Thursday, December 22, 2016

Time for Adults to determine policy, and remove the Montessori kids who seemed to be determined to run our lives!


The TOBACCO DEBATE

It is becoming quite clear that Sri Lanka does not have a clear policy to manage the use, abuse, control, and eventual weaning of our citizens from the supposedly bad habit of cigarette smoking that is claimed to be the No 1 killer in Sri Lanka today.

I use the word ‘supposedly’ because I have to believe that the link below is accurate as it was written by the Chairman of the National Authority on Tobacco and Alcohol, Dr Palitha Abeykoon in today’s Daily Mirror (Dec 22nd 2016) http://www.dailymirror.lk/article/The-Changing-Landscape-of-Tobacco-in-Sri-Lanka-121086.html

The reason I use this word was that in the same paper today, there was an article on Oral Cancer, Prevention and Awareness that puts Oral Cancer as the No 1 cancer in Sri Lanka. Unusually for one day, we also had an article on the missing Heroin that is detected, confiscated and gets back into the market!

On a related note, in today’s FT we had the news of the detection of illegal cigarettes valued at Rs75M. see link http://www.ft.lk/article/586985/Customs-seizes-1-3-million-Chinese-cigarettes

What is clear to one who has devoted this blog over the past 9 years www.kalpanakaranna.blogspot.com with 2500 pages of advice on how to improve the quality of life of people fortunate to live in this Serendipitous isle of Sri Lanka, is that those in power and with authority continue to do what is in their personal agendas to actually reduce the quality of life of those who live here, which by default, results in the continuous emigration of the best and brightest to other lands to and thereby ensure we have NO chance of achieving our birthright of enjoying living in Sri Lanka.

WHY COME TO SUCH A CONCLUSION

When one reads my blog entries on this particular topic of the Tobacco Debate on my past blog entries recently, namely http://kalpanakaranna.blogspot.com/2016/11/consistent-policy-is-not-something-you.html and http://kalpanakaranna.blogspot.com/2016/08/ceylon-tobacco-are-about-to-see-import.html one can understand the gist of it.

In referring to yesterday’s FT article, http://www.ft.lk/article/586825/Rs--15-b-Govt--revenue-up-in-smoke-in-4Q-after-excessive-taxation-on-tobacco  which clearly shows the massive drop in Government Revenue from Tobacco Taxes which I predicted vociferously in the previous blog entries referred to above, but which fell on deaf ears, due to obstinacy of the decision makers who were sold some cock and bull by Nishan de Mel of Verite Research that there was lot more scope for Tobacco Tax increases WITHOUT a drop in overall tax yield from his comparative studies of other Countries. I don’t need to explain here why his analysis was fundamentally flawed, but coming from an Oxford educated person, our uneducated leaders somehow are impressed!

Lets take a holistic approach to the issue at hand, repeating some of the points I have already made for the reader of this blog entry. I will tackle this issue on two fronts. Firstly in terms of raising Taxation Revenue, and secondly in terms of reducing the population’s proclivity of knowingly self-harming, to reduce the Nations expenditure on Health Care, and reduce the productivity of its Citizens arising therefrom.  

What does Sri Lanka want in 2017? They need to raise as much taxation revenue as possible in order to both reduce its deficit to acceptable levels, and ensure it is able to refinance international borrowings at lower interest rates, by gaining business confidence of lenders, which is reflected in the strength of Sovereign Ratings. The raising of the Tobacco Taxes to unacceptable levels has effectively killed the goose that laid the Government’s Golden Egg. Namely ONE tax payer who contributed the largest to the State Coffers, Rs100B per annum, is now contributing substantially less due to this miscalculation.

On the second front on Health, and I wish to disagree completely with  the Chairman of the National Authority that the steps taken have actually contributed more to the increase in illness, because, not only is there a shift to a greater emphasis of chewing betel and arecanut, a move into less healthy beedi, even illegal cannabis, but also the shift to filter less and cheaper cigarettes in the form of Capstan all which combined lead to a more dangerous and uncontrolled usage of substances that can be exceedingly harmful, which will NOT lead to a lower death rate, but arguably a much higher level of suffering.

If the above link on the smuggling of cigarettes is a forewarning, we are likely to see more Politically sponsored smuggling, leading to an erosion of the moral fabric, and fall in state revenue from Tobacco. Worse if smuggling continues unabated, it will result in Ceylon Tobacco calling it quits in Sri Lanka, leaving the field open to the state sponsored COWBOYS to take over, turning a highly regulated industry into one that is NOT regulated!

I don’t need to emphasize the employment loss in the rural areas arising from livelihood of farmers, who have to move from a predictable and well managed cultivation, to a totally uncertain environment of livelihood in agriculture. In a country that is trying to discourage imports, and increase exports, this is another body blow, as we will begin importing cigarettes as well! An about turn from the direction we are supposed to be going to.

Of course the allied costs of lack of confidence of investors of unpredictable state policies that can reduce a highly competent and established business to its knees, are immeasurable. This kind of schizophrenic law making that bears NO relation to what is best for Sri Lanka as a whole will lead to a reversal of every good intention, as words and actions have NO congruity.

MY PERSONAL INTEREST

In case the reader believes I have a vested interest in this argument, I must repeat I have NO interest in protecting Ceylon Tobacco, I am only seeking justice and fair play in Business that has the Country’s best interest at heart.

Just for the record my grandfather HAJ Hulugalle was a director of CTC, and he was friendly with Lord Aldington who was possibly Chairman of BAT in days gone by perhaps 50 years ago. More recently my Uncle SK Wickremasinghe was Chairman of Ceylon Tobacco too, before being posted to London as the High Commissioner. I as a UK qualified Chartered Accountant was involved in the audit of some BAT subsidiaries in London, when I worked there for 11 years, and have some knowledge of how the business model of Tobacco has been developing over the years where it has become concentrated in a few players. 

After all prior to consolidation, Imperial Tobacco financed the establishment of Bristol University which I attended, and have therefore indirectly benefited from their largesse! I have never smoked though, but might be persuaded to start now, as the product is now so exclusive to only a few who wish to flash their ability to afford a cigarette, the only means by which sales would increase in an increasingly irrational world. It is time CTC also sell a pack of Cigarettes at Rs5000 a packet, because they can recoup their lost profits by such means, and there will be many of the irrational elite who would like to show off smoking those packets! Wouldn’t that be a laugh?


It is time the Government engages with the Ceylon Tobacco Company in a positive manner, instead of giving them the cold shoulder, so that we mutually benefit from their continued existence in Sri Lanka. Once the decision is made in London to leave Sri Lanka, there is NO point in trying to chase the horse, which has bolted out of the barn door! We in Sri Lanka can never go fast enough to catch the horse!   

3 comments:

Anonymous said...

Another bunch of Motessori kids at work, namely the GMOA with worst of the lot!

http://www.island.lk/index.php?page_cat=article-details&page=article-details&code_title=157626

Ratmale,Minneriya,Sri Lanka said...

The link in the FT of 3rd January more than parrots what I wrote on this blog entry on December 22nd! Just goes to show anyone with some common sense can pontificate on the outcome of irrational Govt decisions that result in the OPPOSITE of the intended.

http://www.ft.lk/article/588874/Taxes-hit---CTC-announces-20--layoff-of-employees

Ratmale,Minneriya,Sri Lanka said...

The mind boggles when the head of the CSE and SEC don't have the balls to criticize the actions of the Govt. that affect the second highest capitalized company in Sri Lanka, which adversely affects the future of the Sri Lanka Share Market directly.

If the regulators and managers of the share market cannot speak on behalf of the most valuable quoted companies of Sri Lanka, then you know there will be no one to defend you when you come under attack. No wonder then that the best Companies in Sri Lanka would rather not become listed, because they are not only open to public scrutiny, they have to defend their integrity all by themselves, whilst the regulator and market makers leave them to be hounded by all comers. DISGRACEFUL if you ask me!