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Sri Lanka tea sector stuck in colonial-era model after 75 years of independence



Due to lack of thrust in the direction of productivity-based revenue share model

By Sanath Nanayakkare

Regional Plantation Companies (RPCs) are encountering difficulty in planning the future of their financial viability due to the slowness of the government and the trade unions in exercising the best choice for the sustainable future of the sector, The Island Financial Review learnt at a recent press briefing called by the The Planters’ Association of Ceylon (PA).

It was revealed during the Q&A session that on the one hand there is a lack of political-will to deviate from the colonial-era daily wage model after 75 years of independence as the matter is politically sensitive to the government, and on the other hand, better earnings and flexi hours enjoyed by operators (tea pluckers) would lead to a loss of influence the trade unions have on their members.

These are seen key stumbling blocks to successfully implementing a productivity-based wages and revenue share model in Regional Plantation Companies (RPCs) which would be a win-win situation for both workers and RPCs.

Throwing numbers in good measure, RPCs pointed out that since privatization the RPCs have never been a burden on the Treasury as they were under the state control, and 22 RPCs are the only private sector stakeholders engaged in producing, processing and marketing of tea, rubber, oil palm and other crops.

RPCs account for over 450 estates, 371 factories/production units cultivating 43.36% of tea, 23.75% of rubber land and other RPC crops account for 33% of RPC land which include: coconut, oil palm, cinnamon and other crops.

According to Dr. Roshan Rajadurai, Media Spokesman of the Planters’ Association, 25%-30% of RPC tea crop is coming from the wages and revenue share model to which the operators have joined on their own volition having experienced the benefit of this system.

“These operators have used their own discretion to join the system because they can work flexible hours while taking care of their families. Others prefer to work independently and more productively without being pushed around. And there are others who have an entrepreneurial mindset in making their wages from tea plucking a second source of income. We have witnessed them taking good care of their plots and do the plucking in a sustainable way. So this system has resulted in more crop being harvested with improved leaf standards which has led to better prices and lower cost of production for the estate. Higher prices eventually result in higher revenue share for operators, but this needs to be widespread and formalized through a proper mechanism without further delay,” he said.

According to RPCs, the cost of production of a kilo of tea currently is Rs. 960 which has significantly increased due to cost of production and devaluation of our currency.

Senaka Alawattegama, Director/CEO Talawakelle Tea Estates PLC said, “We believe that the root cause of our historic economic crisis stemmed from the failure of successive governments to formulate policy based on robust stakeholder consultations. Unfortunately, we allowed cheap politics to hijack our economic policies. 100% organic fertilizer policy overnight compromised food security and plantation crops declined exponentially. Today, the trade unions are talking about 100% daily wage (Rs. 2,000 per day) as a buffer against the high inflation in line with the colonial-era daily wage model. Not only RPCs, the trade union and the government are aware that the productivity-linked wages and revenue model is the only way forward. Increasing wages in line with inflation will undermine the sustainability of RPCs. When workers are paid on how much they pluck and how much that harvest will seize at the auction, then their compensation would be in line with those dynamics. Had the authorities and trade unions implemented this system when RPC tea plantations proposed it years ago, workers would have been better off today. Instead of Rs. 1000 daily wage, workers would be receiving an average of Rs. 50, 000-60, 000 per month; and most productive workers even more than that.”

He said that RPCs have consistently advocated for reforms to the colonial era daily wage model, in favour of a productivity and revenue share model.

“Furthermore, this system will increase total export earnings with increased volumes of good quality tea available for export which would fetch higher prices. We are at a crossroads where every dollar counts. So we urge all stakeholders to fully implement this critical reform considering its multiple benefits, without procrastination,” Alawattegama, said.

RPCs urged the government and trade unions to look beyond their concerns and interests in order to ensure the sector’s continued progressive performance without letting it be another burden on the already reeling economy of the country.

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SL needs laser-like focus on IMF programme implementation: Dr. Indrajit Coomaraswamy



Dr. Indrajit Coomaraswamy, Former Governor

‘If it gets suspended, it would have pretty dramatic consequences’

by Sanath Nanayakkare

There are three most important priorities for Sri Lanka in the wake of the IMF Programme; implementation, implementation and implementation of the agreed upon benchmarks of the programme. Last thing we need to suddenly find is that we have gone off the track of the programme and it is suspended, Dr. Indrajit Coomaraswamy, Former Governor, Central Bank of Sri Lanka said on Friday.

He said so while giving the keynote speech at a Central Bank hosted webinar titled “What is next for Sri Lanka in the wake of IMF Programme?”

Deshal De Mel, Economic Advisor, Ministry of Finance, Murtaza Jafferjee, Managing Director, JB Securities, Bingumal Thewarathanthri, Chief Executive Officer, Standard Chartered Bank were the panelists at the forum where the moderator was Shiran Fernando, Chief Economist at the Ceylon Chamber of Commerce

The following are a few comments made by Dr.Coomaraswamy.

The IMF EFF has now been successfully negotiated. This is in some way the beginning. There is lot more to do. It’s time to start thinking about what happens next. A little under a year ago, there were acute shortages of the most essential good. There were long queues and one or two people passed away while in queue. Prices were skyrocketing and exchange rate was collapsing, inflation was spiking and the Central Bank had to push up interest rates. All this happened only a few months from where we are today. The fact that things have stabilized to a significant extent clearly is a very favourable outcome but actually there is no room for complacency because the stabilization has happened at a low-level equilibrium.

It has happened when the economy experienced a 7.6% contraction last year. It was better than what was anticipated by the IMF and the World Bank, but still it is a very sharp contraction. And we need to get to a situation where we have macro-economic stability with a growth rate of about 4%. There is a lot to be done for this. But this is a very commendable place to get to after all. The Paris Club comprising G7 countries has endorsed our efforts to restore debt sustainability. The non-Paris Club creditors such as India and China also have endorsed and supported our efforts too. So the largest countries and creditors are willing to support Sri Lanka to get back on track in terms of debt sustainability. So this is not a bad place to be.”

“IMF programme implementation has always been a weakness on our part. This time we have already done a lot as prior action but there is more as you would have seen from the documentation tabled in parliament including structural reforms and institutional reform. So we have to have laser-like focus on implementation and move forward with the programme. If the programme gets suspended, it would have pretty dramatic consequences. So we need to keep it on track. We can’t give up the absolutely compelling need for fiscal discipline. What is next for us is; discipline and making the needed economic policy and implementing what e have agreed to do. During our past IMF programmes, the issue was lack of implementation by the Sri Lankan authorities.

Earlier this week Dr. Chandranath Amarasekare, Executive Director at the CBSL arranged for the Irish authorities to brief Sri lankan authorities on the implementation unit set up in Ireland when the global financial crisis hit Ireland which led them to go into an IMF programme. Ireland was meticulous in the way they set up the implementation framework. They identified all the action that had to be taken and assigned parts of it to relevant government entities to implement them. Ireland is back on track now. We need to have the same degree of laser-like focus on implementing the benchmarks. We have to figure out what needs to be done and ascribe responsibility for each action and monitor

carefully how we are going about it. We have to make sue we are hitting all the targets and structural benchmarks as we go along. These are embedded in the IMF programme. Last thing we need is to suddenly find that we have gone off the track of the programme and the programme is suspended. That will constrain the inflows to the country and it will affect the confidence beginning to build up now. All that will get undermined if the programme gets suspended because we are not able to keep it on track. So the Implementation Unit will need a very good authority to reach out to any part of government and get things done. We need this Implementation Unit to be well-structured and running well. And it should have the authority of the President behind it,”he said.

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Exterminators PLC opens a training and R&D center



Exterminators PLC, Sri Lanka’s premier pest tech and environmental tech company, opened a 5,000 plus square foot training, research and development center to enhance the quality of service via in-depth innovation to create a circular economy inorder to meet the growing demand in environmentally sustainable public health pest management, agricultural pest management, livestock, plantation and landscape pest management, sanitation and disinfection services in Sri Lanka and emerging and developing markets. The facility includes simulated environments for training in pest management, termite management, mosquito management, sanitation and disinfection, health and safety for new recruits and continuous professional training and development for existing employees.

The company plans to provide training for international pest management professionals in emerging and developing countries as well as serve as a training facility for its strategic franchising partners in the region.

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SLT-MOBITEL ‘Hosting Cub’ for MSMEs enables critical infrastructure and value-added hosting services



Understanding the importance of supporting Micro, Small, And Medium-Sized Enterprises (MSMEs) to drive growth and efficiencies, SLT-MOBITEL, the National ICT Solutions Provider is offering its Hosting Cub – Shared Web Hosting service catering to vital hosting requirements.

SLT-MOBITEL provides hosting facilities for MSMEs with affordable pricing, easy expansion of MSMEs cyber presence and other value-added offerings via its Shared Hosting and Virtual Private Server (VPS) solutions.

The Shared Hosting proposal is offered as the most economical option available for hosting. The overall cost of server maintenance is shared, also catering to low traffic websites that do not require higher bandwidth such as smaller websites and blogs.

The Share Hosting solution is available via four levels – Stellar, Stellar Plus, Stellar Pro and Stellar Business. The ‘Stellar’ package 1 GB VSAN Disk Space to balance storage usage, monthly 20 GB Bandwidth, 2 Mbps speed, 10 websites allowed, secure connection through SSL, FTP Accounts to manage file transfers, Unlimited email accounts, Unlimited MySQL Database to manage data, Unlimited Sub Domains, Hosting in SLT’s state-of-the-art Data Centre and WordPress supported. The pack is priced at only Rs 7500 per annum.

Similarly, the Stellar Plus presents an enhanced package with 2 GB VSAN Disk Space, monthly 40 GB Bandwidth, approval of 15 websites in addition to all the other value-additions. It is priced at Rs 12,000 per year. The Stellar Pro delivers 3 GB VSAN Disk Space, monthly 100 GB Bandwidth and 30 websites allowed while the Stellar Business provides 5 GB VSAN Disk Space, monthly 150GB Bandwidth and 40 websites. All other features are also enabled. The costs for Stellar Pro and Stellar Business are Rs 16,500 and Rs 25,500 respectively, per annum.

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