Why Sri Lanka is at the Brink
of Economic Extinction?
Dilrook Kannangara
A factual statement was made in a recent article that Sri Lanka is
heading towards prosperity. But it was miles ahead in asserting that;
it bypassed the present situation but hinted at some of the impending
steps the government ponders in its stab at prosperity.
However, the nation is facing extinction; not from the threat posed
by the terrorists as it can be managed with enough weapons and manpower
organised by good planning. All these ingredients have now come together
to defeat the terrorists. But some anti-Sri Lankan forces can pull the
rug from under Sri Lanka, easily. Sadly it is already happening unbeknown
to many.
Cost of living is going up at a staggering rate with official inflation
rate reaching astronomical figures. If this is not what is termed ‘galloping
inflation’ in economics, it must be something much worse. The prime
reason for inflation is the increases in world petroleum prices. Energy
underlies all human endeavours, products and services. Therefore an
increase in energy prices affects everything. We are destined to live
with petroleum fuels and consequently suffer whenever oil exporters
seek higher profit by allowing higher oil prices. This is a global phenomenon;
everywhere in the world including net oil exporting countries, commodity
prices have gone up. A crude oil barrel was USD 26 five years ago and
almost USD 100 today. That is a compound growth rate of 31% per year.
If the economy is growing at 6% per year (which is true according to
the Central Bank) inflation would be roughly 24% theoretically. However,
not all products and services have a 100% relationship to oil prices.
For instance, out of the total cost of a loaf of bread, only a fraction
would be fuel related costs. Although other commodities like wheat,
milk, etc. have also gone up in price in the world market, their increases
are much less than oil. Therefore, an inflation rate of 24% cannot be
justified on petroleum prices alone.
One other reason for this high inflation is fiscal mismanagement. Simply
the government has mismanaged the economy. What caused the government
to mismanage the economy? It is bad and proven-disastrous economic policies.
Heavy subsidies and socialist economic systems are bleeding the economy
heavily. These must stop right away. There is no sense in allowing a
massive diesel and electricity subsidy to consumers. These must be only
provided to producers. Cost of living must be a burden of every living
human being and not the government.
But the gravest reason for high cost of living is the fault of neither
the government nor oil prices. The blame lies with the shylocks in the
wholesale and importer establishments. The government has correctly
identified this; they have even proposed to engage in commodity import
and wholesale trade via a government owned subsidiary. Of course the
reaction to this is a threat to strike by these shylocks. Bleeding the
consumers, getting rich from their sufferings and blaming the government
are only a part of the equation. The other part is much worse.
Almost all these importers and wholesalers are anti-national; they have
no regard whatsoever for national interests of Sri Lanka and many actively
finance anti-national political, terrorist and underworld movements.
It is no secret that almost 95% of all Pettah traders are anti-Sri Lankan.
The same applies to many other locations throughout the country. This
must change immediately.
They are very well positioned to pull the rug from under the government
anytime. A large scale shut down can cripple the national economy, the
war effort and the sustenance of the government at any time even after
the war is won. Due to the gravity of this situation, the government
must start its proposed wholesale and import business arm immediately;
there is no time to waste.
However, this new company must be managed by commercially astute executives
on commercial terms. A private management best suits it. It must earn
profit; losses should be out of the question as commodity import and
wholesale industries never make losses. Political interference in terms
of artificial price reductions, dumping unemployable youth in it, making
political appointments, transacting with politicians and political entities,
providing free or concessionary items on a political basis, etc. must
not happen as it should be managed as a company not as a government
department.
On the other hand, the Co-operatives are not going to do any good, unless
taken under a commercial company. However, assets of the Co-operative
department, the CWE and the Paddy marketing Board can be leveraged on
a commercial basis to support the logistics of this new company.
This concept follows the Singaporean crony capitalist model that best
suits Sri Lanka. In fact Sri Lanka was a capitalist economy under Sinhala
kings until communist and socialist elements destroyed it.
As in the case of most developed countries and actually developing countries,
all highly profitable business ventures must be with nationalists. This
is the reason why a Left and a Right exist. The Right is pro-business
and nationalist while the Left is not pro-business and not nationalist.
However, in Sri Lanka, as it happens often, it is the other way round.
While pro-business elements are anti-nationalist and not pro-business
elements are nationalist! This is a very unstable situation. Since it
is the pro-business group that has the largest amount of resources at
their disposal they must be nationalist in order to prosper the nation.
From another view point, pro-nationalist forces must be pro-business
and have the largest amount of resources at their disposal. This is
the only way the country can survive economically.
The decision to appoint a private security company which is an arm of
the Ministry of Defence to manage SLRC security must be congratulated.
This is a step in the right direction. All government related establishments
must be provided with security by this company soon on a commercial
basis. It should be remembered that most profitable business entities
in Singapore are government owned and privately managed including Singapore
Airlines, Temasek Holdings (Private) Limited, MND Holdings, and Sheng-Li
Holding Company, which provid a wide range of goods and services. Some
of them have changed names since their prime. Temasek owns significant
shareholdings in many profitable entities in both Singapore and overseas.
Joint ventures between the Singaporean government and both domestic
and foreign partners produced several industrial products, including
steel and refined sugar. In addition, the National Trades Union Congress
(NTUC), which was closely tied to the government, ran many cooperative
businesses, including supermarkets, taxis, and travel agencies on commercial
terms.
The way to prosperity is by becoming the entrepreneur not the labourer.
The few business entities that were floated by Ministries must be multiplied
and the new import and wholesale company must start soon. Their success
would provide the government capital that can be used to finance many
more similar business entities. At last Sri Lanka is entering the highway
to prosperity.
Hopefully decision makers would see the great danger in anti-nationalist
forces monopolising import and wholesale trade and take immediate action
to arrest the situation. Thereafter the process of capitalisation of
Sri Lanka must commence which will be an easy exercise.
War on anti-nationalists must be waged not only in the Vanni battlefield,
but also in the economic battlefields as well.
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