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New govt. to fast-track export-led growth strategy

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By Jayampathy Molligoda

It is common knowledge that Sri Lanka never had a consistent export -led growth strategy. For decades, it has become a buzz word without having a proper infrastructure- both physical as well as soft skill- and much needed foreign and domestic investments. With frequent change of governments, export strategies have been changed and no determined efforts made to promote potential export products, marketing destinations and reap the benefits of positives of globalisation to link up with the global value chain (GVC).

Implement truly export led growth strategy:

It is recommended to appoint a high powered ‘economic advisory committee’ under the Presidential secretariat, comprising key officials of the government, drawn from the Treasury, Central Bank and other relevant institutions, together with a team of experts from private sector thus sharing the same vision and ideology of the new government.

It is suggested that the above mentioned economic advisory committee should pick up acceptable proposals without scrapping the already prepared export strategy and give leadership to effectively implement and monitor same through an efficient economic task force. Whilst supporting traditional exports, time is opportune to concentrate simultaneously for a diversified export portfolio such as newer exportable products as technology-based components, raw materials for chemical industries, bunkering product etc. As far as export of services are concerned, train and upgrade skills of Sri Lanka’s human resource at professional levels, such as nursing and health care services, technology-based services, skilled armed services, maritime and navel services, BPO ICT, etc. This will eventually minimise over- dependence of migrating unskilled labour to the Middle East thus creating unnecessary social issues to their families, children and society at large.

Strictly enforce much needed

fiscal discipline:

The already widened fiscal deficit has been further deteriorated by the recently announced relief measures to meet the COVID-19 packages by the government. Nevertheless, the forthcoming Budget should reflect further austerity measures. It is essential that budgetary allocations are restricted on foreign travel for non-essential purposes for some time and save foreign exchange. Current expenditure should be reviewed regularly and prioritize expenses until such time the economy gets back on track. As for state owned institutions, detailed action plans along with winning strategies should be implemented to minimize losses.

More transparent and equitable pricing formulas will have to be introduced for public goods. Purchase of paddy stocks by the government should be at a reasonable minimum price that covers the farmers cost of production and some element of profit. In order to determine price payable to paddy farmers, it is suggested to introduce a similar scheme such as a reasonable price payable to tea small holders under the Tea Control Act of 1957 as amended, could be used thus stemming from the retail price of rice varieties at the market.

Underprivileged, needy communities can be given subsidies. Indian method of transferring subsidies to underprivileged and bypassing the middlemen through banking system using ‘Aadhar programme’ should be studied and must be adapted to suit Sri Lanka. It is essential to prevent leakages of subsidy as it amounts to a huge drain to the treasury financing.

Link strategy to develop SMEs to global value chain:

It is of paramount importance that the government must revisit and re-activate the financial and banking system loan schemes and provide more wholistic assistance to SME’s, establish SME centres and to provide the necessary guidance and support services which include the following areas;

=Start a programme to promote SME exports linking with global value chain (Select 500 SMEs and support for export as quick starter)

=Engage with DFI’s who have done similar projects – IFC, ADB, JICA

=Encourage SME sector to move up in the value chain

=Give incentives for Sri Lankan expatriate with business ideas to come to Sri Lanka to set up enterprises

=Incentivize setting up of venture capital and Private Equity businesses to support these ideas

=Help Sri Lankan SMEs to find joint venture partners for technology transfer. Set up a fund to support research and Development in SME sector

=Create incubators close to- may be universities to encourage setting up of businesses.

=Restructure banking sector and have a separate window for SMEs in the designated banks.

Re-visit existing subsidies

including fertiliser:

As for fertiliser subsidy scheme, time is opportune to revise same to mitigate negative effects of such schemes. If the present subsidy scheme continues, the Government may not be able to achieve its production targets in the agricultural sub- sectors and the farmers will continue to criticize the Government’s policy implementation. Special cultivation calendar shall be introduced based on resource availability in each Agro- Ecological Zone (AEZ). Improve infrastructure facilities such as laboratories, consultation services, extension on recommending site specific fertilizer application. The strategy should be to export high variety crops in addition to maintain food security and replace unnecessary imported food items.

The government needs to ensure that fertilizer is available to the farmers at the correct time and at a revised level of subsidized price where ‘large-scale estate’ owners also get subsidized fertilizer. We need to educate farmers on the proper usage of fertilizer to suit the soil conditions, minimizing wastage and environmental damage. It goes without saying that the system must provide the optimum quantity of fertilizer at reasonable price in time. It is important to identify farm level factors that influence the adoption of straight fertilizers and it would help in promoting the use of straight fertilizers at the farm level. More investment on R&D as well as private sector involvement are needed for manufacture of fertilizers using locally available raw materials.

The following additional points are also recommended:

a. Oligopoly of present fertilizer importers should be taken away and the government should encourage small- scale importers/farmers/RPCs to enter in to the market to import or produce locally. This will resolve issues related to malpractices, fertilizer availability, etc.

b. There shall be no subsidy given to importers, however a ‘ceiling price’ based on the market rate of fertilizer as determined could be fixed taking into account the CIF price of importers. The Subsidy, being the difference between the ceiling price and the subsidized rate, should be given only to the selected beneficiaries and be paid in cash to their bank accounts.

c. Fertilizer will then be freely available in the market and the selling price could be monitored by the relevant agencies and if there is a requirement of controlling the fertilizer prices at the market, then the ‘ceiling price’ could be used by the government. The present subsidized rate should be increased from – Zero for paddy and/or Rs. 10,000 per metric ton (MT) to say, Rs 12,500 and for other crops, the fertilizer mixtures could be increased from the present Rs. 23,000 to say Rs 35,000/ per MT.

d. Government shall encourage farmers (higher subsidy) for “Site Specific Fertilizer Usage and Organic Fertilizer” and required technology shall be given through crop research institutions. Subsidy should be given only for Urea, MOP, TSP and SA. Subsidy on all other straight fertilizers/mixtures should be removed and encouraged to use only where necessary.

e. It is necessary to clear the outstanding subsidy payments to the suppliers of fertilizer by the treasury leaving no room for ‘blame assigning’ by the private sector.

This will enable the government to reduce the burden on the treasury for additional government expenditure on subsidy (at present Rs 50 Billion per annum) at least by 30%.

(1) Invite FDI under the Chinese led “Belt and Road Initiative” (BRI):

To increase foreign exchange earnings, it is important to enhance port and port services by expediting the already planned development activities. The new Government has already approved the installing three gantry cranes to the JCT and the contract to deepen the JC. There is nothing wrong in entering into JVs based on ‘PPP models’ as articulated under the agreement between the GOSL and ADB on Colombo break-water financing. Geo-political realities and the popular public sentiments on the concept of nationalism should not be construed as strictures for decision making ability for economic growth and the writer is confident the next government under the leadership of President Gotabaya Rajapaksa is capable of maintaining a balance between the two in order to fast track economic growth activities.

It is essential to resort to a full-scale effective drive towards getting FDIs for long term projects in a transparent manner and such FDIs should be used only for revenue yielding projects from which, at least part of the borrowing can be met. It will be useful to revert to the marine and maritime activities and Aviation hub concept and ensure that appropriate projects are listed under these two hubs as early as possible and invite FDI under the Chinese led “Belt and Road Initiative” (BRI) and also link up with the ASEAN supply chain trough BRI as Sri Lanka is not a member of the ASEAN.

Conclusion:

Sri Lanka has already demonstrated its ability to combat COVID-19 successfully and the need of the hour is to fast track domestic economic activities, thus enabling Sri Lanka to record a faster recovery than other countries to improve economic growth. A more pragmatic nationalistic ideology – socialist oriented market based economic development model, coupled with an Executive Presidential system of governance would be more suitable to implement inclusive economic development programme to improve quality of life of the people of this country.

(Writer acknowledges the contribution made by Dr Ranee Jayamaha and Mrs Thusitha Molligoda)

 



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Opinion

CORRUPTION IS CORROSIVE AND CONTAGIOUS

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Corruption is the ultimate criminality. It is also a contagion that spreads both vertically and horizontally. It is clearly eating the heart and vitals of our Nation.Corruption is indisputably a dominant reason for our plight. A lot of sanctimonious scoundrels have promised, with monotonous frequency, to “eradicate” this rampant evil. Each event that unfolds in the all-pervasive political arena, serves to increase the public’s revulsion towards politics and its practitioners.

For instance, everything that emanates from the Diyawanna sewer increases the penetration of this diabolical menace. In our early life, parents and schools drilled in developing minds, a compulsion to adhere to the total rejection of lying and falsehood. No more.

The indelible example of this, we learnt, that in developed countries, the newsagent leaves a pile of newspapers in a stack on the front of the shop, with a little label indicating the price of each. A customer would pick his choice and leave the relevant price. Seldom, we were told was there a risk of a cheat betraying this trust. This kind of simple event, makes me an unashamed and unrepentant “Anglophile”!

It appalls me to witness how casually people who should know better, are chronically dishonest and do not deserve the genteel “economical with the truth” label. They should, in our lexicon be simply referred to as liars.

A distressing fact is that the closer one gets to top, the higher the intensity and scale. How then can one address such persons as “Honourable”? I am personally inclined to restrict this “honour” to those who genuinely deserve it. A colleague goes even better – when one such undesirable stands up to speak, he simply walks out. This may seem trivial, but it is symbolically powerful.

Financial impropriety is not all, but an important factor under the general rubric of “corruption”. Why does our Government fight shy of using the readily available listings of the “wealthy” on the Internet? Panama Papers, Pandora’s Box.

The information is shocking. Several are possibly not cheats, but many of their likes clearly are. When somebody with no substantial means of becoming rich, having neither talent nor worth, turns up with stashes of millions of dollars, cannot such be called to account? Is it a question of “He who has no guilt, may hurl the first stone?’ No stones, no guilt”. More likely, Is it a case of “You scratch my back, and I will scratch yours”. Lots of back-scratching is evident.

The most distressing feature is the lateral and vertical spread of financial corruption. Some seem to display remarkable ingenuity of changing crises to bonanzas. Nothing is beyond their reach. If that “talent” is employed towards the public good, Sri Lanka can become a brightly shining country, like our often mentioned Singapore.

“Horizontal spread” is where the dishonest in one Institution (say Assembly or Department”), spawns the practice in another. The vertical spread is within such a body, where subordinates are inspired to feel “If it is good for my boss, how can it be bad for me”?

To take a simple scenario. Say, someone is flicking his petrol coupons or fudging his traveling claim, a whole chain of persons participate in continuing the chain, down to the officer who writes the cheque.

This spreads of the contagion of corruption, corrodes and fouls all. When stashes of currency notes are unearthed, it strongly indicates that this is highly suggestive of dishonest acquisition. With such evidence being readily available, it is no mystery why is there no effective follow up action? Is it not strange why these products of crime cannot be confiscated and used to meet our nation’s needs. How so? It seems as though we are displaying the caution of one who is walking on eggs.

Everyone would know about the (James) Bond scam. There are strong suspicions, but again an inexplicable delicacy and neglect of follow-up. In relation to inexplicable and undeclared hoards in banks and safe havens abroad, why have these clearly corrupt treasure troves not been captured and restored to their rightful owners, in this case, the Sri Lankan State. Such action is morally and ethically proper. The usual excuse of “the Law does not provide” is a feeble and unacceptable stance.

I believe that even the famous “Numbers only” accounts held in Swiss Banks etc. have been made more transparent. This is action (endorsed by the UN?), that permitted the gold snatched from the Jews, and national wealth that has been robbed by persons of the likes of Marcos (Phillipines) and the Suhartos (Indonesia). There would be ample space for more.

One understands that such remedial measures, require the aggrieved nations to institute legal action within their jurisdictions. In our case, there are several cases of astronomical amounts held by persons who have engaged solely in “politics” with no inherited wealth or talent, to generate such astronomical wealth. If a dozen or so of such delinquents are showed into jail, there could be little need for future “Aragalayas”.

Dr Upatissa Pethiyagoda.

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Opinion

Transformation of agro-food system:

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A culture-based local solution for Sri Lanka

BY Prof Nimal Gunatilleke

The Thirty-seventh Session of the UN-FAO Regional Conference for Asia and the Pacific (APRC) is being held as a high-level Ministerial in-person event in Colombo, Sri Lanka from 19 – 22 February 2024. This was preceded by the Senior Officers Meeting (SOM) held virtually from 31 January to 2 February 2024.

This year’s conference, themed “Transformation of the Agro-Food System,” will delve into key areas such as promoting nutritious food production, ensuring food security, enhancing food production, safeguarding the environment, curbing greenhouse gas emissions, and mitigating climate change risks.

This regionally significant meeting of the Food and Agriculture Organization of the United Nations is being held in Colombo at a time when Sri Lanka is struggling to keep its head above water in the post-COVID era knocked down for the second time in quick succession by her economic crisis.

A government report and data from the health ministry quoted by Reuters indicates that the people in Sri Lanka are currently burdened with soaring prices, including food, largely caused by its worst economic crisis since it gained independence in 1948.

According to the Central Bank Report ‘rising malnutrition among children has become a forefront policy concern in Sri Lanka amidst heightened food insecurity of households caused by the host of economic and social issues that exacerbated during the economic crisis in 2022’.

The following human health statistics extracted almost verbatim from the Reuters report on Jan 18, 2023, are equally disturbing, to say the least.

The number of children grappling with various forms of undernutrition in Sri Lanka has increased for the first time in at least six years in 2022.

More than 43.4% of the country’s children under 5 years of age are suffering from nutrition problems, according to the report released in October, with 42.9% suffering from some form of undernutrition.

Data available on the website of the health ministry’s Family Health Bureau indicate that the percentage of children under five who are underweight, stunted (low height for age), or wasting (low-height for age) increased in 2022 after dropping steadily since at least 2016.

According to the World Health Organization (WHO), malnutrition refers to deficiencies or excesses in nutrient intake, imbalance of essential nutrients, or impaired nutrient utilis ation.

ASIA AND THE PACIFIC REGIONAL OVERVIEW OF FOOD SECURITY AND NUTRITION STATISTICS AND TRENDS

According to the World Bank statistics, Sri Lanka ranked the second worst affected country in the South Asian region in terms of wasting among children under five years. Further, underweight among the same group of children remained around 20.0 percent since 2000, while no significant advancement was reported in terms of children with stunted growth.

Meanwhile, the persistent disparities in malnutrition prevalence across regions and economic sectors in the country suggest that nutrition anomalies remain unresolved for a prolonged period. Across residential sectors, the estate sector has become the most vulnerable sector with the highest prevalence of stunting and underweight children under five years. According to the DHS-2016, around 31.7 percent of children in the estate sector are stunted, compared to 14.7 percent in urban areas and 17.0 percent in the rural sector. Particularly child malnutrition represents a deep concern that carries a generational burden.

UNDERNOURISHMENT AND FOOD INSECURITY: SUSTAINABLE DEVELOPMENT GOAL 2.1

A yet another alarming set of nutrition statistics has been published in the Asia and the Pacific Regional Overview of Food Security and Nutrition, in December 2023 in addressing the Sustainable Development Goal 2.1: UNDERNOURISHMENT AND FOOD INSECURITY.

The percentage of people unable to afford a healthy diet in Sri Lanka was 54% in 2020 and the figure has been increasing ever since.

Prevalence of undernourishment in Sri Lanka is 5.3% (cf. India 16.6%)

The prevalence of moderate or severe food insecurity during the period 2020–2022 in Sri Lanka has been 10.9% (cf. Bangladesh 31.1%)

Undernourishment is defined as the condition of an individual whose habitual food consumption is insufficient to provide, on average, the amount of dietary energy required to maintain a normal, active, and healthy life. The indicator is reported as a prevalence and is denominated as “prevalence of undernourishment”, which is an estimate of the percentage of individuals in the total population who are in a condition of undernourishment.

People affected by moderate food insecurity face uncertainties about their ability to obtain food and have been forced to reduce, at times during the year, the quality and/or quantity of food they consume due to a lack of money or other resources.

MALNUTRITION: SUSTAINABLE

DEVELOPMENT GOAL 2.2:

This section reports on four global nutrition indicators: stunting , wasting in children under 5 years of age, and anaemia in women aged 15 to 49 years.

The prevalence of stunting among children under 5 years of age in Sri Lanka in 2022 has been 15.9% (cf. India 31.7%).

The Prevalence of wasting among children under 5 years of age from 2015 to 2022 in Sri Lanka has been 15.1% (cf. India 18.7%)

The Prevalence of overweight among children under 5 years of age in Sri Lanka is 1.3% in 2022 (cf. 2.8% in India).

ANAEMIA AMONG WOMEN AGED 15 TO

49 YEARS

Prevalence of anaemia among women aged 15 to 49 years in Sri Lanka in 2019 has been 34.6 % (cf. India 53%).

HEALTHY DIET AT NATIONAL SCALE

In this regard, notable transformations in the country’s food system are essential to deliver a healthy diet for people at an affordable price. These include improving productivity in the agriculture sector along with more innovations and research and development, reducing post-harvest losses, more value addition in the agriculture sector, reducing import dependency on food systems, introducing climate-resilient food crops, promoting a wide range of nutrient-rich foods, particularly through the popularising integrated farming, rebalancing agriculture sector subsidies, and tax policies and improving agronomic practices as well as maintaining adequate food buffers to face food emergencies.

Among the solutions provided at the national level include the provisioning of school meals, provisioning of food/cash allowances for pregnant and lactating mothers, the Thriposha program, school water sanitation, and hygiene programs, and the salt iodization programme, among others. Reflecting the impact of these efforts and commitments spanning over several decades, malnutrition among children declined remarkably during the period from 1975 to 1995, with stunting among children below five years of age almost halved to 26.1 percent in 1995, compared to 49.9 percent in 1975, while the underweight child population declined to 29.3 percent in 1995 from 57.3 percent in 1975. However, these trends have reversed since the double whammy started in 2021 with COVID-19.

In addition, some of the small-scale community-level initiatives established under the supervision of the Department of Agriculture such as Hela Bojun Hal (Native Food Courts) are gaining popularity in several provinces in Sri Lanka. These food courts serve a variety of nutrient-rich native food preparations using rice flour, finger millet, local vegetables (leafy porridge), and many other sweetmeats prepared by local womenfolk and sold at an affordable price. Also, there are many beverages and local fruit drinks that are equally popular among the customers.

These food courts providing healthy and nutritious meals are making steady inroads into the food and beverage trade among the health-conscious public from all walks of life including schoolchildren, university students, and blue- and white-collar workers, alike which is indeed an encouraging trend.

If these types of Hela Bojun food courts could be promoted in rural as well as urban schools with the participation of the parents of the schoolchildren under the direction of the school administration and local health and agricultural authorities, it may help to address some of the issues under discussion at the on-going UNFAO-Asia Pacific Regional Conference such as undernourishment, food insecurity, and malnutrition. At the same time, it may give a shot in the arm for promoting nutritious food production while ensuring food security befitting the theme of this year’s UNFAO-Asia Pacific Regional Conference, which is “Transformation of the Agro-Food System”.

Sri Lanka as the host country’s special ministerial event for this conference has put forward her theme as ‘Agro-tourism in Asia and Pacific – accelerating rural development and enhancing livelihoods’ showcasing agrotourism most likely in the world-renown Kandyan Spice/Home Gardens and as a spin-off of this, the local food courts utilizing these home garden produce too, can be highlighted at the same time.

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Opinion

Harin batting for India

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The Minister of Tourism, Harin Fernando, has stated that the Sri Lankan Government will be handing over the operation of Mattala International, Ratmalana International and Colombo International Airports to India. He has added that Sri Lanka is a part of India! Has he lost his senses?

Separately, should it not be the role of the Minister of Ports, Shipping and Aviation Nimal Siripala de Silva to make such a far-reaching decision?

Mattala, Ratmalana and Colombo are the three main airports of entry to Sri Lanka. Giving their management over to Indian organisations is tantamount to putting the proverbial snake inside one’s sarong and complaining that it is stinging.

What then will be the future of Airports and Aviation Sri Lanka (AASL)? They are, in any case, a ‘service provider’.

It is the responsibility of the government of Sri Lanka through its regulator, the Civil Aviation Authority Sri Lanka (CAASL), to adhere to International Civil Aviation Organisation (ICAO) requirements and regulations. Will this be compromised?

The International Air Transport Association (IATA) guidelines for airport governance declare that the State (in this case Sri Lanka) must be accountable irrespective of national, legal or regulatory framework, or airport ownership and operating model. Could that be ensured under this recently announced arrangement?

Such accountability must be guaranteed by enactment of primary legislation in the aviation sector, mindful of the adage that a chain is only as strong as its weakest link. I believe that the Legal Draughtsman’s Office will take an inordinate amount of time to deliver this guarantee, amongst other things.

There is also the matter of establishing an effective regulatory framework with CAASL to monitor technical/safety and economic performance of the aviation sector, and compliance with International Civil Aviation Organisation (ICAO) obligations, Standard and Recommended Procedures (SARPs), and policy guidance.

In my opinion CAASL is not yet capable of that. In a combined operation such as this, IATA stipulates “Awareness and mitigation of potential conflicts of interest inherent in the regulatory framework or ownership and operating model through clear separation of powers, for example conflicts between economic oversight and shareholding arrangements, and separation of regulatory and operational functions”.

So, it is not an ‘open-and-shut case’, as Fernando believes. It is complex. His optimism is amazingly unrealistic, to say the least.

Remember, certification of aerodromes by the technical/safety regulator under ICAO requirements will continue to be carried out by CAASL as at present. According to the Organisation of Professional Associations (OPA), report Sri Lankan regulators tend to be more “obstructive” than “facilitative” when it comes to certification. CAASL needs to be revamped for greater efficiency.

Other refinements involve the independence of regulatory authority (CAASL) from government, and striving for separation of economic regulation from technical/safety regulation. CAASL was formed under the ‘Private Companies Ordinance’ but unfortunately it has drifted back to conducting its business as a regular government office, with political interference and all.

Besides, it is vital to establish an Aircraft Accident Investigation Authority, preferably independent of the CAA. Annex 13 to the ICAO convention says: “The State shall establish an accident authority that is independent of the aviation authorities and other entities that could interfere with the conduct or objectivity of an investigation.”

That, I believe, is what ‘checks and balances’ are about.

Meanwhile, the silence of the Aviation Minister is deafening.

The proposed ‘Indian involvement’ is a sad state of affairs when we have aviation experts in this country who have retired from careers in many parts of the world, and are now capable of sharing their knowledge and experience to good effect.

There is already an Indian-managed flying school at Ratmalana catering to Indian students. Maybe the camel has already put its head in the tent, and only money will talk.

GUWAN SEEYA

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