Ceylon Today Editorial

Sunil Santha to Amaradeva

06 November 2016

From Sunil Santha to Pandit W. D. Amaradeva, Sri Lanka has come a long way in recognizing its lyricists and singers on the Sinhala music scene. Whilst Sunil Santha had to pump petrol, working at a petrol shed to make a living, because his songs and his singing didn't bring him enough money, despite his remarkable talent, Amaradeva however had to undergo no such hardships.

Recognized by politicians and connoisseurs alike, they ensured that he lived a comfortable material life, free of want or need. Amaradeva who died on Thursday was cremated with full State honours yesterday, whereas Sunil Santha died, virtually a pauper, unheralded and unsung.

Another prominent Sinhala artiste who suffered a similar fate as Sunil Santha was C.T. Fernando. He who literally dazzled the Sinhala music scene with his baila in the 1960s, but, with the change of government in 1970, he was branded a UNPer and was put into cold storage.

The sole broadcasting organization at that time was the State controlled Radio Ceylon, and its successor the Sri Lanka Broadcasting Corporation (SLBC). There were no private radio stations or TV channels, then. The living of a songwriter and a singer was virtually in the hands of that State broadcasting organization. They could either make or break artistes.

If an artiste fell foul with the powers that be, political or otherwise, woe be unto him, because that signalled the end of his musical career. The recent examples being C.T. Fernando and Sunil Santha, though, however talented lyricists and singers they were, because they had rubbed the shoulders of the men and women who matter, the wrong way, it heralded the end of their careers.

It may not be wrong to say that Sinhala song writers and singers were able to practise their professions, free from the whims and fancies of politicos and petty bureaucrats, coinciding with the advent of the J. R. Jayewardene administration of 1977. That change brought with it not only the open economy, providing greater opportunities to artistes, but also the appointment of broadcaster Livy Wijemanne to head the SLBC, a few years later.

Wijemanne was a professional. He had no time for petty politics. And though the changes after 1977 ushered in the TV to Sri Lanka, the only public voice media in Sri Lanka was still the SLBC. It had the monopoly over voice entertainment airtime in Sri Lanka. Perhaps, as far as the English radio listenership was concerned, that era, though 'recent' as nearly 40 years ago, may be termed as the golden era of the SLBC.

With the liberalization of the public broadcasting media by President Ranasinghe Premadasa in the early 1990s, which brought with it private radio and TV stations, the market economy took over this sector, which, previously was a State monopoly.

The likes of Amaradeva were no more dependent on the State for their livelihood. The market recognized their talent and such artistes flourished, regardless of State patronage or not. An opportunity that other geniuses on the Sinhala music scene such as Sunil Santha and C.T. Fernando who went before, weren't privileged to enjoy.

They operated in an era under the shadow of a monopolistic State, where not least broadcasting was also in the hands of the State. The State, even as far as the music scene was concerned, decided what was good and bad for the market.

Market forces took a backseat in that era. It therefore followed, so also talent. The State had the monopolistic right to decide which singer and which song was good or bad for the market. And at time, under the pretext of their political leaders'/government's name, unscrupulous bureaucrats took advantage of this situation, either to uplift artiste/s of their choice and in the same way to bring others, who were not to their taste, down, in an era where talent took a backseat.

It may also not be wrong to say that the period between 1977 and the early 1990s, i.e. before the broadcasting sector was opened up, politicos themselves were in the forefront, if not promoting, then encouraging talent on the Sinhala music scene to flourish.

Three such examples are Victor Ratnayake, a great fan of Jayewardene's and, probably, indirectly, Sunil Perera and the Gypsies, and H.R. Jothipala by Premadasa. They were talented in their own right, but were also probably given an impetus by the politicos who lived in that era.

The culture of creating, moulding, encouraging, recognizing and rewarding talented artistes needs to be fostered, with the State creating the enabling environment and market forces thereafter taking over, if Sri Lanka is to produce more such Amaradevas, C.T. Fernandos and Sunil Santhas in the future, to further illuminate the culture of this island.

Weekend Nation Editorial

Hold impartial inquiry on bond scam

06 November 2016

The Joint Opposition (JO) has taken up the cudgels against Prime Minister Ranil Wickremesinghe calling for his resignation on the grounds he appointed Arjun Mahendran to the post of Central Bank Governor and continued to support him even after his alleged involvement in the infamous bond scam.

Resignation has been demanded because the Central Bank technically came under the purview of the Prime Minister and he had given relevant instructions to the bank with regard to the bond issue They point out that even after the bond scam the Prime Minister was not in favour of removing Mahendran from the post, but it was President Maithripala Sirisena who finally prevented his reappointment by nominating Indrajith Coomaraswamy to the post of Central Bank Governor.

Following the recommendations of the Parliamentary Committee On Public Enterprises (COPE) the Prime Minister, however, referred the committee’s report to the Attorney General for legal action. It is in this context that the joint opposition has threatened to organize countrywide protests demanding the Premier’s resignation.

One thing that is relevant here is that ours is not a country where politicians have ever set examples in the past by resigning from their positions whenever some major allegations were levelled against them. The other point is, if Ranil Wickremesinghe resigns at this juncture will it resolve all our problems? At least will it be the end of all corruption in the country?

On the contrary it will be the beginning of a new political crisis in the country especially at a time the new government is trying to put the economy on the right track with some clear vision for the future.

The advantages of such a resignation and the ensuing political uncertainty will go to corrupt politicians who are already being investigated and those who are already indicted and have little choice other than making every effort to topple this administration.

Meanwhile President Maithripala Sirisena has publicly stated that he came to power with the promise of good governance and therefore his responsibility is not only to punish those who have done wrong things in the past but also to prevent recurrence of such things under his own administration.

The President is still the head of the state and head of the executive and has all the powers to ensure an independent investigation into this matter and punish those who are responsible. He has made it clear that he is determined to obtain an impartial verdict through the country’s legal system.

So what is necessary is to rely on the assurances given by the President and our own legal system and to carefully watch the manner in which the investigations are conducted and not to create political chaos by having public campaigns demanding resignations or change of administration.

Sunday Times Editorial

The quick-fix drug price formula is no cure

06 November 2016

Hot on the heels of a nasty blow to the people by way of an increased Value Added Tax (VAT) including on services provided at private hospitals, the Health Ministry seemed to want to cushion the hit by imposing a MRP (Minimum Retail Price) on at least 48 popular drugs. Not a comprehensive list, but yet, they range from the common Panadol to life-saving drugs.

The Health Ministry’s intentions seem at first glance bona fide, but we will come to that later. The initial reaction from both the big pharmaceutical multinational companies and the end-user, i.e. the patient, has not been all that was expected from the move. While for the former it is a bitter pill to swallow, for the patient there are mixed feelings.

The widespread criticism comes from what appears to be a simplistic arithmetical formula that has been adopted in arriving at the MRP. The authorities concerned merely took the two ends of the price range at which a particular drug was sold in the market, i.e. the high end price for a brand name like Panadol and the low end of a similar drug with a slightly different name but with the same chemical ingredients (which are called “generic” drugs) and fixed a price in-between. Hence, a multi-national company manufacturing at Rs. 1.60 per tablet and selling it at Rs. 3 in the market making a near 100 per cent profit in the process, is now asked to sell at Rs. 1.20 which is less than the cost of production forcing the company to run into a loss.

No doubt, these multi-nationals make huge profits in selling pharmaceutical medicines to poor countries. They justify it by arguing that they have to spend chunks of these profits on R & D (Research and Development) for newer and more potent medicines – that will eventually benefit those in these very poor countries. Vast strides have been made over the years in pharmaceuticals, but others argue that no new radical breakthroughs have been made in recent years while people’s resistance to some drugs has increased with no solution to the problem.

The sudden gazetting of the new controlled prices has taken the suppliers by surprise. In some ordinary kades (boutiques) everyday use drugs like Panadol are in short supply while suppliers claim they have to change the price stickers according to Consumer Protection laws. In fact, some are creating an artificial shortage as they sulk at the Government’s move.

Should these drug companies react more vigorously even with the more costly drugs, there is the possibility of this country being taken back to the bad old days of the 1970s when people had to ask friends and relatives abroad to send life-saving or urgently required medicines through passengers coming to Sri Lanka. Then it was only the affluent class and the political elite who had this ability but nowadays with so many Lankans having someone known working or living abroad, the disadvantage to the poorer segment of society will be less. Nevertheless, it will be a retrograde step for a country looking to the future.

There is no easy fix for a pricing policy that must be acceptable to all — from the multi-nationals, to the importer and distributor and last but not least the doctor and the patient. The Chamber of Pharmaceutical Industry has drawn attention to the fact that the new pricing policy of the Government could run the risk of “innovator drug companies” (the multi-nationals) exiting the Sri Lanka market if they are asked to price their brands at the same price of a ‘generic’ product.

While some ‘generic’ products serve the same purpose of curing or proving relief at a lower cost, the quality of some products in the market is subject to question. The Chamber fears the worst if these big companies abandon Sri Lanka and patients are left with only cheaper, but sometimes spurious generic medicines.

The call is for market forces to play their role with the gentle hand of the regulator (the Health Ministry) playing its part rather than going to the so-called socialist era of price controls of yesteryear which however promising it sounds, only bred shortages of essential medicines, a ‘black-market’ and eventually, saw the uninfluential being deprived of medi-care.

Illegal, parallel imports and opening the door for unknown drugs entering the market are real fears. Cost is important, but it is not the only factor in a pricing policy. The overall benefit to the patient is what is paramount.

From all accounts the private sector was ignored in this seemingly quick-fix exercise. No window was given for transition to new prices. The dialogue between regulator and the regulated that prevailed when the President was Health Minister has been done away with. The formula then discussed to allow drug importers CIF + 85% (cost, insurance, freight of a drug plus 85 per cent for marketing and profit) has been jettisoned. This was the via media between manufacturers making sometimes unconscionable profits of up to 500% on a single drug, and remaining in the market.

The two arms dealing with the pricing policy, the National Medicine Regulatory Authority (NMRA) and the National Drug Quantity Assurance Laboratory (NDQAL) are competent institutions and well led, but there seems to be a political flavour to this hurried pricing policy. With thousands of drugs coming in from India (mostly), Pakistan and Bangladesh, the NDQAL simply cannot cope with testing the effectiveness of these imports.

Of late, who else but the Chinese have offered to build a bigger lab for NDQAL? However, rumour swirls in the health sector, spilling into the public domain, that this price control exercise is all about pushing the big pharmas out of the market and allowing new players with connections to VIPs in Government to fill the vacuum with their own agencies selling their own drugs.

This edging out the big players from the market can be achieved only in a closed, captive market. Such a policy goes against avowed Government policy advocated by the President and the Ministry of National Policies and Economic Affairs which is under the Prime Minister of Public-Private-Partnerships (PPP). Can a single Ministry then have its own policy that puts the Government’s bigger goals of attracting foreign investment into the country in jeopardy – and not necessarily benefits the patients at the same time? That is something the Government must ponder.

Idle promises have been made from the Health Ministry of building not one, but four Mount Elizabeth hospitals (the world famous Singaporean medical hub that serves the rich and famous in Asia and the Pacific region). This, when no cardiac surgery is performed in 20 of the country’s 24 districts; there are no stroke units in most base hospitals and people have to buy their medicines in the nearby pharmacy after being seen by a doctor in a state hospital.

Next week’s budget on the Health Ministry has been cut for 2017 by Rs. 14 billion from 3 percent of the total budget last year to 2.7 percent next year. The yawning gap between political rhetoric, populist moves, and the reality is simply widening.

Sunday Observer Editorial

A Budget for whom?

06 November 2016

The Appropriations Bill for 2017 is on the table in the House of Parliament, the assembly of our elected representatives. This is the estimate, by the Government, of its intended expenditure for the ensuing year and, on Thursday (10th), Finance Minister Ravi Karunanayaka, in his second Budget Speech in office, will tell us how the Government will find the money to meet this expenditure and manage the national exchequer during 2017.

Sri Lankans of several generations are now familiar with the occasion of the Budget Day in Parliament having experienced, for some decades, widespread news media coverage of the event and, also, in the build-up to it and its aftermath. People are thus familiar with what happens and what might happen.

Many decades ago, when Sri Lanka was yet an impoverished, underdeveloped country, with high basic food costs, scarce commodities and services and, high unemployment, the National Budget was a political highpoint in the year. People worried over and feared the possibility of higher food costs or to pay more for various essential services and social needs such as health and basic education. In those difficult years, come the Budget, speculation would be high about price rises and sudden changes in the availability of important goods and services – depending on import policy and duty hikes.

Then, governments began to change the tempo of the Budget process for both political and economic reasons. To minimise anticipatory goods hoarding and stocks and monetary speculation, instead of sudden price increases or policy changes on Budget Day, Governments now resort to a form of ‘creeping’ changes: fiscal and others measures intended for the forthcoming Budget would be implemented step by step, gradually, in the weeks before Budget Day.

This also helps the Government politically because there is no combined weight suddenly imposed on the populace or on sensitive socio-economic sectors as it would happen if all measures are announced on Budget Day itself. When such impacts are slightly spread out, then they are less felt and, indeed, a little less noticed. Hence, negative political reactions are diluted, even if marginally.

Today, as Sri Lankans enjoy the prosperity and comforts of ‘middle-income country’ status, the impact of Budgets are felt somewhat differently than in our poorer past. Far more people worry about prices of cars, smart phones, IT products, home-building, even holiday travel costs, as a much bigger middle class that is also better off than 20-30 years ago, enjoys the abundance of goods and services as never before.

Even if good health care is not fully available to all citizens, the basic care offered free by the State is better in terms of quality options while there is now a very wide range of private health care services on offer, if at a price. In education, too, the choice of schools and curriculum has multiplied many times over with a range of quality on offer, if, also, at a price.

And the fear of economic futures is much less since most Sri Lankans have gainful employment and an income stability that cushions sudden cost shocks. Unemployment, today, is only about 4.5 per cent of the labour force unlike the double digit figures less than two decades ago. High youth unemployment figures actually indicate that young people are delaying their choices of livelihood avenues – a luxury not enjoyed earlier. Household and family consumption is high and covers a wide range of things far beyond very basic needs. Economic policy will no longer cause severe malnutrition or semi-starvation, as it once did.

Nevertheless, most Sri Lankans are not rich enough to be entirely worry-free in anticipating the Budget. While even middle classes worry over things that are less ‘basic’, their interest, as consumers, in a wide range of goods and services means that any frustration on their part has a political impact which no government can ignore.

At the same time, our overburdened Finance Minister must worry about the effect of Budget decisions on specific economic and socio-economic sectors. Local manufacturers wait expectantly for monetary, tax and import policy changes that would help them consolidate this country’s industrial base. With over a quarter of the labour force now in industry, manufacturer success, in addition to boosting the economy overall, means more employment, better wages and better work conditions for our working class.

Meanwhile, the country’s farmers – once the bulk of the population and now barely a quarter of it - are worried about high costs of agri-inputs and wait to see if the new Budget will add to their debt burden. The tourism industry, big and small, knows they are already on a roll but worry about inflation and foreign exchange rates that could lower tourist spending. Exchange values are also a concern for exporters who could lose when the local currency strengthens.

There are also mollycoddled segments like State sector employees who not only have a guaranteed fat pension to look forward to but, also, enjoy tax-free incomes unlike the rest of the equally hardworking population. Will income tax policy be reversed to bring the State sector back into its grasp after many decades of this ‘tax-holiday’? This is a challenge that successive governments have avoided given the politicians propensity to play the vote banks and also have a pliant cadre of ‘government servants’. Larger labour force policies need to come into play here in order that the rest of the labour force remains motivated and productive. A major reason that many young people delay their livelihood choice in the hope of a ‘government job’ is due this unfair favouring of the State sector. This, in turn, distorts both labour mobilisation in crucial economic sectors as well as labour productivity.

Thus, the Government as well as Parliament has a vast complex of needs, interests and possible opportunities to heed to in the forthcoming weeks as the people’s representatives debate Mr. Karunanayaka’s proposals starting next Thursday. Ultimately, the national Budget, while favouring selected key sectors in one way or another, should benefit the nation as a whole in the long term, if not in the short term.P 6 Leader.

Sunday Island Editorial

Budget thoughts

06 October 2016

The 2017 budget due to be presented next Thursday has not evoked any sense of anticipation or major expectation. The people are very well aware of the government’s need for revenue and the reality that state expenditure in recent years has far outstripped inflows to Treasury coffers. With the VAT amendment already in place, the major source of needed cash is known and the war drums on that score have already been beaten by opponents of the government in the so-called Joint Opposition. An encore is probable and the issue will, no doubt, be flogged to death all over again. Nobody likes to pay taxes and although essentials have been excluded, a lot of steam has been already generated on VAT on hospital charges including medical consultations and on telecommunications. High earning consultants could have done themselves proud by agreeing to a fee reduction freeing patients of the additional expenditure caused by the VAT imposition. Given what they earn, they could well afford to do so. But nobody seems to have thought of it or called for it. Everybody and his brother now have a phone and higher phone bills must necessarily bite. But unlike in some previous years, though not recently, there was no evidence of ‘beat the budget’ shopping.

Already cigarette and liquor prices are up and the budget is not expected to do any more on this account. Given today’s price of a cigarette (Rs. 50 for a popular brand), and to a lesser extent a bottle of arrack (Rs. 1,250 for VSOA), ordinary people will surely wonder how any but the affluent can afford to smoke or drink any more. But they do and will continue to do so. While governments, both past and present, have used price deterrents to reduce the deadly habits – or should we say addictions? – of alcohol and tobacco, they have done no violence to the interests of state coffers into which both controversial industries pour mega bucks. The manufacture of both harmful products continues to be immensely profitable, the price stick notwithstanding. On top of that there is the thriving illicit liquor and legal beedi industries about which the legitimate manufactures routinely complain. These too are also immensely profitable for those who engage in them.

Finance Minister Ravi Karunanayake has gone public with the statement that the budget is going to be "revolutionary"; but how so nobody really knows. He is also on record saying he is going to reduce the long running deficit which this country has lived with. He wasn’t revealing any budget secret when he indicated that it is projected to be 4.7 percent of GDP next year against the 5.4 percent estimated for this calendar year. However, it is generally known that budget outcomes too often fall short of projections. The capital gains tax about which both he and the prime minister have talked about is coming, but not for share market transactions, he has confirmed. Though no details have been offered the minister has said that this tax will not apply for properties held for over 10 years but those who have made killings on real estate in the short term must cough up a fair share of such gains to the state.

Passenger car prices in this country have been exorbitantly high historically and more so in recent years, on account of the huge import taxes loaded on them. While the revenue authorities will have little compunction about increasing these, they have also to factor reduced imports if prices are too high and the resultant revenue implications. When fewer vehicles are imported, and the condition and congestion on our roads makes this a logical objective, the government collects less from what has long been a cash cow. There have been suggestions to tax vehicle use rather than acquisition of vehicles. The sharp reduction in fuel prices following the 2015 presidential election and ahead of the parliamentary election that followed was undoubtedly a vote gathering inducement. Taking it away especially when global oil prices are down will be unpopular. Whether the government will risk this now remains to be seen. But continuing IMF support will only come at the price of ensuring a lower budget deficit. Increasing vehicle license fees moderately will not raise much cash but tax collectors universally act on the premise that "little drops of water, the mighty ocean makes."

Whatever the finance minister plans to do on Tuesday, he will have to balance the imperatives of what is politically possible against the necessity of meeting conditions necessary for IMF support. Given the massive debt service and repayment obligations, the salary and pension bill of a bloated public service, bleeding state-owned enterprises and many more, Mr. Karunanayake is faced with an unenviable task on Thursday. He has characteristically projected an air of ‘can do’ optimism although what happened last time round cannot be easily forgotten. A lot of what is done is likely to be on the macro economic front. The chances are the already accomplished VAT is where the consumer will pick up the highest tab and the budget will hopefully protect those segments of society most needing succor.