Sunday, October 16, 2016

The most response I have had for my posts since I began posting here in 2007 - yesterday's advice to the Monetary Board

I wish to thank my readers, including those on my facebook page which generated most of the interest, who have been most interested in a topic I really did not think would go too far, as the subject matter was a little hard to understand at best. However it was a principled stand that I took, trying to enlighten the reader to the conspiracy hatched by the Media, aided and abetted by people who have ENVY and JEALOUSY written all over them, to attack success. 

This is all the more hard to stomach for people because the object of their ire is a 33 year old billionaire who basically appeared from nowhere just about 5 years ago, and is now worth in excess of Rs50B. All this in a matter of 5 years.

This is the year of YOUTH and to that we must bend our heads, if we seriously believe we can get out of our economic woes and face the global dynamics with strength.

If Saudi Arabia, one of the slowest in making any moves out of traditional practices, has appointed a 31year old as the Deputy Crown Prince, who is now effectively making much of the decision making in the Kingdom, we can too!

We in Sri Lanka seem to be a long way from that point, but if discussion of what youth can do in light of these last year’s events turned into scandals, courtesy of ignorance and false information put out by aging has beens, who do not like a new generation taking over, we cannot move on. Don’t be prejudiced, be objective.

Much of what I wrote yesterday, was in fact an AGE WAR, where the OLD are trying desperately to hold onto dying practices that have NO place in society today.

The time for Youth, where the Central Bank is still listens to what people who have absolutely NO input in this century. Worse, the Media also make the same mistake in taking heed of has been Economists, and past staff of the CBSL for advice that is far from objective, and ONLY out our respect for age.

I sincerely believe that CBSL MUST also rise with the sign of the times, and have new people with new ideas in their decision making capabilities as commented by people who gave me valuable pointers, which I hope the Monetary Board of the CBSL will heed, or at least consider, when taking important decisions that affect the Country. 

Let us not forget that we will be dead soon, it is those who are 30 and under who will HAVE to bear the burden of our mistakes made out of arrogance. Millenial thinking is on a different plane to that of ours and we chose to belittle it at our peril.

Saturday, October 15, 2016

An Open Letter to the Monetary Board of Sri Lanka

October 15th 2016 (POYA)

Dear Eminent Sirs,


The reports in this morning’s press arising out of your long awaited meeting yesterday, frankly, did not amount to a “HILL OF BEANS”. I would have liked to have seen some leadership emanating from your goodselves, at this crucial moment.

Frankly you all appear to act like pre-school kids, taking a cue from the parliamentarians, who act like a motley collection of “ata pass” survivalists! Trying to decide on the future course of Sri Lanka for the next 50 years, when the next 12 months seems to be a stretch!

Firstly, may I remind you of your primary responsibilities; which are to guide the Policy of the Central Bank, in as much as it relates to Monetary Policy, namely, the exchange rate, interest rate and management of public debt. It is important that these actions give confidence to the international community, so that our Sovereign ratings are enhanced, which will result in lower interest payments on debts, and the ability to borrow at lower rates in future. It is timely to remind you that many countries’ Central Banks currently borrow at near ZERO INTEREST RATES.

Needless to say the actions of the treasury ALSO has an impact on the above, and they must in turn manage fiscal policy, budget deficit, and public spending in balancing the best interests of the Sri Lankan people within Govt. policy.

Frankly, it is NO secret that both arms have failed miserably with regards to this over a very long period, and scapegoating of those without is not the way to go. The crisis we are faced is NOW CRITICAL because of the profligacy of the previous administration, where the excess borrowings incurred has not been able to provide a public return on capital investment, and the use of long term funding to meet recurrent expenditure.

Having explained these basics, your primary role today is to know how to manage the extraordinarily large Public Debt in a manner that is least painful to the Sri Lankan people who will eventually have to repay this increasing liability over many generations to come.

Unfortunately you must have the courage to pull up the fossils in the Public Debt department who acting as neophytes are making an almighty mess of the job they have been given. It is for you to determine if this is willful, or incompetent.

In my opinion, I believe the whole department MUST be replaced by professionals from outside, and even foreign assistance in order to better manage this aspect, and even obtain the assistance of proven consultants, who are capable of designing a system that is simple to operate and manage the revolving debt. (the ability to refinance borrowings when they fall due, at the lowest possible rate of interest)

It is most important to have this fully operational when the massive refinancing activity is required in 2018 and 2019 when we have to meet capital repayment of large foreign loans.

“Given this background, let me come to the main point I am trying to make here”

It is a blind leading the blind mentality in the CBSL situation now. You have JUST ONE primary dealer, who has identified a weakness in the system, employed the best professionals in the Country, pay them more than your Governor, and who merely take advantage of your own incompetence.

I am very sorry to say that the other primary dealers do not have the same vision, particularly the arms of the clearing banks which have access to far greater funds are NOT bidding! This leads Perpetual Treasuries to take the risk, and reap the reward. Why? The head of PD at the Bank of Ceylon probably has a comfortable remuneration package, whether or not he makes any Bond Dealing profits. Why should he break a leg to work hard and take risks? In this case BOC a state owned enterprise, instead making additional billions in profits for the people of Sri Lanka, lend money instead to Perpetual Treasuries, with full collateral to make money.

Therefore instead of finding fault with the performers, it is time to find fault with those who have failed to perform! Wouldn’t that make a change in thinking? That is the mindset of the 21st Century, and it is time some YOUNG blood is infused into your ranks to be aware of, and retake the MISSED OPPORTUNITIES.

You, collectively have been faced with an untenable situation, where the Media, has grossly misinformed the public due to ignorance of how these systems work, who are then baying for blood. You MUST find fault squarely with the CBSL and its current practices that are outdated, and also the GOSL owned Banks’ current risk averse strategies that are a drag on this economy. You MUST force the clearing banks to reduce spread. That is the ONLY way to grow this economy. That is the single biggest reason for the lackluster performance of the Sri Lankan economy to date, and in NOT taking a loan to buy sophisticated machinery in a company I run is a small micro result of this bad policy.

So please have the courage of your convictions to do what is right, and NOT be partial to here say. What we need in Sri Lanka is excellence, leadership and competence. In my opinion that is the problem with the CBSL, due to its hiring policies that need a drastic change. Sometimes brilliance only lasts 4 years in one’s life, and we have lifers in the CBSL keeping desks warm, worse costing the economy trillions due to their unwise action or inaction!

We as a country cannot afford baggage. We MUST have the best of the best seconded to the CBSL for a maximum of 4 years in the prime of their lives, to do the job and be paid for performance. You will see instant results.

By this show of incompetence, you have now raised the bar. If the CEO of Perpetual Treasuries gets a bonus of Rs500M due to your errors, then it will cost you more to get the best. Remember it is NOT Perpetual Treasuries fault for making profits, it’s the CBSL fault for making it so easy for them. If I had the same access to the funds, so could I do the same, and I am no relation or friend of Arjun Mahendran!

After having read what I have to say, if you believe you are not up to the task, and we understand that, please resign and handover your position to someone who is up to it. I know sufficient independent knowledgeable people who can take your place there, and are able to direct the operations of CBSL in the BEST INTERESTS OF SRI LANKA. This is NOT a sinecure, it is a real JOB.

The future of the Country is at stake and it is your call we are heeding.
Thank you

Ranjit Hulugalle

From the forests of Sri Lanka in basic accommodation with no electricity either.

Friday, October 14, 2016

Madushan’s journey – A reality check – a true story

As if to illustrate similarities and differences in the paths people take in life, let me relate a true story, so that my proposal for a 8 week mentoring program in my previous blog entry can be put in perspective.

While in my blog entry I alluded to a 50% success rate, that is yet unproven, and varies with time, and was for discussion purposes only. It can be more or less, depending on how the program proper is designed, executed and evaluated over time.

In the case of Madushan who left school TEN years ago, with NO O levels except in Art, and who over this whole period, I have helped in placing advising and encouraging he is now 26years still with no success UNTIL!

His only perceived skill, I was aware of was in Art and Sculpture, and he got a bicycle in school for winning some kind of art competition. There are few opportunities to excel in this field, unless one is able to be mentored and trained by professionals specifically to develop this latent talent. There was no way he could enter a college of Fine Arts!

He has worked over the years, as a House Boy in Colombo, in numerous Hotels in Colombo and in the Polonnaruwa District, with little success, where he dropped out for silly reasons of clashes where he had perceived that he was being used by others more experienced and with more years of service. He even had a stint in Dubai cleaning supermarkets after hours, none of which led to a permanent work ethic. Nothing seemed to go his way, a wondering wanderer!

In the middle of all this he had also suffered a nervous breakdown, when some girl friend (in reality a professional con artist) in Colombo, taking advantage of his innocence, duped him of all his savings in one shot, and disappeared never to be heard of from again.

Last month when I was again trying to fix him with a hotel job, which he could go for within a 25 minute bus ride from his home here in Ratmale, Minneriya, where he had already been for a first interview, he had BY CHANCE walked into a vehicle body tinkering shop by the side of the road, in Hingurakgoda, not far from his home here, and asked the owner if there was any work. The owner, perhaps needing a hand with some work he had, took a chance and asked him to give it a try, and see how he could fare, not promising any payment at first!

He only had one other staff, who had not turned up for work, but who had some experience in this field. Madushan was shown the basics of the first stage in preparing the surfaces of a repair and asked to try his hand.

This boy who was on a high dose of psychiatric drugs, who could barely get up before 9am, has NOW worked 40 consecutive days of his own volition, and shown a mastery for the work, so much so, that despite him being told initially that he will just be given, travelling and lunch money to get to work, during his apprentice period, now earns Rs1000 a day.

He lives with his father, who does not have a job either, being too frail to work, and would be considered extremely poor, barely being able to scrape the money to pay for the drugs, where he goes to consult a specialist in Kandy once a month to have a blood test taken and review his medicines and get a new prescription for the following month.

You can imagine my surprise when he turned up in a Hero Honda 125cc that looks new being well maintained with 80K km clock, which he had just bought for Rs60,000 from a one owner in Hingurakgoda. I did not ask him yet how he financed it, but I know he will have paid for it in full within a few months.

Now he is up by 6.30 and out of the house by 7.30 and occasionally comes late when work demands it, and for someone who had shivering hands due to the strength of the drugs like lithium he took, now does not either seem to have a tremble or any problem in waking, nor is the worse for wear!

If he is able to keep this up, and graduate and take on the contract work that comes, he will be well set in a year or two. His workshop turns down at least 5 jobs a day, due to the work load, and seems to be an extremely lucrative line of work, that can earn for a fully trained operator, Rs200K a month, with their eyes closed. Even collision repair business from insurance companies are referred to them.

I ask, could this skill have been identified 10 years ago, when he left school? Will my program help him do that? I don’t know. However if it did, he would now be the master of his own universe, being considered one of the most admired in the village! From being one of the least!

Of course as this story shows, there is luck on the way, timing must be right, and the stars all aligned in your favor. In short, FATE. However you cannot wait for something to fall into your lap, YOU MUST GO AND FIND IT YOURSELF.  

Wednesday, October 12, 2016

POST O LEVEL – Empowerment program for our Youth - need of the hour!

There is a severe crisis facing the majority of our youth, namely, the seamless choices available, with NO program designed to assist them in choosing the way forward, taking into account their innate talents and desires. The Govt. answer to this, is INSIST that ALL students attend school through to A levels, or 13 formal years of Education. They have therefore pronounced that even if the student fails his O levels, they should proceed with continuing education in the A level class.

I propose an eight week program, that is VOLUNTARY to begin with, to select 80,000 from the 450,000 who will sit their O level exams in December 2016 as a pilot project to begin on January 1st 2017 ending by 28th February 2017, and a valuable certificate of completion at the end of it, that will confer an element of maturity on this student. They of course then join their normal school year as before to A levels. In any case there is a hiatus period that is too long between sitting the exams and enrolling at A levels!

A world record, as a percentage of population will sit their O levels in December 2016. Parents of whom who are possibly the least competent in our history in terms of parenting skills, that have spoilt and let loose the latest technology smart devices to them, without being able to intelligently guide their offspring in ways that will secure their future.

Those with available financial resources, will enroll their children in Computer, English, and similar advertised programs they see on TV, and the Newspapers, some costing in excess of Rs100,000 for a 45 day intensive in-house English speaking course, to quote an example. Others just wish they had the resources!

In reality, the knowledge these parents have of their children, and their capabilities is zero, as their relationship with their offspring is at a record low, as the generation gap with those born after January 1st 2001 is at its widest, especially in the area of communication, or lack of it.


For those whose children or whose parents are NOT empowered, so are unable to make decisive choices in the best interest of the Children, that a program – NAME TO BE SELECTED – modeled along the lines of ex- British PM, David Cameron’s National Citizen Service, which he set up 8 years ago as leader of the Opposition, which I believe will go a long way in addressing the needs of the 21st Century Youth, in order that they become, productive, compassionate and above all self-confident youth of tomorrow to compete in an increasingly Globalized World.

Please read the link below for the details of Cameron’s program, which due to its success is about to attain Royal Charter Status. It will obtain state support in addition to private sector sponsorship. Cameron by the way has just assumed the mantle of Chairman of it, a more contemporary answer to the Duke of Edinburgh Award Scheme that values leadership, which will continue to run in parallel.

This program’s structure may take different forms once the practicalities are ironed out, and as it is a pilot scheme, and needs immediate implementation, which requires the use of existing infrastructure to get started. The NYSC training centers around the Country, and the Cadet Corps Center in Randenigala are the places that could host the intensive, in-house residential part of this program.

In reality, the preferred route would be to have a complete one month residential program, however resources for immediate implementation are an issue, and a selection of as much as 80,000 from this crop of students will then not be possible.

The other 7 weeks of this Course, will be carried out in the Divisional Secretariat Area of which there are 350 dotted around the Island. They will use the existing resources of the various officers of the Divisional Secretariats, including the Youth Services, Women’s Services, Children’s Services, Agricultural Services, Welfare Services, Disaster Management Services, Employment Services, Health Services and other officers, to inform this youth of the resources available, and build a level of civic consciousness through this program. In truth these officers in the Divisional Secretariats are grossly overpaid and under employed and have time on their hands to include this program within their existing schedule. A case in point is their refusal to go on field visits, citing the lack of transport, and so are pasted to their desks every day or do not turn up for work! If you don't believe me just go to any of these offices and enquire as to the whereabouts of any of the aforesaid officers!

After knowledge, information, discussion and debate, of current issues, vacancies, and areas of excellence, it will give practical help in deciding on what is and is not important to their personal lives, so that they may be able to focus on what they wish to pursue after O levels. Currently they go into the next grade quite BLIND!

Opportunities today, after O levels are endless, you just have to pick up a newspaper to know that. We do not wish to see a blind leading the blind kind of situation which is about to be forced on us. (majority that is)

Even if this program results in a success rate of at least 50% of the intake of 80K who turn up after 100K sign up initially, who making more informed choices, in pursuing vocation or academic studies, using their unique skills to achieve their personal goals it will be counted as a success. We will now have 40,000 more goal oriented, industrious, and productive citizens than otherwise!

The downside is zero, and the initial intake is purely voluntary with a non-refundable Rs5,000 deposit upon signing up. Here it is to show that unless there is some kind of investment, the stakeholders HAVE NO intent of making full use of it, and in today's context this will permit ALL those who opt in with the deposit to be selected for the program in the pilot project, making sure that a proper data mining exercise can take place following the progress of this group over the years, as compared with the others who do NOT join.

Of course the privileged few who are already following a winning formula of life don't need to go on this, they are already ahead of the pack, it is the others who are left behind that we are targeting where there is nothing to lose and much to gain.

Monday, October 3, 2016

Agri Sector problems start with fundamentals in property RIGHTS!

I had a hearty laugh at these boffins talking about agriculture, who know NOTHING about it and persist in pontificating about it, see link:

They are pandering to a bunch of exporters who are looking to the Govt. to help them along the way, without looking at WHY WHY WHY there is NOT enough production of quality to meet the demands of the marketplace, and are talking JACK SHIT about lack of refrigerated transportation etc. These exporters are looking to the Govt. to help in providing refrigerated storage to keep items longer, but don't look at the reason why farmers are NOT producing more, when prices are so favorable, and demand is inexhaustible a dream for an efficient producer! 

Yes they are all issues, but let us first conquer the basics, before we move up the ladder of sophistication. It is about the non-use of agricultural lands for any sort of agriculture. If you ask the owners of the land, they say it is due to it being uneconomic, as the owners themselves are able to supplement their income in far more lucrative ways.

Then you come to the next segment of people, namely those who qualify from University with Agricultural Degrees. They simply don’t have the land, and an Agricultural Lending Institution, that is willing to lend to them to for Agricultural purposes.

So FACT: “THOSE WITH KNOWLEDGE AND DESIRE TO FARM DO NOT HAVE THE LAND” and especially in Sri Lanka’s context today, as land is relatively expensive, and is constantly rising in value, is used as a hugely wasteful tool of investment, especially amongst the private personal sector, where people invest in land as a hedge against inflation, and returns on saving are absurdly low, due to the Banks insisting on high spreads.

So how do we solve this simple problem? Simple. IMMEDIATELY pass legislation that assures the owners of land that they will NEVER lose their titles, and permit them to rent their land, or FORCE if necessary, to rent for minimum of three years, land at nominal rates of say Rs 25,000 per acre per annum in the Colombo District, and less elsewhere for those who wish to farm them.

In my 25 minute drive to work from Godagama to Biyagama, today, I must have passed 1,000 acres of paddy land that is never farmed, that under this proposal could be taken up by large scale farming using the latest techniques by skilled and knowledgeable farmers, they can employ these graduates to do the work!

Upon inspection of the land referred to as “PURAN KUMBURU”, they currently get waterlogged due to excessive rains. This is primarily because the land on high ground has been converted from coconut and rubber estates to housing developments due to the increasing land prices and demand for housing land. Therefore there is run-off to the paddy fields. This can easily be managed by a intelligent system of canals that catch this water, and feed it to small lakes and finally onto the rivers that carry this run-off to the sea.

This way, only the required water can be directed into the fields, and unless there is a project to farm all the land in a field, as there many be 100 owners of the land on one low lying field of 150 acres, then it would make economical sense to give this to a farmer who will use ALL the new techniques of agriculture, the big tractors and harvesters, to work the land for THREE CROPS,  where NOT ONE CROP currently is grown. JUST THINK ABOUT IT!

GOD has blessed this Country, with the possibility of growing three crops of paddy for a year, and we have NOT even attempted to grow one, as it is NOT economical for the owner alone to do it. It is the job of the Govt. to satisfy ALL the stakeholders, while immediately permitting largescale agriculture, in the heart of the Colombo District, that can even grow crops for export direct from the field to the airport, due to proximity to catch the fresh food market in the Middle East by air if necessary.

If you look at the complaints of the exporters with no produce for export due to the Tourism industry grabbing a share of the pie, all these problems of demand, with NO SUPPLY can easily be solved.

I was asking my driver the rhetorical question this morning, as to why our Politicians cannot think enough to pass legislation to enable this simple process to take its course over time and LISTEN TO HIS SIMPLE EXPLANATION

“The Politicians DO NOT think of the Country as a whole, and how any legislation can benefit this Country. They have NO stake in that benefit. They only have a stake to benefit a few of their supporters or paymasters in bribes and such like, so they can make some money, by sharing in a construction contract or similar. It has never occurred to them that we can produce more food, and help Sri Lanka export surplus! They don’t see what you see when you look out of the window. They don’t see dollar signs when they see empty paddy land, unless of course they find a way to permit them to fill this low lying land, so they can make get a cut from the enhanced land value on filling a completely environmentally disastrous option, a favorite of politicians intent on merely making money, no matter how!”

"They cannot see fruit, vegetables, paddy or even grass for cattle in their sights!” 


Friday, September 30, 2016

National Trust Lecture – The 43 Group of Artists – by Rohan de Soysa

Mr Rohan de Soysa, who is the Chief Trustee of the Sapumal Foundation, set up by one of the 43 Group of Artists, Harry Pieris, gave a scintillating lecture of the 43 Group, at the HNB Towers Auditorium on Thursday, September 29th 2016.

He explained clearly how they were formed and why, giving a brief biography of the actors therein, and firmly stamped their influence in the art during the period from 1943 to almost the present, with the last member of the group who passed away a few months ago.

More importantly the styles compared and contrasted with that of the previous influences of Mudaliyar ACGS Amerasekara’s more traditional art, allowing unique styles to develop over the years, with the most famous of them being of course George Keyt.

It was stressed that David Paynter was NOT part of this group, as many tend to wrongly include him too due his painting also during this period.

I show below some links to web sites that can elaborate on the subject better than any synopsis I may be able to add.

I was perturbed however that for such a detailed explanation of Art History of the time, that there was no representation, especially from the Department of the Visual Arts of the University of the Visual and Performing Arts that is located in the heart of Colombo. It is for those students, that the importance of the lecture would be understood, and there is probably no one as knowledgeable as Rohan de Soysa, to put it all together in one presentation, that ties all the people involved and the artists on the fringe who also exhibited at their Events.

I understand that the National Trust recorded this lecture, and I would seriously recommend that these students get a hold of a copy and watch this lecture in its entirety for a greater understanding of the importance of this influence in the Sri Lankan art scene during this period.

Finally a reminder to all about how important art is just like music and dance, in the life of a cultured Nation, and its integral role in creating a lifestyle that fulfills people's natural desires to express themselves. This will no doubt lead to more satisfaction in one's life, as well as be congruent with an improvement in the Human Development Index of a Nation, something we should NOT measure by mere numbers.

Thursday, September 29, 2016

RTI Conference – enough platitudes time for action

The President was only too right, when he stated the obvious, that we know as being the TRUTH. Namely, that the Politicians and Public Officials have NOT identified their duties and responsibilities and thus are NOT carrying out what they have been tasked with.

Little wonder then that the Govt. is impotent, and with crass passive aggressive approach of the Public Officials nothing gets done in the Public Sector leaving the Private Sector to shoulder the burden of growing and maintaining this economy singlehandedly, and despite all the ODDS stacked against them.

The Passage of the Right to Information Bill, will NOT in itself result in any of these things changing, but the fact that the Public have the right to certain information, which when made public, could result in the public official being taken to task, will go half way in making an improvement to the current status quo.

The public should not rest on this passage, but ensure that the appropriate and competent people are appointed to provide the information, as most people in each govt. department are unaware of even how to extract the information that is requested. There will be a period of years, of learning from their mistakes, to be able to fine tune and streamline the information search, to be more productive and useful to the user.

On the more important aspect of Media Reform however, we have NOT even begun this humungous task, of cleaning up what is the most deeply corrupt, and incompetent profession, which after years of interference of the Govt. have NO truly independent and competent professionals in the Industry. It is simply rotten from the top, owners, and editors must take responsibility for this state of affairs, and I don’t see that they have even begun to take steps to arrest this decline, which one would have thought would have arrested itself upon the establishment of this Good Governance Govt.

Of course the Govt. itself is NOT capable of this task, and it is up to an independent commission, authority, which could combine RTI and Media Ethics, to at a stroke address both these issues simultaneously, educating the public on this change, and why due to it, we can expect to see a decline in corruption, and incompetent mismanagement of the public purse as a result. 

Gamani Corea Foundation Lecture – Professor Sir Richard Jolly

Professor Jolly, previously,  of the Institute of Development Studies @ Sussex delivered the GCF lecture @ the Orchid Room at the BMICH last evening, (28th September) on the Sustainable Development Goals, as it pertains to Sri Lanka.

On the high table! were the Governor of the Central Bank, Dr Indrajit Coomaraswamy, Dr Nihal Sanderatne from Peradeniya University, Lloyd Fernando formerly of the CB, and Dr Harsha Athurupane of the World Bank.

The audience included, Godfrey Goonetilleke, Dr Vinya Ariyaratne, Mrs Sugandie Kadirgamar, among other academics, and was well attended.

The details of this lecture will no doubt appear shortly, and I wish only to pick on what I believed was the main message. Namely that Sri Lanka is 29 places above on the Human Development Index than its GDP would place it in world rankings, and when it chooses its strategy to achieve the SDGs, it would be advisable, NOT merely to look at pure Growth Rates, but how they affect rising up the ladder in the HDI and reducing the Inequality.

The way I see it, policy makers are faced with a myriad of tasks, and are unable to prioritize and structure a plan, that they can assert as policy, that leads to real growth of the Economy. I believe that in concentrating on going up the HDI along with reducing Inequality, which the Academics measure using the Genie Coefficient, would be the way to go, but with the proviso that we draw up our priority of SDGs that achieve the goals of improvement to the quality of life of our Citizens.

Needless to say that in my opinion, I would like to see a policy of “ensuring access to clean water, clean air and clean food. right at the top of this as a HUMAN RIGHT!”

In  order to achieve this in the quickest time, we MUST have policies with regard to clean energy, and environmental conservation, along with the reversal of degradation to achieve say a goal of 30% reforestation of the Island by 2030, and demarcate land comprising that 30% now, with conscious policies to ensure that is achieved on time. Whatever is added to the New Constitution, this statement above if engraved in the opening paragraph, will ensure that all other provisions are secondary, and all laws will be predicated on this simple wish being STAMPED!

The Dearth of Young Economists at this lecture was apparent, along with new ideas. Unfortunately the fossils here present, meant not to belittle anyone, except to say that throughout their lifetime, their ability to influence political thinking has been limited, and shown to be ineffective. Therefore we need new thinking.

Shortage of labor was mentioned, but NO ONE was bold enough to make the obvious statement that I subscribe to namely, “SRI LANKA HAS NO UNEMPLOYMENT”. All those who withhold work choose to do so, as they either await a more lucrative, or satisfactory (in their eyes) job, and will not take the jobs that are available in the labor force today.

Of course there is a HUGE skills shortage too, that must be corrected, but for that to be adequately addressed, unless we improve the livability INDEX in Sri Lanka, all those who we train to international standards, to fill the vacancies IN SRI LANKA will choose to leave Sri Lanka for even greater remunerative employment overseas.

That Catch 22 or dilemma facing the Govt. in deciding effective policy to address the problems. We train 1,000 medical practitioners a year at NO expense to the student, but at HUGE expense to the State, only for the State to lose 50% within 5 years of their qualification to foreign lands, many as immigrants, never to return.

There was a lady at the event who was complaining about cramming type of A levels that we have in Sri Lanka, that don’t produce true geniuses, where her son with JUST ONE A at A levels, received a scholarship to MIT, and who now works at Google in the USA. I ask, do we have anything in Sri Lanka that he would even wish to take up, as a career now? I expect he would be a permanent loss!

I believe we must redefine affordable healthcare to have a nutritionally healthy population, reducing the incidence of NCDs, non communicable diseases, with a really Educated population, who are capable of making rational choices for their future, and the only other duty of the State would be to ensure an efficient PUBLIC transportation system, that will enable people to commute to work in the shortest possible time, in comfort. 

These simple goals, will result in both the achievement of the main objective as I have laid out above, but also ensure that Sri Lanka, both rise up the HDI another 29 places in record time, while at the same time, reducing the inequality of income and wealth, and that we can fill vacancies, with competent people, will immediately ADD to growth. We have jobs, we have no people!

FOOD AND SHELTER are areas we MUST NOT worry too much, but permit the private sector more flexibility, by changing landownership laws, and PPPs for High Rise Housing schemes in Urban Areas to fill this dire urban need. 

Wednesday, September 28, 2016

Let us not get carried away on this preferred attire for mothers entering schools!

Both sides seem to have lost the plot on a simple matter of decency. As with everything Sri Lankan we use a “sledgehammer to crack a nut”. It is not the place of the Minister of Education to opine on this, and it is merely a matter for the parents and the school authorities to agree on norms, as it relates to their particular school, and NOT have across the board rules for the whole country.

It shows how out of touch most writers on this topic are:

Obviously most of the comments are in the English speaking media, as it pertains to the St Josephs and a Colombo notice, which sparked this debate and internationalized this, poking fun out of all context for the wrong reason.

Take the provinces outside of Colombo, and observe the movement of parents when bringing and taking kids from school. Remember, this applies mainly to small children, usually under 10 whom the parents escort to school or pick up with older children finding their own way, either by foot, school bus or push cycle.

What do you see? I have not seen ONE comment on this observation. Maybe you are all well off townies and I am just a small time villager. Some mothers cycle, and lately, I have seen mothers come in their motor bikes or scooters. Some even drive three wheelers. What do they do? They for the most part DON’T wear saris, and most often they are in skirts, slacks, and sometimes shorts, when alighting, to drop off or pick up their charges.

They then take a cloth (Redda) and drape it around themselves before entering the school, as it is considered appropriate to look more presentable and look modest when entering the school, than in their normal casual attire that they have to be in to run errands and ride these vehicles as a Sari will be too much of an inconvenience, unless they are the fortunate ones who are teachers or work in a Government Establishment, that requires a dress code.

So guys chill out, don’t make a mountain out of a mole hill, and permit our mothers to both feel comfortable, practical, and be able to multitask by being able to instantly change attire to suit the occasion, and use a practical solution, to cover their modesty. I for one believe that saris can be the most revealing of all outfits, that if draped in provocative ways can be the most offensive, and so please don’t inconvenience our long suffering parents in the hinterlands, by Colombo centric attitudes, clouding the real issue of merely being presentable in from of the public, which applies NOT only to mothers in this case, but also to fathers, who are held to a different standards but should not. 


Monday, September 26, 2016

A lament of a small business trying to increase capacity/productivity/profit! - TREASURY TAKE NOTE

I run a printing business which employs nearly 100 people in Biyagama, outside of the BOI. (Board of Investment Zones for export)  It is NOT in the zone and does NOT get any privileges, tax concessions and other benefits that companies receive at the zone.

Our main inputs are imported papers, and different types of inks. Our output is books, magazines, wrapping papers, newspapers, inserts and posters. During a very short period we also as one of 30 printers, print school books for the Govt. in the three months between September and November.

The taxation rate we pay on profits is 28% and we pay approximately Rs400K per month in EPF and ETF payments. We are running at full capacity, in mostly fully depreciated machinery that is quite old, and we have business that is about 25% more than our present capacity, that we turn down for lack of capacity. As we work at capacity, we run two shifts and work 24hrs a day, except on Sundays, where double rates of overtime have to be paid.

We are faced with a labor shortage of skilled labor, willing to work as Machine minders, who can work overtime when needed, and the labor shortage in this area amounts to about 25,000 vacancies. 

On Friday, we lost one member of staff who has been with us for 18 years, because he just got accepted to a job in Korea, and he had to fly out at a moments notice today. Korea's gain is our loss, as it will take some time to train a person to his skill level, whilst he is going to Korea to do a job of a laborer UNRELATED to this field. Of course he can expect a rupee equivalent compensation of Rs150K a month, about 2.5 times what he earned here including overtime.

1                   We have lately suffered from unannounced power cuts, which cause massive disruptions, when machines suddenly stop, and have to be restarted, with the attendant wastage, and losses. We have a high powered generator to run when we need to, but consumes a heavy diesel load, and cannot automatically start upon an unexpected power outage to prevent disruption.

2                   The Govt. gazetted a monthly pay increase of Rs2,500 per member of staff, (backdated to May 1st 2015) which when you add overtime to the increased basic wages, resulted in a wage bill increase of Rs500,000 per month. Annualized cost the company Rs6M(Govt loses tax Rev 28%)

3                   As of today, we are still owed, Rs3.5M from the Educational Publications Department (EPD) of the Govt. for School Books, which we invoiced before 31st December 2015, now over 9 months old. When we cost the job, assume a three month’s funding OD cost, NOT a 9 month one!

4                   We run on high interest loans and overdrafts, and accordingly we have had to increase our overdraft, due to the delay in receiving the payment above, AND for the purchase of paper for the current years books we are currently printing, where paper cost is over 50% of the invoice value of the books.

5                   We expect an advance payment of 20% of the invoice value of the books we currently print, within the next week, in order to reduce the OD, but that does not even cover the paper, for which we have already exceeded the 30day payments terms, and had to make payment.

6                   A final tax payment for the year to 31st March 2016 is due on 30th September 2016 of Rs3.5M, when we are still owed that amount from the Govt. for invoices that are over 9months old. We DO NOT get any grace period to make the Corporation Tax payment, while we are financing the interest on the late payment of the invoices for Govt. work.

7                   More important than this is the dire need to purchase machinery that can increase our production capacity, so we can increase turnover, replace inefficient, high energy consuming machines with the latest technology, which ALSO has built in energy saving features.

8                   The capital cost of the machine is Rs130M, for which we need to borrow Rs100M from a bank. However the current effective rate of interest of 15% on loans IS TOO MUCH. It does not make economic sense, especially when in the first year, where the new machine will only be working at 50% capacity, going up in following years. If however we are paying at similar lease rates where we are leasing a vehicle for the Managing Director, 9%, as the lease was arranged a year ago, we would go for the new machine immediately.]

9                   It is therefore ironic that we are funding a NON-Productive asset, a motor car at low rates of interest, and we are UNABLE to finance a high productive asset, which will never reduce in value in Rupee terms, as not only the evaluation of the business plan by the bank prior to granting a loan is ALSO arduous, but the interest rate currently prevailing is ALSO usurious!


I have clearly and simply summarized for a lay person, the dilemma a company such as ours faces today in doing business legitimately in Sri Lanka.

We not only pay taxes to the Government for VAT which is currently 11%, NBT currently at 2% and Corporation Tax currently @ 28%, and EPF and ETF contributions currently at 23% of payroll, but have NO relief.

The Finance Ministry is in the middle of drafting their budget for the year 2017, and requesting for suggestions from the public.

What would I say, in regards our business?

1                   We would like a level playing field in that all businesses who earn profits must pay tax, or we should all be treated fairly. There are just too many businesses that are STILL under the radar, not even having a tax file, and therefore NOT paying taxes that are due.

2                   Most importantly for us, I would like the Govt. to give us a three year interest subsidy of 500 basis point, for borrowings up to a maximum of Rs100M for the purposes of purchasing machinery, to increase capacity. In a world where our competitors overseas borrow at zero rates of interest, it is hard to compete if we have to borrow funds at 15%

3        Forcing private companies to make the mandatory payment of Rs2,500 MORE a month to our staff, was a move that affected profitability, AND the ability to reinvest profits in expansion, BOTH barriers to a growing Economy. With the labor shortages, depending on supply and demand the appropriate skills will command the higher wage rates, NOT JUST those that are dime a dozen, who were forcibly upped that skewed the wage differentials further.

It is clear to the reader of this real life example,  that we have Policy makers, who have NO clue how business operates in the real world, and how their policies are killing the growth of the economy, while making political decisions, that they believe are necessary. The MOST important and URGENT task is to ALLOW COMPANIES TO BORROW FOR CAPACITY IMPROVEMENT at rates MUCH lower than for purchasing unproductive items such as Autos, for which financing schemes are dime a dozen with no questions asked. 

IN a Economy that is running at FULL EMPLOYMENT, with severe labor shortages, that the STATE has  singularly been unable to provide suitably qualified people to fill, we have NO choice but to go for the latest labor saving technology, using the latest technology in the marketplace if we are to increase capacity, compete in the global marketplace, and grow our business, even catching the export markets for our products, which the latest technology will enable us to do.