Ceylon Today Editorial

THE ABDICATION OF LEADERSHIP

02 April 2017

The GMOA's membership has apparently been extremely busy getting in touch with 'more than 100 trade unions including the Joint Trade Union Federation,' to exert pressure on the government to shut down SAITM's medical degree awarding programme.

We've been having the Joint Opposition, the JVP as well as the Inter-University Students Federation taking turns to turn the heat on the government to force it to cave into their demand to disqualify SAITM from its right to award a medical degree.

Not too long ago the GMOA and others were abandoning patients to walk out on strike in support of the Joint Opposition's demand for the government to withdraw the Value Added Tax, introduced to raise urgently needed revenue for the government. They, of course felt it alright for them to demand special cars and other perks for themselves.

The government needs to be warned that it simply cannot afford to continue to be submitting to this kind of outrageous sabotage masquerading behind a disguise of medical ethics. From revenue, to education and now to the higher education medical sector, this sabotage has been invading almost every step taken by the government to usher in the sorely needed development and attract foreign investments which alone can create the desperately needed jobs for over 200,000 school leavers every year.

This is not legitimate demand for redress of a just grievance but a vulgar exhibition of political sabotage. They create every dystopian condition, stand in the way of development, harass government at every turn and through them imbue in the masses a sense of discontent with the government and then challenge the government to call LG elections knowing too well that ignorant and impressionable voters could be persuaded to vote against it. Most reprehensible has been the exploitation of maimed soldiers to gate crash the Presidential residence, egging them on to demand pensions which should have been ordered...and paid...by the government that recruited them and sent them to the frontlines where they were sitting ducks for enemy fire and land mines, while those taunting them on were the leaders then, safely ensconced in their luxurious homes and offices in Colombo. But yet, after having visited these same disabled soldiers in hospitals to extract maximum media mileage even from their pathetic states of intense pain from decapitated limbs, the then leaders of government walked away from the cameras without a thought about ordering compensation and pensions to these maimed soldiers, then. They just basked in the victory won by these "war heroes" to whom they failed to pay pensions.

What hypocritically empty humbugs, one and all! And they then stoop to the incredibly unscrupulous level of taunting these self-same maimed soldiers to stage threatening protest demonstrations demanding the pensions which should have been paid to them when their role in the war ended long before the war ended.

Why were the pensions not paid to them back then? When their war ended long before the war ended? When the ugly public chest-thumping went on endlessly while these wounded soldiers lay recuperating in hospitals and in their thatched village homes, why were they then not given pensions and the peace of mind that would have come of it? Poor, ignorant soldiers...how they are being callously duped by ruthless political cunning.

All of this does not augur well for the government's stability. It's time the President and Prime Minister took a firm stand against this vulgar sabotage and made its legitimacy a tangible thing. It's time the government started backing its Judiciary and wielded the big stick against those who for ten years abused the Judiciary and now attempt to undermine it in its rightful exercise of the law and Constitution.

If an Appellate Court ruling can be allowed to be trampled into the dirt the government has then begun to abdicate its power, renege on its commitments to uphold law, order and justice.

The University Grants Commission granted approval and registered SAITM on 30 August 2011 to conduct the Bachelor of Medicine and Bachelor of Surgery (MBBS) programme, yet hundreds of medical students of SAITM were deprived registration by SLMC, citing inadequate clinical training.

Then all that has to be done is to give them that training, let their adequacy be ascertained on that basis and then allowed to begin their medical practice.

The Health Ministry must arrange this immediately. Medical students at State universities pass out supposedly as fit and able practitioners. How is it then that we have an endless list of medical misadventures in State hospitals, the last of which was a female Law student's hand being amputated in a hospital down south?

The political mafia of the GMOA and its 100 Trade Unions, have been allowed to hold the nation and government to ransom for too long.

The Nation Editorial

The search for the ‘missing’ answers

02 April 2017

Families of the disappeared have gathered in at least two locations along the A9 Highway and have been protesting for over a month demanding to know the whereabouts of their loved ones. Most of those who are at these protests are mothers and wives of those who have gone missing during, and soon after the final stages of the war.

Their demands are simple. ‘Tell us what happened to our loved ones. If they are alive, then allow us to go see them, or release them.’

The Northern Province was a scene of chaos during the terminal stages of fighting. Many were arrested, many surrendered. Many of the LTTE cadres who had handed themselves over to the military were rehabilitated and reintegrated into society.

According to these families, some of them were abducted, some were arrested after they had surrendered, and some had disappeared while travelling on the road. According to them, many of the incidents took place between 2007 and 2009.

The issue here is that the families have never heard about their loved ones. It has been at least eight years and the families are still looking for answers to their questions.

But in the process, the families who are protesting claim that several had simply vanished with no trace whatsoever.

These protests were organized in line with the United Nations Human Rights Council in Geneva which concluded on March 24. One argument could be that many of these who were forcibly abducted or arrested were involved with the LTTE or connected to the organization in some way.

Yes that is a valid reason for them to be arrested and detained. One should also not forget those who had gone missing after being forcibly recruited by the LTTE. It is a difficult task since the LTTE has been wiped out. But it should be probed nevertheless. But, the parents have the right to know as to what happened to them after they were arrested.

A Presidential Commission was appointed by the previous government, which was headed by Justice Maxwell Paranagama. The commission conducted several sittings islandwide before handing over its final report in August last year.

However, the important factor here is that Paranagama himself admitted that the report was incomplete as the commission could not complete its investigations within the stipulated time frame. The evidences collected by the commission were to be handed over to the yet-to-be established Office of the Missing Persons (OMP).

However, the delay in establishing the OMP and the government obtaining a further two years to fulfill its undertaking to the UN is likely to have a negative vibe among the families who have waited all these years.

Of course, one should not focus on the North alone. There are hundreds who have gone missing in the South during the 30 years of civil war. These families too have several unanswered questions.

But the demands of the North take the centre stage simply because it received the brunt of the war.

These families right now do not worry about a political solution. For them, their lives have revolved around their loved ones who have been missing.

The new government came into power with several pledges, including one to probe into the disappearances.

In fact, this government came into power mainly because of the minorities and therefore should not ignore their grievances. Nearly two years have passed since the new regime took over. But it has only resulted in more protests on a daily basis.

First, the government needs to establish faith among the people, especially the Northern, war affected communities.

Secondly, it should not be going back on its own words and promises to the people.

It is understood that the government cannot make everyone happy. It cannot fulfill all its promises in one go. It takes time. But, the questions of these families are simple. Why cannot the government give a firm response? These mothers have the right to know what happened to their sons, even if they are no more among the living, so that they could conduct their rites according to their customs.

Sunday Times Editorial

New tax law: Capitulating to the IMF

02 April 2017

Prime Minister Ranil Wickremesinghe told the Bar Association convocation last week that the Government hoped to introduce new laws to replace archaic ones and that while Sri Lanka could be proud of having an old legal tradition in Asia, the country was behind others in the region when it came to enacting modern laws.

Speaking further, the lawyer-premier named some of the laws in the pipeline as being, a new counter terrorism law to replace the PTA (Prevention of Terrorism Act), a new anti-doping law – and a new Inland Revenue law, which he said, would be presented either in May or June. Of course, he also spoke of the perennial problem of law’s delays.

Much of what he said rings true. Sri Lanka must come to speed with the modern world and its legal system needs not only new laws, but efficient administration of justice. To the credit of this Government, the RTI (Right to Information) Act was passed last year after being on ice for 12 long years under the Kumaratunga and Rajapaksa Governments. There was no political will on their part to pass this law – for obvious reasons. From being the first in South Asia had the law been passed back in 2004 when it was ready, Sri Lanka became the last to pass it in 2016.

In drafting these new laws, the old practice had been to copy British laws. Later, Indian laws were also looked at. In the case of the RTI law, various Indian state laws were studied because India did not have a national law at the time. Sri Lanka’s new Company law drew from New Zealand and Canada and the proposed Financial City (Colombo Port City) law is taking a leaf from Dubai’s law. All these had inputs from Sri Lankan experts in the respective fields to make them eventually, ‘home grown’.

But, lo and behold, the proposed new Inland Revenue law is a copy – chapter and verse — of the International Monetary Fund’s (IMF) model law – for Ghana. Not to discredit a fellow Commonwealth member-state like Ghana by any means, but why must Sri Lanka just cut and paste a law virtually drafted by an international lending agency when, as the Prime Minister correctly said, this country is the proud repository of laws that have stood the test of time – and only need some fine-tuning with the assistance of local stakeholders.

The Government cannot surely be so desperate for the next IMF tranche of US$ 1.5 billion in May/June to jettison decades of judicial precedence and principles of complicated tax law and overthrow the basic structure of the imposition of, payment and recovery maintained for a new law that will only introduce confusion in tax collection for at least the next ten years.

True, the tax net must be widened and tax collection must be robust. The subject has been a major issue for successive Governments as only some 20 per cent of the state’s revenue comes from direct taxes (less than a million tax files –of individuals and companies together) forcing Governments to increase indirect taxes like VAT. Tax avoidance and tax evasion are common in every country as no individual wants to pay taxes, voluntarily. But equally, no Government can function without revenue. Corruption and political interference in revenue collection are also a major factor in the Government losing out. Such was the exasperation that back in 2002, the then UNP Government wanted to bring the Inland Revenue, Customs and Excise Departments under one supra Authority. Trade unions protested and later, the Government was sacked in 2004.

Revenue collection has been facing fresh hiccups in the past two years. The Finance Minister’s Budget proposals either got rejected by his own Government, or they fell down in the implementation. Just this week, the Inland Revenue Department wrote saying the S-VAT system – VAT refunds, will continue (despite a decision to review) because of delays in the necessary enabling legislation.

Many of the stakeholders have already critiqued the Government’s move to ‘copy-cat’ the IMF law for Ghana. The Chartered Accountants of Sri Lanka have written to the Finance Minister saying it will be better if the Government consolidated the existing Inland Revenue Act and its amendments and removed sections “which are repugnant and redraft the sections that require clarity and clarification”. They said the proposed Act would only complicate matters – which is contrary to what the Minister told the Cabinet last week which eventually approved legislation to be in line with IMF commitments and levying a Capital Gains Tax.

Professionals in the field point out a whole host of concerns ranging from the use of unfamiliar American terminology and ignoring the rights of genuine taxpayers (if a self-assessment return is not accepted there is too much powers given to the department), accountants held liable for false declarations by the declarant, complicated calculations of depreciation allowances, no concessions or exemptions for retirement benefits like EPF, ETF, a cascading effect on tax dividends by repeated taxation, and lack of transitional provisions to name but a few.

They point out that due to the brevity of the drafting, new loopholes will open rather than close existing ones, Inland Revenue officers will need to learn the new law and there could be two regimes – the new and the old causing confusion. They believe that the new law will be a retrograde step, not a progressive one in revenue collection because emphasis has been laid on less relevant sections of the Sri Lankan economy rather than the more important ones. They also feel the new law will fundamentally change the sources of income, method of calculating the taxable income, claiming deductions, assessment procedures and the administration provisions. They fear litigation will rise as confusion reigns thus making tax law more complicated, not more simplified as should be the case.

These are what the stakeholders say. Instead, they recommend streamlining the poor administration and collection effort and consistent, rationalised Government policy on continued tax incentives in a bid to increase the tax net apart from consolidating the Act of 2006 and its subsequent amendments.

Many countries are now moving towards a cashless society. This week, the PM launched a new digital banking facility with Indian collaboration. He spoke of the millions, especially in rural Asia and Africa who have entered the banking system through this platform where virtual credit cards and 24×7 business hours will revolutionise the monetary world. Businessmen who fund political parties with undeclared slush funds in return for political favours will be easy to detect.

If the Cabinet last week approved the virtual IMF draft which local stakeholders seem to condemn, is the Government going to seek to implement it whether one likes it or not? Or is the IMF now a bigger stakeholder in Sri Lanka than the local stakeholders?

Sunday Observer Editorial

Common regional energy grid

02 April 2017

Wherever else our delicate foreign relations balancing act tilts us towards, hard facts on the ground prevent us from tilting too far away from our immediate geographical location in the Indian Ocean and, very specifically, just off-shore from the South Asian Sub-continent. One such hard fact is energy shortage.

Last week, Sri Lanka decided to join its neighbours in the Bay of Bengal area in a new initiative to share energy resources. The Cabinet of Ministers has approved the signing of an agreement with BIMSTEC, a technical co-operation program among countries in the Bay of Bengal region that will enable the building of a regional energy grid for the pooling and equitable sharing of energy resources.

BIMSTEC stands for ‘Bay of Bengal Initiative for Multi Sectoral Technical and Economic Cooperation’ and its member states comprise those countries either with a Bay of Bengal seaboard or located in the Bay region, namely, Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka and Thailand. BIMSTEC was formed in 1997 in Bangkok, Thailand, to boost economic and technical cooperation among member states.

Even as many countries of the Bay of Bengal region are picking up economic momentum and lifting themselves out of poverty, that very economic growth brings with it the crucial challenge of energy scarcity, as well as, energy diversification.

Energy, today, presents us with a double-edged problem. On the one hand, our current model of development and modernization, globally, requires an impossible level of energy supply, as well as, the production of energy at a rate that is harmful to the natural environment – the bio-sphere. On the other hand, the available quantum of existing energy resources and natural reserves is dwindling rapidly requiring the search for and, invention of, new sources and forms of energy.

Global warming has been scientifically found to be principally caused by excessive emissions of carbon during the production and consumption of energy. And, global warming is now an immediate threat to the very survival of our bio-sphere and, consequently, the human race itself.

Hence, developing countries, on the one hand need to share knowledge in their search for sources of energy that are viable alternatives to fossil fuels and existing nuclear technology. At the same time, the race to consume existing energy is at such a pace that energy markets are unstable. This requires the need to rationalize current energy consumption levels.

The economics of the market has shown that the bigger the production or consumption unit, the better the economies of scale and the rational management of whatever is being produced or consumed. In the case of energy supplies and distribution, since physical connectivity or proximity is paramount, collaborations and integration within a geographical neighbourhood is the best way to go.

Thus, in the Bay region, we have both impoverished economies alongside middle-income ones, while very small economies share borders with some of the world’s largest. At the same time, some countries in the Bay region have natural fossil energy reserves, while others are completely dependent on fossil fuel imports.

The region as a whole, being home to some very dynamic economies and large pools of scientific intelligentsia, holds potential for research to develop new forms of energy, clean energy production and, most importantly, alternate strategies and technologies for development that will ensure lower and safer carbon footprints.

Our geographical proximity will enable Bay region countries to develop more efficient connectivity - in transport and shipping, in coordination and rationalizing of carbon emission footprints, and in actual integration of energy supplies, in a manner that will enable a more rational market in energy supply and demand.

A unified energy grid in the Bay region, in terms of a more balanced and predictable energy market, will also help in smoothening impacts on national economies caused by energy market turbulence.

In the 1970s, Sri Lanka, with a much smaller economy, could plan a Mahaweli Irrigation and Power program that envisaged a possible export of excess hydro-electric power to India. Today, our model of development has taken us to middle income status, but that very model has brought an energy scarcity that is near crisis level. We can no longer think of energy exports – at present, unless we find new indigenous sources of energy.

We are, once more, heavily dependent on carbon fuel imports while we have run through our hydro-electric generation resources. This means a continued massive fuel import bill on the one hand and, on the other, continued pollution and increasing heat emissions.

The sole way to meet current energy demand may seemingly be coal-fired generation, but the environmental implications are dangerous not just to our island but to the whole global environment.

It is only such close collaborative efforts among neighbours that will lift us out of this predicament.

Sunday Island Editorial

State Owned Enterprise

02 April 2017

 

Public Enterprises Development Minister Kabir Hashim last week disclosed some thought provoking numbers relating to State-owned Enterprises (SOEs) at a breakfast meeting of the Sri Lanka Malaysia Business Council which is linked to the Ceylon Chamber of Commerce. Most Lankans believe that SOEs are a huge drag on the national economy. That impression has been ballasted by frequent press reports on the losses amounting to many billions in entities like SriLankan Airlines which the government is trying to turnaround through a public-private partnership. There are also losses made by monoliths like the Ceylon Transport Board (CTB) and what is left of the Janatha Estate Development Board (JEDB) and the Sri Lanka State Plantations Corporation (SLSPC) which took control of hundred of thousands of acres of plantation lands following the land reforms of the early seventies. The minister in the course of his speech revealed among other things that the revenue of 10 SOEs is as high as half the total revenue of the 295 listed companies quoted on the Colombo Stock Exchange saying they have annual revenues totaling as much as Rs. 2.2 trillion.

But there is the flip side of the coin. Several SOEs are in deep distress and 42 of them had received Rs. 215 billion budgetary support in 2012 and 2013. In 2014 the figure was Rs. 123 billion and their losses in that year were Rs. 60 billion – enough to build sixty 300-bed hospitals or support a 100 schools, Hashim said offering an easy to digest comparison. Pondering over the numbers offered in the speech, it is not difficult to visualize the gigantic revenue generated by a few SOEs. For instance the National Savings Bank (NSB) in which the vast majority of families in this country have even a small account generates not only huge revenues but also contributes many billion rupees annually by way of dividends paid to Treasury coffers. In fact, we report in our business pages today that the NSB has earned the biggest profit of over Rs. 13 billion in its 45-year history in the last financial year. The state-owned Bank of Ceylon and the People’s Bank together account for well over half the country’s commercial banking business. Their profits are substantial and would be higher if they have not made bad loans to cronies at political behest. The once state-owned but later privatized Sri Lanka Insurance Corporation, now back under state ownership, grew into what it has become following the conferring upon it of an insurance monopoly.

Sri Lanka (then Ceylon) had a reasonably good public transport system in the pre-Independence and the early post-Independence years. But after the 1956 apey anduwa of Prime Minister S.W.R.D. Bandaranaike there was a decision to nationalize the bus transport system. The railway, of course, had always been a government monopoly from British times with the Ceylon Government Railway (CGR) was run very much like a large and efficient government department. Undoubtedly the bus mudalalis were UNP supporters and the new government took delight in hitting them hard. Companies like Sir. Cyril de Zoysa’s South Western Bus Company were well run and provided a good service to its customers along the southern coastal routes. There were other similarly efficient though less visible bus operators, most of whom ran tight ships; and government collected sizeable tax revenue from them. The nationalization was popular among bus company employees. The Bandaranaike government chose Mr. Vere de Mel, a former member of the Ceylon Civil Service who took early retirement and founded Quickshaws, the country’s first radio taxi company, as the first Chairman of the CTB which ran the bus monopoly. He and his team did a good job but things fell apart with the passing of years.

It must be said that the CTB did an immense service to people living in remote and inaccessible areas by providing them the public transport hitherto denied them as private bus owners naturally demurred from operating on unprofitable routes. The CTB worked on the premise that it was socially equitable that the profitable urban services subsidized the unprofitable rural routes. With the CTB, politicized and mismanaged, unable to cope with the demands of an ever-growing population, the J.R. Jayewardene government took away the monopoly and allowed private bus owners to the business. With the railway too becoming a shadow of its former self with the passage of time, public transport services in the country have degenerated disgracefully. The government has neither the financial muscle to invest in improving it nor the management capability to ensure service delivery to commuters and a return on the massive investment already made.

Minister Hashim in his speech announced that legislation to strengthen loss-making SOEs burdening the taxpayers was under preparation. He said that a proposed board under the new law would endeavor to depoliticize core public enterprises and staff them with professionals to help make them viable and enhance profits. This objective, unfortunately, is easier said than done. We already have a Fiscal Responsibility Act in the statute and what we see on a daily basis is anything but fiscal responsibility. Political opportunism has subordinated all else and SOEs are seen by all politicians as a means of providing jobs for the boys (and the girls) which is the most pressing demand they face from their electors. Chairmen many SOEs are picked not for efficiency but for their loyalty to their ministers. The boards are packed with stooges ever willing to do their master’s bidding while feathering their own nests.

Privatization is strongly resisted by both employees and politicians for their own reasons. Nobody would (or should) quarrel about profitable SOEs remaining in state hands under public ownership if they are run efficiently and generate a reasonable return on equity. The blind belief of some that private management is necessarily more efficient than that of the public sector is not necessarily true. As long time Finance Minister Ronnie de Mel used to often proclaim, the magic is in the management. If the state owns an enterprise and ensures that it is well managed and run efficiently, the public will have no quarrel. In fact, if the state seeks social objectives in addition to financial viability, state ownership against rapaciously profit seeking private ownership would be desirable.