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Editorial

The current state of play

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A legend in his time, Galle’s W. Dahanayake who was briefly prime minister after the SWRD Bandaranaike assassination, attributed his unexpected elevation to the prime ministry to “fortuitous circumstances.” Former President Maithripala Sirisena, although he has not chosen to do so to date, can also say that his unexpected ascendancy to the presidential throne in 2015 was the result of similar good fortune. Sirisena, unlike Dahanayake, certainly aspired to the prime ministry during the Mahinda Rajapaksa regime. But he was overlooked despite his seniority in cabinet and parliament plus long years as party secretary. He seemed far from achieving that ambition when an opportunity to run for president, with the backing of the United National Party (UNP), dropped on his lap. Engineered by former President Chandrika Bandaranaike Kumaratunga among others, Sirisena was offered an opportunity fraught with risk. He took the gamble and won a famous victory.

Thus the advent of the Yahapalana government which gave itself a catchy name which was later effectively used by opponents when it proved itself to be an exponent of anything but good governance. Sirisena has now gone on record telling parliament that his government was more sinned against than sinning and it was wrong to blame it for everything that went wrong. At the time of his election he was more than willing to play second fiddle to UNP leader Ranil Wickremesinghe, who thrice sacrificed, if we may use that term, his presidential ambitions in favour of other candidates judged to stand a better chance than he to win the election. Thus it was that then General (now Field Marshal) Sarath Fonseka, the war winning army commander, ran against Mahinda Rajapaksa, the war winning president, in 2010 as a common opposition candidate. Then it was Sirisena’s turn in 2015 as it was calculated that with wholehearted green backing he could bring a UNP plus vote to the ticket. That happened thanks to factors like the support of Ven. Madulwawe Sobhitha’s National Movement for Social Justice, the JVP keeping out of the race and not splitting the anti-Rajapaksa vote, and the backing of minorities often a UNP ally. Finally Wickremesinghe conceded the ticket in 2019 to his deputy, Sajith Premadasa being a non-contestant at three consecutive presidential elections.

Although it was reported in the early days that Sirisena even went far as saying he as president would address Prime Minister Wickremesinghe as “Sir,” he went on to later assert his presidential authority and denied his prime minister earlier carte blanche. Events that followed are well known and require no restatement. They culminated in Sirisena’s October 2018 “coup” when he appointed Mahinda Rajapaksa prime minister while Ranil Wickremesinghe retained a parliamentary majority. Attempts to test that majority were denied and the country had two prime ministers until the Supreme Court determined Sirisena’s act unconstitutional. The uneasy coexistence lasted only till November 2019 when Gotabaya Rajapaksa comfortably won the presidency against Sajith Premadasa to whom Wickremesinghe was compelled to concede the UNP ticket while retaining party leadership. All that is now history with Sirisena, to whom the SLFP leadership was bequeathed by the defeated Mahinda Rajapaksa, back in parliament with a small party group of 14 MPs who ran under the ruling SLPP banner to ensure their election.

Sirisena believes that everything went wrong for the country because J.R. Jayewardene opened the economy. That is a debatable issue. Not everything Yahapalana did was wrong though there was a lot of that, the Central Bank bond scam being arguably the worst. The 19th Amendment to the constitution had much good that could have been retained instead of discarding it altogether. A new constitution is now being drafted, but the country is not privy to what it will contain. The process is not open and transparent such as the Republican constitution adopted by the Sirima Bandaranaike-led United Front government. Whether the right of dual citizen to sit in parliament, was a one-off measure under 20A to enable another Rajapaksa sibling, who didn’t want to emulate his president brother and renounce his US citizenship, to enter the legislature, will remain in the new constitution is yet to be seen. If it is done away with as promised to win over dissident votes for 20A, accommodating a single individual from the ruling family in the incumbent parliament will require much explanation.

As things now stand, it does not seem likely that the SJB and UNP will reunite although that would be best for both parties. The GOP would not have broken in the first instance if Wickremesinghe had conceded the party leadership to Premadasa and retired to an elder statesman role befitting a politician who has been prime minister of this country no less than five times. It also appears unlikely that the SLFP which would probably have done as badly as the UNP at the last election if it did not run under the SLPP banner will want to recreate the blue party of the Bandaranaikes. Gotabaya Rajapaksa, no doubt partly because of Covid, has lost his popularity quicker into his term than any predecessor. But there is no evidence of Rajapaksa opponents grouping to engineer any regime change though last week’s SJB rally against the teeth of government oppression has sent out new signals.



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Editorial

Sports, science, and sense

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Tuesday 18th January, 2022

Tennis star Novak Djokovic is in a league of his own with his fans spread across the globe. He has all what any sportsperson could dream of—talent, fame and wealth. But he seems to lack one thing—common sense. He found himself up the creek without a paddle in Australia, and faced deportation because he did not play the game there, so to speak. He failed to realise that he was taking a huge risk when he travelled to Australia to take part in the Australian Open because he was unvaccinated. He should have known that he would receive the same treatment as any other unvaccinated foreigner in Australia, and his ranking as World No. 1 would not be factored in where vaccine mandates were concerned in that country. The blame for this unfortunate situation should be apportioned to the organisers of the Australian Open as well.

Anyone who seeks to enter Australia or any other country, for that matter, has to comply with laws, rules and regulations there or be prepared for deportation. The Australian government has been fighting quite a battle to save lives and keep the economy ticking vis-a-a-vis the pandemic; there have also been protests against lockdowns, etc. It has had to keep anti-vaxxers at bay, and this task is perhaps even more difficult than controlling the runaway virus.

There was no way Australia could give Djokovic special treatment while its own citizens were facing severe anti-pandemic restrictions. It has drawn heavy criticism for its action. Its visa approval process has even been described as ‘convoluted and shambolic’ in some quarters, and some critics claim that the cancellation of Djokovic’s visa will be a blow to the Australian Open.

Some Australian officials dragged some issues unnecessary into the controversy; they claimed that if Djokovic was allowed entry, it would be considered a victory for anti-vaxxers, who are all out to undermine the ongoing jab drive. They had a point in that Djokovic is said to have been vocal in his opposition to vaccine mandates. But they should have simply said no unvaccinated person would be allowed to enter Australia and everybody was equal before the law. The Victorian state government has made it abundantly clear that all players, staff and fans attending the Australian Open must be fully vaccinated unless there is a genuine reason why an exemption should be granted. Djokovic and his lawyers failed to prove that there was genuine reason for him to refuse to be vaccinated.

Not that one loves Djokovic less, but one loves the pandemic-hit humans more. It is science, and not sports, that can save the world from the pandemic. Even those who have recovered from Covid-19 have to be vaccinated, according to medical experts. Had the Australian government chosen to bend the rules and let Djokovic in, simply because he has recovered from Covid-19, it would have set a very bad precedent at a time when vaccine hesitancy has stood in the way of the global fight against Covid-19.

Imagine what would have happened if an unvaccinated star like Djokovic had arrived at the Bandaranaike International Airport and been denied entry? One of our jobless government grandees would have tucked up his sarong and made a beeline for the BIA, given the legend a bear hug and taken selfies with him or her before escorting him or her out. (Our is a land where even convicted rapists, murderers, drug dealers and other such anti-social elements serving sentences have been given presidential pardons!) It is believed that the spread of Covid-19 got out of control here in 2020 because scores of workers were allowed to be brought in from a neighbouring country without being tested for Covid-19, and that led to the formation of the Minuwangoda garment factory cluster.

Australia has done what is good for its people in spite of international pressure and thereby shown the way where pandemic control is concerned. It is hoped that other countries will not hesitate to adopt such tough measures in fighting the virus. One feels sorry for Djokovic, whose career has suffered a heavy blow, at what is described as his most successful Grand Slam tournament, but the fact remains that nobody, however famous or powerful he or she may be, should be allowed to trifle with vaccine mandates.

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Editorial

Another ‘loincloth remedy’

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Monday 17th January, 2022

Now, anyone could import rice, paying as little as 25 cents a kilo as duty. Trade Minister Bandula Gunawardena has said the government decision is aimed at preventing a rice shortage and bringing rice prices down. But the question is whether enough foreign exchange is available for rice imports. Minster Gunawardena himself has admitted that there are already 500 freight containers of rice at the Colombo Port pending clearance. The power and energy sectors are in a mega crisis as the country is without enough dollars to pay for fuel imports. Most industries dependent on imported raw materials are struggling to stay afloat; some of them have already gone belly up. Will the Trade Minister or any other SLPP grandee claiming to be well versed in the dismal science explain how forex will be found for rice imports?

The rice shortage and attendant price increases have come about for two reasons. One is the fertiliser shortage, which has resulted in a sharp drop in the Maha yield, and the other is hoarding by big-time millers and wholesalers. The government is not willing to change its fertiliser policy, which has run into stiff resistance from resentful farmers, and it is too impotent to take on the Millers’ Mafia, which has become a law unto itself as politicians benefit from its largesse during elections.

Rice imports are only a band-aid remedy. True, any essential commodity has to be imported in case of a severe shortfall in the domestic supply thereof, but such measures must necessarily be short-term; the government does not seem to know when it will be able to stop rice imports. Unless the fertiliser crisis is resolved urgently, rice imports will go on until the end of time, and several other agricultural products, too, will have to be imported. The country’s food security will be pie in the sky in such an eventuality.

SLPP MP and former President Maithripala Sirisena has, in an interview with Siyatha TV, said he wonders whether there is a move to discourage farmers from engaging in agriculture and drive them to sell their lands to private companies. Multinational corporations have already acquired large extents of land for commercial agriculture here; prominent among them is an international banana producer, which got a foothold here during the previous Rajapaksa government. The present-day leaders seem relentless in their efforts to turn this country into a banana republic.

Meanwhile, let Sirisena be told that his family is also responsible for farmers’ woes; his brother, Dudley, is one of the millers who make unconscionable profits by exploiting both the farmer and the consumer alike; and his relative, State Minister Siripala Gamlath, is also a miller thriving at the expense of the poor paddy farmers and hapless consumers. Shouldn’t he put his own house in order instead of shedding copious tears for farmers and consumers?

Whether the government is working according to a secret plan to make farmers fed up with agriculture, one may not know, but its wrong agricultural policies are fraught with the danger of discouraging the farming community. When farmers suffer massive yield losses, and cannot recover production costs, much less redeem their valuables pawned to raise funds for cultivation purposes, they will be left with no alternative but to vote with their feet. Some of them have already done so, and unless this trend is arrested urgently, the country’s economic crisis will worsen with more dollars having to be spent on food imports. Besides, rural poverty will increase exponentially, and the farmers reduced to penury are likely to migrate to urban centres looking for jobs that are not there. The country may run out of dollars at this rate, and therefore the people will have to starve if imports are promoted as government policy at the expense of the local production of main food items. (We might achieve self-sufficiency only in turmeric!)

The government’s decision to promote imports as a solution to the rice shortage instead of addressing the root causes of the problem is like using a loincloth to control diarrhoea, as a local saying goes.

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Editorial

The galloping stock market

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The booming Colombo Stock Exchange (CSE) last week, after a two-year Covid-impelled silence, hosted its first news conference to share with the media what its chairman, Mr. Dumith Fernando, called a “fantastic story.” He was not exaggerating even slightly. The CSE’s performance last year was more that extraordinary by any standard with several historical highs established in all the indicators that matter. These included the heights reached by both the broader All Share Price Index (ASPI) and S&P 20 measuring the performance of the more liquid and better rated stock. There was also the daily average turnover, which even in highly depreciated rupee terms, that not long ago was computed in the millions is now running into billions. On top of that, there was the equity capital raising initiatives of companies seeking new listings on the trading boards of the exchange. Once upon a time, the CSE laboured might and main to persuade companies to list. But now, companies are jostling in the queue to obtain a quotation and these, without exception, have been several times over-subscribed on the opening day itself. Such successes mean millions, if not billions, of rupees of zero cost capital for newly listed companies.

The story goes on. There are those whispering or derisively labeling the current surge in the stock market as looking very much like something out of Ripley’s Believe It or Not – a “phantom market,” as the CSE boss put it, that is not supported by fundamentals. Such suspicion is inevitable in the context of a rapidly declining economy but with a paradoxically booming stock market running alongside. Fernando easily demolished that contention. There are many reasons, he said, for what the exchange calls the “quantum leap” in the market last year. Not the least among them is the plummeting deposit interest rates now down to single digits. People who once squirreled away their savings in banks or much higher interest paying but riskier finance company fixed deposits, have now found that the CSE has opened possibilities of much better returns in a scenario of plunging interest rates. No wonder then that a new class of investors, far removed from the business savvy high net worth persons who traditionally invested in what they judged as ‘good’ company shares, have become active in the stock market. The old guard looked for a steady dividend stream and capital appreciation in the longer term. Some of them did trade their shares making tidy, if not super, profits. But a large number held their stock over the longer term. The new investors are a different kettle of fish. They are looking for quick, often instant, trading profits, seldom investing in the longer term.

Today there are droves of what the market calls ‘retailers,’ – relatively small investors with little capital to play with, attracted to the CSE like moths to light. They see many possibilities to earn themselves some good money in the stock market and a record number of new investors, most of them 40-years or younger, have opened trading accounts. Today market players don’t have to visit share-broker offices and wrestle with all kinds of paper work to become active traders. They can do it all from their homes or offices armed with no more than one of those ubiquitous smart phones that many own today. Both brokers and the CSE itself are digtized and offer a modern trading platform nearly on par with what is available in more advanced markets.

Records established by the CSE last year includes the number of new listings up on the trading boards. Dumith Fernando said at the news briefing that last year, mainly in the latter part of 2021, there were as many as 13 initial public offerings. All of them attracted stunning investor interest being oversubscribed, sometimes several times over, on the opening day itself. Analysts confirm that many of these shares gained from their issue prices when trading commenced days later though there was at least one exception. But the general picture was instant profit for many small investors whose trading strategy is to take profit and invest funds realized in selling shares in new shares where they believe further profit is possible. They grumble about inadequate allocations due to the high demand for the shares on offer. But issuers generally tend to be fair to small investors.

Brokers say that the same share is often bought and sold, by a single punter, who will do multiple transactions in the course of a single trading day. Like betting on horses, gambling on a stock exchange is not without risk. But the fact that new players keep entering the market by the day suggests that the risk is much less than at the races and one player’s success attract many new players into the market. Where retailers are concerned, the herd instinct is very much in evidence with interest in a single counter drawing hordes of players into it, rightly or wrongly. The CSE website is full of notifications of the attention of listed companies being drawn into unusual trading activity in their shares. The inevitable response is that the company is unaware of any undisclosed price sensitive information that may have attracted unusual investor interest. Brokers say that low-priced shares may attract interest in a market where an upward trajectory as seen here was all too evident in recent weeks.

How long the carnival will last is anybody’s guess. But there are many putting their money where their gut instincts tell them that there’s more to be made.

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