By Sanjeewa Jayaweera
The steep price increase in essentials like milk powder and cooking gas has caused much debate and anger amongst consumers. The opposition politicians are milking the angst among the public to score some points. There is no doubt that any increase in food prices causes the greatest anger and frustration amongst those struggling to make ends meet. The inability to provide dependents three square meals a day is a failure that causes a great deal of mental anguish.
In the developed world, having three meals a day is taken for granted, whilst in many developing countries, this is still not possible for a particular segment of the population. Therefore, it is the responsibility of the governments that we elect to plan and develop the economy to create productive employment so that all non-disabled adult citizens are gainfully employed. Unfortunately, successive governments in Sri Lanka have miserably failed in this area. The reasons for such failure are too numerous to be discussed in this article.
The purpose of this article is to share certain information which hopefully will enable the readers to understand better the challenge of maintaining stable prices of imported commodities and how poor decision making by GOSL makes matters worse.
It must be understood that prices of imported commodities are not within the control of the importer, who in most instances are private enterprises and individuals. Commodity prices in the world market are governed by many factors ranging from droughts and floods that impact the harvest and, at times, export bans. Currently, post covid supply chain constraints are also contributing to a surge in prices the world over as demand exceeds supply. Prices are always a function of demand and supply, and when demand exceeds supply, it is natural for prices to up.
Milk powder is an essential item amongst families with children. Due to its nutritional value, despite some in the medical profession claiming otherwise, many parents ensure that it is included in the grocery list. Therefore, the inability of parents to procure this vital commodity due to either it being too expensive or because it is not readily available leaves many such parents seething in anger. A recent news telecast before the price increase showed a long queue of persons waiting to purchase a packet of milk powder, with many complaining that they have stood for more than three hours. Some were claiming that they had travelled a distance of more than 10 kilometres.
Unfortunately, the public is not fully aware of the reasons for either the need for a sharp increase in the retail price or the cause for the shortage. The Global Dairy Trade website (www.globaldairytrade.info) shows that a metric ton of full cream milk powder on November 20, 2020, cost US $ 3,037. This price excludes freight. The retail price of 1 kg milk powder in Sri Lanka was then Rs. 945/-.
The world price then increased to a high of US $ 4,364 per ton by March 02, 2021. It has since fallen to US $ 3,749 per ton by October 05, 2021.
In addition to the significant price increase in US Dollar terms, the Sri Lanka rupee, which stood at Rs. 184 per US Dollar in October 2020 has depreciated to Rs. 203 by October 2021.
In percentage terms, the increase within the 12 months is 35 per cent whilst in March 2021, it was 50% at its peak. In addition to the rise in world prices and the depreciating rupee, the importers also had to bear an increase in freight costs, which have doubled.
The unfortunate aspect of this saga is that GOSL, through the consumer protection authority, did not allow the retail price to increase from Rs. 945. As milk powder is considered an essential item, its retail price is mandated by the GOSL.
In such a scenario, the importers were bearing significant losses. The net result was that they either stopped importing milk powder or reduced the quantity imported significantly, thus causing a shortage of milk powder in the market. When an item is sold at a loss, the more you sell, the more you lose.
The fact that the GOSL did not grant a price increase is unfathomable. It is basic common sense that no private enterprise is able or willing to bear losses. Private business people are the favourite whipping boys for politicians, media, and the public in our country. No doubt some racketeers fleece the public. People need to understand that those who engage in business activities invest their funds, invariably savings in expectation of getting a reasonable return. It is no different to us as individuals investing our savings in fixed deposits. We rightfully expect a decent return which till recently was around 10 per cent for the year. Therefore, in my view, given the risk taken by those venturing into business, a return between 15 per cent to 20 per cent after tax is a fair return. Many don’t achieve such a return, and quite a lot fail in their business ventures and lose their savings.
The alternative is for the GOSL to be the importer. However, given the repeated scams that have been perpetrated by those working in the state sector, such as Sathosa, we know that government enterprises are ill-suited for such activities. In that case, the private importers should be allowed to operate in an environment where the objective of cost-plus profit is achieved, and it is for the GOSL to facilitate this.
Businesses are often accused of not bringing down prices once increases are granted despite world prices reducing, and the general belief is that business enterprises are making super-profits. In most instances, this is not the case. The actions of the GOSL, which many are unaware of, prevent the prices of such commodities from being reduced. I want to share an example of how the GOSL uses its power to levy duties and taxes on imports that prevent importers from passing on the benefit to the consumer.
The GOSL enforces customs duty at the point of import which is a cost that needs to be added before arriving at the retail price. It has been and is the policy of the GOSL to increase the duty component when world prices of essential items reduce and reduce such duty when world prices increase.
The example given below is based on records maintained by a former colleague of mine who was the purchasing director. The company that we worked for imported Skimmed Milk Powder (SMP) as a raw material.
It should be noted that the world price shown would have fluctuated during the period. Therefore, I have shown the world price on the date when the duty change was implemented.
I trust the above schedule explains why importers of milk powder are constrained from passing on the benefit of reducing prices to the consumer. Thus, it is evident that the GOSL is surreptitiously keeping the benefit to themselves and not allowing it to be passed on to the consumers.
The rationale of pricing imports that I have outlined above is equally applicable in determining the price of gas, petrol and diesel. Even state enterprises like the Ceylon Petroleum Corporation and Litro Gas should be allowed to trade on a formula of cost-plus profit. There is no alternative to this principle.
My contention and that of many who are familiar with Economics and Finance are that by not passing on the cost increase through a price formula based on cost plus profit, even those who can bear such price increases are subsidized. There will be some consumers for whom the increased cost of petrol, diesel, gas and milk powder will have no consequences; there will be some consumers for whom a certain degree of adjustments to their monthly expenditure will need to be made and a degree of belt-tightening to accommodate such price increases. Some of these adjustments might mean resorting to carpooling, travelling by train or bus. That is the choice that needs to be made. However, there will be a segment of the population who are unable to bear such price increases. Therefore, the GOSL should provide a monetary allowance to bear such price increases and make them responsible for allocating their funds. I say this as, at times, I am perplexed when I see some of the people who flock to the Liquor shops when they are opened after a period of closure.
Getting it right on human rights
By Jehan Perera
Twice every year, the situation in the North and East of the country resembles that which existed during the three decades of war. One occasion is during 18-19 May, which is the anniversary of the end of the war in 2009. The other is 26-27 November, which used to be celebrated by the LTTE as Heroes Day, when they remember their war dead. Even though the war ended 12 years ago, these two days have the capacity to mobilise the sentiments of the Tamil people, particularly in the North and East and to generate an equivalent opposite reaction in the government, which leads to a heightened military presence. The period 2015-19, in which the government actively sought to promote a reconciliation process that gave more leeway to Tamil sentiment was one of de-escalation.
The wounds of war remain unhealed as the events of the past week have shown. The week leading up to 27 November saw people and organised groups in the North and East preparing to commemorate the war dead and the government preparing to forestall it. Police sought to get prohibition orders from the courts in the hope that the law would prevent the commemoration events from taking place. However, most of the courts did not oblige, and reaffirmed the basic rights to freedom of association and to remember the dead. They also ordered that no LTTE symbols could be displayed and refused to place further limits on the right to memorialise, except to the need to keep within Covid health guidelines. The right to remember is a human right, which the JVP practices faithfully every year, and the law setting up the Office of Reparations offers support to memorialisation.
Despite the presence of a large contingents of security forces in public places, and checkpoints and partrolling, remembrance events took place in most areas in public places and cemeteries, with people lighting lamps and candles. In some places memorials took place in the face of soldiers standing near to them with guns in hand. In other places the large numbers who gathered were not permitted to enter the area they wished to go to, and only a few were permitted in with the rest of them standing out. In many other parts of the North and East more low-key commemorations took place. Due to the heavy security presence and the fear of harassment, intimidation and detention, many opted to hold memorial events in their homes. A journalist was hospitalised after he was allegedly assaulted for taking a photograph of the name-board of the site where the last battle of the war was fought. This suggests the use of arbitrary power.
The heavy-handed actions in the North and East take place at a time when the government is also trying hard to impress the international community that it is serious about improving the human rights situation in the country. The international perception that the human rights situation in the country is deteriorating is very strong. Recently the famous Scotland Yard, which had been training the Sri Lankan police said that they will not renew their training contract with the country’s police force during the remainder of the agreed period, which ends in March 2022. They cited human rights concerns. In recent days, the Bar Association of Sri Lanka and human rights organisations have protested against the deaths in police custody of those accused of drug and other criminal offences. The cessation of training by Scotland Yard is liable to make a bad situation even worse.
However, the Scotland Yard decision is in keeping with the overall international assessment of human rights in Sri Lanka. In its latest report on the global human rights situation, the UK’s Annual Human Rights and Democracy Report issued in July 2021 stated Sri Lanka is among the 31 Human Rights Priority Countries. The January 2021 report on Sri Lanka by the Office of the UN’s High Commissioner for Human Rights (OHCHR) expressed deep concern over “trends emerging over the past year, which represent clear early warning signs of a deteriorating human rights situation and a significantly heightened risk of future violations”. The report further stated that “Security forces increased their surveillance and intimidation of human rights activists and their use of the Prevention of Terrorism Act, with a number of arbitrary arrests. The government proposed new regulations with powers to arrest and send individuals to rehabilitation centres to be ‘de-radicalised’ with no judicial oversight or requirement for further process.”
In June this year the EU parliament gave an early warning that its GSP Plus duty free tax privilege would be withdrawn as a last resort unless Sri Lanka demonstrated that it was serious about keeping to its commitment to uphold human rights. This is an economic benefit that the Sri Lankan economy cannot afford to lose when foreign exchange earnings are much lower than the demand for it and there is a shortage of dollars in the market and new strains of the Covid virus threaten to strike. While the EU resolution states that 12 years on from the end of the war, domestic initiatives for accountability and reconciliation have repeatedly failed to produce results, thus more deeply entrenching impunity and exacerbating victims’ distrust in the system, the EU has indicated that the Prevention of Terrorism Act (PTA) as it currently stands is central to what is unacceptable to them.
The government is currently in the process of amending the PTA. It appointed both a committee consisting of senior government officials headed by Defence Secretary General Kamal Gunaratne to submit a report on the PTA, which they have done. Now that report is being vetted by a ministerial subcommittee headed by Foreign Minister Professor G L Peiris who are seeking the views of other sections of society. This past weekend they met with civil society members in the form of the Sri Lankan Collective for Consensus (SLCC), which consists of individuals drawn from civil society organisations that have reconciliation, human rights and peace building aims in their work. Prof Peiris explained that there was no draft legislation as yet to share but only a set of proposals which they wished to discuss with civil society and other groups.
Prof Peiris explained that the changes to PTA proposed were a result of consensus between the Ministries of Foreign Affairs, Justice and Defence and the Attorney General’s Department; these changes are not conceived as one time ones, but as a part of a continuum, there being other changes contemplated that will be agreed on later. He also assured the members of SLCC that changes in legislation will be rapid, and take place early next year. The changes proposed will fall short of expectations of those whose primary concern is human rights, but are an improvement over the present formulation of the PTA. The salient amendments described in the verbal presentation made by Prof Peiris was the shortening of the maximum period of the detention order, restriction in the use of PTA, judicial oversight, supervision by magistrates of detainees, access to lawyers by those detained, speedy trials and repeal of Section 14 with regard to publication. Prof Peiris promised that this was only the start.
The question, and the challenge, will be in the implementation. The present spate of killings in police custody is distressing. In one instance, the lawyers for the person under arrest had warned beforehand that their client will be killed in the next day or days in a shootout, and appealed to the Bar Association and to the police IGP to protect that person’s life but to no avail. All systems collapse and no perpetrator is identified and so there is impunity. In a statement the Bar Association said “Once again, the Sri Lanka Police is involved in an incident which has the hallmarks of an extra judicial killing. This killing comes at a time that Sri Lanka’s human rights record is under scrutiny and there are threats of consequences to the country and its economy as a result of the deteriorating human rights situation…Responsibility for these killings must lie not only with the persons who carried out the killings but also all those who command them and those who failed to ensure the safety and security of the suspect. The BASL calls upon the IGP to explain his failure to protect the suspect who was in Police custody.” There are other changes that need to be made, the most important of which is the need for a system of checks and balances that works and the Sri Lankan state to consider all its citizens to be precious.
Generic system failure or inherent deficiencies in corporate ethics?
SLIIT controversy in the context of establishing private sector higher education institutions in Sri Lanka
By Prof Susirith Mendis
Having been a regular contributor to ‘The Island’, I have ventured again into expressing my opinion in public spaces after an extended period of silence, as I felt compelled to, after I read the excellently argued piece by Prof R.P. Gunawardane titled ‘SLIIT should remain non-state and non-profit institution’ in The Island of November 23.
Prof. Gunawardane explains why Sri Lanka Institute of Information Technology (SLIIT) should remain non-state and non-profit. He also discusses dispassionately the ‘issues and concerns’ that have come up in recent times about the unsavoury circumstances under which SLIIT ended up completely under private ownership divesting itself from what they might have seen as ‘the restraining clutches’ of the Mahapola Trust Fund (MTF). Prof Gunawardane’s recommendations finally, as well, are mostly acceptable and valuable.
But there are a few places where I beg to disagree and also wish to extend comment on the two topics he has touched upon.
Leaving the comments about the restraints of the University Grants Commission (UGC) on the state universities for later, let me first take issues about SLIIT.
SLIIT and MTF
Things have ‘hit the fan’ since the COPE report on SLIIT became public. Minister Bandula Gunawardane has assured at a meeting chaired by the President, that in his capacity as Minister of Trade, “action would be taken to take over SLIIT divested through fraudulent means”. The Minister used the words “fraudulent means”. The Island of August 10, 2021 headlined its story on the COPE revelations on SLIIT, ‘COPE tells govt. to undo SLIIT swindle’. So, it has been named fraudulent and a swindle.
The Second Report of the Committee on Public Enterprises tabled in Parliament on April 6, 2021, was a Special Report on SLIIT. The report prepared on the basis of an investigation by the Auditor General’s Department has recommended that “the SLIIT be recognised as a non-governmental institution and that the decision taken by the Cabinet of Ministers on 24.05.2017 not to include the said institution under any purview of the Ministry be reconsidered.” It also recommends that “the institution be taken over by the Mahapola Fund.”
Furthermore, the COPE recommended that action be taken under the Public Property Act against ‘all parties involved’ (my emphasis) in the action taken to deprive the government of its ownership of SLIIT and its control by an agreement signed on May 12, 2015 without any formal authority.
Therein lies the crux of this issue, that Prof Gunawardane failed to emphasise. But Prof Gunawardane rightly questions the bona fides of SLIIT in not responding to the summons of COPE to appear before it, using a technicality and informing, through their law firm, that it is ‘not legally obligated’ to do so. If all the actions of SLIIT in the process of the MTF divesting itself of SLIIT were above board, and there was nothing to hide, this would have been the best opportunity that the management of SLIIT had of publicly declaring that it had clean hands. Their refusal to do so is suspicious to say the least. A subsequent full-page advertisement (for which they must have spent a few cool millions) in The Daily Mirror of October 29, 2021, titled ‘The True Story of SLIIT’ was a varnished narrative signed, sealed and delivered to a gullible public. What was curiously revealing was, therein, they relate in passing, “the great risks and sacrifices made by the pioneers of SLIIT,” in particular those of Prof Lalith Gamage. It is a good advertisement. As good an advertisement as all advertisements are and expected to be, where critical information is suppressed, and high-points are emphasised and overblown. Like advertisements for milk foods or table margarines, for instance.
The refusal of SLIIT to appear before COPE may have prompted Wijeyadasa Rajapakshe to move the Supreme Court in terms of article 126 and Article 17 of the Constitution of Sri Lanka to request the cancellation of agreements between the MTF and SLIIT. The former Minister of Justice as well as Minister of Higher Education under the Yahapalana government, has named Cabinet of ministers including the Prime Minister, Members of the Commission to Investigate Allegations of Bribery or Corruption, the IGP, Attorney General, members of SLIIT and the Mahapola Higher Education Scholarship Trust Fund as respondents, and asked for issuing of notices to them and most importantly an order directing the Attorney-General to charge and indict Gamini Jayawickrama Perera, Dr. Wickrama Weerasooriya (deceased), Anil Rajakaruna, Prof Lalith R. Gamage and Prof Luxman Rathnayaka, among others.
Wijeyadasa Rajapakshe alleged that though he made a complaint to the CIABOC on February 25, 2019 that the loss caused to SLIIT as a result of the corrupt transaction at that time was about Rs. 23,000,000,000. (Rs. 23 billion), the outfit did nothing except recording statements from him twice.
As the Minister of Justice and of Higher Education, Wijeyadasa Rajapakshe was privy to all the sordid details of what happened at a particular MTF Board of Governors meeting when the Board was coerced into consenting to the divesting of SLIIT from the MTF.
Now, it is in the hands of the Supreme Court. We shall wait with bated breath. But in the meantime, a debate in Parliament is on the offing, which may bring to the public domain what is still not fully revealed.
Considering all of the above, I cannot but disagree with Prof. Gunawardane that the Vice-Chancellor/CEO of SLIIT should be retained in that position. He has apparently compromised himself, having started splendidly well in bringing SLIIT initially up to what it became later. Here was a golden opportunity for MTF and SLIIT to jointly set up a model for public-private partnership in the provision of higher education to an ‘education-hungry’ generation of Sri Lankan youth. But unfortunately, SLIIT has not conducted itself to be above reproach. Greed has, perhaps, taken over the early ideals of treading new paths in establishing a new kind of higher educational institution, as often as it happens in the conduct of most human affairs. In the end, it seems to have gone the same way as did North Colombo Medical College (NCMC) and South Asian Institute of Technology and Management/Medicine (SAITM) – manipulated by vested interests, for different ends, under different circumstances and different political regimes. Hence, my question in the title. Is it a system failure or corporate greed that creates an environment that attempts at private higher education, as in the three cases mentioned above, have failed our expectations? Failed to show that education, even in the hands of the private sector, is not wholly a ‘tradable commodity, but it is also a public good’.
We, the public also would wish, if it is at all possible, to know the answers to the following:
(i) Why has SLIIT not named the ‘company’ to which the SLIIT Board of Directors transferred the assets of SLIIT in 2015?
(ii) Who owns SLIIT now?
(iii) Why is there deliberate secrecy about ‘company’ that owns SLIIT?
(iv) Who are the shareholders of the above ‘company’?
(v) Does the Chancellor or the Vice-Chancellor/CEO or any other member of the Board of Management of SLIIT have any financial interest or any ownership or shareholding of the said unnamed ‘company’?
Until these questions have unambiguous answers, the truth about SLIIT will not be known.
I believe that a Presidential Commission has to be appointed to probe the allegations of a ‘fraudulent’ ‘swindle’ sullied by corruption at the highest levels of the SLIIT management.
State universities and the UGC
Prof R. P. Gunawardane argues that ‘UGC interference’ in State universities has retarded or restrained their growth and development as universities. I fully agree.
He quotes as examples Harvard, Princeton, MIT, Stanford and all ‘Ivy League’ universities in the US and to a lesser extent the British universities, such as Oxford and Cambridge, that are free from the fetters of government control. I believe that we need to look at their origins and the context in which they were established. Oxbridge were established as religious institutions of learning. The origins of Oxford are lost in the mists of time and legend, but the influence of the Christian Church in these two institutions is well-known. Harvard was founded to train clergy as a ‘church in the wilderness’. Hence, we cannot compare our state universities with the hoary traditions and culture that are behind those institutions that have developed through millennia and centuries. As a result, neither their governance structures nor their ethos can be replicated to our contexts.
Having said that, I agree that we need to strive for higher goals and greater futures for our universities. But, having been in the system for four decades, I have many misgivings about the self-governance of our universities. We have not shown that we have the distinct capabilities of ensuring quality and standards of higher education without state overview. I wish it were otherwise. To illustrate this absence of educational as well as fiduciary or financial responsibility and accountability within our universities, let me quote these two examples.
(1) External Degree Programmes: Several state universities conducted external degree programmes. Sri Jayewardenepura, Kelaniya, Peradeniya and Ruhuna universities were prominent amongst them. As I estimate, 15,000 to 35,000 students were registered annually by each of them. Almost all of them, if not all, were degrees in the Arts and Humanities. The monitoring of quality and standards was poor, and often non-existent. Many academic staff of these universities were external lecturers at mushrooming tutories countrywide, that conducted classes. Though they were expected to make a declaration to their respective universities about their involvement as external teaching staff, to avoid conflict of interest when examiners were appointed, this was practised more in the breach. Corruption became rampant. Examiners were correcting over 5,000 answer scripts. I was not surprised that the Minister of Higher Education, S.B. Dissanayake said publicly that ‘examiners throw answer scripts in the air and give marks according to when and where they fall’. He must have had some inside information. One of them told me that he built his three-storey house from the external degree examination payments he received. The Director of the External Examinations Branch was a much sought-after position. And once in, few left willingly. No control was possible due to pressures of vested interests within universities until the UGC stepped in and limited numbers that could be registered for external degrees by a special circular.
(2) Master’s degree, postgraduate diploma and certificate programmes: Though Bachelor’s degrees are non-fee levying, all other programmes conducted by state universities are fee-levying. Such programmes began to mushroom in all state universities. Academic staff delivering lectures and examining answer scripts were paid handsomely. Therefore, such courses began to proliferate. Master’s programmes were the most lucrative. Some professors and senior staff in universities neglected their undergraduate lectures and concentrated on postgraduate lectures. Examinations were delayed and results were not released for months, if not years. Having paid large sums of money, postgraduate students languished without being awarded their degrees. Some newly established universities with a severe dearth of academic staff even to effectively conduct their undergraduate bachelor’s programmes, were commencing and conducting Master’s programmes. Some even commenced such programmes in Colombo in rented premises with minimal involvement of their academics in the teaching programmes. The quality of these Master’s programmes was much in question. Since the situation was going out of control, the UGC had to bring in stricter criteria for universities to establish postgraduate courses. This had to be done by the UGC because the powerful vested interests within the universities overwhelmed any attempt at internal reform. But, even now, the proliferation of Master’s degree programmes in our state universities are a matter of much concern and debate.
The above are just two examples of the lack of educational and fiduciary or financial governance of the state university system in Sri Lanka.
After all, we are currently debating the deficiencies of governance at the highest levels of government. It is my considered view that neither systems nor persons of adequate integrity are in place for us to entrust self-governance to our universities at present. Corruption will become rampant from student selection to awarding of degrees. This is despite a myriad of UGC circulars. What would the playing fields be, without such an independent referee, and if none of those restraints by circulars (rules) were in existence? I may be a pessimist. But I fear to envisage such a scenario.
Negombo in the spotlight…
DJ Ishan, who has also done his thing, internationally, behind the console, has released his very first single, as producer, titled ‘Negombo.’
The song, written by Sampath Fernandopulle, with Pramul Elica on lead vocals, mastering by Ashan, and Vikith Perera with the baseline, is all about the vibe and colours surrounding the coastal town, and everyone featured on the song, and its production, hails from Negombo. The song and video were released online last week.
Ishan started out with Curzon Entertainers and then, 13 years later, formed his own unit, Entertainment ID, and has been seen in action, as a DJ, at top notch local and international events.
‘Retro Revival,’ one of the country’s most anticipated ‘90s parties, is the brainchild of Ishan. He was a regular feature at the immensely popular ‘9 Days of 90s’ party, ‘Dream Music Fest’ and the ‘Negombo Music Fest.’
He has also played at the VLV Lounge Singapore, Stock Resort Austria, Kristallehutte Austria, JW Marriott Malaysia, Dighali Maldives and was a support artiste for globally-renowned DJ Selectro, in Belgium.
With the release of the single ‘Negombo,’ Ishan is opening up a new chapter in music production, together with DJ MASS, in commercial pop music.
“Negombo is where I grew up, went to school, played cricket and represented the country with various teams, started DJing, and now started producing music. So, I always wanted to show my gratitude to my hometown and for the people of Negombo who have helped me right throughout. This song is about the city of Negombo, the people, the beaches and everything about this wonderful place I call home,” Ishan says.
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