By Ameer Ali –
A deliberate fear has been injected among voters by champions of the old order that NPP’s system-change through social revolution, apart from other damages critics claim, would first and foremost destabilize the economy and jeopardize even the little stability that Ranil Wickremesinghe had managed to achieve under IMF direction. On his part, RW too warns listeners attending his campaign rallies of the return of long queues and disappearance of gas cylinders were Anura Kumara Dissanayake be elected as President and NPP allowed to form government. Even Sajith Premadasa and his lieutenants equate AKD’s emphasis on revitalizing the domestic real sector with the 1970 Sirimavo government’s disastrous inward-looking economic policies and import substitution strategy. It is time to demolish these distortions and scaremongering and explain to voters the real nature of NPP’s economic strategy.
To start with, one must remember that NPP is the child of aragalaya, and the generation that led that revolt with the demand for system change, unlike its predecessors in the previous century, is part of a global family of network societies with instant connection with people and events and not willing to live isolated in a closed society with a closed economy. This generation aspires Sri Lanka to remain an open society with an open economy but developing competitively and progressively to win a respectable place in the world arena while protecting itself from unwanted pressures and interference from foreign quarters. NPP’s economic strategies should and does therefore reflect this overall objective, and its policies should be looked at and assessed accordingly.
There are three areas or issues on which the critics have raised their concern abut NPP’s economic trajectory: its policy towards IMF assisted economy revival agenda, future of the market economy and role of foreign investment. AKD has declared in no uncertain terms that his regime would go along with the IMF program but would renegotiate with its author for certain adjustments in the agenda especially with a view to strengthen the domestic real sector and reducing the burden on the working poor. This should have been done at the start when RW invited IMF for assistance. But he and his delegates didn’t. As a result, it is the lower income groups that are bearing a greater share of the cost of stabilization and recovery. The IMF recommended handout through RW’s aswesuma is no answer to this injustice. Given Sri Lanka’s dire financial strait IMF was right in insisting on fiscal consolidation to reduce ballooning budget deficits. This should be achieved by increasing government revenue while reducing its expenditure. Increasing tax rates and profits of state-owned enterprises are the safest means to raise revenue. When the SOEs are operating at a loss the onus of raising revenue falls on taxes. But the question is who should pay the tax and at what rate? No one pays tax voluntarily. But IMF prefers broadening the taxbase to spare the rich and wealthy. RW’s VAT was the result which hit the low-income groups harder than the moneyed class. However, those who are familiar with the Laffer Curve would know that lower taxes bring in more revenue than higher taxes, an idea originated from the 14th century sociologist Ibn Khaldun. But that is valid only if tax collectors are honest, efficient and beyond corruption. Sri Lanka’s tax department has a lot to answer for the low tax revenue. Ultimately therefore, the problem lies with governance. That was why even IMF insisted on governance reforms. It is in this respect NPP’s resolve to change the political culture and governance of the country stands tall. With fairer tax structure NPP could raise more revenue than RW’s VAT and other taxes. Hence, AKD’s proposal to renegotiate with IMF should have sympathetic hearing. IMF is therefore not going to suspend its program if AKD were to be elected. There are also geopolitical factors that would keep IMF continue with its mission whoever is elected as president.
Likewise, AKD has assured that NPP is not going to kill the free-market economy and free enterprise to be substituted with the outmoded state capitalism. But the free-market economy should be made totally free without artificial rigidities and mafiosi operations, as it is found at present. For instance, is the local rice market free of collusion? Aren’t the rice millers acting as a mafia and exploiting both the paddy growers and rice consumers? The tragedy is that this mafia has its connections inside the government circle and RW has done nothing over the last two years to cut them. Once again it is a matter of bad governance.
Finally, NPP’s position on foreign investment. AKD had reiterated that he would welcome foreign investors, but again the question to face is why they are reluctant to invest in Sri Lanka. Remember how Gota handled the Colombo Harbour West Terminal issue. He unilaterally abrogated the original agreement with India and Japan by yielding to the pressure from nationalist trade unions and Buddhist priests. Similarly, he halted the Japanese rail project after Japan had started working on it. Following that debacle, Mitsubishi Corporation decided to wind up its operations in Sri Lanka. What message do these incidents send to foreign investors? Will they have any confidence in Sri Lankan governments? There was no transparency in many of the deals governments made with foreign investors. Therefore, AKD’s quest for FDI should start with rebuilding this lost confidence by reforming governance. Even then Sri Lanka needs to be selective in choosing the right type of FDI so that the projects started by foreign investors will have strong linkages with the local economy. NPP’s revitalization of domestic real sector must benefit from FDI. Otherwise, FDI built ventures would just remain as export enclaves with little connection with the local economy like the British plantations in the 19th century. Currently, the Port City Project resembles such an enclave. Thus, NPP while welcoming FDI would have to be selective and channel those investments to fill those gaps left by domestic investors because of lack of funds. Doesn’t this policy make economic sense?
The success of NPP’s entire economic trajectory hinges on reforming governance. This is the pillar on which the new system would be built and that was the message from the aragalaya generation. AKD’s resolve to change the rotten political culture and moribund system of governance should therefore stabilize the economy faster with IMF assistance and lay the foundation for sustainable economic growth with equity. Voters seem to have understood this message for the first time. System change warrants a new constitution and AKD has promised to introduce one. In contrast, none of the other contenders have anything better to offer than the same smorgasbord of promises within the existing political culture and governance. Either the country enters a new era on 21st with AKD at the helm or continues to struggle facing crisis after crisis under the current system.
*Dr. Ameer Ali, Business School, Murdoch University, W. Australia
Ajith / September 8, 2024
Exactly within next two weeks we will know who will be the 9th Executive President of Sri Lanka. In fact this election is the first election that happen after the Economic Crisis.So far, no one was charged or punished for this crisis. The victims of the crisis are Sinhalese people. This is the first time only ordinary Sinhalese people experienced the impact of the Political culture they preferred for the past 75 years. This is the first time they challenged the executive Power which claimed that I am above the law, I am not answerable to the people. So far, no one answered who and who are responsible for the crisis and what happened to them? Now, the People have to make a choice. That choice will decide the future. But they did not get the answer to their questions. All are telling I will do this, I will give you but they are not prepared to what did we did in the two years about those who brought us to that crisis. why?
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Mani / September 8, 2024
AKD might talk about the IMF, market economy and FDIs but the undecided voters are not as gullible as Prof Ali in taking AKD at his word. They recognise that the NPP has merely piggy-backed on the aragalaya to gain power.
“One of the remarkable features of the political behaviour of the JVP was its ability to articulate two parallel political agendas at the same time – one for the wider masses and another for inside the party… The party leadership had a clear idea as to the ideological clash between the inner party agenda and the public agenda. For example,
the party leadership was conscious that it could not integrate Sinhala-Buddhist nationalism into the official party ideology even though it used the former on tactical grounds. In executing this extremely subtle dual strategy, a sharp differentiation had to be maintained between the party activist and the masses. The notion upakrama (tactics) was crucial in the JVP political language in explaining this dual strategy to party activists. Whenever a party cadre showed any uncertainty over the dual strategy, the well known answer was “eka upakramayak sahodaraya” (comrade, it is
only a tactic).” (Dewasiri 2010, Mainstreaming radical politics in Sri Lanka)
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Mani / September 8, 2024
Btw, Dewasiri, quoted above, was the former FUTA leader and sympathetic to the JVP/NPP cause.
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gamini / September 9, 2024
What assurance can Dr. Ameer Ali offer, that a collapse of the Economy and the breakup of the System of Governance will not occur in case the NPP wins?
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Native Vedda / September 9, 2024
gamini
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“What assurance can Dr. Ameer Ali offer, that a collapse of the Economy and the breakup of the System of Governance will not occur in case the NPP wins?”
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SJ will advise AKD to enforce measures like “Cultural Revolution” purge a few innocent party members or alternatively AKD could follow the Khmer Rouge, “intensifying the paralysis with a series of ideologically based edicts: shutting down banks, sometimes physically destroying them, abolishing the national currency and free markets, confiscating private property, and start from year ZERO.
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ramona therese fernando / September 9, 2024
NV,
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Well, the Khymer Rouge Tactics has finally worked its wonders, and Cambodia is now one of the fastest growing economies on the planet. Our Motherland does not need to go back to the time of the Khymer Rouge, but Cambodia can loan us its expertise on systems change and governing matters that boosted it up to its eventual success….we can therefore have the privilege of skipping the bad parts. Anyway, nothing can be as bad as especially what the UNP did to the struggling Masses who called out for some deliverance. Purging a few politicos would be the expected thing rather than imprisonment, torture, and death of masses of young men who had been looking for decent employment.
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LankaScot / September 9, 2024
Hello Ramona,
I don’t know which Khmer Rouge tactics you are talking about. Have a little History Lesson from this https://reason.com/2024/01/12/pol-pots-atrocities-still-matter-45-years-after-khmer-rouges-fall/
Best regards
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ramona therese fernando / September 9, 2024
LankaScot……sounds like what the Lankan wannabe capitalistic governments, especially the UNP, continually did to the suffering Masses. Sounds like the French Revolution that created the liberty, fraternity, equality concepts for the world. Sri Lanka can now skip over the guillotine parts and implement directly what they established.
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Ajith / September 9, 2024
What assurance can Dr. Ameer Ali offer, that a collapse of the Economy and the breakup of the System of Governance will not occur in case the NPP wins?”
The question should apply to all not only for NPP. Assurance can be given by any one but in reality it is impossible/ Even no one can guarantee that the Presidential Election will be done in September 21st? President RW loudly claim that if he is not elected the people have to go back to streets in que for gas, electricity and milk. Is it a guarantee or threat?
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Naman / September 9, 2024
I too want AKD to win the Presidency and establish Law & Order to country.
Lack of it has caused the crooks to hold on to power and to live an affluent life. The so called Elites prefer the current system to continue but the fair minded sensible Sri Lankan prefer to have the overdue SYSTEM CHANGE that NPP promises. Sajith Premadasa’s system change is a fake one which will allow the exploiters to thrive.
Tamil voters should realise what is good for the majority race is GOOD for them as well. Hence they should actively support AKD’s 🧭 X (Compass).
With NPP’s victory people of this country could celebrate Deepavali in grand style as evils would have been defeated.
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Naman / September 9, 2024
I do feel NPP ‘s campaign hasn’t reached the rural base in the North & East of the country. Those who are not so rich in the towns and cities I find prefer for the same SYSTEM to continue so that they can have their livelihood preserved.
The SYSTEM CHANGE could be wrongly assumed to mean complete change to the present system. It isn’t so. We simply want the CHECKS & Balances in the process of GOVERNANCE established in SL.
ie Professionals doing their jobs without falling on to the feet of the politicians
Judges who did that should feel very ashamed of it. MR was rescued by one such Justice nearly 20 years ago.
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Naman / September 9, 2024
Majoritarianism was THE cause for the country’s FAILURE. Failure to develop the North and East of SL because its majority residents were Tamils too contributed to the UNDER DEVELOPMENT also a cause of economic collapse. Development of KKS and Trinco PORTS and building Hambantota harbour would have been very beneficial to SL.
Minorities thriving will help all to live in a more prosperous successful country
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SebastianSR / September 9, 2024
It is not so simple to say that Majoritarianism was the cause of the country’s failure, although it is a partial truth, since SWRD’s nationalistic and socialist programs were too dual attacks on the stable development. Initially, most of the industrialization investment was in the North and East, with the cement factory, the Soda Factory, Valachenai, Pulmodei mineral sands etc. etc., put in place when GGP was the minsiter of industries under the first UNP government. Later developments also came in with boat building projects in Karainagar and so on. The Jaffna university came very late mainly because of competition and bikering among Tamil leaders, similar to the battle of causeways some decades earlier when some leaders objected to development and causway connectivity as it will make sone depressed caste villages “uppity”. However, such thinking is hopefully a matter of the past.
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ramona therese fernando / September 9, 2024
Person like Ranil has no respect for the Domestic Real Sector. He considers it Goday and not worthy of Lankans in high-class settings. Rajapaksas surprisingly, did so too. Whilst Ranil did it in arrogant dismissive fashion, Rajapaksa’s did it because they were ashamed of goday connections. Finally…..FINALLY, let the people come into their own! Selling rice to the world without mafioso buying luxury flats, flying first class, and sending their children to study in Western universities is the first step towards deliverance of the Masses. Also should be the seafood industry, the vegetable industry, the teas and rubber industries, the tourist industries minus the 10-star Colombo hotels. NPP will probably put a cap on over US $10,000,000 of amassing + widening the tax brackets.
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ramona therese fernando / September 9, 2024
Once the Domestic Real Sector is taken care of, country can then splurge into the free market enterprises of luxury goods like Louis Vuitton, Mercedes Benzes, Marry-Me desserts, and the Jerome Fernando after-life.
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old codger / September 9, 2024
“To start with, one must remember that NPP is the child of aragalaya”
As the election draws closer, we get more and more BS from NPP acolytes like Dr. AA and Asoka Seneviratna.
The NPP was formed in 2019, long before the Aragalaya.
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SebastianSR / September 9, 2024
….continued….
The rise of communalism, with the ITAK overtaking the Tamil Congress in the mide 1960s also made economic development second priority compared to ethnic and cultural battles. Tamil business be it the Maharajas, Rowlands, Cargo-Boat etc., invested in the Western Province rather than in the North. When communal strife led to Separatist doctrines, these involved rejection of economic cooperation with Colombo, rejection of the bid to extend the Mahaweli to bring water further north, destruction of the cement factory, Yal Devi, and other infra structure. The Rajapaksa government, after winning the war, spent a very large amount of money on demining the North and East and rebuilding its infrastructure. Now it is time that some of the “refugees” living in palatial houses in Markham and Scarborough (how did they get the money?) come forward with help instead of sending pocket money for kids.
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