FUNDING AGENCIES ATTACH CONDITIONS FOR DONATIONS
Posted on August 13th, 2016
Dr Sarath Obeysekera
We are a poor third world country hence we depend heavily on borrowing.We go to other countries and plead aid and donations .Japan ,Korea ,UK and EU countries provide donations and attach the funding to a condition stipulating that the award of the contract should be given to the country who donates the money .
As an example,Japan is providing a donation to Sri Lanka to supply large coast guard vessels ,with a condition that the ships should be built in Japan ,Sri Lankan companies do not reap any benefit .Another Japanese soft loan is given to Sri Lanka to build smaller Coast Guard Vessels ,with a condition that the contract should be carried out by Colombo Dockyard which is a Japanese own company in Sri Lanka.
Not only Japanese take away over 50% of the profit of the company ,they supply equipment to build them thru one of the subsidiary of the Japanese owner .Then the yard used majority Indian Workers ,thus pumping out some more foreign currency out of the country.
Other small time contractors and boat builders have no chance of reaping any benefit.
Indian Exim Bank also gave a loan to build two number Coast Guard Vessels with a condition that they should be built in Goa shipyard in India .Another loan was given to build two bulk supply vessels to Shipping corporation and they are built in India .
Austria give soft loans to improve infrastructure and the job should be done by an Austrian Company.
Access built many bridges In Sri Lanka and the fabricated bridge components were brought form UK who gave the loans.
Altair tower built by Indian a Company with material and most of the labour from India .
Port City to be built by Chinese ,Hamabantota Port and Airport were built by Chinese with loans from China .
Sri Lanka have no way of improving our own skills and technology as we have to depend on other countries to provide funds and they execute the job too.
It is high time that the Government seriously considers this situation and rethink the strategy if and when sign ETCA
Dr Sarath Obeysekera
August 13th, 2016 at 6:54 pm
Dr. Sarath, I appreciate your articles. Our foreign exchange earnings are sucked away by these helpers at the end of the day. One can go back to the days before 1956 and see how we managed to fund most of our projects.
We had institutions to train our own to do the work. Ceylon Technical College, Maradana; Basic Technical Training Institute, Ratmalana; Hardy Institute, Ampara; Junior Technical Schools around the country and Institutions and companies that train Apprentices.
Now where are we heading?
August 13th, 2016 at 9:30 pm
Dr. Sarath,
What you are highlighting here is the fact of life in SL.
Our people are eternally tied to other countries through loans including those from WB, ADB et al. They will provide small scale loans (say $25m to $40m) for capacity building or improvements of education systems etc. What do we get?. Loan arrangers will come with brief cases full of CVs and our politicos will agree to hire them. All the money from the loan will be spent on them to stay in five star hotels and their families to run around the country and our poor tax have to pay back with interests for nothing.
We are paying loans all the time and there is no money for work to be done by our own companies. They have to do subcontracts from contractors of the loan giver at rock bottom prices and are unable to pay reasonable salaries to our own professionals. The result is that people like us have to languish overseas until we drop dead. Our politicians somehow provide opportunities at home for educations but are unable to provide those who come out with jobs except in state institutions.
For this to be corrected we need a leader with correct vision. Our current lot can only see the next election.
August 14th, 2016 at 12:13 am
Agree with Aloy.
Although project sponsors attach conditions to use foreign labor as a condition for loaning the money, we should divert as much of the work as possible to local companies using local labor and local expertise.
When that happens, their earnings go into the pockets of Sri Lankans and ultimately sustain the local economy, create local savings for local investments and provide opportunities to train and create a more skilled workforce.
The development of profitable well concieved national infrastructure using foreign loans is fine, but we should use our labor and our own expertise wherever possible.
August 14th, 2016 at 1:10 am
One way to get engineers some good opportunity, business and employment is to put more red tape, that is to get them as registered practitioners for every trade. Design, construction etc will then have to be certified by local registered engineers. We should not simply accept designs from foreigners, just because the are related to the money lender or donor.
August 14th, 2016 at 5:40 am
We are a poor country. Are we acting like one? Especially politicians and the so called educated professionals ( educated free of charge). We have had this select and capable group of professionals (medical, engineering, science, management) for more than a 70 years. What have they contributed to SL economy/? It is the poor blue collar workers like housemaids who completely shoulder the economy. But in addition to not contributing anything to the economy this educated clan and the politicians have been shamelessly using the dollars earned by these poor people to import luxuries duty free. So much so now almost half of the foreign exchange earned is spent on fuel and cars which are clogging the roads (imagine what would happen if fuel prices go up from the current unusually lows). This is after the kith and kin of these poor people saved us from terrorism to the tune sacrificing more than 25 thousand. and these privileged classes have no sense of gratitude and carry on their wasteful and useless ways without being productive and striving to build a knowledge based economy
August 14th, 2016 at 6:04 am
There is a good side to employing the donors own companies and skilled labor. otherwise as usually happens there will be tons of corruption and mismanagement and our politicians who get a cut at the beginning and engineers in charge of the projects will build their own palatial homes.
August 14th, 2016 at 6:44 pm
I agree with Sena.
That is the crux of what happens in Sri Lanka. It is inhuman and exploitative. Our loan payments, corruption and waste must be measured by the additional number of housemaids and other blue collar workers (and their dead bodies flown back to Sri Lanka) needed to sustain them.
Worst part is they don’t even have voting rights! These people should get organised and demand concessions, protection, recognition, family support and other assistance commensurate with the massive forex they earn for the country. Subsidies for tea industry ($300 million) must be scrapped as it is not a profitable industry. That will force more plantation workers to get Middle Eastern jobs. Sri Lankan tea plantation workers are the highest paid in the world (main reason for unprofitability).
Project management of all foreign funded projects must be provided by the donor. When locals get them, they manipulate. Road construction has always been utterly corrupt and wasteful.
Tax on luxury vehicles must be doubled and no politician or government servant should be granted any vehicle more than $40,000 for MPs and $30,000 for others. Bus only lanes should be introduced on main roads which will speed up bus travel, make luxury bus travel profitable and discourage cars (mostly with one passenger) clogging the roads. Customs function must be streamlined. Sri Lanka loses at least $500 million due to fraud and inefficiency at customs. I personally know persons who regularly fraud the customs in bringing used washed denim jeans, electronics/gold/diamond inside vehicles or larger objects, mobile phones and heavily undervalued imports.
Sri Lanka should introduce ethnic quotas to each combined faculty of taxpayer funded universities. All graduates leaving Sri Lanka permanently before serving country for 5 years must be charged a fee for their tertiary education, proportionately. Those going on SLBFE registered employment is not considered leaving permanently.
As Sri Lanka faces a debt crisis and a balance of payment crisis, this type of conservation of limited forex and investments is needed. Otherwise the poor fools of the next generation unfortunately left in Sri Lanka will have to repay these. With slowing population growth, their burden will worsen.