Sugath Kulatunga

The President Wickremesinghe must be thanked and congratulated for sharing his vision and plan to restore the failed State and economy of Sri Lanka with the people. His participatory approach to development has to be commended.

His comprehensive statement of June 1 on sounds very inclusive but excludes the Parliament and specially the National Council which only a few weeks back he sponsored enthusiastically to undertake development planning. Another observation is that the four pillars on which his road map rests is in essence cover the five pillars indicated in the IMF proposals. While in the IMF proposals, under their first pillar of revenue based fiscal consolidation mentions only cost recovery-based energy pricing, President’s statement incudes a 4th Pillar, which is the – State Owned Enterprises Transformation. He also makes his second pillar as the Investment Drive.

The The President appears to be very sensitive on the accusation against him that he is selling the country. In fact the media has given him an epithet as Wikunumsinghe. He has tried to vindicate himself vigorously by rhetoric. It must be noted that selling the country includes selling national assets, endangering security and compromising the sovereignty and territorial integrity of the country. His opponents would point out that his past record on them is not without blemish.

The The President harps on the provision of relief to the needy and vulnerable segments of the society. This country has always followed pro poor policies. IMF has adopted it to shield themselves from the criticism that IMF discriminates against the poor. It is a new IMF approach which the President also has gladly accepted. The President grieves that all citizens have suffered with the economic crisis and its aftermath. It must be conceded that it has also been an opportunity for traders and racketeers to fleece the citizens with impunity.

With the revenue to GDP ratio of only 8.3 percent in 2021 and expenditure was 19.9 percent SL had to agree with the IMF drastic measures to take steps to bring about a balance between and expenditure and revenue. As the President points out, the county has to accept higher taxes to make this possible. If the present opportunity is missed there would be more deprivation and social and political unrest in the future.

When  the President declares that” In order to foster a conducive environment for investment, we also need to reform Sri Lanka’s trade practices, which have been structured under strict protectionist policies. It is time to remove these barriers that have discouraged investors and to promote a more open and welcoming approach” he is echoing the much repeated IMF prescription. So far the trade liberalization has been justified by the IMF in that import restrictions, exchange restrictions, and other restrictions related to balance of payment discourage export development. The President has extended it to investment promotion. Most Asian Economic Tigers had import substitution and restrictions on imports in the early days of their economic takeoff. The President or his economic advisors should explain how protection of domestic industries discourage investments. In the ealy phase of development most countries protected their domestic industries with high tariffs on imports of manufactured products. According to the World Bank publication:

https://documents1.worldbank.org/curated/en/958161468770740374/pdf/multi0page.pdf
as late as 1980s, the effective pro- tection rate for manufacturing was nearly 30 percent in Korea, 50 percent in Thailand, and 70 percent in Indonesia.

The President states that ‘the burden of covering losses incurred by state owned enterprises will no longer be placed on the people’. There cannot be disagreement on this reasonable stand. But he also proposes to deprive the people of the profits made by some SOEs like the SLT and SLIC. SOEs were established by different government at different times to answer market failures of not providing adequately essential service to the public. They have failed due to politicians capturing them for power, to provide employment to henchmen and for illegal incomes. The success or failure of any business venture depends not on the ownership but its management. The answer to SOE failure is to remove the political nexus and establish a SOE management service of professionals to run the SOEs like what Singapore has done through Temasek.

In judging the future of SOEs there must be a proper cost/benefit analysis done including that of externalities and social benefits. For example, in evaluating Srilankan airline its contribution to Tourism and middle east employment should not be discounted. It is important to avoid the privatization swindle of the 1977 era. is manifold; includes sellin

The The President emphasizes that he will not allow anyone to drag our motherland back to where we were a year ago.” The blame for the economic debacle of last years should be accepted by all previous government. It would have been deeply appreciated if he also said mea culpa too.arity, compromise the sovereignty and territorial in

Mr. Wickremesinhe’s acceptance of the Prime Ministership when everybody refused is greatly appreciated. He was also the person who was best suited to act as interlocuter with IMF and the international agencies.

The President acknowledges the financial assistances provided and promised by several countries and agencies to support us to meet our debt obligations. But the fact is that they are also safeguarding the debts due to them. H

The following suggestions are made for consideration in the implementation of the several Pillars of the Road Map for economic salvation. Under the 1^st Pillar –of Fiscal and Financial Reforms it is suggested that in addition to reforms in tax policies, revenue administration, and public financial management, reforms in Public Administration should also carried out simultaneously.

In addition, the following suggestions could save unnecessary costs and make the public service less costly and more efficient.

One of the costly items in public administration is the cost of vehicles. It is proposed that in future, all government vehicles are standardized in a few makes preferably in electric vehicles. The government should call for competitive tenders with the condition that the supplier should also agree to progressive manufacture of the vehicle locally.

Even today internal correspondence of the government is not digitalized. This should be done to save the use of paper and make the system more accessible and efficient.

It is time that concentration of government administration in Colombo City be dismantled by establishing satellite offices in the periphery and some departments which have no rationale to be in the City be moved into the districts.  Please visit the following website for more information and justification of these proposals. Vide-https://vicharasl.wordpress.com/2023/06/12/plight-and-prospects-of-our-public-service-2/

The President has rightly stated that the aim is to prioritize efforts such as renewable energy, green hydrogen, and digitization. On renewable energy the government should first operationalize the 4000 MW of renewable energy as disclosed by the Minister of Power and Energy in Parliament where the investments have been approved but the CEB has failed to enter into power purchase agreements. It is appreciated that the government proposes to draw inspiration from the Andhra Pradesh in India, which has excelled in developing these areas. The Government of Andhra Pradesh has always been at the forefront of leveraging information technology to provide services to Citizens and businesses in an efficient and optimal manner through its various e-Governance initiatives and programs.This was possible as the Chief Minister was technology savvy and the state had an abundance of technical talent to undertake the innovations. Sri Lanka has not been able to digitalize the data bases in many departments. Many Departments do not even maintain their websites up to date. We need to first develop the technology talent base. We can also learn from Andhra micro irrigation techniques and crop hybridization such as in Murunga.

The President intends to invitate the private sector to submit their own business proposals that align with his vision of modernization and sustainability. This is a timely and constructive proposal. In the selection criteria it would be useful to include technology upgradation and spread effects.

However, it must be pointed out that a better proposal of recognition and support for pioneering investment was implemented by the EDB in the 80s. This scheme also had a venture capital element in that EDB could take shares in the investment in pioneering projects up to 49 % of the capital. Unfortunately, a later Chairman, a retired CBSL staffer, who was a trade promotion expert scrapped the scheme and followed up with dismantling the Projects Division with trained personnel in project formulation and evaluation. That Chairman did not understand the difference between development and promotion. To add to the damage the Treasury withheld the bulk of the EDB cess proceeds on imports.

Such support for projects of pioneering projects existed in Malaysia and is there in India where the Indian Government extends comprehensive support to Champion projects with a view to make them world leaders.

The President’s faith in public engagement is over optimistic. No serious discussion of development issues cannot be fruitfully take place on public platforms. It will end up in show of oratory and nit picking. Even as members in the executive boards of public corporations the contributions of private sector representatives are zero. In ten years of experience in the EDB where leading business representatives were members of the Board other than on issues affecting their narrow business areas their contributions on general development issues were nil. In the CTB of pre-Anil Moonesinghe era and in the Oils and Fats Corporation there were members who did not open their mouths throughout their occupancy as Board Members.

It is better to open the Lab discussions’ through dedicated websites with interested and informed public to express their views. It would be worthy to commence Economic Development Forums in the Universities under the guidance of senior teachers in the relevant areas. Universities should be involved in undertaking research in selected areas to allow more informed discussions. It may be wise to try out both the private sector initiative on investments and the novel Lab process in pilot project on a few selected sectors like agriculture.

It is noticeable the there is no mechanism to involve the much talked about National Council or Sectoral Committees in Parliament in this vital exercise. The President my have realized that they are incapable of generating innovative plans on development.

On the third Pillar on governance the strict action contemplated on corruption is appreciated as it has been a cancer on our economy and society. On this subject credibility of the government could be restored only by taking action to revisit the cases rejected on technical grounds including the Central Bank scam. An immediate administrative action could be the withdrawing the 100 odd pages of the Bond commission hidden in the Archives and tabling that in the Parliament. It is incredible that no member of Parliament has called for it.

It would help in public cooperation in detecting tax dodgers if the Asset declarations and Income taxpayers list is made public at least in specific websites.

The President proposes a Presidential Delivery Bureau (PDB) comprising of high-ranking officials from both the public and private sectors to coordinate the implementation of these plans. Would it not be better to reinstitute the time-tested Committee of Development secretaries who would be more familiar with the proposals and operations.? It could be reinforced with a few private sector leaders.

The President’s focus on the Four Pillars mirrors the conditions stipulated by the IMF but provides a methodology for implementation. In particular the President’s emphasis on public participation is novel and innovative. But it must be appreciated that the success of the cutting-edge proposal on investment depends on a number of policy reforms on key areas like Education, Agriculture, Industry and Technology. This need must be addressed simultaneously with other reforms.

Taiwan is an Island smaller than Sri Lanka with a similar population. Today it is a high tech powerhouse with a per capita income of over US$ 36000,  leading the world in a number of high tech industries.  At the beginning of the 1980s, Taiwan increased the ratio for senior vocational schools and general high school to 7:3. By 2012 there were 155 senior vocational schools, 14 junior colleges, and 77 universities/colleges of science & technology, totaling 246.

The President has faith in the social market economy model in Germany. He should also learn from the time tested and successful dual education system in Germany. Vide -https://wordpress.com/post/vicharasl.wordpress.com/553. The President may direct the newly appointed Committee on Education Policy to examine the systems in Germany and the East Asian countries.

Whatever the shortcomings embarking on this ambitious reform agenda to put the economy back on a trajectory for stable and inclusive growth will in the end be much better for the country than not undertaking these reforms and prolonging the crisis and making it permanent.”

Sugath Kulatunga

For FB

COMMENTS ON THE SPECIAL STATEMENT OF THE PRESIDENT.

The President Wickremesinghe must be thanked and congratulated for sharing his vision and plan to restore the failed State and economy of Sri Lanka with the people. His participatory approach to development has to be commended.

His comprehensive statement of June 1 on sounds very inclusive but excludes the Parliament and specially the National Council which only a few weeks back he sponsored enthusiastically to undertake development planning. Another observation is that the four pillars on which his road map rests is in essence cover the five pillars indicated in the IMF proposals. While in the IMF proposals, under their first pillar of revenue based fiscal consolidation mentions only cost recovery-based energy pricing, President’s statement incudes a 4th Pillar, which is the – State Owned Enterprises Transformation. He also makes his second pillar as the Investment Drive.

The The President appears to be very sensitive on the accusation against him that he is selling the country. In fact, the media has given him an epithet as Wikunumsinghe. He has tried to vindicate himself vigorously by rhetoric. It must be noted that selling the country includes selling national assets, endangering security and compromising the sovereignty and territorial integrity of the country. His opponents would point out that his past record on them is not without blemish.

The President harps on the provision of relief to the needy and vulnerable segments of the society. This country has always followed pro poor policies. IMF has adopted it to shield themselves from the criticism that IMF discriminates against the poor. It is a new IMF approach which the President also has gladly accepted. The President grieves that all citizens have suffered with the economic crisis and its aftermath. It must be conceded that it has also been an opportunity for traders and racketeers to fleece the citizens with impunity.

‘’’’’’’’’’’’’’’Continued

The President’s focus on the Four Pillars mirrors the conditions stipulated by the IMF but provides a methodology for implementation. In particular the President’s emphasis on public participation is novel and innovative. But it must be appreciated that the success of the cutting-edge proposal on investment depends on a number of policy reforms on key areas like Education, Agriculture, Industry and Technology. This need must be addressed simultaneously with other reforms. Taiwan is an Island smaller than Sri Lanka with a similar population. Today it is a high tech powerhouse  with a per capita income of over US$ 36000,  leading the world in a number of high tech industries.  At the beginning of the 1980s, Taiwan increased the ratio for senior vocational schools and general high school to 7:3. By 2012 there were 155 senior vocational schools, 14 junior colleges, and 77 universities/colleges of science & technology, totaling 246.

The President has faith in the social market economy model in Germany. He should also learn from the time tested and successful dual education system in Germany. Vide -https://wordpress.com/post/vicharasl.wordpress.com/553.

At the recent ceremony on presenting appointment letters to teachers the President stated that the challenge is to make education system relevant to the 21^st Century. To make that chane the President may direct the Education Policy makers to examine the systems in Germany and the East Asian countries.

Whatever the shortcomings of the reform proposls, embarking on this ambitious reform agenda to put the economy back on a trajectory for stable and inclusive growth will in the end be much better for the country than not undertaking these reforms and prolonging the crisis and making it permanent.”