Sunday, May 27, 2012

DFD, no more.

The great baritone,  Dietrich Fischer-Dieskau died last week. I have been out of touch with matters musical for some time so it was quite by accident that I discovered the fact. 
Listen to him in Schubert's lovely Im Fruhling, accompanied by Richter, here.  A recording of a rather humourous Schubert song, with Gerald Moore, the pianist he was most associated with, is here. The Economist has a nice obituary.


Friday, May 25, 2012

The role of women in Sri Lanka's exports

The country has a few major exports, tea, garments and the remittances of migrant labour being the most important.

I just realised that the majority of the workforce in all of these sectors is women. In the tea industry, almost all of the most productive work is done by women.

In the garment trade, the majority of the sewing staff are women and are well represented in other parts of the industry as well.

The migrant labourers include skilled and unskilled workers but all of the housemaids are women.

Interesting, huh?

Does anyone have any statistics of employment by sex in these sectors to share?

Saturday, May 19, 2012

How to be a Dictator

For anyone wishing to reach higher office and succeed, this is a rather funny guide to the path to the top. Apparently bad behaviour is almost always good politics.

For people who want a taste of the book, there is a good review here.

While on the subject of dictators, don't miss this film when it comes out.

Wednesday, May 16, 2012

Who is calling the shots in Sri Lanka?

Dino had written a post on this.

My view is that the US attitude to, and involvement in, Latin America was dictated in part by the Monroe Doctrine.

The perceived involvement of the USSR in affairs there drove US policy and interference. Sri Lanka is small, distant and has little strategic value unless the Chinese are indeed pursuing a "ring of pearls" policy across the Indian Ocean. 

For the US this could be a concern but it is a much greater concern for India, hence the active involvement of India. The warm relationship that Sri Lanka enjoys with Pakistan in contrast to the colder one with India doubtless contributes to Indian suspicion of Sri Lanka.

Let us not for a moment forget that there are real concerns over governance, law and order and civil liberties that will cause both Europe and the US to look hard at the country. The Tamil lobby plays its part but remember that there is a never ending stream of people, from the Fonseka family, to the Bharatha Lakshman family to many, many unknown others who, through various channels appeal to the US and Europe in the hope that something can happen, since the systems of justice and law-enforcement no longer work, and indeed are preying on the citizenry.

In conclusion, I don't the the US intends to interfere, certainly not in the way they did in their 'near abroad'. Times have changed and misadventures in Iraq and Afghanistan have taught them painful lessons. However, a domestic uprising if frustration builds to a sufficient level is a real possibility, we have seen ominous rumblings before.

The great saving grace that has prevented this so far, in my opinion, has been the flight of the young. They leave in droves, to the Middle East, to Japan, to South Korea, to Italy, indeed anywhere where they can get a toehold. The Arab Spring was driven by the unemployed, youth as long as we export our frustrated people the country will not reach a boiling point. The added advantage is that the monies sent back, help keep the local economy alive. Virtually every family has some one abroad who sends money back that helps pay the bills and keeps everyone, including the Government happy. Not only will they have no trouble, they can even boast that economy is doing well, even as private consumption is sustained by foreign inflows.    

Sunday, May 13, 2012

GoSL buys 14 MI17 helicopters, spends Rs.328m on vehicles, Rs.350m on the sugar companies, what on earth is going on?

Buried within the inner pages of today's Sunday Times were two stories that almost made me drop my cup of tea.

Glancing through the political column the writer mentions,almost  en passant, that the cabinet approved the purchase of  fourteen MI-17 helicopters  from Russia. The purchase is to come from a US$300m credit line extended by Russia but does not mention the price. According to this site,  the cost of an MI-17I is around US$11-12m each. Even if the GoSL is buying the older models, they cost around US$7.5m each. The cost, at a minimum, will be between the range of US$105m- US$168m, but it is important to know the true cost because I fear that the whole of the credit line may have been spent on this. We don't have a war, there can be no possible urgency for the purchase, even if the airforce needed to upgrade its fleet this could at least have been delayed a couple of years.

The next story is almost as bad, a supplementary estimate of Rs.350m has been passed to pay recurrent expenses at Pelwatte and Sevanagala Sugar companies that were taken over by the Government. Obviously the companies have not generated sufficient income to meet expenses and the Government has stepped in to fill the gap, as it is obliged to do since it owns the business. Had these losses been incurred when the businesses were in private hands the owners would have to meet the shortfall, this is exactly why Government should have no involvement in running industries. They have always proved to be drain on taxpayers, but recent losses by state owned business have reached frightening levels, the Srilankan loss of Rs.19bn is a new record, as is CEB Rs.25bn loss.

The Government is also spending another Rs.328.2m on vehicles for various ministries. Just to put things in perspective, a retired Civil Servant of the old Ceylon Civil Service was criticising the Archbishop of Colombo who had come to see him many years ago in a chauffeur driven Mercedes Benz. He had asked the Archbishop how he could possibly justify this, the Archbishop had claimed that the car was a donation. Hardly a fitting way for a man of god to travel was the Civil Servant's comment. He said that when he was offered a Mercedes he refused, arguing that he could not possibly visit poor villages in such a luxurious car. He preferred his battered Volkswagen Beetle, with holes in the floorboards covered with wooden planks.

A further Rs.2.2bn has been approved to meet the shortfall of provisions on capitalisation of SriLankan Airlines and Mihin Lanka airline.

It seems that the Government has lost all sense of proportion, spending freely while the population have been hit by mammoth taxes, some of which will go towards financing these 'essential' expenses.

This should have been headline news, not buried inside the inner pages of the press.

The customs website gives a useful summary of some of the new taxes imposed, especially on food.

Saturday, May 12, 2012

Does Dodol come from Malacca?

A friend of mine returned from a holiday in Malaysia with some sweets from Malacca that were called 'Dodol'.

They were absolutely delicious and were similar to Kalu Dodol. The colour was slightly paler and the texture much stickier, it was like pulling on chewy toffee, a very pleasant mouthfeel, in the technical nomenclature of a chef.

There were apparently several flavours, the one I had was coconut flavour which is why it was so similar to Kalu Dodol.    The more exotic flavours included Durian (also delicious, according to my friends). Wikipedia does not tell us where it originated but given that it is popular in as far flung a place a Zanzibar it may even be Indian. My friend was told that it originated in Malaysia and more specifically in Malacca.  

A recipe is available here.

Some links on Malaysian and Sri Lankan cuisine here.

In search of the perfect Dodol, from the Times of India.

Wednesday, May 09, 2012

The Norochcholai power plant lacks a pier

The topic of the infamous coal power plant came at a party recently. A guest, who seemed to know something of the matter remarked that one of the problems was that the power plant lacked a pier, therefore coal could not be unloaded directly onto the premises.

Instead, the coal is unloaded onto small barges and then transferred to the plant. This is, to say the least, grossly inefficient. Quite apart from the inefficiency, the barges cannot travel if the water is rough, which is pretty much most of the time during the rainy season. I was trying to verify this information and came across this letter, written in 2005 highlighting some of the problems, including the issue of unloading coal.

Another story that the guest had heard was that when the barges cannot transport the coal the ships are held up, so they simply dump the cargo and leave. It sounds a little difficult to believe, does anyone have any more information to share? If they are not dumping the cargo they must be paid heavy demurrage, which pushes up the cost of the coal.

Tuesday, May 08, 2012

Why is it so impossibly hot?

I thought we were over the worst of the heat by the end of April, but no, the nights have got much hotter and steamier in May. We have been fairly lucky the last few years, the monsoon set in early and things were cooling off by mid April.

This year the weather remained extremely hot until the third week of April, then we had a combination of extremely heavy monsoon showers and, whenever the rain stopped, a return of the heat. Nevertheless on the whole, things were a little cooler during the last couple of weeks of April.

I was   trying to sit under a fan a little while ago while oppressive waves of hot air kept beating down. Sometimes I wake up to find my head bathed in sweat, once my pillow was quite wet. The fact that I use a mosquito net makes it a bit hotter, but I fear the mosquitoes more than the heat.

I am a sound sleeper, so once I get into bed I rarely wake up before dawn, but these days I am occasionally wakened by the stifling heat, although I generally get back to bed fast enough.

I would envy my friends who have air-conditioners,  except that they have been so heavily stung by the increases in their electricity recently, it hard to feel anything more than pity.

Monday, May 07, 2012

The cancellation of the TFC deal leaves more questions unanswered

Newspapers on quoting the Presidential Secretariat reported on Saturday that the purchase of shares in The Finance Company by the National Savings Bank had been canceled.

The controversy started when the state-owned National Savings Bank(NSB) bought a 13.2% stake in The Finance Company(TFC) on the 27th of April. The NSB paid a price of Rs.49.74 per share well above the current market price, which raised many eyebrows. On the day of the deal The  TFC shares traded in the range of Rs.30-Rs.32.50. A few  days after the deal was completed the market returned to Rs.30, raising still further suspicions that something was amiss.

The deal was stoutly defended by the Chairman of  TFC, Preethi Jayawardena who said that the value of the share of TFC previously did not reflect the company’s performance or potential.

The valuation of shares can be complex and is sometimes subjective, but the market obviously does not agree with Mr Jayawardena because it returned to the previous levels within a few days. Usually when there is a sudden increase in the price of share, especially when a large block is traded, investors and analysts will take another look at the company, to see if there is some hidden undiscovered value. If they believe there is some undiscovered value, there will new interest in the share which should support the share price  at the higher level. The fact that this did not happen suggests that the rest of the market does not see any reason to re-rate the share.

The Finance Company posted some very unimpressive numbers for the quarter to December 2011. The Chairman of the TFC correctly points out that the TFC reported a profit of Rs.15m for the nine months to December 2011. It is however worth noting that the TFC reported a profit of Rs.33m for the six months to June 2011, meaning that the company lost Rs.17m in the most recent quarter.  In other words, after a more hopeful start to the year, company performance deteriorated in the most recent quarter.

A cursory glance at the reported numbers reveals that the company has a negative gross interest margin. The interest margin is the markup that a financial institution will keep over its cost of borrowings. It is the equivalent to the margin that a trader keeps when selling goods. A negative interest margin indicates that the TFC is paying out more interest to its depositors than it earns from its what it loans to customers, which means the company is losing money even before any administrative or running expenses are charged, a situation that even the most hardened banker would regard as dire.

Where then have the improvement in TFC's results come from? From a sharp increase in 'other operating income', of which we know nothing since the results carry no further details. The cashflow statement reveals that the profits for the year appear have benefited from a Rs.200m reversal of provisions for loan losses and doubtful receivables, analysts would want to know if there has been a real improvement in the quality of the portfolio.

The sellers of the two blocks included a director of the TFC. According to disclosures made to the CSE, these shares were purchased at Rs.48 per share on the 21st of September 2011.

If the deal itself looks questionable the manner in which it was cancelled raises yet more questions.

Was the trade reversed on the CSE? Not yet. Usually when an erroneous trade is made it is reversed on the day itself or at latest on the next market day. In this instance the NSB did not make the payment due on the shares on Friday, itself a breach of the CSE trading rules. It offered no explanation nor, as far as anyone is aware, did it make a request for the trade to be cancelled.

On Saturday there was a decree from the President ordering that the trade be canceled but there   was complete silence from the industry watchdogs.  The Central Bank and the SEC have remained silent leaving it to the President to take action. What of the internal Governance of the NSB, is there no investment committee that vets large investments?  Given the fact the similar deals have involved the ETF, EPF and Sri Lanka Insurance should there be a public investments board that vets all public sector investments?

Despite all of these unanswered questions on due process, one thing is clear – the value of transparency. Because the deal took place on an open market and because of the disclosure requirements of the CSE, it was possible for interested parties to examine and detect suspicious transactions. Perhaps the regulators should simply push for greater transparency, a good dose of sunshine in some dark corners will keep many a nasty germ in check.

Update : Further reading - the TFC deal and the CJ.

Saturday, May 05, 2012

An avoidable tragedy

I heard about a tragic accident yesterday. Today I learned that the person involved was a former colleague, we had worked at the same company some years ago.

He had apparently changed jobs recently and got a new Toyota Harrier of which he was very proud, not having owned an SUV before.  A few days back, while reversing his vehicle he had run over both his wife and daughter. Both were in intensive care, the child has now died but the wife is apparently out of danger. The child was fourteen years old.

Reversing vehicles is always dangerous, there are special safety guidelines that may be applied at the workplace, but few people think of these things when at home. Running over a small child is quite possible, but how he managed to run over a fourteen year old and an adult is a mystery, probably the vehicle was high and visibility at the back, poor. Children should always be taught at an early age not to run after vehicles and more importantly, told why. We were told this when we were little but, I can' recollect that we were ever told why and I'm not sure how strictly we followed the rules.

Come to think of it, if we are just a little thoughtless, It can happen to anybody. It has almost happened to me, as an adult. I was directing a friend when he was reversing at the Galle Face hotel car park. He came back a little too fast and bumped into me. The speed was slow, about 5-10kph, but the force that it carries is surprisingly powerful and it knocked me off my feet. There is a six foot drop at the back of the car park, but luckily some bushes broke my fall and I managed to hang on to them until help arrived. It looked quite comical and many people on the green were too busy laughing to help but it could have been very dangerous.

A similar instance took place on a narrow estate road upcountry, with a steep cliff on one side. I almost reversed into the friend who was directing me. We were young and foolish and everyone was laughing about the incident afterwards, but looking back now I realise how dangerous it was.

Never stand behind a car when its reversing, even if one is directing, stand to a side and direct the driver.   


Friday, May 04, 2012

Tis the season to be jolly

I had expected yet more taxes to be imposed on consumer goods over the Avurudhu holidays.

Much to my disappointment, the Government did absolutely nothing, but they seemed to have saved the price increases for the Vesak holidays.

Milk powder, cement and gas have been the targets this time around. For anyone who still boils their drinking water here is a tip: buy a good quality water filter and save the gas. I would recommend the Unilever Pureit, which is one of the best around. It is available locally.

As for milk power- for adults in South Asia who lack a gene to produce the necessary enzymes to digest milk, drinking milk-especially in large quantities is a waste so you may as well as give it up. Its perfectly alright to add a little milk to ones tea or eat some ice cream but one can give up a regular glass of milk without foregoing much in the way lost nutrition.

For the rest, there is not much other than to tighten ones belt and plans ones travel arrangements carefully.

 The Government claims that the tax is not for the purpose of raising revenue (to pay for such necessities as an airline that managed to lose in a single year, almost four times its purchase price) but to help local farmers. This has been repeated oft enough and people may think that helping farmers is a good thing. The Government needs to to make a choice - do they want to support half a million farmers or four million households? Consumers, who bear the brunt of this supposed generosity need to ask why this is necessary.