17th June 2001
Front Page
Editorial/Opinion| Plus| Sports|
Mirror Magazine
The Sunday Times on the Web

Launch of MR Vacuum Tap Changers in SL

MR Germany, the market leader in On-Load Tap Changers (OLTCs) for the voltage regulation of Power Transformers, launched its latest development on 17.5.2001 at the Trans Asia Hotel in Colombo.

MR has been supplying OLTCs to the Ceylon Electricity Board since the early 1960's with an excellent after-sales support.

The new MR W-type is an On-Load Tap Changer with Vacuum bottles as a switching medium. 

Besides other advantages the maintenance costs for the end users are sharply reduced, as during the average lifetime of a power transformer in network application only two inspections are required.

BELA International (Private) Limited was appointed as local agents for MR in Sri Lanka around five years ago. Since its appointment BELA has been a dynamic partner of MR in providing marketing, sales and after sales activities in Sri Lanka. Through BELA's efforts much needed technical training for CEB engineers were initiated to bridge the gap of the Tap Changer technology between MR and CEB. Now, BELA International (Private) Limited is geared to provide the complete range of support services for all MR products in Sri Lanka, a company spokesman said.

Developing Young Minds -NDB project 

Tissa Central College, Kalutara was the latest school to benefit from the National Development Bank's "Developing Young Minds" project of gifting state-of-the-art multimedia computers to schools. NDB began its programme three years ago, with a vision of giving more children an opportunity to experience the world of knowledge accessible through computers. In addition to computers placed in schools, the Bank launched a highly successful Internet learning centre "Planet Internet" at the Colombo Planetarium in 1999, which is visited by thousands of eager students from all over the island each year.

Tissa Central College, established over 60 years ago, has a student population of 3,200. A regional computer centre has been set up within the school premises, that offers classes for students who have completed their O/Level examinations. The new computer donated to the school by NDB will allow students to be introduced to computer-based learning at a younger age and to take advantage of the educational software provided. The computer was handed over to the Principal of Tissa Central by NDB's Kalutara Branch Manager, Mr. W. Kalansuriya.

Sophisticated items at street sales!

By Naomi Gunasekara
Anything is possible down those narrow, crowded streets of Pettah if you know what you are looking for and at what price. From thambili on hand carts to consumer goods, glitter and tinsel to second-hand computers, and electrical items of various types to clothes and furniture are available in the open markets of Pettah at prices one would marvel at.

A stroll down a narrow Pettah street amidst the hustle and bustle, passing decadent buildings of a by-gone era and men of varied countenance and conduct - betel-chewing, spitting, selling, squatting, standing, running, ordering, bargaining, watching, carrying goods and idling - with sarongs pulled up to their knees and mostly barefooted, will give you a feel of Pettah and its manifold operations.

Prince Street was full of optimism last Monday despite the gloominess that seemed to mar the prospects of an otherwise prosperous day. Nevertheless, street hawkers were busy with their usual modes of business – selling second-hand electrical items of varied descriptions and utility value. Water motors, computers, monitors, motherboards, irons, grinders, fax machines, video games. All were found in abundance in the open market at surprising prices. A computer monitor for Rs. 500, a motherboard for Rs 200 and a water motor for Rs. 150. 

According to hawker Mohammed Rizvi who has been selling electrical items for over twelve years, the business is a profitable one despite the fact that most of his customers are students. "People with a mechanical background come here. They know what they are looking for and even buy an entire (computer) monitor to remove a particular circuit or fuse," he said.

This is a business where the entire part kept for sale is sold as an item per se despite a circuit within it being of the only use to the customer. However, purchases that do not function can be exchanged or refunded, according to Rizvi. "I started off selling switches and other little electronic gadgets. Those things are found everywhere. People want motherboards and other computer parts today. Those who know mechanics collect these parts and make their own computers for about Rs. 20,000."

Rizvi says the items are stored at a warehouse down the same street. His day starts around 9.30 a.m and he brings the items to his sales spot with the help of nattammis. At the end of the day, when he takes the items back to the storehouse around 6.30 p.m., he is paid Rs. 300-400 by his mudalali or employer who provides Rizvi with the merchandise. Almost all the electrical items sold down Prince Street belong to one "mudalali" who engages 10-15 day workers for selling them at different spots down the street. Like Rizvi, all of them are paid Rs.300-400 and they have been in the trade for many years.

The "mudalali" however, declined to comment on whether the sale of second-hand electrical items was a profitable business and immediately ordered his workers to cover the items with polythene as it had started raining.

When the rain ceased, the crowds flocked around a hawker who started shouting with renewed vigour; "Sale lot, sale lot…aluth badu mahaththaya…" while unpacking a brand-new video game set. On the ground was an equally modern video game set. "Rs. 1,250!" the hawker shouted and people stood in disbelief. A passer-by was heard remarking despite the sound made of the flocking crowd; "Kadayak mankolla kaladha kohedha."

Although most of the electrical items sold down this street were second-hand, defective and brand-new electric items like grinders, mixers, irons and video games are also available at prices that are Rs. 3,000-4,000 less than other shops. "Most of the merchandise are purchased in bulk from companies at the end of the year while the others are purchased from individuals who want to discard their old electrical items.

We buy an entire lot at once and settle dues within three or four days of the purchase. Companies do agree on such payment schemes. We also pay the whole amount whenever we can afford to. In fact these motherboards were purchased for Rs. 10,000," explained Sham, another hawker who has been in the trade for 15 years, pointing at a bulk of motherboards.

However, down the streets of Pettah you find brand-new, flawless, colour TVs, washing-machines, rice cookers, mobile phones and other electrical household appliances without guarantees at prices that are Rs. 3,000-4,000 less than in shops. "People don't go for guarantees anymore. There are enough and more people who can fix little problems in most of today's electric goods. Besides, most of us cannot afford to buy brand new washing machines and colour TVs at the prices found in shops," said a customer who declined to be named.

"I bought a washing machine, which is usually sold at Rs. 22,000 for Rs. 17,500 in Pettah and I don't see anything wrong with it. With all our other daily expenses it is difficult to purchase expensive household appliances with guarantees. Besides, why go for expensive things when you can find identical items at lesser prices?" he queried. 

Cheap second-hand goods from the west

By Diana Mathews
Computers for a song, furniture at unbelievable prices! Where is all this stuff coming from?

In recent times, many price-conscious consumers are heading for the streets of Pettah, fast becoming famous for its availability of various products at low rates in what is known as the 'Grey market'.

Traders in Pettah say a range of used consumers goods like televisions, cellular phones, computer parts, bicycles or even used furniture are being imported from countries such as Thailand, Malaysia, Switzerland, Italy, Korea or Indonesia in containers. "Any item ... you name it and we got it," noted one trader.

They say most of this stuff is dumped or set aside in these countries in auctions on Tuesdays and Fridays, usually referred to "garage days" for disposing items.

A few Sri Lankans residing in these countries go on a purchasing binge for large second hand items, such as sofas and wardrobes at auctions. They visit these auctions, collect the used items sold at rock bottom prices - as they are discarded by consumers in what is widely regarded as a throwaway society - and ship them to Colombo. These items once in the market are cheaper than the new ones in posh shops, giving the consumer a choice and also the trader a huge profit!

For the typical Sri Lankan customer, who is ultra price-conscious and not ambience phobic, shopping is perceived as a means to an end. He or she would rather buy cheap used items from the roadside than expensive goods in air-conditioned well-lit malls.

Consumers say while only used cars from Japanese backyards were imported to Sri Lanka decades ago, now anything and everything comes into the 'Grey market'.

Economists say the new trend in marketing second-hand goods from abroad is a form of dumping which could have serious repercussions on the Sri Lankan economy while consumers argue that access to such goods helps middle and lower income groups who are unable to afford high-priced luxury goods.

DFCC Bank receives ADFIAP award

The 24th Annual conference of the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP) was held in Tokyo, Japan recently under the auspices of the Development Bank of Japan. ADFIAP is a regional association of development banks and other financial institutions, comprising 70 members and representing 33 countries, engaged in the financing of development. Its mission is to foster closer relationship among members through the provision of services, enabling member-institutions to improve and upgrade their activities to help sustain development of their respective countries.

DFCC Bank was among those pioneering development finance institutions which was awarded a 20th century achievement at this 2001 annual conference. DFCC Bank is the only Development Financing Institute in Sri Lanka to be honoured with this award. The Bank was also recognised for its distinguished service to the cause of development financing in furtherance of its role of promoting national economic development. Moreover, the DFCC Bank's meaningful participation and significant contribution to ADFIA; since its foundation in October 1976, towards the success of development financing in the region too was recognised.

'The Voice of Spices'

The Spice and Allied Products Producers' and Traders' Association (SAPPTA) conducted a 2-day residential workshop 'The Voice of Spices' at Le Kandyan Resort recently.The objective of the seminar was to encourage large-scale cultivation of spices by potential growers. The programme was structured in a manner to enhance the knowledge sharing and to build up a network for better implementation. The DFCC Bank, which is currently in the forefront of providing financial assistance to the plantation and commercial agriculture sector in Sri Lanka, was the principal sponsor of the event.

The Chairman of SAPPTA in his welcome address called on all the stakeholders in the spice sector to join hands and move towards the common goal of making Sri Lanka a major spice producer. He emphasised the need for more commercially oriented research in spice cultivation, processing and value addition. The Chairman promoted the need for availability of better and more planting materials for commercial cultivation. The chief guest for the event was Mr. E.M. Wijenayake, Chairman DFCC Bank. He deliberated on Spice Trade being one of the oldest trades in Sri Lanka and he said that the country must regain the prominent position it held in this sector in the world.

Abans provides nothing but the best

Abans have stepped up their campaign to support the Government in its efforts to prevent Sri Lanka from becoming a dumping ground for cheap, low quality household and electronic appliances. The random imports of such appliances by unscrupulous traders is flooding the market and innocent consumers are being duped into purchasing cheap appliances, without a guarantee or after sales service.

Abans import only the best international brands of home appliances, complying to the highest international quality standards which are again individually quality tested and checked before it is offered for sale. At Abans you will find only genuine, globally acknowledged, quality brands such as LG, Mitsubishi, Electrolux, Hoover, JVC, Haier, Frigidaire, Japan, Premier, Elba, Toyostar, Pyrex, Corning, Visions, Corelle, Carmen, Morphy Richards, Pifco, Russell Hobbs and much more.

Abans endeavour to provide Sri Lankans with nothing but the best. Home appliances that help to save time and energy and make housekeeping easier with more time for leisure and relaxation at home.

In support of the Government's Rural Development projects, Abans have opened showrooms and service centres in towns and cities island wide to bring affordable and lasting quality household and electronic appliances within the reach of every housewife.

Extended Fathers' Day for Nations Trust 'KIDZ'

KIDZ account holders at Nations Trust who say that "my father cares too....." can expect many surprises during an extended Fathers' Day treat taking place at Nations Trust Bank. All kids are being invited by the Bank to go on air and express their fondness, love and appreciation to their fathers will receive 'cash prizes' of Rs. 1,000-each that will be credited to their KIDZ accounts with the bank. And that's not all, every participating kid will receive a gift, which can be presented to their loving father on Fathers' day.

Kids can also grab their friends and take them along to any of the Nations Trust Bank Branches located at Colpetty, Sri Sangarajah Mawatha, Fort Kandy or In-Store Units located at Keells Super outlets at Liberty Plaza, Mt. Lavinia, Wattala or Park & Shop outlets at Kohuwela and Nugegoda. They are bound to step into a candy treat and will be luacky to meet a surprise guest who will be giving away 'yummy stuff' at the super markets over the weekends. The KIDZ who introduce their friends will also get gifts for themselves and their fathers to show their appreciation for all that Dad does.

Premier Pacific International opens inaugural venture

Premier Pacific International (Pvt) Ltd., a BOI-approved 100% foreign direct investment company declared open the company's inaugural venture in Sri Lanka - a luxury apartment complex sited in Sri Lanka's most prestigious residential area, Colombo 7.

Styled Premier Pacific 2001, the Rs. 350 million luxury apartment complex is an eight-storied building consisting of 38 apartments and two penthouses as well as a roof-top garden and Club House.

Premier Pacific 2001 was opened by Investor and Director of the company, Nishan Perera, in the presence of the company's Chairman, Nimal Perera, other company Directors and company staff. Future residents of the Apartment Complex as well as representatives from the Architects and Consultants - Tanya & Suren Wickremasinghe Architects (TSWA), the Main Contractor - Tudawe Brothers Ltd., (TBL), the Structural Engineers - STRAD Consultants, and officials from the banking sector also attended the ceremony.

Addressing the gathering, the company's Chairman said that Premier Pacific could be clearly identified as a pace-setter for modern home living with a combination of focusing on customer needs and the uncompromising high standard of product offered. "Premier Pacific 2001 is an important milestone not just as the company's inaugural venture, but also as the most luxurious apartment complex in the heart of Colombo".

Shipping & Aviation

  • CSAV change hands
  • South Korea plans policy changes
  • CSAV change hands

    CSAV, Compania Sudamericana de Vapores (South American Steamship Company), is a Chilean publicly traded shipping company, presently the largest in Latin America.

    CSAV, one of the oldest shipping companies in the world, was founded in 1872. At the beginning, the company's activities consisted exclusively of a coasting service, but was soon extended along the West coast of South America up to the Panama Canal, before its opening regular traffic.

    CSAV, then extended the sphere of its activities to the United States and later to Europe, the Far East and Japan, South East Asia/Pacific Islands and east coast of South America. Nowadays it features a comprehensive service for general cargo, bulk cargo, fresh and frozen products and vehicles, using both owned and chartered vessels, and thus establishing a permanent link between the Atlantic and Pacific coast of South America, and the rest of the world.

    Increasing trade between different regions of the world has become essential for the present and future development of all countries and other economics welfare; accordingly, CSAV has seized the opportunities generated by international maritime trade, readily adapting its services to the customer's requirements and establishing new routes and services, thus conveniently and efficiently linking Latin America with the most vital ports of the world.

    CSAV, operating across the five continents, offers its so-called "line" or regular services, by means of which it provides permanent sailings from certain ports, fixed itineraries and suitable vessels able to convey a large number of containers and a wide variety of conventional cargoes. Likewise, the shipping company owns vessels specially designed for frozen cargo, cars, bulk cargo and forest products. An intermodal service, which combines different means of carriage, has also been established by the company, besides other complementary operations such as storage areas and pier services, etc. 

    This "door to door" service, to any destination, is normally carried out jointly with CSAV's subsidiaries: Sudamericana Agencias Aereasy Maritimas S.A. SAAM, (South American Air and Shipping Agency), as a maritime forwarding agency, and COSAN, a container terminal in Santiago.

    The company's philosophy is mainly directed to the attainment of a top quality service for its customers, providing timely and efficient measures to assist them in improving their foreign trade operations, offering all its shipping facilities, technology and services, and ensuring the reliable transportation of their products to and from all the main areas of the world.

    CSAV was in Sri Lanka over a decade. Newly appointed agent is NORLANKA SHIPPING (PVT) LTD., who are ISO 9002 certified in the shipping industry.

    South Korea plans policy changes

    SOUTH Korea has announced medium-and long-term development plans for the shipping industry. The Ministry of Maritime Affairs and Fisheries is seeking to introduce a shipping fund, make changes to the accounting rules and set up a marine arbitration board.

    Senior officials from Hyundai Merchant Marine and Hanjin Shipping told that a revision of the accounting rules is very urgent. They said ship finance loans are currently considered as foreign debt.

    When the won loses value against the dollar, the debt from ship financing loans increases sharply. But foreign exchange losses are book value losses, they argue, rather than actual losses.

    The government is considering a number of ways to solve this problem including debt ratio deregulation. From May 21, shipping companies with debt under 1.5 times the average debt ratio can apply for listing. The aim is to help companies to raise additional funds.

    Implications of the IMF Standby

    How does Sri Lanka hope to stabilise the economy and improve its reserves so as to be financially viable at the end of 14 months of the SBA?
    By A. S. Jayawardena, Governor of the Central Bank
    The Standby Arrangement (SBA) which Sri Lanka entered into with the International Monetary Fund (IMF) on 20 April has become a subject of debate; and parliament is expected to have its own debate from 19 – 20 June. Already, Prof G L Peiris, Deputy Minister of Finance has made a statement on the subject to parliament on 6 June which has appeared in all newspapers. At the same time, all the documents relating to the Standby have been tabled in parliament and released to the general public. This is the first occasion when a government in Sri Lanka has done so, all previous Standby documents having been withheld even from the cabinet of ministers. As there has been a lot of misreporting of such arrangements in the past, it was a courageous decision of the President to make these documents available to the public so that they will not be misled by rumour and gossip.

    This is not the first time that Sri Lanka has entered into borrowing arrangements with the IMF. There were arrangements in the 60s and the 70s, and most recently in September 1983, March 1988 and September 1991, the last two being longer term structural adjustment facilities. Sri Lanka has also utilised in the past the IMF's facility for compensation of sudden trade income shortfalls when either export income declined because of adverse export prices or import expenses increased because of adverse import prices.

    It is important to understand the nature of the IMF and the World Bank, the two institutions established after the Second World War to help countries facing economic adversity. The capital of these two institutions are contributed by the member countries who own quotas in the IMF and shares in the World Bank. There are over 180 countries who are members. The IMF was expected to help countries facing external payment difficulties and the World Bank was expected to help countries restructure and promote development and ameliorate poverty. The IMF keeps in close consultation with all members and expects countries with imminent payment difficulties to come to them early for assistance rather than late, when the exchange rate and the reserves have taken a beating.

    As on previous occasions, the government decided to use the standby facilities of the IMF at this time because of the decline in external reserves arising from the sharp increase in payments for oil imports and unexpected increases in budget expenditure. By strengthening the country's reserves, it is possible to prevent undue downward pressure on the rupee. It is precisely to meet such contingencies of temporary balance of payments difficulties that the Standby Arrangements of the IMF are used. Hence, the recent SBA can be described as a well-timed effort to stabilise the economy.

    No agreements signed
    It should be noted that no agreements as such are signed between the government and the IMF in a SBA. The government engages in a consultation process with the IMF and makes a statement of its future economic policies, which is referred to as the Letter of Intent (LOI). If these policies are deemed to be sound and practicable, the IMF Board approves financial support. Typically, a Standby is a short-term facility and is repayable over 3 to 5 years with the interest currently at 4.38 per cent. In this instance, the SBA amounts to US$ 253 million. The programme is front-loaded in the sense that US$ 131 million is provided immediately; they have increased the reserves from April 25. The rest is available in four tranches of about US$ 30 million at the end of August and November, 2001 and February and May, 2002.

    A SBA generally signifies the Fund's endorsement of the country's economic policies. The front-loading reflects even stronger support. Generally speaking, such arrangements generate worldwide support for the country. In this instance, the World Bank, the ADB and other donor countries have pledged about US$ 270 million as additional support. Moreover, international private investors generally tend to lend to and invest in countries whose policies have the stamp of approval of the IMF. The IMF's stamp of approval at this time is crucially important to Sri Lanka for two reasons; firstly, the negative effect of the country with the international community because of the internal conflict; secondly, the expected slowdown in the world economy during 2001. Many nations around the world are getting ready to face a slowdown in the coming year and it is always useful to have the support of the international community for Sri Lanka in these circumstances.

    Very often the discussions on IMF arrangements get derailed by adverse comments relating to IMF conditionality. In this regard we rarely realise that nothing can be got in this world without some form of conditionality. A child gets pocket money from a parent on a condition of good behaviour. We get a degree from a university only if we study and pass examinations. From no money lender or a bank can we get a loan without conditions which facilitate repayment. When the IMF grants facilities it must be satisfied that the borrowing country has the capacity to duly repay the money. Thus, a country facing a decline in external reserves will have to enunciate its policies which will help increase future reserves which will enable the repayment. It is precisely this that the LOI does, by enumerating government's policy of the future, which will enable it to tide over the current difficulties and to repay the money in 3 to 5 years.

    How does Sri Lanka hope to stabilise the economy and improve its reserves so as to be financially viable at the end of 14 months of the SBA? The fundamental policy underlying the arrangement is a commitment to reduce the huge budget deficit of Sri Lanka from nearly 10 per cent last year to 8.5 percent this year and progressively in the future. We need increased revenues or reduced expenditure to reduce a budget deficit. All the revenue increasing measures in the LOI, such as the temporary increase of 40 percent of import dues, raising the national security levy by 1 percentage point and the 20 percent surcharge on corporate income tax, have already been announced in the Budget 2001.

    If there is a revenue shortfall, government has already indicated that it would take corrective measures such as raising the price of cigarettes. Due to limitations in raising revenue, greater emphasis is placed on expenditure reduction measures. As the budget proposals had announced, security-related expenditure will be contained at Rs. 63 billion, a saving of about Rs. 8 billion, current expenditure excluding wages will be reduced by 10 percent and public sector employment and wages will be frozen at current levels this year. The President has appointed a commission to review government salaries and has requested public servants, who received a wage increase nine months ago, to wait until next year because of budget constraints. These policy measures are already in place. There is also a reduction of expenditure on Samurdhi which would be achieved by the ongoing programme of removing high income undeserving persons receiving benefits, which could enable some increase in benefits to the deserving poor.

    An issue that was left unresolved was the question of the GST. The IMF felt that in view of the difficulty of maintaining a security-related levy (NSL) as a permanent source of revenue, GST may have to take over. The government felt that the GST is yet to become established and an increase now might encourage avoidance. 

    The most important commitment is to progressively eliminate transfers and subsidies to public enterprises. In simple language, the Petroleum Corporation, the Electricity Board and the CWE will have to cease depending on running their institutions at a loss by running up debts with banks. This does not necessarily mean an increase in their prices, which can be avoided if they can bring down their costs. There is nothing we can do if world prices go up, because any subsidy to prevent world prices being reflected in local prices or for that matter, any other subsidy, means that instead of asking the users of the products to pay for the use, the non-users are compelled to pay for the loss incurred through taxing.

    There is no justification why the non-consumers of petroleum, electricity or bread should be called upon to pay losses through taxation so that the consumers will get the product at a cheaper price. These price distortions heap untold burdens on unidentifiable groups all over the country. They are now universally regarded as inefficient, inequitable, counter-productive and harmful to a country's development. In the ultimate analysis, none of us can have a free meal, because someone has to pay for it ultimately. Hence, it is important for good economic policy to make the consumers pay for what they get, at least the cost of production. This policy may cause some hardships to people who have got habituated to receiving subsidies at other tax payers' expense, but they should realise that this is unfair by the majority of the people and that the only viable solution to the cost of living problem is to raise the income of the people. Also, the government has committed itself that if it is compelled to raise prices because world prices have moved up, it will automatically bring them down when the world prices go down. This is necessary for economic discipline in the country.

    The government has also made a commitment to reduce public sector borrowings and wherever possible to use privatisation proceeds to reduce domestic debt. That would also mean that public enterprises will have to pay back their debts to the banks, a healthy development, because some enterprises have behaved as if they could borrow to the hilt and not repay their loans to the banking system, which have been made out of people's deposits. Also, it has been a sensible practice of the government to use privatisation proceeds of enterprises which have been set up in the past by public borrowing, to reduce the past public debt rather than use it for current expenditure. These are very healthy developments.

    Exchange rate
    On the exchange rate, the IMF has endorsed the Central Bank's decision to independently float the rupee (Central Bank not intervening daily in the morning) since 23 January. (Incidentally the rupee was floated in 1978). The IMF had been advocating and supporting the previous policy of widening the intervention band since June 2000 and probably preferred a continuous widening in the future. But the Central Bank found that this policy would only have aggravated the situation because the local market tended to take the Central Bank's selling rate as an indication of the future direction of the rupee. Hence, the Central Bank took the view that the market must take full responsibility for its bids and offers, which would yield profits to those who dealt prudently and losses to those who gambled. The only concern it had was that, as in Indonesia or Thailand or Korea, the rupee could have gone into a free fall, which would have had very adverse effects on the cost of living. There was evidence, however, that this would not happen unless the market behaved perversely, because, unlike Indonesia, Thailand etc., Sri Lanka has not maintained an artificially overvalued currency linked to the US$ in the past. Hence, here should not be any pressure in the market to push the rupee down as in other countries. As expected, the rupee went down marginally and now has stabilised at a level which in the view of many observers is now at a fairly realistic and stable level.

    The Fund also expects the future monetary policy framework to be developed which will explicitly target a desired rate of inflation, moving away from the current structure of targeting supply of money. Inflation targeting is gaining ground in all central banks in the world and our Central Bank is also moving in this direction. It is expected that monetary policy could be better targeted to achieve the primary objective of a Central Bank, of maintaining a low level of price changes.

    Contained in the SBA are also reforms of the two state banks. There are no proposals for privatisation of these two banks. In fact mere privatisation of these two banks will serve no purpose. But the government states in the LOI that it will restructure these banks as dynamic and competitive institutions, a process we started last year. A similar process has been started in the Central Bank.

    With regard to the labour market, the government has committed itself to expedite labour tribunal cases where delays have caused very high costs to businesses. When labour costs rise in this instance, businesses become reluctant to employ new labour. That is not good for a country which has about 8 percent of its people unemployed. All labour laws which protect existing labour only, without considering the right of all people to employment, are increasingly becoming anachronistic. There are also government commitments to gradually move to a social safety net to protect labour in transition. These are not new to government policy.

    These are some of the major aspects of the SBA. It will thus be quite evident that there is nothing new in this SBA than the policies that have been repeatedly spelt out by the government in various policy statements and budget speeches. In other words there are no surprises hidden from the public. Some price increases would be inevitable but it is important to bear in mind that the cost of living of the people can be helped or improved mainly by taking measures to increase their income, rather than artificially through price subsidies.

    Time and time again, the wisdom of this policy has been proven in Sri Lanka as well as in many other countries. Many countries have learnt this lesson very early and have taken strong steps to stabilise their economies, after which they have emerged as fast developing countries. The choice before Sri Lanka is whether to adopt sensible policies that will help increase the people's income in the future or go back to stagnate in an abyss of price distortions and economic mismanagement.

    What the SBA with the endorsement by the IMF/World Bank and the other donors shows is that Sri Lanka has the support of the international community to undertake strong policies which will promote development and reduce poverty. However, much delayed price adjustments of petroleum and other products may cause short-term difficulties to some people, which will have to be borne so that future incomes can be raised. These are realities which we have to face. We cannot run away from problems.

    Then there is the senseless rhetoric that by borrowing, we are mortgaging our country and its future. We don't sell ourselves when we borrow to build a house. This is sheer archaic logic. As long as we increase our income by borrowing after paying back interest and capital, it is beneficial. Sri Lanka has been a prudent borrower and an external debt service of Rs. 13 in Rs. 100 of foreign earnings per year indicates that. It shows that we have raised our loans on very concessional terms. 

    Increasingly, the international community is getting tired of countries whose people do not live in peace and whose people cannot manage their economies prudently. These countries get marginalised by the world community. By not doing the right thing now, we run the risk of getting marginalised in a rapidly growing community of nations.

    Index Page
    Front Page
    Mirrror Magazine

    Return to Business Contents


    Business Archives

    Front Page| News/Comment| Editorial/Opinion| Plus| Business| Sports| Mirror Magazine

    Please send your comments and suggestions on this web site to 

    The Sunday Times or to Information Laboratories (Pvt.) Ltd.

    Presented on the World Wide Web by Infomation Laboratories (Pvt.) Ltd.
    Hosted By LAcNet