Sri Lanka Equity Forum
Dear Reader,

Registration with the Sri Lanka Equity Forum would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
Sri Lanka Equity Forum
සිංහල පරිවර්තනය
Latest topics
» DIMO...................... DIMO
by kapifm Today at 9:43 am

» KZOO-Be Careful
by TARGET Today at 4:51 am

» Need a help regarding SUVs...
by TARGET Today at 4:48 am

» lanka-ashok-leyland-records-revenue-growth
by AbhiSanSL Today at 2:25 am

» KZOO - WHAT WOULD BE THE RIGHT TRADING PRICE ON THE 13TH JUNE
by ruwan326 Yesterday at 7:32 pm

» Any News on RICH........
by Teller Yesterday at 5:48 pm

» Good news - CB will keep rates unchanged
by TARGET Yesterday at 4:22 pm

» CLATEX DIVIDEND
by suddera Yesterday at 4:00 pm

» COMB BANK RIGHTS ISSUE
by Top Trader Yesterday at 3:11 pm

» Stay away from OFEQ
by ruwan326 Yesterday at 12:41 pm

» CITK & CITW
by Eugine Fernando Yesterday at 12:15 pm

» Game will start with SEMB
by man123 Yesterday at 11:41 am

» Plz any1 tell me about WAPO and SEYB.X
by dumifer Yesterday at 10:53 am

» GEMS in AUGUST & SEPTEMBER
by Harry82 Yesterday at 8:39 am

» FOR YOUR ATTENTION
by ruwan326 Yesterday at 7:22 am

» ALUM COMMUNITY
by ruwan326 Yesterday at 6:34 am

» Will HARRY JAYAWARDENA lose his entire business helm
by soileconomy Thu Jun 22, 2017 6:02 pm

» Sri Lanka Royal Ceramics increasing production of porcelain tiles
by DS Wijesinghe Thu Jun 22, 2017 3:49 pm

» VONE Net Assets per Share Rs. 38
by nirowat Thu Jun 22, 2017 3:27 pm

» POLICY RATE UNCHANGED??
by worthiness Thu Jun 22, 2017 9:50 am

» Sri Lanka’s Lanka Ceramics diversifies into quartz, palm oil
by Harry82 Thu Jun 22, 2017 6:35 am

» CSEC and CFVF
by Teller Wed Jun 21, 2017 11:20 pm

» LIOC Future in AUGUST
by Ran49 Wed Jun 21, 2017 10:28 pm

» GRAN touch 175 tommorrow
by Light of Hope Wed Jun 21, 2017 9:17 pm

» KZOO & CSE @ITS BESTවිලී ලජ්ජාවේ, සංතොසේ බැහැ
by ruwan326 Wed Jun 21, 2017 6:30 pm

» SRI LANKA FINANCE SECTOR - HOLD - Mar 2017 - FC Research
by stockback Wed Jun 21, 2017 12:15 pm

» COCR will be star in next ASI Run
by stockback Wed Jun 21, 2017 11:39 am

» keep eye on MRH...
by samansilva Wed Jun 21, 2017 10:52 am

» CIFL--- BE CAREFUL
by Eugine Fernando Wed Jun 21, 2017 10:50 am

» KZOO.N IS IT GOING TO BE ANOTHER WAPO
by ruwan326 Wed Jun 21, 2017 9:57 am

» any one can tell, whats going on in anilana hotels?
by sumanasiri Tue Jun 20, 2017 4:57 pm

» What will happned to REEF after RESTRUCTURED
by sumanasiri Tue Jun 20, 2017 12:04 pm

» WHAT HAPPENED TO Rs185/= KAZOO RIGHTS
by Miss-Sangeetha Tue Jun 20, 2017 11:02 am

» Will JKH touch Rs. 180
by worthiness Tue Jun 20, 2017 11:00 am

» JKH to sell their stake in Cinnamon Lake?
by Steve Jansen Tue Jun 20, 2017 9:39 am

» FLCH Browns Capital
by thankrishan Tue Jun 20, 2017 8:47 am

» AGST recorded huge loss
by Teller Tue Jun 20, 2017 2:53 am

» Will AINV.N go up or will go further Down
by Teller Tue Jun 20, 2017 12:58 am

» RENUKA CAPITAL PLC-Fomer KZOO
by ruwan326 Mon Jun 19, 2017 6:58 pm

» Why CITK and CITW Moving.
by Kashyapa Senarathne Mon Jun 19, 2017 1:57 pm

» FLCH WILL HIT 3.50
by thankrishan Mon Jun 19, 2017 10:07 am

» VONE.N0000 HOT SHOT .DON'T HESITATE
by ruwan326 Mon Jun 19, 2017 6:49 am

» LOFC Day Chart (MACD Position)
by stockback Sun Jun 18, 2017 5:42 pm

» TAP....TAP.......TAP............
by Richman Sun Jun 18, 2017 2:38 pm

» Sri Lanka: John Keells Holdings trying to advise SL Government to eliminate Global Booking Engines such as Agoda, Yohobed, Booking.com, TripAdvisor, FindMyFare, Expedia and AirBnB from Sri Lanka
by ruwan326 Sun Jun 18, 2017 9:17 am

» Teejay Jersey Lanka PLC - Depreciated Rupee had a very positive impact
by kumarweerarathne Sat Jun 17, 2017 7:36 pm

» Sri Lanka: Don't Panic - Year to date Foreign inflow to CSE Tops Rs. 20 billion but Some Local Big Investors are purposefully selling to bring down the market
by ruwan326 Sat Jun 17, 2017 11:35 am

» Any idea on cable industry - KCAB, ACL, SIRA
by wallstreetguy Fri Jun 16, 2017 6:43 pm

» What will happen to the CIFL.N
by Neluka Karannagoda Fri Jun 16, 2017 6:19 pm

» Sri Lanka: World's largest stock Manipulator Raj Rajaratnam's trainee Now John Keels Leisure Sector Executive Director Krishan Balendra tries to disrupt Tourism Startups in Sri Lanka by marketing about Tax Loss to government
by Mark Levin Fri Jun 16, 2017 1:45 pm

» LOLC is going to hit 150 Very Soon
by kovida Fri Jun 16, 2017 12:13 pm

» look @ the dock,it can go up
by sumanasiri Fri Jun 16, 2017 11:17 am

» සමාගමක කොටස් ගත්තහම අපිට මොනවද හම්බෙන්නේ
by sumanasiri Fri Jun 16, 2017 10:57 am

» CFVF,CSEC,CINV CAN MOVE UP TIME TO ENTER
by sumanasiri Fri Jun 16, 2017 10:49 am

» GREG Possible to move at least Rs 14 every soon.
by Light of Hope Fri Jun 16, 2017 8:48 am

» MBSL MOVING UP....!
by wisdom79 Thu Jun 15, 2017 7:30 pm

» ABANS FINANCE PRODUCES NINE MULTI MILLIONAIRES
by fortuneteller Thu Jun 15, 2017 5:50 pm

» KZOO right paper
by ruwan326 Thu Jun 15, 2017 5:27 pm

» Abans group and the budget
by fortuneteller Thu Jun 15, 2017 4:36 pm

» Abans Group
by fortuneteller Thu Jun 15, 2017 4:34 pm

» BPPL Moving on
by kovida Thu Jun 15, 2017 2:13 pm

» How to access the my post topics/ Past posts in this forum
by CSE VIJAY Thu Jun 15, 2017 2:02 pm

» VONE will Hit Soon with Anual Report
by Elahara Thu Jun 15, 2017 11:35 am

» LOFC Chart 28.04.2017 (weekly chart)
by TraderCSE Thu Jun 15, 2017 11:12 am

» BFN 18+ guaranteed
by DS Wijesinghe Thu Jun 15, 2017 10:22 am

» Next week is Millionaires week
by anjelo Thu Jun 15, 2017 9:17 am

» SLND ANY IDEA
by tharanga1979 Thu Jun 15, 2017 8:41 am

» Very bullish market
by Hanoifortune Thu Jun 15, 2017 8:20 am

» PHAR ANY NEWS?
by Teller Thu Jun 15, 2017 12:26 am

» ASCO trending with LAND & Property
by Richman Wed Jun 14, 2017 9:59 pm

» VPEL ready to Run
by Teller Wed Jun 14, 2017 8:10 pm

» SFIN _DIVDEND
by Teller Wed Jun 14, 2017 8:09 pm

» AINV.N will move up soon
by Teller Wed Jun 14, 2017 8:06 pm

» Lotteries boards under foreign ministry
by Teller Wed Jun 14, 2017 8:03 pm

» CFVF.N Started Running
by Light of Hope Wed Jun 14, 2017 7:45 pm

» Any idea on odel?
by fortuneteller Wed Jun 14, 2017 4:52 pm

» HARI- HARISCHANDRA MILLS - CAPITALIZATION OF RESERVES
by Saman12 Wed Jun 14, 2017 11:12 am

» SEMB-Can give good Short Term Returns
by Agape Wed Jun 14, 2017 10:22 am

» BFL Result
by Deen79 Tue Jun 13, 2017 3:43 pm

» Save Money | The Game Plan
by tkc Tue Jun 13, 2017 11:37 am

» GRAN COMMUNITY
by sharemarket Tue Jun 13, 2017 10:26 am

» Foreign buying & selling
by yasbawi Tue Jun 13, 2017 8:32 am

» He says it's coming
by ruwan326 Tue Jun 13, 2017 7:21 am

» SFIN UPDATE
by thankrishan Mon Jun 12, 2017 4:38 pm

» When will be the right issue of AINV.N
by Neluka Karannagoda Mon Jun 12, 2017 12:28 pm

» Browns to sell 5 hotels
by reyaz Mon Jun 12, 2017 8:38 am

» Climate Change & SL Corporate sector. Are we ready?
by reyaz Mon Jun 12, 2017 8:32 am

» Tamil Translation - ஸ்டாக் மார்க்கெட் பேச்சு
by Quibit Mon Jun 12, 2017 8:07 am

» Sri Lanka Equity - සිංහල පරිවර්තනය
by Quibit Mon Jun 12, 2017 7:48 am

» TJL COMMUNITY
by samcader Sun Jun 11, 2017 8:46 pm

» CSE to include non-voting shares in IMC calculation
by Eugine Fernando Sun Jun 11, 2017 8:29 pm

» TKYO.N0000 What behind it ?
by saliya1000 Sun Jun 11, 2017 8:59 am

» TYRE COMMUNITY
by saliya1000 Sun Jun 11, 2017 8:21 am

» KZOO POSSIBLE FOR SUB-DIVISION OF SHARES BY 100
by ruwan326 Sat Jun 10, 2017 7:54 am

» Why is there more demand for PCH.N than PCP.N ?
by Neluka Karannagoda Fri Jun 09, 2017 12:31 pm

» CCS - RIGHTS ISSUE & SUBDIVISION OF SHARES
by ruwan326 Fri Jun 09, 2017 11:48 am

» PCHH Dilemma
by ruwan326 Fri Jun 09, 2017 9:01 am

» DAILY STOCK WATCH June.07.2017
by ruwan326 Fri Jun 09, 2017 8:59 am

» PCHH - Adam Capital
by soileconomy Fri Jun 09, 2017 6:54 am

Statistics
We have 20021 registered users
The newest registered user is CooperOr

Our users have posted a total of 325160 messages in 49950 subjects
Poll

SLEF Market Sentiment Indicator

73% 73% [ 1135 ]
27% 27% [ 422 ]

Total Votes : 1557

Sri Lanka: Deficits in the economic policy?

View previous topic View next topic Go down

Sri Lanka: Deficits in the economic policy?

Post by MalcolmTurnbull on Sat Mar 25, 2017 9:57 pm

What Sri Lanka must do is what is good for Sri Lanka, and not for the World Bank. There is nothing wrong in strengthening the businesses in the country to produce goods and services, create employment and boost the growth. But it should not be at the expense of the poor, the working people, the needy or the average citizen.

by Laksiri Fernando

“Neoliberalism is the defining political economic paradigm of our time – it refers to the policies and processes whereby a relative handful of private interests are permitted to control as much as possible of social life in order to maximise their personal profit.” – Robert McChesney

( March 20, 2017, Sydney, Sri Lanka Guardian) If we draw an overall balance sheet of the present government, the major deficit is in the economic ledger than in the political one. Although the promised political reforms have not yet been satisfactorily fulfilled, the people seems to feel much ease under the present dispensation than the previous one, according to reliable information. However, the situation might be quite chaotic on both fronts, if corrective measures are not taken in the foreseeable future. The past two years would be marked as not so productive, but abundantly ambivalent.

There seems to be a common defect or weakness underlying both spheres of economic and political policy making. In my opinion, that can be summarized as lethargy or lack of leadership. Then comes wishful thinking.

Take the example of the new constitution making process. So far, the government has failed to come up with a viable draft for a new constitution. It was admirable that the government allowed the Public Representation Committee (PRC) to gather people’s opinions from various parts of the country. It is also admirable that the Constitutional Assembly allowed six sub-committees to come up with their proposals. However, if the government had believed that a viable constitutional draft would emerge spontaneously out of these processes, that was a terrible mistake. That is not what we mean by democracy or even liberalism. A leadership is necessary, and that is why people elected a new government. The government had lost proper supervision or leadership in the sub-committee process. That is why we are in the present predicament.

Economic Performance

When we look at the economic performance, the country has stagnated, if not gone backwards. This is not what people expected from the political change in 2015. The overall growth rate has come down than going up. It has adverse consequences for the people. After the end of the war, the GDP growth rate (2010-2014) rose to 6.5 which the World Bank called the ‘peace dividend.’ If it is just a spontaneous peace dividend, it should have gone up today, because now you have ‘better peace’ than before.

However, it has come down to around 5 percent during the last two years, the average per capita income still stagnating below US$ 4,000. At the beginning, it could have been argued that a temporary stagnation happened because some of the ‘corrupt or dubious’ projects of the past administration had to be stopped. But this is no longer an excuse. This does not mean that there have been no income or economic movement within the economy. Unfortunately, however, it has been to make the rich better off, while the poor eking out with difficulties to make their ends meet. This is particularly because of the increase of the value-added tax (VAT) to boost the government revenue disregarding many other alternatives. This was on the advice of the World Bank.

What Sri Lanka must do is what is good for Sri Lanka, and not for the World Bank. There is nothing wrong in strengthening the businesses in the country to produce goods and services, create employment and boost the growth. But it should not be at the expense of the poor, the working people, the needy or the average citizen.

There are major other setbacks in the economic performance when we consider the value of the rupee, foreign reserves, debt payments, sectoral unemployment rate, inflation of the essential goods etc.

What Happened to the Social Market?

There is nothing much wrong in the political policies of the present government. But economic policies have been lethargic and leaderless, and obviously not in the correct direction. At the beginning, they talk much about the social market economic policies. Even I was impressed about the pronouncements. However, this rhetoric has not been transformed into policies or practices. A social-market policy was particularly welcomed given the nature of the national unity government.

It is well known that the two parties in the government, the UNP and the SLFP have had somewhat different economic policies or approaches to the economy in the past. Therefore, to strike a balance between the two, a ‘social-market’ policy would have been ideally suited. However, instead of this balance, it appears that the economic policies have clearly tilted towards neo-liberalism dictated by the World Bank and the IMF. Yet, some people still argue that policies are not enough liberal or neo-liberal and that is the reason for the economic ‘drifting’ (Razeen Sally).

Ultra-neo-liberalism is revealed not only in internal policies but also in dealing with the international actors. On the controversial bond issue, it is clear that misappropriation has taken place, the government becoming quite ‘liberal’ on its bond policy. Instead of a balance policy of ‘direct placements’ and ‘primary auctions,’ that many countries follow, the government opted to go merely for primary auctions following some IMF guidelines. Even the IMF had not been so deterministic in their guidelines. Yes, primary auctions can stimulate the expansion of private bond market. But in this case, what has happened is a family benefitting exorbitant profits through insider-trading. Now the Minister of Finance has come forward in defending the deal.

There is nothing wrong in primary auction system, if it is balanced with direct placements as well. However, in primary auctions, conflict of interest or insider-trading should not be allowed in whatever the name. In a mixed economy like in Sri Lanka, the direct placements also should be allowed to certain public sector entities such as the EPF/ETF or public banks for their economic viability and ultimate benefit to the people. This can be open even to the insurance sector (public or private). That is what most countries do, not merely guided by neo-liberalism. The participation of the private business companies is important in an economy. However, the public sector also should be preserved and made even competitive with the private sector. That is how China has achieved its mammoth growth. We should not only turn West, but also should turn East for economic guidance.

Wishful Thinking

This ‘neo-liberalism’ is also revealed in the so-called debt-equity swap deal for the Hambantota port. There is no denial that the former administration had taken loans to the brim. But just because those loans are difficult to pay back, the national assets should not be sold or leased for long periods (99 years!) even to the Chinese. China has revealed that the deal was something initiated or requested by the Sri Lankan government. As I have written in these columns previously, what should have been done is to have a joint venture formed with the same Chinese Company, the Ports Authority taking a 55 percent of equity. This is not a 100 percent swap of the debt, but at least 45 percent.

Debt is bad for a person or a family. But it might be a necessary evil for a developing country, if the loans are used strictly for developmental purposes and not for consumption or extravagant privileges of the politicians or bureaucrats. Although the IMF is strict on debt ratio (debt to GDP) for poor countries, countries like America or Japan are highly debt ridden countries. Only difference is that they have other means for raising loans other than the IMF. Poor countries like Sri Lanka are stuck with the IMF’s discriminatory loan conditions for foreign reserves and many transactions.

Some people want to blindly follow international norms and institutions whether they are on finance, trade or human rights. But considering clearly discriminatory effects on poor countries, we should ask them to be reformed. These include the IMF, the World Bank and the UNHRC.

It is just wishful thinking on the part of the government or its main drivers of economic policy (the PM and the Finance Minister) to believe that free trade agreements would automatically bring FDI (foreign direct investment) and economic miracles to the country. They seem to be day-dreaming about free trade at a juncture where globalization is slowing down internationally. The only advocate of globalization today is China! The European countries only struggle to salvage the Union. The drive for free trade should be measured, balanced and realistic. One example of this contrary wishful thinking is PM’s interview to The Hindu newspaper on 15 December 2016. Answering a question about ETCA with India, the PM went about loose talk as follows.

“We want the Indian agreement also quickly. Because, one, the Indian agreement paves the way for a tripartite [arrangement for trade and investment] by 2017 — Sri Lanka, India, and Singapore. The agreements we have between us mean that we are at the crucial entry points of the Bay of Bengal and we can work further on a closer economic union within the Bay of Bengal [region].”

Here he not only talks about an agreement with India on which India and many professionals in Sri Lanka have reservations, but also talks about a tripartite agreement between India, Sri Lanka and Singapore. Not only that, he talks about a closer economic union within the Bay of Bengal region. Then he repeats the urgency of the Indian agreement as follows.

“For that to succeed also, we require the agreement with India, because the five southern States [Tamil Nadu, Karnataka, Andhra Pradesh, Telangana, and Kerala] and Sri Lanka — the total GDP of such an economy is over $500 billion with the possibility of doubling to a trillion dollars within a decade or so.”

Now here he talks about a ‘new economic union,’ comprising the five southern Indian states and Sri Lanka, even completely disregarding the quite acrimonious political problems existing between Sri Lanka and Tamil Nadu. In addition, Sri Lanka is a $ 80 billion economy with 21 million population. By pooling this in a $ 420 billion South Indian region with a 300 million population would bring disaster to Sri Lanka, purely considering self-interest of the country.

At least those who propose these fancy ‘economic unions’ should first show proper research, feasibility studies and clear plans. These people also should learn from Brexit and current trends in the EU. At least the architects of the European Union took some decades to evolve their blue prints. But our pundits (sorry to say that) think everything would evolve as magic. The expressed thinking is to double the size of the economy or the per capita income in the region as stated. Why cannot Sri Lanka do it itself, without risking a disaster. Didn’t Sri Lanka manage to double the economy during the last decade (from $ 40 billion to $ 80 billion)? Increased trade or even political cooperation with South India may be desirable, but not definitely an economic union at this stage.

A Bizarre Professorial Analysis

This is almost the same proposition that recently Prof Razeen Sally has put forward. Going beyond the Prime Minister, Sally has also touched on some sensitive political, ethnic and religious matters. In his “Sri Lanka: Three Scenario’s for the Future” (DailyFT, 17 March), the following is one of his formulas for the economic take-off in Sri Lanka.

“Multinational firms will establish South Asia hubs in Sri Lanka and link it to global supply chains in manufacturing and services. Sri Lanka will have much closer links with South India, its big business houses and its 300 million consumers. It will be South Asia’s hub and gateway for trade in the Indian Ocean.”

It is very much similar to RW’s wishful thinking. What is most questionable among this Professor’s (Associate Professor of Public Policy at a Singapore university) prognosis of Sri Lanka’s economic ailments is the following.

“The Wet Zone’s natural bounty breeds a fatal complacency, especially in Sinhala-Buddhist culture. …A culture of working hard, planning for the future and earning one’s success has never taken root. It has among the minorities – hardy Tamils used to eking out a living in the barren north and east, Muslim traders, Colombo’s tiny Indian trading castes, even Christians – but not really among Sinhala Buddhists.”

In my concerned opinion, what he explicitly expresses is a ‘racial prejudice.’ We usually hear racial prejudices coming from the majority community. Here comes a racial prejudice from the minority. Even if there is some element of truth in what he says about the Wet Zone, the way he talks about other ethnic and religious groups even living within the same Wet Zone, leads to conclude that he is utterly prejudiced.

Apart from the above prejudicial statements, the economic panacea of Sally is also similar to the views of our PM and those who at present run the economy. Apart from his academic position in Singapore, I understand that he is also the Chairman of Sri Lanka’s economic think-tank, the Institute of Policy Studies! I also wonder whether he is also an advisor to the PM or the Finance Minister?

Courtesy - http://www.slguardian.org/2017/03/sri-lanka-deficits-in-the-economic-policy/


MalcolmTurnbull
Equity Analytic
Equity Analytic

Posts : 31
Equity Stars : 350
Reputation : 0
Join date : 2016-09-17

Back to top Go down

View previous topic View next topic Back to top

- Similar topics

 
Permissions in this forum:
You cannot reply to topics in this forum
Who is online?
In total there are 93 users online :: 6 Registered, 0 Hidden and 87 Guests

kovida, ruwan326, stockback, TARGET, udith, wallstreetguy

Most users ever online was 541 on Mon Sep 19, 2011 11:29 am
Forum Disclaimer

The information contained in this forum have been submitted by third parties directly without any verification by us. The information available in this forum is not researched or purported to be complete description of the subject matter referred to herein. We do not under any circumstances whatsoever guarantee the accuracy and completeness information contained herein.

www.srilankaequity.com its blogs, forums, subdomains and/or its affiliates and/or its web masters, administrators or moderators shall not in any way be responsible or liable for loss or damage which any person or party may sustain or incur by relying on the contents of this report and acting directly or indirectly in any manner whatsoever.

Trading or investing in stocks & commodities is a high risk activity. Any action you choose to take in the markets is totally your own responsibility, www.srilankaequity.com its blogs, forums, subdomains and/or its affiliates and/or its web masters, administrators or moderators shall not be liable for any, direct or indirect, consequential or incidental damages or loss arising out of the use of this information. The information on this website is neither an offer to sell nor solicitation to buy any of the securities mentioned herein. The writers may or may not be trading in the securities mentioned.