Features
From building businesses in the Far East to the main board of R&C
(Excerpted from the autobiography of Lalith de Mel)
From time to time head hunters had been contacting de Mel about leading initiatives in developing markets. So he sought an appointment with the Chief Executive and asked him bluntly whether he was a potential Board candidate. He would go no further than to assure him that he was on the shortlist for the Board. The CEO sensed de Mel might leave and did not want that and so the conversation veered to what he would like to do next.
He had often argued at the Group’s strategic discussions that the Far East was an area of great potential. So he was asked whether he would like to move to the territory and make a serious effort to build a series of new businesses for Reckit and Colman in the area and was promised all the financial and human resources he required.
He decided to take on this role. He also decided that if he was not appointed to the Board after his stint in the Far East, he would move to one of the other groups which were contacting him about working for them in a regional role in the Far East. He thought it would be much more fun spending the rest of his working life in the East than in the West.
So he came home and told his wife and family that he was thinking about moving to Singapore. His wife thought Singapore was exciting (she really enjoyed her stay there). His daughter Chiara had just finished the first term of GCSE at a school which was her fourth school as they had also sent her to Colombo for a few years in the Sinhala stream at St. Bridget’s. He was worried about the disruption and decided that he would not push her and gently floated the idea. She too was up for it. The only condition his daughter imposed was that she wouldn’t move unless they took their dog, a Cavalier King Charles Spaniel called Dusty, to Singapore as well. So he took off to Singapore with his wife, daughter, Dusty and their Sri Lankan housekeeper.
Building businesses in the Far East
The two top items on the agenda were finding a house and a school. The company had a nice spacious house with a large garden, something that was very rare in central Singapore. Everybody liked the house so housing got a tick. The next item on the agenda was a school. His daughter got a place at United World College, so that too was ticked. The next was getting to school and back. Singapore was extremely safe and they didn’t have an issue with sending their daughter back and forth from school using public transport.
In the former British colonies, people spoke English. A reasonable amount of English was also spoken in Thailand. The Indonesians did not speak English. It was a very large market and it was useful in Indonesia to speak Bahasa to get around the market and ask a few meaningful questions. It was also useful for his golf since the caddies in Singapore and Malaysia spoke Bahasa. So he put that on the agenda.
The Far East was the one major gap in the Reckitt & Colman portfolio of countries. They had a big business in the USA, a good presence in Canada, businesses across Latin America and Europe and in the major markets in Africa, Australasia and South Asia.
“I had been making the case for developing the Far East regularly at the Group’s annual conference on strategy. I had said many times that this region would at some stage in the future be a huge consumer market. The individual markets would all grow at a different pace, but they would all grow. Those not familiar with the territory saw a hazier picture.
China had not opened up and may never do so. Japan was difficult. The news about Indonesia, Thailand, Taiwan, Philippines and Korea was more about political turmoil and less about big consumer markets. There were many claims on the Group’s resources, and the Far East was perceived as something that would be a long haul and years of losing money. Every year they said ‘let’s look at it again next year’.
They were also turned off as foreign investment was regulated in every country in some form or the other and the route may be joint ventures and that did not appeal. Approval was required from various authorities and there was the smell of corruption in the air in most of these countries. All this meant complexity and that did not appeal to the Group.
That was the background when I accepted the challenge. I said, ‘I will set out what I will endeavour to do’ and wanted approval in principle. I added that I wanted to be left in peace to get on with it without a host of corporate planning and finance staff visiting, nit-picking and debating the viability of my plans.
I said I would set up an operating entity with own or joint manufacturing facilities in Singapore, Malaysia, Thailand, Philippines, Taiwan, Indonesia, China, a marketing entity in Hong Kong and Joint Ventures in Japan. The target for completion was three years. I said this would provide the basic infrastructure that would enable the Group to progressively build its business in the region in the future. I added that if we did not put these starting blocks in place, we would never be able to benefit from the growth in the region.
Chief Executive, John St. Lawrence knew that if I did not get a clear yes, without a variety of conditions and reviews before each tranche of funding, I would walk away.
I got approval without any conditions and was up and running straightaway. I had already built a factory and had an office in Singapore and used this as the support base for the new businesses. At the end of three years I delivered. I did everything that I said I would do.
During this time I never visited the UK. I did not step into the corporate office for three years and I did not attend any of the annual conferences. I blocked all efforts by corporate planning and finance staff to visit the region to ask their usual probing questions to justify their roles. If they wrote, it went into the bin. But I religiously reported every month on progress to my Group Director, who fortunately had the good sense to leave me severely alone.
The only visitors I permitted were the Chairman and the Main Board Executive Directors.”
To summarize, de Mel established a company and business in Singapore with good manufacturing facilities, a company and business in Malaysia with manufacturing facilities, Joint Venture in Thailand with the Thai partner having manufacturing facilities, a new Joint Venture with a factory in Indonesia, a Joint Venture with an old trading firm in the Philippines which had manufacturing facilities, a new company with manufacturing facilities in Taiwan, a Joint Venture with the Chinese Government authorities, two manufacturing Joint Ventures in Japan, one in food and one in consumer products, and a new company in Hong Kong that was the resource base for developing China.
He had visits from the Main Board Directors. Some of them may even have had doubts that he had created so many businesses so quickly and wanted to see for themselves whether it was just a name board on the wall or whether there were actual manufacturing facilities, staff, products in retail outlets and a distributing network. They all went on trade visits and saw Reckitt & Colman products on the shelf, including the newly-launched Dettol plaster, soap and shower products, which have now grown to be mega products. The Chairman, Sir Michael Colman, had also visited and been impressed with what had been achieved in a short time.
From this model of developing a region in a rush, the key learning was to have top quality local management staff and de Mel put a lot of time and effort into making sure that he managed to get the appropriate staff. He never used any expats in the countries (except for a small corporate team of one Pakistani and one Indian in his corporate office in Singapore).
After two- and- a-half-years, when most of it was done, Corporate Headquarters insisted that he should do the Advanced Management Program at Harvard Business School and so it was off to the USA and Harvard. Multinationals put emphasis on evaluating and training their senior employees and one of the places considered best for this was the Harvard Business School and its acclaimed Advanced Management Program (AMP) for professionals higher up in the organization.
Lalith de Mel with wife Shiranee at the Harvard Business School AMP Graduation function
AMP was an uninterrupted and highly-condensed MBA for top business executives who could not spend a year away from the business. So the program had what they would usually do in a year condensed into four hectic months. Therefore he spent four months in Harvard away from his duties in Singapore doing exactly that.
It expected full commitment, especially because the program was to enhance not only the leadership capacity of the participants but also that of the organizations they worked for. It was for potential business leaders who were one or two levels away from the position of CEO and identified by the employer as persons vital to the company’s future business plan.
The program enabled the participants to meet and learn under recognized thought leaders, skilled educators, ground-breaking researchers, active corporate board members and award-winning authors. The majority of those who joined the program came from companies with an annual revenue in excess of $250 million and should have had at least 20 to 25 years of work experience including substantial time as a senior executive. Thus, a participant would be studying together with an elite group of business leaders groomed to graduate to the next level of the corporate ladder.
As a highly-integrated and fully-immersive program, its intention was to bring out analytical skills and cross-functional perspectives in a short period of time. Therefore AMP would ensure development in management skills, strategic insights, innovative thinking and initiating change as they were key qualities expected by the employer to drive their businesses. AMP was restructured to fit the current economic landscape so that the skills acquired could be applied in the participants work environment at the current point of time.
The ultimate perk of having completed the AMP is that one becomes a lifelong member in the Harvard Business School alumni and has exclusive access to its growing global network as well as resources and tools to keep learning. Though it was a stressful program that required a lot of hard work, Lalith enjoyed the course and successfully completed it.
At last an Asian director, appointed to the R&C main board at age 53 53
“My aspiration as a Regional Director was eventually to get on the Main Board of Reckitt & Colman PLC, which was a major top 100 company in the UK. I knew this was not going to be easy to achieve because it was an old traditional British company and a major top 100 public company in the UK. The Chairman at the time was Sir Michael Colman, a baronet. During my time at Corporate Headquarters, the Main Board Directors were all British with one exception, an Australian. I was the first non-British person to be a Regional Director. I had come through that glass ceiling and I wondered whether I could go through the next and get on to the Main Board.
The Main Board was composed of the Chairman, Chief Executive, six Group Directors and four Non-Executive Independent Directors. The challenge was to become one of the six Executive Directors. An opening came about only when one of the Main Board Members reached retiring age or was removed. At the time de Mel returned from Harvard, the Chief Executive and one other Director were due to retire and two slots were available.
A team of two Non-Executive Directors were given the task of selecting the next CEO. The favourite for the role was the most senior Director. I knew him well; he was a Regional Director occupying the next office when I came to London and we were good friends. We also played cricket together for the R&C London team. Early in his career he had been appointed to the Main Board and was the longest on the Board, so I felt that if my friend Peter Maydon was appointed, perhaps I would have a chance of getting on the Board. The final recommendation of the Non-Executive Director selection team was a surprise; they recommended a very young man, Vernon Sankey, who was the youngest on the Board. The full Board, after considering it, decided to appoint him.
The top team in the company comprised the Group Directors, the Regional Directors and Heads of the major businesses. We all attended various residential conferences from time to time so knew each other well as we ate together and had a few drinks at the bar together in the evenings. When I heard that Vernon Sankey was appointed I was surprised, but I did not feel uncomfortable because I knew Vernon quite well.
The appointment of an executive director of a major public company was an important task. After internal discussions, the chairman would make a recommendation to the full board which would make the final decision. The head of human resources had a large role to play as he was responsible for managing management succession for all the key jobs and he had a short list for all the jobs and had all the career information about potential candidates.
The retiring chief executive would also participate as the prospective candidates had all worked for him. The incoming chief executive would have a big say because the new board would be his team. An agreed decision would be recommended by the chairman to the full board.
On the day that the Board announced the appointment of Vernon Sankey, I was in Singapore. I remember the day well. Late in the evening, I had a call from Vernon in London and he said he would like me to join the Board as a member of his team. At last, the objective of getting on the board of this UK top 100 company was finally achieved. When 1 was appointed I got a flood of letters of congratulation.
Those who did, and would report to me, probably felt it was prudent to congratulate the new boss. What I found gratifying was to receive many letters from former colleagues. I have quoted below from three interesting letters.
Ted Wright when he was Group Director of the Overseas Group invited me to work in London as a Regional Director. This is what he said:
What a cheering announcement we found when we got back from a trip to France this week! I was truly delighted with the news of your appointment to the Board with responsibility for the whole Pacific Rim (West).
I well remember the day when I decided that your abilities were never likely to be adequately exploited if stayed in your native Sri Lanka and it’s immensely satisfying to see one’s predictions proved correct. You have mastered every challenge thrown at you and, I know will do the same with the new ones… With all good wishes for a most successful future,
Yours,
Ted
A letter from Stan Ward who was the Head of HR. He had retired by the time I went to Singapore. I was delighted to learn that far back when Stan was Head of HR, I was in the frame for a Board appointment.
I cannot say how delighted I was to hear the news of your appointment. Heartiest congratulations and best wishes for your future success.
Forgive me if I’m indiscreet, but it was always an ambition of mine that You would get on the Board, so I’m doubly pleased that one of my favourite ‘old boys’ has made it… Again, every good wish and warmest congratulations and regards,
Stan
A letter from Peter Knee, the last Group Director I reported to before being appointed to the Board:
“…you have worked hard and successfully for the promotion and also waited overlong for it. May the fact that it has now occurred be seen by you as a well-deserved recognition of your talent and achievements, and by the R&C world at large as both and more. And here I am thinking particularly of encouragement it will bring to all those in many countries who may have wondered whether R&C would cease to be a British international company and start to become a truly described multinational one. It has!”
The euphoria of the appointment and the congratulations received soon evaporated and became a memory of the past. It was overtaken by the challenge to prove beyond any doubt that those who appointed me had made a correct decision. I was aware that there would be some who were unhappy with the decision, particularly those who saw themselves as candidates for the Board. If my performance had bumped along and if I had difficult issues with senior managers, they would have gleefully pointed out publicly that I was not up to it.
This was not a job for life. If you did not perform, you had to go and take early retirement! That was the polite way to say that one was fired. During my tenure two Main Board Directors and one Chief Executive took early retirement.
Returning to the UK
We had kept our home and so we had no problems on that score. Our worry was Chiara, our daughter’s education. Fortunately she had a good track record with eight As at GCSE in Singapore. She got a place at the very elitist boys’ school Westminster that had just started taking in girls for Advanced Levels. We were always concerned about whether the many changes in schools due to my movements would affect her studies. Fortunately they did not. She got three As in her A/Level exam and the Certificate of Excellence for Economics given for the best two papers in Economics. Much to our disappointment she would not go to Cambridge after being offered a place at my old college after a gap year and instead went to Warwick University, which had a good reputation for Economics. She did well as usual and got a first class in her BSc Economics.
Combating money laundering:
Governor of the Central Bank of Sri Lanka Dr. Nandalal Weerasinghe has said combating money laundering and countering financing of terrorism will help improve the credibility of the financial system, increase FDIs, enhance access to international financial markets, promote good governance practices and strengthen national security. Accordingly, a Financial Intelligence Unit has been given the opportunity to conduct further investigations into suspected transactions and activities related to money laundering and financing of terrorism.
Money Laundering: A Global Menace
Money laundering is a pervasive global issue that threatens financial systems and undermines the integrity of economies. It involves disguising the origins of illicitly obtained funds to make them appear legitimate. Criminal networks, terrorist organizations, and corrupt officials frequently employ this technique, exploiting weaknesses in financial regulations and enforcement mechanisms. Today we examine the concept of money laundering, its mechanisms, and its impact, supported by notorious examples worldwide, highlighting the need for robust anti-money laundering (AML) frameworks.
Definition and Mechanisms
The Financial Action Task Force (FATF) defines money laundering as the process of concealing the illicit origins of funds through a series of transactions designed to obscure the money’s true source. The process typically involves three stages: placement, layering, and integration. Placement introduces illicit money into the financial system, often through cash-intensive businesses or smuggling. Layering involves complex transactions to obscure the trail, such as transferring funds through offshore accounts or shell companies. Finally, integration reintroduces the laundered funds into the legitimate economy as clean money.
The main methods of money laundering include:
Layering: This involves complex financial transactions designed to obscure the origin of the illicit funds. Layering can involve transferring money through various accounts, converting it into different currencies, or using shell companies. The goal is to make tracing the money difficult.
Placement: This is the initial stage where the illegal funds are introduced into the financial system. It often involves depositing large amounts of cash into banks, purchasing assets such as real estate, or using the funds for gambling or investments in legitimate businesses.
Integration: In this stage, the illicit money is integrated into the economy in a way that makes it appear legitimate. This could involve purchasing high-value goods, transferring money across borders, or setting up fake businesses to funnel money in and out.
Smurfing:This involves breaking up large amounts of illegal money into smaller, less suspicious amounts and depositing them in different accounts or financial institutions to avoid detection by regulators or authorities.
Use of Shell Companies:
Criminals create fake companies (shell companies) that don’t engage in any real business. These companies are used to hide the ownership of illegal funds, often moving them through multiple jurisdictions.
Trade-Based Money Laundering:
Criminals manipulate trade transactions, such as over- or under-invoicing, to disguise the movement of money. They may falsely report the value or quantity of goods to justify payments or receive excessive payments from foreign entities.
Cryptocurrency Laundering:
With the rise of digital currencies, criminals use cryptocurrencies to facilitate money laundering, often through exchanges or by using privacy-focused coins to obscure the transaction trail.
Real Estate Laundering:
Criminals buy high-value real estate and then sell it, using the profits to launder the illegal funds. This may involve inflating property values or flipping properties for a higher price.
Casino Laundering:
Money launderers may use casinos to launder funds. They could gamble with illicit funds and then cash out with a “clean” check or claim winnings, making the money appear legitimate.
Terrorist Financing:
Though not exactly money laundering, terrorists sometimes use similar methods to move money around, often utilizing donations, front organizations, or international financial networks.
Preventing money laundering involves stringent regulatory controls, such as Know Your Customer (KYC) procedures, anti-money laundering (AML) checks, and monitoring for suspicious transactions.
Notorious Examples of Money Laundering
The Bank of Credit and Commerce International (BCCI) Scandal
The BCCI scandal of the 1980s and early 1990s remains one of the most infamous cases of global money laundering. BCCI was accused of laundering billions of dollars for drug cartels, terrorists, and corrupt officials across multiple countries. The Colombo branch of BCCI was acquired by Seylan Bank and restructured it with the help of the CBSL.
Danske Bank Case
Danske Bank, Denmark’s largest financial institution, became embroiled in a money laundering scandal in 2018. Investigations revealed that its Estonian branch had facilitated the laundering of approximately €200 billion, involving funds from Russia and other former Soviet states.
Panama Papers
The Panama Papers leak in 2016 exposed how Mossack Fonseca, a Panamanian law firm, helped individuals and entities worldwide evade taxes and launder money through offshore shell companies. Notable figures implicated included politicians, celebrities, and business magnates.
The MDB Scandal
Malaysia Development Berhad (MDB) fund was established to promote economic development. However, investigations revealed that billions of dollars were misappropriated and laundered through luxury purchases, real estate investments, and shell companies. High-profile individuals, including Malaysian officials and international bankers, were implicated.
The HSBC Case
HSBC, one of the world’s largest banks, faced allegations in 2012 for facilitating money laundering by drug cartels in Mexico. The bank’s inadequate AML controls allowed billions of dollars in illicit funds to pass through its accounts, resulting in a $1.9 billion settlement with U.S. authorities.
Impact and Challenges
Money laundering has far-reaching consequences. It erodes trust in financial systems, fuels corruption, and enables organized crime and terrorism. Moreover, it creates economic distortions by misallocating resources and undermining fair competition. Countries with weak AML frameworks often become attractive destinations for illicit financial flows, further exacerbating economic inequality.
However, combating money laundering presents significant challenges. These include the complexity of tracking cross-border transactions, the rise of cryptocurrencies, and the use of sophisticated techniques by criminals to evade detection. While international bodies such as FATF and national governments have implemented stricter regulations, enforcement remains inconsistent.
Mechanisms to Prevent Money Laundering: Existing Measures and Proposed Controls
Money laundering poses a significant threat to global financial systems and economic stability. Preventing this illicit activity requires a combination of robust regulatory frameworks, international cooperation, and technological innovation. We examine existing mechanisms for combating money laundering, evaluates their effectiveness, and hope to propose enhanced controls and remedies to address emerging challenges.
Existing Mechanisms to Prevent Money Laundering
1. Regulatory Frameworks
Governments worldwide have established laws and regulations to combat money laundering. Key frameworks include:
Anti-Money Laundering (AML) Laws:
Laws such as the US Bank Secrecy Act (BSA) and the European Union’s Anti-Money Laundering Directives (AMLD) mandate financial institutions to implement controls for detecting and reporting suspicious activities.
Know Your Customer (KYC) Policies:
Financial institutions are required to verify the identities of their clients, ensuring transparency in transactions and reducing the risk of illicit activities.
Suspicious Activity Reports (SARs):
Institutions must file SARs with relevant authorities when they identify transactions that may involve money laundering.
2. International Cooperation
Money laundering often involves cross-border transactions, necessitating international collaboration. Organizations like the Financial Action Task Force (FATF) set global standards for AML measures and facilitate cooperation among member states. Additionally, mutual legal assistance treaties (MLATs) enable countries to share information and coordinate investigations.
3. Technology and Data Analytics
Advancements in technology have bolstered AML efforts. Artificial Intelligence (AI) and machine learning (ML) are used to detect anomalies in transaction patterns. Blockchain technology also enhances transparency by providing immutable records of financial transactions.
4. Financial Intelligence Units (FIUs)
FIUs, such as the US Financial Crimes Enforcement Network (FinCEN), analyze financial data to identify and investigate money laundering activities. These agencies act as intermediaries between financial institutions and law enforcement.
Effectiveness and Limitations of Existing Mechanisms
While existing mechanisms have had some success in curbing money laundering, challenges persist:
Evasion Tactics:
Criminals continually devise sophisticated methods, such as trade-based money laundering and virtual asset exploitation, to bypass controls.
Regulatory Gaps:
Variations in AML standards across jurisdictions create vulnerabilities, particularly in countries with weak regulatory frameworks.
Resource Constraints:
Many financial institutions and enforcement agencies lack the resources to implement advanced AML measures effectively.
Proposed Controls and Remedies
1. Strengthening International Cooperation
Enhanced collaboration among countries is essential to close regulatory gaps. Establishing a unified global AML framework, supported by real-time data sharing and joint task forces, can improve enforcement.
2. Leveraging Advanced Technologies
AI and Predictive Analytics:
Develop AI-driven tools capable of real-time transaction monitoring and predictive analysis to identify suspicious activities.
Blockchain Integration:
Promote the use of blockchain in financial systems to improve transparency and reduce opportunities for laundering.
3. Addressing Cryptocurrency Risks
Cryptocurrencies have become a preferred medium for laundering due to their pseudonymity.
4. Capacity Building and Training
Provide financial institutions and enforcement agencies with adequate resources and training to stay ahead of evolving laundering techniques. Awareness campaigns targeting high-risk sectors can also enhance compliance.
5. Public-Private Partnerships (PPPs)
Fostering collaboration between governments and private sector entities can improve AML efforts. PPPs enable the sharing of intelligence, resources, and best practices.
(The writer, a senior Chartered Accountant and professional banker, is Professor at SLIIT University, Malabe. He is also the author of the “Doing Social Research and Publishing Results”, a Springer publication (Singapore), and “Samaja Gaveshakaya (in Sinhala). The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the official policy or position of the institution he works for. He can be contacted at saliya.a@slit.lk and ww.researcher.com)
by Professor Emeritus,
I M Dharmadasa
Sheffield Hallam University, UK
This article summarises the history of solar energy development in Sri Lanka that I have been involved with, over the past 40 years and my thoughts on the present situation in the country. As an active solar energy conversion researcher in both academia and industry (British Petroleum Research in London), I have seen the maturity of this technology since the late 1980s and started to promote it in schools and community events in the United Kingdom.
I then extended this work to my native country, Sri Lanka, in 1991, by initiating a UK-DFID (UK Department of Foreign and International Development) funded and BC (British Council) managed Higher Education Link (HE-Link) programme. This is how I met all renewable energy promoters in Sri Lanka. This article brings back my memories from the work done in collaboration with various people, starting in the late 1980s.
During the six-year HE-Link programme, I worked with several universities (Peradeniya, Colombo, Kelaniya, Moratuwa and Ruhuna) and organised conferences, seminars and public lectures in schools and government ministries. There were only two or three small solar energy companies at that time, struggling to do business, and they all joined together to promote renewable energy initiatives in the country.
Among many interested academics, senior engineers like Dr. Ray Wijewardane joined all these events, and I met three notable entrepreneurs working in this field starting in 1985. They were Lalith Gunaratne, Pradip Jayawardane and Viran Perera. These three friends, who were brought up in Canada, visited Sri Lanka for a holiday after their marriages and decided to stay in Sri Lanka and start a solar energy business. Their starting work was a mobile solar water pump, but about 80% of the people who were not connected to the national grid asked for solar lighting rather than solar water pumping.
Sir Arthur C Clark also gave them a good helping hand and they started to install small solar home systems in rural areas. They also started to import solar cells and assemble SUNTEC 36 W solar modules in the country, but due to various barriers from outside, that project had to be terminated. There were numerous barriers within the country itself. I remember a newspaper article that appeared in Sri Lanka titled, “Solar Power Suitable for Lotus Eaters”. After all this fantastic work in the late 1980s, Lalith returned to Canada, Viren started an eco-tourist centre, and Pradip continued to work in the solar energy field.
Most of these entrepreneurs told me that the government authorities did not listen to them due to their vested interests. For this reason, I made the decision to promote renewables as a research scholar without any connection to a commercial company. This approach worked well, and I made two or three visits to Sri Lanka in some years delivering public lectures in ministries, universities and in schools. I also wrote numerous articles in the local press and completed many interviews on applications of renewable energy sources.
Solar home systems, at early stages, had about 50 W solar panels. These were combined with lead-acid batteries to store energy and provide 5-6 lights at night. This was also enough to power a black-and-white television for a few hours. Depending on the number of lights used, the cost of such a system varied between Rs 40,000 and Rs 60,000.
Meanwhile, the Ceylon Electricity Board also worked to expand the national grid under the country’s 100% electrification programme. As the national grid is available almost everywhere, the interest in small solar home systems gradually disappeared.
There were many people in the country involved in promoting renewables, and I was able to visit Sri Lanka every year to spend a few weeks at a time and work with numerous institutes.
I also personally met almost all Science & Technology Ministers, starting from Bernard Soysa, and some Power and Energy Ministers to introduce renewable energy projects. Although the government’s take-up was slow, the private sector developed very rapidly, starting many new companies for solar system installation.
Gradually, the main interest turned to the grid-tied larger solar systems installed on freely available rooftops. With the “Soorya Bala Sangramaya” programme introduced around 2016, solar roofs began to be connected to the grid via “Net Metering”, “Net Accounting”, and “Net Plus” methods. A few years ago, a 5 kW solar roof used to cost about Rs 14,00,000, but today, the cost has come down to about Rs 9,00,000. Each 5 kW solar roof installed in the country removes the need to burn 7.5 metric tons of imported coal, introducing numerous health and economic benefits to the nation, including reducing the country’s huge import bill.
I also collaborated with the ex-chairman of the Sri Lanka Sustainable Energy Authority (SLSEA), Prof. Krishan Deheragoda, to bring two 500 kW solar farms to the country, introducing larger solar farms. After promoting renewable energy over four decades, I am pleased to see numerous large solar energy systems beginning to appear in the country, including “Floating Solar Farms”.
The current government’s interest in indigenous, hydro, solar, wind, biomass and bio-gas energy, as well as the contributions from over 200 private solar energy companies to power Sri Lanka, is a very encouraging sign.
As a result of the six-year HE-Link programme SAREP (South Asia Renewable Energy Programme), the Solar Asia Conference series and the “Solar Village” project evolved. Solar Asia Conferences have taken place twice in Sri Lanka, once in Malaysia and once in India.
A pilot solar village started in 2008, and nine solar villages have been established in the country since. The concept of solar village is to empower rural communities by introducing a regular wealth creation method using solar energy and guiding them to develop themselves sustainably. This, in turn, contributes to reducing poverty and mitigating damaging climate change, benefits 80% of the Sri Lankan population who lives in villages, and paves the way for the prosperity of Sri Lanka. To attract external funding and rapidly replicate solar villages in Sri Lanka, a “Solar Village SDG” community interest company (CIC) was formed in November 2024.
According to the latest SLSEA statistics, Sri Lanka has 2000 MW of solar and 200 MW of wind installations. This is 2.2 GW and a good fraction of the total power production capacity (~5 GW) in the country.
The intermittent nature of solar and wind can currently be balanced using hydropower until the fast-developing green hydrogen technology is established in Sri Lanka. When solar power is at its maximum power production during the daytime, the hydropower can be reduced simply by controlling the flow of water without any technical difficulties. With the positive steps taken by the GOSL and the private sector, Sri Lanka could become a renewable energy island in the future, giving the country many health and economic benefits and attracting many tourists from around the globe.
To achieve this noble goal, every sector in the country should work together. The general public should understand the benefits of using renewables and install more systems in the country, perhaps via “Crowd Funding”.
It is now clear that ROI (Return on Investment) from a solar roof is greater than the interest earned by keeping the money in the bank. PV companies must improve their “after-sales service” to increase customer satisfaction and help their customers get the most from their investment by promptly rectifying any issues arising from these new technologies.
The CEB has a great responsibility to gradually improve the national grid by reducing energy leakages and replacing weak transformers and grid lines to move towards a smart grid, enabling the absorption of more indigenous solar and wind energy.
The Author, I. M. Dharmadasa, is an Emeritus Professor with 51 years of university service, over 40 years of active solar energy research, and over 35 years of renewable energy promotional work. He has supervised 30 Ph.D. students and published 254 scientific articles and two books in this field.
by Jehan Perera
Four months after coming to power, the NPP government is facing growing criticism from those in the opposition and also scepticism regarding its ability to make policies necessary to revive the country and its economy. The catchy stories in the media are invariably in relation to some mishap or shortcoming in the past of government leaders. Some of these relate to the inexperience of the new decisionmakers, many of them having spent their lives in academia rather than in politics or public administration. The criticisms that ring true to the masses of people relate to the economic difficulties they continue to experience in full force. Those who contributed to the economic catastrophe of 2022 by their own actions over the past decades have little credibility to criticise.
The promise of an uncorrupt government made at the presidential and general elections continues to keep popular support on the side of the government. There is a continuing belief that the government is sincere about keeping corruption under control and dealing with past abuses. But there is also disappointment that the promises the NPP made about renegotiating the IMF agreement and reducing its burden on the masses of people are not being realised in the short term. The gap between the rich and the poor continues to be very large with those who are owners of rice mills, hotels and stocks getting massive profits while those on fixed incomes and subsistence farmers eking out a living.
The basic problem for the government is that it inherited an economy that had been made to collapse by irresponsible governments of the past. The agreements that the previous government signed with the IMF and international bondholders reflected Sri Lanka’s weak bargaining position. This was why Sri Lanka only got a 20 percent reduction in its debt, whereas other countries got 50 percent reductions. The NPP government cannot extricate itself from the situation. The hope that a generous benefactor will extricate us from the difficult economic situation we are in underpins the unrealistic expectations that accompanied President Anura Kumara Dissanayake during his two state visits to India and China.
CAUTIONARY TALES
Nearly two centuries ago, in 1848, one of Britain’s 19th-century Prime Ministers, Lord Palmerston, declared “We have no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual, and those interests is our duty to follow.” His speech was meant to explain and defend Britain’s foreign policy, emphasising that the country’s decisions were guided by its strategic interests rather than fixed loyalties to other nations or ideologies. It justified Britain’s controversial alliances and interventions, such as supporting liberal revolutions in Europe while maintaining colonial dominance elsewhere. This explains the inconsistent use of legal and moral standards by the international community that we see in the world today.
When Sri Lanka engages with other countries it is important that we keep Lord Parlmerston’s dictum in mind. Over the past three decades there has been a noticeable shift in the practices of countries that have claimed to believe in the rule of law and universal human rights. There was a long period after the end of the second world war when the powerful countries of the world that had emerged victors in that war gave leadership to liberal values of human rights, democracy and justice in their engagements in the international arena. Together they set up institutions such as the United Nations, international covenants on human rights and the International Court of Justice, among others. But today we see this liberal international order in tatters with happenings in countries such as Iraq, Libya, Syria, Ukraine and Palestine reflecting the predatory behaviour of the strong against the weak.
According to international scholars such as Prof Oliver Richmond of the UK, the Liberal International Order (LIO) is losing its grip as global power shifts toward an emerging Authoritarian International Order (AIO). In his writings, he highlights how the LIO’s failures to resolve key conflicts have exposed its weaknesses. The prolonged failures like the Cyprus peace talks and the breakdown of the Oslo Accords in Israel-Palestine have highlighted the limits of a system driven more by Western dominance than equitable solutions. The rise of powers like China and Russia, who openly prioritise state sovereignty and power over liberal values, marks the shift to a multipolar AIO in which every country tries to get the maximum advantage for itself even at the cost to others.
Prof. Richmond warns that neither the liberal or authoritarian international orders, as implemented, are equipped to deliver lasting peace, as both are driven by geopolitical interests rather than a commitment to justice or equality. He argues that human rights, development, pluralism and democracy as the outcome of peacemaking and political reform that the Liberal International Order once held out as its vision is more just and sustainable for ordinary people than the geopolitical balancing, and authoritarian conflict management which is now crudely pushed forward by the proponents of the Authoritarian International Order. Without a new approach that prioritises fairness and sustainability, the world risks further division and instability.
NOT GENEROSITY
Following upon the stately receptions accorded to President Anura Kumara Dissanayake in India and China, there is much anticipation that Sri Lanka is on the verge of receiving massive support from these countries that will give a turbo-boost to Sri Lanka’s development efforts. In the aftermath of India’s unprecedented economic support of USD 4 billion at the height of the economic crisis in 2022, the promise of as much as USD 10 billion in economic investment from China reported by the media offers much hope. India and China are two economic giants that are in Sri Lanka’s neighbourhood who could do much to transform the economy of Sri Lanka to reach take-off into self-sustaining and rapid economic development. This accompanies the shift of economic power in the world towards Asia at this time.
Both India and China are keen that Sri Lanka should be in their orbit or minimise its position in the other’s orbit. They each have strong rivalries and misgivings about each other, especially regarding security issues. They have had border disputes that led to military confrontations. The Authoritarian International Order that Prof Oliver Richmond has written about would influence their behaviour towards one another as well as towards third countries such as Sri Lanka. President Anura Kumara Dissanayake appears to have been aware of this problem when he visited India and China. In both countries he pledged that Sri Lanka would do nothing that would be injurious to their security interests.
Lord Palmerston’s old dictum that countries act on permanent interests rather than permanent friendships is important to bear in mind when foreign governments make inroads into third countries. Sri Lanka needs to protect its own interests rather than believe that foreign countries are going an extra step to help it due to shared political ideology, age-old friendships or common culture or religion. Sri Lanka, its leaders and citizens, need to look at each and every offer of foreign assistance in a realistic manner. Each offer should be assessed on its own merits and not as part of a larger package in which generosity is imagined to be the sole or main motivating factor of the foreign country.
For Sri Lanka to emerge stronger, it needs to evaluate every offer of foreign assistance with a clear-eyed focus on its own national interests, ensuring that the benefits align with the long-term well-being of its people. Pragmatism, and hard headed analysis, must guide the country’s engagement with the world. This would be best done in in a bipartisan manner at the highest level, without being distracted by partisan party politics and narrow political and personal self-interest which has been our failure over time with a few exceptions.
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