Media Coverage on #ReformNow Conference: Let's Reset Sri Lanka

Let us focus on global changes immediately - President

We can’t use the old economic model further:

We can no longer use the old economic model and we must pay attention to global changes by thinking innovatively, said President Ranil Wickremesinghe yesterday. He was delivering the keynote address at the professional forum to launch the Advocata Institute’s research report on Sri Lanka’s economic reforms held at the Bandaranaike International Conference Hall in Colombo yesterday (05).

The conference organised by the Advocata Institute under the theme “LET’S RESET SRI LANKA” is held on August 5 and 6 at the Lotus Hall of the Bandaranaike International Conference Hall.

Read the full article here

President reiterates, difficult times ahead

President Ranil Wickremesinghe says Sri Lanka has '6 difficult months ahead' as the island nation attempts to stabilize the economy through agreements with the IMF.

Speaking at a forum organized by the Advocata Institute in Colombo today (05), President Wickremesinghe said that the 'way out' for the country is through the agreements reached with the IMF.

"Although people talk of alternative measures, they have not worked out," the President said, emphasizing that first and foremost, Sri Lanka has to enter into the standby agreement, with the staff level agreement with IMF.

Read the full article here

Sri Lanka President hints on possible wealth tax for economic, social stability

Amid widening gap between the rich and the poor in Sri Lanka, the island nation will have to go for higher taxation including on wealth, President Ranil Wickremesinghe said on Friday while delivering a keynote speech at an economic forum.

The crisis-hit country is struggling with lower state revenue and higher government expenditure with 86 cents of each rupee of tax revenue spent on state sector wages and pensions.

Read the full article here

Sri Lanka President hints on possible wealth tax for economic, social stability

Amid widening gap between the rich and the poor in Sri Lanka, the island nation will have to go for higher taxation including on wealth, President Ranil Wickremesinghe said on Friday while delivering a keynote speech at an economic forum.

The crisis-hit country is struggling with lower state revenue and higher government expenditure with 86 cents of each rupee of tax revenue spent on state sector wages and pensions.

Read the full article here

SL must focus on higher revenue mobilisation to overcome crisis

Sri Lanka still has scope to overcome the macroeconomic instability if the Government could focus on revenue mobilisation through inclusive tax reforms based on scientific analysis, Advocata Institute Senior Research Fellow Dr. Roshan Perera opined.

Speaking at the ‘Let’s reset Sri Lanka’ forum organised by the Advocata Institute recently, she underscored that the root cause of the existing macroeconomic instability was due to lack of fiscal discipline.

Read the full article here

The old economic model is no longer viable, IMF proposals must be implemented - President

President Ranil Wickremesinghe says the old economic model can no longer be implemented adding that innovative thinking is required while paying attention to global changes.

Delivering the guest speech at a conference today (05) Mr. Wickramasinghe said proposals of the International Monetary Fund (IMF) must be implemented to recover from the economic crisis the country is facing, regardless of whether they are good or bad, and regardless of who likes them or not.

Read the full article here

‘National carrier matters, but profitability matters more’

Delaying the privatisation of SriLankan Airlines will not help, however the steps towards privatisation of the national carrier should be taken in consultation with international experts who understand the aviation industry, Thilan Wijesinghe, Chairman and CEO of TWCorp (Pvt) Ltd., said at ‘Let’s Reset Sri Lanka –Reform Now’ conference hosted by Advocate Institute, recently.Thilan who is knowledgeable about many aspects of SriLankan Airlines’ operational outlook said so responding to a query on how debt-laden SriLankan Airlines can attract potential buyers to push a privatisation process forward.

Read the full article here

IMF, a starting point in path to recovery - President

Advocata Institute hosted its economic reform conference, #ReformNow last week. The two day event discussed the economic reforms needed to recover from the current crisis and promote growth.

The event brought together policymakers, l internationally recognised thought-leaders, the business community, civil society and citizens of Sri Lanka to facilitate this much needed discussion. The sessions focused on themes such as reforming taxation, state-owned enterprises, social safety nets , trade policy and land policy.

Read the full article here

‘Only 15 out of 40 employment laws in regular use’

Sri Lanka has over 40 laws that relate to employment, of which only about 15 are in regular use.

Most are dated before independence or shortly thereafter and many are outdated, Shyamali Ranarajah- Attorney at law (Pictured) said.

Sri Lanka’s labour reforms must be led by the highest level of government whilst stakeholders must have a seat at the discussions for labour reforms.

Moreover, Ranarajah said dispute resolution mechanisms must be made efficient, productive and must not become a barrier or a hindrance to growth and employment creation, she opined.

Read the full article here

South Asia can have integration in dancing & cooking, but not trade, quips Prez RW

Strengthening trade relations with the world is essential for countries to fulfil their economic aspirations, however, efforts will have to be made by individual countries to strengthen ties as within the South Asian region and trade integration will not happen, said President Ranil Wickremesinghe. “There will have to be bilateral agreements with whoever we want. There is too much politics involved for there to be a regional trade agreement in South Asia,” the President told a fully-packed audience at the ‘Reform Now’ conference hosted by Colombo-based economic thinktank Advocata Institute.

“So we can keep that aside. We can have integration in dancing, we can have integration in cooking. but certainly, we are not going to have integration as far as the economy is concerned,” Wickremesinghe quipped.

Read the full article here

CSE seen as being controlled by a few people; ‘not a proper platform to list SOEs’

The CSE is not a proper platform to list state owned enterprises because it’s being controlled and dominated by a few people or small groups of them. It cannot be a match for leading stock markets like the London Stock Market because it doesn’t reflect a broader perspective, President Ranil Wickremesinghe said.

“Either you must change or bring into being a new organization to broad base the stakeholder participation level without allowing a small set of people to control it, Wickremesinghe told an economic forum which was organized by the Advocata Institute and held at the BMICH yesterday.

Read the full article here

‘Negotiations with China needed as well to evolve sustainable debt restructuring proposal’

Sri Lanka’s debt advisors are currently looking at local debt, as a restructuring plan to negotiate with our creditors is being developed as part of efforts to make debt sustainable in order to obtain support from the IMF. The latter has specifically told us to bring a sustainable debt restructuring proposal through negotiations with China as well, President Ranil Wickremesinghe said.

Read the full article here

#ReformNow Conference: Let's Reset Sri Lanka

Sri Lanka is in the midst of its worst economic crisis since independence. Advocata Institute organised Sri Lanka’s first ever reset economic conference prioritizing economic recovery and growth. You can now watch these conferences once again on the Advocata Youtube channel and Advocata+ Youtube Channel.

Sessions of the conference were live-streamed on 05th and 06th August 2022 on the Advocata Institute Facebook page!

During the conference Advocata Institute launched it latest report and a policy product tracking the performance of State Owned Enterprises

To access the the platform and report visit https://soe.lk/

This report can be accessed below.

The State of State Owned Enterprises in Sri Lanka


Watch the full sessions on our YouTube channel

You can access the presentation from our sessions below:

Debt Crisis, Structural Adjustment and Trade Policy by Prof Prema-chandra Athukorale

Centralizing the State's Ownership Function by Daniel Alphonsus

State of State-Owned Enterprises by Ravi Rathnasabapathy

Air India Privatisation Story – takeaways for Sri Lanka by Thilan Wijesinghe

Taxation, Stability and Growth by Dr. Roshan Perera

Taxation, Stability and Growth by Prof. Mick Moore

Resetting Samurdhi -Social Safety Nets by Dr Stephen Kidd

Resetting Samurdhi - Social Safety Nets by Ms Gayani Hurulle

Context setting - Labour market Presentation by Udahirini

Labour market reforms for more inclusive growth by Ms Shyamali Ranaraja

Unlocking Land for development – Current Land Utilisation by Migara Rodrigo

Unlocking urban potential by Mr Nayana Mawilmada

Agricultural land by Dr Roshan Rajadurai

The Case For Private Industrial Zones – Lessons From The Dominican Republic by Mr Juan Jimenez

#ReformNow # Let’sResetSriLanka

Day 01 - August 05th

Day 02 - August 06th

Masterclass | Total Factor Productivity | Ep 1 | Advocata Academy | Dr Sarath Rajapatirana

Welcome to the Advocata Academy! We are launching the Masterclass series, conducted by Dr. Sarath Rajapatirana, Academic Chair of Advocata Institute. 

The first episode is on “Total Factor Productivity”, which focuses on the role productivity plays in the economic growth of a country. This episode also highlights some of the reasons why Sri Lanka’s productivity levels are low and how this can be improved.

Dr. Rajapatirana has worked across the world with leading international organizations such as the World Bank, World Trade Organisation, ITC in Geneva, and the International Cooperative Alliance in Latin America. He is a former economic advisor to the President of Sri Lanka and has advised governments and policymakers around the world. 

The second episode is on “Introduction to International Trade”

The Third episode is on “Industrial Policy’

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Masterclass | Introduction to International Trade | Ep 2 | Advocata Academy | Dr Sarath Rajapatirana

Welcome to the Advocata Academy! We are launching the Masterclass series, conducted by Dr. Sarath Rajapatirana, Academic Chair of Advocata Institute. 

This is the second masterclass on “Introduction to International Trade” which highlights the important role that international trade has played in the development of many countries around the world. The masterclass also explains import substitution and describes Sri Lanka’s experience with import substitution and how it affects efficiency and productivity. 

Dr. Rajapatirana has worked across the world with leading international organizations such as the World Bank, World Trade Organisation, ITC in Geneva, and the International Cooperative Alliance in Latin America. He is a former economic advisor to the President of Sri Lanka and has advised governments and policymakers around the world. 

The first episode is on “Total Factor Productivity”

The third episode is on “Industrial Policy”

Masterclass | Industrial Policy | Ep 3 | Advocata Academy |Dr Sarath Rajapatirana

Welcome to the Advocata Academy! We are launching the Masterclass series, conducted by Dr. Sarath Rajapatirana, Academic Chair of Advocata Institute. 

This is the third masterclass discusses on “Industrial Policy” and the difference between industrial policy and policy toward industry within the context of Sri Lanka's policies over time and how this can affect economic growth. 

Dr. Rajapatirana has worked across the world with leading international organizations such as the World Bank, World Trade Organisation, ITC in Geneva, and the International Cooperative Alliance in Latin America. He is a former economic advisor to the President of Sri Lanka and has advised governments and policymakers around the world. 

The first episode is on “Total Factor Productivity”

The second episode is on “Industrial Policy”

Year on Year food price increase close to 50%

Originally appeared in the Ceylon Today, Lanka Business Online, Daily FT

Advocata’s  Bath Curry Indicator (BCI) , which tracks the monthly changes in the retail price of food, recorded an increase of 14% from March 2022 to April 2022.  This is a year on year increase of 49% for this basket of food. 

This is driven primarily by prices of dhal and samba rice being the highest recorded by the BCI. A kilo of Dhal in April 2021 was Rs 178, a year later it costs Rs 466. A kilo of samba in April 2021 was close to Rs 130, a year later this costs Rs 210. With food prices increasing at this rate, a family of four to spend on the BCI basket of food would have to pay approximately Rs 560 more for a week. 

The Colombo consumer price index recorded a similar rate of 47% year on year increase in food inflation. Comparing supermarket food prices from March 2021 to 2022 there has been an increase of close to 40%. 

This drastic increase in food prices in 2022 is a result of macroeconomic instability within the country. Although global prices have increased due to the pandemic and issues with supply chains, global prices have not  increased as fast as the prices in Sri Lanka. 

In Sri Lanka in addition to the global pandemic related issues, we are currently facing shortages of foreign currency which impacts local supply chains.  This impact has also been exacerbated by consistent import restrictions, both causing shortages. These shortages compounded by the fact that the value of the currency has been falling steeply have all contributed to food prices rising faster and faster in 2022. 

The BCI tracks the weekly retail prices in the Colombo market of the most commonly consumed food ingredients that might be used in a typical Buth curry meal. The prices are collected from the “Weekly Indicators” that the Central Bank publishes. 

The BCI Indicator can be accessed at www.bci.advocata.org.

Media Coverage on Gender Discriminatory Labour Laws in Sri Lanka and Female Labour Force Participation

Gender discriminatory labour laws hold back women’s participation in the workforce

New Advocata Institute Report spells out the gender discriminatory labour laws such as banning work at night that impacts female labour force participation

Advocata Institute says that Sri Lanka’s labour laws that discourage the entry and retention of women in the labour force are a factor preventing female participation in the workforce.

The report identifies the lack of reference to part-time and flexible employment in the existing labour law, time restrictions on employing for women at night, dearth of legal provisions for sexual harassment in employment and restrictions on overtime work for women, as legal obstacles that discourage women joining and actively participating in the workforce.

The report focused on four main areas of discrimination in the labour market: sexual harassment in the workplace, overtime work, work at night, and part-time work. The report highlighted that if these issues were addressed it is likely that female participation in the workforce would greatly improve which would benefit the economy and attract investment (particularly in the context of Sri Lanka’s tight labour market and the cost of labour).

Read the full article here

How our labour laws have limited our ladies

Experts discuss legal and practical issues preventing female workforce participation

Even though the world has moved forward considerably in terms of ensuring gender equality in the workforce through laws and policies, Sri Lanka is yet to improve and update its labour laws, most of which are archaic. Due to the unavailability or the lack of laws that match today’s society, females are greatly inconvenienced, and it is hindering them from achieving their full potential and contributing to the country’s economy and strengthening their own and their households’ economies.

The need for law reforms and other practical issues that discourage females from playing their role in the country’s workforce were extensively discussed at an event held by the think tank Advocata Institute on 7 March, where the findings of a study about the existing labour laws and how those should be reformed were highlighted.

Study on laws affecting the female workforce

The report titled “Gender Discriminatory Labour Laws in Sri Lanka and Female Labour Force Participation” authored by T. Yapa, T. Hoole, G.S. Sallay, S. Bamaramannage, and J. Peerez – identifies the lack of reference to part time and flexible employment in the existing labour laws, time restrictions on employing females for duties at night, the dearth of legal provisions to prevent and address sexual harassment in employment, and restrictions on overtime (OT) work for females, as legal obstacles that discourage females from joining and actively participating in the workforce.

Read the full article here

Freedom For Her: Gender Discriminatory Labour Laws in Sri Lanka and Female Labour Force Participation

Advocata Institute is launching a research study on 'Gender Discriminatory Labour Laws in Sri Lanka and Female Labour Force Participation' in celebration of International Women's Day 2022!

The study concentrates on laws related to sexual harassment at the workplace, gender discriminatory laws on overtime, part-time and nighttime work and the event is organised in order to bring awareness to the topic amongst the general public and policymakers and implementers.

Panelists for this discussion are Thalatha Atukorale (Member of Parliament and Women Parliamentarian's Caucus), Dr. Ramani Gunatilaka (Independent Consultant and Research Associate at ICES), Ayomi Fernando (Industrial Relation Advisor, Employers Federation of Ceylon) and Thanuja Jayawardene (General Manager, Women's Empowerment, Advocacy and Code of Conduct, MAS).

The event was live-streamed on 07th of March 2022 at 6.00PM (IST) on the Advocata Institute Facebook page!

This report can be accessed below.

‘Gender Discriminatory Labour Laws in Sri Lanka and Female Labour Force Participation'


#FreedomforHer #AyataNidahasa

15% food price increase in a single month

Originally appeared in the Daily FT

Advocata’s  Bath Curry Indicator (BCI) , which tracks the monthly changes in the retail price of food, recorded an increase of 15% from November 2021 to December 2021. 

Much of this increase is driven by rising prices of vegetables. 100g of Green Chillies at Rs18 increased to Rs 71. This is a 287% increase in just one month. Similarly, prices of Brinjals have increased by 51%, red onions by 40% and beans and tomatoes by 10%. 

Overall, since 2019, prices have almost doubled, and compared to December 2020, prices have increased by 37%. 

This means that an average family of four, who spent  Rs. 1165  weekly on the BCI basket of food items in December 2020 now has to pay Rs 1593 for the same basket of goods just 1 year later. 

The BCI tracks the weekly retail prices in the Colombo market of the most commonly consumed food ingredients that might be used in a typical Buth curry meal. The prices are collected from the “Weekly Indicators” that the Central Bank publishes. 

  The BCI Indicator can be accessed at www.bci.advocata.org.

A tribute to Linda Whetstone from Sri Lanka

On December 15, 2021, in the midst of those who loved her and all those who she loved back, Linda Whetstone left this world at the epicenter of the institution that her later father, Sir Antony Fisher founded, The Atlas Network.

Linda was a beacon of light to all those who believed in freedom and human dignity. She was a generous donor and an advisor to think tanks and liberals around the world. 

The Advocata Institute bears testimony to the support and strength she gave to Sri Lankans to stand against the crude shadow of populist nationalism that had overwhelmed the fabric of social life in our country.  Before the founding of Advocata, liberal ideas around economics were held by a few scattered individuals and lacked an organized and coherent voice.  Our partnership with Atlas Network, which Linda Whetstone chaired at the time,  was pivotal in making us effective communicators and advocates of these ideas in Sri Lanka.
 
The team at Advocata remembers fondly Linda’s strong encouragement, belief and trust in us as a young organization to host the 2019 Asia Liberty Forum held in Colombo. One of the youngest think tanks in the Atlas network to host a major event.  Dear Linda, you were one of the cornerstones at the Atlas Network that had the confidence that we could pull it off. 

During the 2019 Asia Liberty Forum,  Linda personally sponsored half a dozen young people to attend the conference. Over the years with her support, Advocata Institute and The NightWatchman Society has been able to translate books about basic economic ideas to help expand the knowledge of young people and decision makers, a cause she believed in firmly. 

Linda Whetstone also has the unique distinction of serving as the  President of the Mont Pelerin Society and also as a board member and adviser of the Institute of Economic Affairs and Students for Liberty as well as numerous other organizations.  

The world of free market thinkers has lost a champion of liberty.  Linda will be fondly remembered by all those who were inspired, encouraged and influenced and who were fortunate enough to have been associated with her in life.

We will miss her infectious energy, her support and friendship. 

The founding members of the Advocata Institute


Time to bring SOE privatisation to the policy table

Originally appeared on Daily FT, Ada derana Biz , Sunday Observer and The Sunday Island

Privatisation is the need of the hour.

  • Sri Lanka is already in one of the worst economic crises in its history. Experts warn that deep economic reforms are essential. 

  • Reforming SOE's can  curb further losses,  which add to the fiscal deficit. 

  • The  Cumulative losses of the 55 SOEs from 2006-2020 is a staggering 1.2 trillion.  

  • Disposing of State Owned Enterprises which are a burden on the public finances, is the crucial need of the hour. 

  • Immediate privatisation of  large  State Owned Enterprises,  will  build international investor confidence. 

“Big, ponderous, Government enterprises are not responsive to our needs. And because they’re not responsive, you will go home today and you will have a blackout of one hour, because they’re load shedding during peak hours,” said Prof. Rohan Samarajiva, a veteran policy expert and an advisor of the Advocata Institute.

He made these comments at Advocata’s press briefing, organised to highlight the urgency of carrying out reforms to State Owned Enterprises (SOE). “The basic issue is that we, in this country, are suffering from a twin deficit. We need to get started on addressing the core problem,” further stressed Prof. Rohan Samarajiva.

According to Prof. Samarajiva, privatising a globally visible, yet loss-making SOE, such as SriLankan Airlines is the best solution to create confidence among investors that Sri Lanka is serious about reforms.

Sri Lanka’s SOEs are a serious burden on public finances. With the economic crisis reaching a tipping point, it is becoming increasingly impossible to keep these loss-making enterprises afloat. The continuation to do so, at the expense of the taxpayer, can have serious consequences to the economic trajectory of the nation.

Advocata Institute’s research team has identified that the cumulative losses of the 55 SOEs from 2006-2020 is a staggering Rs. 1.2 trillion. The combined loss per day of the Ceylon Petroleum Corporation, the Ceylon Electricity Board, SriLankan Airlines, Sathosa and the National Water Supply and Drainage Board is approximately Rs. 384,479,189, according to data for the year 2019.

This is at the backdrop where the country is wading through a serious debt crisis with questions surrounding the ability to meet forthcoming debt obligations. The briefing brought together a panel of industry experts who raised alarm bells on why Sri Lanka cannot afford to be complacent about SOE reforms anymore.

Prof. Rohan Samarajiva further explained the seriousness of this issue along with how privatisation can achieve positive outcomes for the country. “In 1997, Sri Lanka Telecom was making losses and providing bad services. Today, after privatisation, it is providing us with good services and employment and double of what they were earning. It is also providing the Government with a dividend which generated billions to the Government.” He highlighted that the country has no other alternative to prevent the haemorrhaging losses of SOE apart from privatisation.

“Privatisation is not a one-size-fits-all model. It is different in different countries and sectors, as seen in the telecommunication industry in Sri Lanka. With a good regulator we can have competition, leading to greater efficiency and making technology accessible to the common public,” commented Advisor to the Advocata Institute Anarkali Moonesinghe.

She further elaborated that possible avenues for privatisation that can be considered include the listing of SOEs in the stock exchange. According to Moonesinghe: “Our stock market could use large capital companies that are owned by the Government today.

“It not only gives people ownership but also broadens ownership by giving the average person an opportunity to become a direct stakeholder to these enterprises. This can be a better option than attaching the person through taxpayer money or having your EPF/ETF being taken into these enterprises,” thereby describing the merits of listing.

Advocata Academic Chair Dr. Sarath Rajaptirana said that the present crisis makes two choices available to the country, which is “reform or perish”. He highlighted the urgency of implementing structural reforms.

He further commented that the key issue with SOEs lies in productivity. “For over 30 years, Sri Lanka’s total factor productivity was less than 1%. This is in severe contrast to countries such as South Korea and Vietnam, where a jump in productivity is experienced today which we were never able to maintain. If you want permanent change in the GDP rate, you need to have productivity increase,” said Dr. Rajaptirana.

The recording of the media event can be found at advocata.org.

Media coverage on "Urgency of State Owned Enterprise Reforms"

Why does Sri Lanka need a national airline when india doesnt have one? Prof. Rohan Samarajiva

Amidst a whopping amount of losses national carrier SriLankan Airlines has been making for years, LIRNEasia Founding Chair and Advocata Institute Advisor Prof. Rohan Samarajiva questioned why Sri Lanka would need a national carrier when India, the neighbour, does not have one. 

During a press briefing organised by Advocata Institute on “The Urgency of State Owned Enterprise Reforms”, Prof. Samarajiva stated that SriLankan Airlines should be privatised to not only save public money, but to also improve the credibility of the country by showing the country’s creditors that Sri Lanka is genuinely committed to meeting its debt payments. 

Prof. Samarajiva pointed to the fact that Sri Lankan is hemorrhaging around Rs. 47 billion in losses per annum and questioned the rationality of using public funds collected through commodity taxes from a person who has never even gone near the airport. 

Read the full article here

Broad SOE reforms urged for SL to regain confidence of external creditors

With the government’s current approach appearing to be failing in its ability to meet upcoming external debt servicing commitments, the Colombo-based policy think tank Advocata Institute urged the government to roll out a broad reform package targeting ‘strategically important’ State-Owned Enterprises (SOEs) as a way to regain confidence of the country’s external creditors, illustrating the determination to resolve the prolonged structural issues in the economy.

According to data presented by Advocata, the cumulative losses incurred by key SOEs were estimated at Rs.1.2 trillion during 2006-2020, while the total SOE debt reached to 9 percent of GDP in 2020. The top five SOEs alone incurred an estimated Rs.384.48 million loss per day burdening both State coffers and ultimately the taxpayer.

“Sri Lanka lacks credibility in its approach to the creditor. In the current context, it’s not possible for us to increase revenue. Therefore, what we have to focus is on cutting expenses. This will send a strong message of responsibility and of commitment to anyone who has given us loans and they will say, ‘this is the country we should negotiate with, because they are serious about their economic problems’,” LIRNEasia Founding Chair and Advocata Institute Advisor Prof. Rohan Samarajiva said.

Read the full article here

State-Owned Enterprise losses mount to staggering Rs 1.2 trillion

The 55 “Strategically Important” listed State-Owned Enterprises (SOE) snowballing losses from 2006 to 2020 is a staggering Rs. 1.2 trillion. Out of the 527 state-owned enterprises the Treasury has classified 55 as “Strategically Important” it was revealed at an Advocata Institute that organised an event on “The Urgency of State-Owned Enterprise Reforms” last week.

Sri Lanka’s State-Owned Enterprises have placed a significant burden on public finances. They are also a major source of inefficiency in the economy. “Therefore the present economic crisis, along with Sri Lanka’s current debt crisis, makes reforms on SOE’s a national priority to emerge from present economic challenges,” it was opined at the event.

Read the full article here

Advocata's event on the Urgency | News 1st: Prime Time English News | (09/12/2021)

Advocata's event on the need for the “Urgency of State Owned Enterprise Reforms” featured on Newsfirst Prime Time English News

"Urgency of State Owned Enterprise Reforms"

The Advocata Institute hosted a press brief on the '"Urgency of State Owned Enterprise Reforms" with Advocata’s Academic Chair Dr. Sarath Rajapatirana, Advocata’s Advisors Professor Rohan Samarajiva and Ms. Anarkali Moonesinghe on December 09th at 2.00PM.

The event commenced with a 10-min presentation, analysing the performance of key State Owned Enterprises. Followed by statements made by Dr. Sarath Rajapatirana, Professor Rohan Samarajiva and Anarkali Moonesinghe on the need for SOE reforms, before opening the floor for a question and answer session with journalists and media.

The event was moderated by K D Vimanga and Sathya Karunarathne.

The presentation by KD Vimanga on "Urgency of State Owned Enterprise Reforms" can be accessed below.

Urgency of State Owned Enterprise Reforms Presentation

Watch the discussion on Advocata Institutes YouTube channel. 

Media coverage on " A National Consensus for the Economy"

Privatise SriLankan - Prof. Samarajiwa

The Government should privatise national carrier SriLankan Airlines and save millions of rupees that is being daily wasted to keep the airline, said founding Chair of LIRNEasia, Prof. Rohan Samarajiwa at the Advocata Institute organized building political consensus for economic reforms event at BMICH on Wednesday.

He said that if the Indian government can privatise their national carrier Air India, the Sri Lanka government too could do it. He however said that like what the Indian government did the Sri Lankan government too would have to shoulder their burden of settling all the debt owed by the airline when it was privatised. “However even after doing this the Sri Lanka government would be able to save millions of rupees that is allocated to ‘up keep’ the airline.

Read the full article here


‘IMF bailout viable option for mounting debt repayment’

Whichever government is in power they would have to face the current dollar crunch, escalating global commodity prices, pandemic and most of the other current issues and one way out of this is to look for a IMF funding Chair of LIRNEasia, Prof. Rohan Samarajiwa at The Advocata Institute organized building political consensus for economic reforms event at BMICH on Wednesday.

He said that no institution has given loans to Sri Lanka by force but now the debt repayment is mounting and one viable option would be to look at the IMF for a bailout. He also said that the budget did have salient features and though not adequate to cut down the fuel allowance of the parliamentarians by 5 liters is a step taken in the right direction giving a positive message that polities too are taking some cost cutting measures. But the one off tax imposed on corporate is not a welcome move.”

Read the full article here


Prof. Samarajiva proposes Sri Lankan divest shares

LIRNEasia Founding Chair and Advocata Institute Advisor Prof. Rohan Samarajiva, during a recent event, suggested that the Government divest SriLankan Airlines on the same lines as Air India.

“The objective is to protect the taxpayers of this country from having to continually cover the losses of this technically bankrupt state-owned company,” he said, highlighting the importance of immediate measures to improve public finances.

The national carrier makes a daily loss of Rs. 129.03 million. In the last four years of operation, it has cost the economy Rs. 137 billion in the form of accumulated losses.

Prof. Samarajiva also stressed the importance of building a national consensus to implement immediate reforms to tackle a wide range of issues ranging from unsustainable debt to shortages of essential items in the country.

“We are no longer talking about a crisis that is about to engulf us. We are now in its midst, though not its depths. The hope that the 2022 Budget would give the right signals has evaporated,” he added.

Read the full article here


National consensus mooted to overcome potential sovereign default

A national consensus backed by a common minimum programme, which should be implemented by an independent team of experts, is mooted for Sri Lanka to overcome a potential sovereign default next year.

“As the Central Bank (CB) will be a focal point in this process, we need to transform the CB into a real independent and responsible entity, which can work with a national government. It should give priority to technical advices in its decision-making and it should not be an entity, which experiments different theories such as Modern Economic theory,” LIRNEasia Founding Chair Prof. Rohan Samarajiva told a forum organised by Colombo-based think tank Advocata Institute, under the theme ‘A National Consensus for Economy?’, in Colombo, on Wednesday.

In taking part in the panel discussion, ruling-collation MPs Prof. Ranjith Bandara and Dr. Suren Raghavan as well as opposition MPs Dr. Harsha de Silva, Patali Champika Ranawaka and Vijitha Herath, identified the need of a national consensus to overcome the looming crisis.

Ranawaka estimated Sri Lanka’s external debt repayment obligations at a minimum of US $ 3 billion, which include International Sovereign Bonds (ISB) and Sri Lanka Development Bonds (SLDB) for the next eight months, with only US $ 1.5 billion usable foreign exchange reserves in hand.

Sri Lanka has a US $ 500 million maturing ISB in January, next year and another US $ 1 billion maturing ISB in July next year.

Read the full article


Call for consensus on structural reforms to get out of economic crisis

“We are no longer talking about a crisis that is about to engulf us. We are now in its midst, though not its depths. The hope that the 2022 Budget would give the right signals has evaporated,” Prof. Rohan Samarajiva, a leading policy analyst and an advisor of the Advocata Institute, said.

He made these comments at Advocata’s latest event, ‘A National Consensus for Economic Reforms or Arthikayata jathika sammuthiyak?’. Prof. Samarajiva provided a breakdown of severe economic and social challenges facing the country. His keynote speech stressed on the importance of building a national consensus to implement immediate reforms to tackle a wide range of issues ranging from unsustainable debt to shortages of essential items in the country.

The present macroeconomic instability lies in the failure of the state to implement deep structural reforms to the economy for nearly twenty years. The COVID-19 pandemic has exposed Sri Lanka’s fundamental weaknesses that have plagued the economy for a long period of time.

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Defaulting debt repayment can have severe repercussions

Sri Lanka has been running deficits over the decades following the post- independence period when the fiscal deficit was over 10 percent of the GDP.

In 2020 it exceeded 10 percent of the GDP and is likely to deteriorate in 2021. “If the government continues to consume more than it earns or when the domestic private savings are not sufficient to finance the economy it can reflect in our current account deficit. In the absence of domestic saving, the country has to depend on foreign savings to bridge the current deficit,” said Dr. Roshan Perera, Senior Research Fellow of the Advocata Institute at the launch of a publication on “Framework of Sri Lanka’s Economic Recovery at a webinar held this week.

She said in the absence of FDIs coming into the country Sri Lanka had to borrow from abroad. In the 2000 period funds came mostly from bilateral and multilateral sources and concessional financing. But these funds ceased when the country’s rating was elevated to a middle- income country status. When Sri Lanka embarked on infrastructure projects in later years, it had to borrow from private lending agencies and international sovereign bonds with shorter grace periods with higher interest rates. This had an impact on debt service payment which has ballooned over the years. With low foreign inflows coupled with the COVID-19 pandemic, debt servicing has been a challenge, she added.

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Sri Lanka urgently needs ‘National Consensus’ on deepening economic crisis, policy analysts and politicians say

We are no longer talking about a crisis that is about to engulf us. We are now in its midst, though not its depths. The hope that the 2022 Budget would give the right signals, has evaporated, Prof. Rohan Samarajiva, a leading policy analyst and an advisor of the Advocata Institute said, last week.

He made these comments at Advocata’s latest event , “A National Consensus for Economic Reforms or “ආර්ථිකයට ජාතික සම්මුතියක්?”.

Professor Samarajiva provided a breakdown of severe economic and social challenges facing the country. His keynote speech stressed on the importance of building a national consensus to implement immediate reforms to tackle a wide range of issues ranging from unsustainable debt to shortages of essential items in the country.

The present macroeconomic instability lies in the failure of the state to implement deep structural reforms to the economy for nearly twenty years. The COVID-19 pandemic has exposed Sri Lanka’s fundamental weaknesses that have plagued the economy for a long period of time. The event brought together politicians representing the main political parties to discuss the importance of a united course of action, to drive Sri Lanka’s economy towards a path of growth.

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Advocata's event on the need for a broader consensus for economic restructuring | News 1st: Lunch Time English News | (25/11/2021)

Advocata's event on the need for a broader consensus for economic restructuring featured on Newsfirst Lunch Time English News

Advocata's event on the need for a broader consensus for economic restructuring | News 1st: Lunch Time Sinhala News | (25-11-2021) දහවල් ප්‍රධාන ප්‍රවෘත්ති

Advocata's event on the need for a broader consensus for economic restructuring featured on Newsfirst Lunch Time Sinhala News

ආර්ථිකයට ජාතික සම්මුතියක්? A National Consensus For The Economy

The Advocata Institute hosted a live discussion on 'ආර්ථිකයට ජාතික සම්මුතියක්?' with Prof. Ranjith Bandara (SLPP), Dr Suren Rāghavan (SLPP), Patali Champika Ranawaka (SJB), Dr Harsha de Silva (SJP), Vijitha Herath (JJB) on November 24th at 6.00PM.

The keynote address was delivered by Prof Rohan Samarajiva (Chairperson, LIRNEasia | Advisor, Advocata Institute). The discussion was moderated by Dhananath Fernando and Sathya Karunarathne.

Watch the live discussion on Advocata Institutes YouTube channel. 

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Media coverage on 'Essential goods price hike'

Essential goods price hike: ‘Price formula is another way for Govt. to interfere with businesses’

Expressing their view regarding the prevailing situation over the price increases of multiple essential goods, the Advocata Institute stated that the public has to brace themselves for a ‘rocky’ next months due to necessary hard economic reforms.

Join the conversation with Hiru News, on behalf of the Advocata Institute, which is a Colombo-based independent public policy think tank, Research Analyst Sathya Karunarathne commented on the multiple price hikes imposed in the market within the past week as well as the possible long-term solution that could be interested.

Read the full article here.

Fostering competition and improving productivity are the best form of price control.

Originally appeared in the Daily FT , Daily Mirror

The crucial role of prices in solving the economic problem.

The recent  decision by the government to withdraw several gazette notifications imposing price controls is a step in the right direction.  Consecutive governments have used  price controls  to address equity concerns instead of undertaking the hard reforms needed to create competitive markets.  Prices are central to solving the core economic problem that all societies face: how are scarce resources (re)allocated to meet as many of the unlimited wants of consumers as possible? Allowing prices to carry out this function, so that more consumer wants can be met achieves the best outcome for an economy.  

From such a perspective, the recent decision to end price controls on essential foods (including milk powder and wheat flour) , liquid petroleum gas and cement is  a step in the right direction. Price controls create distortions such as shortages, rationing and the creation of a black market as well as substitution towards low quality alternatives. Although price controls are often introduced by governments with the intention of protecting the poorest consumers in society,  they are  very inefficient, as a means of redistribution. Often these subsidies are biased against the poor as they consume less of these goods than the rich.  Further, sharp increases in prices could have negative consequences on low income households in the short run.  Ideally such price increases should be made gradually so consumers can adjust to them or be able to shift to cheaper alternatives.  

Administratively controlled prices particularly on goods and services provided by the government exert a huge burden on the fiscal, leading to high borrowings and debt.  It also affects the conduct of monetary policy by masking  underlying inflationary pressures. 

Fostering competition and boosting productivity is a better way of reducing the cost of living. This involves removing barriers to entry and deregulating the economy. A good example of this is in the cement industry. The industry is dominated by two players and competition is constrained by a government policy that restricts the number of plants that can operate in each port.  If a new factory is set up,  priority is given to existing operators in the port. This limits new investment and  competitive pricing. Another key issue that makes construction prohibitively expensive is the use of paratariffs (CESS) on imports reducing contestability in the market. There is a misplaced perception that imports are not necessary, where there is local production, but it is the threat of imports that increases contestability, keeps prices low and improves consumer surplus. Further, it also incentivises domestic producers to improve productivity and competitiveness benefiting all stakeholders. 

The same is true of the LP gas industry. There are only two players in the market, i.e., the state-run Litro Lanka Limited and Laugfs Gas PLC.  One would expect that the presence of  Laughs Gas should create some competition in the industry.  However, strict governmental control  over LP gas prices and barriers to entry for new players into the industry, have prevented an efficient market  from developing.  The industry is highly capital intensive and the lack of storage facilities is the most significant  entry barrier.  Allowing  the use of common storage facilities along with opportunities in distribution will make the industry more competitive, exerting  a downward pressure on prices in the long run.  

Our experience over the past few months illustrate the adverse impact of price controls on the economy.  At the same time, governments are also  concerned that removing price controls would generate inflationary pressures. However, through careful management and communication, one - off increases in prices need not feed into inflation expectations and wage negotiations.  This requires tight rein over demand driven inflation and credibility that the central bank would use its monetary policy tools to keep inflation within its targeted range of 4 - 6 per cent. 

Hence, going forward, we urge the government to refrain from using price controls to address equity concerns. Instead, creating a competitive business environment and boosting supply is the best solution to lower prices in the economy. In order to support vulnerable households the government should provide a cash transfer to cushion the impact of price increases of essential commodities. This would require a re-examination of the Samurdhi scheme which currently excludes some of the most vulnerable households and tighter administration to ensure benefits accrue to those who need it most. 

Advocata’s Analysis on Price Controls can be found at; https://www.research.advocata.org/wp-content/uploads/2018/10/Price-Controls-in-Srilanka-Book.pdf. 

Key Points 

  • Recalling gazettes imposing price controls is a move in the right direction. 

  • Allowing market focus to set market prices prevents price instability. 

  • Allowing more competition and the entry of private sector players is the only  policy solution to counter the adverse effects of unsustainable increases in market prices.   

 

Media coverage on මිල පාලනයෙන් පොඩි වෙන මිනිස්සු - Cyber Conference

Lifting price controls will help local milk producers

The shortage of essential products can be mitigated by creating a competitive business environment without price controls for imported and local products, according to an economic expert.

Chief Operations Officer of Advocata Institute Dhananath Fernando said by doing so, the consumer will be provided with an opportunity to select whatever goods that are suitable for them.

Participating in a discussion at the Government Information Department, he cited imported milk powder as an example and pointed out that freight charges have been increased by five or six-folds, adding that it was a world issue and not something exclusive for Sri Lanka.

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