Sri Lanka expects to tap tourism niche, trade with India ferry service
ECONOMYNEXT – Sri Lanka is expecting widen tourism and trade links with the start of a ferry service between the two countries from April 29, which is cheaper than air travel and has a higher baggage allowance officials said.
Sri Lanka’s Ports Ministry has started to build a passenger terminal in Kankasanthurai (KKS) port in the northern Jaffna peninsula with the help of the Sri Lanka Navy at a cost of 144 million rupees to support the ferry service.
The ferry service will operate between KKS and Karaikal Port in Pondicherry, India.
“There are private ferry owners who operate the services, and at the moment, there only three ferry operators,” Viraj Abeysinghe, the Media Secretary of the Ministry of Ports, Shipping, and Aviation, told Economy Next.
“However, we, as a ministry, provide infrastructure facilities only. A ferry will carry 150 passengers at a time and will take around a 4-hour journey from Karaikal Port to KKS Port.”
The charges will start from 50 US dollars per passenger for a one-way trip, which is roughly around 16,075 rupees, and a baggage allowance of 100 kilos will be permitted.
The charges will start from 50 US dollars per passenger for a one-way trip, which is roughly around 16,075 rupees, and a baggage allowance of 100 kilos will be permitted.
“The ferry service will cater to a different sector of the market because it is going to be cheaper than traveling by air,” Priyantha Fernando, Chairman of Sri Lanka Tourism Development Authority, told Economy Next.
“So we are opening up to a different segment of the market, and it will definitely make a positive contribution.
“This will definitely help tourism, and it will also help commercial activity because the baggage allowance is much greater, and there will be trade taking place between India and Sri Lanka.”
Entrepreneurs from Sri Lanka and India are encouraged to join this opportunity.
The service will also open up the way for export and imports for cheaper prices, which can indirectly benefit the country, he said. (Colombo/Apr21/2023)
Sri Lanka expects to tap tourism niche, trade with India ferry service
IMF facility only the beginning of a tough journey: Dr. Roshan Perera
- Govt. needs to undertake several structural reforms within the year
- Sri Lanka must also focus on structural reforms to unlock growth
- Limited capacity and political space may affect speed of reforms
- SL governments in particular have very short-term policy orientation
- CB independence strengthens House oversight over public finances
- With independence comes need for greater transparency, accountability
- More independent central banks deliver and maintain lower inflation
The securing of the International Monetary Fund (IMF) facility is only the beginning of a long and tough journey to moving the country towards a more sustainable growth path, asserted public policy specialist and Advocata Institute Senior Research Fellow Dr. Roshan Perera, in an interview with The Sunday Morning.
“The focus of the IMF programme in the near term is on macroeconomic stability and debt sustainability. There are five main pillars of this programme and monitoring the progress of these objectives is based on strict quantitative targets. Apart from this, there are several structural reforms the Government needs to undertake within the year to ensure the programme stays on course,” she pointed out.
Furthermore, this programme, unlike the last 16 programmes, entails a debt restructuring exercise to ensure Sri Lanka’s debt is brought to a sustainable level, Dr. Perera noted, adding that this was a more onerous task as it required the cooperation of many stakeholders – both domestic and foreign.
“Achieving all this requires the Government to work simultaneously on multiple fronts. Limited capacity and political space may affect the speed at which reforms are undertaken. But the bottom line is unless these macroeconomic and structural reforms are carried out, Sri Lanka will likely be going back to the IMF for the 18th time,” she warned.
Commenting on the proposed Central Bank Act, Dr. Perera, who is a former Director of the Central Bank of Sri Lanka (CBSL), said: “I think we need to take a step back and understand the rationale for Central Bank independence. Unless the macroeconomic and structural reforms are pushed through, Sri Lanka will find itself in a similar situation in a few years.”
Following are excerpts of the interview:
Now that the IMF facility has been secured, what are the next steps the Government should take to ensure Sri Lanka’s economic recovery?
This is only the beginning of a long and tough journey to moving the country towards a more sustainable growth path.
The focus of the IMF programme in the near term is on macroeconomic stability and debt sustainability. There are five main pillars of this programme: advancing fiscal consolidation and strengthening institutions, restoring price stability and rebuilding external reserves buffers, public debt sustainability, ensuring financial stability, and reducing corruption vulnerabilities.
Monitoring the progress of these objectives is based on strict quantitative targets (performance criteria) on the Government’s primary fiscal balance, credit to the Government, and the net official international reserves, as well as indicative targets on Government tax revenue, social spending, costing of non-commercial obligations for fuel and electricity, and Treasury guarantees.
Apart from this, there are several structural reforms the Government needs to undertake within the year to ensure the programme stays on course.
To be completed by Q2 2023:
- Parliamentary approval of welfare benefit payment scheme (enhanced social safety nets)
- Cabinet approval of a comprehensive strategy to restructure the balance sheets of key State-Owned Enterprises (SOEs)
- Parliamentary approval of new anti-corruption legislation
- Parliamentary approval of the new Central Banking Act
To be completed by Q3 and Q4 2023:
- Revamping the VAT system by removing almost all product specific VAT exemptions
- Submitting the Public Financial Management (PFM) Law to Parliament
- Parliamentary approval for the full revision of the Banking Act
But in addition, this programme (unlike the last 16 programmes) entails a debt restructuring exercise to ensure Sri Lanka’s debt is brought to a sustainable level. This is a more onerous task as it requires the cooperation of many stakeholders – both domestic and foreign.
While the IMF programme at this point focuses on macroeconomic stabilisation and debt sustainability, the country needs to focus in parallel on undertaking structural reforms to unlock growth. This includes improving the business environment and boosting productivity and fostering competition by removing bureaucratic barriers, trade reform, labour market reform, and land reform, among other structural reforms.
Achieving all this requires the Government to work simultaneously on multiple fronts. Limited capacity and political space may affect the speed at which reforms are undertaken. But the bottom line is unless these macroeconomic and structural reforms are carried out, Sri Lanka will likely be going back to the IMF for the 18th time.
Is the Government’s approach to the debt restructuring plan feasible in terms of meeting the April deadline set by the IMF?
The objectives of debt restructuring are to put Sri Lanka’s debt on a sustainable path and to restore market access for the country. The IMF programme hopes to achieve these overall objectives by:
- Reducing public debt below 95% of GDP by 2032 (public debt was 128.1% at end 2022)
- Reducing the Government’s annual Gross Financing Needs (GFN) to an average of 13% between 2027-2032 (the GFN of the Government was 34.5% in 2022)
- Reducing the Government’s annual debt servicing in foreign currency to a maximum of 4.5% of GDP every year in 2027-’32 (the debt servicing in foreign currency was 9.6% of GDP in 2022).
In order to achieve these targets, the Government needs to engage both domestic and external creditors to modify the terms of the existing debt contracts in terms of coupon adjustments, maturity extensions, and haircuts on the principal.
The Government is expected to announce the coverage and parameters of both the external and domestic debt operations by end April 2023 and complete the Domestic Debt Optimisation (DDO) exercise by May 2023 and the external debt restructuring by September 2023.
This appears to be an ambitious timeline given the experience of other countries that have undertaken a similar exercise. For instance, Ghana took around two months to come to an agreement with 85% of its domestic creditors. This excluded pension funds.
In the case of banks, although it was a ‘voluntary’ exercise, they were ‘incentivised’ to participate in the Domestic Debt Exchange (DDE) by increasing the risk weight to 100% on old bonds as opposed to 0% on the newly-issued bonds and excluding non-participating banks from the Ghana Financial Stability Fund, which was set up to provide liquidity support.
In the case of Sri Lanka, the authorities announced that in the case of Treasury bills, of the Rs. 4.1 trillion outstanding, only Rs. 2.6 trillion ($ 7.1 billion) held by the Central Bank would be restructured. This accounts for more than 50% of the assets of the Central Bank, which will have implications for the liquidity and solvency of the Central Bank.
Of the total outstanding Treasury bonds of Rs. 8.7 trillion ($ 24 billion), superannuation funds hold around 43%. If they are excluded from DDO, the burden of restructuring will fall on banks that hold around 44.5% (Rs. 3.9 trillion) of the outstanding stock of Treasury bonds.
This will have implications for financial stability given that banks have already been affected by multiple shocks and the continuing contraction of the economy. This may require regulatory forbearance from the regulator on capital requirements, but is also an opportunity for consolidation within the financial sector.
Hence, the extent of the domestic debt restructuring would depend on the extent of recapitalisation it would entail as well as the impact on financial stability [i]. Who bears a greater share of the restructuring cost will depend on the economic and financial costs of the different options.
Will the proposed Central Bank Act yield the expected results? Shouldn’t the focus be on preventing political interference over ensuring independence?
I think we need to take a step back and understand the rationale for Central Bank independence.
At the beginning I said that unless macroeconomic and structural reforms are pushed through, Sri Lanka will find itself in a similar situation in a few years. Ensuring these reforms are undertaken requires political commitment but also an independent bureaucracy that is able to make the right decisions and carry them out. This requires a stronger institutional framework for policymaking.
Governments in general and in Sri Lanka in particular have very short-term policy orientation – they operate from one election cycle to the next. These policies may make the public happy in the short run, but they fail to deliver the long-term goals for the country. Adopting a rule-based policy framework as opposed to a discretionary policy framework is able to overcome this time inconsistency problem of policymaking.
In the case of a central bank, independence insulates monetary policy from short-term political considerations, which otherwise leads to boom-bust cycles and time-inconsistent policies.
Central Bank independence refers to instrument independence, not goal independence. That is, while the goal of monetary policy (inflation target) is set together with the Government, the conduct of monetary policy should be free from Government control. In other words, the Central Bank should be able to use its instrument (interest rate) to achieve the goal that has been set by the Government (inflation target).
However, since the Central Bank of Sri Lanka also undertakes agency functions for the Government such as debt management and managing the Employees’ Provident Fund (the largest provident fund in the country), there are likely to be conflicts with the primary objective of domestic price stability. Hence these functions need to be taken out of the CBSL if it is to focus on its primary mandate.
One of the main obstacles to the Central Bank achieving its primary objective has been the monetisation of the Government’s deficit through the purchases of Government securities. In the proposed Central Bank Act, purchase of Government securities from the primary market is prohibited (Section 86). This is an essential element for the independence of the CBSL.
Monetising the deficit allows governments free rein over the printing press without having to go to Parliament for approval. Giving the Central Bank independence in fact strengthens parliamentary oversight over public finances rather than diminishing it.
However, with independence comes the need for greater transparency and accountability. “…If you’re independent, it’s vital that people can understand what you are doing. If you are independent and you tell the general public ‘It’s none of your business,’ independence will be taken away from you, sooner or later” – former Governor of Swedish Riksbank Stefan Ingves.
Greater independence requires greater parliamentary oversight. Many countries require the governor of the central bank to explain to parliament or a parliamentary committee the rationale behind every monetary policy decision. It also entails better communication with the general public on the policies undertaken.
One of the main sources of independence is through the appointment of the governor and the members of the boards. Excluding the secretary of Finance from the Monetary Policy Board was to ensure monetary policy decisions were made independent of the Government. However, in the proposed bill, the minister in charge of Finance is responsible for a majority of appointments to the boards. This could dilute the independence of the institution.
The consequences of not achieving the set targets are not specified in the proposed bill other than requiring the Central Bank to explain to the minister in charge of Finance, and in some cases Parliament, the reasons for deviations from the target.
This was a major failure of the Fiscal Management Responsibility Act. Despite continuous breaches of fiscal targets, no one was held responsible because there was no accountability mechanism built into the act.
Finally, the CBSL cannot achieve its objectives and overall macroeconomic stability will not be possible without fiscal discipline. Sri Lanka enacted a Fiscal Management Responsibility Act No.3 of 2003 (amended in 2013, 2016, 2021) with several fiscal rules, but enforcement was weak. Fiscal rules need to be integrated into government budgets and medium-term fiscal frameworks [ii]. Some countries have included correction mechanisms which specify a path to return to the fiscal rule following a deviation. It also requires better oversight by Parliament.
The proposed Budget Office in Parliament can play the role of an independent nonpartisan entity that can provide fiscal oversight by assessing fiscal plans, evaluating budget forecasts, costing Government budget proposals, and monitoring adherence to fiscal rules. But this entity must be given operational independence, have the technical capacity, and have access to timely information to carry out an independent analysis.
For a rules-based framework to work, it requires political commitment. But the overall benefits to the citizens of the country in terms of improving overall welfare are considerable.
There is empirical evidence to support that more independent central banks deliver and maintain lower inflation compared to less independent central banks. Countries with less independent central banks tend to run higher budget deficits since monetary financing is easier politically compared to raising taxes and hence end up with higher public debt and economic crises.
Footnotes
[i] Grigorian, David A., 2023. ‘Restructuring Domestic Sovereign Debt: An Analytical Illustration,’ IMF Working Paper 23/24, Washington, DC.
[ii] Study in 2021, ‘Fiscal Rules and Fiscal Councils Recent Trends and Performance During the Covid-19 Pandemic’ prepared by Hamid R. Davoodi, Alexandra Fotiou, Paul Elger, Daniel Garcia-Macia, Xuehui Han, Andresa Lagerborg, W. Raphael Lam, and Paulo Medas (IMF Working Paper WP/22/11)
https://lankafocus.org/wp-admin/post.php?post=1887&action=elementor
Peddling the Government’s Narratives
As of now, Ranil Wickremesinghe has three points in his favour. First, there is the IMF deal, which his government is more or less using as a shield against criticism of the many austerity measures being enforced in its name. Second, there is the SJB-UNP nexus or the many not so subtle commonalities that have linked the main opposition with the president’s party. Third, there is the SJB-JVP-NPP divide that has only fragmented the opposition to the government’s benefit.
Contrary to what the neoliberal commentariat may believe, the IMF bailout is not a magic wand. Such bailouts come with strings and conditionalities attached; any government availing itself of these arrangements is bound to comply with those conditions. But such conditions, if complied with in full, are bound to provoke popular resistance be it from the middle classes or trade unions. This is the typical trajectory of IMF austerity. Once enforced in full, it tends to provoke unrest and instability and brings about an authoritarian backlash from the state. The state, for its part, finds itself in a conundrum. If it does not adhere to the conditions in these bailouts, the IMF can withdraw but if those conditions are followed and implemented in toto, the public can revolt against it.
The IMF bailout has brought the country’s main opposition, paradoxically, to a common platform with the government. The SJB’s economic establishment has already criticised political parties opposed to the IMF arrangement. Their question is not whether the bailout is in the public’s interest but whether there is an alternative to dealing with the IMF. And it’s not just at the level of economic theorising; even the government’s handling of trade unions has elicited their approval. To give the most glaring example, the government suspended 20 workers, including several attached to the Ceylon Petroleum Corporation, for participating in a strike. Over the next few days, SJB MPs S. M. Marikkar and Hirunika Premachandra publicly criticised not the government but the unions, advocating the regime’s proposals to dismantle and “liberate” the energy sector.
This is rather fascinating, if not perturbing, because both Marikkar and Premachandra have, through the media, promoted and depicted themselves as populists, indeed as the epitome of the vox populi. Premachandra, in particular, was at the forefront of last year’s protests against Ranil Wickremesinghe. Yet like Damitha Abeyrathne, once a heroine of the aragalaya and a self-avowed political neutralist, these politicians, essentially bourgeois if not petty bourgeois, have given way to their class interests. It is significant that the SJB’s leader, Sajith Premadasa, has been braver than any of his colleagues in criticising the IMF deal although in doing so he has earned the ire of Colombo’s neoliberal establishment. In fact, Premadasa’s remarks about the IMF, taken together with Premachandra’s, Marikkar’s and the SJB economic troika’s public statements, have only betrayed the rifts and divisions in the country’s main opposition – hardly a point in its favour.
What is even more intriguing about these developments is that, as far as the recent spate of strikes go, SJB-allied trade unions have played a respectably leading role. Among the leaders of the recent CPC strike was Ananda Palitha, formerly with the UNP but today with the SJB. When Palitha attacks the government and threatens strike action and when the economic brains trust of the party his union is linked to excoriates unions, one cannot be faulted for questioning the SJB’s stance on these workers’ struggles. The paradox here is not just between two ideological flanks in the party but, more disturbingly, between the party and its own advocacy groups. In that sense, Premachandra’s and Marikkar’s remarks don’t just spoil the SJB’s working class prospects but they also reinforce the new left’s critique of the party as just another bourgeois outfit.
For its part the government dealt its cards stealthily during the recent strike. It did not break the strike at once nor did it dismiss the strikers. Kanchana Wijesekera merely instructed the chairmen of the CPC and CPSTL to terminate their employment if they saw it fit. On the other hand, the government showed clearly that it was not above using the army to disrupt the strike. At the same time, even after breaking the strike, Wijesekera did not fire the workers but he ordered them to be sent on compulsory leave, resorting to an age old tactic of publishing their names and smearing them in the media. It’s a little hard to say whether the government got what it wanted but it seems as though, for the moment, it has. It has managed to convince the public of the need to privatise SOEs and the need to crack down on trade unions, which it depicts as an obstacle to ongoing reforms.
So deftly did the government handle this, in fact, that not a single news outlet saw it fit to assess certain companies that had expressed an interest in entering Sri Lanka’s fuel sector. While an investigation is yet to be carried out, certain media did, later on, note that these companies seemed dubious, some of them even lacking an online presence. Yet by then the queues and the shortages that had ensued because of the strike – queues which no doubt evoked memories of last year’s crisis – had pushed motorists to criticise unions rather than the government. This was the picture that the media painted earlier in the week; the motorists they talked to all seemed to favour privatisation and they blamed unions for sabotaging “necessary” reforms. Indeed, it goes without saying that media organisations that less than a year ago came out in support of activist and civil society groups are now peddling the state’s narrative on these groups and on the reforms.
Of course, this was only to be expected. The media – at least the traditional media – has always gone after exposure. It got this exposure last year from the aragalaya and to that end it spotlighted the protesters. Ranil Wickremesinghe’s appointment as prime minister and president pushed the media to abdicate from this role; from advocating the protesters’ cause, it became a mouthpiece for neoliberal reform, flagging the IMF deal as a need of the hour. In doing so it showed that it was not above marginalising the protesters it had promoted a few months back. Barring a few critical-progressive voices, the media eventually became an outlet for Colombo’s neoliberal commentariat whose function now seems to be that of an ideological ballast for the state. Not that this should surprise anyone. The media had always been a double-edged sword; it could stand for dissenting voices, as it initially did, but it could also peddle the regime’s diatribes against those voices as it later did.
There is certainly a critique to be made of trade unions, particularly the stronger, more powerful ones. The economic right, for years, has charged these unions of corruption and condemned them for holding the economy to ransom and for promoting their sectional interests over those of the country. The economic right has its own motives in perpetuating such narratives. But the unions themselves have done little to combat them. To give one example, when the CEB threatened to switch off the grid in 2017 over a pay anomaly, right wing news websites gleefully published the salary slips of CEB workers, pointing out that an average employee at a state institution was paid much more than his or her counterpart in the private sector. In effect, public sector salaries were stigmatised and public sector employees were excoriated for making demands supposedly in excess of their earnings.
Considering these developments, the left has to make an urgent stand. It cannot sit by idly and dabble or indulge in ideological polemics. The truth is that new left today has fallen far short of its potential, not merely because it lacks the proverbial fire in the belly, but more worryingly because it has let sectarian clashes dominate its politics. Presently, the JVP-NPP insists on depicting itself as a purist party while appealing to the middle classes; it hence excoriates the IMF even as, several months ago, its own leader accepted the absence of an alternative to the IMF and instead contended that an arrangement with the organisation requires an “exemplary” political group to implement it properly. The FSP, a more radical outfit, is hamstrung by its own contradictions although President Wickremesinghe himself has hinted that it represents a threat to him. If the new left is interested in pursuing its goals, it needs to up its game. The government has stolen a march on them. It is up to them to regain what they have lost to the enemy.
India-Lanka ferry service is still on rocky seas
The chances of having a ferry service between India and Sri Lanka by the end of this year seem likely provided both India and Sri Lanka are clear about the details
Replying to the demands for grants for the departments concerned in the Tamil Nadu Assembly early this month, Highways and Minor Ports Minister E V Velusaid that efforts are underway to launch a short ferry service between Rameswaram and Sri Lanka in a few months’ time. The idea is to link Rameswaram and Talaimannar first, covering a distance of 50 kilometres. This will be followed by another ferry service, linking Rameswaram and Kankesanthurai (KKS),a distance of 100 km.
Accordingly, the Tamil Nadu Maritime Board has sent a detailed project report to the Union government for approval, the minister said.“The Rameswaram minor port does not have facilities. The State has been in touch with the Union Government, which is keen on starting the project and is ready to fund the development of the port, costing INR10-15 crores, to launch the ferry service,”news reports have since quoted Tamil Nadu officials. Accordingly, the Ministry of External Affairs (MEA) and the Union Ministry of Shipping and Waterways have agreed to the project, the report claimed. “The ferry can go at a speed of 30 knots between Rameswaram and Talaimannar,” the Times of India report said. “With a 150-passenger seating capacity, the travel time will be one and two hours to Talaimannar and Kankesanthurai, respectively. The sheltered waters of Palk Bay would aid the project”, the report added.
The Union and State governments in India, and also Sri Lanka are on the same page as regards launching ferry service,” an official told the newspaper.
This followed a recent video conference involving officials of the Sri Lankan High Commission in New Delhi, the MEA and India’s Ministry of Port, Shipping and Waterways, and also the Tamil Nadu Government, according to the news report. The Union Government will accordingly float ‘Expression of Interest’ to identify operators to operate from Rameswaram, it added. “The state government is interested in readying the entire project in six months. The construction of the Rameswaram jetty is the only bottle-neck. The Union and State governments in India, and also Sri Lanka are on the same page as regards launching ferry service,” an official told the newspaper.
Inherent contradiction
However, an inherent contradiction is discernible in the official positions of the Tamil Nadu government and that of its Sri Lankan counterpart. It relates not only to the chosen route but also the timing of the ferrylaunch.
According to NimalSiripala de Silva, Sri Lanka’s Minister of Shipping, Ports and Aviation, the ferry service would be launched not on the routes mentioned by the Tamil Nadu minister, but on the Kankesanthurai-Karaikal route, the latter being an enclave of the Union Territory of Puducherry. It will be launched as early as 29 April this year, a Sri Lankan Shipping Ministry statement said further.
As discussed between the Minister De Silva and India’s MEA on 26 March, two immigration and emigration offices, one each in Kankesanthurai and Karaikal, would be set up for this purpose, and preliminary measures have already commenced in this regard. The immigration office at the KKS jetty and the port are fully operational and ready to start, Minister De Silva said. The minister also clarified that neither government would provide the ferry to operate the service. Instead, India’s MEA will float tenders for operators with boats having a carrying-capacity of 150 passengers to operate the service. Considering that traders from Tamil Nadu and Sri Lanka’s North and East are the targeted segment, the baggage allowance, put at 100 kgper passenger, will be an attraction. The one-way ticket charge is also proposed at an affordable US$ 50 per passenger, though it would be for the selected ferry operator to fix the ticket-cost.
Restoring ‘Boat Mail’
Earlier, at a meeting with MEA’s Joint Secretary (IOR) Puneet Agrawalin Colombo in December last year, Minister De Silva requested early commencement of the ferry service.At the meeting, Sri Lanka sought increasing the quantum of India’s concessional loan for developing the Kankesanthurai Port, attributing the higher cost to fluctuation in the price of construction material. It was over and above the US$ 45.27-million Indian assistance granted in 2018 for upgrading the KKS Harbour into a commercial port and for strengthening the country’s efforts to become a regional maritime hub.Public sector Dredging Corporation of India has already deepened the KKS Harbour. India has also funded the dredging of the approach channel, with the larger cargo ferries in the future in mind.
The one-way ticket charge is also proposed at an affordable US$ 50 per passenger, though it would be for the selected ferry operator to fix the ticket-cost.
At the time, the choice of destination on the Indian side had shifted from Karaikal to Puducherry, after it was found that the private port at the former site was facing bankruptcy proceedings. Ferry operators also reportedly indicated that the longer trip to Puducherry could cause sea-sickness among passengers unused to sea-travel. Hence, the decision was to run the ferry service reportedly between Kankesanthurai and Nagapattinam in Tamil Nadu, not far away from Karaikal.
However, the bankruptcy proceedings seems to be in the concluding phase, with one private operator, Adani Group, likely to take over from another, Marg, in the none-too-distant future. This could then entail the possibility of the Sri Lankan minister’s announcement coming true, though not by the month-end. Whichever the Indian destination that New Delhi finalises, as long as the clearances and works are completed in time, the chances are bright for the ferry service commencing operations at the end of the north-east monsoon cyclone season by the year-end.
The Sri Lankan statement of December also quoted Indian official Agarwal as underlining the appropriateness of reviving the long-forgotten passenger ferry service between Dhanushkodi in Sri Lanka and the temple-town of Rameswaram in Tamil Nadu. Minister De Silva agreed to the proposal and also emphasised that the Sri Lanka railway service can also be connected with the passenger ferry service, and thus revive the pre-Independence, Colombo-Chennai train travel by the ‘Boat Mail’, with an intervening ferry trip from Danushkodi / Rameswaram to Talaimannar in Sri Lanka.
The bankruptcy proceedings seems to be in the concluding phase, with one private operator, Adani Group, likely to take over from another, Marg, in the none-too-distant future.
The ‘Boat Mail’was diverted from original Danushkodi point to Rameswaram after a train full of passengers and also the railway station and the pier were all washed away in a cyclone in 1964. The Rameswaram-Talaimannar service also went on long hibernation in 1984, after sea-based Tamil militancy of the LTTE’s ‘Sea Tigers’ made those waters unsafe.
Trade and tourism
According to the recent Times of India report, there are also plans to include partial cargo service in the next phase of the Rameswaram-centred ferry service. Subsequently, cargo services will be allowed from Rameswaram to Sri Lanka with 300-500 tonne capacity. “The State Government has already sent a detailed proposal worth INR600 crore to have a bigger facility to the Union ministry of shipping and the discussion is going on,” the official said.
Sri Lanka is steadfast with Kankesanthurai as their entry port for the ferry service to Tamil Nadu. The Indian port-of-call is yet to be finalised by the Government of India and Tamil Nadu through consultations. Going by the Tamil Nadu minister’s statement in the State Assembly, some basic issues need to be sorted out and for good—and early—so that whatever the route finalised in consultations with Sri Lanka, it should become operational as early as possible.
Independent of all this, there is a huge scope for improving trade and tourism between the two countries, including religious tourism. As is known, ferry service works out cheaper than air travel, and there is also a limited adventure in sea-travel, especially with short cruise trips.Budget pilgrims from Tamil Nadu and the rest of Indiacan visit prominent Hindu places of worship, namely, the KeerimalaiNaguleswaram temple, and the Kathirgamam or Kataragama temple down South, which is of religious significance to both Hindus and Buddhists. That is also when budget tourist operators enter the scene.
Going by the Tamil Nadu minister’s statement in the State Assembly, some basic issues need to be sorted out and for good—and early—so that whatever the route finalised in consultations with Sri Lanka, it should become operational as early as possible.
Likewise, pilgrims from Sri Lanka will have easy access to Velankanni church, Nagore dargah, Tirunallar Saneeswaran temple and other places of religious importance in the Cauvery delta districts, which are dotted with other Hindu temples all across, with easy access to Madurai Meenakshi Amman temple and Palani Murugan temple. Budget pilgrims from Sri Lanka’s majority Buddhist community can also take the ferry service to travel all the way up to Bodh Gaya, Sarnath and other religious centres, and also Lumbini, the birth-place of Lord Buddha in Nepal.
Incidentally, Sri Lanka’s Sinhala-Buddhists are also ardent devotees of Lord Venkateswara in Tirupati. As may be recalled, Buddhist temples in Sri Lanka invariably have separate shrines for Lord Ganesha and Lord Vishnu. In turn, all these can then help the revival of the Boat Mail, with Indian railways considering the extension of it all the way to Bodh Gaya and Sarnath, apart from Buddhist pilgrim centres and other places of tourist interest, en route.
https://www.orfonline.org/expert-speak/india-lanka-ferry-service-is-still-on-rocky-seas/
Civil Society Collective calls on diplomatic missions to ensure LG polls are held
The Civil Society Collective for Protecting the Franchise has sought the support of Diplomatic Missions with regard to their call to hold the 2023 Local Government (LG) election on time, in a bid to protect democracy.
Issuing a statement in this regard, the collective highlighted that failing to hold the LG polls in a timely manner would have serious implications for democracy and governance.
“It would mean that the constitutional right to elect representatives at the local level would be compromised. It will set a dangerous precedent and impair the democratic process”, the statement read.
They further explained that not holding the election using a lack of finances as an excuse could ‘open the door for using such flimsy pretexts for postponing Parliamentary and Presidential elections’, highlighting that this practice , if allowed, will wrongly incentivize leaders who are inclined to not hold elections till it is beneficial for them.
Further emphasszing the adverse effects the postponement of the LG polls has had not only on the country’s democracy but also on its institutions, the Civil Society Collective for Protecting the Franchise called upon Sri Lanka’s international partners to closely monitor the situation, and to ensure that the election is held in a timely manner.
They also urged these international institutions to highlight the importance of an election for the country’s stability and economic recovery.
“It is critical to remain steadfast in advocating for the elections to be held on schedule, and to ensure that the government adheres to the established legal framework. This will serve to preserve the democratic principles upon which Sri Lankan society is founded and to safeguard the right to elect our representatives”, the collective said in this regard.
Below is the relevant statement issued by the Civil Society Collective for Protecting the Franchise;
Civil Society Collective – Joint Statement (English) by Adaderana Online on Scribd
Sri Lanka to raise duty-free allowance for migrant workers to encourage remittance
COLOMBO, April 3 (Xinhua) — Sri Lanka is set to increase duty-free allowances for migrant workers at the airport starting May in order to encourage remittance, Minister of Labor and Foreign Employment Manusha Nanayakkara said on Monday.
The increase will be based on the amount of money remitted by the workers, Nanayakkara said during a media briefing.
Under the new scheme, there will be five categories of concessions.
For people having remitted 2,400-4,799, 4,800-7,199, 7,200-11,999, 12,000-23,999 and 24,000 U.S. dollars or more, they will be eligible for an additional duty-free allowance of 600, 960, 1,440, 2,400, and 4,800 U.S. dollars, respectively, when shopping at the airport, according to the minister.
The concessions will be available to anyone who has sent the mentioned amount of money through official channels to the country within a year, the minister said.
He added that no tax will be charged on foreign worker remittances and money held in banks in the form of foreign exchange.
Migrant workers’ remittance is one of the main sources of foreign exchange for the South Asian country.
http://www.china.org.cn/world/Off_the_Wire/2023-04/03/content_85209507.htm
Enditem
CPA Statement on the Anti-Terrorism Bill – 2023
The Centre for Policy Alternatives (CPA) observes that the Government published an ‘Anti – Terrorism Bill’ in the Gazette, on the 22nd of March 2023. This Bill seeks to abolish the Prevention of Terrorism Act (PTA) and introduce an Anti-Terrorism Act. Such legal reforms must be studied in the context of the abuse of the PTA and Emergency Powers carried out by consecutive Presidential regimes, with the present draft providing broad powers to the executive with limited checks and balances. CPA notes that the present Bill requires serious attention, especially when authorities have used security laws to target minorities, critics and protesters, entrenching a culture of torture and impunity in Sri Lanka. CPA reiterates that law reform alone cannot achieve far reaching change in the absence of a genuine political will to change the culture of dehumanising treatment of persons under the guise of counter-terror. In this initial comment on the proposed Anti- Terrorism Bill, CPA observes that the Bill bears significant similarity to the Counter – Terrorism Bill (the 2018 CTA) that was Gazetted in 2018, but subsequently never passed by Parliament. However, the new Bill contains several offences that were not a part of the 2018 CTA, some of which raise serious concern for the freedom of expression, potentially giving the State an additional tool to crack down on dissent and criticism. One improvement in the Bill is that confessions made by suspects in detention to a Police officer are no longer admissible in evidence – a general principle in the ordinary law, for which an exception was made in the PTA. The admissibility of confessions made in custody created a culture of ‘forced confessions’ leading to systemic injustices.
A major concern that remains, however, is with Detention Orders. The Bill places the power to make Detention Orders in the hands of a Deputy Inspector General of Police (DIG), a power which under the PTA is held by the Minister of Defense. However, while the 2018 CTA allowed for the initial Detention Order by a DIG to extend up to 2 weeks,the Bill is more similar to the regime under the PTA, allowing the Detention Order to be made for up to 3 months. This is a major concern, which could lead to the suppression of the liberties of persons accused under this Bill, even if there is no substance to such allegations. Detention Orders can thereafter be extended beyond the initial 3 months, up to a year, but the extension must be approved by a Magistrate. Under the Bill, the President is also given the power to make ‘Proscription Orders’ against organisations. These orders are to be issued against organisations accused of an offence amounting to terrorism, but also when the President ‘has reasonable grounds’ to believe an organisation is acting in a manner ‘prejudicial to the national security of Sri Lanka, or any other country’. This wide power may be used to target legitimate dissent in the country, which, based on recent patterns of crackdown must be considered a very likely possibility.
Similar to the PTA, the President has wide powers to make regulations under the Bill. CPA has over the years raised concerns with and litigated regulations made under the PTA which have the potential to be used as a tool of suppression and abuse. This regulation-making power must be curtailed in order to protect the liberties of the citizenry. Especially concerning is the power granted to the President by the Bill to issue regulations to implement rehabilitation programmes for persons for whom the Attorney- General has recommended a deferment/suspension of criminal action, given the history of abuses and fundamental rights’ violations committed during such rehabilitation processes. In 2021, CPA filed a Fundamental Rights Application challenging a similar set of regulations under the PTA, and the Supreme Court stayed the operation of the regulations.
CPA also notes that the definition of the ‘offence of terrorism’ in the Bill is overly-broad and contains vague undefined elements, such as acts ‘violating territorial integrity or infringement of sovereignty of Sri Lanka or any other sovereign country’. The use of such terms is concerning given Sri Lanka’s contentious history of repression and abuse of anti-terror laws. Moreover, this definition of the offence of terrorism, lacks precision, and adherence to the principles of necessity, proportionality, and legality. CPA is concerned with the secrecy surrounding and the timing of the publishing of the Bill that is deeply problematic and is indicative of the lack of interest to genuinely engage with the public on a critical issue. The preliminary issues raised here is in the hope of constructively engaging with authorities and lawmakers, and to create a dialogue on whether such a law is even needed in Sri Lanka. This will be followed by a more detailed commentary on the clauses of the Bill in due course. The present proposal must be viewed in light of Sri Lanka’s legacy of abuse, and the systems in place that have facilitated such abuse. At a time when Sri Lanka is pursuing a path of recovery and rebuilding, it is critical to ensure that genuine measures are taken to address recurring practices of abuse and impunity and uphold the rule of law and democracy in Sri Lanka. Lawmakers must understand that given the history of abuse there is a long way to go in building public trust, and the onus is on the State to recover that trust by putting all the necessary checks and balances in place.
CPA Statement on the Anti-Terrorism Bill – 2023
Tourist arrivals top 100,000 in March marking historic hat-trick post-2019
- First 26 days of March draw 105,714 tourists, pushing Q1 arrivals to 315,898
- Russia leads as top market with 22,038, followed by India, UK, Germany and US
- Tourism Minister Harin Fernando applauds industry stakeholders’ efforts for strong comeback in 2023
By Charumini de Silva
With arrivals surpassing the 100,000 mark in the first 26 days of March, Sri Lanka’s tourism industry has welcomed over 300,000 visitors in the first quarter, starting 2023 on a positive note.
This is also the first time Sri Lanka’s tourism industry recorded over 100,000 tourist arrivals in three consecutive months after 2019.
Led by Russian travellers, during the first 26 days of March, a total of 105,714 tourists arrived in the country, propelling the cumulative figure to 315,898 continuing the growth momentum and boosting hopes for a good year. The growth in the first quarter (with a few days remaining) of tourist arrival is over 10.7% compared to the same period last year, but still 55% lower than the first quarter of the benchmark year 2018.
Russia leads as the top source market, reflecting 21% or 22,038 of total arrivals during the first 26 days of March followed by India with 15% or 15,695, the United Kingdom with 8% or 8,555, Germany with 8% or 8,256, and the US with 5%, provisional data released by the Sri Lanka Tourism Development Authority yesterday noted.
“Sri Lanka’s tourism industry has made a strong comeback in 2023 after a series of major setbacks from 2019. The respect and tribute of it should go to all stakeholders of the industry for all their dynamic and steadfast commitment to overcoming the challenges. I salute their dedication and efforts,” Tourism Minister Harin Fernando told the Daily FT.
He also said that the National Tourism Policy blueprint will also be implemented soon to set out consistent policies and standards to boost Sri Lanka’s tourism industry to its next stage of growth in 2024.
“We are excited about 2023, as plans are underway to make Sri Lanka a year-round destination,” the Minister added.
Tourism accounts for close to 5% of Sri Lanka’s economy. The industry is hopeful of achieving 1.55 million visitors and an income of $ 2.88 billion in 2023.
With Sri Lanka Tourism not opting for a global communication blitz in 2023, however, it will focus on nine key markets identified as India, Russia, China, the UK, France, Germany, the Middle East, and Nordic countries. The MICE tourism segment is earmarked as a key segment Sri Lanka looks to explore this year to push the numbers and earnings.
Analysis opined that the continuous positive publicity at the global level was also a major factor for the boost in arrivals post-political instability just last year.
McKinsey mantra for Sri Lanka
- McKinsey Senior Partner Chair of Insights and Ecosystems Sven Smit moots likely Indian century ahead and says strategically located Sri Lanka stands to gain
- Describes Sri Lanka’s potential as solid and this could be realised with right strategies, competence and competitiveness and make Sri Lanka grows better and bigger than it had in the past
- Stresses Sri Lanka must find its own positioning in the region and globally
By Nisthar Cassim
Renowned global management consulting firm McKinsey is urging Sri Lanka to use the strategic geographic location effectively and benefit from India’s rise whilst following best practices of successful emerging economies.
“If the Indian century comes through, whoever is related to that will have benefits,” emphasises McKinsey Senior Partner Chair of Insights and Ecosystems Sven Smit who is also the Chair of the McKinsey Global Institute, the firm’s business and economics research arm.
“Are you close to something that grows?” queried Smit in an interview with the Daily FT during a recent visit to Sri Lanka. “One of the endowments of Sri Lanka is location. I come from the Netherlands, where the port of Rotterdam is. To what degree can Sri Lanka be the port of India or a port? Even if you’re a port to India, that will make a big difference,” he added, reinforcing that Sri Lanka stands to benefit from India’s rise.
Smit stressed when something as big as India starts to move at a different pace, it pulls its surroundings and Sri Lanka with right strategies, competence and competitiveness, can grow better and bigger than it had in the past.
He stresses Sri Lanka needs to ask itself whether the country is making what India needs or be the logistics hub for what it needs or ships out. McKinsey executive said that at the potential level Sri Lanka is solid and this could be realised by the right strategies. “The more you have the best business policies and practices the better it is,” said Smit and listed among them were fiscal discipline and currency stability along with a dynamic agriculture, manufacturing and services sector including tourism and logistics.
“Sri Lanka has a natural endowment to do agriculture and better agriculture is needed in the world, including productivity. Sri Lanka could be one of the more productive locations,” said Smit who is a member of McKinsey’s global leadership team, overseeing the firm’s knowledge development.
He added that being an island nation, Sri Lanka also has a natural attraction to tourism which has great potential.
He stressed that “Every country will need to find its position.” According to Smit, a country can only get one or two words in the mind of the world. “From a brand perspective of New York it is Wall Street and the Big Apple. Singapore has its financial centre. Sri Lanka can put one or two words. Is it the port, is it tourism, or is it a manufacturing place? This doesn’t mean that you should do all four, but one or two of those should be the things that the world will think or remember when it is comes to Sri Lanka.”
“What always works is if you have one or two strong winners, it will pull everything up. If you have an industry that’s big and strong ‒ be it manufacturing, tourism or ICT, and for that you need basic services, and then when that engine runs on the platform of that, another engine can run. Countries are going to be known for what works the best,” Smit added.
https://www.ft.lk/top-story/McKinsey-mantra-for-Sri-Lanka/26-746781
Quick impressions on post-war development
Jaffna revisited
The recent visit to Jaffna, after several years of forbidden travel due to the pandemic, provided an opportunity to revisit areas of interest and observe the changes, including positive and negative developments, in both the economic and social fronts. It was a quick visit and unexpectedly the timing of the visit coincided with the visit of the President who declared open the Jaffna Cultural Centre on 11 February 2023. The festive atmosphere that prevailed on that day was combined with a subdued celebration of the 75th anniversary of Sri Lanka’s Independence. The atmosphere signified that Jaffna is slowly emerging from the isolation that kept its charms hidden.
Except for the cleaning up and beautification of Aryakulam and its environs with a benefactor’s contribution, the Jaffna Municipal Council does not appear to have initiated any significant renovation and refurbishment work in public areas
Economic Activities
The war-torn city of Jaffna is coming back to life after almost three decades and three years of the pandemic while struggling to cope with day-to-day cost of living pressures and erosion of well entrenched societal values. One could witness the disappearance of bullet marked buildings which are being renovated with remittances received from overseas.
The end of the war saw significant road development initiatives sponsored by the central government. This resulted in paved roads including the major artery-A9-and other pivotal highways that connect Kankesanthurai, Palaly and Point Pedro. Unfortunately, some areas did not benefit from this uneven development. For example, the road leading to some of the main Islands like Velanai,Pungudutivu and Nainathivu is in a dire state requiring immediate attention. There could be similar situations elsewhere not traversed by the author.
Renovation of old houses and temples, and establishment of small businesses appear to have occurred during the pandemic. The emergence of supermarkets combined with a surfeit of wedding halls give the impression that there was money circulating in the community despite lack of evidence of enhanced economic activity-remittances from abroad have been used to reconstruct damaged houses and buildings as well as invest in some less productive ventures. Anecdotal evidence suggests that most of the wedding halls will soon be white elephants!
While construction activities proceeded on a small scale with private funding, public places like the Jaffna market and Tinnevely market areas remained largely untouched. Except for the cleaning up and beautification of Aryakulam and its environs with a benefactor’s contribution, the Jaffna Municipal Council does not appear to have initiated any significant renovation and refurbishment work in public areas. The development of the Aryakulam area into a place of both historical and touristic attraction is a welcome move, but may require further investments to enhance its potential.
In a city where the primary mode of transport was bicycles, the growth in the number of scooters signified that overseas remittances were occasionally put to good use despite contradictions in the way funds were invested. The Jaffna youth considered the possession of scooters as a status symbol in addition to its practical value as a transportation mode. This has also helped older adults to be less dependent on public transport to get to work and attend to household activities.
In anticipation of an influx of tourists, increased number of medium sized hotels and resorts and a plethora of guesthouses have sprung up in the last few years. Many of the guesthouses remain empty although hotel occupancy rates are improving with south-north traffic and a sprinkling of overseas tourists.
An interesting development is taking place consequent to the removal of border controls. The movement of Sinhalese from the south has increased considerably and their involvement in some economic activities has created an opportunity for increased social interaction with the Tamils. A substantial number of people travel from the south to visit religious places in Nagadeepa/Nainatheevu and other areas of social interest. The number of visitors from the south outnumbered those from within Jaffna on the day the author visited Keerimalai Springs, a place noted for its religious significance and healing properties. Another event comes to mind-the author witnessed a busload of visitors from the south entering the Jaffna market after visiting Sri Naga Vihara and negotiating prices for products in Sinhala. It was interesting to observe that proficiency in the Sinhala language among Tamil traders was even better than their counterparts in Colombo. This situation raises hopes that movement of people irrespective of their race, religion or caste will now promote unity in diversity and greater interaction among the country’s diverse population.
The involvement of Sinhalese in some economic activities has created an opportunity for increased social interaction with the Tamils
The social structure is reported to be crumbling. The social stratification that encompassed caste-based divisions which continued to survive the onslaught of the civil war is now co-existing with clan- based divisions resulting in sharp deterioration in the social order. The emergence of gangs engaged in criminal activities using sword as a weapon combined with indiscriminate use of drugs among the youth have created a divisive population.
In contrast to this development however, a substantial number of youth pursuing higher studies have shown keenness in their studies. What was gratifying were the scenes witnessed in many roadside areas where queues of students in bicycles were waiting for their turn to attend tuition classes. The difference was that such students were always accompanied by one of their parents compared to what prevailed a decade or two ago when the same practice of attending tuition classes rested entirely with the students themselves. This sharp difference has apparently arisen due to the fear that unaccompanied students would fall a prey to drug use and other socially disruptive practices.
An assessment
Is Jaffna booming, blooming or busting is the question that arises in the minds of those familiar with Jaffna’s heritage, historical background, culture and socioeconomic development patterns. Jaffna is going through a process of transformation which displays both positive and negative features. The author, in his book entitled, ‘ManagingDevelopment: People, Policies, and Institutions’ launched in Colombo under the auspices of the current President (then Prime Minister) in August 2019 and later in Sydney, Australia in September 2019, and in Manila, Philippines in November 2019 had this to say about development, “Development is about people. People are both partners and beneficiaries of change. Good policies and effective institutions provide the basis for sound development management. Successful institutions derive their power from competent leaders and good management practices. The pace and process of development are determined by good governance and strengthened capacity to implement and manage projects”. Viewed from this perspective there are shortfalls and issues relating to policies, appropriate institutional structure and oversight and sound governance, including dynamic leadership and management, providing form and content to structured development at the local level.
Regaining confidence in the stability of life which had been badly battered during the civil war and subsequent post-war period could be considered a significant positive feature. Although the pandemic had an adverse impact on agricultural activities there was progressive participation in pursuits that kept people engaged in productive occupations. At present farming activities are slowly building up though not to the levels of the pre-war situation.
Non-farm activities comprised opening of small-scale grocery stores, supermarkets, fisheries and general business ventures and mixed trading enterprises, including tourism related ventures. Supermarkets and agro-industrial enterprises such as mills, and packaging industries have generated some employment among the youth.
Infrastructure development, one of the key features of post war development, has had both positive and negative impacts due to uneven spread and lack of adoption of a strategic planning approach.
Education has been identified as an industry in the Jaffna peninsula from the time of the British and continues to be so even now although standardisation of university admissions in the 1970s caused a substantial setback. However, the level of interest in pursuing higher studies is evident in the keenness shown by students to follow tuition classes despite obstacles.
The participation of people from the south in economic activities has brought the Sinhala-Tamil communities together and with or without their knowledge they are promoting inter-communal harmony and social integration.
The primary limiting factor is the lack of a planned investment pattern, both public and private, that has resulted in uneven and lopsided development which has contributed to unproductive ventures mushrooming in several parts of the city. This was confirmed by many, including legislators who understand the pulse of the people better. Some of the supermarkets located in distant areas were reported to be on the verge of closing due to lack of business. The practicality and sustainability of these ventures were not subjected to critical examination at the planning stage. The same applies to guesthouses many of which have had no guests for months.
Another limiting factor is the drug menace which seems to attract the marginalised youth who, having suffered from the trauma, loss of life and poverty during and after the war, found an escape route provided by unscrupulous and influential drug traffickers.
Conclusions
Jaffna is moving forward and is witnessing a positive transformation, albeit with limitations arising from ill-planned, adhoc and disjointed interventions spanning the entire development domain. The absence of investments in any major industrial venture suggests that long-term investment planning has been missing. A distinguishing feature of the development pattern is that investment funds came largely from overseas remittances with no significant inputs from successful local entrepreneurs or from local government institutions. This needs to be reversed and funds should be generated within the country at central and local levels if the pattern of investment is to be directed at ventures that will have a durable impact on the society with their economic and social viability assessed and analysed critically at the planning stage. This however does not preclude external financing provided it is channelled appropriately.
There needs to be a centrally located planning entity or a technically competent approval body which could coordinate the approval, supervision and monitoring of new ventures based on their relevance and economic value. An overarching body of this nature could possibly fall under varying authority levels depending on the scope, nature, and size of the investment portfolio; under the district secretariat, the Governor or the Jaffna Municipal Council, as appropriate.
The social issues, including drug trafficking, need to be tackled with appropriate intervention, supervision and funding from both central and local government levels. The establishment of an effective, high level task force comprising representatives from civil, military, police and NGO’s to handle crime and drug use could play a pivotal role to apprehend offenders, seek appropriate punishments, and enforce rehabilitation activities endorsed by medical and social welfare institutions.
(The writer is formerly of the Ceylon Civil Service and Retired Senior Professional of the Asian Development Bank)
https://www.dailymirror.lk/opinion/Quick-impressions-on-post-war-development/172-256631