffmann was given the Conservation Award for the year 1965 – presented by the Soil Conservation Society and sponsored by Selwyn Samaraweera – this man wrote a critical editorial titled ‘Medals for the Meritorious’. That upset Dr Spittel, who put him in his place and obtained his resignation.
Later, things changed, as Thilo Hoffmann progressed with his ‘bridging’ function. On the occasion of a District Meeting in Kandy, Dr Nihal Karunaratne humorously referred to the time he joined the Society when he was often “the only black bugger there”. Thilo responded, to everyone’s amusement, “And now I am the only white bugger here!”
Developing and leading
When Thilo accepted the honorary job of Secretary, the office of the Society, and its single employee, Sam Rajendran, had to move to Colombo. A tiny cubicle was rented at the Friend-in-Need Society at No. 171 General Lake’s Road. Here, a small desk, a chair, some files and less than Rs 500 in cash – the total assets of the Society – were installed, with Rajendran as clerk-in- charge.
Two years later, with the Society growing, more space was needed for’ its office. A shop in Bogala Building at Upper Chatham Street close to Baurs building was taken on rent. This was used for a short period. In 1964 the office was moved to Chaitya Road, opposite the new lighthouse. This was done on Thilo’s initiative. The premises were secured for the Society by him.
The small, unoccupied structure there had been used during the last World War by an Army dhoby and belonged to the Army. The only other building along the newly constructed road, then named Marine Drive, was the Ceylon Light Infantry Headquarters, which is now part of the Navy Headquarters.
The structure was improved and enlarged from time to time, and a wall built around the premises. An article by Sam Elapata Jr. in Loris, reproduced as Appendix III, describes Thilo’s involvement in this.
For the first time, the Society had a regular place to work in, and to hold the monthly committee meetings, even the general meetings, and to house its library – started by Thilo – and files, thus serving as a central rallying point for all members. It remained the headquarters of the Society for 34 years. Recalling his early days Thilo says:
“I was young, inexperienced in public speaking and shy. I attended my first half-yearly meeting (at Kurunegala, I think) as Hony. Secretary in the role as I saw it: organizer and recorder but not active participant. The President, ‘Ted’ Norris was discussing a possibly controversial subject (I cannot remember what). When he had finished there was silence, and so he just ordered me to speak. I was, of course, not prepared, and it was the first time I spoke before a public audience, not in my mother tongue, and with a strong Swiss accent. But it did not go too badly and that gave me confidence.”
He continues: “In the course of time I learnt to speak freely in public, and occasionally I even enjoyed it. But generally I had to give myself a push. This was also the case when I had to meet powerful VIPs, such as Ministers, Prime Ministers and Presidents. My basic shyness never left me, although most people have perceived me quite differently.
“Of political and other VIPs I got to know very many in the course of my work for conservation, and a few became friends, such as Ministers Edwin Hurulle and Nissanka Wijeyeratne, Lalith Athulathmudali and also D. B. Wijetunge, who became President of Sri Lanka.”
Gradually, through purposeful and relentless work, Thilo Hoffmann built up and furthered the Society, as no one before or after him. Similarly he served its cause. Knowledge, understanding, enthusiasm and self-discipline are some of the characteristics which have made him a successful conservationist. But mainly it was his perseverance, his tenacity, which brought results. As long as there was a glimmer of hope, he would put forward again and again his ideas and proposals, never letting up, with memos, reminders and personal meetings with anyone from the Prime Minister or President downward, who would be in a position to bring a project to a successful end.
His style of work was entirely based on his own involvement. He would himself do all the hard work, investigations and field work, write reports and memos, push and cajole. Any memo from the Society submitted to any authority during the period he was Secretary or President was written by him. The fact that he knew what he was speaking and writing about, based on his intimate and detailed knowledge of the country, was a prerequisite to his success.
The Society and its General Committee would provide the necessary backing and background. He found that there were few others who could be relied upon to perform major tasks with the personal involvement, discipline and perseverance required. Hoffmann never took up extreme positions, always keeping a balanced mind and advocating reasonable and realistic solutions. He could readily see and understand contrary viewpoints as well as external constraints, e.g. political though not personal. In this he is notably different from present day `super-activists’ and ‘greens’, who in his opinion “polarize to extreme positions and exaggeration, often based on ignorance, even ill-will and mischief”.
Day-to-day problems were dealt with by correspondence or direct intervention. Thilo’s application and promptness in such matters are described in the last Chapter. There were many cases of poaching, not only by villagers but by well-to-do hunters. There was illegal timber felling, and clearing.
Complaints and reports from members had to be looked into. This often led to unpleasantness and frustration, such as in cases of drunken engine drivers ploughing their trains into elephant herds crossing the railway line at night in the Polonnaruwa area.
Once, two student members, a local and a German, verbally reported a serious case of misbehaviour and shooting by an Air Force training group in the Lahugala Sanctuary. Thilo wrote a letter. An ‘inquiry’ was held by a senior officer. The incident was denied, and Thilo was asked to apologize. When he requested the two members to confirm their report in writing both refused! The foreigner is today a professor, and organizes seminars and writes papers about Sri Lanka – like so many others, says Thilo, who use the island for easy pickings.
The institution of District Representative (“DR”) had been created in 1962, when Thilo was Secretary. The DR had to have at least two meetings per year in his District. There were DRs in many areas, including Jaffna, Ampara, Ratnapura, Kandy, Kurunegala, Puttalam, and Udawalawe. They were sent the minutes of the monthly committee meetings. Thus the members in the Districts were informed of the activities of the Society. At Udawalawe the DR was Gamini Punchihewa, and at Ratnapura it was Bennie Abeyratne, a close friend of the Hoffmanns.
Talks, film shows and discussions were regularly organized. Members and friends got together in this manner, which was a great help to Thilo in the promotion of the objects and ideas of the Society, the enrolment of new members, and to obtain support for Society activities. Thilo attended most of these meetings, which were often held in planters’ clubs, and were followed by social gatherings of members, office-bearers and guests. Mae Hoffmann’s 16 mm wildlife movie was a big attraction. A gift to the Society’s membership drive, it was shown in public over and over again, even in distant places such as Embilipitiya (Udawalawe), Passara and Inginiyagala (Gal Oya).
Jungle bungalows owned and run by the Society for members, an old proposal, were promoted. As a matter of principle, these had to be outside National Parks. Dr Uragoda in his book (see Chapter III, above) says: “In the mid 1950s the first attempts to obtain leases of crown land for building bungalows were made. After much difficulty and plenty of spade work especially by the Honorary Secretary, Mr. T. W. Hoffmann, the Society managed to obtain leases of crown land near Wilpattu and Yala.”
Thilo and the Assistant Secretary, Lalith Senanayake chose the two locations after several visits to the areas. Money was collected for putting up the buildings. The Volkart Foundation of Switzerland, no doubt on Thilo’s persuasion, made a handsome contribution of Rs 5,000 to the fund. The Wilpattu bungalow was opened to members on December 1, 1967 and the Yala bungalow on December 31, 1969. Much later, a Society bungalow was built by the boundary of the Udawalawe National Park.
At Lahugala the unused Irrigation Department circuit bungalow was managed for some time by the Society for the benefit of visiting members and guests. It was situated on the bund of the large, picturesque tank, where visitors are sure to see elephants at almost any time of the year. The area, formerly a Sanctuary, is now a National Park.
When Hoffmann took over as Secretary the number of members was less than 500, and the Society’s total assets, as mentioned, amounted to a few hundred rupees. There was no library and no proper office. Most of the members were planters, with a few of the urban elite thrown in. The Society was just ticking over, although it had in the course of time had some remarkable individuals as members and office-bearers: see the paper by Thilo in Loris titled ‘The WNPS of Ceylon: Some Historical Reflections on the Occasion of its 75th Anniversary.”
.At the end of his time as President the Society had over 5,000 members, assets worth many lakhs, and had become a force to be reckoned with.
An autobigraphy of a remarkable self-made billionaire
The story of Ceylon Teamaker: MERRIL. J. FERNANDO
by Manik de Silva
Merril J. Fernando’s recently published autobiography would be considered by many to be best story of its kind coming out in recent times, if not all time, of the life and times of a business leader in Sri Lanka. Similar volumes published in recent years that come readily to mind are the life and career stories of C.P. (Chari) de Silva of Aitken Spence, Ken Balendra of John Keells, Hemaka Amarasuriya of Singer and Rienzie Weeraratne of Unilever.
Undoubtedly many more resources have been poured into this production than to its predecessors. The result is spectacular both in appearance and substance. Over 200 interesting photographs scattered throughout the well-designed volume, makes reading its 400+ pages easy. The reader cannot but be impressed about MJF’s meticulous record keeping that is a feature of the book; also the author’s deliberate decision not to pull back his punches aimed at some prominent figures in the country, many of them now dead.
Merril Fernando, undoubtedly, is the best known face in Sri Lanka’s tea industry. He’s not the biggest producer or exporter of tea in the country. But his Dilmah brand, coined from the names of his two sons, Dilhan and Malik, is also the best known Sri Lankan-owned brand worldwide. Few would know until they read the book that the original brand name was Dilma, The ‘h’ was added later to give it added punch as recommended by advertising professionals in Australia; nor would many know that Fernando served four years as a seminarian at St. Aloysius Seminary in Borella (“I was very unhappy and frequently reduced to tears”). Training a youth who had his sights on the legal profession to be a catholic priest was forced on him by his parents to whom he couldn’t say “No” at that point of time in his life and the prevailing culture.
Also that very early in his working life when he was training as a tea taster at Heath and Co., a hard to get opportunity then when that work was largely a preserve on the British, that he broke away to take up a job offer in the U.S. multinational, Mobil Oil. Fernando says the terms offered were “quite attractive,” and the offer too good to turn down at age 22-years with about Rs. 1,500 monthly on the table. He admits a “distressing lack of responsibility in suddenly abandoning my trainee tea taster programme.” Although he enjoyed the work the work at Mobil and was good at it, he says “the business was open to and driven by bribery” and he returned to tea at AF Jones, a small firm run by a British father and his two sons.
A condition of that employment was that he had to train in London at his own expense. In arranging his training slot, the head of a British firm here wrote to a friend in London recommending MJF (letter reproduced in the book) raising an interesting points about Merril (1) ” His general appearance and ways of doing business have always struck me as displaying a certain amount of integrity, which is more than I can say for most of his brethren” The second was “I have made it perfectly plain to him that in the UK there are no bottle washers or Tea Boys to wait on learners and practically all the messy work has to be done by the learners themselves.”
Fernando started at AF Jones, a company he was to later acquire, as an Assistant Tea Taster at Rs. 750 a month in May 1955. His UK experiences makes good reading including the story that he brought back pounds 325 when he returned to Ceylon at the end of five months. His landlady in London, Mrs. Butler, had tried to persuade him to buy her terraced house for pounds 750 and offered to arrange a mortgage. “I didn’t even consider it,” says Fernando. “That apartment was worth four million pounds in 2019.”
What comes out strongest in the book is Merril Fernando’s passion for “pure Ceylon tea” and his determination that this product be offered globally to discerning consumers worldwide. When strong lobbies were hard at work saying that Sri Lanka should be made an International Tea Hub like Dubai and Rotterdam by permitting the import of cheaper teas for blending, packaging and exporting, he battled unrelentingly against a move he considered would be disastrous making many enemies in the process.
Equally strong is the projection of Dilmah as a family business with his two sons figuring in both text and pictures. Merril promoted his tea using his own photo widely and with homely messages to consumers of a product coming from “us to you.” His own avuncular appearance and the excellence of the photography, perhaps an offshoot of Dilhan’s passion for the camera, played a major role in promoting Dilmah, evident in many of the photographs included in the book. Fernando’s faith in God and belief in divine intervention is a continuing thread through the publication.
There is no doubt that Merril Fernando has made a major contribution towards preserving the authenticity of Ceylon tea which had over the long period when it succeeded coffee in this country had built the reputation for unique flavour and quality that made tea drinkers worldwide recognize the product as the best available. His early training exposed him to the harsh realities of international tea export trade and he says he learned many important lessons he would never forget. These helped him to chart his business course over the next few decades. This experience and the absence of severe work pressure gave him time as a trainee in London for reflection, absorbing new impressions, acquiring new tastes and inculcate in him a lifelong passion for travel and new cultural experiences.
Attacks directed at him over the years included accusations that he was getting favours from his former father-in-law, Major Motague Jayawickreme, onetime Minister of Plantation Industries, although his marriage to Devika Jayawickreme had long ended by then. The fact that President J.R. Jayewardene made Jayawickreme dispose a small shareholding in MJF’s listed Ceylon Tea Services Ltd. (the predecessor to Dilmah Ceylon Tea Compny PLC) on a conflict of interest argument is duly recorded in the book. But Fernando makes the telling point that Jayawickreme bought the shares three years before he became minister. He also says he once refused to speak to Jayawickreme for three months when the latter called for a vote on an appointment to the new Tea Centre in New York with Fernando’s the only dissenting vote against the proposal.
The reader must not be misled by what’s written above to think that Merril Fernando has made his autobiography a platform to merely hit out at those who opposed him. On the contrary, he has been lavish in his praise of many including senior bureaucrats and political authorities that include one time Plantation Industries Minister, Dr. Colvin. R. de Silva and his former teacher and later Trade Minister Hugh Fernando. But there is another side to that coin when he discusses estrangements with business partners at AF Jones and later in his own companies.
I have known Merril Fernando for over 50 years and reported on his journey through the tea industry. One anecdote I will relate here is an occasion he took me to his home on Gower Street in Havelock Town for a string hopper dinner. That was the first time I had eaten a seer fish kiri hodda with pol sambol. I was so impressed about the meal that I mentioned it to his neighbour, my friend Mrs. Bertha Samarasinghe, the wife of the then Judge-Advocate of the Navy. A fine cook herself, Bertha responded: “Merril understands fish. I see him buying his fish from vendors at his gate.” This came to mind when I read a reference in the book to the “ever-faithful Alice, the best chef I have ever known apart from my mother.” She probably cooked the meal I enjoyed.
He could have found no better writer than Anura Gunasekera, a retired tea planter who worked for Dilmah for 10 years after he quit planting to collaborate in the writing which took all of three years to finish. With Merril Fernando completing his 92nd birthday days before the book was launched in May, there were constant challenges including covid, MJF’s hospitalization off and on during the writing and many more. But an excellent production of a compelling read has been the result.
The book is priced at Rs. 10,000 with all proceeds of sales going to MJF supported charities. But it looks as though it would have cost more to produce if all costs are factored. However that be, it’s a compelling read on the life of a remarkable man, a self-made billionaire who’s fond of saying that “business is a matter of public service” – his many charities testifying to this. It’s the history of a battle to preserve the integrity of Ceylon Tea which Merril Fernando says ought to be marketed like wine and champagne.
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