Due to the prevailing COVID pandemic in the country, whilst adhering to quarantine laws, I thought fit to address you all through this webinar. In the circumstance, I humbly invite you to share these ideas as much as possible with others.
Many years of untold sufferings have made the masses to get fed up with the system, instilling a general notion in the minds of people that “Politics is not for us”. Today, people have lost faith in the successive governments that had ruled for over 70 years. They have come to realize that “if we they toil and earn something on their own, they could make ends meet” without depending on others or the government. Another section of the society is gripped with uncertainty about the future of their children. Therefore, the parents are encouraging their children to leave the country to seek greener pastures. A golden opportunity is on the cards for a new alternative political and economic journey towards prosperity.
Disastrous Consequences of Economic Policies
The economic policies implemented since mid 70s have brought nothing but disaster to our country. They followed the dogmatic principle of economic prosperity through competitiveness between supply and demand. Most of the state-owned economic institutions were either closed down or sold. The handloom industry, Embilipitiya Paper Corporation and Kantale sugar factory including the machinery therein were sold as scrap iron for a mere pittance. A total of 449 plantations were given over to private companies in 1992. All profit-making plantations were thus given over to private companies and government retained only a few plantations which were running at a loss. Today, we get only 1/4 of the harvest which we got in 1992. At that time, the harvest was about 900-1000 kg per acre.
Strongholds of power, finance and services were given up by the government. As a result, the state income started to drop. In 1960s the state income was 20% of the GDP in 1980 it dropped to 19%. In 2000, it was 16%, in 2010 was 12% while in 2020 for the first time in the history of the country, it showed a drastic drop of 9%. In the face of this vast decline, it became imperative that we obtain huge loans to cover the daily expenses. In 1952 we had borrowed only Rs.1 billion. In 1972 it was 10 billion and in 1999 it was close upon 1000 billion. In 2017 the figure was 10,000 billion while by the end of 2020 it had risen to about 15,000 billion. This figure which was 1 billion in 1952 has risen to 15,000 billion today.
Today, as a nation, we are entrapped in loans and faced with the problem of repayment. Last year the whole state income was 1367 billion, but the loan instalment and the interest were more than 1900 billion. The entire state income is insufficient to repay the loan instalment and the interest.
As a result of our economic policies, productions slowed down, our share in the world market was diminishing fast. In 1950’s our share in the world market was 0.5%. That means from a transaction of 200$ in the world market we would get 1$ but by 2020 this has reduced to 0.05%, accordingly we would earn 1$ only through a world transaction of 2000$. Can this downward decline of our share in the world market be considered successful? Today, we have to import a portion of our needs. In 1950 our country received a profit of Rs.50 million through exports. The export earnings were Rs.50 million more than the expenditure on imports. In 1976 after various increases our foreign earnings stood at 40 million. Anyway in 2018 the loss in profit has increased to about 10,000 million. Last year it was around 6000 million. Can this state of affairs be called successful?
The rupee depreciates fast. In 1950s’, 1$ was Rs. 4.77. In 1976 it was Rs.8.88. In 2015 it was 131. At present we are compelled to pay Rs. 206. The loss in production, diminishing of the world market share, decrease in our export earnings including increase in expenditure has contributed to the downfall of the rupee. All these data show how unsuccessful our economic policies have been during the past seven decades.
What is more, the incumbent rulers on the 5th May, several cabinet papers which are detrimental to the country were presented. Udaya Gammanpila in the guise of nationalism brought in a cabinet paper to sell the remaining state shares of the power sector. According to the amendment to the Petroleum act, only refining of crude oil is left to the cooperation. Accordingly at present, neither a company nor a joint venture is permitted to engage in oil refining. Therefore, the new amendment to the Petroleum Cooperation act recommends that this permission should be granted. A cabinet paper has been approved to hand over the functions of refining, blending, distribution and import of oil to the private sector. The related act is to be presented to the parliament and they are ready to relinquish the state monopoly of the Petroleum Cooperation.
On 5th May a proposal was brought to establish a new company by the name of “Selindiva” to sell the old buildings of immense antique value. Cabinet approval had been obtained to sell 1.58 acres where the Grand Oriental Hotel is located, 0.75 acres where the Gafoor Building is located, 1.5 acres where the Foreign Ministry is located, 0.51 acres of the General Post Office building and land, 1.37 acres of the Water’s Edge Development project, 5 acres land encompassing the International Coordinating center KKS Jaffna. Further, the Hilton Hotel and the Grand Hyatt center are to be sold. On the other hand, deforestation and selling prime forest lands too is on the cards. Handing over of 700 acres of land from Muthurajawela forest too is a part of this deal. In addition Mahinda Rajapakse had submitted a cabinet paper to sell the 42 acre land where the Welikada prison complex is situated.
Pawning Our Geography Strategic Positioning
Myopic vision has made our rulers to mess up and underestimate the importance of our strategic location in the Indian Ocean. In fact, we are a tiny island nation with a population of little more than 2 billion living in a land area of 65, 610 km2. Sri Lanka is located in a central point that falls along the maritime network of India, Europe, Australia, and the Far East. Approximately, 36,000 ships ply the maritime route network. 30% of the world trade takes place in and around harbours located in Indian Ocean, including Port of Colombo which is ranked the 24th among top harbours in the world.
In 2005, Sri Lanka obtained a loan of 400 million USD to build the western breakwater/dock of the port. Thereafter East terminal, West terminal and South terminal were built. But the Rajapaksha regime wrote off the West terminal to a Chinese company. They have invested around 500 USD in our ports to handle 38% of its operations, whereas we have spent 1300 USD to build a port in Hambanthota where no ships are arriving. Moreover, the East terminal of the ports of Colombo was safeguarded after much lobbying by trade unions, various professional, societal and political movements, but the government opted to sign a 35 year lease agreement to lease the West terminal to Adani group of India with 49% share, where only 36% and 15% of shares were retained with John Keels Group and the Ports Authority respectively.
Grappling With the Pandemic
At a time when the entire country is afflicted with Covid-19, speculation is rife about government discrepancies and shady deals in the imports of antigen kits, lab instruments and a vaccine scandal purportedly paying 5 dollars more than a particular country, when importing vaccines from China.7 million vaccines are to be imported at this price. Corruption is at its worse, even at the expense of human suffering due to Covid-19. Entire quarantine process has now become a business venture. Overseas work force now returning home is made to pay through their nose for their quarantine in hotels. Adding insult to the injury, the government is planning to import 227 vehicles (Prado) for MPs amidst the current economic downturn and severe pandemic situation. How on earth can the rulers resort to purchasing of new vehicles at a time like this?
Underutilized Human Capitol
Some reports indicate that we have 3 million overseas workforce. Whilst some reports indicate about 2.5 million work force. However, this can estimated to be around 2 million. They remit only 7.8 billion USD. Most of our work force is being sent overseas to fill in vacancies in the lower category job market. A handful of foreigners who work in Sri Lanka receive at least 1000 million USD from Sri Lanka. On the contrary, our massive overseas work force brings us revenue of only 7800 million USD.
Now the people of the country have two options before them to choose from as far as the economy is concerned. Although Gotabaya Rajapaksa comes with his nationalistic approach, or Ranil Wickramasinghe with his neo liberal policies, or Sajith Premadasa comes with his social welfare schemes, all have the same instinct to continue with the same policy. People placed high hopes on the incumbent president Gotabaya Rajapaksa. But he has also marching towards the end of his political journey as an unsuccessful monarch. Therefore, please do not handover this country to individual magicians. Building a nation is a collective process.
Today we are at the crossroads between a perilous path that you took for the last 70 years and a safe and secure path full of solutions. Should you wish to choose the road full of solutions, we implore you to join us to open up new vistas. Looking forward for the second part of the seminar in which solutions will be discussed
*Excerpts from the online seminar JVP 2021-06-06 at JVP head office Battaramulla by Anura Kumara Dissanayake