Sunday, November 16, 2014

More expropriation of assets: estate companies now in the gunsights of the Government

The Government has issued a menacing statement on the status of the privatised estate companies warning that "underpeforming" companies would be taken over by the Government.

Taken at face value the statement seems innocuous - what is wrong with cancelling the lease and taking over something that is underperforming?

The question is, what is defined as "underperforming" ? Returns below par?  Losses? For a start, lets assume that the definition means a company that is making losses.

The next question is: who bears the losses of a private company ? The answer is the financiers of the company - the shareholders and the banks. What happens when the State takes over the company?

The state becomes the financier-and naturally assumes responsibility for the losses. This means taxpayers and citizens. Why are we in an unseemly hurry to impose additional burdens on the public?

Any losses are a burden on the public, unless, by some magic, performance improves under Government control.  We have plenty of evidence to the contrary

For example Srilankan Airlines was consistently profitable under the management of Emirates. The Government, in a fit of pique, took over the airline, paying Emirates US$53m for its stake. Last year Srilankan lost some Rs.30.1bn (around US$231m). In just one year, the State managed to lose almost 5 times its original investment, a truly mind boggling feat.

The Committee on Public Enterprises (COPE) in its review for 2012 reported that only 11 of  235 state enterprises reported a profit. This should be sufficient evidence to stay the case against any state interference to "improve" management in any so called "underperforming" business. Things will be infinitely worse in the hands of the State.

This also raises an interesting question on the remaining estates owned and managed by the JEDB and the SLSPC. Not all the estates were privatised, there were some that were unsaleable at the time and these remained in State hands.

An excellent test of the Government's fitness to manage estates would be to publish a summary of the performance for the Government estates for each year between 1992 and 2014. We need the basic crop/yield figures, selling price per kilogramme, the turnover and the net profits or losses.

This can then be compared with a similar summary of the performance of the privatised estates. To be fair, what we need to compare is the relative change in finances (in percentages) from the starting position of 1992.  It does not matter if the State companies are still making losses, what we need to know if the position is better of worse against the starting point, with similar information on the private sector.

We can then draw an informed conclusion on the wisdom of this latest proposal en route to our Nationalist, Socialist Utopia,  

Related post: Felling Timber on estates to pay EPF/ETF dues.


Friday, November 14, 2014

Ranil’s House Of Tards - A response to Indi

Indi has written something more on the election, specifically on what appears to be the opposition's main platform-the abolishing of the executive presidency.

He highlights an issue that also worries me "Nobody is going to put themselves out of a job to see some other mutton-chop get it. "

This is a real danger. Power, once tasted is rarely given up. Remember that CBK  promised to abolish the presidency when she campaigned in 1994? She then went on to serve both presidential terms. What guarantee do we have that even if an opposition candidate wins, the presidency will be abolished?

No real guarantee at all. If it is a joint candidate or a coalition pushing for the abolishment there is a slightly better chance- the coalition partners or alliance will have to hold the incumbent to the promise-and the deed will need to be done in the white-hot heat of the immediate aftermath. Any delay will be fatal.

As an added safeguard, the steps or the process that will be followed to abolish the presidency must be made public as part of the campaign. it may include the formation of a constitutional committee, perhaps with international observers to guarantee that its objectives will be met.

People will then understand that there is a serious process in place to which some thought has been applied, not simply an electioneering slogan or gimmick.This will naturally add weight and substance to an opposition campaign.

An interim option could be that the 1978 Constitution be repealed entirely immediately on the change, restoring the 1972 constitution.  My personal preference would be for the restoration of the 1946 constitution, the only truly good one that we had but it is politically impossible - the name of the country, the position of Buddhism being two of the issues that no politician will contemplate touching. The next best thing is the 1972 constitution. Flawed though it is, it is better than what we have.

Under the 1972 Constitution the office of the president will still remain, but in a purely ceremonial role.  This will also have the added benefit of abolishing the evil provincial councils and banishing the horrible creatures who inhabit those bodies to eternal political limbo.

The constitutional committee can then either make amendments to the 1972 one or have the fresh on drafted. I wonder if the UN or some other body has a template of a constitution that can be adopted rapidly with few changes?

Any further thoughts on this?

Thursday, October 23, 2014

Voting rights to expatriates - a bad idea

Serendipity had put up a post endorsing the call by the BBS to grant voting rights to expatriate Sri Lankans.

I think this is a very bad idea.

Expatriates who live overseas have no stake in affairs here. The do not pay tax, their lives are unaffected by the standard of governance. Their jobs are not impacted by economic policy, the purchasing power of their salaries is impervious to inflation in their homeland.

They do not have to rely on the public services of the country, their liberties and rights are dependent only on the situation in their country of residence.

Doubtless many are Sri Lankan at heart. Granted that they love visiting the 'home' country but when they visit they are little more than tourists, enjoying the sights and sounds. They may speak the language and may have grown up here, have family and friends here, yet they remain only visitors.

Although their roots and attachment may be deeper than an ordinary tourist, they will eventually return to their regular lives overseas.

For me, this is the deciding factor. Their real lives are overseas.

If they have such little stake in affairs here, why should they vote?

Serendipity thinks that they will be less likely to be 'bought'. Possibly, but I fear that many of them view Sri Lanka through the eyes of tourists, rather than residents, as I pointed out here.

In fact, if we stop to reflect, the expats have already voted - with their feet. For whatever reason; economic, political, social, they have left, seeking a better life elsewhere.

No better testament is needed as to their real convictions. If we give expats the vote, we may as well give it to all tourists.

Friday, October 17, 2014

Why This Election Is Going To Suck : response to Indi

Indi had written a post on the upcoming election and I was rather surprised by his assessment of the current regime. It was a relative assessment, in comparison to its predecessors but I find it difficult to believe that we have seen anything other than steady decline since the 1950's.

Are they less racist?

True, JRJ is one of the biggest villains; he promoted the language issue before SWRD, sabotaged the B-C pact and orchestrated (not ignored) the 1983 riots, plus of course the stupid new constitution.

That sounds like fairly high bar to beat, but the new lot is now stoking new religious hatred between Buddhists and minorities. They also seem to be trying set the minorities against each other - Hindu v Muslim/Christian and also Christian v Muslim. 

They are also seem to be busy executing N.Q Dias's strategic vision to militarise and garrison the North - see the posts that I linked to here.

They have not (yet) ended by shedding the same amount of blood that JRJ's policies eventually did (perhaps partly because international scrutiny - witness the ebb and flow of the BBS before and after CHOGM, UNHCR summits) but in terms of intent I would say it’s pretty disastrous.

In terms of the productivity and the economy I admit that they have poured a lot of concrete all over the countryside, but so did the leaders of Greece and Spain.

Fueled by cheap credit from European banks Spain and Greece embarked on grandiose, ego-boosting infrastructure. From Olympic stadia, to opera houses to airports gleaming new infrastructure dotted the countryside. They looked impressive and generated a great deal of pride and while the money was flowing no one worried. No one understood the cost or felt the pain - until the debt needed to be repaid.

Sri Lanka is no different, the glittering faƧade, funded largely by Chinese and international debt gives the appearance of development and prosperity but is ultimately unviable. As long as the world economy remains in the doldrums and relatively cheap international credit is available, no one worries about the price. 

Official Government debt (including loans guaranteed by the Ministry of Finance) has ballooned by 64.5% between 2009 and 2013 (from Rs.4,328,495m to Rs. 7,120,075m). (This excludes debt raised direct by state owned enterprises and other agencies).

Sri Lanka’s Government revenue has been consistently below its recurrent expenditure, which means we are borrowing to repay interest on current debt, all the while taking on further debt to finance new capital expenditure.

Eventually lenders will begin to wake up and once the inflow of funds slows we will be faced with a debt crisis – being unable to repay debt and therefore unable to borrow further. Since public services are also (partly) paid for by debt these will either have to be cut back (painful austerity measures) or money will be printed locally leading to high inflation. Interest rates may spike when the Government starts borrowing locally with the knock on effects of driving private businesses down. This leads to declining investment, growing unemployment and all the rest that we have witnessed in so many other debt crises before and are particularly apparent in Spain and Greece today.

The well-oiled propaganda machinery which now paints Chris Nonis a gate crasher and denies an assault even took place will spring in to action blaming the international banks and lending agencies.

Of the politicians who hoodwinked the lenders with false statistics and promises and then pocketed the money (which is the main incentive for building white elephants in the first place), not a word is said.

As the Guardian says

As one of the smallest countries to host the event, the Greeks still speak of 2004 as a defining moment, when the country crackled with optimism, confidence and pride. The defiance of the doomsayers who believed the Olympiad would never get off the ground – given the chaotic countdown to the opening – still elicits cries of delight.

"For a short time we were the centre of the world, people knew that a place called Athens existed," said Dimitris Evangelopoulos, Greece's national track and field coach. "And we pulled off a good Games, everyone says it. "

And look where they ended. 

Our great moment of pride was in 2009. Since then the regime has taken Sri Lanka from flawed democracy to Banana Republic. We now seem to have set a course in the direction of a Pariah State.

Wednesday, October 08, 2014

FM 97.8: New Chinese radio station in Sri Lanka

I don't often listen to the radio but a friend of mine rang me yesterday and told me to listen to 97.8 FM - he said it was a new Chinese station.

I tuned in briefly today and it does seem to be manned by Chinese (judging by the accents) and it seemed to carry some news about China. According to my friend, he heard advertisements for Sinhala and Tamil classes, so it seems to be aimed at the growing population of Chinese workers in the country.

China is heavily involved in Sri Lanka, the presence of a radio station that appears to be catering to Chinese workers is an indication of the depth of the involvement. There was a report (towards the bottom of this article) of a Chinese-run restaurant catering to Chinese workers.

I have no objection to free movement of labour provided it is happens within a competitive open market. If the projects were awarded on the basis of open competitive tenders and the winning bidders found it cheaper or more productive to employ foreign workers then there is no major issue.

Local workers should have the opportunity to work for the Chinese projects, if
they were unable to recruit locally at the wages offered or if the skills were lacking then relying on expats would be acceptable. This is not the case with these projects, everyone from the sweepers to the cleaners to the cooks come from China presumably because they prefer to work with their own people.  This I think is wrong.

Related post: Chinese aid not working

Addendum: Does anyone know if the new station is a part of SLBC? Due to lack of funds/programming the SLBC used to rebroadcast the BBC on its own frequency during the day (from about 9am to about noon and then again from around 1pm or 2pm until around 5pm). The BBC pulled out of the arrangement after the SLBC started to censor some stories. Could this Chinese channel be a replacement for the BBC ? 

Update : The programmingin the morning (at around 7-8am) is in English. During the middle of the day it is in Chinese.  


Tuesday, October 07, 2014

What do we expect from a Government?

There is a discussion to be held next week on the need for an alternate government.
It is worth posing the question: What do people expect from a government? Why do we need one in the first place?

The nation state is something that evolved over time. At its most basic, the role of the state is to provide common services that would not otherwise be available and to maintain the peace - some semblance of law. 

Today we expect rather more, the state sets economic and monetary policies that have a huge impact on the lives of people, therefore we rightly hold them responsible for the management of the economy. This is an abstract concept that many citizens may find difficult to grasp but it can be broken down into more basic questions.

  • Are there sufficient job opportunities? If there are, why are so many seeking employment abroad ? 
  • Do we have an affordable cost of living? Not many will track their expenses in detail but have citizens been able to save more, and perhaps invest, over past few years?  Are they enjoying a richer or more varied lifestyle? Do they have to get into debt, credit card or otherwise to meet household expenditure?
  • We have witnessed some improvement in roads but how do you find the bus and train services? How useful are the new roads if you cannot find a bus? 
  • How do you find the health service and the schools? What was your last experience in a Government hospital ? The police? How easy is it to put a child into a school ? And why must we pay for tuition?

These are only a few questions that occurred to me, there will be plenty of others that we may ask.

Different age and socio-economic groups will have different problems, but if we start to think about what we may expect, we then get a yardstick with which to measure the performance of the Government.
Nine years in office is a long time.  How far has the current regime provided answers to your problems? Have the problems become better or worse?  

Ask the right questions, then you will know if you need an alternate Government.

Friday, October 03, 2014

The Chris Nonis incident: The culture of impunity and due process

Critics of the Sri Lankan Government frequently claim that a culture of impunity exists in the country. What could they mean? I found a definition that is useful:

The term "culture of impunity" refers to a situation in which people in a society have come to believe that they can do whatever they want with impunity (which means without having to face any consequences for their actions)....This concept is pretty much 180 degrees opposed to the idea of the rule of law.  The rule of law is the idea that all people will be punished if (and only if) they break the law.  There is no impunity for anyone under the rule of law.
Mr Chris Nonis, the country's High Commissioner to the UK has been assaulted. Can we expect an enquiry, leading to punishment of the culprit? Most unlikely. There is no report of any enquiry, only of attempts to cover up and hide the incident, which is a strong indication that nothing will happen.

Yet, when Mr Nonis was interviewed by CNN,  he was convinced that :

we have had a vibrant civilization for 2,500 years. We have perfectly educated people and I think we're perfectly capable of carrying out our own domestic inquiry."
I wonder how many people will still believe this?

To test the principle, all we need do is observe the outcome of this incident.  I'm not holding my breath and I don't think even Mr Nonis is.

Perhaps if Mr Nonis wanted justice he should have lodged a complaint with the New York police instead?