Positive Occurrences Over The Last Three Months in Sri Lanka

When it comes to the recent state of events in Sri Lanka, especially relating to politics, there has been a lot of talk of negative issues. Recent issues include the constant strikes burdening the public, the garbage problem, the threat of dengue and economic issues that include the cost of living & the debt repayment Sri Lanka is going through. I’m writing this article to point out that while there are negative issues occurring, there are also positive ones. I’ve seen what appears to be an increase of positive incidents in Sri Lanka politically over the last three months and will be listing some of them.

GSP+

Firstly, in May Sri Lanka regained the European Union’s (EU) service of GSP+. GSP+ is a trade service given to developing countries for full removal of tariffs regarding all products covered under the product categories of the GSP service that has less benefits. We earlier had this service, but it was suspended by the EU in 2010. The EU is Sri Lanka’s biggest export market and this gives a much needed boost to our exports which hasn’t been performing great recently. GSP+ enables Sri Lanka to increase and diversify its exports. Sri Lanka began receiving the benefits of this service on the 19th of May.

Cabinet Reshuffle

Shortly afterwards there was a cabinet reshuffle that occurred on the 22nd of May with more changes made a bit later. I think positive changes were made when it came to economic affairs. I thought making Mangala Samaraweera Finance Minister was a good decision as I consider him to be a better Minister than his predecessor. There were further changes made to portfolios on the 31st of May, and I’ll be referring to what I see as two positive economic changes from that. Eran Wickramaratne being appointed as State Minister of Finance was very good as it’s an area he's an expert in due to his banking career and having studied Economics at the University of London. Dr. Harsha De Silva was given the portfolio of Deputy Minister of National Policies and Economic Affairs which gives him a chance to work in his field being an economist. These three men have the potential to turn around the Sri Lankan economy, especially as the last two are of a higher quality than the average politician.

Rajagiriya Flyover

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

Banning of Bottom Trawling

A destructive form of fishing called bottom trawling is practiced by both Sri Lankan and Indian fisherman, with fishermen from India being the strongest offenders of this issue in Sri Lankan waters. On the 6th of July, Bottom Trawling and other illegal fishing activities was banned with the passing of a bill in Parliament. This was a good move for environmental reasons and it helps Northern fisherman as bottom trawling is part of the problem of Indian fisherman violating Sri Lanka’s sovereignty by fishing in Sri Lankan waters.

Sri Lanka Customs Online Payment Platform

On the 20th of July, an online payment platform for customs declarations was launched in Sri Lanka. It’s called LankaPay Online Payment Platform done in partnership between Sri Lanka Customs and the Central Bank of Sri Lanka. This digital system greatly improves the efficiency of Customs payments, especially for exporters/importers.They previously could only make direct Customs payments online via two state banks, but now can make direct Customs payments online via any bank. This system is implemented under the guidance of State Minister of Finance Eran Wickramaratne.   

New Economic Advisers

In July, there were the appointments of two well regarded Sri Lankan economists as advisers to the Finance Ministry. Firstly, Deshal De Mel who works as a Senior Economist at Hayleys Group was appointed as an Economic Adviser to the Ministry of Finance. Secondly, Professor Razeen Sally based in Singapore who is the Chairman of the Institute of Policy Studies was appointed as a Senior Adviser to Finance Minister Mangala Samaraweera. Both these two individuals have been giving their criticisms of Sri Lankan government policy, especially relating to the economy. They in fact both gave lectures with their criticisms at Public Policy Think Tank Advocata Institute last year being ‘What’s wrong with Sri Lanka’s economy?’ by Deshal De Mel and ‘Sri Lanka: Three Scenarios For the Future’ by Razeen Sally. While I wouldn’t go as far as they did in some of their criticisms, the fact that these two men who have major criticisms of Sri Lanka’s economic policy are working for the Finance Ministry as Economic Advisers show that the new leadership at the Finance Ministry is not appointing yes-men, but intelligent economists who have good ideas of what should be done instead. Hopefully, their input will be able to reduce the negative economic policies and bring about an increase of positive economic policies.

Passing of the Foreign Exchange Control Bill

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

Government Action on Strikes

As I mentioned at the start of this article, a problem currently going on in Sri Lanka are the constant strikes that cause difficulty to the public. A problem has been the government’s policies regarding these strikes including their lack of action to prevent these frequent occurrences. On the week beginning Monday 24th July, workers of the Ceylon Petroleum Corporation went on strike. On Tuesday 25th July, the government declared in a Gazette under the Essential Services Public Act of the storage, transport & distribution of petrol being mandatory and that anyone who fails to report to work will get terminated from service. On Wednesday the 26th of July, the Sri Lanka Army was brought in to distribute fuel. Hopefully this response by the government is a sign that they’ll respond better to strikes and take action to prevent ones from happening in the future. It’s worth noting that early this month, UNP MP Mohamed Mujibur Rahman called for new laws and regulations to address the strikes issue.

Hambantota Port Lease

On the 29th of July, Sri Lanka signed a signed an agreement with Chinese State Entity China Merchant Port Holdings to lease the Hambantota Port. I’m aware that this deal is unpopular with some saying we are selling out to China. Some aspects of the deal may not be the best for Sri Lanka, but I think that it was a good decision that needed to be made. Sri Lanka is facing a massive debt crisis, and this payment eases that as it’s bringing in US $1.12 billion which is a massive amount of money. The sale also is beneficial as the Hambantota Port was a loss making institution bringing economic damage to the country. Hopefully, China Merchant Port Holdings will make the Port profitable and there will be a creation of Sri Lankan jobs as well. It’s also worth noting that this isn’t a sale, but a lease and that it’s a Public Private Partnership with Sri Lanka still having a stake. The agreement gives China Merchant Port Holdings a 70 percent stake and Sri Lanka a 30 percent stake. Dr. Parakrama Dissanayake, Sri Lanka Ports Authority Chairman, said on the 31st July episode of the political talk show Face The Nation that this is the largest FDI we have ever received at US $1.12 billion. Sri Lanka hasn’t been having enough FDI coming in, so it’s very good to see FDI of that scale coming to Sri Lanka.

Action Against Bribery

A form of local government in Sri Lanka is the Pradeshiya Sabha. On the third of August, Ranil Madawa Kamal Nilame a former Rambewa Pradeshiya Sabha Chairman got sentenced to five years in jail as well as a Rs. 40, 000 fine for soliciting and accepting a bribe over a youth who was seeking employment in Korea. This incident occurred 10 years ago in 2007, so it reveals the broken legal system we have in Sri Lanka where things take far too long. However, it’s good to see a government official being sentenced for bribery based on efforts by the Commission to Investigate Allegations of Bribery or Corruption (CIABOC). It’s interesting to note that on the 16th this month another former Pradeshiya Sabha (Tangalle) Chairman was arrested for allegedly accepting a bribe. It’s possible that CIABOC is functioning with some improvement due to these instances. Let’s hope they’ll continue to get more efficient and will work hard so that in the not too distant future they’ll make arrests and actually deliver the much needed prosecutions for the figures said to be involved in bribery and corruption of the previous government.

Waste-To-Energy Power Plants

On the 10th of August, two solid waste-to-energy power plants began construction as Public Private Partnerships. These projects are led by the Ministry of Megapolis and Western Development and will be bringing in US $193 million in FDI. The plants will convert the waste generated in Colombo and Gampaha into energy. This project is a double achievement for Sri Lanka as it will help solve the garbage problem Sri Lanka is currently facing as well as bring in the much needed FDI. There is also going to be a third project of this sort commencing soon bringing in an investment of US $91 million.

Road Discipline

There are positive moves taken regarding road discipline. On the 11th this month, the Cabinet of Sri Lanka had made important decisions regarding traffic. They had approved increased fines for issues that include driving under the influence of drugs or alcohol, entering irresponsibly into a railway crossing, driving without an authentic licence and driving without proper insurance among others. The Cabinet also decided to install CCTV cameras near areas prone to accidents and use them to identify and punish those guilty of offences. Also, earlier this month the Ministry of Megapolis and Western Development announced that they’ll implement priority bus lanes in Colombo and its suburbs to ease traffic congestion. The first phase of implementation began on Tuesday the 15th of August, with there being further implementations over the next four weeks each week as well as another priority lane to be implemented on the 30th of November.   

Inland Revenue Bill

A new Inland Revenue Bill is being discussed right now with the intention of passing it in Parliament before the end of this month. Finance Minister Mangala Samaraweera mentioned that in Sri Lanka indirect taxes currently account for 80 percent of tax revenue with 20 percent accounting for direct taxes. It is important to note that this figure is actually higher as economist Jayani Ratnayake said in an 18th August interview on Biz1st Review 360 that indirect taxes accounted for 83 percent of tax revenue in 2016. The Minister noted that this law is the first step of reducing indirect taxes to 60 percent and increasing direct taxes to 40 percent. This should benefit low income earners. Another objective of this bill is to create an investor friendly environment by simplifying the tax structure to attract more FDI. This bill is also brought to deal with the problem of tax evasion. The Finance Ministry has been having discussions with stakeholders on this bill. On the 18th of August, Minister Samaraweera stated that the Inland Revenue Bill will be presented to Parliament the following week and that the bill will be passed by the 25th of August. He also stated that most of the concerns raised regarding this bill will be addressed.

Conclusion

An issue I’ve had with this government was their slow pace of reforms, especially as they were elected on a reformist agenda. Thus, it’s a positive sign to see more reforms recently with the banning of bottom trawling, the passing of the Foreign Exchange Control Bill and the likely passing of the new Inland Revenue Bill. The Inland Revenue Bill appears to be the only major reform of the three reforms, and unlike the first two ones hasn’t been passed yet. This could be a sign of faster reforms, and it would be good to see other major reforms along the lines of the Inland Revenue Bill being passed before the end of the year.

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

The Importance of Patience with Investigations

When Sri Lanka’s current President, Maithripala Sirisena was elected on the 8th of January 2015, one of the themes of his campaign was to stand against corruption. As a result, investigations into allegations of corruption and other criminal activities of the previous regime began shortly after he came in to power. I am aware that many Sri Lankans don’t have faith in these investigations. I too would have liked the investigations to be faster and more efficient, but I do notice progress and believe it is important to be patient in these investigations. I will explain why I believe they take time referring both to the complexity of the procedures and the obstacles that delay these investigations.

If anyone reading this isn't Sri Lankan or is unfamiliar with Sri Lankan politics, there is something I’d like to say about the previous government. I believe one of the problems of the previous government was nepotism. There were family members of Ex-President Mahinda Rajapaksa involved in government who include his brothers Gotabaya Rajapaksa (Defence Secretary), Basil Rajapaksa (Minister) & Chamal Rajapaksa (Minister and then Speaker) and his sons MP Namal Rajapaksa & former Navy officer Yoshitha Rajapaksa. I mention their names in order to inform readers of their connection to the Ex-President as they will be referred to in this post.

First of all, I’d like to point out that investigations of this nature take time. You can’t just use Presidential Powers to throw people that you suspect in jail. If you do that, you are resorting to the same tactics that the previous administration used, such as when they imprisoned 2010 Presidential Candidate Sarath Fonseka after his defeat. Doing that goes against the rules of justice. The work of these investigations is to be carried out by the organisations conducting them. Human rights lawyer and former executive director of Transparency International Sri Lanka J.C. Weliamuna spoke of this in the Sunday Observer: “There should not be any difference between the previous government and this government. They should not only take the last government to task but I am sure once this institution is well established, which is still happening, they will go into the complaints against this government, also financial investigations are not like investigating murders or any other crimes. It takes sometimes months and years. It is a very complex diligent procedure and they are taking that fairly seriously and I am satisfied of the way they are working and CID and FCID are functioning.” It’s interesting to note that he mentioned that the FCID (Financial Crimes Investigation Division) is still being established. That institution was founded a year ago. Further, Deputy Minister Eran Wickramaratne mentioned in a recent interview (dailymirror.lk) that he thinks “that nothing can be rushed and whatever the action that is needed to be taken should after conducting thorough investigations. Innocent people should be protected and only those who have infringed the law should be taken to task.”

We don’t know how true the government is to their word about these investigations being independent, but Deputy Minister Eran Wickramaratne stated in a YouTube excerpt of a speech he made last March that people ask him about the investigations, elaborating “I’ve always wondered why people are actually asking a politician that question because this is not the role of the politician, this is the role of law enforcement and then subsequently the role of the judiciary. But the fact that they walk up to you and ask that question is because of our long history of politicisation of institutions of government in this country and that’s precisely what we want to depoliticise so law enforcement authorities are free to act and also that the judiciary will be free to act in the way they see fit”.

I will now list two reasons why these investigations take time. Firstly, persons of the previous administration, especially those at the very top have been taking measures to cover themselves and also the work of their lawyers can prevent their arrests. I believe that the files had been destroyed in government offices last year just as the transition of power occurred. Secondly, a problem with Sri Lanka’s legal system is that issues are known to move quite slowly.  

One obstruction last year was Justice Jagath Balapatabendi who was appointed by the previous President as Chairman of the Bribery Commission. The then speaker Chamal Rajapaksa was reported to have invited and met with Justice Balapatabendi in the first half of 2015. It is possible that this meeting was for Chamal to uncover information about the investigations against members of his family & political party and/or influence the investigations in their favour. A few days after this incident a commissioner resigned for “personal reasons” implying it was due to Justice Balapatabendi. This information was obtained from an article by Dr. A.C. Visvalingam. Justice Balapatabendi did eventually leave his office likely by resignation as he was replaced last October by Justice Titus Bodhipala Weerasuriya. His replacement should hopefully have improved these investigations. Like Justice Balapatabendi, the previous Attorney General Yuwanjana Wijayathilaka was appointed by the Ex-President and appears to still be loyal to him. He finished his term in January and the new Attorney General Jayantha Jayasuriya was appointed this month. I hope Jayantha will improve the efficiency of the Attorney General’s department.

There have been several incidents of politicians and their associates being summoned (often repeatedly) to record statements over their allegations. People being summed include Mahinda Rajapaksa, his wife Shiranthi Rajapaksa, their son MP Namal Rajapaksa, Gotabaya Rajapaksa, Ex-Minister Wimal Weerawansa, former Presidential Secretary Lalith Weeratunga, former Provincial Minister Udaya Gammanpila, previous Central Bank Governor Ajith Nivard Cabraal among others. I know these persons have not been charged yet, but the fact that many people have been summoned and some of them repeatedly shows those behind the investigations are working hard at it.  

I have seen some progress on the investigations and will now list some arrests that occurred last year.

• In March, MP and former Deputy Minister Sarana Gunawardana was arrested over a breach of trust & a financial fraud.
• In April, Ex-Minister Basil Rajapaksa was arrested along with two other personnel relating to the ‘Public Property Act’.
• In May, former MP Sajin de Vass Gunawardena was arrested on allegations of misusing vehicles that were property of the Presidential Secretariat & also Former Minister Johnston Fernando was arrested on allegations of misappropriations he conducted at Government owned business Sathosa.
• In December, former chairman of the Securities and Exchange Commission (SEC) Nalaka Godahewa was arrested along with two others over an allegation of a financial irregularity said to have taken place at SEC. 

Fast forward to 2016, where last month Yoshitha Rajapaksa was arrested over alleged financial irregularities conducted at his television station Carlton Sports Network (CSN).

I am aware that almost all of these persons have got bail soon after and released, but these are the first steps taken in the justice process. It’s important to note that in December, Basil and Kingsley Ranawaka (one of the other two arrested with him last April) were called to appear in the Colombo High Court on the 10th of March which is less than a month away.  

This is my take on the situation. It is true that matters have proceeded slowly, but there have been some arrests, which I see as an important step in the process. I hope that the trials for those arrested won’t take a long time to begin and that those guilty of offences will be brought to justice.