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Opinion

Sugar scam or tax scam?

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Early in the Sirisena administration, there was a ‘treasury Bond scam’ (bandumkara mankollaya) which lawyers, politicians and journalists conjured up into a Central Bank, bond scam (mahabanku badumkara mankollaya). When a fundamental rights case, arising out of the scam, was heard in the Supreme Court, a lawyer for the defence, argued that the matter was a ‘kussiamma job’ in the Central Bank, between the Governor of the Bank and his subordinates, and that the parties in the Central Bank prepared a meal as was ordered by the master. While there was a kernel of truth, in his argument, it was misleading in that officers of the Central Bank were an essential link in the insider dealing, that turned out to be the essential nature of the crime. No assets of the central bank were involved in the transactions and the Bank’s books contain no accounts of any losses arising out of the scam. All the estimated losses were suffered by the state. The dealings were in government bonds. The entire scandal arose in the bond market and revolved around transferring (selling) insider information that enabled a particular dealer in the market to make a killing, at cost to the state, and, incidentally, to other bond dealers. Some senior Central Bank officials, and the Chairman of the Monetary Board (therefore governor of the Central Bank), are among those that have been charged according to law. These allegations arose out of other proceedings after the Supreme Court denied the claims of the complainants that the scandal deserved further inquiry. The moniker ‘mahabanku mankollaya’ helped to perpetuate the myth that Central Bank bonds were involved and that losses were incurred by the Monetary Authority of the country. It diverted attention from the true nature of the crime to a fake nature and thus from those who perpetrated the crime and those who aided and abetted the commitment of the crime to that did not exist.

A commentator, in this newspaper, wrote a few times about the abuse of terms and this newspaper seems to have realized the validity of that man’s claim. Others continue to perpetuate the abuse of terms to propagate fake news. I was annoyed by the cartoon this (15/3) morning in which your cartoonist mentioned a sugar scam. There was none such.

The same fate seems to befall the tax scam (badu mankollaya) arising from the import of sugar and import tax variations for a very brief period of a few months. The tax rate was reduced from Rs. 50 a kilo to Rs.0.25 for a few months and raised again to Rs.50 per kilo, for no substantial reason, other than that of reducing the cost to the consumer (good enough). Large quantities of sugar that were imported at the lower rate of duty, by a few and a very large part of that by one person. Because a few people controlled supplies of sugar they controlled the price of sugar and consumers did not benefit from the lower price that the government expected. It is disingenuous of the Treasury to argue after the event, that they did not know that the few would not reduce prices as the Treasury expected. The same foul game had been played a few years earlier under the Sirisena administration. Treasury economists surely should have known the structure of that market before they took the decision to reduce the rate of duty by a factor of 200 from Rs.50 per kilo to Rs.0.25 per kilo in one fell swoop. The lower import duty was not passed onto the consumer. The Treasury now estimates that the loss to the state was Rs.15.9 billion, not an inconsiderable pot of money. As every loss to someone in the market is always a gain to another, who was that another? The importers, in this instance. Clearly, the scam related to taxes (badu mankollaya) payable to the state. That there was a sugar scandal (seeni mankollaya) is fake news, designed to erase the responsibility of the Treasury for the scam.

 

Usvatte-aratchi



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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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Opinion

Pledges to abolish executive presidency

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With the presidential elections around the corner, the abolition of the executive presidency has come up for discussion once again.

This time around, the proposal for abolishing the executive presidency has come from former President Chandrika B. Kumaratunga. She pledged to scrap it first when she ran for Presidency in 1994. But she did not fulfil her promise.

Former Presidents Mahinda Rajapaksa and Maithripala Sirisena are also now for scrapping the executive presidency.

Almost all the former Presidents came to power promising to scrap it but once in power they swept it under the carpet.

The Opposition parties claim they are for the abolition, but after the next presidential election. which, they say, they are confident of winning.

Mahinda has recently said it is preferable to abolish the executive presidency because he has already held it twice. However, he seems to have forgotten that he was greedy for power and he failed in his third attempt. For him and most other past Presidents, executive presidency is sour grapes.

They are now trying to have the executive presidency abolished in the hope that they will be able secure the premiership.

Ironically, Anura K Dissanayake, NPP leader and presidential candidate is against the abolition of the executive presidency as he is confident of winning the next presidential election.

So, all of them are in the same boat and one thing is clear; whoever becomes President will never have it abolished.

The campaign for scrapping the executive presidency will go in circles, forever.

Dr. P.A. Samaraweera 

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