Friday, April 25, 2008

nothing is what it seems

When one is used to taking a word as a bond, when promises are made and are not kept, it starts a chain reaction. As a result of someone for example letting me down, that creates a problem for me as inevitably I will have to let someone else down as my promise to the other person was made on the basis that the promise made to me will be kept.

One must realize that the person you break your promise to, does not care of the reasons for breaking it. Those reasons are not relevant to him. It therefore puts the promise maker in an altogether vulnerable situation being branded a liar.

This problem is acute in Sri Lanka, as most people cannot say no and even worse, cannot give notice when they leave their jobs, putting the person who is relying on that task in a very bad position. I guess larger organizations by definition are able to cope better with this situation, as they have more people who can take over tasks left undone by others, and in smaller organizations this is an acute problem.

In my personal case I have been put into so many situations in a short time span where promises were broken and I have accordingly not been able to keep my promises, putting me in very embarrassing situations, as well as in desperate financial straits due to other people’s behavior.

How one avoids the reduction of this sort of issue is either, almost assuming this promise will not be kept and making a plan B in every situation, or not making any promises to anyone, or at least tell them that your promise is purely contingent upon something else.

For example this year has been a disaster as far as the weather is concerned with more than the expected rains falling in all parts of the island. This has been a severe hindrance to the agricultural output as even farm work stops for rain and people are nevertheless paid.

So in this kalpanakaranna blog we need to think a little before we can promise, as promises create expectations that sometimes can be unrealistic. I am torn with being unable to accept a very high degree of uncertainty in my dealings with people, that has made my life extremely difficult.

a very serious skills shortage that hampers growth

Apart from Government, which I believe is the single largest obstacle to growth in Sri Lanka, the next biggest obstacle is the skills shortage especially in the area of senior skilled management.

As a matter of policy every intention should be keep skilled people in the country as they are the immediate requirement for higher growth rates. Secondly there should be attractive incentives to entice others who have gone overseas to return not to retire but to contribute to the economy positively. Both these are possible with the right policies.

Very few of the 7000, who leave the shores each year to gain an education, return. They are picked up by Universities overseas and given scholarships and then remain, as they do not believe they can earn enough in Sri Lanka to repay the immense cost of their overseas education they have borne.

There are still others, who despite not having an overseas education, have skills that are in demand in other countries and are able to obtain employment relatively easily, and therefore leave for greener pastures. This brain drain is apparent in every field, and is impossible to stop until it can be unquestionably shown that the alternatives available in the country are worth remaining for.

The uncertainty created by the war is not helping and an increasing number of people are looking at even permanently settling in countries such as the USA, UK, Canada and the Antipodean countries. What this does to our manager cadre in the commercial establishments is devastating. One cannot blame people who are struggling to make ends meet, especially if they do not own their homes or have the means to own their home. In overseas countries the payment for a home is something one can aspire to by making a down payment and then making payments for a mortgage.

There are a couple of schools of thought on this. People cannot be stopped from leaving, and so all one can do is to provide opportunities to retain people. It is ironic that the government appears to encourage the setting up of nurses colleges to send nurses overseas before we can fill the required cadre in the local health sector. A more meaningful idea would be to second experienced staff for a year if they so wish with a commitment to return, rather than train young nurses only to leave forever. They can then supplement their income at an experienced level, and the young ones can hope to earn this income in the future.

This will reduce the added problem of nurses leaving the field when they get married, further reducing the available skills to that sector. A similar situation even applies in the senior management fields in the garment industry where experienced people have left for other countries that provide greater opportunities for advancement, whereas the initial skills earned in Sri Lanka is what has helped them to be more marketable.

Another approach is to stand back and take a piecemeal look at realities looking long term as to who will benefit the country and who will not. If scarce resources are used to train to export with no return on investment, then that is a cost to the country to be avoided with little benefit. If we can in some ways expect a return on this investment be it remittances from overseas or some such then there is a positive return.

On this basis, I believe improving the English skills of the housemaids will be more beneficial in terms of the remuneration they can expect, along with some electrician and carpenter positions where people are bound to return than training doctors and accountants most of whom who leave, do not return.

In getting back to the core issue of how we prevent skills from leaving, we have to in the long term train people in such a way as to fill local vacancies, where the remuneration paid is satisfactory for the job performed and the incentive to leave is less except for a short term for a middle east type job where the person is more likely to return.

This then directs one to the core issue, Middle East vs other. (I include all Arab countries and some other short term work visa places in the this category including Singapore) As far as Middle East type jobs we should encourage males with skills to go as the remittances are higher and family breakdowns are less likely. With regard to other countries we should just look at the investment in these people and determine that it is not a cost worth bearing and let the private sector take control of that while the public sector does not subsidize, as in University education just to export people where the host country gets the full benefit with no repayment to the investor. We should always remember the most important is to improve local conditions to prevent the need for people to go overseas.

Friday, April 11, 2008

i thought we prided ourselves as a nation of intelligent beings

I believe that though we have great computer programmers doing very complicated stuff, we are still a very foolish lot, not using common sense or even taught to use common sense. I get exasperated as to how detailed I need to give the instructions, and my staff do not like it when I tell to write what I say exactly as I say as they will not do what I ask.

Today was a day replete with this and can barely hide my disgust and anger as all the cockups meant more money spent, which left me less to spend on the areas I really needed to so it directly affects my business profitability in all the unthinking mistakes made.

I gave specific instructions to buy 8 bottles of coconut oil for the shop. Instead 9 was purchased, the reason being there was one of the 4 double bottles with some dirt so the can was used, and the full can is 7 bottles and one other double bottle was 2.

I gave money to put diesel in the can for the tractor, to be used this week for ploughing. He took the money and put the diesel in the cab, which had enough to get back to the farm tomorrow anyway and I would only have additional funds on Friday to fill up. So this extra money will have to come out of what I was hoping to spend to take to the shop tomorrow, so that means less for the shop from here.

I take 6 or 7 types of paddy to mill at the local miller. The boys know exactly that I need details of every type of paddy the weight before milling, and so I can once I get the weight after milling check the profitability of the paddy from this one and that knowing the conversion rates from paddy to rice of the various sources. I cant tell them to do this all the time, when they have been used to me requiring this info each time. Today they got a total and not by type making all my calculations go awry.

It just seems that they just don’t hear the instructions so I will in future have to write everything down and then check word for word if they did it correct. Unfortunately this is no guarantee that it will be as it should even in this scenario. The fact that I have to interact a lot with people with a level of education much maligned who are not taught to think is partly to explain. If they were better able to think, then they would not be working for me I guess!! But for some one less challenged or challenging!!

The welfare state of Samurdhi Beneficiaries

There is something extremely wrong about our Samurdhi system, which was intended to help the truly deserving and poor, but now covers half the nation. The GNP per capita is US$1,500 in Sri Lanka. Either the inequality in this country is way ahead of anywhere else or 75% of those receiving benefits should not be. The latter of course is the case.

Entitlements are used as election carrots and therefore, no one from either side wants to rock the boat by streamlining this or cutting benefits, It has got to be done as the absurd situation of people coming in vehicles to claim their entitlements makes a mockery of the system. I have heard people complaining saying they deserve an entitlement they don’t get, but so and so is getting it because they belong to a particular political party in power.

Last morning I was returning to Minneriya at the crack of dawn and was surprised to see so many well dressed women in the Samurdhi queue waiting for the cooperative sales outlet to open so they can cash in their stamps for foodstuffs. Some would queue for hours for some lentils or rice, rather than spend that time in employment to earn more than the handout.

In other countries it is called welfare dependency and I suspect the same is the case here. To wean someone from getting something they are used to is even harder than giving them this benefit in the first place. It is incredible the time and effort to obtain this benefit, but I know from personal experience people don’t like to forego anything free. It is better not to give it free, rather than expect people not to take up the entitlement. It is important that it is overhauled, so efficiencies can be released back to the economy.

The administration cost of this department is staggering with the number of employees used to distribute these benefits and the attendant costs. All this adds to the inefficiencies in the system, which is turn affect the productive process of the economy. It is sadly that the processes set up to keep people out of deprivation is used instead to add to the inefficiencies and no one has the courage to address these for fear of being singled out for ridicule.

It is important to take immediate steps to reform Samurdhi and thus release much needed resources to remedy some of the other more pressing gaps in the economy.

Monday, April 7, 2008

the core problem of the economy of Sri Lanka

The core problem of the economy of Sri Lanka

Unproductivity and Inefficiency are the fundamental problems that have not been identified and hence not addressed. These core problems, have caused inflation, under employment, low growth in GDP and a general lowering of our capacity to compete with the rest of the world.

We have therefore identified the wrong problems and while trying to solve them, have not been nor ever will be successful. When a mistake as basic as believing unemployment is a problem in Sri Lanka is made by even the most eminent policymakers, then the solutions they recommend create more problems. Tackling the fundamental problems will then automatically solve the unemployment issue, the bloated government bureaucracy and terms of trade issues as well as exchange rate and lagging development.

The concentration of energies in misdirected spheres has lead to the current malaise, and once the core issues are identified and tackled it will be surprising how the market forces will take over the mantle of growth and development.

Sri Lanka is no longer a developing country, where special action is needed to correct things like mass starvation or malnutrition as well as the absence of the rule of law. The GNP per head though unequally distributed exceeds US$1,500, which in purchasing power terms is about US$5,000. This is quite adequate to give all the people a modicum of the basics and therefore the efficient allocation of the resources and the emphasis placed in the correct areas will lead to an overall improvement in living standards and market driven solutions to some intractable problems.

Some of the problems that will solve themselves by this approach, partially or satisfactorily, will be the bloated bureaucracy, food production, reduction in the skill shortage, terrorism, corruption, environmental degradation, education and unemployment.

In conclusion therefore if measures are taken to combat the twin if not related issues of unproductivity and inefficiency by taking steps to minimize these aspects in all areas of the economy, first by identifying the worst offenders and then taking action to correct them, we can go a long way to solve some of the pressing problems of today.

what is the truth?

The Truth is not elusive, its just not understood even if you are looking straight at it

The Lord Buddha in one of his teachings said some thing to this effect and I hope I am quoting the gist of it correctly, “How possible can the ordinary person, enjoying the senses, reveling on the senses, lost in the senses, comprehend a Truth which is beyond the senses, so profound, so subtle.”

Is there no shame in the hearts and minds of our leaders, who are just so drunk in the senses of privilege, wealth, obeisance, and power not to realize what is happening, and how it is affecting the lives of 95% of the citizens they are ruling? These same citizens are so disunited, and lack a leadership that represents their interests, they do not know how to eloquently spread this message without fear of being branded unpatriotic.

This new status quo gives even greater incentives for those drunk in the senses to believe they are within the law, and actually are representing the people’s best interests, so they can convincingly raise the level of looting knowing they can get away with it.

It will be too late once the treasury is empty and the country is bankrupt, and borrowings out of control, for someone else to steady the ship. Any corrective action will only involve more pain as the country would have mortgaged its future to a band of crooks and they can criticize the reformer who has no choice but to make the tough choices. The reforms will be necessarily unpopular, making its implementation tricky as the West, IMF and foreign interference would be blamed for those choices instead of the perpetrators who would have long gone enjoying their spoils in a gamblers paradise where it is easy to fritter away ill gotten gains.

It is to those who have some influence left to take control of the destiny of the country, and take a stand immediately. Sadly these very same people are complicit by their inaction, condemning them thus. Sins of omission, being their guilt rather than of commission by the original perpetrator.

Civil society is not agitating, to rock the boat as they are not affected directly. Those affected have no mouthpiece and the eastern culture of fate, encourages apathy. We are witnessing a “if you cant beat them join them” scenario, by those we would have chosen to lead the agitation. So they are also drunk in the senses unable to see the truth that stares them in the face.

Friday, April 4, 2008

A conspiracy of silence and tradition

In my daily interactions with people in the villages, I find one aspect very strange and inexplicable, and I am putting a point of view that no one has hitherto subscribed to.

As part of our traditions, as it is not prescribed in religion, we have a ‘magula’ when a daughter attends age. It is a fearful time for any family, not a ‘magula’ to look forward to. My maid is dreading the day her daughter attends age, as she has no means to incur the cost, and will inevitably have to get into debt, pawning what little she has got left to pawn.

Death is another area, where the funeral costs are exorbitant, and in villages this is mitigated by the ‘death assistance committee/club’ that is set up to provide funds for it. However the 7th day almsgiving (hath davasa dana) and the 3month almsgiving (thun masa dana) and one year almsgiving,(avurudda pinkama) are costs families have to bear.

To those who are not aware of this, what happens is that in a village, the whole village attends these, and they have to be provided with food, refreshment and in some cases a lot of alcohol. I have been invited to many of these in the villages, and they insist that I be present, it is a matter of honor for them that I attend. Our traditional contribution is a packet of biscuits and a kilo of sugar, which does not begin to scratch the surface of the cost.

I attended a ‘magula’ recently in Giritale, and poor girl had this ‘nanawa’ where she is bathed and brought out, does not know what is happening and does not understand all this as it is a psychologically traumatic period for her. The policeman father had three bottles of arrack on each 5 person round table laid out in the yard, with venison (illegal) for bites and other eats. God knows how much he spent and how much unaccounted bribes he took to fund this, but at least he may have had a better chance of finding the wherewithal. Most villages get into serious debt to fund these events and feel it their duty to do so as it otherwise would be a matter of shame if they are unable to throw a real party.

The cynic in me feels it is a further ploy by the village ‘mudalali’ moneylender of last resort, to completely subjugate other villagers into perpetual debt, poverty and hopelessness. There has got to be proportionality

Define travel and entertainment

In the context of this essay I am encompassing all activity that is not work related, study related, taking exercise, caring for family and cooking as a matter of need, and is instead when one voluntarily spends time to relax and unwind, except sleep.

There are the more obvious ones like going to the cinema, watching TV, reading, socializing, carrying out activities for fun, like hobbies. Less obvious would be smoking and getting drunk or engaged in illegal activities not directly related to acquitting wealth. So entertainment does not have tobe legal either.

Controversially though I will include gathering news and surfing the Internet also into this category. Being retired is a luxury most people look forward to, and for them the Internet is a great and increasing source of relaxation, when the inevitable boredom of watching too much TV sets in. Increasing one’s knowledge even in retirement stimulates the brain and is also a form of entertainment of one does not have to do it.

Therefore I put the media firmly in the box of entertainment and would go so far as to say it is more entertainment than factual. There is more news that we don’t see or hear about than what we are shown, so in that context we are only partially informed, not completely, however much a news hound we may consider ourselves to be. If we take news in that context we would then be more selective in what we believe and look on it more like another canned episode of a soap opera like reality TV.

Many of our social ills arise from the lack of time to think. Take parents due to the pressures on earning to keep the family fed and clothed ignore parenting, and result in latch key kids all over the world. They, often have no idea what their kids get up to and the influences they are exposed to. This is turn creates social problem that arise from a young age, and schools and teachers are blamed instead.

Every family or household that defines their role and plans their time and entertainment is bound to be more fulfilled and fraught with less pressures. Needless to say for those where work and entertainment are one, then a balance of life to ensure the family is not neglected is also essential.

Where does religion or adherence to a faith come into this mix? It should really fall into the entertainment section, as otherwise religion becomes a chore. It should be something voluntary and one which we enjoy doing and not done out of charity, fear and compulsion. Helping those less fortunate or in need, (a.ka. charity) will also be encompassed in this aspect of living a life worthy of one’s beliefs.

Then there are social obligations that have to be fulfilled to be part of a religion, a family or a village, so that the normal duties to ensure the proper functioning of society are carried out. This aspect will likely if not voluntary go into the must do box as a chore much in the way of cooking for the family, and not be classed as entertainment.

If we each always think of what we are doing and classify our activity primarily into the two categories, then we can really determine if the activity we are engaged in defined as entertainment is really necessary or if that is also a chore which we can drop. When a activity that should be entertainment becomes a voluntary chore and we don’t like it unless it falls into the must do box, we should drop it if we are to improve our lives and not let it become just a robotic existence.

That’s to repeat the word again and again. We must think clearly and if we are doing something we don’t have to and which does not give us any satisfaction, and has no perceived objective, we should drop it. That is the most difficult part of decision making in life. When we get used to doing something for a long time without thinking, we become enslaved to that and an unnecessary activity seems to be necessary.

By thinking things through and honestly evaluating it, we can rationalize it and see if we are performing it to kill time, to benefit someone, for our enjoyment or because we have to for job, family, society or duty. Given this process we will then find purpose in our lives and find fulfillment in what we do and if we don’t we will know it is done for a purpose. Waste is then eliminated.

Mindless activity is the root cause of societal ills, when people become directionless. In young people this is a major reason for crime and therefore incarceration. We must teach these skills, with school, temple and parents taking a role in this. Those who manage time well undoubtedly stand out as success stories in society and such behavior should be encouraged.

Sri Lanka has no unemployment

A recurrent theme that runs across my writings is that far from having unemployment, we are desperately short of staff in every field, skilled or unskilled. The root of the problems lie in those governing still holding on to outdated notions as they have never tried to hire skilled people. Of course hundreds apply for Ministerial Security Duty as they get a lot of money for riding around in Jeeps at full speed, and they think that is because there are so many people without work!!

The future pool of workers will come when the forces are demobilized at the end of the ground war, but I see a greater source, being the hugely overstaffed state sector, that is both costing too much money which is therefore not going into development work, but also adding to the inefficiencies as far as the smooth running of the economy is concerned, with bribery and corruption sustaining the attraction of this sector.

The invisible barriers to labor movement should be reduced, which is the duty of the government, then the worker will find his own job. Then this myth that only a politician can give one a job will forever be eradicated.

Once this simple analysis is accepted there will be a volte face in policy to the good. This will by its own steam encourage graduates to look for employment instead of waiting for a job to fall into their laps from the state.

Sri Lanka is a very fortunate country, as they can export unlimited numbers of people as their human potential and stock is so highly regarded, except for a few who recently have muddied it by using forged certificated to show non-existent skills. When the war ends, and the peace is honorably and magnanimously made, the flow of foreign money, from overseas Sri Lankans and foreigners will overwhelm the system, as there is no better place to live.

That is why the foundation for this future must be made by people with a vision, that surpasses their own limited capacity to absorb, because they are just trying to hold on to a job that does not exist because they too are frightened of unemployment because it is only the rulers who are unemployable in this country. We cannot let people who will not be given a job by their own mother, dictate how the country goes forward and make decisions for the rest of us hardworking, long suffering citizenry.

Responding to changing dynamics a future plan is essential

In all aspects of life, and in the context of this essay, that of the future plan for the country covering all aspects is essential. The Mahinda Chinthanaya of the President was a brave attempt to put a stamp on his vision, which has failed from the start, presumably because he lent his name to it, forever staining him, as all plans seem to stumble and he will rue the day he lent his name. Only the future will judge on his term, as one, which gave so much hope, only to die in the womb even before it was born, as it did not have a fundamental basis or reason for birth.

The inexorable rise of India and China and the subsequent pressure on the worlds natural and agricultural resources by these two giants was only too predictable. How Sri Lanka planned to respond to this was what should have been fundamental to the Rajapakse vision but was not concentrating solely on the mundane, losing sight of the big picture and making the visionary decisions in keeping with the response to the Global reality.

Sri Lanka is just too small and not self sufficient to even think of becoming insular. We can never shy away from the open economy, when over a million people are actually working outside the Island. We cannot even pay lip service to the JVP insistence of not privatizing state industries except in exceptional circumstances.

A vision based look at most likely scenarios, should have been used as a foundation. Rise in world oil prices, resulting increase in electricity costs with no plan to plug the shortages for years to come. The severe shortage of workers, especially in the skills needed; the shortage and therefore double digit increase in food prices and the resultant increase in fertilizer and other input costs of food production; the likely effects of oil wealth in oil producing countries; the unpredictable weather patterns to be built in as a normal occurrence; the brain drain of skilled personnel emigrating; the increase in recruitment to the forces; the resulting increase in defense costs and shortage of male farm labor arising there from could all have been forecast.

Given these factors, a reduction in Government servants, not an increase should have been factored in. A more efficient electricity supply with fewer employees, and short and long term plans for alternative energy sources, for which carbon credits etc are available is just one example of what the policy document should have included in it. A much more capital intensive route to infrastructural development such as road building should have been envisioned rather than the still manpower bloated methods currently in place, adding to the upward wage pressure on other sectors due to lack of workers. A plan of ensuring a much more skilled labor force to be sent for foreign employment so more funds would be remitted per person working should have been an integral part of the plan.

On the financial sector, the distinct advantage of maximizing on cheap funds due to historically low interest rates in US dollars, used to finance infrastructure, underwritten by foreign remittances could easily have been marshaled, especially because the rupee payback on foreign borrowings is low when the currency does not depreciate given high interest rate environment locally.

Sri Lanka does not have a large foreign debt and also has not attracted a lot of foreign money, so permitting funds to invest in sovereign debt by gradually opening the economy will cushion the rupee, despite the high inflation.

In the area of Tourism, our Hotels could all be full today, if we only concentrated on the Indian tourist as his currency had appreciated 50% on the SL rupee while the US $ has actually depreciated. To the Indian our hotel costs would have dropped, while for the European they have increased as all are priced in dollars.

The Tea Industry has benefited enormously, but that is not to say, had the government been able to help them further, to replant and become more efficient, as well as encourage and promote value addition, the benefit of the high prices could have been much higher.

The private sector is the engine, but the government must build the tracks on which this engine moves forward. They should not mess with engine by even choosing the driver, given half a chance they will put a drunk at the wheel!

Its not too late to change direction, and stop wasting money on airlines, that even the Italians are selling to the French or is it the Dutch, unworkable airports or grandiose irrigation schemes. Just improve what we have and the rest of us will take up the mantle and show what Sri Lanka is capable of.

Taking a leap of faith and a leaf out of corporates

When a family company gets to a certain size, and family members alone cannot effectively run the business, professional managers are hired to take care of day today business, with the owners, acting more in a directorial sense guiding the strategy and steadying the ship if something goes wrong. At a later stage when these companies go public, and owners gradually dilute their interest and diversify their personal portfolios, then effective ownership and control separates, and the next generation of the family merely act as passive shareholders, not involved anymore, just getting a return in the form of dividends with or without trust funds.

The above is the traditional example of growth. In Sri Lanka, the leap of faith to go from family to hands off management is a very difficult one, which very few if any companies have been able to do so far. I attribute this to the founders lack of trust of employees, taking with them vital information to start up their own companies in competition.

A truly dynamic company should not worry about this as the start up costs far outweigh the advantages already with the existing company, and if the progression to grow in a company is clear for able people, the company should not fear this outcome. It will then ease the pressure on the owner, family or the next generation to remain hands on and instead make time to concentrate on the strategic direction, only possible if one is removed from daily operational duties.

The multinational in Sri Lanka therefore operate under conditions where they do not fear any home-grown competition, as they feel those businesses have a short shelf life due to their lack of vision. This leads to the Nestles and Unilevers of this world to make super-profits out of the lack of competition and only the local entrepreneurs are to blame for the former’s success.

I would like to see some of our very successful businessmen, relax their management grip a little to concentrate on strategy, thereby encouraging our local talent to show results as managers, with appropriate incentives, rather than see them leave these shores to greener pastures, where opportunities abound. This inevitably results in a loss of hard to replace talent. It becomes a self-fulfilling prophecy when business leaders bemoan the lack of talent, which they helped to create by not wanting to let go.