Features
THE NEED FOR INCREASED FUEL PRICES AND DIVESTITURE OF CEYLON PETROLEUM CORPORATION
by Sanjeewa Jayaweera
In a recent TV talk show “Face the Nation”, a panel of economists mostly with experience in the private sector delivered an insightful and no holds barred discussion on the recent hike in petroland diesel prices. The participants were Murtaza Jafferjee (Chair of Advocata Institute), Nishan De Mel (Executive Director Verite Research), Dr Anila Dias Bandaranaike (Former Assistant Governor of Central Bank) and Shiran Fernando (Chief Economist of the Chamber ofCommerce).
It was good to listen to a discussion where no attempt was made to cotton wool the perilous position of the Sri Lankan economy. It was pleasing that all panelists felt that the price increase was inevitable even if taken rather late in the day. Some of the key points they made were:
Murtaza Jafferjee said, “market forces are not allowed to operate due to government interference, which prolongs the issues at hand despite creating an illusion that everything is fine. The government is trying to solve a foreign currency solvency issue by using toolsintended to manage a liquidity crisis. We spend a net amount of US $ 3.5 billion in a year on fuel imports (when the average price is US $ 70 per barrel) which is the single largest import, and that it is vital to price it correctly.
“The revised pricing, unfortunately, does not still cover the cost of diesel. The government should have done price increases in stages. In New Delhi, the price of a Liter of petrol is Rs. 250/- (SEE TABLE 1). According to a World Bank study, the fuel subsidy benefits the richest 30% of households (here) with 70% of the benefit. He proposed that to ease the burden of higher fuel cost on the poorest segment of the population, there needs to be a cash transfer, like Samurdhi benefits to that segment instead of subsidizing all and sundry.”
His message was not to play politics with fuel prices, causing a huge hole in the economy. He was astounded that the single person income tax-free threshold of Rs.three million for a year introduced by the government in 2019 is 400 per cent of the country’s per capita income. This contrasts with countries like Singapore and Australia, both of whom have a much higher per capita income than Sri Lanka, but the tax-free threshold is only around 20% of per capita income.
Dr Anila Dias Bandaranaike said, “leadership need to make tough decisions and convince the public to undergo certain hardships to work towards a better future.” Those presently overseeing the management of the economy are out of their depth and drowning. Post-2015, when attending parliamentary oversight committees, she observed that most MP’s were absent and that many of the few who attended did not understand what was going on! She was critical of the private sector and referred to them as the NATO = No Action Talk Only! But unfortunately, she declined to comment about the role of the utterly inefficient and subservient public service of which she was part for several years!
Nishan de Mel said, “The present government reduced a plethora of taxes when it came to power, thereby significantly reducing government revenue—estimated to be around Rs. 600 billion. These measures were to act as an economic stimulus leading to economic growth. Unfortunately, no analysis has been done to determine whether these measures achieved the desired result.”
He lamented that there is a lack of economic data readily available in our country. This prevents proper monitoring and analysis of various actions resorted to by the government and hinders future planning. He cited an example of how the Central Bank has filed a court case to prevent access to certain data relating to the bond scam. They retained expensive lawyers from private practice as opposed to those from the Attorney Generals Department. The government is resorting to local borrowing to bridge the budget deficit, and by keeping the lending rates below inflation, the government is borrowing at zero cost. Our economy is in a precarious position.
The Need for a Formula for Pricing Fuel
Those who have some knowledge and understanding of how the government should manage the economy have been of the view for several decades that the government needs to price the supply of fuel, electricity, gas, and many other commodities and services based on a formula ofcost-plus profit. In 2018, the Yahapalana government did introduce a price formula. They were subjected to both criticism and ridicule. With an impending election, the practice was hastily withdrawn. A document prepared as far back 2003 proposed that the fuel price formula should be based on:
CIF price (FOB + freight + insurance + evaporation losses) to which the following costs be added (port + jetty charges + customs and excise duty + financial charges + storage and terminal charges + marketing and distribution charges) to arrive at the wholesale cost.
The retail price was to be arrived at by adding the following to the wholesale cost (profit margin of 5% + retailer and dealer margin of 2.5% of the wholesale price + VAT).Fuel prices should be revised monthly to reflect changes in Singapore Platts average FOB price and exchange rates.
It was a simple enough formula to have been implemented. No doubt there would have been periods when world oil prices spiked well above US 100 per barrel, the retail price would have been high. However, we all know that no commodity or service can be provided below costother than for a short period. Unfortunately, this type of logic has escaped those who have governed our country for so many decades.
Actually, it is a case of not being able to take tough decisions at the correct time. Short-term political popularity has overridden the compelling need for sound economic management. That our country has lacked visionary leaders since Independence is evident. However, we, the masses, are equally culpable for our predicament. The quotation “people get the government they deserve” is quite apt.
In addition, high fuel prices hopefully should also act as a catalyst for car owners to adopt practices such as car-pooling. The benefits extend beyond just financial to also reducing traffic jams on our roads, pollution etc.
The Losses incurred by Ceylon Petroleum Corporation (CPC)
At the outset, I must express my disappointment that the latest CPC Annual Report available is for the year ended December 31, 2018. This reflects the overall inefficiency that pervades state institutions where the work ethic is deplorable. Many companies listed on the Colombo Stock Exchange releases their Annual Reports within 90 days of the end of the financial year. An examination of the financial statements of CPC for 2018 reveals the following.
CPC posted a loss of Rs. 105 billion, of which Rs. 82.7 billion was on account of foreign exchange rate variation and a further Rs. 12.9 billion due to interest costs. Unfortunately, even at a Gross Profit Level (Revenue less direct costs), there was a loss of Rs 3 billion. TheBalance Sheet as of December 31, 2018, reflects that CPC has accumulated losses of Rs. 325.6 billion. The net assets are a negative of Rs. 281.7 billion. Borrowings were Rs. 296 billion,although there was Rs. 110.6 billion of bank deposits, investments in treasury bonds and bank balances. Other liabilities of Rs. 313 billion included foreign bills payable for imports of Rs. 245.5 billion.
CPC is insolvent, and the Auditor General has qualified his report by stating, ” The Corporation’s ability to continue as a going concern without the financial assistance from the Government is doubtful.”
I have included a table (2) detailing the eight-year history of the performance of CPC and some essential information. The absence of the financials for 2019 and 2020 prevents me from doing a 10-year analysis. As can be observed in 2011, 2012, and 2018, CPC made a loss even at Gross Profit Level and posted a loss before tax in five out of eight years. In 2011 and 2012, the average price for a barrel of Brent crude was in the region of US $ 112, and the consequences of not adjusting the fuel price are apparent. On the other hand, in 2013, despite the average cost of a barrel of Brent being US $ 109, CPC was able to post a Gross Profit of Rs. 26 billion as fuel prices were adjusted to reflect the cost.
Poor Management of CPC
Given the pivotal role that CPC plays in our economy, there is a need to ensure that people of skill, proven competence, and experience be appointed to both the Board of Directors and the key management positions. I have noted from perusing the corporation’s Annual Reports that the Executive Chairman post is like a merry go round. In the year 2017, there were three different Chairmen, whilst in 2018, there were two separate Chairmen. No organization, let alone one as large as CPC, can function effectively without continuity. In addition, the calibre of people appointed to the post of Chairman is a cause for concern.
In 2017, the Minister of Petroleum appointed his brother as the Chairman. Under any circumstances, this appointment can only be deemed as nepotism. In addition, the Chairman being a former cricketer, had no relevant experience nor proven competence and maybe the skill sets required to hold this position. The infamous hedging deal that cost the country’s taxpayers a sum over Rs. 14 billion between 2007 and 2008 occurred when another former national cricketer was the Chairman of CPC.
Do we ever learn? Another who served as Chairman in 2018 is a person whose career was in the Sri Lanka Administrative Service. With all respect, having dealt with various senior public servants in our country during my career in the private sector, I have grave reservations about their capability to hold a position that requires proven commercial acumen and expertise. A question that needs to be posed and answered by the Chairman and the Board who served the CPC in 2020 is whether they took advantage of rock bottom prices in the world market to secure our future supplies.
Auditor General’s Report On CPC
The Auditor General’s (AG) Report for 2017 and 2018 of CPC and subsidiary run into 29 and 18 pages, respectively. They are a damning indictment of maintaining poor accounting records, lax internal controls, non-adherence to Sri Lanka Accounting standards, lack of evidence for audit, non-compliance with laws, rules, regulations, poor management decisions, operating inefficiencies, and transactions of contentious nature.
Due to the constraint of space, I shall only list a few of them, although any reader interested can access the annual reports of CPC on their website www.ceypecto.gov.lk
Differences in balances payable/receivable as reflected in the accounting recordsof CPC and other parties:
A difference of Rs. 670.93 million in the inter-company balance between CPC and the Subsidiary – Ceylon Petroleum Storage Terminal Ltd., as of December 31, 2017, increased to Rs. 2.47 billion by December 31, 2018.
A balance difference of Rs. 436.78 million observed between CPC and the Department of Inland Revenue (IRD) regarding Income Tax, Economic Service Charge, and Value Added Tax payable/recoverable.
There is a balance difference of Rs. 778.3 million between CPC and the CEB as of December 31, 2018
An amount of Rs. 2.7 billion is reflected in excess as payable to Sri Lanka Customs compared with Sri Lanka Customs’ records.
No basis disclosed or audit evidence provided for the provision of Rs. 142.92 million made on inventory items to be written off.
An amount of Rs. 4.59 billion payable to the People’s Bank on account of hedging transactions between 2007 and 2009 has been excluded from the financial statements of CPC. In addition, Commercial Bank of Ceylon Plc has filed a case at the Commercial High Court, Colombo, claiming US $ 8.65 million from CPC. The total estimated loss due to the hedging transactions between 2007 and 2009 is estimated to be Rs. 14 billion.
An estimated loss of Rs. 1.5 billion because of non-implementation of collecting a monthly utility fee from CPC- owned dealer operated filling stations and Treasury owned dealer operated filling stations from January 01, 2014, onwards.
CPC has borne Rs. 53.57 million and Rs. 259.9 million during 2017 and 2018 respectively as PAYE Tax of its employees without deducting it from their personal emoluments.
A sum of Rs. 307.8 million incurred in purchasing seven motor vehicles in 2017 without the approval of the Ministry, General Treasury and the Department of Public Enterprise.
An agreement has been entered into with Hyrax Oil SDN BHD to build a Lubricant Blending Plant on a BOT basis in May 2016. No comparable proposal has been obtained, which is the acceptable procedure. The AG’s report also mentions that they could not ensure that a properfeasibility study had been conducted for the project.
The list is much longer. The Auditor-General and his staff need to be commended for their work. In most countries, an audit report of this nature would result in action against officers responsible. I believe most audit reports compiled by the Auditor General on state enterprises would be equally bad or even worse.
The Impact of fuel Prices and politicization
The Minister, in justifying the price increase said, CPC has borrowed around Rs. 600 billion from People’s Bank and Bank of Ceylon, and any further borrowing might destabilize the entire banking system.
There is no doubt that an increase in fuel prices has a ripple effect that runs across from the cost of transport to goods, resulting in hardship to some population segments. It mainly impacts the poorer segment struggling to make ends meet. The popular euphonism in Sinhalese that most opposition politicians say “gahen watuna minihata gona anna” which is equivalent to the English “from the frying pan to the fire.”
In the 2018 Annual Report, it is disclosed that CPC lost Rs. 14.7 billion due to selling kerosene below cost. The loss per litre is Rs. 56.86. The annual report states, “The subsidy on kerosene is largely misused by the transport sector when the price gap between the diesel and kerosene is more.” However, as Jafferjee said, the solution to avoid this pain is to make a cash transfer to those in the poverty net and not benefit the rest of the population.
I came across a Sri Lanka review done by the World Bank in 1996 where they say “Sri Lanka’s large array of safety nets are both costly and poorly targeted. They typically have transferred resources, albeit modest, to a large fraction of the population above the poverty line and inadequate sums to the very poor.” Unfortunately, 25 years on this statement is still applicable.
It is deplorable that politicians of both the main parties try to politicize fuel prices despite being aware of the massive negative economic impact of not pricing fuel based on the cost-plus profitformula. Their job is also to educate the public and stop childish symbolic acts of riding bullock carts, cycles and three-wheelers. The decision to import expensive vehicles for MP’s needs our unreserved condemnation. One must live hoping that action will be taken against the members of the CPC Board who in 2017 ordered seven vehicles for Rs. 307 million with no covering approval.
Conclusion
In my view, the need to privatize the Ceylon Petroleum Corporation is compelling. The government can maybe hold a majority stake of 51%. However, the management of CPC by an independent professional team outside government interference is a must. This is equally applicable to many other state corporations like the CEB, the National Water Board and Litro Gas.
I can imagine the howls of protest this will draw from the JVP, other left-wing parties, and trade unions. The opposition by the trade unions is understandable given that the staff cost at CPC for the year was Rs. 6 billion, which increased to Rs. 12.7 billion inclusive of the subsidiary company. As to whether the Rs. 259.9 million borne by CPC as PAYE tax on behalf of its employees is included or on top of this is anybody’s guess. The cost to company (CTC) of anan employee at CPC (excluding the subsidiary company) is approximately Rs. 180,000 per month.
The government must draw upon the success of the part divestiture and independent management of Sri Lanka Telecom and Sri Lankan Airlines under Emirates to restructure all loss-making institutions. These changes should have been implemented long ago, but as the panel of experts said in the Face the Nation talk show, it is better late than never.
by Geewananda Gunawardana
It is encouraging that the piece on agnotology and ethnicity (The Island December 4, 2024) elicited an erudite discourse (‘Ethnicity and genetics – A non-racial academic response’ and ‘Ethnicity – a synonym for confusion,’ The Island December 11 and 16, 2024, respectively) concluding that ethnic divisions have no biological basis. However, we cannot overlook the fact that humans have an evolutionary tendency to belong to a group, clan, or cult for survival purposes; we are social animals. Not having fangs, claws, venom, or any other protective anatomy, tribalism is the way humans have chosen to defend themselves. Unfortunately, the same evolutionary force makes us blind to the hazards of this habit. Throughout human history, this vulnerability has been exploited by story tellers of all stripes and spots to bring us under their fold and fatten themselves. We Sri Lankans tend to fall for such stories at an alarming rate with grave consequences. That is the focus of agnotology: the investigation of our weakness in believing stories, or the resulting culturally induced ignorance, and its effects on our society. It goes beyond ethnic relations.
One thing must be made clear, there is no point in continuing endless academic discourse and hoping for problems to go away. What is necessary is to find ways to reduce and finally eradicate culturally induced ignorance, or the habit of adhering to baseless, false stories that are harmful or counterproductive, and put them into action.
It is a fact that unlearning is much harder than learning. Therefore, it is best if we can stop learning such baseless, fake stories in the first place. The unpleasant truth is that it can be too late for some segments of society as such stories are deeply engraved in their minds. They will reject the facts, and we have no choice but to look beyond their objections. Therefore, the best remedy is to stop our children from learning culturally inherited myths, beliefs, and practices that disrupt harmony, waste valuable resources, and stop us from joining the 21st century. We must tell them the truth that they are poems, myths, and beliefs, etc., and they should not be accepted as undisputable truths. We must train the younger generation to think critically and have the skill to separate facts from fiction, instead of being blind followers. If the Buddha could say that about his teaching, why cannot we say the same about fabricated stories with hidden agendas?
It is inevitable that there will be a deafening outcry that such actions will ruin our proud culture and heritage. There is absolutely no need to let that happen; we can continue culturally and religiously important activities intelligently if we knew their true meaning and that we are not manipulated by some storyteller for their benefit. We must give our children the facts and train them to make sensible decisions rather than blindly following rituals. Even Buddhism teaches us that following rituals blindly is a barrier to liberation.
We have paid dearly for inflaming ethnic division. Let us not forget that the civil strife had cost the nation more than twice the current debt. Should we continue to spread questionable theories that try to prove one is superior to the other or one arrived before the other and has a larger claim to the land? Is it necessary to impress children by glorifying the battle between Dutugamunu and Elara that happened two thousand three hundred years ago? Or, is it more important to convince them that divided we will continue to wallow in misery?
Let us not forget that whether it is the iron age or the 21st century, the root cause of these evils is the elite that manipulate these stories to their benefit. We managed to sideline the old elite, the establishment, or the aristocracy, but there is a new elite trying to raise its ugly head: the so-called academic elite. Please do not jump to conclusions. There is no need to explain again when elite becomes a dirty word but let us be clear that there is an honourably learned community that provides a valuable service to the country. We value them. It is the fake academics that we must be weary of. Let us admit that it is the cream of the cream that enters our public universities. Whether they exhibit additional letters before or after their names or not, we must bear in mind that they are the smartest lot the country has produced. Whether the country reaps the investment made in them or not is a different issue.
Those who could not get in are not necessarily inferior, it is just that the others did better; and if they can afford it, they continue their education in private institutions here or abroad. Unfortunately, this is where elitism raises its ugly head; we want meritocracy for good reasons, but did everyone get an equal opportunity to collect such merits? We have a habit of giving more weight to foreign degrees, a residue of elite veneration, without verifying the quality of the granting institution or the veracity of their claims. It is no secret that it is possible to buy a degree in some countries. Even worse, I know firsthand an individual who worked as a checkout clerk at a pharmacy chain abroad and paraded as a doctor back at home! However, in this internet age, there is no need to be ignorant, to be gullible and believe their stories; few questions and a quick search of the web can verify their claims, and stop the emergence of a new elite, the bad kind. Let us ask not what letters they have added to their names but ask what they have done or can do to solve problems (my apologies to JFK).
We shamelessly propagate many stories that originated in the iron age without ever questioning their relevance to the 21st century. The ugliest of them is the caste system. We must question the value, or the purpose of following a social stratification system started by nomadic farmers from the central Eurasian Steppes to safeguard their feudal system four thousand years ago. Once again, it was their elite that deceived the humble peasants and took advantage. Imagine starting a similar system by treating descendants of computer programmers differently from those of civil engineers, for example. Force them to have different naming systems, prevent intermarriages, live in segregated enclaves, and assume one is above the other. It is a disgrace that we keep this system and go to the extent of forming separate voting blocks.
Another antiquated practice we hang onto is astrology, which started in Mesopotamia. They used the cyclic movement of celestial bodies as a calendar to plan their agricultural activities. Their geocentric models of the cosmos did not allow them to realise that the seasonal changes are the result of the tilt in earth’s rotational axis and varying distance to the sun. This ignorance made them elevate seasonal changes to acts of divinity. It is true that the gravitational force of the moon causes tides, but how can nuclear furnaces that are light years away impact human lives on earth? Science has yet to discover any such forces or find any evidence that astrological predictions have any basis. There are billions of people who lead healthy successful lives in this world without ever following astrology. Instead of astrology, let us teach the children astronomy, so that they will understand that climate change is not a hoax.
The Age of Reason along with scientific revolution started in the 17th century helped humanity get rid of baseless beliefs and myths that were used by the elite to retain power. Unfortunately, we seem to have missed that revolution and are still trapped in the past. That is no accident either: the elite had done their part to limit our access to knowledge. The underlying reasons that resulted in the widespread tuition business that sells knowledge are good examples. The disparity in the quality of public schools between urban and rural areas is another; do the elite send their children to rural schools? According to one report, over eight hundred rural schools had been closed permanently by 2023. The school dropout rate due to poverty is estimated to be about 30 to 35 percent. Is there any doubt that quality education is only for the elite?
Not only that many practices we engage in have no real value, but they also funnel our precious resources to nefarious activities. Unfortunately, these stories are so deeply engraved in our collective psyche that we do not have the will to challenge them. That is the power of storytelling, and its role in shaping our destiny. This is particularly ironic for one important reason. The goal of the ‘Age of Reason’ and the ancient tradition that most Sri Lankans venerate, protect, and give their lives to preserve have the same goal: understanding the natural world and humanity’s place in it through reason: knowing reality. Unfortunately, instead of following that guidance, we have shrouded that timeless truth we inherited with practices based on beliefs, myths, and mysticism. We have legitimized many primitive practices such as rituals centered on appeasing deities, demons, ghosts, clairvoyant reading, and other numerous spirits bringing them under the umbrella of that venerated tradition and blinding ourselves to truth.
We fail to see that communicable diseases are caused by germs and not by angry spirits, and the absurdity of appeasing higher powers for cures instead of using proven medications. The facts of a simple biological event such as reaching puberty are often buried under rituals; the associated taboos impact females from participation in education and in the work force and, at times, risk their health. The period poverty is discussed in high circles, but does it help the needy? These practices teach our children to leave their destinies at the mercy of mystic superpowers instead of taking control of their lives themselves. There lies the biggest obstacle to prosperity. These are all difficult subjects to deal with, but we must initiate a dialogue on the information gap at a minimum if we must move the country forward.
There are many more practices and beliefs that hamper our progress. Hopefully, we will have the courage and wisdom to have that discussion, someday. Until then, we can do one thing at home: let us tell our children the truth. If our practices have artistic, cultural, and economic values, let us tell them so without wrapping them in mysticism. Let us teach them poems for their literary value but not as historical facts. Let them know that history is written by the victors and often gives the writer’s perspective. Let us teach them the value of rational thinking and help them join the 21st century along with the rest of the world. Let us have no doubt that a prosperous country can be built only on fact-based information that is objective, and not on opinions, beliefs, or assumptions inherited from the dark ages. Let elimination of such culturally acquired ignorance be our new year resolution.
“The bad news is time flies. The good news is you’re the pilot.”
Cassandra quotes below a poet she never could enjoy – Alfred Lord Tennyson (1809 – 1892). He was 1st Baron Tennyson and Poet Laureate during much of Queen Victoria’s reign. To her he sounds pompous but his Ring Out Wild Bells is a simple poem and she found it apt at this time. Two stanzas of the poem go thus:
Ring out the want, the care, the sin, / the faithless coldness of the times;
Ring out, ring out my mournful rhymes/But ring the fuller minstrel in.
Ring out false pride in place and blood, /The civic slander and the spite;
Ring in the love of truth and right, /Ring in the common love of good
.I am certain you reader will guess the implied meaning Cass has in mind when quoting these lines. Yes and a loud YES; Sri Lanka is ringing out the bad, ugly, mean, corrupt, pompous pride and bloated egos of those who ruled us. The majority of us have hope in our hearts and look forward to an all-round improvement in how the country is governed. We also are sure the new people at the head of government and state are very different from those Big Wigs of this year before October and down the years, who so drastically dragged the country down to the very depths of deprivation and bankruptcy.
Tennyson rings out the want, the care, the sin; the faithless coldness of the times.
Yes, the times of waiting days in queues for essentials is over. Some may remind Cass it was Ranil W, who did away with queues by taking the right economic decisions. Yes, partly, but during his time as Prez he could have done much more to ease the lot of not only the poorer segment of Sri Lanka’s population but all who suffered. And this while 90 odd persons were advising him and running around in luxury cars while we suffered deprivation.
There certainly was ‘faithless coldness’ during times past when decisions were taken to please the very small minority of the rich at the expense of the rest of Sri Lankans. Coldness we associate with Prez Gotabaya and ‘false pride in place and blood’ during the years Mahinda R was Prez with his favoured persons doing just as they please, not caring one jot for those they made to suffer. Cold unconcern. Coldness is attributed to Ranil W. Comes to mind Keheliya Rambukwella and Lohan Ratwatte, the former importing medical drugs that were ineffective or lethal; the latter strutting in prisons at night with a thigh exposing woman friend. The list of crimes is very long.
Tennyson calls for a ringing in of love of truth and right and common love. AKD, Harini, Vijitha Herath and others of the NPP are ringing in truth and honesty; right government ensuring people’s rights; and intending to end the evils of corruption, nepotism, favouritism and family bandyism of concern only for the wellbeing of families.
A sense of empathy and concern for the country and its people by those in power is definitely in the air, which was never present, except as far back as when DS Senanayake, Dudley Senanayake and John Kotelawala were in power. Kotelawela showed concern in his own brusque way. They were not self-centered and we do not expect our new leaders to be this, even to the slightest degree.
Cassandra’s summation on the state of the country and people’s perceptions is optimistic. The country will sure improve and Ministers in the Cabinet will work to improve the country and its people, not themselves. When honesty, commitment and selflessness are apparent in political leaders, lesser ones too will follow. Thus, we could expect bureaucrats who serve the country with honesty and dedication.
Accidents and apparent incompetence
We are glad the Police have taken due note of the far too many road accidents and have started preliminary findings to arrive at the root of the serious trouble. As the Editor of this newspaper commented in his editorial on this subject, common causes of road accidents are incompetent drivers; road unworthy vehicles; buses plying competitively for fares; and drivers and bus conductors addicted to drugs or intoxicating drinks and being at the wheel under either influence. Also, their being over-worked with far too long spells driving. All these can be remedied. Strict supervision of drivers and vehicles; bus owners being law abiding; the Police taking preventive and punishing action; and punishment meted being severe.
Cassandra experienced the crass incompetence and, perhaps, the debilitating influence of drugs on a driver of a motorbike. She was informed by a friend that a parcel was being delivered to her by one of the delivery services now having good business during this season of gift giving. The delivery man was to be expected around 8.30 pm, the friend said. Cass waited till 9.30, her equanimity fast disappearing and her ire rising. She phoned her friend who contacted either the delivery service or the courier. She was promised he would be at her door in 20 minutes. The clock hands showed 10.30 pm. The driver contacted her. She gave him detailed directions to her home, which even an idiot could follow.
No delivery. She phoned the delivery man, thrice. Each time she heard the motorcyclist ask people directions to Cass’ abode and they gave very accurate directions. But the man could not follow them. She called him. He was just a couple of yards away but at a cross roads, which he should never have been in. Directions were given – simple, easy to follow and unambiguous. No man, no parcel. She sent her domestic to the end of the lane leading to her place. Man finally appears at 11.45. Cass was beyond throwing a tantrum and closer to a stroke or heart seizure.
She was sure, though inexperienced in dealing with druggies, that this driver was under the influence of a drug which dulled his senses to near zero. Her Man Friday tells her that young men are recruited from places far distant from Colombo and do not know its roads and streets. No excuse at all. Glaring faults of employers are non-caring and greed for profit at any cost. Fault of employees: sheer incompetence and immorality in being under the influence of drugs or drink while on the job.
This anecdote is to highlight possible-to-be-remedied faults of businesses. Even government offices had don’t-care-less employees. That will change, and sure must already have changed. Thankfully, Prez AKD gave govt employees a strong pep talk: do your job or you will be made to quit.
Cass ends this Friday’s optimistic Cry with wishing each of her readers a very happy New Year with much less burdens to bear and life improving with hope and anticipation. Gratitude to those who govern us can be given again, replacing the disdain and dislike, hate too, felt earlier. A New Year to the country we love so much of increasing prosperity, equal rights to all and peace!
Features
Navigating the Dragon’s Den: Sri Lanka’s strategic balancing act ahead of President AKD’s visit to China
by Professor Chanaka Jayawardhena
President Anura Kumara Dissanayake is scheduled to embark on a state visit to China early next year, following his recent diplomatic success in India. As Sri Lanka rebuilds from the ashes of an economic meltdown, this visit will serve as a pivotal moment, shaping not just bilateral relations but also the island’s broader economic and geopolitical trajectory. While the allure of Chinese investments may offer short-term relief, the stakes are high: the decisions made during this visit could either cement Sri Lanka’s recovery or deepen its vulnerabilities.
The Economic Promise: Opportunity at the Doorstep
China’s economic might is undeniable. As the world’s second-largest economy and a leading investor in developing nations, China has demonstrated a remarkable ability to deploy vast sums of capital into infrastructure projects and industrial ventures. For Sri Lanka, a nation grappling with limited fiscal space, Chinese investment could unlock opportunities in critical sectors such as energy, transport, and manufacturing.
The Hambantota Port stands as a testament to the scope of Chinese involvement in Sri Lanka. Despite initial controversies, the port has emerged as a strategic hub, offering potential for revenue generation and job creation. However, the same cannot be said for the Mattala Rajapaksa International Airport, often dubbed the “world’s emptiest airport.” While envisioned as a key logistical and passenger hub, the airport has yet to realise its potential, serving as a reminder that infrastructure investments must align with realistic demand projections and comprehensive planning. Addressing this gap should be a priority during discussions with Chinese counterparts, ensuring that such projects contribute meaningfully to Sri Lanka’s economic landscape.
Additionally, enhanced trade relations with China offer significant upside. As Sri Lanka seeks to diversify its export portfolio, targeting China’s vast consumer base could invigorate key industries such as apparel, seafood, and tea. Establishing favourable trade agreements during this visit could pave the way for sustainable economic growth, moving beyond aid and debt reliance.
The Geopolitical Tightrope
The geopolitical stakes for Sri Lanka are both immense and intricate, requiring delicate balancing between its key regional partner, India, and the opportunities presented by China. India remains Sri Lanka’s closest neighbour and has historically shared deep cultural, economic, and security ties with the island nation. India’s contributions during Sri Lanka’s economic crisis, including emergency financial aid, are a testament to its enduring commitment. However, India also views any expansion of Chinese influence in Sri Lanka with heightened concern, perceiving it as a potential security threat within its sphere of influence in the Indian Ocean region.
President Dissanayake must walk a fine line during his visit to China, ensuring that the agreements forged do not alienate India or exacerbate regional tensions. While pursuing Chinese investments, Sri Lanka must communicate its intentions transparently to India, emphasising that its engagement with China is rooted in economic pragmatism rather than any geopolitical alignment. Joint initiatives with India, such as collaborations in regional trade and maritime security, can serve as confidence-building measures to assuage Indian apprehensions.
China, on the other hand, presents unparalleled economic opportunities. Investments in infrastructure, manufacturing, and renewable energy could provide Sri Lanka with a much-needed economic boost. However, Sri Lanka’s leadership must remain vigilant to avoid the pitfalls of overdependence on China, as evidenced by the debt crises faced by other nations engaged in the Belt and Road Initiative. The priority must be projects that not only bolster the local economy but also preserve national sovereignty.
To emulate the success of nations like Vietnam, Sri Lanka can adopt a “bamboo foreign policy”—firmly rooted in its national interests yet flexible in adapting to the complexities of great power politics. Vietnam’s ability to maintain economic ties with China while cultivating strategic partnerships with the United States, Japan, and ASEAN countries offers a valuable model. Sri Lanka, too, must engage other global players, ensuring a diversified set of partnerships that prevent over-reliance on any single nation.
Moreover, Sri Lanka’s policymakers must focus on ensuring that the benefits of Chinese investments accrue to Sri Lanka itself, rather than serving external strategic interests. This includes rigorous scrutiny of project proposals, transparent procurement processes, and an unwavering commitment to prioritising projects that yield tangible economic returns for the Sri Lankan people.
The challenge lies in balancing these dynamics while maintaining Sri Lanka’s sovereignty. A comprehensive, long-term vision that places Sri Lanka’s national interests at the forefront is essential. Investments should align with the country’s development goals, fostering economic resilience and reducing external vulnerabilities. Ultimately, the success of this balancing act will determine whether Sri Lanka can emerge as a stable and independent player in the region or remain a pawn in the larger geopolitical chessboard.
Potential Pitfalls: Lessons from the Region
Sri Lanka’s impending engagement with China is fraught with risks, many of which have been experienced by other nations. Laos, for instance, has faced severe debt distress due to over-reliance on Chinese loans for infrastructure projects under the BRI. Similarly, Zambia’s excessive borrowing from China has resulted in contentious renegotiations and fears of asset seizures. These examples underscore the importance of scrutinising loan terms and prioritising projects that deliver tangible economic returns.
Another potential pitfall is the erosion of sovereignty. Nations that over depend on Chinese investments often find themselves compromising on key policy decisions, whether in trade, security, or governance. Sri Lanka’s leadership must ensure that economic agreements do not come at the expense of national autonomy.
Moreover, transparency is critical. Corruption in procurement processes and project implementation has plagued many BRI initiatives, undermining public trust and long-term viability. President Dissanayake’s government, which has earned public confidence for its anti-corruption stance, must maintain rigorous oversight over any agreements signed during this visit.
Charting a Vision for the Future
While the immediate focus of President Dissanayake’s visit will likely centre on securing economic investments, the government must adopt a comprehensive vision that extends beyond short-term gains. This vision should encompass three key pillars:
=Economic Sustainability:
Sri Lanka must prioritise investments that align with its long-term development goals. This includes focusing on renewable energy projects that reduce reliance on fossil fuels, thereby lowering energy costs and improving environmental outcomes. Digital infrastructure development, such as expanding broadband access, can drive innovation and attract high-value industries, while skill development initiatives can prepare Sri Lanka’s workforce for the demands of a modern economy. By diversifying its economic base, Sri Lanka can reduce its vulnerability to global economic shocks and ensure sustainable growth.
=Geopolitical Balance:
As Sri Lanka engages with China, it must simultaneously deepen partnerships with other nations, including India, our immediate neighbours in the SAARC region and the rest of both the western world along with the global south. Strengthening ties with India, its closest neighbour, ensures regional security and cooperation, while partnerships with any country with the means can provide access to alternative sources of investment and technology. A multilateral approach will mitigate the risks of over-dependence on any single nation and enhance Sri Lanka’s global standing. By actively participating in regional forums and initiatives, Sri Lanka can position itself as a bridge between competing powers, leveraging its strategic location to attract diverse opportunities.
=Social Cohesion:
The benefits of Chinese investments must be equitably distributed to avoid exacerbating social inequalities. Infrastructure projects should include components that directly impact local communities, such as job creation and skill development programmes.
Transparent planning and community engagement are essential to ensure that large-scale projects do not displace vulnerable populations or create environmental degradation. By fostering inclusivity and addressing the needs of all segments of society, the government can build public trust and strengthen social stability, which is vital for long-term development.
A Positive Path Forward
President Dissanayake’s forthcoming visit to China represents both a challenge and an opportunity. By adopting a cautious yet ambitious approach, Sri Lanka can harness the economic potential of Chinese investments while safeguarding its sovereignty and geopolitical balance. The lessons from countries like Vietnam, Laos, and Zambia serve as valuable guideposts, highlighting both the promise and perils of engagement with global powers.
Sri Lanka’s recovery journey is far from over, but the foundations for a brighter future are being laid. The government’s ability to navigate this complex landscape with transparency, vision, and pragmatism will determine whether the nation can emerge stronger, more resilient, and truly independent. As the president steps into the dragon’s den, the world will be watching—and so will the people of Sri Lanka.
(Views expressed in this article are personal.)
(The writer is Professor of (Chair) of Marketing, University of Surrey, UK. Linkedin: https://uk.linkedin.com/in/marketingchanaka, Email: Chanaka.j@gmail.com
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