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!

http://www.nytimes.com/2016/10/16/world/rise-of-saudi-prince-shatters-decades-of-royal-tradition.html

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.

An Open Letter to the Monetary Board of Sri Lanka

October 15^th 2016 (POYA)

Dear Eminent Sirs,

DON’T SEEK TO PUT BLAME ON OTHERS UNTIL YOU ARE BLAMELESS

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 21^st 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.

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.  

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 1^st 2017 ending by 28^th 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 1^st 2001 is at its widest, especially in the area of communication, or lack of it.

WHAT I PROPOSE IS:

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 21^st 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.

http://www.telegraph.co.uk/news/2016/10/11/david-cameron-ive-found-my-first-job-after-politics-building-the/

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.

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:

http://www.dailynews.lk/2016-10-02-193000/business/94650

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.

FACT: “THOSE WITH ARABLE LAND DON’T FIND IT ECONOMICAL TO USE IT”

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!” 

HOW TRUE!