Friday, November 17, 2017

Blue Green and scientific! Do we care, are we aware?

Friday, 17 November 2017

I see many comments on and summaries of the most recent Budget of the State. It is interesting to note that almost all the summaries ignore the provisions for science and technology made by the Budget. It is always interesting in this country how little attention science gets and yet we speak of moving into a knowledge-based economy.

Blue Green and scientific! Do we care, are we aware.docx by Thavam on Scribd

Some Strengths and More Weaknesses of the Budget 2018

November 17, 2017, 10:10 pm

*Where are the estimates for Provincial Councils?
*No clear investment in R&D
*Export promotion is admirable
*Targeted deficit is reasonable
*But taxes heavy on ordinary people
*Condominium VAT contradicts ‘free market’
*Excessive liberalization of shipping and logistics is questionable
*5 per cent GDP growth and 6 inflation are not promising

By Laksiri Fernando

Under the prevailing circumstances, the Budget 2018 may appear reasonable on paper. The government expenditure is kept under reasonable control, and the deficit expected to be 4.8% of the GDP. In addition, as the maiden budget of the new Finance Minister, Mangala Samaraweera, the delivery of the budget was praiseworthy and the rationale explained is very clear, whether one agrees or not, or however flawed.

The Rationale

Although the rationale is called the ‘social market economy,’ it is more towards ‘neo-liberalism’ than anything else. This is in a context where ‘neo-liberalism’ is failing or getting into reverse gear in many countries including its mother nation, America. The newest setback was when the Canadian PM, Justin Trudeau, simply absconded himself of signing the Trans Pacific Partnership (TPP) early this month in Vietnam. This was after President Trump’s withdrawal.

‘Social market economy’ is primarily a German concept, good for that country. Although theoretically sound, when applied to a developing, still a Third World country, there are some obvious discrepancies. The still subsistence agricultural sector can get completely neglected as it has happened in the Budget as well as in the Vision 2025. The policy makers should not live in Ivory Towers, however sweet their theories might be to them.

In his Preamble, Samaraweera was correct in saying that Sri Lanka was lagging behind in development after independence compared to other Asian countries because "we were fighting with each other on the basis of political ideologies, ethnicity, religion, and even on the basis of caste." However, he was doing the same by attacking the ‘socialist mindset’ of others outside the chambers. Even in the budget speech, his excessive emphasis on ‘free enterprise, sweeping liberalization and globalization’ can be considered ideological, inviting a fight, and not pragmatic. He has also adamantly stated that ‘liberalization is not negotiable’ referring mainly to the so-called shipping liberalization.

Debt and Revenue

Referring to the difficulties that the government was facing in 2015, the Minister was correct in saying "the major challenge we had to face was the rapidly and continuously falling Government revenue and a mountain of debt." But this is the tail end of 2017, and the Budget is for 2018. Has the Government being able to rectify the revenue situation and has he proposed anything promising for the future? These are questionable when we go through the revenue proposals and figures.

We know in respect of the debt of the Hambantota port, a ‘debt-equity swap’ was implemented. But why the government couldn’t negotiate, at least at the same time, a ‘debt-aid swap,’ to mean cancellation of some debt as aid to the country? That could have been possible, especially in a context where the port was leasing out to the same sources.

The foreign debt stock or ‘mountain’ by 2015 had two main components: (1) loans taken for the war and (2) loans taken for some infrastructure development projects. Both had some portions going to the private pockets. That is what should be investigated properly without vacillation. More importantly, there are some who have benefitted more economically from those infrastructure developments. They should pay more and the government should get more revenue to invest in further development.

Didn’t our economy expand from a $ 40 billion economy to a $ 80 billion economy after the end of the war? Didn’t our per capita GDP move up from $ 2,000 level to nearly 4,000 level? Who benefitted more? They should pay more in terms of direct taxes. However, according to the present Minister’s or Government’s ideology, largely the ordinary people should cover 82% of the tax revenue (Rs. 1,659 billion) through indirect taxes, in contrast to income tax of largely the rich or well off, 18% or only Rs.375 billion.

It is a misconception that direct taxes would discourage businesses and entrepreneurs. That depends on the rate and the way you implement it. It is natural that they would be happier if the taxes on them are less. Even the Queen has taken measures to avoid taxes according to the Paradise Papers. However, the direct taxes also can make businesses and entrepreneurs work harder. There are also other ways of giving incentives or encouraging them. Anyway, they have to make their contribution to the economy for the benefits that they get.

There was and is another component to public debt. That is largely domestic; loans taken through various means for day to day government expenditure, and including to cover budget deficit. The present government also has a dismal record on this count, making the country indebted and losing through the scandalous bond scams and other means. The present Budget has not proposed any strict measures to curtail government expenditure for politicians at all levels (national and provincial); for their perks, vehicle benefits or exorbitant foreign travel.

It is true that the government revenue has been improving during the last few years, but at a snail pace. Unfortunately there is no particular contribution that the present government has made, or making in this Budget for its improvement. The anticipated level is still 16.3% of the GDP. There is no ‘decisive turnaround’ although there is a subtitle on that in the budget speech.

Budget or a Vision?

The Budget appears too much of a vision than a carefully worked out income-expenditure projection for the next year. The vision is fine if it is implemented, but the country would like to know at least the approximate allocations for different sectors. If not in the speech, the table in Annex IV titled ‘Summary of the Budget (2014-2017)’ should have given that information.

For example, what is the overall allocation for Provincial Councils? What are the proportions in terms of recurrent expenditure and capital or project expenditure for provincial councils? These figures are not given even after so much of talk about devolution, fiscal devolution and even federalism. The Budget has newly allocated Rs. 13,300 million for Reconciliation according to Expenditure Proposals (Annex II). That is admirable, if the allocations are properly used. But the implementing government institutions are mainly the Ministry of National Integration and Rehabilitation, and the Ministry of Prison Reforms, Rehabilitation and Resettlement, or other national Ministries and obviously not the Provincial Councils. Even the Provincial Council participation, particularly in the North and the East is not clear.

In the Budget figures, the total allocated expenditure by the State for the year 2018 is Rs. 3,001 billion. Understandably, that is the present capacity. Out of the above figure, Rs. 2,250 billion is for recurrent expenditure to mean mainly for salaries and wages, including the provincial councils. What is left for investments/projects is only Rs. 761 billion. This has been the weakness of all budgets throughout years which is not even corrected this time obviously within financial/income constraints.

Similarly, how much is allocated for the military or national security? The budget does not give any clue. There is much talk about the Blue Economy, declaring "our ocean bed is almost 26 times the size of our land mass with enormous potential." However the country’s Navy is apparently not involved in this venture.

Most importantly, the Budget 2018 and its background Vision 2025 talk about a ‘knowledge economy, innovation, enterprise Sri Lanka, creating entrepreneurs, making them global leaders’ and so on.

There are some admirable allocations made in this direction. However, there is no comprehensive figure how much is allocated for R&D in the country in this Budget. Development Research figure very poorly in the proposals.

Throughout the years, different ministers have presented their budgets on ad hoc or personally selected formats. This has been confusing. There has been no common format at least to give a comprehensive picture and figures of the status of the Budget and allocations. This can be considered a major defect in financial management in the country. One positive aspect of this Budget is that, what is said in the paragraphs are largely consistent with the proposed budget items.

New Proposals

The strength of the Budget can be considered in the new proposals for capital expenditure or public investment. While the total allocation is Rs. 761 billion (25% of the total expenditure), including already allocated public investments, the new allocation amounts to R. 182,739 million (or 183 billion), according to my calculation. There are 193 items proposed under 19 headings -as given in Table 1. In the Budget proposal the totals are not given, hence is the table.

Deriving from the ideology of neo-liberalism or social market, the Budget is heavily supportive of the private sector and foreign capital as revealed from the above proposals. Given the underdeveloped nature of the productive forces of the country – the capital accumulation, entrepreneurship and intellectual labour - those efforts cannot be completely discounted. However, what is highly questionable is the neglect or low priority given to the public sector.

The new proposals have allocated a total of Rs. 25,300 million for‘Enterprise Sri Lanka’ (10 proposals), ‘From Local Entrepreneurs to Global Leaders’ (20 proposals), ‘Creating Enabling Environment for Foreign Investments’ (8 proposals) and ‘Harnessing Our Young Entrepreneurs’ (4 proposals). In contrast, for the improvements in the ‘Public Sector Service Delivery’ (6 proposals), the allocated amount is Rs. 3,300 million only (out of which 770 million being recurrent). It is not so much of the allocated amounts that matter. But there is no re-training or enhancement of qualifications (except IT), that has been proposed for the public servants. Foreign post-graduate training is a requirement for higher officers.

There are allocations for the improvements in the school sector (Rs. 5,605 million), higher education (Rs. 7,340 million) and the health sector (Rs. 3,700 million). Without too much of patronizing talk or schemes on school education, if the initially proposed one year reduction of school years (13 to 12) by the Minister of Education was implemented, there could have been much more meaning for the now proposed STEM scheme (Science, Technology, Engineering and Medicine). What is terribly missing in the scheme is the second M (Management), before +A (Arts).

The allocations for both university and medical/health reforms are not sufficient, considering the potential role in development. There are no apparent allocations for university or medical research much needed in the country. There are no university educational reforms proposed at all. It is doubtful whether the present proposals can bring any "world class university education" to the country, as the Budget speech (subtitle) boastfully claims (p. 33).

Major Controversies

The Budget or rather the Budget speech has proposed to amend the Sri Lanka Ports Authority Act and the Merchants Shipping Act(p. 21). This is in the context of creating a Logistics Hub. However, this is proposed even without consulting the Minister for Ports and Shipping, Mahinda Samarasinghe, let alone other stake holders. The collective responsibility is apparently breached.

What is more controversial is the statement that "restrictions on the foreign ownership on the shipping and the freight forwarding agencies will be lifted." These claims are already contradicted, while the Finance Minister maintainsthat ‘liberalization is not negotiable.’ Equally controversial is the proposal to create an ‘independent Ports regulator! It is like talking about ‘independence of the judiciary! There are some rumours about vested interests involved, or extremist globalist Advocacy groups listened to. Be as it may, there is no need to completely externalize ‘freight forwarding’at the expense of the local entrepreneurs. It goes against the national interests and benefits to the country. Overseas partnership might be the appropriate. Already there are no apparent restrictions on foreign input and participation.

There are other controversies. VAT is reintroduced (15%) to condominium sales going against the ‘free market’ principles in this instance. Equally questionable is the bank transaction fee which is abolished or non-existent in many free market countries. Sri Lanka’s restricted revenue base is understandable. Therefore, various adjustments to the Excise duties on liquor can also be reasonable although the expressed justifications are fictional (about Beer!).

Under the private sector development, a Development Bank is proposed with an EXIM widow. However it is not clear whether the priority is given to EX or IM. With 1.200 para taxes lifted, there is a possibility of a mad rush for imports, further jeopardizing the trade deficit. There can be so much of practical liabilities of an ‘ideologically driven’ liberalizing policy, without being pragmatic or practical.

During the Minister’s Budget speech, there is much encouragement and support given to the urban private sector(minus shipping!) and more so to the foreign investors. However, Corporate Responsibilities were never emphasised or even mentioned. No Business Excellence Framework (BEF) was proposed for the private sector or for the equally important public sector. Strategically unaddressed sector in the Budget, unfortunately,is the poor agricultural economy, except certain incentives given perhaps under pressure.

CONTRADICTIONS AND CONTROVERSIES IN MANGALA’S MAIDEN BUDGET

First programme called the ‘Small Scale Industries (SSI) Credit Scheme’ was implemented almost 40 years ago

In the absence of a “National Education Policy”, these ‘on the run changes’ allow discrimination of rural youth

Proposal to establish three new medical faculties in three State universities is another big fake

2017-11-17

Much has been said and more talked about Mangala’s maiden budget, the 72nd budget in Independent Ceylon and now Sri Lanka. Yet there’s enough left that can be said and should be said about his budget for year 2018.

Leaving out all controversies over beer and moonshine, pollution-free urban travel and then wild beasts and safari in Yala National Park among many others, Mangala’s preamble to the budget stressed the common and the popular statement that, “…since

the day of independence, instead of collectively working towards building the nation, we were fighting with each other on the basis of political ideologies, ethnicity, religion, and even on the basis of caste….” His budget proposals should, therefore be, read with that as the context and the objective of this 2018 budget.

Reading begins with the performance of this government. A year ago his predecessor Ravi Karunanayake proposed giving free “Tabs” to school children. PM Wickramasinghe in November 2016 addressing the Asia Pacific Conference in Hong Kong said, “Tabs” will be given to university students on a concessionary price. Where it is now, is not known. So is the major food security project that was allocated Rs. 8 billion. It is now said that, most major proposals for 2017 had simply gone missing from the balance sheets of the Finance Ministry/Treasury. Though a “Task master”, Mangala’s budget proposals have to be seen with such miserably inefficient performance of his government.

For youth, he does propose many changes and additions to formal education stressing 13 years of schooling irrespective of GCE O/L exam results. He proposes changes to A/L subject combinations, to examination and assessment methodology, proposes introduction of Genomics, Coding, Robotics and Nano science to school curricula, development of e-Text books and allocates funds for the already-launched “Smart” class rooms in selected schools. PM in an observation trip to Sri Jayawardnepura MV, said it would take “a decade to go islandwide”. In the absence of a “National Education Policy”, these ‘on the run changes’ allow discrimination of rural youth who will be left a decade, or even more years behind the privileged urban youth.

We need to develop AMPs, PHIs, Midwives and Sanitary Inspectors with better and modern training to establish a preventive community health system

This country has not been able to train enough teachers capable of teaching English in all schools, even after Kannangara Reforms; 73 years ago. And in this country, out of 2,635 schools with classes up to GCE A/L, have only 698 schools with A/L science subjects. Students in schools with only Arts/Commerce subjects have thus been deprived of studying science. The much hyped “free” education system does not provide equal opportunities to all school children with equal quality. A sorry case where governments and the State continue violating “Child Rights” and the Budget contributes in increasing violations.

As such, there is an undisputed necessity in identifying social needs across districts and across different social segments in relation to education. It demands serious social discussion that includes teachers, parents, academics and educationists. In the absence of such social dialogue in developing a policy framework for national education respecting provincial rule, ad hoc changes decided upon by a few in Colombo and brought in as budgetary proposals will not remedy the crisis in education. They will not provide even worthy employment to rural youth in their own areas. All that is being proposed from “Smart” class rooms to Robotics and Nanoscience are for urbanised economic activities. That by itself restricts these proposals reaching the larger rural population.

Proposal to establish three new medical faculties in three State universities is another big fake. We need to develop AMPs, PHIs, Midwives and Sanitary Inspectors with better and modern training to establish a preventive community health system, that would reduce numbers seeking hospital beds for curative treatment. We don’t then have to keep packing the health service with medical doctors and waste tax payers’ money to build hospitals to accommodate more patients. Also, we seriously lack qualified and competent academic staff in the country to even staff the existing medical faculties like Rajarata, Eastern and Ruhuna. Adding three more would thus be chaotic and would further devalue the quality of medical doctors produced. The question therefore is, what purpose does this proposal serve or seek to achieve?

Inclusivity in society that Mangala stressed in his preamble, also go the same crooked way. Reconciliation is not just about allocating funds as decided in Colombo for housing, infrastructure and livelihood programmes. It is about allowing the people in war affected North-East to have their fair share in deciding what they need for their own future

Reconciliation for an inclusive society has to go with economic growth. “The SME sector must be the backbone of our economy.” he therefore concludes.”However, the lack of capital or the difficulty in accessing capital due to both the cost of capital and the requirement for collateral have been main impediments in the development of ‘start-ups’ and SMEs” is his diagnosis. It is said the government initiated eight credit schemes for SME’s this year. It is proposed to disburse Rs.15,000 million through these schemes next year and all such schemes to be fused into a single “Enterprise Lanka Credit Scheme”.

There is nothing new in this. First major programme called the ‘Small Scale Industries (SSI) Credit Scheme’ was implemented almost 40 years ago in 1978 through the PB and the BoC in collaboration with the IDB. In 1979, the 2nd programme funded by the World Bank and the ADB, with the NDB overseeing, was implemented through five local banks exclusively for SMEs. They were all, subsidised concessionary loan schemes and continued till 1996. Thereafter, there had been many credit schemes, like SMILE, SMAP, Sahanaya and Saubhagya. By 2010, according to WB data on SME credit facilities, four out of seven commercial banks that covered SME lending, HNB, Commercial, DFCC and Wayamba Development Bank, had SME portfolios of 49.4%, 30.2%, 41.3% and 10.5% respectively, out of their total portfolios.

During these same periods, foreign donor-funded NGOs also pumped in big money into this sector as programmatic aid. The ILO and the GIZ (then GTZ) had their own business training programmes like SIYB and CeFE for specialised training on business planning, management skills, market linkages etc. Local NGOs also ran their own soft loan and credit facility programmes. Thus if SME’s over the past decades have not grown to Mangala’s expectations, then the problem is not about “accessing capital”. The problem is elsewhere in this free market economy. That needs thorough research before pumping in more money at the expense of the tax payer.

Inclusivity in society that Mangala stressed in his preamble, also go the same crooked way. Reconciliation is not just about allocating funds as decided in Colombo for housing, infrastructure and livelihood programmes. It is about allowing the people in war affected North-East to have their fair share in deciding what they need for their own future. It is a fact of life, people need dignity in life, not just material comforts, that too as decided by the Colombo government.But that is what this budgetary proposals are all about. Contrary to his preamble, Mangala is proposing further centralised planning and implementation, completely ignoring PC’s and the promise for more power to provinces in a new Constitution. From tourism, fisheries - both freshwater and marine, eco-friendly parks in all LG body areas, to the Carbon tax to be imposed on vehicles, everything has been taken over by the Colombo government from planning, deciding numbers, fixing locations and even the revenue that may be possible if projects are run efficiently.

As far as the Tamil politics and reconciliation are concerned, the budget proposal to strengthen the Police along with the new e-NIC is far more serious than all other proposals on centralising governance, though the TNA leadership in parliament supports this government and its budget. We have in a different context during the past 30 years and more, turned the Police into an auxiliary force in national security. It is in such a context, the police department is allowed to have its own TID. The whole society has lost sight of the fact, the Police Department has to be a civil department. Establishment of the National Police Commission (NPC) has failed in re-establishing it as a civil department.

Mangala’s proposal to establish a university for the police including developing competency in special IT skills, wrapped in very timid and innocent lingo goes without question in a Southern society still revelling in war victory. One need to note the marked difference in upgrading competencies of a regular civil department and that of a very corrupt and heavily politicised agency resorting to excesses in law and enjoys impunity. Worst is when Heads of State and Government continue stressing the importance of “National Security”. In all countries National Security is nothing but”surveillance and intelligence”. In our geo-political region it is mostly about excesses and arbitrary rule.
With that, the authorities given unrestricted access to private and personal information in trespassing “privacy” with the new e-NIC would regularise a repressive police regime. The collected personal bio data and biometrics turned into a centralised and digitized data base would allow intelligence and surveillance agencies to track the location of any individual at any given time. (Read my DM article “eNIC threatens Sovereignty of People of September 8, 2017). That apart, there is also discussion of establishing a GPS tracking system of all vehicles, explained as a necessity to control and track down crimes.Using new technology to heavily centralise surveillance and intelligence under the Colombo government narrows down all possibilities of reconciliation in a democratic civil society.It is with such development, Managala’s budgetary proposal on a Police University and IT skills development should be assessed.

The major, politically relevant proposals in this budget thus leads to controversies and contradictions on what Mangala said would be his and his government’s objective in driving this economy for growth. Economics that contradict his politics.

The Blue Green Budget of the Unity Government

Friday, 17 November 2017

The Budget proposals of the Unity Government under the theme ‘Blue Green Budget’ for the fiscal year 2018 are expected to support the achievement of medium-term targets such as Per Capita Income of $ 5,000, one million new jobs, FDI inflows of $ 5 billion and the doubling of exports to $ 20 billion.

Finance and Mass Media Minister Mangala Samaraweera, presenting his maiden budget for 2018, envisions increasing the economic growth rate to 6% by 2020 from the current 4.5%.

Samaraweera said, in 2018 we envisage a GDP growth of 5%, inflation of around 6%, and we hope to achieve for the first time in almost six decades primary surplus of 1% of GDP and a Budget deficit of 4.5% of GDP. The economy is expected to grow by around 4.5% in 2017 and projected to move gradually to a higher GDP growth path of around 6% by 2020, while containing the level of unemployment at around the 4% level.

Budget deficit

The Budget targets a fiscal deficit of 4.8% of GDP in 2018, which is only slightly above the 4.7% target agreed with the IMF and continues the consolidation that began in 2016. Floods, disease and drought weighed on the economy and public finances during 2017, and contributed to the Government missing its initial 2017 fiscal deficit target of 4.6% of GDP.

Nevertheless, the Government still expects the 2017 deficit to fall to 5.2% of GDP, from 5.4% in 2016. The hope for stability in 2017 has been largely driven by measures to boost tax revenue, including a hike in the value-added tax (VAT) to 15% in November 2016 from 11%. However, this push for indirect tax will certainly lead to more pressure on COL.

Revenue

On the revenue side the Government expects revenue to rise strongly again in 2018, to 15.7% of GDP, from 14.7% in 2017. The revenue increase is expected to be supported by an Inland Revenue Act passed in September 2016.

The act, which will come into effect from 1 April 2018, aims to simplify the tax laws and improve the efficiency of the collection. Despite these positive reforms, there are numerous risks to the Government’s revenue projections given that they are based on a GDP growth assumption of 5-6% for next year and its track record in the last three years. However, Samaraweera is optimistic.

He said: “We are in the process of effecting revenue reforms in all areas including Inland Revenue, Customs, Excise and others to raise Government revenue closer to 20% of GDP over the medium term. Samaraweera is confident that revenue will increase and that expenditure will remain well targeted and rationalised, and that the overall Budget deficit will reduce to 3.5% of GDP by 2020.

Government debt

The next three years will be crucial with debt repayments amounting to almost Rs. 7,000 billion. The biggest challenge for the Unity Government is the repayment of international sovereign bonds which will mature every year from now on amounting to almost Rs. 600 billion where bunching is a severe strain on Government finances.

Exchange rate depreciation could also push up the local currency value of government debt, given that around 40% of the total was denominated in foreign currency at end-2016,” In 2018 alone debt repayment amounted to Rs. 1,970 billion. The Government may be forced to compromise on the investments to be made in 2018, given the huge debt burden. The Government debt/GDP ratio rose to 79.3% of GDP in 2016 - well above the 60.9% median for sovereigns rated ‘B’ or lower.

Fortunately foreign exchange reserves have risen to $ 7.5 billion at end-October from $ 6.1 billion at end-2016, and the reserves could be sufficient to cover 3.5 months of current account payment by end-2017. This certainly needs to improve further.

2018 proposals

The Government will introduce the Enterprise Sri Lanka Credit Scheme with the objective of encouraging the SME sector to strengthen entrepreneurs. During 2018-2020, the Government will support the formation of 50 agro and fishery companies, 25 majority women-owned companies and 150 youth centric start-ups. To encourage women entrepreneurs, the ‘Enterprise Sri Lanka Credit Scheme’ will make available credit facilities with the interest subsidy being at least 10% more for women entrepreneurs relative to others.

Rs. 2,000 million has been allocated to further strengthen the skills development programs undertaken by the National Youth Corps. The Government plans to implement a program where youth groups will undergo three-six month training courses in a specific skill as demanded by the private sector.

To fund this, an ‘Employment Preparation Fund’ at the Ministry of National Policies and Economic Affairs will be set up with an allocation of Rs. 2,500 million.

With the aim of promoting direct foreign investments and simplifying business registration, a one stop shop for business registration through a single identification system and the introduction of a system to scan and digitise company records, create a database of trademarks using the Department of the Registrar of Companies’ funds.

With the aim of fostering reconciliation, a large number of proposals have been made, including the construction of 50,000 brick and mortar houses for the North and East, and the introduction of irrigation systems and construction of a home for differently-abled women in the North, introduction of low interest loans and provision of a stable livelihood for 12,600 rehabilitated ex-combatants. In addition, Rs. 2,500 million will be allocated to provide housing and infrastructure for the Muslims who were forcibly evicted from the North by the LTTE in the early 1990s.

Other highlights

Rs. 500 million allocated to offer loans under ‘Entrepreneurs Sri Lanka’ program.
Anti-dumping and countervailing laws to support local industries.
Government will remove up to 1,800 para-tariffs in 2018.
Loans for SME industries, without guarantors.
Rs. 10,000 million allocated to establish an EXIM bank specially to provide long0-term loans to small and medium enterprises.
Rs. 800 million for Export Market Access Program to be introduced for companies with less than $ 10 million in earnings and for potential new entrants to the export market.
Restrictions on foreign ownership of shipping and freight forwarding agencies will be lifted.
All tourism service providers will be required to register with the Sri Lanka Tourism Board to bring the informal sector under the broader tax net and a VAT refund scheme for foreign passport holders at airports and seaports from 1 May 2018.

Conclusion

This Budget is significant because of the Government’s efforts to make the country green by enforcing policies which are obviously aligned with international agreements over climate change. This could attract new money into the country. Then on the expenditure side, the Government expects public investment spending to rise by 20% in 2018, while recurring spending is forecast to decline.

Interest payments are expected to account for more than one-third of total revenue, which is a key weakness in the fiscal profile. High Government debt and the large cost of debt servicing weigh heavily on Sri Lanka’s credit rating and managing that will require sustained fiscal consolidation over the long term with strong leadership.

The new tax on bank debt and basing the duty tax on engine capacity of vehicles instead of CIF needs a rethink. However, to implement the 2018 proposals of the Budget, Parliament will firstly need to approve it and secondly the Green Blue Government will have to work together as a team to implement it. Finally, the proof of the Budget proposals will be in their implementation and realisation.

(The writer is a thought leader)

Anti-Muslim Assaults In Gintota

NOVEMBER 17, 2017

Gintota is currently facing a heavily tense situation with impending riots, by Sinhalese mobs against Muslims.

Reports from the ground said that there is a riot building up currently after a Sinhalese group of youth had assaulted a bunch of Muslims who were playing.

A skirmish between two groups over a bike accident has escalated to violence. According to reports, a Muslim child had been knocked down by a Sinhalese youth. He had been granted bail today and had with a group assaulted a set of youth who had come to play.

A small mosque and several houses belonging to Muslims in Gintota have been attacked by Sinhala mobs leading to major tensions. Police and the special task force were mobilized yesterday and withdrawn this afternoon when tensions eased. It erupted again this evening when a large mob from outside had arrived and started pelting stones at the mosque.

The Muslim youth too are gathering and tensions are rising. The STF and police have been mobilized again, and tear gas has been used at the mob that had gathered. Muslim youth are worried that Gintota may become another Aluthgama.

Updated – 11.50 pm

Police curfew has been imposed in the Gintota police area (Welipitimodara, Maha Hapugala, Rukwatta, Gintota/West and East, Pidiyagama and Kurunduwatta) till 9 am tomorrow following the clash.

Trying to fool all the people all the time

Rajeewa Jayaweera-November 16, 2017, 9:58 pm

The Public Accounts Committee of Parliament held its national awards ceremony at the Parliament complex last Tuesday. It was presided over by President Maithripala Sirisena and Prime Minister Ranil Wickramasinghe.

Evaluation of information gathered from 842 state institutions has resulted in the categorization of their performance into several categories. 81 or less than 10% received ‘highly performing’ ranking.

The news bulletin broadcast by Ada Derana included sections of the presidential and prime ministerial speeches.

The Prime Minister stated, "The President knows what has happened to SriLankan Airlines. Planes have been purchased on huge loans. We cannot easily settle those. The loan amount is USD 740 million. I cannot even tell you as to which one we should pay, during 2018 and 2019 now. The previous government did not even have a proper finance management. However, I would like to say one thing. We should not pass this loan amount to the next generation, and we should pay for the sins we committed."

The President stated, "it will take time to uproot bribery and corruption from society. These things cannot be corrected in a month or two. The projects run by them have both positive and negative effects". President Sirisena highlighted an example of funds passed for a three-storeyed building in a school in Polonnaruwa. The school currently has only two floors even though financial allocations have been exhausted. No action has been taken against those responsible to-date.

The President suggested a separate event for the state institutions which were at the bottom of the list, an explicit reference to the ‘hardly performing’ category!

It would appear, both our President and Prime Minister have taken the entire population of the country to be fools.

It is a given, the deal entered into by the Rajapaksa administration with Airbus Industries at the cost of USD 740 million was enmeshed in corruption. That said, the yahapalanaya government wasted more than a year in cancelling the first four of eight aircraft ordered. The second four are still in the order books of the manufacturers. The fact is, the longer the delay of cancellation, the higher will be cancellation charges when eventually cancelled. The report by Weliamuna BoI on SriLankan Airlines, prepared at the cost of over Rs 3 million is gathering mothballs. Meanwhile, mismanagement of the national carrier continues. Lease agreements of two unwanted Airbus A330-200 aircraft recently extended for three years cost the airline over USD 24 million. Attempts by some board members to hold the official responsible accountable went awry due to a sub-committee appointed by the Prime Minister concluding ‘no error’ in extending the lease agreements. The two-unwanted aircraft are currently severely underutilized. By such actions, the yahapalanaya debt burden will further increase the Rajapaksa debt burden. As for Finance management of this government, the less said, the better. The bond scam took place at the Central Bank under the Prime Minister’s watch. The findings of the three UNP party lawyers appointed to investigate the scam, to say the least, leaves much to be desired. Their detections were so ‘thorough,’ the then Finance Minister’s directive to three Chairmen of state banks to underbid at the bond auctions, paving the way for the windfall received by a private primary dealer was not in their report.

No one expected or expects corruption to be eliminated in a "month or two". However, many expected the prosecution of at least some of the most corrupt (and criminal) individuals of the Rajapaksa regime. In less than two months, the President will complete three years in office. He has passed the mid-point of his term of office. Barring those convicted in the ‘Sil Redi’ case, investigations of many other wrongdoers are in limbo. The Lasantha Wickramatunga, Thajudeen and Ekneligoda murder cases remain unsolved.

Meanwhile, what is happening in the country indicate no signs of corruption and waste being contained, let alone eradicated.

As requested vide cabinet paper no: 16/ 0309/ 702/ 010 submitted by the Prime Minister, approval was granted by the cabinet of ministers to lease a building at 288, Sri Jayewardenepura Mawatha, Rajagiriya to house the Ministry of Agriculture at Rs 21 million per month. It also required a down payment of rent for two years amounting to Rs 504 million. The government valuer’s valuation for the same building amounts to Rs.13.5 million a month. On April 7 this year, Committee of Public Accounts (COPA) informed Secretary to Agriculture Ministry of its inability to approve the leasing of the proposed building without following government procurement guidelines. Nevertheless, the building’s owner DP Jayasinghe Tours & Transport and Secretary Agriculture signed the lease agreement on April 08, 2016. The need to relocate Agriculture Ministry from Govijana Mandiraya to free space for parliament was supposedly a prime ministerial initiative. According to sources, despite payment of rent, the Agriculture Ministry is yet to relocate to the leased building.

Meanwhile, sixteen floors of office space at the newly built and government-owned Suhurupaya building in Battaramulla remain unoccupied.

The President who chairs cabinet meetings was a party to the cabinet approval granted to the Prime Minister’s cabinet paper to relocate the Agriculture Ministry.

These are but samples of a mountain of misdeeds of yahapalana government currently in the public domain. It is clear proof; this regime is no more sincere than the former in eradicating corruption and waste.

It is obvious, neither of these two leaders has read Abraham Lincoln who once said: "You can fool all the people some of the time and some of the people all the time, but you cannot fool all the people all the time."

Rajeewa Jayaweera

Sri Lanka’s child labour reduced by 60 percent

Nadira Gunatilleke-Friday, November 17, 2017

The Child Activity Survey conducted in 2015/2016 records that the child labour has reduced by 60 percent in Sri Lanka compared to the previous Child Activity Survey conducted in 2008/2009.

“Children in hazardous forms have also been significantly reduced”, Labour and Trade Union Relations Minister W.D.J.Seneviratne stated.

Minister Seneviratne pointed out that recently the minimum age of education was raised from 14 to 16 through the regulations of the Education Ordinance by the Ministry of Education.

The MInister also noted that the minimum age of employment should also be raised to 16.

He said this while addressing the Fourth Global Conference on the Sustained Eradication of Child Labour held in Argentina recently.

Minister Seneviratne stated that therefore, the necessary arrangements are being made to amend the ‘Employment of Women, Young Persons and Children Act – No: 47 of 1956’ with the other relevant laws.

The provisions for prohibiting the forced labour of children, prohibiting the child trafficking, Prohibition of Commercial Sexual Exploitation of Children, and Prohibition of Using Children in Illicit Activities are already set up in the Penal Code of the country, the Minister added.

Court rejects Gota’s request

November 17

The request made by former Defense Secretary Gotabhaya Rajapaksa to acquit him and other 7 defendants from the charges in the Avant Garde case was rejected by Colombo Chief Magistrates Court today (17th).

Former Defense Secretary Gotabhaya Rajapaksa and the defendants told Court that the written approval granted by the Bribery Commission when filing the case has not been filed before the court and the defendants could be acquitted as it was against the law to proceed with the case without the written approval of the Bribery Commission.

The eight including Gotabhaya Rajapaksa have been accused of causing Rs. 11.4 billion in losses to the government by allowing Avant Garde Maritime Services (Pvt) Ltd to maintain a floating armoury.

Colombo Chief Magistrate Lal Ranasinghe Bandara rejecting the request and announcing that presenting the Bribery Commission’s approval to the court was not necessary for a case filed by the commission ordered that the case would be heard on 26th February 2018.

One of the suspects, former Additional Secretary of the Ministry of Defense Damayanthy Jayaratna has not been arrested yet. She has gone abroad violating state regulations.

Michigan students pass call to probe Israel investments

University of Michigan students react to a fellow student speaking in support of a resolution to investigate university investments, 14 November. (Twitter)
Nora Barrows-Friedman Activism and BDS Beat 17 November 2017

The student government at the University of Michigan passed a resolution recommending the university’s governing body investigate its investments in Boeing, Hewlett Packard and United Technologies, companies that profit from Israel’s violations of Palestinian rights.

The victory follows years of attempts by student activists to pass such a measure.

Student senators voted in support of the resolution with a vote, by secret ballot, of 23 in favor and 17 against, with five abstentions. The meeting, which stretched from Tuesday evening into early Wednesday morning, was reported to be the longest in student government history.

Over the years, efforts to pass Israel divestment resolutions have included contentious debates, protests and impassioned speeches by students and members of the public inside packed halls during student government hearings.

Israel advocates, meanwhile, have pushed hard against measures to support Palestinian rights on campus. A student speaking in opposition to the resolution on Tuesday evening claimed that divestment measures would bring “extreme divisiveness” to the university, reported campus newspaper The Michigan Daily.

During a 2014 divestment hearing at the University of Michigan, Zionist students and speakers appeared to be well-coached and on message, reported The Electronic Intifada’s Ali Abunimah, who was present.

That initial resolution was “tabled indefinitely” by the student government, leading to a week-long sit-in and protest by University of Michigan students.

A similar resolution was voted down a year later, following intense student organizing campaigns, teach-ins, mock checkpoints and direct actions on campus.

Accountability

The campus group Students Allied for Freedom and Equality (SAFE) has been at the forefront of the divestment push.

In a press release, SAFE members said that the campaign, dubbed #UMDivest, “has uplifted the voices of Palestinians on campus for 15 years” and has been supported by more than 40 student groups, 20 members of faculty and “countless current students and alumni.”

View image on Twitter

#BBUM @THEBSU

We, The Black Student Union, supports #UMDivest

11:54 AM - Nov 14, 2017

View image on Twitter

Zoe @zoeproegler

Dana Greene: “Don’t walk past suffering. Don’t look the other way. Do something.” #UMDivest

10:39 PM - Nov 14, 2017

“We need to continue the coalition building that we have been doing throughout SAFE’s history,” Andrea Sahouri, co-chair of SAFE, told The Electronic Intifada.

“This is not just a Palestinian issue – a violation of human rights threatens the rights of everyone,” she said.

More than 110 alumni of the University of Michigan signed a letter of support for the resolution, saying that the university “should be held accountable to the actions of each and every one” of the many corporations in which it holds investments.

“As lifelong members of the Michigan family, we have the right and obligation to demand that our investments be ethically sound and at the very least, investigated,” the alumni state.

The University of Michigan has previously divested from apartheid South Africa in 1978 and against the tobacco industry in 2000, reports Michigan daily MLive.

In 2015, the student government passed a resolution to force the administration to investigate its investments in the fossil fuel industry.

“Students care”

Students say that after years of working to get a resolution passed, they will now work to make sure the administration begins investigating its investments in companies complicit in Israel’s occupation.

“I’m just hoping the administration can realize that this is what their students care about, and should take action on,” Sahouri said.

Meanwhile, student activists celebrated their long-awaited victory.

TeamSAFE @SAFEumich

And with that, hours later, #UMDIVEST passed. 23-17-5. WE MADE HISTORY

3:19 AM - Nov 15, 2017

#UMDivest resolution passes pic.twitter.com/GcSLdrsb9u
— dania (@astoldbydania) 15 November 2017

dania @astoldbydania

#UMDivest resolution passes

3:03 AM - Nov 15, 2017

Dancing to "Dammi Felastini" by Mohammed Assaf after victory in @UMich #UMDivest campaign pic.twitter.com/6lRwDGkAXv
— Graham Liddell (@grahamliddell) 15 November 2017