Ceylon Today Editorial

Indira’s bombshell

14 October 2016

 

Export Development Board of Sri Lanka (EDBSL) Chairman Indira Malwatte dropped a bombshell recently.

Speaking at the inauguration of the 16th World Export Development Forum which took place at the BMICH on Wednesday (12 ), she said that in negotiating free trade agreements (FTAs) and in lifting of trade barriers, the government needs to take into consideration concerns expressed by industrialists.(Ceylon Today Tuesday, 13)

Malwatte made this statement in the presence of Premier Ranil Wickremesinghe, who, much like his distinguished uncle J.R. Jayewardene is a champion of free trade. Underpinned by Wickremesinghe's fixation to enter into FTAs and similar such trade agreements, ironically with the island's key import markets and not its export markets, a point raised by economist and Chairman of the semi-government think tank, Institute of Policy Studies, Dr. Razin Sally, at the recently concluded Ceylon Chamber of Commerce Economic Summit.(Ceylon Today's editorial of 3 August)

Nonetheless, one of the key points that comes about with Sally's statement and that of Malwatte's, is the openness practised by the current Yahapalana Government co-led by President Maithripala Sirisena and Premier Ranil Wickremesinghe. It was the freedom to express one's views, though being in government.

Meanwhile, Wickremesinghe who spoke after Malwatte at this seminar elaborated his vision of making trade pacts with Sri Lanka's key importing countries, namely an economic and technical cooperation agreement with India, Sri Lanka's largest import market (CBSL's 2015 Annual Report), the agreement of which is better known by its acronym ETCA. He also enunciated the signing up of FTAs with China, Sri Lanka's second largest import destination, Singapore (its fourth) and a comprehensive economic partnership agreement (CEPA) with Japan, the island's third largest import destination.

The Premier's vision of ETCAs, FTAs and CEPAs is to create both a strong middle class and a million jobs in the country.

But, seemingly in support of Malwatte's view, whilst simultaneously throwing a spanner on Wickremesinghe's vision, Professor Prema-Chandra Athukorala, Professor of Economics, Australian National University, speaking at a function in Colombo two months ago, said that studies have shown that free trade zones (FTZs) and not FTAs boost exports. (Ceylon Today of 20 August)

FTZs in general are opposed to by multi lateral donor institutions such as the IMF because they offer tax breaks, which, according to the IMF, blunt government revenue.

Nonetheless, Achilles' heel in FTAs are their subtle rules of origin (RoO), according to Athukorala. He cited the example of a joss sticks manufacturer at Mawanella who cannot export joss sticks to India by availing himself of the apparent concessions available under the existing Indo-Lanka Free Trade Agreement (ILFTA) because of India's stringent RoO, where a key component in joss sticks manufacture has to be imported from India, which, however, disqualifies this manufacturer from exporting to India under the ILFTA concessionary duty umbrella. It's the present ILFTA that Wickremesinghe wants to expand to an ETCA.

But a silver lining in Wickremesinghe's speech was his statement that he would be flying to Brussels tomorrow (Saturday 15) to renegotiate the lost GSP+ duty free facility in exports to the EU, Sri Lanka's second largest export destination excluding the UK, lost due to the blunder bussing of the previous Rajapaksa regime, six years ago, in August 2010.

Renegotiating of the lost GSP+ facility would also be right up Sally's sleeve. In related developments, Sri Lanka's largest export destination is the USA and the third largest the UK. Sri Lanka's exports, particularly to the West, are led by garments, its second largest foreign exchange earner after remittances.

Nonetheless, there are also holes in Malwatte's argument, ie of confining to obtaining the views of only the industry and of its workers when it came to the signing up of FTAs and the lifting of trade barriers. What about the needs and views of the masses, that elects governments to power in democracies such as Sri Lanka's?

Do they want quality goods at affordable prices, or, are they happy with shoddy goods to which they have to pay exorbitant prices? One of several reasons why the masses elected Jayewardene to power nearly 40 years ago was that they wanted to break the shackles that restricted them to be content with only locally made low quality goods available at exorbitant prices.

Probably, Malwatte, being the custodian of Sri Lanka's export economy, should be more concerned with that sector; in an era where exports have taken a hit, being down 5.2 per cent year-on-year to US$ 5.2 billion in the first half of the year according to available statistics, rather than be concerned about affairs which don't come under her domain.

Daily News Editorial

Let saner counsel prevail

14 October 2016

The UPFA segment in the Unity Government, true to form, is playing populist politics. Some of its stalwarts such as Dilan Perera are forever on the war path with the UNP, taking great pains to distance his party from the policies of the Greens. The Deputy Minister is acting as if he has no part in the Government. The Chief Minister of the Western Province Isuru Devapriya was also seen on TV the other day attempting to undermine the authority of the Prime Minister.

UPFA General Secretary Minister Mahinda Amaraweera is no better. One recalls Amaraweera taking issue with the UNP for its move to store paddy at the Mattala airport warehouses. He is also on record stating that they would not allow projects started by Mahinda Rajapaksa in Hambantota to be halted. Hailing from the deep South as Rajapaksa, it could be that Amaraweera was not keen to rub the Hambantota voters on the wrong side by speaking ill of Rajapaksa.

Be that as it may, Amaraweera has told a vernacular newspaper that, they of the SLFP, had made certain pro-people proposals to the government and Finance Minister Ravi Karunanayake to be incorporated in the budget and that their support for the budget is contingent on these proposals being implemented. Though not revealing what these proposals were, the Minister said they of the SLFP will ensure that maximum relief is provided to the people through the budget and that they would not stand for any additional tax burdens being imposed on the people or the pruning down of the existing benefits enjoyed by them.

The SLFP members in the Unity Government may well be anticipating a fund of public goodwill that will accrue to them by forcing the government to implement their suggestions and score politically. But taking the credit, they also hope to steal a march on the UNP at future elections. But they are going about things the wrong way.

A budget is the most important financial document, that will chart the government's fiscal policy and the economic path for the ensuing year. Hence it will have to take many important factors into consideration and weigh in the pros and cons before a budget is being prepared. A national budget is also studied by our international lenders and prospective investors.

True, a budget is normally a balancing act, offering ‘something’ to the have nots, low income groups, the consumer and generally the marginalized while at the same time paying attention to the macroeconomic picture. This is the reason why budgets are prepared after many inputs by experts, economists and professionals, expending a lot of thought and the proverbial burning of the midnight oil. There is therefore no room for unwise and haphazard suggestions that may send a budget into tail spin.

In this context the government can ill afford to implement all the suggestions made by the SLFP, merely to make political capital while portraying the UNP as the villain of the piece. True, the public expect some form of relief from the government at every budget and often times a government's survival too had depended on what it offers to the people in their annual budgets.

But, as the present government keeps on saying ad nausem, the economy is in a parlous state, as a result of the mindless profligacy and the astronomical debt left behind by the Rajapaksas. These debts have to be repaid and the government needs to find the revenue for this if the country is not to be caught up in the vicious cycle of having to re-borrow to pay the debts that keep mounting. Besides, aid to the country is contingent on the government reducing the budget deficit and maintaining a tight fiscal regime.

Hence, there are many variables that go into the preparation of the national budget and it is not as simple as the SLFP wants to make the people believe, for its own advantage. The Government, no doubt, could draw up a populist budget where the UNP will benefit politically more than the SLFP. But it will sooner rather than later have to come to terms with realities.

The SLFP which is demanding freebies, as it were, it has to be said, has no grasp of the way the UNP gets about things. The UNP is famously known for being good administrators and it goes against the grain for the Grand Old Party to act in a haphazard nay irresponsible manner especially where the country's finances are concerned. It would certainly not have “cut” and “chopped” the national budget, as it was forced to do, the last time over, due to pressure brought upon it by its alliance partner. Hopefully we wont see a repetition of it this time around.

President Sirisena would do well to advise his followers to go slow on their demands, particularly given the current financial position of the country. After all, national elections are a good four years away. Hopefully the country's economy would see a turnaround by that time wherein all stakeholders could reap in the political dividends.

The Island Editorial

Polls phobia

14 October 2016

 

Prof. S. Ratnajeevan H. Hoole’s article on the opposite page today sheds light on the predicament of the National Election Commission (NEC), which has become a whipping boy for the incumbent government afflicted with what may be called polls phobia. The outspoken don calls the independence of the NEC, of which he is a member, into question. He deserves praise for having the courage to turn the searchlight inwards and also exposing the conceited politicians pretending to be great democrats.

Going by the manner in which the ruling party leaders trifle with the NEC members one may wonder whether a sinister attempt is being made to reduce the NEC, too, to an appendage of the government.

Elections are the lifeblood of democracy and no government has a right to postpone them for political reasons. The SLFP-led United Front government extended the life of Parliament by two years arbitrarily without elections until 1977 and, thereby, created a situation where the UNP obtained a steamroller majority which it abused in every conceivable manner. The replacement of the general election with a referendum in 1982 under the JRJ regime paved the way for the second uprising of the JVP, which tapped the public resentment to fuel its anarchical political project and plunge the country into a bloodbath. It is always counterproductive for a government to postpone elections as we have seen in the past and the present dispensation will have to pay a huge price for not respecting the people’s franchise.

The practice of politicians, especially those who are still wet behind the ears but full of themselves, summoning the NEC members according to their whims and fancies must stop forthwith. If they want to boost their burgeoning egos let them try some other method without inviting NEC members to meetings and keeping them waiting. Members of the so-called independent commissions should be treated with respect which they deserve. Strangely, numerous civil society outfits which took on the Rajapaksa regime with might and main to protect democracy—and rightly so—have chosen to ignore the blatant violation of people’s right to vote at present. It looks as though they thought ‘right or wrong it is our government’. They should be ashamed of themselves and stop pretending to be champions of democracy.

Since the much-vaunted electoral reforms are not likely to see the light of day in the foreseeable future, arrangements ought to be made to conduct the LG polls under the previous electoral system without further delay. The government must not be allowed to go on putting off polls indefinitely on the pretext of effecting electoral reforms. It is a pity that the self-castrated official Opposition and the Joint Opposition are not cranking up pressure on the government to respect the people’s franchise the way they should.

Prof. Hoole argues that in the present scenario the NEC deciding to go for LG polls can be considered an option. He, however, says in the same breath: "Commission going for elections could lead to an embarrassing reversal by courts but trying for the right thing is what leadership is about. Indeed, decisive action by the Commission would give pause to those who think they can play with the people’s right to representation and make threats to a Commission." The NEC member is to be commended for his lateral thinking, which we believe, is the way forward. His cogent argument will help silence the critics of the NEC, who are barking up the wrong tree.

Anyone who expects a government which fears elections to protect democratic rights of the people only hopes against hope. It is said that when a government fears the people there is liberty and when the people fear a government there is tyranny. A government that arbitrarily postpones elections does not fear the people!