Financial Times

Telecom Ministry slams SLT, privatisation
By Quintus Perera
Posts and Telecommunication minister D. M. Jayaratne last week slammed privatization and Sri Lanka Telecom and its Japanese partner, NTT, for failing to meet the needs of Sri Lankan subscribers, saying privatization of this institution had not benefited the public.

In a wide-ranging interview with The Sunday Times FT, the minister - who once handled agriculture - spoke on a range of issues including plans to get the help of other service providers to clear the backlog at SLT, and subsidies.

Excerpts:
You have made serious allegations on SLT performance? Do you have any specific charges against SLT?
Actually, some 700,000 people are asking for new telephones and the numbers are increasing day by day, mostly from rural areas. I have discussed with all the 10 telephone service providers (land and mobile) the prospect of installing land telephones. Land telephone providers cannot provide mobile telephones and mobile telephone providers cannot install land telephones (under current rules).

These providers irrespective of what segment they belong to have been requested to provide one million land telephones - with each providing 100,000 telephones. I had three rounds of discussions with these companies on the issue and they are willing to accede to the request. We are now trying to change the regulations enabling them to provide both land and mobile telephones and then we would issue licenses accordingly.

One of the conditions is that they have to supply the requirements of the rural areas first before providing new telephones in urban areas. All the companies will have to commit to a timeframe in delivery.

The government and the TRC (Telecommunication Regulatory Authority) have frequently postponed the Calling Party Pays (CPP) proposal. Would you announce a definite date to implement this plan?
This is under discussion.

All governments speak of spreading IT to rural Sri Lanka and especially to schools. How many schools are provided with telephone connections as telecommunications are a pre requisite to access the world through Internet and e-mail? Would you also reduce exorbitant tariffs so that rural Sri Lanka would be able to have access to telephones?
We are installing a Telecommunication City close in Colombo. Here anyone could use the facilities at very nominal rates. We can earn a lot of foreign exchange. This (Telecom city) facility is available in countries like India. I am also discussing how to reduce charges with telephone companies.

When telephone companies get the opportunity of supplying more telephones they would be able to reduce tariffs. The benefits the companies would receive should be passed on to the people. Then not only schools but everybody else also would enjoy low telephone tariffs. There are now 1.2 million telephones and 2.4 million mobile telephones in Sri Lanka. We are going to have a total of 2.2 million land telephones.

There is concern that privatization has become big business and that there are certain irregularities in these privatization deals leading to bribery and corruption. The government has been reluctant to divulge the contents of some agreements to the public. Why can't there be transparency in these issues?
Most officials think privatization benefits the people but with regard to SLT I do not think there is such a thing. From 1996, people have been asking for telephones and the number now stands at 700,000. Then how can they say privatization is efficient? There have been a number of petitions against SLT that they do not care for subscribers. Overall SLT subscriber care has been reported to be bad. The World Bank says privatization is better.

I do not know … it is only happening here, but if things happen this way people would get disgusted with privatization. There is an agreement with the Japanese company NTT and the government. But the problem is that NTT has more power in SLT even though it only owns 35.5 percent while 49.5 percent is controlled by the government. As it is a world-renowned company it should look at the issue of providing the telephones to the backlog of 700,000 telephones. We have power to give licence to other companies. I hope the Japanese people will also help at this juncture to solve this problem.

The inability to provide telephones is very bad for our economy and it is a shame for our country because we have such a famous Japanese company with us, as well as a good telecommunications infrastructure.

As a senior minister in the government what is your perception about proposed plans by the Finance Minister to do away with subsidies while the JVP a constituent party in the government wants to retain subsidies?
You cannot cut down all the subsidies because subsidies benefit local farmers and industrialists and could be in the form of loans (at low interest). When you give manure (fertilizer) to the farmers they produce more rice and then you save foreign exchange. It is the same with other crops like tea and rubber. When you offer subsidies then production increases and (some part) is exported thereby earning foreign exchange.

Through subsidies, you can produce more and export and not only save foreign exchange but save it by not importing any shortfall in food needs. You give subsidies for the benefit of the people and thereby the whole country benefits. Therefore I am for giving subsidies. Offering subsidies in a country like ours is a good thing.

The JVP wants the Finance Minister to introduce some form of exchange control regulations to retain export earnings as they believe exporters are holding back their earnings anticipating the rupee to further depreciate. This could push the country back to a 1970-1977 kind of period. Any comments?
We must encourage foreign investors to come to Sri Lanka and not scare them away as they are very important to our economy. When China was under Mao, he didn't permit the Ford Co. to set up a factory in China. Today things have dramatically changed. China now has got foreign investors from other countries.

Its economy is moving fast. It hasn't changed its political vision but changed its economic vision. Therefore countries like ours must safeguard the interests of foreign investors and private sector entrepreneurs. I think as the world is changing, we should also change our thinking, our economy and culture.

Back to Business