A dream in the best interest
of the country
Dinesh Weerakkody, popular columnist in this paper as well as in many others, and Chairman of the country’s largest private bank – Commercial Bank – has compiled what he has written to newspapers and journals over a period of two decades and published in a book form.
The book has been titled ‘In the Best Interest of My Country,’ which has two connotations. One is that it is an expression of his dream that this country should be wealthy, prosperous and free from all ills. The other is that he presents his views on many aspects of Sri Lanka’s extant social, economic, political and business atmosphere without taking a side and in the best interest of the country.
A way back, Mahatma Gandhi, Martin Luther King Jr. and Nelson Mandela too had had dreams springing from their hearts. Analysts today say that the dreams of King Jr. and Gandhi are yet to be realised. But, Mandela was able to realise his dream within his lifetime. Similarly, one has to hope that the nation will be able to make Weerakkody realise his dream one day which will truly be in the best interest of the country.
Compilation of a decade long writings
The current volume being the fourth in its series covers Weerakkody’s writings from around 1990 and runs into more than 800 pages. Its articles have been organised under four main categories – Economic and Business, Political, Human Resource Management and Business Today.
Since each of his writings cover many areas, he would have found it difficult to strictly fit his articles to these four headings and one therefore finds articles broadly dealing with economic issues and public policy being categorised under the category of politics and vice versa. Since economics has been derived from the broad subject of political science which was later sub-branched to political economy, all these articles could have been categorised under ‘political economy’ without doing injustice to either economics or politics.
The present arrangement of articles has been as they have appeared in different publications in chronological order. Instead, had they been arranged under different subjects such as ‘public corporations’, ‘governance’, ‘university education,’ etc., the readers would have been immensely benefited.
Review of some of the recent articles on selected topics
The articles written by Weerakkody gift the readers with gems of wisdom and all of them cannot be reviewed in a limited review like the present one. Hence, only the recent articles covering broadly economic issues have been selected for this review. But the reader is warned that it covers only a minute fraction of the broad subjects on which Weerakkody has written and the readers should therefore refer to the entire book if they wish to have a full grasp of Weerakkody’s rich wisdom.
One important feature of these articles has been the foresight he has shown in analysing issues which have stood the test of time and therefore become applicable to even the current conditions prevailing in the country.
The supporter of GSP Plus
In two short articles on GSP Plus one published in September 2009 under the title ‘Should we save the GSP Plus Status?’ and the other published three months later in the same year under the title ‘GSP + Lifeline against Competition’ published in December 2009, Weerakkody has summarised the rhetoric for and against the facility that had been much in vogue at that time.
While the private sector, especially the garment and apparel industry had predicted doomsday for Sri Lanka’s economy, the officials including the top ranks at the BOI and the Central Bank had maintained the position that the non-receipt of GSP Plus does not mean the end of Sri Lanka’s economy and the country can safely manage the cost.
This writer recalls that it was revealed at that time that the total cost of the loss of GSP Plus would be somewhere around $ 250 million and the Government was ready to recoup that amount to the losers. At one point the Central Bank had argued that losing GSP Plus was beneficial to the country because it would enable the garment industry to develop its future strategy on the basis of global competition rather than on concessions.
In a box article in the Annual Report of the Central Bank for 2009, exporters were reminded that concessions were not the only imperative for maintaining the competitive edge of Sri Lankan produce in the international markets, implying that the rupee depreciation effected in that year served the exporters more than the concessions which the country would have got out of GSP Plus.
Loss of employment if GSP
Plus is not extended
Weerakkody, arguing from a different angle which the authorities had failed to notice, had drawn the attention of the policymakers to the potential loss of employment due to the non-extension of GSP Plus to Sri Lanka by the European Union. He had said that the employment growth in both 2007 and 2008 had been largely in the public sector and the private sector had lost about 100,000 jobs in those two years.
In this background, he has argued that it was natural for those who had an interest in the private sector job creation to entertain a fear about the vast job losses in the garment sector. According to him, garment sector at that time had been employing some 300,000 directly and another 750,000 indirectly.
Since Sri Lanka’s garment exports to EU constituted about 51 percent of the country’s garment exports, economic cost of the loss of a substantial number of garment jobs – both direct and indirect – would have been substantial and any subsidy given by the Government just in one year would not have been sufficient to maintain that employment level.
When some quarters connected to the Government started to deride the EU without considering this loss, Weerakkody thought it fit to warn that “we all need to be mindful about what we say to please the Sri Lankan gallery.” His final plea was that, as a Sri Lankan genuinely concerned about the issue, both the private sector and the public sector should work together to retain GSP Plus because of the far reaching economic and social consequences it would bring to Sri Lanka in the event Sri Lanka would not get an extension.
Weerakkody being a prophet
That was Weerakkody’s dream and that dream did not come true. Sri Lanka lost GSP Plus concessions because the authorities maintained right from the beginning that it was not essential for Sri Lanka to export more to the EU. To prove that they were correct, the authorities even showed some partial statistics that Sri Lanka had exported more to the EU in 2010 than 2009 but did not talk about the fact that increase was from a low base in 2009.
In reality, the gain in 2010 was lower than the total exports to EU in 2008. 2011 was a good year of trade performance for Sri Lanka and therefore the country could export a highest value to EU in dollar terms. However, the country began to experience the full brunt of the loss of GSP Plus in 2012; according to the statistics presented to the Annual Sessions of the Sri Lanka Economic Association in 2012 by the industry representatives, the total loss due to the non-receipt of GSP Plus had amounted to not $ 250 million as originally estimated by the authorities but to $ 1,500 million, a substantial amount which could not be recouped by the Government at any time.
Politicians are not good businessmen
In a series of articles, Weerakkody has taken the Government doing business to the task. He has questioned whether toothless Parliamentary Committee on Public Enterprises or COPE can stop the mismanagement of public institutions in an article published in January 2007. Though COPE has pointed out serious frauds in a number of leading public enterprises, it has just remained at that level of just ‘pointing out’ and no concrete action taken to correct them or bringing the miscreants to the book. With impunity expressed by all those concerned about these frauds, the outcome has been the perpetration of more serious frauds in later years.
The problem is not with COPE but with the Government which thinks that it is better suited to run commercial enterprises. In an article published in July 2011, he has answered the question why Government should not run commercial enterprises, thus disputing a popular belief deeply imbedded to the core of the present Government and its top policy making leaders. The failure of the Government, he has attributed, is because politicians who run it are good at making political decisions but not economic ones.
Who is to regulate the regulator?
To ensure re-election, politicians are biased toward ‘today’ and love ideologically driven rhetoric whereas businesses need long-term planning and sound decisions though they may be unpalatable to the electorate immediately. When public enterprises are placed under such a bunch of people, Weerakkody predicts that they are doomed to failure. Since the Government’s job is to regulate and facilitate, a question then arises who will regulate the Government when it is engaged in commercial businesses.
The available regulatory mechanisms such as the control by the Cabinet of Ministers and then through COPE are all weak and do not serve the purpose. The Cabinet does not have a way of looking at enterprises from their economic viability and COPE, without any technical support other than from the Auditor General, is very badly handicapped. Thus, public enterprises continue to exist with losses made year after year with total impunity for the people who are responsible for such losses since those losses are paid for by people through public funds allocated to the public enterprises by governments from time to time.
Ill-fated Mihin Air
In an article published in January 2009 under the title ‘Our Leaders Need a Dip in Hudson River,’ Weerakkody has raised the issue of Mihin Air, Sri Lanka’s ill-fated budget airline, which made losses from the day it was started. Despite the losses and unpaid bank loans to State banks, the Government has decided to re-launch the airline with a budget allocation of Rs. 6 billion pending from the Government.
Such an enterprise, if it had been re-launched by the private sector, it would be called “putting good money after bad money” but in the case of the public sector no attention is paid to such considerations. Thus, Weerakkody has written that if the Government wanted to invest Rs 6 billion in the aviation industry, it would have “used the money for re-fleeting SriLankan Airlines instead of just wasting on an airline that is not commercially viable as they simply cannot fill their flights.”
The shrewd entrepreneur in Weerakkody on this point has been prophetic. In the subsequent three years, as the Ministry of Finance Annual Reports for 2011 and 2012 report, Mihin Air not only made losses in subsequent years, it in fact increased its losses: Over the three-year period from 2009/10 to 2011/12 its operating losses amounted to Rs, 4 billion; during the period from 2012/13 to 2015/16, its projected operating losses will amount to Rs. 8.8 billion. In this connection, operating losses are not a good indicator of its performance since its net losses would be much more than the operating losses after charging interest costs and depreciation.
It is indeed unthinkable that a private company will operate with budgets of projected losses for the medium term without coming up with serious plans of restructuring or if they do not work out, plans for the closure of the company to save the money that has already been invested in its assets. But Mihin Air, continuously pampered by the Government despite its mounting losses, has been an exception.
Another dream that is difficult to realise
Weerakkody, in the best interest of the country, wishes that public enterprises should operate efficiently, providing their due services to the people. But for that to happen, public enterprises should undergo a complete reform program.
When the previous UNF Government was in power, he has stressed the need for reforming public enterprises in an article published in January 2002. That was when the UNF Government was just formed. That Government had an agenda for reforming public enterprises, but with its electoral defeat in 2004, that agenda became a thing in the past ridiculed not only by Opposition politicians but also by key policy making officials.
Dr. Sarath Amunugama who functioned as the Minister of Finance during 2004/05 was so irritated by the loss-making public enterprises that he publicly called the four largest loss makers ‘monsters who eat up the public’s money’. His intention, like that of Weerakkody, was to introduce a reform agenda for public enterprises but he too could not fulfil his dream. Today, it appears that the four monsters have been joined by a dozen of more monsters.
Given the large number of public enterprises making losses and becoming a burden to the public today, it is unlikely that a proper reform program could be implemented successfully as dreamed by Weerakkody.
Weerakkody: A simple and
Weerakkody’s writing style is simple, easy to understand and layman-friendly. He does not waste words when it comes to calling a spade a spade and like a good entrepreneur, he has maximised his ‘communication output’ with the ‘least number of most effective words’. Wherever it is necessary, he quotes from renowned literature or politicians of worth to convey his ideas forcefully.
He stands strongly for the free market economy, an efficient Government and a public sector to facilitate growth through the private sector, Sri Lanka’s seamless integration to the global economy, the need for promoting exports, development of talents and skills at all levels and above all governance at both the State sector and the private sector equally. Those are ideals which in his conviction will save Sri Lanka. His writings do not carry private agendas and have been made in the best interest of the country, as the title of the book has claimed.
However, there are two shortcomings of the production the volume. One is the facsimile reproduction of what he has written to Business Today, which is a real vision-tester for readers. The other is the absence of an Index to enable readers to refer to a particular topic or a subject of interest easily.
A must read by everybody
Despite this, his current volume, in the opinion of this reviewer, is a must for every library and a must read by every citizen who is interested in learning of Sri Lanka’s current economic, social and managerial developments.
(W.A. Wijewardena can be reached at email@example.com.)