Positive occurrences over the last 3 months in Sri Lanka

By Asela Atukorala

When it comes to the recent state of events in Sri Lanka, especially relating to politics, there has been a lot of talk of negative issues. Recent issues include the constant strikes burdening the public, the garbage problem, the threat of dengue and economic issues that include the cost of living and the debt repayment Sri Lanka is going through. 

I’m writing this article to point out that while there are negative issues occurring, there are also positive ones. I’ve seen what appears to be an increase in positive incidents in Sri Lanka politically over the last three months and will be listing some of them. 

GSP+

Firstly, in May Sri Lanka regained the European Union’s (EU) service of GSP+. GSP+ is a trade service given to developing countries for full removal of tariffs regarding all products covered under the product categories of the GSP service which has fewer benefits. 

We earlier had this service but it was suspended by the EU in 2010. The EU is Sri Lanka’s biggest export market and this gives a much-needed boost to our exports which have not been performing great recently. GSP+ enables Sri Lanka to increase and diversify its exports. Sri Lanka began receiving the benefits of this service on 19 May. 

Cabinet reshuffle

Shortly afterwards there was a Cabinet reshuffle that occurred on 22 May with more changes made a bit later. I think positive changes were made when it came to economic affairs. I thought making Mangala Samaraweera Finance Minister was a good decision as I consider him to be a better minister than his predecessor. 

There were further changes made to portfolios on 31 May, and I’ll be referring to what I see as two positive economic changes from that. Eran Wickramaratne being appointed State Minister of Finance was very good as it’s an area he’s an expert in due to his banking career and having studied Economics at the University of London. Dr. Harsha De Silva was given the portfolio of Deputy Minister of National Policies and Economic Affairs which gives him a chance to work in his field, being an economist. These three men have the potential to turn around the Sri Lankan economy, especially as the last two are of a higher quality than the average politician.

Rajagiriya flyover

There is a Rajagiriya flyover being constructed right now to improve the traffic congestion currently faced in Rajagiriya. It was originally scheduled to be completed in December 2018, but Deputy Minister of National Policies and Economic Affairs Dr. Harsha De Silva revealed at the site in June this year that the project is being expedited for completion by December 2017.

Banning of bottom trawling

A destructive form of fishing called bottom trawling is practised by both Sri Lankan and Indian fisherman, with fishermen from India being the strongest offenders in Sri Lankan waters. On 6 July bottom trawling and other illegal fishing activities were banned with the passage of a bill in Parliament. 

This was a good move for environmental reasons and it helps Northern fisherman as bottom trawling is part of the problem of Indian fisherman violating Sri Lanka’s sovereignty by fishing in Sri Lankan waters.

Sri Lanka Customs online payment platform

On 20 July, an online payment platform for Customs declarations was launched in Sri Lanka. It’s called the LankaPay Online Payment Platform run in a partnership between Sri Lanka Customs and the Central Bank of Sri Lanka. 

This digital system greatly improves the efficiency of Customs payments, especially for exporters and importers. They previously could only make direct Customs payments online via two state banks, but now can make direct Customs payments online via any bank. This system is implemented under the guidance of State Minister of Finance Eran Wickramaratne.   

New economic advisers

In July, there were the appointments of two well regarded Sri Lankan economists as advisers to the Finance Ministry. Firstly, Deshal De Mel who works as a Senior Economist at the Hayleys Group, was appointed as an Economic Adviser to the Ministry of Finance. 

Secondly, Prof. Razeen Sally based in Singapore, who is the Chairman of the Institute of Policy Studies, was appointed a Senior Adviser to Finance Minister Mangala Samaraweera. Both these two individuals have been giving their criticisms of Sri Lankan government policy, especially relating to the economy. They in fact both gave lectures with their criticisms at the public policy think tank Advocata Institute last year, with Deshal De Mel speaking on ‘What’s wrong with Sri Lanka’s economy?’ and Razeen Sally addressing the topic ‘Sri Lanka: Three scenarios for the future’. 

While I would not go as far as they did with some of their criticisms, the fact that these two men who have major criticisms of Sri Lanka’s economic policy are working for the Finance Ministry as economic advisers show that the new leadership at the Finance Ministry is not appointing yes-men but intelligent economists who have good ideas of what should be done instead. Hopefully, their input will be able to reduce the negative economic policies and bring about an increase of positive economic policies. 

Passage of Foreign Exchange Control Bill

On 25 July, Parliament passed the Foreign Exchange Control Bill which is a reform improving the status of foreign exchange in Sri Lanka. The voting for this bill used the electronic voting machine for the first time in Parliament. Voting this way is more efficient and allows for better tracking of MPs’ votes.

Government action on strikes

As I mentioned at the start of this article, a problem currently going on in Sri Lanka are the constant strikes that cause difficulty to the public. A problem has been the Government’s policies regarding these strikes including their lack of action to prevent these frequent occurrences. 

On the week beginning Monday, 24 July, workers of the Ceylon Petroleum Corporation went on strike. On Tuesday, 25 July, the Government declared in a gazette under the Essential Services Public Act of the storage, transport and distribution of petrol being mandatory and that anyone who fails to report to work will get terminated from the service. 

On Wednesday, 26 July, the Sri Lanka Army was brought in to distribute fuel. Hopefully this response by the Government is a sign that they’ll respond better to strikes and take action to prevent ones from happening in the future. It’s worth noting that early this month, UNP MP Mohamed Mujibur Rahman called for new laws and regulations to address the issue of strikes. 

Hambantota Port lease

On 29 July, Sri Lanka signed an agreement with Chinese state entity China Merchant Port Holdings to lease the Hambantota Port. I’m aware that this deal is unpopular with some saying we are selling out to China. Some aspects of the deal may not be the best for Sri Lanka, but I think that it was a good decision that needed to be made. 

Sri Lanka is facing a massive debt crisis and this payment eases that as it’s bringing in $ 1.12 billion which is a massive amount of money. The sale is also beneficial as the Hambantota Port was a loss-making institution bringing economic damage to the country. Hopefully, China Merchant Port Holdings will make the port profitable and there will be a creation of Sri Lankan jobs as well. 

It’s also worth noting that this isn’t a sale but a lease and that it is a public-private partnership with Sri Lanka still having a stake. 

The agreement gives China Merchant Port Holdings a 70% stake and Sri Lanka a 30% stake. Sri Lanka Ports Authority Chairman Dr. Parakrama Dissanayake said on a 31 July episode of the political talk show Face the Nation that this is the largest FDI we have ever received at $ 1.12 billion. Sri Lanka has not been having enough FDI coming in, so it’s very good to see FDI of that scale coming to Sri Lanka. 

Action against bribery

A form of local government in Sri Lanka is the Pradeshiya Sabha. On 3 August, Ranil Madawa Kamal Nilame a former Rambewa Pradeshiya Sabha Chairman got sentenced to five years in jail as well as a Rs. 40,000 fine for soliciting and accepting a bribe over a youth who was seeking employment in Korea. 

This incident occurred 10 years ago in 2007, so it reveals the broken legal system we have in Sri Lanka where things take far too long. However, it’s good to see a government official being sentenced for bribery based on the efforts by the Commission to Investigate Allegations of Bribery or Corruption (CIABOC). 

It’s interesting to note that on 16 August another former Pradeshiya Sabha (Tangalle) Chairman was arrested for allegedly accepting a bribe. It’s possible that CIABOC is functioning with some improvement due to these instances. Let’s hope they’ll continue to get more efficient and will work hard so that in the not too distant future they’ll make arrests and actually deliver the much-needed prosecutions for the figures said to be involved in bribery and corruption of the previous government. 

Waste-to-energy power plants

On 10 August, two solid waste-to-energy power plants began construction as public-private partnerships. These projects are led by the Ministry of Megapolis and Western Development and will be bringing in $ 193 million in FDI. 

The plants will convert the waste generated in Colombo and Gampaha into energy. This project is a double achievement for Sri Lanka as it will help solve the garbage problem Sri Lanka is currently facing as well as bring in much-needed FDI. There is also going to be a third project of this sort commencing soon bringing in an investment of $ 91 million.

Road discipline

There are positive moves taken regarding road discipline. On 11 August, the Sri Lankan Cabinet had made important decisions regarding traffic. They had approved increased fines for issues that include driving under the influence of drugs or alcohol, driving through a railway crossing irresponsibly, driving without an authentic licence and driving without proper insurance among others. The Cabinet also decided to install CCTV cameras near areas prone to accidents and use them to identify and punish those guilty of offences. 

Also, earlier this month the Ministry of Megapolis and Western Development announced that it would implement priority bus lanes in Colombo and its suburbs to ease traffic congestion. The first phase of implementation began on Tuesday, 15 August, with there being further implementations as well as another priority lane to be implemented on 30 November.   

Inland Revenue Bill

A new Inland Revenue Bill was passed in Parliament. Finance Minister Mangala Samaraweera mentioned that in Sri Lanka indirect taxes currently account for 80% of tax revenue with 20% making up direct taxes. 

It is important to note that this figure is actually higher as economist Jayani Ratnayake said in an 18 August interview on Biz1st Review 360 that indirect taxes accounted for 83% of tax revenue in 2016. The Minister noted that this law is the first step in reducing indirect taxes to 60% and increasing direct taxes to 40%. This should benefit low-income earners. 

Another objective of this bill is to create an investor friendly environment by simplifying the tax structure to attract more FDI. This bill is also brought in to deal with the problem of tax evasion. 

Conclusion 

An issue I’ve had with this Government was their slow pace of reforms, especially as they were elected on a reformist agenda. Thus, it’s a positive sign to see more reforms recently with the banning of bottom trawling, the passage of the Foreign Exchange Control Bill and the passage of the new Inland Revenue Bill. 

The Inland Revenue Bill appears to be the only major reform of the three reforms and it would be good to see other major reforms along the lines of the Inland Revenue Bill being passed before the end of the year. 

I see a real improvement in the Finance Ministry following the new leadership of Mangala Samaraweera and Eran Wickramaratne. They got to work since leading the Finance Ministry and have been consulting with the relevant stakeholders to help them carry out their roles well. It’s likely that the benefits of some of these occurrences will be felt over the remainder of the year.