The Political Column

8th November 1998

Fowzie derailsrail fare hike

By our Political Correspondent

Minister G. L. Peiris has put a lid on speculation about a snap Presidential Election when he presented a budget of "reform" with few if any election hand-outs to the common man.

The only direct benefit to the common or middle class people was the reduction of tax on the Employees Provident Fund which means that those getting less than Rs. 500,000 won't be taxed.

The government has also taken away a major benefit enjoyed by migrant workers. Duty-free concessions given to them to buy household appliances have been severely restricted.

Dr. Peiris said this was being done to protect local manufacturers severely hit by duty free equipment "leaking" into the market and to stop exploitation by the "middle man" but the government is likely to lose some support from most migrant workers and their families.

Two ministers had opposed this move when the Cabinet took up the main budget proposals before they were presented in Parliament.

The President said she had taken this decision to withdraw the duty-free benefits to migrant workers after a careful study.

"This is an unfair decision, we tried to do this on a previous occasion too," Minister Jeyaraj Fernandopulle said.

But the President replied, "I know that some people are trying to oppose this move. I have learnt about duty-free Mafias operating under the protection of politicians."

At this stage Minister Mahinda Rajapakse said that the President was making an unfair allegation.

"This is a human problem," Mr. Rajapakse said. "Everybody returning after a stint abroad would like to buy something like a refrigerator or a fan duty-free at the Airport."

"Since the government had embarked on rural electrification, a refrigerator in the home is quite common in villages these days," he said. But the President retorted there are more important problems for them to face than having refrigerators at home.

Mr. Rajapakse was equally adamant. "If this concession is withdrawn, people will curse the government. Having a refrigerator is a modern day requirement rather than a luxury," he said.

"I have taken a decision on the matter and it stands," the President emphasised. The matter ended there.

But Mr. Rajapakse put in a last word saying, "it looks as if there wouldn't be elections for the next two years." The President responded "We can't have budgets and elections together." When it is budget time we will have a budget and when it is election time we will have elections."

This was not the first time the "duty-free" matter has raised a controversy.

When a similar proposal was brought before the Cabinet some time ago by Minister Kingsley Wickremaratne, it was Minister S.B. Dissanayake who opposed it vehemently saying that anybody would like to purchase durable electrical appliances from the duty -free shops rather than going in for low quality local products.

In the ensuing argument it was pointed out that many people opt to buy foreign products believing them to be of superior quality and if the local producers could also achieve such standards the duty -free concessions granted to the migrant workers would not be an impediment to the local manufacturers.

Local manufacturers however re-iterate that much of their products were as good as any international make, but they could not compete for local customs against the free availability of the imported product, sans duty.

Until now those returning from abroad got a duty-free allowance of US $ 1,100 (Rs. 67,000), with which they were able to buy a number of items, including TV sets, washing machines and refrigerators. Now a returning worker will get a grant of Rs. 5,000 from the Foreign Employment Bureau, far less than $100. There is nothing worth buying after working so much, families of migrant workers complain.

Fuel and wheat flour prices have come down substantially in the world market, but the government provided no relief in those areas to ordinary people.

The excuse was that when oil prices went up in 1997, the Ceylon Petroleum Corporation had suffered a loss of nearly Rs. 4000 million and that loss had to be made good.

But political wags were asking whether CPC was unable to pass on the benefits of a world oil price drop because it was pumping out money for party politics and politicians.

For the pre-budget Cabinet meeting the President arrived with a broad smile, while an aide carried a briefcase containing the budget proposals. At the outset, she asked whether Minister Nandimithra Ekanayake was present, saying she had an urgent matter to be taken up with him.

She told him she had information that his ministry had given contracts to clear certain jungle areas which would result in the felling of a large number of trees. She was informed the Timber Corporation had already called for tenders. "Stop this immediately," the President ordered the minister.

It was also noted that the Timber Corporation had not started re-forestation programmes though it was trying to cut down trees in some areas.

At this stage Minister Anuruddha Ratwatte referred to a project in Moneragala saying it could turn out to be a threat to the environment.

The President said all such projects will be halted. She insisted that any project that affected the country's forest cover must be referred to the Cabinet for a full study before a decision is taken.

The President then opened the briefcase and began discussing the budget proposals. When it came to Transport, the President said she was compelled to increase train fares by 25 percent to improve service and give a better deal to commuters.

As usual, Minister A.H.M. Fowzie rose to his feet and spoke out."I am totally against it. I am a frequent visitor to railway stations and other public places. I won't be able to face the people if you increase the train fares. If you do this the private bus operators will follow suit," he warned.

"I will have to face the music. I'll be the target while others here go home and relax," he added.

Then came a veiled threat. Mr. Fowzie said if the Cabinet did not withdraw the proposal, it would be difficult for him to continue as the Minister of Transport.

He said his objective was service to the people and if he was unable to do that, he would step down from the post and go back to the people.

Ministers Jeyaraj Fernandopulle and Mahinda Rajapakse supported Mr. Fowzie. They said the proposed rail fare hike would produce only the wrath of the people against the government.

Eventually, the President agreed to withdraw the proposal. It was a triumph for Mr. Fowzie.

But the President did not let go unconditionally. She warned Mr. Fowzie that she would keep a close eye on the country's railway service.

When the budget proposals were presented in Parliament, Mr. Peiris said the government does not intend to proceed with the proposal to increase the railway fares by 25 percent. The proposal read thus,

"The cost of running of the Department of Railways has increased rapidly from Rs. 1,675 million in 1994 to estimated Rs 2,340 million in 1999. As against this trend, the estimated revenue of the Department has increased from Rs.916 million to Rs.1,300 million leaving the operational loss to increase from Rs.779 million to Rs. 1,040 million. I therefore propose to increase the railway fares by 25 percent with effect from December, 1998. This will generate additional revenue of Rs. 300 million in 1999."

But expressing his intention to withdraw the original proposal the Minister said that although the government proposed an upward revision it has now decided not to proceed with the matter considering its impact on the weaker section of the society.

When Dr. Peiris announced the withdrawal, Mr. Fowzie was seen smiling from ear to ear and applauding while the Opposition hurled various remarks.

Another contentious proposal was the one to invest the Employees Provident Fund in the private sector.

At the Cabinet meeting Labour Minister John Seneviratne remained silent but former Labour Minister Mahinda Rajapakse spoke out against it .

He said trade unions needed to be consulted and he saw no need for a change in handling EPF money. The President said the decision was taken in consultation with the Labour Minister.

But Mr. Rajapakse insisted on a review. The President however was not ready to withdraw it. She said it would be announced in Parliament as it is but they would include a qualifying clause once a decision was taken to implement it.

During the budget speech Dr. Peiris referring to the EPF and ETF funds said:

"I also encouraged long term funds such as EPF, ETF, Insurance and NSB to provide equity capital to companies which are already listed or seeking listing.

"Accordingly EPF has invested Rs 232 million during the year while ETF has invested Rs 2671 million.

Without continued efforts to reduce the budget deficit, I expect that these institutions will increase their investments in quoted companies during 1999 by considerable margins. In terms of last year's budget proposals the government also contributed to the establishment of a settlement guarantee fund and compensation fund this year to provide investor confidence in stock trading to facilitate market participation."

Soon after Dr. Peiris concluded his budget speech the UNP Parliamentary group assembled in a committee room for a brief discussion on the budget.

When they were rushing in, the young MP from Batticaloa Ali Zahir Moulana was seen talking to Deputy Minister Vishva Warnapala.

The deputy minister was heard asking the MP why they were gathering in the committee room.

"To discuss the budget," the MP said. Dr Warnapala replied,"What is there to discuss in the budget? As for me there is nothing in it."

When the UNP group met party leader Ranil Wickremesinghe his initial understanding was that the budget lacked concrete proposals to address the burning issues of the day.

"They seem to be far away from the world of reality, they are speaking of opening farms now, when it is an integral part of our rural life," he said.

All this would be exposed at the budget debate, he added.

Former Minister A.C.S Hameed will open the budget debate for the UNP.

Former Finance Minister Ronnie de Mel, who presented 12 budgets in a row said he was shocked that no relief was given to a heavily over-burdened people.

Though Mr de Mel arrived late for the UNP group meeting, UNP MPs gave him a round of applause.

Mr. de Mel wearing a broad smile told the MPs to wait for another year, hinting that no-relief budgets such as these would bring the UNP back to office soon.

After deciding on the speakers, the UNP leader briefed the MPs on his discussions with business leaders regarding all-party talks on the ethnic conflict.

He said the UNP was putting forward the Liam Fox agreement as a basis to the bi-partisan approach and acknowledged that it was Mr. Hameed who has presented the case to the business leaders.

Mr. Wickremesinghe said his understanding was that the business leaders would act as a corridor to the bi-partisan approach between the government and the opposition.

Meanwhile the alliance formed by the business leaders to find a political solution to the ethnic strife appears to have run into few problems.

It is likely that Armeyn Wirasinghe, who played a lead role in initiating an action program to bring the two major parties together, would quit the negotiating group. His letter of resignation is likely to reach co-ordinator Lalith Kotelawala by tomorrow.

A well-known businessman who heads the Colombo International School and several other business concerns, Mr. Wirasinghe is also likely to step down as the Chairman of the National Chamber of Commerce, paving the way for Mano Selvanathan of Carsons to take over.

The dissension arose at a meeting last week, presided by Ceylinco boss Lalith Kotelawala.

At this meeting it was suggested that the UNP too should nominate three members to the co-ordinating committee since the government has already done so.

But Mr. Wirasinghe expressed a different point of view when he said that it would not be proper to ask the UNP to nominate three members when the party was still awaiting a response to its suggestion on the implementation of the Liam Fox agreement.

Mr. Kotelawala has played a prominent role during the past few weeks to get the two major parties together to resolve the national crisis.

It is learnt that at one stage of the meeting it was suggested that the business leaders proceed without the UNP since the opposition party refused to participate in their All Party Conference at the BMICH on October 22.

However, since the main objective of their initiative was to get the two major parties together it was later decided to meet UNP leaders separately.

Mr. Kotelawala's role is now being questioned in some UNP circles who are asking why he proposed that K.N Choksy be the UNP nominee.

However Mr. Kotelawala, who has a UNP background with close connections to the famous Sir John has indicated to others that he is quite confident of a good hearing from the UNP.

Since both Ken Balendra and Patrick Amarasinghe are out of the country, the business leaders are yet to take a decision as to what their next step should be.

The Presidency

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