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Confronting capitalism – market oriented economy with state guidance

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By Jayampathy Molligoda

Recently the Governor, Central Bank, Professor WD Lakshman, at a media briefing stated that Sri Lanka was following a market- oriented economy with state guidance, involving some controls and restrictions. He was quoted as saying that such a framework would not be successful under an IMF program. This, in my view needs further elaboration. As we understood, IMF programme will essentially impose some conditions such as; maintaining fiscal discipline- not to exceed the government budget deficit beyond say 8-9 % of GDP, not to defend external value of the rupee, meaning not allowing the rupee to depreciate by pumping dollars from the official reserves of the Central Bank, not to go for unnecessary commercial foreign borrowings etc.

 

Managing in turbulent times:

According to IMF global economic outlook based on October 2020 report, most countries imposed stringent lockdown measures and as a result, the economic activities contracted dramatically on a global scale. The report says that although easing lockdowns can lead to a partial recovery, economic activity is likely to remain subdued until health risks abate.

The positive feature of working with IMF is that our credit rating could be improved and our Banks and other financial institutions may be able to transact with foreign financial institutions efficiently and arrange trade finance facilities and commercial borrowings at competitive rates. Also, the Sri Lankan exporters may be able to receive foreign remittances without unnecessary delays and restrictions imposed by foreign correspondence banks. As for credit rating position, Sri Lanka was downgraded four months back and at present, Sri Lanka is ranked C grade. When a country is under an IMF standby facility, there is a greater possibility of the ratings getting improved, thus building confidence among the business partners and foreign multilateral financial institutions like World Bank, ADB, JBIC etc.

As articulated by the Central Bank Governor, the government has been able to contain the trade deficit through stringent import control measures in order to save much needed foreign exchange, as the tourism & travel and some exports such as textile and garment sectors have been badly affected during the year under review. This is in the backdrop of some export targets where the government policy makers were expecting 4-5 billion US $ per annum in terms of tourism proceeds before COVID-19 pandemic hit. In fact, Sri Lankan economy could realise only 0.9 billion US $ from tourism in 2020.

Nevertheless, the Central bank has been able to provide guidance, support and advice to the government to manage the macro- economic fundamentals quite efficiently during these turbulent times, which is commendable. The following table shows the summary of the vital statistics of Sri Lanka’s macro- economic transactions with the rest of the world. An attempt has been made by the writer to make some provisional figures and estimates to ascertain whether Sri Lankan economy could withstand the pressure from this global economic downturn. Also, it is important to critically review the efficacy and effectiveness of the economic policy changes contemplated by the present government policy makers and to what extent they succeed in confronting capitalist economic system in todays’ context.

 

= Author’s estimates

As can be seen, the biggest challenge is in the management of the debt repayment capacity, especially in view of the fact that a total sum of US $ Billion 7 is due during the current year, which is the highest ever debt service figure that the country has to service in order to avoid sovereign default. In addition to above, domestic forex debt repayments such as FCBU and SLDB amounting to 1.5 billion US$ will also become due, however the government may be able to successfully arrange foreign SWAPs from friendly countries’ multilateral financial institutions and Central banks to meet any contingencies. It should be mentioned that the Central Bank of Sri Lanka is vested with the responsibility of the management of the public debt, in terms of Section 113 of the Monetary Law Act.

 

Confronting capitalism:

Throughout the world, economic growth has drastically slowed. Natural resources are exploited for short-term profits. Wealth is concentrated in the hands of a few. When a large number of children living in poverty, multinational ultra- rich elites tuck their money into tax heavens. As we all know, lockdown impacted peoples’ ability to move across borders, but it doesn’t stop money flowing into tax havens around the world, as claimed by Forbes magazine.

Anna Zakrzewski, who leads Boston Consulting Group’s Global Wealth Management division did a detailed study and the economic shocks of coronavirus have meant that offshore financial centres such as Switzerland are back to their old tricks: Banking peoples’ money away from their more- risky homelands.

‘Confronting capitalism’ by Philip Kotler published by American management association explains 14 major problems undermining capitalism and offers real solutions for a troubled economic system. Although best known as a marketing guru, Kotler trained as an economist under three Nobel price- winning economists, namely Prof. Milton Friedman who represented free market economic thinking and two other professors, Paul Samuelson and Robert Solow of MIT. Some of the serious shortcomings of capitalism as articulated by Kotler include: tends to focus narrowly on GDP growth, generates income & wealth inequality, proposes no solution to persisting poverty, exploits natural resources and environment in the absence of regulations, favours short term profits over long run investment planning, fails to pay a living wage and others.

 

New economic and business model for tea plantations:

This reminds me the Sri Lankan tea plantation -RPC model introduced in 1995, where some 88,000 hectares of cultivated tea estates have been transferred to 20 RPCs under 53 year lease period with only one golden share retained by the government, expecting the companies to put in much needed investments in Re/new planting, infilling of tea, optimum utilisation of arable agricultural land and other resources including factory modernisation, tea marketing efforts and other viable diversification options , and improve labour management relations through collective bargaining process etc. As per latest statistics at Tea Board, the total tea production at RPC level has come down to 70.6 million own crop and bought leaf of 24.2 million kilos totalling only 94.8 million kilos in 2020 (total national production in 2020 was 278 million kilos- 34% RPC share) from the 135. 3 million kilos in 1995 where the total national production was as 246 million kilos- 55% RPC share.

in January 2019, the daily wage was revised to Rs 750/ per day under the main collective agreement entered into between the RPCs and worker trade unions in 2003. Unfortunately, the daily attendance allowance and the productivity linked wage rates hitherto enjoyed by the workers have been taken out jointly by the parties to the collective agreement, which the undersigned, as a non- executive director attached to one of the RPCs had made written representations in January ’19 itself to the EFC and the negotiation committee, thus expressing serious concerns. Thereafter, the demand for wage increase came even before the presidential election held in November 2019 from worker trade unions under the collective agreement generally to be negotiated once in two years only. The RPCs have called for a new hybrid wage structure focusing on a revenue share model based on ‘three day’ productivity-focused rates and three daily wage rates -a total package for the entire week for the estate workers. But this was not acceptable to the worker unions quoting ‘six day work rule’ and practical issues. An option favoured by the trade unions is to increase the basic wage which attracts not only EPF/ETF, even the other terminal benefits such as gratuity holiday pay etc. An ‘out-grower model’ where the workers are allocated small plots of land to grow their own tea to sell to the factories was also suggested without much deliberations to study far reaching implications.

In view of the deadlock, the cabinet has decided to refer the demand of Rs 1,000/ daily wage to the tea & rubber industry wage board for a decision and they have incorporated a sum of Rs 900/ together with a budgetary allowance of Rs 100/ to make Rs. 1000 as minimum daily wage payable to the workers under wages board ordinance. The writer has been a proponent of the collective bargaining process under the main collective agreement entered in to 2003. My own view is, once the wage anomaly is sorted out, it is expedient that the parties to get back to the CA and honour the conditions in the said agreement in the best interest of the tea industry, thus maintaining good labour: management relations at estate level

 

Export earnings are getting trickled -down to farmers:

With an annual export earning of LKR 230 billion, at the Colombo tea auction level, the tea prices have increased from Rs 545/= per kilo of made tea in 2019 to Rs 628/= per kilo for the full year 2020. Despite production decreases, which is the main concern today, the foreign exchange earnings have reached this level thanks to the fob price of tea improving from Rs. 822/ per kilo to Rs. 867/ in 2020, due to efforts by our tea exporters- supported by improved quality of the final product by growers and manufacturers and ‘Ceylon Tea’ promotional campaign. Consequently, the export earnings are getting tricked down to tea small holders and in fact, the farmers are receiving Rs 90 per kilo of their green leaf as against Rs 79/= per kilo in 2019 on an average basis. The main thrust would be integrated quality and productivity. Contrary to media reports recently, the majority of RPCs have also been making profits during the year 2020 as per Colombo stock exchange filing. Tea. Credit goes to all the stakeholders of the global tea value chain from our tea grower to Sri Lankan tea marketing companies.

Sri Lankan tea industry is not just a business, it is a way of life for over 2.5 million people and we need to protect and nurture nearly 500,000 small holders and 700 tea factories and 140,000 estate workers by encouraging tea exporters to really focus on promoting and marketing Ceylon Tea B 2 C, in addition to B2 B tea exports. Discerning tea consumers world over are paying premium prices for Ceylon tea, due to promotional campaigns focused on authenticity of the product based on sustainability credentials and wellness factor of Ceylon It is in that context only the recent wage increases should be viewed.

 

Conclusion:

From the above it can be seen that the main stakeholders, namely the RPCs, the worker trade unions and the government have failed in working together to attain the mission set out at the time of privatisation of tea plantations in 1992. After 29 years of the first privatisation, it has now become necessary to migrate in to a new economic and business model for RPCs, thus promoting high quality plantations, and need to focus more on sustainable agricultural and manufacturing practices through infusion of increased investments and management inputs. Nevertheless, the success depends on our ability to market and promote ‘Ceylon Tea’ in global target markets as a premium quality beverage under the ‘sustainable food’ category. As Mahatma Gandhi said, the difference between what we are doing and what we are capable of doing would solve most of the world’s problems.



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Features

Sohan…adapting to the ‘new normal’

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Surprisingly, the Coronavirus pandemic seems to have galvanised our entertainers into action.

True, most of the big bands are finding the going pretty tough, these days, as most public shows, like concerts, sing-along, and dances, have been put on hold.

Fortunately, we do have artistes who capitalise on unexpected situations to continue to keep the public, and their fans, entertained – of course, doing it differently

Band leader Sohan, of Sohan & The X-Periments fame, who is always innovative, when it comes to music, has hit upon a novel idea, in order to keep his band occupied, for the next three months.

He has decided to put The X-Periments into ‘recording mode.

Says Sohan: “I’m getting them involved in doing in-house recordings at my home studio.”

And, what’s more, I’m told that Sohan has found a secret sponsor, so the boys will be paid, too. Obviously, it’s a win-win situation and that makes Sohan extra happy!

The veteran artiste/entertainer went on to explain that the main CD will contain cover versions of his favourite songs, and will also include a duet with his daughter Erandika who is scheduled to be in Sri Lanka, hopefully, in May. She is currently in the States.

The song, Sohan has in mind, is that immensely popular golden oldie, made popular by the late Nat king Cole (and daughter Natalie Cole) – ‘Unforgettable.’

Clifford Richards will be seen in a virtual concert, along with Corrine Almeida, and Sohan

The second CD will feature Sohan’s original songs, both western and oriental. 

Sohan will be working with Shobi Perera, Kumar de Silva, Rajiv Sebastian, Roshan de Silva, Chrys Wikramanayake, Rukshan Perera and Damian Wikkramatillake on his novel project, while Krishantha de Silva, who manages Sonexco Enterprises, will take on the role of coordinator.

Although this project will keep The X-Periments, busy, one day of the week will be designated as ‘recording day’ and they have a deadline of three months to complete this project, said Sohan.

There is also a possibility of Sohan inviting a few of his friends to join him in the vocals but that will depend on the materiel he decides on.

“There is no point in hanging around, waiting for work. Musicians have to innovate and create work to keep going, during these challenging times.”

 Sohan is also working closely with Corinne Almeida  and Clifford Richards and has an idea of doing a virtual concert, with the same line up that was featured at the Valentine show, called  ‘Love at the Edge.’

Rajitha, of Misty, is helping them with the technical details of the show,

No doubt, things are looking a bit rosy for Sohan & The X-Periments, and Trishelle.. 

The guys are also working with Benjy and Aquarius, on a mega event, for Richard de Soysa, to be held at Nelum Pokuna,  which is scheduled for mid- May, of 2021, and will feature 10 leading artistes ..

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Remembering Dr. Neville Fernando

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This tribute is in remembrance of my father-in-law, the late Dr. Neville Fernando who would have celebrated his 90th birthday on 9th March 2021. He passed away unexpectedly on the 4th of February 2021 due to the deadly COVID-19 virus.

His birthday will be remembered with an almsgiving to the priests at the Kotikawatta temple to invoke merits on him to attain the Supreme bliss of Niravana. Religious observances on his birthday were an annual occurrence even during his lifetime.

As I ponder his memories, being ‘no more’ is the saddest thought that crosses my mind. I suspect that if you are reading this you understand what I mean logically. Death means that our loved ones never grow a year older, although logic does little to clear up our confusion when his birthday continues to happen year after year.

His memories and deeds throughout his life brought back towards the day I joined his family, when I was just a medical house-officer at the Nawalapitiya Hospital in 1982, through the marriage to his only daughter. Even then he was known to be a real legend and an honest politician. Today, I am in this position as a cardiologist due to his encouragement, loving care and continuous assistance in whatever means. My mind is full of memories of those loving moments shared together. He was a loving, kind and straight gentleman. I may also use the words handsome and charismatic leader. He will inspire us throughout our lives. His pleasant disposition will charm anyone and uplift our mood.

He led a good life and now has a left a good legacy of four children( three boys and one girl) whom any father would be proud of, nine grandchildren and five great grandchildren loved by everyone. He is now no more and no one can fill the void nor bring back the warmth and love he exuded.

We all have courage and we have our convictions, but rarely have the courage of our conviction. His kindness and compassion were his key attributes that made him so special. He had been a good general practitioner before coming to Parliament defeating a formidable leftist politician Leslie Goonewardene who represented Panadura for decades. It was a landmark victory for the UNP in 1977. He was a kind and compassionate doctor who served the rich and poor alike in Panadura for many years and was sought after by his patients for his well known ‘athguna’ (healing hands). This is where he earned his loyal fan base to enter into politics.

Among many things he achieved in Panadura establishing the “Kethumathi” Maternity Hospital, the only one of its kind outside Colombo, helping Sri Sumangala Girls College expansion programme, starting Agamathi Girls school and Janadhipathi Boys School and self funding the Sri Saugatha Vidyalaya Pirivena building at n the Rankoth Viharaya temple in Panadura. Likewise he helped many Buddhist temples during his tenure.

He also started an industrial zone in Modarawila, Panadura which was an abandoned marshy area before that. He had provided the first computer lab and two acres of additional land to expand the Sri Sumangala Vidyalaya which is spoken with gratitude by the students of his alma mater. He did not expect anything in return.

He was a fearless ,principled and honest man who opposed JRs’ motion to takeaway Mrs.Bandaranaikes’ civic rights as he never wanted to compromise his basic human qualities over politics. Very soon he left the Government before any attempt to expel him and formed a small party with few other honest politicians. Later he joined SLFP on the invitation of Mrs.Bandaranaike and worked in the party as an Assistant Secretary for the progress of the country.

He was a maverick par excellence ,an entrepreneur ,extraordinaire and a businessman with a foresight. As one of the pioneers in the hospitality industry, he built hotel Swanee, subsequently he started JF and I, one of the most modern printing and packaging factories in the country to date. He also pioneered a porcelain factory called “Royal Fernwood Porcelain” in Kosgama. Which provided so many employment opportunities and in time to come, helped to economically develop the area.

Continuing his political career, he entered Parliament again as an SLFP opposition member. Later on in 1994 he decided to give up politics.

His divestments in the Porcelain factory enabled him to purchase Asha Central Hospital which was developed with latest equipment and brought to international standards. This is the time I had to take a difficult decision to leave the Government as a Consultant Cardiologist and join Asha Central Hospital in 1998 to help him in his endeavour. He developed and managed Asha Central Hospital till 2007 and subsequently sold it to start his new venture SAITM or South Asian Institute of Technology and Medicine with the encouragement of the then Min.of Higher Education Wishwa Warnapala.

Infact I was very much concerned about the new development because of the past experience in the country with the North Colombo Medical College. He always used to tell “every child should have the right for a decent education either in a government or non-government organisation”. His main vision was to give a higher education opportunity for the students .Therefore apart from medicine he also established nursing, engineering , IT, management programmes with the help of esteemed academics who believed in his vision. He established the Dr Neville Fernando Teaching hospital (NFTH) in Malabe to provide clinical training for his students at the medical faculty .It was a impressive state of the art hospital with 1002 beds and latest medical equipment . All of this was done during his 80s which was a remarkable achievement.

SAITM gave him immense pride and a lot of pain at the same time. He was very proud of the fact that he was able to give so many scholarships to deserving students (close to Rs.600 million scholarships during his time).In addition to saving a tremendous amount of foreign exchange he was also able to give an opportunity to students to stay in Sri Lanka with their parents, without having to go overseas for their education leaving behind all family and friends.

However, he had to face many obstacles during this period and was socially and politically crushed due to SAITM. With time, he made a decision to give the NFTH to the Government in return for the clinical training of the medical students of SAITM. In 2017 SAITM was closed down by Maithripala Sirisena who gave in due to the heavy opposition made by the unions against private medical education.

At 89 years of age he was an avid Facebook warrior and used to keep abreast of what was going on in the social media. He was a big cricket fan and never missed watching a cricket match day or night.

Writing about this unique personality cannot be limited to a few words. His life is a monumental story full of new chapters. He dreamed big and his dreams were of public service, even when he was no longer a politician. He yearned to make this country a better place for people to live in, even in his eighties.

May his journey of Sansara be a short one and may he attain the supreme bliss of Nirvana!

 

Dr Mohan Jayatilake

Consultant Cardiologist

 

 

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Features

Boogie Night with Suzi

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Yes, music lovers, get ready to boogie the night away, this Saturday, March 13th.

From 9.00 pm to 10 pm, you would be given the opportunity to see Friends’ former female vocalist, Suzi Croner (Fluckiger) boogie away on Facebook, on Talent Network Group (TNG).

Suzi is excited about this new scene, which will be live streamed, worldwide., and she plans to belt out songs from the Friends’ era (’80s and ’90s), country, and rock ‘n’ roll.

She is already working on her repertoire and says she will make ‘Boogie Night with Suzi’ a real exciting event.

TNG is a Dubai-based project, administered in Dubai, with moderators, worldwide.

And, that means, the whole world is going to see Suzi boogie away.

Several local artistes have already been featured on TNG.

 

 

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