charindra chandrasena  00:04
Mr.

Dhananath Fernando  00:06
Chandrasena, how

charindra chandrasena  00:07
are you?

Speaker 1  00:08
Keeping well after two weeks. After two

charindra chandrasena  00:10
weeks, after a lot of globe trotting from you.

Speaker 1  00:13
Absolutely. How was how was Riyadh's Riyadh? This is substitute. Riyad Riyadh

charindra chandrasena  00:20
is a fun substitute. But I'm also happy to see you back.

Speaker 1  00:24
Absolutely, a lot has happened. But yeah, glad to glad to be back. Yeah,

charindra chandrasena  00:31
yeah. Where did you go?

Dhananath Fernando  00:32
I was in Jakarta first, and then I had to come back for like two days, and again I had to leave to Bangkok. Right. So it was good, and interestingly, Jakarta. There was some protest before, but I think it was settled. You went

charindra chandrasena  00:48
and settled it. I don't

Dhananath Fernando  00:52
mind getting the credit for that. Norway, Norway. Yeah, it was good. It was good. Good.

charindra chandrasena  00:59
You're back in Sri Lanka. Glad to be back now.

Dhananath Fernando  01:02
Yes, absolutely. And and and back on time for to celebrate the to celebrate the one

charindra chandrasena  01:07
year anniversary of the

Dhananath Fernando  01:09
new government.

charindra chandrasena  01:09
Yes. Dana, from an economic point of view, okay, give me your honest thoughts. Right, if you were to rank or rate the government in this first year, now when we say first year, we mean the first year of the presidency.

Dhananath Fernando  01:25
Presidency, right?

charindra chandrasena  01:27
So mainly focused on AKD and his team. How have they done economically, according to you?

Dhananath Fernando  01:34
Yes. So Javi, I give 100% marks for AKD for keeping the policy consistency on most of the critical areas, especially on continuation of the IMF programme. Again, it is not that IMF can fix all our problems. It is just that's a anchor stability. Like you have to bring the stability with the anchor. No, so that was the fundamental anchor, and he didn't change it. And kudos to him that he even didn't, regardless of the opinion differences, they acted with maturity to keep the central bank governor and the treasury secretary, and they accelerated the debt negotiation programme, signed most of the debt contracts. and continued that. That's number 100% marks for that. And also on the digitization front. Now I I saw on newspapers even the GovPay platform for traffic fines has been tremendously improved. So I think the digitization drive, appointing someone like Dr. Hans and getting his support and driving it is the second thing that they have done right. So I would give like rather than going like on isolated operational thing. Okay, I did this, I did that, but it's the consistency that they brought in and without changing the key reforms is is what I see. So, which for that I think they have done well, and the results can also be seen. The exchange rate is stable. Investments are slowly picking up. Remittances are picking up. Tourism is moving as usual. So, you can see the results. So, and also the the Public Debt Management Act, the the Central Bank Independence Act, they didn't change it regardless. I mean, it also takes political courage, you know, like to go. They went to courts against the Central Bank Independence, but they didn't change it once they came to power. So that's the overall scorecard. But I would like to know what is on the on the problem. Just

charindra chandrasena  03:40
just on that, what you mentioned, I see this as a fantastic example of political pragmatism, right? Where, as you said, they clearly and let's let's focus it on AKD since it's his anniversary, right? AKD and the entire party had a problem with the central bank governor, so Dr. Nandaral Vira Singh was not in their good books. Absolutely, nor was mr. Mahindra Silvadar. Right. Once he came in, right in Singhala, there's a term for it. Hapandary at a But I think it's a bit more advanced than that. I think he realised that what was said on the political campaign was not really feasible, especially because he didn't want to rattle the cage too much, right? He didn't want to overhaul the entire thing because it was such a massive revolution and such a big change that if he tried to change everything at once, then he would end up in in very deep waters. So I I love the fact that he put his ego.

Dhananath Fernando  09:41
The the culprits or the people who have been engaged in these corrupt cases is easy for them to approach directly the institute and get the institute to capture yes because ultimately it's individuals who are I mean who you know operate in these institutions of course and if they are not paid well and if they really do not have the capacity it's easy to, you know, rather than coming it through the earlier it came through the political channel. But now, since if the politicians are have, I mean, if they are if their hands are off from that process, now the the next process would be they will go to the institute.

charindra chandrasena  10:36
Yes.

Dhananath Fernando  10:36
So that's where I think the political authorities has to be cautious. But how do how do you evaluate on the on the political side? This is all economics, but there's a political angle.

charindra chandrasena  10:46
Yeah, on the political side, I think. So picking up on that point, I think the political culture was the the main thing that they promised to change. So in political culture, there are several elements, right? One is corruption, right, which was you know, systemic,

Dhananath Fernando  11:02
right? And

charindra chandrasena  11:03
then there is this whole about thing about how politicians enjoy way too many privileges and perks. So that's again the signalling has been given with the removal of the President's Entitlement Act, and then you have this lethargy, right? And that is where I think. So recently, Minister Bimal Ratnayak was talking to the railway authorities chief, railway department chief.

Dhananath Fernando  11:36
He had a major complaint on yes, yes,

charindra chandrasena  11:38
and he was saying flat, flatly, bluntly, if you can't do it, please leave. Right. So he was talking about the fact that fans have not been installed. Dana fans. Right. I mean, this is just ridiculous. Right. So I'm glad that there is this action coming in, and this doesn't feel as superficial or as cosmetic as the Gotaba presidency's actions, where he went into this what rice.

Dhananath Fernando  12:12
Yeah, he he went to the rice. Yes, the the the shops and the retail shops and yeah the retail shops and basically

charindra chandrasena  12:18
he was sitting on the chair and giving a call to somebody, I mean, that just feels performative, right? This feels a bit more sort of structured, a bit more targeted. So, and he, in

Dhananath Fernando  12:31
fact, he said, like, I apologise so many times, and there has to be a limit for exactly

charindra chandrasena  12:34
that. That I mean, I don't know whether he he is actually telling the truth or not, but if he has, then that's incredible that the minister has to apologise. That's very Japanese, right? For the minister to apologise, so he's apologising, apologising, and the people under him are not performing.

Dhananath Fernando  12:50
And he shared a very sensitive case, which because this this area is a very close area. Personally, Chari, because I have been a big fan of commuting by train. From you're a fan. I'm a fan. I mean, I mean, I I love travel by train because it's convenient from Morotour to Kolpiti. That's the fastest con convenient in the sense, like of course the the ride is not very convenient during the during the rush hours. But I mean, if you look at that view and the peace of mind, if you can actually have a proper seat, and if you can work and take that 2025 minutes, there is no better alternative to travel to Colombo. But the sensitive case was there was he said like the kid was travelling for the first time at that train, and there was a issue with the window and the shutter and the the chop the fingers. Yeah, I think I have a slightly while I respect Minister Bimal on being so open about it, but I think the next phase is you cannot fix chari a fans issue, a toilet issue, a timetable issue just by the muscle power. True, that is where you have to think on the organisational structure and reform it. I think that's what is missing. Coming back to while they have done a tremendous job, at least on the first year, on stabilising the some policy consistency, digitization, and anti-corruption. I think what is I would say as a suggestion, or rather than lacking, like what they could have done better, was quickly moving to those organisational reforms. Because when a minister is trying to attend to fixing a fan and a toilet, you are also because already the 20% of the time of president's term now has been is over,

charindra chandrasena  14:38
which

Dhananath Fernando  14:39
is the most critical time where the reforms could have been initially. So I think now they have to think about okay in terms of restructuring railway. How are we going to do it? Like are we going to allow coming purely from an economic point of view? Are we going to bring investment? Are we going to bring like you know for cargo? Whether are we going to open it for a. Operate or like how are we going to capitalise on the fixed assets which is available? Because if you go on that railway track just to observe, you can see about 2030 people going just to repair the railway track, which obviously is not very effective. And if you look at the real estate value, which are on that at least that coastal line, is unbelievable. I mean, if you look at the Grand Bell Hotel next to the Kolpiti Junction, like the Kolpiti Railway, it's. I mean, look at the value, and you have on the other side of the road, which is the Kolpiti Railway Station, completely underrun, completely underutilised. But if you really want to, since they have the two thirds majority, if you really want to change the Railway Act and the regulatory framework, because I know they are not allowed to lease for long term as per the Railway

charindra chandrasena  15:51
Act.

Dhananath Fernando  15:51
So those changes, they are, yeah, they need to quickly, you know, accelerate. I think that would be my comment on what could have been done, and also the clean Sri Lanka, because that was the I think I thought president could have given more emphasis because now it seems there are isolated projects coming up under clean Sri Lanka banner. But someone who has some sense on marketing and branding, you know, that was the very first thing that the president brought out. I think that could have given prominence.

charindra chandrasena  16:19
Yeah, no, I I I have a fundamental problem, right? Like you said, a marketing comms problem. What is that name, right? Clean Sri Lanka. It was supposed to be so. It had it had a three pronged plan initially, right? Which was cleanliness, like what we know as dirt and clean, dirty and clean, and then in terms of corruption, no corruption, and I think if I remember correctly, the third one was that they take care of the environment and all of correct, right? Correct.

Dhananath Fernando  16:52
That's the same thing. I also recollect when you mentioned yeah.

charindra chandrasena  16:54
But like as as a branding exercise for me, I'm not a big fan of Clean Sri Lanka, the name, and also I think they could have broken this up into several programmes because Clean Sri Lanka for me when I first heard it, I thought it was about clean toilets, clean railway stations, clean bus stands, clean roads, all of that. That makes sense, but to have that larger plan and and right now it feels like they are actually going on that tangle only. Correct, right? Then it makes sense. So, not by design, but by accident, they have fallen onto the right track. But for me, the initial grand plan just didn't make sense. Why it was called Clean Sri Lanka?

Dhananath Fernando  17:37
Yeah. The other thing is, Chari. Now, if you look at the Clean Sri Lanka, they appointed a presidential task force. We have people like mr. Deepa, Surya, Rachi, Sandhya, Salga. Though there were, you know, quite reputed names were there. And then I think I'm not sure whether it's operative or not. For the for the little that I know, some of them have stepped down from that committee, which doesn't give a good indication because that was the very first programme, yeah, first move, and you should have continued on that absolutely on the name. I think it could have been thought twice, but again, Chari. Now, even if you look at go on that environmental front, now let's take Colombo City. I think hats off if compared to India and the region, we have a fairly clean city in Colombo, mainly because I don't want to mention the name that there's a cleaning company who basically sweeps all the roads and at least keep it under control. I think the next step is like when you the garbage collection, this sweeping the roads, all that, then it has to move to like okay, how are we going to recycle it? How what is the cost? I mean, who bears the cost? Whether it's a taxpayer, whether are we going to collect it from parking? The next step could have been thought, and again to expand it for let's say Anuradhapura or like the touristic areas, at least. So then it has a I mean spillover economic impact. So I think that's I would I thought that could have been something to think about, because at least with the private enterprises engagement, you have a reasonably clean city, and then you think about the the the rest of the other channels. It could have made more sense under Clean Sri Lanka banner rather than going on that broad umbrella, which is sometimes difficult to deliver.

charindra chandrasena  19:23
Yeah, yeah, and also it's not targeted. No, that's my problem. Absolutely. Because and also how do you like metrics-wise, Dana? Yeah. Like reducing corruption, how do you measure that? Correct. Right. It's it's difficult. It's very difficult. Yes, anti-corruption indexes are there, but like you know, area-wise, it's very difficult. Whereas cleanliness, you can actually, you know, do a measurement. So, for me, just just a bit strange. Yeah. So

Dhananath Fernando  19:49
yeah. So I think on economic wise, and also the digitization, which I think is moving in the right direction. The next step is that getting to that digital. Digital ID will

charindra chandrasena  20:01
take time, Dana. Apparently, so I think they are targeting maybe 2028, right? And I like that they are giving it three more than three years because that's realistic. That's and I think maybe that comes from Hans himself, who would have told them that this can't be done like in a year, right? Because you have to leave room for delays, right? Especially in Sri Lanka, you have to leave leave room for delays. So I think 2028. I think that will be a game changer. Yeah,

Dhananath Fernando  20:32
and I think the point is, Chari now for to get resa to bring Rizas in 2028 or 29, which is a critical layer closer to a presidential election, at least the foundation and the process has to start now rather yesterday. So I think that's important. So that's what I mean. It's fine. Even if we can get it by 2028 29, that's good enough. That's good enough. But the foundation work has to be done, and also on the geopolitical front, I think that is also because the the visit by the president to India was successful, and even Prime Minister Modi's visit to Sri Lanka was successful, and then there was another followed up visit to China. So the geopolitical front, given the complicated context, and also with the U.S. tariff context, which a lot of business community had some doubts, of course, with U.S. taking a different stance, and of course, giving-I mean, at least achieving a reasonable tariff rate compatible with the region. I I would say so. On the, it's not about your grand plan. Also, when you move, when your when your ship is on the sea, there'll be storms, which is unexpected. So, in a way that they have reacted in a way to the unexpected storms as well, which was the main one was President Trump's marriage reasonably well.

charindra chandrasena  21:49
I I feel like a lot of people expected them to pivot towards China, right? Because of the historical links between the JVP and communism, right? But that didn't happen. If if at all they have pivoted towards the U.S. Yeah, right, and that may be just to prevent the tariffs or to reduce them. You know, not to antagonise the U.S. because Trump is just unpredictable, so you never know what he'll do, whereas President Xi is far more predictable and far more long-term and far less temperamental. So I think they are trying to balance both sides. But I think a gun to the head, and they were asked to choose. Right now, it looks like they'll choose the U.S.

Dhananath Fernando  22:38
Yeah, I think even President or even the absence of a representation to the Shanghai Cooperation Summit is, I think, an indication. And also, we paused the the the tax on the digital services because earlier there was, I think, about the the the VAT was supposed to charge, if I remember right, for the digital services like Microsoft and Google, and because of the context, I think we put that on hold. Was it 18% or 15? I really cannot recall. Yes, but definitely we we we applied brakes on that given the context. So I think I think those are somewhat positive. But I think at the same time, where we have to be cautious is to realisation coming purely from their Advocata point of view, Chari, that the market system is what works for people, because market system is what brings prosperity for the common man or the most, I mean the people who are below the poverty line. That's where you can give the access. So I think it's important that you focus on that the government can take care of that social safety net and take care of the most vulnerable people. That's a separate thing, which I think it's the role of the government. No, but the the to to to limit the government and at the same time allowing the market system to work is fundamental. Especially keeping the central bank's independence is important. Where I have, I would not recommend, or my dissatisfaction would be, of course, reversing the the CEB act to an extent. Of course, we can have that conversation also in the same podcast. But politically, Chari, anything else? Like, do you think the the the the new the 159 members are stepping up to the expectations of people because or do you see the arrogance or inexperience or the way they carry themselves is it how how do you raise basically

charindra chandrasena  24:34
Dana during the campaign and even after the election what we are noticing is that there is a massive yawning gulf between Anuragumar and the next best person in the NPP? Fact of the matter is that right?

Dhananath Fernando  24:54
Do you mean to say that it's a one man show? No, it

charindra chandrasena  24:57
it is the closest government to a one man. Show we have ever seen, in my opinion. If you think back, probably the closest example you can get is 1956 SWRI Bana Raila, right? But even that was not a one man show. Even though he broke off from the UNP and then formed the SLFP, he had some good people around him. Here, this revolution would never have happened without AKD. Even if all the other ingredients were there, right? If you take a pot and you want to, the result is an NPP government. You put all these ingredients like the Aragalaya, the economic crisis, COVID, all of that

Dhananath Fernando  25:39
together,

charindra chandrasena  25:40
all of that together, and you take one out at a time. You can take all of them out, and it'll still produce it. But if you take AKD out, it won't. You

Dhananath Fernando  25:48
mean there's a personal element that came out?

charindra chandrasena  25:51
Absolutely, because he went out of his way to change the image of the NPP. Sorry, the JVP forming NPP that was not I think his own decision it was a collective decision but he's the guy who he

Dhananath Fernando  26:07
was the face of the face of that whole

charindra chandrasena  26:09
rebranding right and then the the wealthy people were alienated by the JVP he brought them into the fold right business crowd, English-speaking Colombo audience. Like, who would have thought that they would end up voting for the JVP? So this is this is the greatest political upset Sri Lanka has ever seen, and the most stunning effort made by like one man to engineer, so between him and the next best next tier, there's a big gap. So that's what we are seeing, right? But I'm glad to see some people are stepping up. I think so. I also have reservations about what Bimal Ratnayaga said whether it was too harsh, but I think he's trying to do something, right? I feel that, and Prasanta Bunasena, he, you know, his deputy minister, I think deputy minister transport, transport, right? I I feel like he's trying to do something. I feel Harini is very important to the mix because she adds a different dimension to the party and gets a different audience into the base. Then Vijayhera, I feel, is the most balanced hand they have. So there are there are a few encouraging signs, but generally they keep letting down the the work done by AKD a lot, right? And I think that's where they need to improve, and maybe that will come in the second year. Because one thing, Dana, is that when people say this is an elbow government, it is an elbow government, right? And I think

Dhananath Fernando  27:52
there's there's there's no point trying to hide hide away from it. It is an elbow

charindra chandrasena  27:57
government, but everybody starts driving with an elbow. You're never born with a driving licence, right? Exactly. So I don't mind an elboard government as long as every week and every month they are better than the previous week and the previous month. So I I see that here even from the next year. So that's my view on

Dhananath Fernando  28:17
it. If I may ask, Shari now, how do you see? Because while okay, you're you're going beyond your political analysis now. Also, at the same time, we hear the sort of a one-party concept. We need 20 years, and we will not give up power. Sort of a sentiment. It may not be coming from the top, like the the the top leader, but you can see that sentiment. Even if you look at the history, sometimes the sometimes the when there are multiple power centres, and of course, when in an environment where you have a very weak opposition, which is in complete disarray, how do you see that concept? Because don't forget, like every time, most of the political parties all wanted sort of a one party. I mean, everyone wanted to be in power forever, so they slowly direct to the one party. If an investor or someone questions about it, whether that you know after just in one year that sentiment pops up, what would be your response?

charindra chandrasena  29:19
No, I I think two sides to that. One is this government, more than any other government, should not harbour any ambitions of having a one-party rule. To be fair to them, nobody, like you said, nobody at the top level has even articulated anything to that effect. Okay, so that's a distant, distant thing if it ever were to happen. Secondly, I think the onus is on the opposition, right? The opposition right now is in disarray, and them banding together is actually sending the opposite message to what they want to send. Right, them banding together is not strength in unity. United we stand, Nimi. It's more like united we steal, right? So that's the image that is going out, right? United we steal, united we loot, united we destroy. That kind of vibe, and the NPP, especially AKD, is a master at communicating that message. That all of them have got together, like they have a singular thing. Yeah, like that. So this they'll they'll turn this into horo api accumulator, right? So the opposition needs to have a strategy right now. It's like okay, anybody we can find like all hands on deck now, right? That's not the strategy. Strategies. Who's the leader of any movement that is going forward? They don't know who the leader is. Is it Namal? Is it Sajith? Is it Ranil? So the onus I would say is on them to make sure that the government can can't even dream of one party system. As for the government, they shouldn't even think about it, right? Because that is when they will be you know absorbed. They'll be destroyed from the inside, right? Those kind of ambitions. So that should be completely out.

Dhananath Fernando  31:24
No, no, no. Interesting thoughts. Also, I think the other topic that which is in the limelight is on the. I think we discussed about it, but also the the drug and the ice context. So

charindra chandrasena  31:36
more than 700 kilogrammes of ice and heroin have been detected or caught from the south.

Dhananath Fernando  31:47
Yeah,

charindra chandrasena  31:48
that is not just the south. Actually, it is the three lorries in Tangal.

Dhananath Fernando  31:55
Yeah,

charindra chandrasena  31:55
right. So, yeah, I'll let you start on that because when you say Tangal, okay. No,

Dhananath Fernando  32:01
I I think that I think the the claim has been by the minister of public security has been there are political connections to these drug what you call this issue. I think it's obvious. I mean, people had the same thing, but I think it's important to reveal who are the people behind it after proper investigation. How I see it, Chari. Now look at the approach by the Australian government on the illegal immigration. So basically, they have a very collective strategy. They they invest on those countries where people do not get into poverty. So then they consider this illegal migration as an option, and they also protect their borders with joint military and you know security operations. At the same time, they have also a process that okay, if you really want to get into the U.S. the Australian labour force or to so I think the the attempt on this combating this drug issue, we have to have a. At the moment, we are strictly going on from as an outsider. From what I see on news, is mainly on the okay. We are going with the the legal and the the police and the anti drug tools that we have, which is I think very important and also reveal that dismantle that political backing and that finance backing is very important. I think that's where also the this anti money laundering, the how the the money being transferred between these individual characters has to be basically disband. Like so, I think the banking system has a big component. So we should not only think of okay, it's all about police going with the police dogs and you know finding it out is not going to stop this. That's one, and also to dismantle it from the political front is a second thing. But third is also giving these people the job opportunities and creating their economic opportunities because otherwise it's very difficult for them

charindra chandrasena  33:56
to to pick up on one point. The banking system, if you want to elaborate on it? How could the banking system ensure customer or depositor confidentiality while also, you know, assisting the government? How do you strike that balance?

Dhananath Fernando  34:12
Yeah. So I think Chari now hats off to the again. That's why the importance of the institutional reform. Now the central bank. If you look at our central bank's data system, which is I would say one of the best in the world. Now even if you look at our balance of payment accounts, since

charindra chandrasena  34:31
since when is this?

Dhananath Fernando  34:32
Since after the independence of the central bank actually,

charindra chandrasena  34:36
yeah, okay. It it

Dhananath Fernando  34:36
comes out after about I think 30 to 45 days. Best like previous. I mean, we have a monthly balance of payment data now.

charindra chandrasena  34:45
Right.

Dhananath Fernando  34:46
Early. I mean, most of the countries it's quarterly. Right. But now it's monthly. That's where we know where we are heading towards. We know whether whether we are at $1 shortage or an excess because because now central bank has implemented a. System where every dollar transaction, I think there are about 42 fields that everyone has to fill, so they know exactly for what purpose that the dollars has been transacted. What's the amount that came in? Okay, whether it's tallying with the with the cost deck. I think that process is there.

charindra chandrasena  35:16
Right.

Dhananath Fernando  35:16
So as a result, it's basically. So you're

charindra chandrasena  35:19
saying central bank already has access meaning has divulgable access. Absolutely, they can cooperate with the law enforcement. Absolutely, I think

Dhananath Fernando  35:31
that that is there. I think next is the probably the financial intelligence units and all that has to maybe you know go behind the suspicious transactions, so on and so forth. That's a separate thing. Of course, you have to protect the confidentiality of the depositors and those who operate with the banks. But I think it's important to look at on that because the next step would be on the informal channels, which which also we have to keep an eye. But the more that you put over regulate, also it opens up for a lot of you know informal channels, but I think that is on the right side. But I think the next step is because I think from the statistics with the population composition, I think the next few years there will be lot of young people will be joining the labour market because of the democratic dividend that we had. Of course, afterwards it will be more the we are moving towards more a elderly population. So when there are more young,

charindra chandrasena  36:26
aren't we already in a? Didn't we already pass the demographic dividend? No,

Dhananath Fernando  36:31
we we had the demographic dividend, but from the now with COVID and all that, now our younger population and the school enrollments and everything has have a dip because with COVID and all that, people really did not have lot of. I mean, the the the birth rate was fairly low. So, but I think now people who are turning 18 years old is pretty much the birth rate that we had with 18 years before. So now I think this couple of years I will bring the statistics for the next podcast, there will be more people. I mean, more people because I thought

charindra chandrasena  37:03
I thought we were having an ageing population. No, we are having an ageing population,

Dhananath Fernando  37:07
but compared to the the next, I think few years, there will be an additional like the youth population or joining the labour force. I think is fairly a little bit higher than the previous years. Right. So when this happens, either they will go for these, you know, complete drugs or complete unnecessary things, or it can end up in riots. So it's important that we create that job opportunities. That's why the economic reform programme is very very important. So and look taking a look at like a you know multifaceted approach on this drug issue, and at the same time, because in the drug world, Chari, no regulation matters. No, it's a complete illegal thing. So you just try to get the job done in any any illegal means. And at the same time, when you have the political connections backing it, and when you have other actors, when you have that ecosystem, then you have to dismantle everything. When you are only looking at the legal provisions, there will be other channels that it can come, and you can apply the same model on economic growth as well. Because when you have the political will, when you have the global networks connected, and when you build that ecosystem, it works on the on in favour in favour of economic growth as well. When you have the global network, when you have that ecosystem regulatory framework, then economy is also prospering. So I think that's something that we have to think about on this rug issue. But of course, it's important that we dismantle this political connection and you know bring the regulatory front. I mean, you know, how shall I say to enforce more on also the the banking and the financial side because ultimately the money has to move. So that's something that we have to think about.

charindra chandrasena  38:52
Okay, so I want to move on to another important matter: the CEB strike. Yeah. Right. So they haven't gone into a strike yet, but they are they are threatening to go into one on the 26th onwards if their demands are not met. Now, firstly, they are against the reform of the CB, right? So, can you explain why they are against it and why they shouldn't be against it? Because I'm assuming you you are on the side of the reforms.

Dhananath Fernando  39:28
Absolutely, I'm on the side of the reforms. I'm on the side of. I mean, I'm I'm against the amendments that the the new government did. I think that's one thing that they reversed. They could have easily kept the act as it is and moved forward. In my view, now they are made it too complicated. Okay, before that, now this is the golden moment to highlight a point that we have been saying for so long. Now there was every time when there was a conversation about reforming some of the state institutes. Especially connected to telco electricity, the conversation was okay. This has a national security issue, like you know, national security. You should not touch this. Now I would like to question back. Now there are trade unions are a single link game illa nama from the president, right? How how shall you say that? Another three vida hamuda we say nadi nay kya, the chief of all military. They are threatening him, and they are threatening the consumer, saying that we don't know if something happens, you will not. I mean, we will all the entire country would be out of

Speaker 2  40:39
power,

Dhananath Fernando  40:41
and we are over the years saying that we had a national security interest. We have a grid. Even a monkey jump can completely crash the system. And over over a period of time, the electricity prices have been increasing. At the same time, the quality is deteriorated. Now, I would like to ask back: Is it still? I mean, aren't we risking the national security by by by having this electricity board in this form? Aren't we really have to have reforms to avoid the national security threat because now they are threatening the president, right? So I think that national security argument is no longer. I think I think the

charindra chandrasena  41:21
ones who are making that argument are thinking national security from an outside point of view, in the sense that, okay, so let's take for example India. If our grid is dependent on India, then India can, you know, any in any geopolitical tension era can just cut the turn the switch off.

Dhananath Fernando  41:42
Yeah. No, but I think even Chari now even I would say okay if we that is if we connect the grid with India but now in this form they are not against like connecting with India it is about reforming the internal structure and also they have constantly discouraged the renewable energy fund, like even the Nana,

charindra chandrasena  42:02
can you do you want to take a minute and explain exactly because there's a lot of like misunderstanding and a lack of understanding about firstly what Minister Kanchana brought in and then how what the amendment to that is correct but in brief if you can explain very

Dhananath Fernando  42:18
briefly Minister Kanchana's proposal was to unbundle the CEB to generation, distribution, transmission, and the national system operator. And under Chari, under generation, he distributed it further: hydro, wind, coal, diesel, because those are four different types of asset classes. Because a generation which is required for wind is completely different from hydro. Okay. But what this government did was they didn't go to that extent of a division. They only kept, they unbundle, but not between like hydro, coal and diesel, they kept it as one company. So that's I would say the fundamental difference. And in Minister Kanchana's proposal, they they allow the private sector to take a stake. The private sector can invest. Invest in the sense they can own the assets or shares of the CEB. I mean, CEB will no longer valid, but on the generation they can divest some of the assets and they can get a 49% or whatever that percentage of share. So that I would mark. There are multiple other, but that's the main difference. So what this government did was no, we are only unbundling it, but only for four four main distribution generation, but not for that further division of based on the type of the energy source. The problem with that, why we, I mean, while this is better than what it was before, the reason was our issue was in that form, Chari, it is very difficult to raise funds to upgrade the grid because when you have the 100% ownership with the government, the government has to go and borrow money. And we all know, according to the information that has been revealed, they need about five to 6 billion US dollars billion, which is beyond our reserves levels as at now. In the next four to five, I actually

charindra chandrasena  44:22
heard an even greater number that 5 billion is for

Dhananath Fernando  44:27
only for for transmission transmission, and

charindra chandrasena  44:30
that there's 8 billion total for the entire thing. Absolutely. So when

Dhananath Fernando  44:35
the government goes and borrows it, it's very difficult because we are at a you know C rating, interest rates would be higher, and when you borrow, it will add to this because it's 100% government-owned company. Your debt to GDP ratio will go up, and at the moment, no one is willing to lend us money on on the other side. So as a result, you will have the same power infrastructure for the next eight to five to eight years. Which is not good for our exports, so that was the issue. But however, now this strike is against even this reform, even the diluted bond.

charindra chandrasena  45:10
So the president yesterday or day before said that this is not to privatise, right? But they are calling it the first step towards privatisation. Yeah, yeah.

Dhananath Fernando  45:20
No, I I think I think this is definitely not going to privatise because I think the concern was when you break these institutions, it comes as a private limited company. I think people are worried when you say a private limited company; they think it's privately owned. Private limited company is a form of a registration. Even the government can own a private limited company. For an example, airport aviation is a private limited company which is 100% owned by the government. Same way, the Genco and the Transco can is a private limited company registered and under the Samadam Maduro the the the company registrar office, which is 100% owned by the government. So the other side claims, okay, because of that, the government can any time like you know do a share issuance and sell it. I think that that can be done. Even I would encourage to do it because that's how you bring the governance to it. And without doing that, you really cannot bring capital into the system upgrade, and that's what everyone did know. Jarik, when he picked me, they basically listed at the stock exchange. With that, they got a cash infusion, and then they upgraded and they invested, reinvested. That's the that's how a business would work because you really cannot like save money. I like you cannot bring the money that you saved under the mattress and bring it and investor because we are talking about billions and billions of dollars. So I think that's I encourage, but this is not going to set up a good example. I I I I recommend that they could have gone ahead with the previous government's Khan Chana's Minister Kanchana's bill and moved forward in the same format because it was all approved and now we are trying to meddle with it and likely I mean if if we cannot move forward likely that we will remain in the same structure for the next five to 10 years which is not a good indication Charlie

charindra chandrasena  47:19
right so just to move back on to the the main topic we had, I just want to sort of look it look to the future also. Now we have, I call it an elboard period. Right now, elboard period should be over now because it's one year. Right. Next year, what are your policy priorities for the government?

Dhananath Fernando  47:48
Yeah. So, Shari, before we move to the next year policy priorities, this I mean, from here onwards, it will be mainly the next policy priorities will be. I mean, some of it will be available for our general audience, but there will be some exclusive content for our Advocata insider audience. So you can be an advoca, become an Advocata insider. It's just 12,000 rupees a year. So it's just 10,000 rupees a month, and we have an early bird offer till 14th of October. It's 10,000 rupees a year, so it's even less than 1000 rupees per month, and you can get the analysis on exchange rate and the vehicle market and many news stories related to the economy. How you should invest your private investments and how does it affect your businesses? All those will be available for for our Advocata inside. which is just 12,000 a year, but this a little bit of it, the policy recommendations will be available for our general audience who are regular watchers through our YouTube channel. So, in terms of policy charity, I would prioritise the inflation, keeping it under 2% I know that there's. I I want to correct something. Even we discuss that.

charindra chandrasena  49:04
When I say policy, Dana, I don't necessarily mean policy like in a narrow sense. I mean overall, what you want to see, the top three things you want to see.

Dhananath Fernando  49:12
Public transport.

charindra chandrasena  49:13
Okay.

Dhananath Fernando  49:13
Definitely number one. Number two on investments. Give the access to the private industrial zones to attract the investors. Third, the customs, because Charyn, there's no point investing on this new terminal, east container terminal, or the west container terminal without having a single window or like a easy custom process. Because what are you going to do with the port like when you have a very most complicated custom process in the world. Yeah. So every

charindra chandrasena  49:42
single window has been in in the works for now more than 10 years, right?

Dhananath Fernando  49:46
Even more than that, I think. Yeah. So I think I would focus on those three because it it helps to grow the economy on one side. It helps on connectivity. It helps on trade. It helps on exports. It helps on. Dollar inflows, it helps on investments because this port sector is something that we can easily attract investments rather than completely. Because all our other processes, at least we have that, you know, strategic location advantage. Because the other investments, it's very difficult. No, you have to get regulatory approval, go to EDB, this and that, and BUI, very difficult, but in the port sector at least the strategic location can override many other issues that we have internally. So and for that we have to have the customs for sure because if you want to become a trading hub, there's no chance having a very complicated customs system. From here onwards, it will be mainly for our Advocata insider audience, so you can be an advoca, become an Advocata insider. It's just 12,000 rupees a year, so it's just 1000 rupees a month, and we have an early bird offer till 14th of October. It's 10,000 rupees a year, so it's even less than 1000 rupees per month, and you can get analysis on exchange rate and the vehicle market and many news stories related to the economy. At least these three. If we can make some progress, I think that would be the that that would be better for everyone's future because that will also help the economic growth on the other side.

charindra chandrasena  51:16
Lovely. I think we had a good chat today. We had

Dhananath Fernando  51:18
a good chat. We covered a lot. Covered a lot. Yeah. And become an Advocata insider, so you can help, and we can bring, and we can we can give some at least the transfer. Allow us to Charindra when you when you when you when you become, he's he's

Speaker 1  51:30
so kind to join this

Dhananath Fernando  51:31
podcast. But again, as you know, everyone's you know the when the market system works, that's where we want to shoot ideas and get the public conversation going, Chari, in all three languages, and some of this content is only exclusive for our Advocata Insiders. But because of the Advocata Insiders, we can only do this free of charge other content because they are the one who are basically sponsoring our content, and it's a small amount, 10,000 rupees, just not 1000 rupees a month. So become a subscriber, and also we are also available in Advocata Kural in Tamil and Advocata Plus in Singhala, and we are in pretty much all sorts of social media channels: TikTok, Instagram, LinkedIn, Facebook, YouTube, you name any social media platform. We are there, so subscribe us and Faro Charindra as well. And looking forward for another good chat chari. Yeah, I'll see you next week. See you next week.


Transcribed by https://otter.ai