A SME policy finally in Sri Lanka

 Wednesday, 18 October 2017

The other day there was a communiqué that Sri Lanka must have a SME policy as per the direction from the leadership of the Yahapalanaya Government. It sure gave breath to the economy that is currently nose diving with a growth at 4.7% and all banks curtailing short-term lending.

This directive comes in the backdrop of the rating agency Moody’s downgrading the Sri Lankan banking sector from Stable to Negative, the core reason being property exposure where nonperforming loans are nudging from 2.7% to almost 4% in State banks.

Sri Lanka 2017

In the backdrop of SMEs contributing to over 70% of the economy, a point to note is that doing business in Sri Lanka is getting tougher even though many expected a pro private-savvy growth agenda-driven strategy post 8 January 2015.

According to the World Bank’s ‘Ease of Doing Business Report for 2017,’ Sri Lanka has slipped to the 110th position from the current 109th rank even though the country has made strong progress in reforms relating to starting a business and protecting minority investors. Hence we see that whilst driving the economy to be contemporary, the country has not kept the pace of growth in relation to other countries.

Apart from the ease of doing business, on the overall brand value of the country we have not made the country attractive on exports, FDI or tourism which are strong economies internally for SMEs. The brand value as per the latest Nation Brand value computation reveals that from $ 74 billion in 2016 it has just moved up to $77 billion which is not healthy for a progressive country and the Government at play that is linking the country to the world.

SMEs – 70% of GDP

If we define an SME, the sector generates more than 70% to Sri Lankan GDP in the focus sector of exports and almost 73% are small and medium enterprises. Whilst there is considerable visibility on the formal sector be it on print or electronic media, we rarely see SMEs in any of the glitzy magazines or the financial section of any of the newspapers.

If numbers are crunched a colossal $ 60 billion contribution comes from SMEs to the economy. It may not be incorrect to say that they are the forgotten entity of the Sri Lankan economy just because their share of voice cannot be heard. Hence the new policy perspective coming into play is opportune but a point to note is that we have heard this rhetoric many times in the last 15 years with a ‘SME white paper’ presented to Cabinet too some years back too. But sadly we never saw the reality hitting the market place.

SME?

The key issue in this sector is that there is no proper definition of what an SME is. This is not unique to Sri Lanka but common to many countries around the world, as classifying an SME can be on a multitude of variables that can vary from one country to another. The absence of data in this uncontrolled sector of the economy adds to the complexity.

In Sri Lanka, some say that an enterprise which has less than 99 people and an asset base of four million can be termed an SME. Then another definition is less than 50 people but an asset base of 20 million. The World Bank states that if any enterprise has less than 99 people, it can be termed an SME. Hence it is very clear that this is one key policy decision that Sri Lanka needs to take as a country given that concessionary financial facilities can be targeted as well as availability of specific business development services can also be made available if there is a clear classification of an SME.

Apart from the fact that over 70% of GDP is generated by SMEs, another important point to note is that from the 5,000 odd exporters that generate almost 11 billion dollars to the economy, nearly 80% of them are SMEs. If we take another sector like the tea industry, from the 300 million kilograms of tea that Sri Lanka produces, almost 70% of them are from the small holding producers that have just half-an-acre of land area, which once again comes under the SME classification. Hence we see that there are many unsung heroes in the SME business who never get highlighted or for that matter identified so that development can be done from a State perspective.

SME tracked back

If I may take you back to how the SME sector evolved in Sri Lanka, apparently way back in 1952, the World Bank had suggested that the Government develop SMEs rather than promoting large industries. Then in the 1960s the Sri Lankan Government began focusing on developing cottage industries and SMEs for the sole purpose of saving foreign exchange through import substitution and to spruce up employment.

Thereafter in the 1977 post-liberalised economy, SMEs were developed to drive the export market, which is actually when the SME sector was unleashed to become the backbone of the country’s economy. With this development came the multitude of Government agencies and private sector banks that were being set up to provide the policy environment to support this fast-developing business sector. This included the department of small industries, CISIR, EDB, SLSI, IDB, SLECIC, Textile Department, National Gem and Jewellery Authority, NEDA, DFCC, NDB, SME Bank and later renamed as Lankaputhra and today, the powerful bank called Regional Development Bank (RDB) to name the key institutions.

In the recent past we have seen many line ministries like the Ministry for Traditional Industries and Small Enterprises coming into the fray, which explains the fast-growing importance of this sector but sadly the key issues have not been successfully addressed.

SME challenges 

One of the key issues in Sri Lanka is that there no clear policy for a typical small and medium scale entrepreneur to be guided. In Thailand there was a SME promotional plan and in Philippines there was SME development plan launched with aggressive field administration. ASEAN got together and launched a blue print for ASEAN SMEs which got traction but Sri Lanka could not latch on to this.

The challenges that SMEs are up against are that to register property it takes almost 258 days and 5% of the land value, which is not conducive to foster entrepreneurship. The lack of business development services, in adequate research and development facilities, quality certification at district level and the linkage to export markets come up as key issues whilst the biggest issue is the difficulty in having access to concessionary finance.

Another point highlighted by the SMEs is that almost 28 types of taxes have to be paid to a bank during the year, which is very cumbersome and time-consuming and it must be a priority item that must be addressed. Some went on to say that a typical SME being stretched for talent is today faced with labour issues given the employment rate being at below 5%.

The thrust by India

If we take a cue from a country like India, way back in year 2010 there were around 30 million SMEs in India but with key changes to policy on the lines discussed above, the progress has been phenomenal. As at today, the number stands at over 600 million SMEs as per the statement by the Minister of Small Scale Industries – Agro and Rural Sector.

The Secretary of the said Ministry went on to say that with minimum policy changes, the greatest results were being achieved, given that there was a passionate commitment to drive strategy. Whilst Sri Lanka continues to be rhetoric in its focus on SMEs, we have not been able to develop the backbone of the country to driving economic growth.

Recommendations

The first key task is for this sector of business to have a single line ministry. This will lead to a clear and focused agenda that can be developed which will be followed by a set of policy guidelines. If this is done, some of the key issues highlighted above will be addressed due to the focused manner of implementation.

Secondly, a SME Policy Unit must be set up so that very close contact can be made with the SMEs, which will result in an updated database which will make the task of developing specific business strategies possible. This can also lead to a once-a-month SME forum to be organised where the key obstacles that SMEs are faced with can be highlighted so that a PPP model of problem solving can be applied just like the ‘Samatha Piyasa’ Exporters Forum that was staged at one time at the EDB.

Thirdly, support linkages can be developed with ITI, EDB, SLSI and the Department of Registration so that at regional level too this service can be accessed by a typical SME. Fourthly, the issue of access to finance must be addressed. This can only be done if financial rigour is being practiced by the SMEs so that when it comes to documentation required for one to take a loan, things are in order.

Maybe the Regional Development Bank can have a unit that helps SMEs structure their documentation in a way that access to finance is possible even if the cost of the capital is not as attractive, the logic being that even if interest rates are reduced to levels that are very attractive, if financial discipline is not being practiced by an SME, access to finance will still remain an issue.

Finally, maybe we need to fast-track the setting up industrial estates in different parts of the country but in a sector specific manner, just like in India, so there is greater focus and stronger networking that leads to the industry as a whole becoming very competitive. This can also help drive specific technology that can be shared by the different competitors as well as the employment can be targeted by sector. A classic example is Atchchuveli industrial zone which could be linked to the South Indian economy.

Conclusion 

Whilst the recent discussion of the SME policy to be launched is positive, I feel even if we can include key strategies into the 2018 Budget for activation will be more beneficial than an elaborate document targeting SMEs, the logic being that getting together a multitudes of SME agencies together can be a nightmare given the politics of Sri Lanka. Hence the Kaizen approach will be more productive.

(The author was a Board Director of the first SME Bank of Sri Lanka when he was the Chairman of Sri Lanka Export Development Board.)

Woman refused admittance to hospital gives birth outside it

October 17, 2017

A woman in Raiwind gave birth outside the District Headquarters (DHQ) Hospital, Raiwind early Monday morning after staff at the hospital refused to treat her.

Initial investigation conducted by the hospital suggests that a lady health worker refused Sameera Bibi — who was experiencing severe labour pains — any medical help because “there were no doctors available at the hospital in the early hours of the morning.”

Bystanders at the scene told DawnNews that no Rescue 1122 ambulances were available at the hospital, one had to be called to the scene and by the time it arrived the child had already been born.

When contacted, Punjab Minister for Health Khawaja Imran Nazir told Dawn that the provincial ministry had ordered an inquiry into the matter.

Source: ‘Dawn’

(Punjab is a state bordering Pakistan and is the heart of India’s Sikh community. Despite bystanders were unable to get a ‘Rescue 1122 ambulance’, India has sent hundreds of ambulances to Sri Lanka. How concerned Indian government is regarding health in Sri Lanka!)

Key witness, Anika, leaves country

Death threats from someone close to Karunanayake family:

By Shyam Nuwan Ganewatte and Sarath Dharmasena-October 17, 2017, 10:36 

Additional Solicitor General Yasantha Kodagoda PC yesterday informed the presidential commission of Inquiry probing alleged bond scams that Anika Wijesuriya, a key witness who testified before the Commission, had left the country due to death threats from someone close to former Minister Ravi Karunanayake’s family.

Anika divulged before the commission vital information with regard to former Finance Minister Ravi Karunayake’s family acquiring a penthouse formerly owned by her at the Monarch Residencies at Colombo 03 Kodagoda told the Commission that Wijith Wijesuriya, a close relative of Anika Wijesuriya had complained to the commission of threats. According to the complaint Anil Nettikumara, who called Ravi Karunanayke, Uncle Ravi, was the man who had allegedly threatened Anika.

Kodagoda said the complaint had been made over the phone on October 14.

Deputy Solicitor General Kodagoda requested the commission to order an investigation into the complaint and take steps to provide security to members of Anika’s family.

The Additional Solicitor General told the Commission that laws had been enacted, enabling witness protection and a separate police unit had been established for that purpose.

Kodagoda said Anika had started receiving death threats after giving evidence before the Commission and as a result she had been compelled to leave the country. He said that Anika had returned to Sri Lanka to attend the funeral of one of her friends last month and she had received death threats again.

After Anika had left the country following the funeral, she had asked her brother to complain to the commission of about the death threats.

Kodagoda told the Commission that Nettikumara had committed a serious offence and the complainant had urged the Commission to take legal action against him.

Commission Chairman Justice K. T. Chitrasiri said the Commission would take necessary action.

Eyes Wide Shut: Ranil’s Governance

By Sarath de Alwis –OCTOBER 17, 2017

Sarath de Alwis

‘Eyes wide shut’ was the title of a film by famed director Stanley Kubrick. Loaded with Freudian subcurrents, the film was about an occult society that eliminates any one who cross its path. A theme that would no doubt appeal to a buccaneer primary dealer in sovereign bonds!   

The enigmatic title is a play on the familiar phrase ‘eyes wide open’. It conveys a subconscious urge to circumvent inconvenient truth.

This writer was reminded of Kubrick’s movie title when reading the spuriously succinct statement from the Prime minister’s office. “Prime Minister Ranil Wickremesinghe is prepared to offer clarifications at any time to the Presidential Commission of Inquiry into bond auctions in view of references to him during proceedings,”

If the President was satisfied with the clarifications from the Prime minister, he need not have taken the trouble to appoint a commission. 

The statement unclothes the man. It is contemptuous of the intelligence of the average citizen. It’s snooty indifference, to what has unfolded before the commission probing the bond scam, is incredible.

Ranil

At the time of writing this missive, on 17th October, the Presidential Commission has officially concluded hearing of evidence. The commission according to reports has said that it will re-sit for a special hearing if clarifications from the Prime Minister were needed.

The Prime minister’s views on auctions and direct placements are recorded in the Hansard. It is also replete with his Horatio like dogged defenses of Arjuna Mahendran, the man he handpicked to implement his macroprudential supervision of the country’s financial institutions and monetary policy.   

   To meet the charge of conflict of interest, Arjuna Mahendran’s counsel elicited the information that his predecessor Niward Cabraal had his first cousin, brother in law, sister in law and the daughter of his brother in-law in banks that were supervised by the central bank.

Quite apart from the puerile theatrics, the revelation has a deeper implication. The oligarchy under the Mahinda autocracy is very much alive and thriving under the UNP wing of the hybrid coalition.

We do not know if the commission report would find who authorized the Chief Dealer of the Bank of Ceylon to bid Rs.13 Billion on behalf of Perpetual Treasuries.

Mahendran

Arjuna Mahendran, Niward Cabraal and their ilk are people with advantages,  as are their patrons. They have one common denominator. They regard themselves as inherently worthy of the leveraging power they possess. Their possessions and privileges are natural adjuncts of an elite class.

Why Oh Why, did Sirisena appoint this commission? No body breakfasting on bonds and billions expected a probe by a Presidential Commission. So, let us be grateful for small mercies. 

Prime minister Wickremesinghe is entitled to the luxury of looking at the fiasco with eyes wide shut. That does not mean that we must buy it. 

What the nation expected was his testimony under oath and subject to cross examination as was done in the case of his protégé who whined ‘ask the prime minister ‘not once but several times.

Our challenge today is to face the fate our good governance experiment full in the face. Or else, we can  watch good governance evaporate with our eyes wide shut!

Malik Samarawickrama and Kabir Hashim Chairman and General Secretary of the UNP have both assured the Bond Commission that Perpetual Treasuries Ltd did not make any cash donations to the United National Party.

Cabraal

Gotabaya Rajapaksa, Defense Secretary at the time of the Welikada prison carnage has assured the committee of inquiry appointed to probe the bloodbath, that he did not order deployment of 798 STF troops that resulted in the deaths of 27 inmates and injuring many more.

Are they to be believed?  In the last two years, we have discovered that truth no longer matters. We are not even skeptical any more. Mahinda defined our truths. Under Maithri, Ranil is constructing his own truths.

It took two years for the Prime minister to table the report of the   committee of inquiry in to the Welikada incident. The Sunday Times which published some of its findings informs us, that it had to make an application under the Right to Information Act to access a copy of the report tabled in parliament in whose custodial care, lies sovereignty of ‘we the people.’ 

The Bond Commission was appointed two years after the first scandal tainted bond issue surfaced. In the intervening two years, the Prime Minister doggedly defended his handpicked Governor of the central bank. The record will show that he insisted that Arjuna Mahendran should be reappointed for a full term.

The Leader of the House, Lakshman Kiriella never tired of insisting that the dismissal of a petition by three public interest litigants by the Supreme court was a total refutation of all allegations of iniquity, corruption or misconduct.

Only the naïve would assume that the Prime Minister wanted a presidential commission on the bond controversy. Only absolute blockheads would assume that the revelations before the commission surprised the UNP leadership.

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Basil’s predictions and his hallucinations…

“A hallucination is a fact, not an error; what is erroneous is a judgment based upon it.” ~Bertrand Russell 

2017-10-18

Pradesheeya Sabhas became a devolved subject under the Provincial Councils in the Local Government system of Sri Lanka. This mechanism of local government was introduced in 1987 through the 13th Amendment to the Constitution.The legislative bodies that preside over the third tier municipalities in the country, they total up to 271 and are collectively responsible for governance of approximately 16,726,000 people. Ranging from 5 to 23 per council, there are 3,624 Councillors in total. 

“The world loves to be amused by hollow professions, to be deceived by flattering appearances, to live in a state of hallucination; and can forgive everything but the plain, downright, simple, honest truth.”

The above quotation is attributed to William Hazlitt (April 10, 1778 – September 18, 1830), an English writer, drama and literary critic, painter, social commentator, and philosopher. He is now considered one of the greatest critics and essayists in the history of the English language, placed in the company of Samuel Johnson and George Orwell. Such a writer would not put his pen on paper and write rubbish.

We would align with the parties in the joint opposition and several other parties. We have also discussed with Northern Tamil parties which are against Tamil National Alliance (TNA)

In relation to Basil Rajapaksa’s prediction on the upcoming local government elections, one must understand the ‘simple and honest truth’ this quotation reveals. 

Only last week this very newspaper, under the headline ‘SLPP slated to win over 200 PSs – Basil’,reported thus: “Sri Lanka Podujana Peramuna (SLPP) front liner Basil Rajapaksa said yesterday they would contest the upcoming Local Government election as a ‘broad alliance’ with other political parties and would secure more than 200 Pradesheeya Sabhas”. There are 271 such councils in Sri Lanka. Of the 271, 65 fall within the Northern and Eastern Province. Northern Province has 28 while the Eastern Province has the rest, 37.

There is no way any party other than the Tamil-affiliated Parties in the North and Muslim-led parties in the East would sweep those 65 Pradesheeya Sabhas, barring Seruvila, Kantalai, Morawewa, Gomarankadawala and Padavi-Sripura in Trincomalee District and, Dehiyattakandiya, Damana, Uhana, Maha-oya, Namal-oya and Padiyatalawa in the Ampara District. These 11 Pradesheeya Sabhas have an overwhelming majority of Sinhalese Buddhist voters in their voter registers.

Altogether Basil, the so-called architect of Mahinda Rajapaksa’s election victories (except when the architect’s designs went wayward in the humiliating defeat at the 2015 Presidential Elections) predicts that his SLPP will win 200 out of the 217 (271-65+11). It is indeed a staggering result, if one could achieve it. A ‘mere’ 92% of the Pradesheeya Sabhas! Basil is not dreaming, he is hallucinating. 

The newspaper report, attributing to Basil Rajapaksa, further says:“We would align with the parties in the joint opposition and several other parties. We have also discussed with Northern Tamil parties which are against Tamil National Alliance (TNA). We have not decided whether to contest under a common symbol or as a front just as how the UNP contested at the last general election or under different symbols”.

Basil said however, they had agreed on several key matters including those of contesting the election campaign on a common manifesto and under the leadership of former President Mahinda Rajapaksa.
Mr. Rajapaksa said they would launch their election campaign considering it as a referendum against the government on its anti-democratic actions, economic crisis, mounting cost of living, selling of state resources, crippling of village level development, non-generation of employments and matters related to the Constitution.

He said they appreciated the government’s move to increase women representation at the LG polls and added that they would field more youth for the election whereas the government acted to decrease the quota for the youth…” he said.

Basil Rajapaksa is no intellectual. He has no ideology in a conventional political sense. His political birth is mainly associated with his biological birth, as a brother to President Mahinda Rajapaksa. His catapulted rise to be reckoned as a ‘political force’ was an ‘accident of birth’. These ‘accident-of-birth-politicians’, during their heyday, nearly emptied the national coffers; they virtually ran the affairs of the country as if the country was their private backyard; when some government officers did not carry out their whimsical orders, they ousted them like an aimless drifter taking out irritating leaches. So steeped in a nauseatingly corrupt brigade of rulers, they mistook the servility of government servants as loyalty of substance; they were so much entrenched in their own comfort zone of political power, once power left them, they simply could not adjust to a powerless state of existence.

Today, the SLFP is in a very sad state. Its leader is the President who was elected by the UNP, Tamil and Muslim votes. More than 75% of the SLFP may have voted for Mahinda Rajapaksa

That is why Basil fled the country within twenty four hours of their humbling defeat at the last Presidential Elections.The FCID had arrested Basil Rajapaksa over a land issue in Matara on May 12, 2016. He was previously arrested in April 2015 too on alleged financial misappropriations in the Divi Neguma Department. Now he is out on bail! 

However, Basil may have chosen to forget why they were sent fleeing on February 8, 2015, but the people at large have chosen otherwise. Of all people, for Basil Rajapaksa to shamelessly come forward and pontificate to us about ‘anti-democratic actions’ of the current regime is simply put, laughable. Let us leave Basil’s ‘political philosophy’ aside and see whether what he predicts falls within the realm of ‘the possible’. Sri Lanka Podujana Peramuna (SLPP) is not Sri Lanka Freedom Party (SLFP).

It’s not being led by a leader who has made any sacrifice of any sort. When Gamini and Lalith left the United National Party (UNP) and formed the Democratic United National Front, they were accepted by the people as ones who had made some sacrifice of leaving lucrative Cabinet portfolios; besides, both of them were widely acclaimed intellectuals who, once charged with responsibility, delivered with flying colours. The Tamil Diaspora may paint them as racists, they may try to sling mud at them without an iota of evidence, but their records spoke for themselves. Yet, when they left a traditionally accepted mainstream party such as the UNP, an overwhelming majority of people chose to stay with the traditional mainstream party. Gamini and Lalith could muster only 23% of the total vote. 

It is a travesty to mention Basil Rajapaksa’s name in the same sentence with Gamini Dissanayake and Lalith Athulathmudali, leave alone make any comparisons. Yet it begs scrupulous inquiry into the inscrutable dynamics that define the current political picture. 

In order to win the political debate in the rural hinterland of Sri Lanka, one invariably has to have a very steeply ingrained political structure that feeds from top to bottom and bottom to top. In the current setup, only the United National Party has that political structure, unbroken and functioning. The Sri Lanka Freedom Party is bogged down in an ongoing intra-party squabble. The so-called Sri Lanka Podujana Peramuna is too new for the people to digest and make a choice on. And its leaders, who they think are their strength, must be made to be their weak-link.

A choice campaign against the Rajapaksas with the necessary evidential material and highly fine-tuned, focus group-tested talking points and carefully crafted campaign slogans could easily deliver the majority of the Pradesheeya Sabhas to the UNP.

But a great majority of youth voters will certainly stay away from the elections. For them, there does not seem to be any magic waiting to be unfurled; there is no real change at the centre waiting to be effected. 

That effect, the effect of non-participation of youth at local elections, will have an impact on all parties. Yet, I’m sure, in the North it will be different. Wait and see, massive numbers of youth would fall in line at the polling stations in the Northern districts, come Election Day. 

Today, the SLFP is in a very sad state. Its leader is the President who was elected by the UNP, Tamil and Muslim votes. More than 75% of the SLFP may have voted for Mahinda Rajapaksa. But that 75% was not enough to vote in a President. As a result of this brutal reality, the fissures that appeared on the outside seem to have been deeply rooted. Some leading SLFPers while enjoying the luxuries of Ministerial portfolios are wilfully trying to pull the rug under the feet of their leader. They still have not come to terms with the Presidency of Maithripala Sirisena. The jealousy is killing them. It is almost childish and utterly deplorable.
 
In this convoluted milieu, Ranil Wickremasinghe is waiting, willy nilly allowing his name to be entangled in the notorious Bond-scam. There are many critics of the Prime Minister who hold the view that he is not fit to be the leader of the country while at the same time queuing up at Temple Trees to pay their pooja at his feet. These are those cocktail-cockroaches, whose wives demand that they be on the invitees’ lists for every event, big or small! 

The writer can be contacted at vishwamithra1984@gmail.com 

How can Sri Lanka gain from Asia’s ‘noodle bowl’ of regional infrastructure?

 Wednesday, 18 October 2017

China’s Belt and Road Initiative (BRI) – a web of intercontinental road, rail and port links – is a hot topic in Sri Lanka. The debate has focused on the implications of the Hambantota Port and the Colombo International Financial City for maritime security in the Indian Ocean.

Yet the BRI is only one of many initiatives for infrastructure financing that are criss-crossing Asia looking for new markets. Sri Lanka’s development priority is to identify the various initiatives, cleverly manage their risks, and use them to build the domestic infrastructure needed to create a vibrant economic hub in the Indian Ocean.

Mega-regional initiatives

Asia’s global economic rise over recent decades underlines the economic case for investing in regional infrastructure, which has traditionally linked two countries for trade-led development.

The India-Bangladesh Electrical Grid Interconnection project and the Dushanbe-Uzbekistan regional road in Central Asia are classic examples. Another on the potential drawing board is the so-called ‘Hanuman Bridge’ that may one day link Sri Lanka with South India, if political conditions are right.

There is little doubt that such cross-border projects have contributed to Asia’s economic development, by stimulating flows of goods, services, investment, and people across the borders of neighbouring countries. By improving connectivity, they have also fostered regional peace and cooperation among the region’s small and large countries alike. Safeguards and public policies have been pursued to reduce negative effects from such projects; including displaced people, environmental degradation, and crime.

Asia’s enormous gap of infrastructure financing – reflecting excess demand for regional infrastructure investment and an inadequate supply of infrastructure finance – has also led to several competing ‘mega-regional’ infrastructure initiatives. Being much more ambitious and complex than two-country regional infrastructure projects, these large initiatives will have significant implications for Sri Lanka.

These initiatives are led by Asia’s rising powers, with motives ranging from philanthropic support to develop poorer countries, to narrowly promoting business interests of the state-owned and private national firms of the rising powers.

Key infrastructure projects in the region are: (i) China’s BRI, financed in part by $100 billion in commitments from the Asian Infrastructure Investment Bank, a $40 billion Silk Road Fund, and additional pledges of $129 billion made by President Xi at the Belt and Road Forum in 2017; (ii) Japan’s $100 billion Partnership for Quality Infrastructure; and (iii) ASEAN’s Master Plan for Connectivity, financed through the $500 million ASEAN Infrastructure Fund. 

Financial commitments, although not yet determined, are also likely to be significant for the Asia-Africa Growth Corridor, led by India and Japan; the South Korea’s EurAsia Initiative; and Russia’s Trans-Eurasian Belt Development. The EU investment plan, on the other hand, raised $136 billion in investments last year; Asia could potentially benefit from this initiative in the long run.

As Asia’s mega-regional infrastructure initiatives are still in the initial stages of development, information about them is lacking. Some seem better designed than others; with deep project management, high quality engineering solutions, strong buy-in from recipients, and sizeable financial commitments. As good management, engineering, and donor practices spread, laggard initiatives may well emulate their predecessors; a coherent and transparent architecture of mega-regional infrastructure initiatives might one day emerge in Asia.

Emerging risks

Aside from an information deficit, multiple and overlapping initiatives in Asia also risk creating a “noodle bowl” phenomenon. The “noodle bowl” effect, which is more typically associated with free trade agreements (FTAs), refers to a situation in which a growing number of overlapping arrangements generate increasingly complex rules and higher transaction costs for countries and business.

Clearly, there are many shared attributes, as well as differences, between the regional infrastructure initiatives. There are commonalities and differences in their vision, ambition, time horizons, financial commitments, co-financing approaches, and implementation strategies.

Presently, Sri Lanka has limited exposure to mega-regional infrastructure initiatives. The Hambantota Port and the Colombo International Financial City have placed Sri Lanka on the BRI’s map. The upcoming project to develop the Trincomalee city and port is likely to be supported by Japan’s Partnership for Quality Infrastructure, as well as by Singapore and India. Others may try to envelop Sri Lanka in their initiatives once the country’s growth picks up beyond the expected 4.5% for 2017.

The threat of an entangled “noodle bowl” of mega-regional infrastructure initiatives may be exacerbated by three factors.

First, scarce finance may be packaged in a complex and potentially way that could make the noodle bowl effect more pronounced.

Asia needs an estimated $2.5 trillion for infrastructure development between 2016-2030, yet it has limited financial commitments of some $400 billion. Recipients and donors want to stretch these limited funds through innovative financial means; such as by co-financing regional projects with development agencies, state guarantees to incentivise private investors, fully-fledged public private partnerships (PPPs), re-packing of various financing instruments, and crowdfunding. Governments will also need to increase spending for regional infrastructure projects in cash-strapped national budgets.

Indeed, a bewildering array of partnerships and instruments will likely make infrastructure financing more difficult to fathom and to coordinate among the various actors.

Second, mega-regional infrastructure initiatives will likely create winners and losers.

Winners arise when initiatives (i) reinforce comparative advantage reflected in trade and foreign direct investment patterns in Asia, to avoid the risk of “building ports and airports to nowhere”; (ii) are backed by open regionalism initiatives and domestic structural reforms; (iii) incorporate adequate safeguards (e.g. for the environment and resettlement) in formulating projects; and (iv) coordinate among themselves in key areas such as planning, project formulation, procurement practices, financing, and implementation.

Losers from initiatives are hard to predict, as the devil is in the detail for specific projects. Landlocked countries like Nepal, or island states like the Maldives, that are excluded from mega-regional infrastructure initiatives, may be marginalised. The same might apply to distant provinces within countries like Sri Lanka’s hill country, or the north. Some transport routes – either land or maritime transport, for instance – and some workers, such as port workers, may also fail to benefit from efficiency-seeking PPPs.

Ironically, the quest to maximise the benefits of mega-regional infrastructure measures could contribute to the “noodle bowl”. Asian countries should collectively adopt offsetting measures in order to avoid this outcome and mitigate the negative effects of such initiatives. Creating Asian variants of the EU’s regional development funds would address regional development imbalance; these funds are best established under the framework of sub-regional cooperation bodies like ASEAN or BIMSTEC.

Third, mega-regional infrastructure initiatives may pose risks to the debt sustainability, governance, and transparency of participating countries.

Developing countries, with weaker financial capacity and governance, may be more susceptible than richer countries to these risks, and may find that their implementation capacity is overstretched. Some label Sri Lanka – with a total public debt to GDP ratio about 80% in 2016 – as a case of a debt-fuelled, infrastructure strategy.

Sri Lanka’s strategy

As more initiatives are established, the likelihood of Asian “noodle bowl” risks increase. Prudent debt management, a strong anti-corruption policy, and capacity building on infrastructure financing help mitigate these risks and realise opportunities in Sri Lanka.

Additionally, Sri Lanka should formulate a national infrastructure development plan to meet its aspiration of becoming an upper middle-income country by 2025 with a targeted per capita income of $ 5,000. Detailing the projects listed in the Government’s recent Vision 2025 document with financing proposals might be the core of this plan. Carefully comparing the financing terms of the plethora of mega-regional infrastructure initiatives with alternatives is another useful step. Blending grant finance with concessionary loan financing would be ideal.

Embedding the financing from mega-regional infrastructure initiatives in on-going IMF/World Bank stabilisation/reform programmes is a difficult but necessary task for infrastructure policy coordination. Finally, in view of the long gestation period of infrastructure projects, initiating a dialogue on infrastructure financing among political parties will help minimise duplication and risks.

The rising powers deserve praise for attempting to solve Asia’s large infrastructure financing problem with mega-regional initiatives. Nevertheless, more thought and time is needed to ensure that these infrastructure initiatives support Sri Lanka’s dream of becoming an Indian Ocean hub.

[Ganeshan Wignaraja is the Chair of the Global Economy Programme at the Lakshman Kadirgamar Institute of International Relations and Strategic Studies (LKI) in Colombo. The opinions expressed in this article are the author’s own. They are not the institutional views of the LKI and do not necessarily represent or reflect the position of any other institution or individual with which the author is affiliated.]

NAMAL’S THEATRICS AND THE INSIDE STORY OF HELLOCORP

15 October, 2017

Gowers Corporate Services, the controversial legal and consultancy firm linked to parliamentarian Namal Rajapaksa, is making headlines again with Ornella Iresha Silva, a Director of the Company and a former Private Secretary to Rajapaksa, being arrested by Police at the Airport, earlier this week.

NAMAL’S THEATRICS AND THE INSIDE STORY OF HELLOCORP.docx by Thavam on Scribd

Despite denial, Gota implicated by ex-STF Chief

Welikada prison compound

Report on Welikada Prison Massacre in November 2012

 By Chandani Kirinde-Sunday, October 15, 2017

The deployment of a staggering number of 798 armed STF personnel to conduct a search of two wards of the Welikada Prisons in November 2012, in violation of all laid down procedure to be followed when Prison premises are searched, led to the riot there which resulted in the death of 27 inmates and caused injuries to many more, the report of a fact-finding committee states.

The 3-member committee, to look into facts pertaining to the incident that occurred at the Welikada Prison on 9.11.2012, was appointed by former Minister of Justice Wijeyadasa Rajapakshe. Its report was tabled in Parliament in February this year by Prime Minister Ranil Wickremesinghe. The Sunday Times filed an application under the Right to Information (RTI) Act to obtain a copy from Parliament early this month.

Among the disturbing findings of the Committee was evidence that, in the case of six of the inmates killed in the incident, T-56 automatic weapons had been introduced where the bodies were found, with a view to projecting they had used the weapons, and thus justify their extermination. As evidence, the Committee produced photographs in which the weapons are absent in the photos taken by the Prison Depts’ official photographer, soon after the incident, but the T-56 are clearly seen near the bodies when the Magistrate visited the scene for the inquest, a few hours later.

Also going by the evidence of the Judicial Medical Officer (JMO), the Committee concluded that three of the inmates were selectively killed.

Among those who gave evidence before this Committee were former Defence Secretary Gotabaya Rajapaksa as well as senior Prison and Police Dept officials but when it came to the question of who had authorised the use of STF personnel to conduct the search, they either said they were acting on the directive of more senior officials or, claimed they were unaware of any such decision.

As the Committee said in its Report, “Ironically, the responsibility with regard to the use of the STF had been found to be nobody’s liability in this instance”
Mr Rajapaksa was among the witnesses who denied knowledge about either the search operation or, the use of STF personnel, stating it was not legally permissible to carry any arms and ammunition into a Prison facility. He had also told the Committee that it was up to the Prison Dept officials to prevent the entry of STF or police officials with arms to conduct a search.

However, the evidence of other officials who came before the Committee was in conflict with the evidence of the former Defence Secretary.

STF Commandant- Deputy Inspector General of Police (DIG-Rtd) Chandrasiri Ranawana in his evidence, told the Committee that the search conducted on 9.11.2012 was not done on its own accord by the STF, but on the direction of the then Defence Secretary, with the coordination of DIG Nimal Wakishta [Director- State Intelligence Service (SIS) and DIG Terrorist Investigation Division (TID) during 2012], after a series of discussions with senior officers of the Prison Dept.

According to DIG Ranawana, the STF was functioning under the Ministry of Defence until the beginning of 2013, and thereafter, came under the purview of the Inspector General of Police (IGP). However, on the day the search operation took place, it was still under the administrative control of the Ministry of Defence.

The evidence by the then Commissioner General of Prions, P.W. Kodipilli, also supported the position of the STF Commandant, that the need for conducting search operations using 798 STF personnel was made at a meeting held at the Ministry of Defence on 17.07.2012, at which Mr Rajapaksa was present.

Mr Kodippili admitted the search was organised under his direct intervention and supervision, in a very secretive manner, to prevent it being leaked to other prion officers including the then Superintendent of the Welikada Prisons, Gamini Jayasinghe.

The Committee which heard from nearly 90 witnesses including inmates, Prisons, Police and STF officials, Defence Ministry and Prisons Reforms Ministry officials as well as JMOs and fingerprint experts, made several observations and recommendations in its report.

The Committee said it found a request had been made by Mr Kodippili to the Inspector General of Police (IGP) N.K. Illangkoon about three months prior to the incident, seeking the assistance of 300 STF personnel to conduct a combined search operation covering Colombo Remand, Magazine and Welikada Prisons. However, the IGP had responded unfavourably to the request, stating that “search operations inside Prison facilities have to be conducted with a proper action plan and coordinated in an organised manner by the STF and Prison officials.

However, in the search operation conducted on 9.11.2012, which took place when the IGP was overseas on an official assignment, the number of STF personnel had risen to 798, to conduct the search at only the Welikada prisons, that too only in two wards, namely ‘L’ ward and Chapel building. The Committee held the view that the presences of 798 STF armed personnel inside a prison facility will itself give way for the formation of a turbulent situation among the inmates, and the use of a paramilitary unit to conduct a search in a civilian institution, was an “appalling decision”, while their entry into the Welikada Prison with weapons, was in total violation of the law.

The Committee also condemned the firing of tear gas into two padlocked cells at the Prison, which was identified as the main cause for the provocation of the inmates. “This action of the STF could be classified as an act of inhuman treatment, as the inmates could not move out of a closed area to surmount the effects of tear gas smoke. It was evident from the evidence that transpired before the Committee that the tense situation within the Welikada prion was a creation of the STF and not the inmates.”

The Committee comprised retired High Court Judge Wimal Nambuwasam (Chairman), Rtd. DIG Asoka Wijetillake and Rtd. Additional Secretary (SLAS), Ministry of Local Govt and Provincial Councils, S.K.Liyanage.

Welikada Prison shooting in 2012: Appeals Court directs AG to file report

Lakmal Sooriyagoda-Wednesday, October 18, 2017

The Court of Appeal yesterday directed the Attorney General to file a report in court regarding the progress of the CID investigation into the Welikada prison shooting in 2012.

A writ petition was sought an order directing the Inspector General of Police (IGP) and the CID Director to commence an investigation into the Welikada prison shooting in 2012 that caused the death of 27 prisoners was yesterday re-fixed for support on December 6.

When the petition came up before Court of Appeal (President) Justice L.T.B. Dehideniya and Justice Shiran Gunaratne, the Attorney General informed court that the CID had commenced a comprehensive investigation regarding the incident that achieved remarkable progress.

Sudesh Nandimal Silva who was in remand custody at the time the alleged incident took place filed the writ petition citing the Prisons Commissioner General, CID Director, Inspector General of Police, Prison Reforms Minister, Rehabilitation, Resettlement and Hindu Religious Affairs and the Attorney General as respondents.

The petitioner (Silva) brought Court’s attention to what he saw and was within his personal knowledge of the tragic incidents to obtaine relief.

On November 9, 2012 at about 1.00 pm, Silva and other prisoners at the Welikada prison received information that Army and STF personnel were about to enter the prison to conduct a search operation. He got to know that here was an argument between prison officials and a contingent of TID and STF personnel waiting at the prison gate on the procedure related to the search operation.

Silva stated that the prison was in Army control until 10 am on November 10, 2012. By that time 27 prison inmates had been killed by the STF, Army, TID and Prison Intelligence. The petitioner has made a complaint to the CID on February 2, 2015.

Silva said that although four years had lapsed since the brutal killings of these prisoners, no action has yet been taken by the police or the Attorney General to conduct the investigation and prosecute the offenders.

This petition was filed through Senior Counsel K.S. Ratnavale and counsel Senaka Perera.

Senior State Counsel Madawa Tennakoon appeared for the Attorney General.

MAHELA AND KUMAR JOIN THE CAMPAIGN TO END VIOLENCE AGAINST WOMEN

17/10/2017

COLOMBO, 17 October 2017 – Cricketing legends Mahela Jayawardene and Kumar Sangakkara spoke to more than 100 school children about the need to end violence against women and girls at the Ministry of Education.

The Minister of Education, the Hon. Akila Viraj Kariyawasam, the European Union Ambassador, H.E. Tung-Lai Margue, and Gender Specialist, Mrs. Sriyani Perera, joined Mahela and Kumar on stage to speak out about the continuing high levels of violence directed against women and girls in everyday life.

Minister Kariyawasam and Ambassador Margue introduced a video, featuring Mahela and Kumar, which will be circulated to schools in the country to increase awareness of the problem. The video was produced by the European Union (EU) Delegation to mark the
International Day for the Elimination of Violence Against Women,

Commenting on the initiative, Minister Kariyawasam said, “The Government of Sri Lanka is strongly committed to the elimination of Violence Against Women, and has taken significant steps to combat its prevalence. However, it still requires consistent and concerted efforts to challenge and change attitudes and behaviours that normalise and reinforce violence against women. I’m really grateful that Mahela and Kumar have been willing to give their time to highlight that this sort of behaviour is completely unacceptable. I’d also like to express my

thanks to the European Union, working in conjunction with the Family Rehabilitation Centre, for their support in raising awareness about this problem.”

“We were delighted when Kumar and Mahela agreed to become our Envoys for Women’s Rights. It’s really important that Sri Lankan men hear from such role models about this serious and deep-rooted issue.” said H.E. Ambassador Tung-Lai Margue. “Studies have shown that more than half of the women in Sri Lanka have experienced some form of violence, but there is a dearth of open public discussion around the problem. Prevention of violence against women and girls starts with better educating and informing children in schools. We believe that having Kumar and Mahela speak about the issue will help make it easier to talk about the issue in public. The initiative is part of our long-term commitment to fight gender discrimination and to raise awareness of gender issues both in Sri Lanka and in the wider world.”

– Press release issued by EU- Sri Lanka offcie.

CBK returns to active politics from Attanagalla

By Harim Peiris-October 17, 2017, 8:37 pm 

An election the opposition has been clamouring for, the local government elections are finally expected to be conducted on or around the 20thof January 2018. Preceding those elections was what some sections of the media described as a purge of SLFP dissidents from the all-important post of organizer of an electorate. JO stalwarts, Kumara Welgama and Mahindananda Aluthgamage, being among others sacked from their positions by President Maithripala Sirisena as SLFP Party Leader. Consequently, President Sirisena appointed a range of new SLFP electoral organizers, mostly fresh, younger politicians from the provincial level. What was clear though, through the sackings, was that the attempted rapprochement between the two factions of the SLFP, those within the government and those with the Opposition, was now effectively over and the battle lines for the local elections have been drawn. We are headed for an essentially a three-way contest, between the two partners in government, the UNP and the SLFP, and the new SLPP - the most likely political vehicle of the Joint Opposition and its smaller allies.

Most interestingly though was the reinduction of retired President Chandrika Bandaranaike Kumaratunga as SLFP organizer for the Attanagalla electorate, a Bandaranaike stronghold which the family has nursed for generations and which has stood with the SLFP during good times and bad, including the nadir of the 1977 defeat. The appointment as electoral organizer, signals a return from retirement back to electoral politics for the matriarch of the SLFP. The Gampaha District, Sri Lanka’s second most populous district on which a national election can turn. With her profile and stature, President Kumaratunga is now effectively the SLFP District Leader for Gampaha.

CBK’s return to electoral politics did not occur in a vacuum, and is largely the logical conclusion of her active architecture of the rainbow coalition which ousted the former Rajapaksa Administration in 2015; a feat thought near impossible then, both due to President Rajapaksa’s popularity, and more importantly due to the fractious nature of the political opposition around 2013 and 2014. But President Kumaratunga sensed the winds of change, did the impossible, and formed the grand national "rainbow" coalition of the NDF, and of course the rest is our nation’s recent history.

The political story of the SLFP post the elections of 2015 is that it did not fully fall in behind President Sirisena, with a section of the Party remaining in the opposition and fashioning themselves as the Joint Opposition, while a section of the Party joined the National Unity Government or the grand national coalition of the two major parties. Joining the intra-party fight at an early stage, though initially in only a semi-executive manner was President Kumaratunga who made no secret of her desire to keep the Rajapaksa’s from ever making a political comeback to the national leadership. President Kumaratunga is also actively committed to the National Unity Government, believing that a measure of consensus between the two major parties is required to give effect to the next generation of state reforms - economic, political and social - required to solidify our transition to a post conflict, upper middle-income country, with social cohesion and justice.

Within the SLFP, the return of CBK to a post of electoral organizer, and especially in the key Gampaha District, puts her on SLFP party parity status with Mahinda Rajapaksa, as a formidable political player and former president, with a mass public following with an electoral appeal to the base of the SLFP party faithful. It significantly strengthens President Sirisena’s hand, with President Kumaratunga aligning her support in line with President Sirisena’s.

The return to active politics from retirement is a not unusual political phenomenon globally, while how it plays out in Sri Lanka and the SLFP will remain to be seen. The most well-known international example is that of President Daniel Ortega, head of the Sandinista political movement in Nicaragua, who governed Nicaragua for eleven years from 1979 to 1990 and then made a comeback after seventeen long years, being re-elected President in 2007 and governs to date.

The Rajapaksa-led Joint Opposition, however, also did not let the grass grow under their feet during these past two and a half years, and have formed the Sri Lanka Podu Jana Pakshaya (SLPP), under Basil Rajapaksa, which is likely to be the political vehicle of choice for the Joint Opposition (JO), for the local government elections. This sets up an interesting three-way contest, between the UNP, the SLFP and the JO (SLPP), the first time in nearly three decades when one of the two major parties faced an election seriously divided, the prior occasion being when late Gamini Dissanayake and Lalith Athulathmudali broke away from President Premadasa and the UNP to form the DUNF (Rajaaliya). In the ensuing election, the DUNF came a respectable third place, but the weakening of the UNP through the schism witnessed the return to power of the SLFP in 1994, under the then young and newly returned from self-imposed exile, daughter of the SLFP founder, Chandrika Bandaranaike Kumaratunga.

The January 2018 local government elections will also end up being a three-way political context and it remains to be seen what the outcome would be. The practice of coalition or alliance partners contesting elections separately and then forming post-election alliances is not unusual, not just globally, but even in Sri Lanka, where essentially the August 2015 General Elections was contested while the SLFP was in coalition with the UNP in the post presidential election national unity government.

Perhaps it is appropriate to conclude with a quote from a senior Indian journalist and political analyst who once told me, some years ago, "it would be a serious political analytical error to ever count out and disregard, the Gandhi’s of India, the Bhutto’s of Pakistan and the Bandaranaike’s of Sri Lanka". With general elections due in Pakistan in 2018, with local elections due in Sri Lanka early next year, and Indian elections due in 2019, time will tell to what extent the old adage still holds true.