Covid-19, which has taught many a lesson to the rich and the mighty, is causing unparalleled turmoil in the neoliberal economies of the world. It has made governments and economists think of alternatives to the market driven dependent economies that most poor countries practice or are forced to practice. Sri Lanka too is trying its hand with options like export control, import substitution, taxation, protective tariffs, etc. Most countries are forced into it due to the disruption of several aspects of the system, such as foreign exchange earning capacity, international transport, and local export oriented industry. Sri Lanka is faced with considerable decline in its main sources of foreign exchange, such as foreign employment, tourism and garments. The foreign exchange thus earned are, in the main, spent to import food items, textile, medicines, fertilizer, etc., that could be locally produced. Is there any logic in advocating the continuation of this policy – Covid or no Covid?
Yet there are people including parliamentary bigwigs, who criticize the present government policy of controlling imports and attempting import substitution. They say such policy would antagonize Western countries who buy our products, like tea and rubber. Yes, it would make them angry but then that is how they pursue and perpetuate the practice of neoliberalism and exploitation of our resources. They say Western countries would stop extending preferential treatment and favourable terms to us in trade. Yes, they may do that but we must know that these are only tools they use to trap us into their system of neocolonialist exploitation. These people who talk like this in parliament must be tools of the neocolonialists.
It may be worthwhile to look at other countries which had adopted import substitution, in the past as well as recently and see how they have fared in their effort. This concept and policy could be traced back to the 18th Century German economist Friedrich List who proposed a “National System” of political economy where tariffs were to be imposed on imported goods while free trade would operate for local products. Later in the 1950s and 60s the Global South, particularly Latin America, adopted this policy and came to be known as Import Substitution Industrialization (ISI). ISI is based on the premise that a country should attempt to reduce its foreign dependency through local production. It envisaged industrialization of production for greater efficiency and mass production. Most of the Latin American countries, like Brazil, Mexico, Argentina, Ecuador, Honduras employed this system, the larger countries with big populations were benefited to a greater degree than smaller countries.
African Socialism, which started about the same time with leaders like Kwome Nkrumah of Ghana and Julius Nyerere of Tanzania giving it leadership, took up ISI as its economic policy. These movements were socialist and nationalist and naturally anti-west and the Western powers did not view these developments kindly. In the 1980s with the fall of the Soviet Union, and the IMF and the World Bank gaining immense ground, the Global South abandoned ISI policy and turned to the West and again became the servant of neoliberalism.
However, there is a country which recently adopted these ISI measures with great success. Russia has managed to save several billions of Dollars by vigorously following ISI policies in the industrial sector, mostly in the areas of agriculture, automotive, chemical, pharmaceutical, aviation, etc. In 1914, their cost of food imports was 60 billion dollars, it was brought down to 20 Bn by 2018, in 2012 the pharmaceutical industry was negligible and by 2017 it has developed into a 50 Bn industry. These achievements were mainly due to subsidization of vital industries, import restriction by heavy taxation and other protective trade policies.
There may be lessons for Sri Lanka from what has taken place in the above mentioned countries. First and foremost the essential food items that could be produced here should not be imported and everything required for this endevour such as land, water, seeds, fertilizer, machinery should be made available. Every effort should be made to manufacture locally these things necessary to achieve self-sufficiency in food. If we are self sufficient in food, medicine, clothes and housing we need not be afraid of economic warfare that imperialists resort to when they want us to do their bidding. We must get assistance from friendly countries like China and Russia to achieve self-sufficiency in essential items and not for mammoth projects that politicians think would enhance their image.
As mentioned above, ISI policies employed for heavy industrial development had succeeded in large countries like Brazil, Mexico and Argentina but in smaller countries like Ecuador and Honduras such attempts at industrialization had failed. This was the experience in Africa too. Development of one industry at the expense of others or one crop like tea for instance could also lead to failure.
Therefore Sri Lanka must not go for heavy industries. First it must achieve self sufficiency in food and other essentials. Later it could start small machinery like power looms, electrical and electronic items. Industrialization should be at the manageable level of agriculture, clothes and such items and perhaps not heavy industries like automobiles, etc. The threat posed by Covid-19 must be converted into an opportunity and made full use of to make the country’s economy and politics independent of external factors.
N. A. de S. Amaratunga
How to avoid water shortages and power cuts
A section of the Southern Expressway affected by floods (file photo)
It is a strange thing in this country with so many rivers flowing into the sea right round the island, as soon as the rains cease there is a drought and there are thousands affected with no possibility of getting anything out of what they have cultivated, be it rice or vegetables. And while the rains last there are a number of places that get inundated with roads impassable and people displaced from their abodes.
If one recalls the history of this blessed isle it was King Parakramabahu the Great who said that not a drop of water should be allowed to go into the sea without being made use of. That was the era when Sri Lanka exported rice to other neighbouring countries. How did they do this? They had neither sophisticated equipment nor machines that are available now. They also did not have the help of foreign qualified experts. But with whatever skills they had they were able to achieve what they wanted. All this was done by conserving the water from the seasonal rains the island had.
The weather patterns have changed and now we do not get rain as stated in our books on Geography. What we learnt from the books was that the south western monsoon will be from around May to end August/ beginning September. The North eastern monsoon brings rain from November to February. In between these two monsoons there will be convectional rain in the months of April and October. Does the rainy seasons occur as in the book now? Not at all. The weather patterns have changed completely. The farmers are not sure as to when the rains would come, unlike in the good old days.
The rains are unpredicatable. When it rains it pours for a short period. But in that short period there are floods and roads, paddy fields and houses get inundated. The rains cease and the flooding subsides. The authorities have forgotten what happened and they get back to their normal routine until the rains strike again with the same results.
Then there is a prolonged period of drought. Now the reverse happens. There is no water to cultivate and in some areas no water to drink. What has been cultivated has withered away. The farmers are in a quandary as they are unable to pay back the loans they have obtained to cultivate with the hope of repaying after the harvest.
When there is heavy rain for a long period the reservoirs and tanks swell up and then the sluice gates are open to let the excess water out. This water that is let out just gushes out and goes into the sea without being made use of at all. Why is it not possible for the irrigation authorities to have tanks at a lower level to collect the excess water and make use of this water too? There is such a large amount of water that is released like this which can be made use of for cultivation when there is no rain.
The large amount of water carried by the Kalu Ganga has been flowing into the sea from time immemorial without being used for anything other than for people to bathe and bathe their animals. This is a source where the water can be conserved and if possible diverted to the dry zone to assist the farmers in their cultivation.
Even in the city of Colombo when it rains heavily we have seen the same areas getting flooded. This has been the case for a long time. But so far nothing has been done and come the next rain we will experience the same problem. This is so in the areas in Galle, Ratnapura, etc.
It is time the relevant authorities looked into this and do the needful to conserve the large amount of water that flows into the ocean without being made use of. It may be possible to use this water not only for agriculture but also for generation of hydro power. If this can be done, this island will never have to face water cuts and power cuts.
HM Nissanka Warakaulle
C-19: Implications and Complications
By I. P.C. MENDIS
Covid-19 understandably has doubtlessly put the world in a flat spin, and this isle of ours is no exception. Due to the new strain of the virus, all aspects, from precaution to treatment, are on trial and error basis. The effects of some recommended vaccines are being questioned. So far, there seems to be global acceptance of precautionary measures, such as wearing of masks, social distancing and congregation. It is regrettable, to say the least, that the Sri Lankan population, by and large, has still not realised the gravity of the problem, and seem to behave rather callously in adhering strictly to the guidelines, resulting in offenders being hauled up by the law enforcement authorities for prosecution in courts.
It is indeed well and good for them to strictly enforce the law in the circumstances of general laxity and the need to control the spread of the infection. However, such measures need to be taken after careful examination and study of their implications, and the effect they would have on other relevant policy decisions, already in place, so as to ensure that they do not work at cross-purposes. The decision to prosecute offenders as aforesaid, which entails fines and/or jail terms, is supposed to be based on some antiquated Ordinance, which doubtlessly has come to our rescue in the absence of recent legislation. However, having earned much experience in its working, with the first wave of the virus, the think – tanks behind it had ample time and opportunity to compile the inputs necessary to streamline it or frame new laws/regulations, as a matter of urgency. It is indeed a pity that it has not been done so far.The result is that we have to still hang on to an antiquated Ordinance, which in its implementation seems to be a contradiction in terms with certain other areas of governance. It is regrettable and in a sense a misfortune that some of these measures could be a source of embarrassment to respected high-ups, who are themselves learned in the law, to announce such decisions to the people.
Jail Terms: Obviously, the decision to give an offender a fine, jail term or both, lies with the courts. This is, in the context where there exists a serious debate over the overcrowding of prisons, the Presidential pardons being given by the thousands, as a measure of easing such congestion, the huge backlog of court cases lying unresolved, and the recent increase in the cadre of judicial officers to ensure their speedy disposal.
In addition, the pressure already borne by the Attorney-General’s department, the time and energy already expended by the police, the involvement of witnesses and other agencies — not to speak of the immense pressure on the purse of these minor offenders — and the government necessitating, inter alia, the involvement of the black-coated fraternity; who will generally not take kindly to any simplification, as evidenced by their past selfish conduct in opposing the SLFP measure to let the Public Trustee handle a given category of plaints, and the recent opposition to the proposal to appoint lawyers as Chief Inspectors of Police!
Suggested Relief Measures: It is a forgotten factor that in the days gone by, Cadets and Class II officers of the now defunct Civil Service, were gazetted as Police Magistrates to hear given categories of plaints. It would be extremely beneficial if the government gives serious thought immediately to gazette Divisional/Additional Divisional or other officers to handle such cases, with powers to impose a stipulated fine. We have the Conciliation Boards already charged with the responsibility of trying to settle disputes (without penal powers, however) and Traffic policemen imposing spot fines. So what can be the problem? Indictment can take place if the fine is not paid or the offender contests the plaint.
The only problem can be the selfish interests of a particular section, which has to be discounted in the larger interests of the people, who are already overburdened with monetary and other compelling issues! The proposal may be achievable with a simple amendment to existing legislation or under emergency regulation.
Over to you, Your Excellency, Mr. President!
‘Bad Boy Billionaires’ of Sri Lanka
By UPALI COORAY
This headline quotation in part, is the title of a Netflix series “Bad Boy Billionaires”. This Netflix series brings out some of the epoch-making financial scams in India. The documentary film exposes the truth in an investigation in major corruption scandals, money laundering in India involving Vijay Mallaya (Kingfisher Airlines) Subrata Roy (Sahara India) Nirav Modi (Gitanjali group) Ramalinga Raju (Sathyamgani computers)
Among these scammers Subrata Roy has done something which has parallels in Sri Lanka.
India’s market regulator petitioned the Supreme Court to direct tycoon Subrata Roy to an immediate payment of 626 billion rupees ($8.4 billion) meant for poor investors.
The Securities and Exchange Board of India said the outstanding liability of the Sahara India Parivar group’s two companies and the conglomerate’s chief Roy stand at 626 billion rupees, including interest, according to court filings.
India’s Supreme Court in 2012 ruled that Sahara group of companies violated securities laws and illegally raised over $3.5 billion. The companies said monies were raised in cash from millions of poorest of the poor of Indians who could not avail banking facilities. SEBI could not trace the investors and when Sahara firms failed to pay up, the court sent Roy to jail.
Roy, who at different times owned an airline, Formula one team, cricket team, plush hotels in London and New York, and financial companies, stayed in jail for over two years and has been out on parole since 2016.
The Sahara story, almost a decade after the final judgment, is far from over. Roy has so far deposited over 150 billion rupees, SEBI said in the court filing, while the Sahara group said it had deposited 220 billion rupees.
Financial scams in our country have increased in recent times and not a day passes without news of customers being cheated by finance companies, etc. Let’s start with the oldest of Sri Lankan con- artistes Emil Savundra or Emil Savundranayagam, who was a Sri Lankan who settled down in Britain in 1960, a born cheat. The collapse of his Fire, Auto and Marine Insurance Company left about 400,000 motorists in the United Kingdom without cover.
As a post-war bootlegger, Savundra committed bribery and fraud on an international scale before settling down in the UK to sell low-cost insurance in the fast-growing automotive market. By defaulting on mandatory securities, he funded a lavish lifestyle and travelled in fashionable circles even with the famous Christine Keeler and Mandy Rice-Davies. He was into power boat racing too.
This drew scrutiny by the press, which discovered major frauds. In a TV interview with David Frost, Savundra demonstrated contempt for his defrauded customers. The police had been investigating him, and he was soon arrested and sentenced to eight years imprisonment. Released after six, Savundra died two years later as a drug addict.
Piyadasa Ratnayaka alias Danduvam Mudalali of Hungama, Southern province, had allegedly accepted deposits from over 20,000 investors in a pyramid scheme. He was on bail for the alleged financial scam. Mudalali was killed by an unknown armed gang in Pusallawatte, Kuruwita.
Hideki Finance and Investments, which went bust in 1987, had over 4,000 depositors. The Central Bank had to intervene and pay the depositors their dues in instalments.
The multi-million rupee ‘Sakvithi’ scam by Sakithi Ranasingha did not spare even the handicapped or the sick, as it plundered the wealth of thousands of unsuspecting customers who suddenly realised that all their savings had gone up in smoke. About 5,000 investors were defrauded to the tune of 900 million rupees. A Police inspector was also allegedly involved in the scam, which was exposed following a raid by the Central Bank on unregistered financial institutions.
Kingsley de Silva, an ex-naval rating suffering from a chronic kidney ailment, has been robbed of Rs. 1.2 million — money he had saved for a life-saving surgery. This money, the 65-year-old Mr. Silva said, included payment he received from the Navy on retirement and the rest from the part-sale of ancestral land in Maharagama. He did not know what to do or whom to turn to.
Dulanjan Atapattu, a retired government teacher was due to undergo heart surgery. He needed extra money for the operation and medication, and invested his savings in what he thought would be an income-generating scheme.
“I invested Rs. 2 million after selling my house. Initially, I got a monthly interest, and was impressed with the return. But I was soon to be proved wrong,”
With a self-esteem as philanthropists, embracing the word of God, the very name Deshamanya Dr. Lalith Kotelawala and Lady Dr. Sicille Kotelawala evoked respect, trust and above all a sense of security. That was why 9,054 people in this country, trusted the duo with millions of rupees, in some cases tens of millions of rupees in life savings. Maybe part of those millions belonging to some depositors was black money. Perhaps, some of them invested their money to evade paying tax to the government, or they were just plain greedy or a mixture of both. After all, why did they not invest the monies with financially stable banks?
Whatever the case, they were confident that their savings/loot would be safe in the hands of two human beings held in the highest esteem. There were leading businessmen, civil servants, Buddhist monks, Christian clergy and world-renowned Sri Lanka cricketers, who would never have resorted to money laundering, were also deceived.
When Golden Key collapsed like a pack of cards in December in the year 2008, and as the unsavoury details unraveled in staggered scenes of drama, horrified, dismayed depositors who had been earning as much as 30 and 32 percent on their investments at Golden Key, were forced to come to grips with the fact that soon their monies would be confined to mere numbers on a piece of paper. Soon to be identified as one of the biggest white-collar frauds.
Held in esteem by those who claimed to be his friends and say they trusted him wholeheartedly. Today, these same people spit his name out with vilification. Thousands of families robbed of a monthly interest amounting from thousands to millions of rupees, earned off their capital investment with Golden Key.
At least one depositor from this list, Lady Dr. Sicille Kotelawala will have no such qualms. Her investment in Golden Key was to the tune of Rs. 10.6 million only. A paltry sum by her standards. Even that most likely is what she skimmed off from the company itself. After all, according to court documents she was paid a staggering Rs. 3.5 million a month for being the Deputy Chairperson was just peanuts. She was rich enough not to have to worry about paying for groceries or medicines.
From lower middle-class families to upper, from the rich to the superrich there was no class distinction between the 9,054 people who entrusted their monies with Golden Key.
The strange thing is that most of the big depositors are businessmen who understand finance. They would have known that the unrealistically high interest rates paid by Golden Key could not be sustained. They would have also known that it was not registered with the Central Bank. But then again, the company had been in existence since 1978, and the collapse of the Ceylinco Empire had been predicted for more than a decade. You can run a pyramid scheme for so long, only if new depositors keep depositing money in.
After 10 years of agitation the depositors were paid by the Central Bank with funds from liquidated assets of the collapsed venture.
What is important to note is that most of these company founders were well-respected businessmen in Sri Lanka.
Justin Kotalawala the founder of Ceylinco insurance was a well-respected businessman in the country. He was related to one-time prime minister Sir John Kotalawala.
Sakvithi Ranasingha was a private tuition master highly respected by his students and their parents. He abused his reputation to deceive the unsuspecting depositors and lived a lavish life. In fact, he taught English to prisoners while in jai.
Late E.A.P Edirisinghe and his spouse Late Soma Edirisinghe – Desha Bandu Desha Shakthi and a Honorary Doctorate from Open University of Sri Lanka, an unparalleled feat of being awarded the “Lion of the year” on four occasions and many more, were entrepreneurs who would never have resorted to deception. They were pawn brokers, jewellers, film producers, cinema and TV channel owners and philanthropists. The ETI finance matter is sub judice and, therefore, will not be discussed any further.
Late Kattar Aloysius, the founder of Free Lanka Trading company, a well-known businessman in the country who was initially a major exporter of dried fish, but subsequently diversified into industrial products, granite, indenting agent for importing commodities to Sri Lanka, agents for alcoholic beverages such as cognac, Dewar’s whisky, etc. He was respected among the business circles here and abroad.
Now, the name of Aloysius is synonymous with the Treasury bond scams.
As you sow so shall you reap.
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