Friday Apr 26, 2024
Friday Apr 26, 2024
Friday, 20 December 2013 00:00 - - {{hitsCtrl.values.hits}}
In this context, we have to face several challenges. In my view, number one is foreign exchange reserves. Our exports are on the decline. This is a trend. We have to take this seriously into account. We have only three main streams of foreign exchange. Number one is exports. Number two foreign remittances and number three is tourists.
Several factors have contributed to the decline in exports. We cannot afford to continue with this trend. We are no longer entitled for concessionary loans from lending agencies. This is precisely why we have to concentrate on increasing our exports. Our traditional importers are Europe and America. Since the economic recession is coming to an end, potential in the market is in a better position. But we have to take into consideration that the Asian economy is leading the world economy today. Therefore, we need to divert our attention to the Asian market. Secondly, value addition to our exports needs much emphasis. We can’t afford to export raw rubber and similar things.
The Government expects exports to be 10% and find 10 billion dollars. I am not very optimistic. Unless we seriously think about value addition and go into new markets, we cannot expect much from exports. Our focus on foreign remittances too needs to undergo drastic changes. There are changes taking place in the foreign economy. Housemaids will not bring us much foreign exchange. Today the market is for professionals. For example, there is a big demand for professionally qualified healthcare workers. Tourism comes next. We have to now attract developing countries such as China, Indonesia and Malaysia.
Our next biggest challenge is Government revenue. Our Government revenue is on the decline from 1997. Unfortunately no Government has taken this situation seriously. When Mrs. Bandaranaike handed over the Government to President J.R. Jayewardene, Government revenue was 35% of the GDP. Today it is only 13%. All the administrations since 1997 have failed to arrest this decline. GDP has almost doubled, per capita has doubled but it has not affected Government revenue. There is something very wrong – our taxation policy needs revision. Because ours is one country where the highest tax rate is 24% and that is the lowest in the world. On the other hand after the war our consumption has risen by 70%. But according to people, there is no purchasing power. There is some contradiction in the position. The conclusion is that there is black money operating. I don’t know the exact statistics but it has to be 30% to 50%.
My observation is that during the last 10 years there is a massive increase in the middle income group. They do not invest or save. This is a peculiar situation. The only way to correct this situation is to have a good taxation policy. Almost 80% of Government revenue comes from indirect taxes. This has to come down to 60% and give that relief to the consumer. The 20% direct tax should be increased to 40%. This is why I said revision of the taxation policy is essential.
Q: Are you satisfied with the Budget?
A: This is not my Budget. We are in a coalition Government. I have my own views. I am particularly not satisfied with the taxation policy. In fact I have openly stated this. I have even told the President about my views. The three revenue houses that come under the Ministry of Finance have to be put in place. I am not at all happy about the functions of the three revenue houses. The President in his Budget speech has mentioned that action will be taken to correct this. But I do not know to what extent this will be realistic.
Q: Do you feel this is a pro-capitalist Budget?
A: This is a capitalist Government. All our budgets have been capitalist budgets; there were never socialist budgets.
Q: This Budget has neglected the working class. No significant incentive has been offered to the working class. What action needs to be taken to correct this situation?
A: We have 2.5 million public servants. Then there are 550,000 pensioners. How are we going to pay them? We must increase Government revenue. What is accepted by the economists is that in a lower middle income society like ours, there should be a minimum of 18% GDP. But ours is only 8%. When Government revenue drops, the most affected segment of society will be lowest segment of society.
"This is a capitalist Government. All our budgets have been capitalist budgets; there were never socialist budgets
The three revenue houses that come under the Ministry of Finance have to be put in place. I am not at all happy about the functions of the three revenue houses. The President in his Budget speech has mentioned that action will be taken to correct this. But I do not know to what extent this will be realistic
Several factors have contributed to the decline in exports. We cannot afford to continue with this trend. We are no longer entitled for concessionary loans from lending agencies. This is precisely why we have to concentrate on increasing our exports
Our focus on foreign remittances too needs to undergo drastic changes. There are changes taking place in the foreign economy. Housemaids will not bring us much foreign exchange. Today the market is for professionals
There are 70 odd commercial institutions which are expected to show profit and loss. Corruption takes place only in commercial organisations. Out of that 70 odd, except in 16 institutions, all have been made profit earning now. Of the 16 institutions, 98% relate to four institutions: CEB, CPC, Mihin Air and SriLankan Airlines. I have taken a decision to audit these four institutions every three months
CEB and CPC will of course turnaround by next year, mainly thanks to God or nature. The Petroleum Corporation has settled all its dues to the CEB. It is in a better position. The other two institutions are a different story; they started operations without any capital. They started with borrowed money; taking overdrafts and loans. I have strongly criticised the Treasury for this entire situation
Bringing casinos will bring many more other problems to the country. No matter how many laws you bring in, the Sri Lankan people will also get access to these, soon it will become infectious. In countries such as Latin America, casinos and gambling have become a curse. Therefore, in my view, the best thing would be not to have casinos at all"
Q: What is your party’s stand on casinos?
A: We are not in favour of casinos at all. We suggested to Cabinet that the best measure would be to impose heavy taxes and restrict entrance to allow foreigners alone, if at all. The best thing would be not to allow casinos at all.
Q: Do you agree with the way the Government is allowing the setting up of casinos in the country?
A: I think they (the Government) might not bring them at all.
Q: Why do you say that?
A: Everyone is against it. The Buddhist priests, Malwatte, Asgiriya, they are all against it. In my view, the Government should be scared to bring it when there is such strong opposition.
Q: How do you justify a Sinhala Buddhist country engaging in such immoral high-yielding businesses in order to boost revenue?
A: This is not a question about morals. This is a social problem. Bringing casinos will bring many more other problems to the country. No matter how many laws you bring in, the Sri Lankan people will also get access to these, soon it will become infectious. In countries such as Latin America, casinos and gambling have become a curse. Therefore, in my view, the best thing would be not to have casinos at all. But since we are in a coalition Government, we have to come to a compromise. The three leftist ministers took a strong position. We have clearly said impose heavy taxes if at all and do not allow locals in.
Q: If the Government acts against those requests, what would be your next step?
A: We are yet to decide. But like I told you before, I feel that Government will think about it all over again.
Q: When in the Opposition, you were against privatisation. Why do you now keep mum when your Government continues to lease State land and properties to foreigners?
A: You must take the international context into account. When the world economy changed after 1991 with the collapse of the socialist world, all the countries including socialist countries had to take a few steps backward. This was the reality. Everything depends on the balance of economic forces. Mrs. Bandaranaike, who did not have any higher education, nationalised everything. Then so-called educated Chandrika Kumaratunga came and privatised everything. The world reality has changed. After 2005 the world has once again changed. That is why Mahinda Rajapaksa is in a position not to privatise.
Q: If we are to act according to world realities, what is the point of different parties having different policies and principles?
A: Our socialism means long-term perspectives. We have our strategy for the long-term. We are not trying to set up a socialist economy; that is not possible. We must do whatever possible in the changed situation. We are always with the social forces; the working class to the peasantry. We have gained by that; we have not lost anything. This is what the JVP could not understand. If the JVP stayed with the coalition, things would have been a lot different today. Now they are repenting. They overestimated themselves. Where is Wickremebahu Karunarathna today? Now he is going to join the UNP. This is the difference between us and the others.
Q: What are your views about the beautification of cities?
A: I am part of the Government. I am collectively responsible for acts of the Government. Even in a one party government, there can be different views and ideas. So you can imagine the situation in a coalition government. There are areas that we don’t agree on. In my personal view, beautification of cities is not a priority.
Q: We see uncultivated land being taken over by the Government in the name of beautification of cities. Do you approve of such measures?
A: Don’t mix the issues. Urbanisation is part of development. All this time, the Western Province accounted for more than 50% of the GDP at the expense of the other provinces. Now this has changed and it has come down to 43%. That does not mean the Western Province has come down in development. It means that development of other areas has come up. For example, the Northern Province that was lagging behind now has 22% of GDP for development. The North Western Province was second but today the Southern Province has overtaken that. That is development. When development takes place, the need arises for urbanisation. My only concern is whether it is fair to spend so much money on certain areas.
Q: We notice a trend in local authorities in the ruling party losing its budgets. Does this mean there is no unity among them and they had no proper plan to serve the people when coming into power?
A: My simple answer is that each one of these chairman of these councils has become an executive president. They are not consulting others. The UPFA is concerned about this trend and they are summoning all these people. But I feel there is something more than that. I want to talk to the Speaker about this; provincial councils and pradeshiya sabhas accounts are never audited by Parliament – never in history. There is no supervision at all. If the chairman and secretary get together, they can do anything. There is a fight for corruption to divide their shares. I don’t think this has anything to do with politics.
Q: There are many cases of corruption and allegations of bribery taking place in State institutions, especially in the Police. As the Chairman of COPE, what measures could be taken to prevent such actions?
A: All the 244 institutions were audited twice for the last three years. This was for the first time in the history of the Legislature. There are 70 odd commercial institutions which are expected to show profit and loss. Corruption takes place only in commercial organisations. Out of that 70 odd, except in 16 institutions, all have been made profit earning now. Of the 16 institutions, 98% relate to four institutions: CEB, CPC, Mihin Air and SriLankan Airlines. I have taken a decision to audit these four institutions every three months.
CEB and CPC will of course turnaround by next year mainly thanks to God or nature. The Petroleum Corporation has settled all its dues to the CEB. It is in a better position. The other two institutions are a different story; they started operations without any capital.
They started with borrowed money; taking overdrafts and loans. I have strongly criticised the Treasury for this entire situation.
Corruption is a global phenomenon and capitalism breeds corruption. Earlier there were incidents of vehicles belonging to State institutions going missing. But I have put an end to that. For the last one year, not a single vehicle was reported missing. Earlier there was complete anarchy in the armed forces and Police, but now everything has been put in order.
