Speaker 1 00:42 You know, this is. study that was done. Sorry, by the it's called Demography or International Housing Affordability, right? So on that study, it was done. I think in 2024, so it's recent. So if you look at a normal country where where you buy a house. It's you just have to save up only around three years, two to three years of your annual income totally to get a house, right? So I had this time to look into how it is like in Sri Lanka because we are here now at the end of the day. So when I checked, I mean our last census of 2019, it's very hard to compare the 2019 average annual household income to house prices this year, especially Speaker 2 01:26 when the dollar rupee has almost doubled. Double exactly. So what Speaker 1 01:29 I did was I inflated it up and we ran a small model and we got it. So the house average household income was about 1.7 million Sri Lankan rupees, right? So this annual, and estimating. I'm I'm I'm sure you all can come in here, right? We can't buy a 25 million apartment in Sri Lanka in Colombo. Sorry, in Colombo, right? Not even an entry level, right? So definitely, Tirani Kulathunge 01:55 it's definitely more than probably minimum is 30 million. 30 million in Colombo, right? So let's Speaker 1 02:00 say generally in Colombo, 25 million. Let's just assume, right? And with a 1.7 million annual income, you need to save up at least 25 years of your income. And I was just thinking, anyway, you can't save 25 years of your income. Right? Saving half of your income would mean you have to wait 50 years. So given that you start working at like 2221, 22, still people don't work. Then they're doing their undergraduates, right? Usually 2324, You start, you will be 75 when you have a house. Given that you save, you know, your average annual income for 50 years. Tirani Kulathunge 02:37 Well, you know that totally is ruining our Sri Lankan dream, don't you think? Speaker 1 02:43 100% Tirani Kulathunge 02:44 Like, okay, for me, I would like. I had this vision. Okay, maybe back then, like by 25, I have a house, I have a car, my own apartment. Begin. All right. Yeah. What about you? Did you have that dream as well? Speaker 1 02:56 100% A house, a car. I mean, it's that's that's kind of my Sri Lankan dream. I'm not sure how it might differ from people to people. Doctor, yours, Riyad, you might. Did you have a Sri Lankan dream? Speaker 2 03:07 So okay. So without actually going too much into me, I'll just say you know the Sri Lankan dream. It actually the reason I said that is like it depends on from place to place. There's a huge difference between the village, the suburbs, and the Speaker 1 03:22 city, yeah. Speaker 2 03:23 Right now, for example, if you take Colombo, the most desirable places in Colombo are, but a lot of people there is 357, right? That's that's those are the rich name or the flow neighbourhoods, right? So I was having this chat with a friend of mine, right, and he was saying, just think about it. Only people who can afford a house from that range. Either you have to be expats. You have to be expat. Yeah, possible. Either you have to be some kind of a politician. Speaker 1 03:53 There we go. Right. Speaker 2 03:54 Or either you have to be some kind of a businessman. You know, black or white. Speaker 1 03:58 Fine. I'll let that. I'll let Speaker 2 04:00 that. I'll keep that to your imagination, right? And oh, it has to be inherited. Most of it is actually inherited, right? Most of the people who have houses. I mean, now you see a lot of people who have sold and who have gone overseas or sold or rented and gone to the suburbs where they prefer to live maybe a little bit more quieter life, right? But normally in those areas, that's the normal formula. So it depends on where you are. Now the people in the village, they are particularly content with a particular lifestyle. Right, their lifestyle is very basic. It's very relaxed. Right, and when you have that very relaxed lifestyle, you don't need a lot. Right, of course that lifestyle has to be supported by a certain number of subsidies that come from somewhere, yeah, right, and you get this rebellion that happens is when the subsidies are cut, right? I think Dr. R can probably give a better insight into that how the subsidies pay be growing the whole political sphere, and the politicians also make sure for the. Both those subsidies are given, so that is one. So second, the thing is, then you leave to the second category. That is the category in the middle, right? You get the suburban people, right? For them, the main thing is first when they come, they are the people who are not doing the traditional village occupation. That is that may be agriculture or some kind of a you know some kind of enterprise that's going on. So most of them are actually they are professionals. They are working, right? And what they try to do, and probably they do a part-time job also, right? So the other thing is primary is they want to get to Colombo is one thing schools for their children, or at least setting up their background for schools, right? And the other one is basically the first thing they want to get is a car. So when you buy a car which runs at how many? 200% tax, like minimum. Yeah. Right. 200% tax. Yeah. Right. And I thought it was Tirani Kulathunge 05:53 300. You start with a 150. 150. It keeps escalating. Maybe the vehicle I'm looking at is at 300% Yeah. Speaker 2 06:01 Right. So when you start from there, what happens is you need to put away like maybe 10 years of your life to pay the vehicle off. Right. So that means you are in your mid 30s, and then you start you start thinking about the house. Right. The cost of construction is so expensive here. It's at least 35% to 40% more than another country. Maybe it's even more now. I don't know. You can probably talk about the numbers. Yeah. So Speaker 1 06:26 coming to cost of construction. So that's the whole point, right? Like the reason why we have to wait so much is because everything is expensive. Speaker 2 06:34 Yeah. Speaker 1 06:35 And we have to make it clear for everyone that it's not expensive because it's you know expensive to produce them or make them or create them. It's expensive when you import it to Sri Lanka. So that's the whole. Is Tirani Kulathunge 06:48 it though? I thought that it was more expensive to do it domestically, and it's much more cheaper to do it internationally. Like you know, rely on countries that does it on economics of scale, basically. Speaker 1 07:01 100% It is technically cheaper, but it's just that we have itself made it expensive Speaker 2 07:07 with taxes, with Speaker 1 07:08 taxes, with para tariffs, sources, just to double the prices in the in the name of protecting our infant industries to protect these giants who produce locally. So I Tirani Kulathunge 07:21 want to direct this very quickly to Doctor R, right? So like in 1977, we have all of this trade liberalisation, right? So back then, let's say, were you actually, you know, confident that this would work, or is it that was it, you know, as much of a leap of faith that you know, as it look in hindsight. What are your thoughts, doctor? No, I'm going Dr. Sarath Rajapatirana 07:44 to tell the truth. Okay, actually, I'm not. I knew we had to do Speaker 3 07:48 it. Then Dr. Sarath Rajapatirana 07:48 by working with the central bank at that time, central bank people can't get involved in this. Yes, Dr. Sarath Rajapatirana 07:56 but I had to get involved in it because it's for the country I knew. I had done my been in abroad. I worked with people who believed in trade, international trade, which is Anne Cage, one of the best people in the world. And I said, "Yeah, I can help you to think about it. Tirani Kulathunge 08:15 Dr. Ajpat, so I knew. Yeah, Dr. Sarath Rajapatirana 08:17 to I knew from the very first day that if we liberalise the economy, we will have entirely different results. And now today, sitting here on this chair, I say that is the same thing we can do here is to liberalise the economy. Tirani Kulathunge 08:32 Right. Dr. Sarath Rajapatirana 08:32 We are really remove all the unnecessary restraints. Tirani Kulathunge 08:35 Actually, I'm more curious, doctor. Now, like you know, you said that you were involved, right? Yeah. Which departments or ministries that were you involved in this decision making? Oh, it was industrial Dr. Sarath Rajapatirana 08:45 ministry. I didn't really care for. No, frankly. Tirani Kulathunge 08:49 Okay. Dr. Sarath Rajapatirana 08:49 They had no idea. Oh, how do you allow these people to come from abroad? Right. They had no idea, frankly. But Tirani Kulathunge 08:56 was there a national narrative, like you know, that hinders that decision making? Dr. Sarath Rajapatirana 09:01 No. Look at the look at the universities at that time. Universities, they didn't believe in this at all. The people I worked with didn't believe in that. Only they had to come and say they are talking nonsense. This is not what you had to do. Tirani Kulathunge 09:14 Yes, Dr. Sarath Rajapatirana 09:15 the Jar Jar Janu believed that he had to do it. Now he is not an economist. He is a great lawyer, but some people in the fringes helped him. Tirani Kulathunge 09:24 Right. Dr. Sarath Rajapatirana 09:24 Yeah. Tirani Kulathunge 09:25 Understood. So now I felt like now just connecting to what Riyad mentioned, like you know back then, consumption needs were differed from each, let's say, the rural, the suburbs, and all that. But now, do you think I'm asking from everyone also say that with technological information, you know, being evolved and people are being more informed of the opportunities that are extended. Do you think that preferences from the rural area, let's say, on that lineup, have changed over time? That there's more demand. For a better lifestyle, Speaker 2 10:02 of course, Tirani Kulathunge 10:03 along the way. Speaker 2 10:04 Yeah, so of course there is a better demand now. If you take the three segments again, the rural, let's say, village, and get the suburban, and you get the city. So, but the thing is, the rural has gone up by a particular percentage. The middle class has gone up by much better, but the city has gone up by leaps and bounds. Yes. So the city, if you go in particular areas, when people are thinking of getting, you know, some some car, they are looking at bringing jeera guns down. They are looking at bringing Ferraris down. They are looking at bringing Lamborghinis down, right? So those particular areas, these are people that have a lot of money. Well, Tirani Kulathunge 10:37 I I want to bring them down, but I don't have money. So Speaker 2 10:40 I mean, there's a But we are not Dr. Sarath Rajapatirana 10:51 talking about them because they're not very useful to talk about them. No, there's nothing. Not acceptable to anybody. Very few people out of 100, maybe half a percent. No, true, Speaker 2 11:02 true doctor. We are just talking about how things have changed, right? So because if you look at back in the day, people who want to get that experience, what they normally do is they don't buy the car because of the you know the the taxation you need to pay. What they do is they go to Dubai or somewhere in the Middle East, charge or something, and they hire the vehicle and they have their fun over the weekend or for the week or something, and they come back. Now they are trying to buy, even though we have terrible roads with potholes all over the place, and those cars have terrible ground clearance. But still, they are interested to bring. But I suppose it's a bit of a class thing or something to show. So that is one. But the scenario going back to what you call affordability. Affordability there is a huge mismatch now. There's no question about it, right? Especially, especially at the basic level of getting a basic vehicle and actually buying a house. Because in Sri Lanka, anyone who comes from the middle class, their primary there are two big dreams they have. One actually sorry, three dreams they have. One thing is getting a car, getting married, and having like a decent wedding, and then having a house. So that's their three primary objectives, and the three primary objectives. If we go now, thanks to inflation and thanks to the what you call what's happening to the currency, the the and because because whatever happens, the when the rupee doesn't hold its value, can be domestic, can be foreign, right? What happens is affordability goes down the toilet. So currently, affordability is not something because if you go back and let's say if you go back to Doctor As generation, people who are working at let's say a government job or can be a teacher, they could save enough money to buy a house, and you get enough people who had built houses and all like that. Speaker 1 12:46 So was it possible back then? Actually, Speaker 2 12:48 I think back then, doctor, I think it was possible. No, it was possible. Yeah, because inflation wasn't you know this bad. Right. Speaker 1 12:55 So normal job. Speaker 2 12:56 Yeah. Speaker 1 12:57 You know, and including normal Dr. Sarath Rajapatirana 12:59 job. People who work in central bank with me, Speaker 1 13:01 right? Dr. Sarath Rajapatirana 13:02 Could get 25,000 rupees to to buy a house. Speaker 1 13:07 So they they had enough money to save up and no because of the Dr. Sarath Rajapatirana 13:10 high high salary they got. No central bank has already got it. Speaker 2 13:14 No, correct. But what I'm saying is a novel. Let's say a teacher because I remember my mom was saying a story that she was a trainee teacher. I think, in the 1970s, and she said that she, from a salary, she could she could actually buy this thing of gold, right? Sourina gold, right? Yeah. With a salary, which he has been, and normally at that time, lot of the you know lot of the female folk used to do that because that's how they save up for their wedding, right? So she said she you could buy now that. So if you look at currently how much is the salary of gold now 275,000 something like that almost 300,000 right how many government teachers do you know make 300,000 no one Dr. Sarath Rajapatirana 13:50 no one not even Speaker 2 13:51 a government principal at a let's say big school like either all or Anand won't make or Visaka won't make a salary of that amount so which shows affordability has died in this country because the reason is inflation has completely eaten into it. Because if you look at affordability and price stability, the most stable thing is always gold. You can use gold as the benchmark. So if you look at the affordability of a sovereign of gold back in the day, right? From that you can factor okay, if this person takes a loan and works for 25 or 30 years, at least 25 years, right? You can achieve the set targets. Now you get people who are mid-level executives in blue-chip companies, right? What they say is, and they're eternally on rent. They're saying the only thing we can afford is the car. Speaker 1 14:38 So where did we go wrong, doctor? Dr. Sarath Rajapatirana 14:40 Wrong economics. Speaker 1 14:42 Wrong economics. Dr. Sarath Rajapatirana 14:42 Yeah. Speaker 1 14:43 From your time to this one, if you could point out to the few key places where we started Dr. Sarath Rajapatirana 14:49 the I started the example that they are the other and them did liberalising the economy. Right. Nobody can say that. Was not a good thing. It was a very good thing. Okay, then one of our problems is that we change this party doing this, that party doing the other thing, and we ruin what what was what could have been done before continuously. We got broken, as it has done now at this moment. So, Tirani Kulathunge 15:23 do you know an exact point where we actually lost our, you know, potential of expanding through in our economy? Like one drastic problem. Dr. Sarath Rajapatirana 15:36 I I have to say no because I was not in this country for a long time. Tirani Kulathunge 15:40 Right. Right. Right. Dr. Sarath Rajapatirana 15:42 Yeah. Yeah. But I know, for example, in England, all the youngsters complain this: we don't have mind to buy a house. Yeah, yeah. We don't have mind to buy a car. Same thing that we have been talking. Yeah. They, they talk too. But not in the U.S. though. Not in the U.S. Tirani Kulathunge 16:00 Tell me more about it, doctor. Dr. Sarath Rajapatirana 16:02 Yeah. In the in the U.S. it assumes that you first of all, when a when a guy or a girl becomes 16 or 18, they have to leave home, mind yourself, go and find, look out it. So they had to work from there, and they are they are not dependent on their parents for heaven's sake. Nobody depends on parents. Right. They say, "Hey, John, it can't believe. Speaker 1 16:25 But I think in Sri Lanka, it's very common for a person to achieve a dependency. Speaker 2 16:30 Yeah. No, yeah. It's very high. Very much. Yeah. Speaker 1 16:32 Yeah. Speaker 3 16:32 Yeah. Speaker 1 16:33 And so is that an issue to do with affordability, or is that a cultural thing, or how? No, I think Speaker 2 16:41 I think it's a mixture of both. No, I mean culturally also we are in that scenario where we are very attached to our family, and that's the reason why also in Sri Lanka, you know, these what you call elderly homes or nursing homes are not a thriving business here because generally the you know the parents also when they get old they they stay with their children. This is a good thing, right? Culturally, but affordable. is also another problem. I think it's becoming even more persistent and something with your generation now, because the reason is I think the last generation that actually want to save money and you know buy a property and all that is probably probably I think guys of my vintage because the reason is, and a lot of people say now the people are most lazy. They are, you know, they don't want to. This thing they are basically busting their money. You know, the the real reason is, you know, it all works with economics also. Because the reason is affordability is a big problem now, because your the money now salaries haven't gone up. If you if you look at the level of prices of houses, and if you look at salaries, Speaker 1 17:42 exactly Speaker 2 17:42 right. It's ratio is completely it's completely warped now, right? So then you think about yourself. No, okay, no point me this, no point me trying to go and this thing. That means I like to live like a pop. My T cell is better to stay on rent or stay with the parents or something than they do some experience or leave the country. So that's what happened. A lot of people are leaving the country because they can't afford anything. So I was about Dr. Sarath Rajapatirana 18:04 here the problem again. Not many people can leave the country. Period. Speaker 2 18:09 No, that is also true. So the people who leave the country are the people who actually can go overseas and get a job or something and do something good, right? So other people who go are basically I've seen this in especially in Italy. You know that I've seen that where those are the people who end up doing the the low end jobs exactly and it's I mean and the money what they save there it's not good enough to buy a house here right because the cost of living in those countries also have gone up very high right it's very high I mean you see that a lot where a lot of people are complaining about the UK Australia even the US, where inflation has really taken off. So the the the the coming back to our own domestic issues in Sri Lanka, what he calls the real problem has always been inflation. We are historically we are used to high inflation. Sorry, and because of historic high inflation, we have historic high interest rates. Now in the U.S. you can afford because housing loans are going at 2% right? Or at least it used to. Now I don't think it's even there. I don't think it's there anymore. Where in the Western world it was like 2% two and a half percent, and the pricing structure was such. And you can go further out of the city because the public transport was there, right? Because they have a proper rail system and all that. In lot of the Western countries, you get that. Here you can't do that because the reason is one thing is your housing loan. I mean, as far as I remember, housing loans are always 14% Dr. Sarath Rajapatirana 19:36 right? 14% Yeah. Yeah. Speaker 2 19:38 So at 14% housing loan, you just do you do the numbers like normal housing loan which you can finish in 15 years. This will take because of the compound because of the compound value of inflation. Sorry, interest. It's going to take 30 years because it keeps compound because of the compound factor. So if you look at that, affordability is a big. Problem where nobody talks about too much. Speaker 1 20:02 So I think a government tyranny you can add. I think the government can do a lot when it comes to you know fighting this affordability, right? Any government balance it the Tirani Kulathunge 20:13 options that they have, right? I don't agree with Dr. Sarath Rajapatirana 20:16 that. Speaker 1 20:17 You don't agree with that. Why is that, doctor? Because it's too Dr. Sarath Rajapatirana 20:20 much. That's trouble. That's why we are here. Tirani Kulathunge 20:22 But I want to bring in this point, Doctor R. Let's say on free trade agreements. Yeah, it's something that the government should be doing. Free trade Dr. Sarath Rajapatirana 20:29 agreement is not free trade. Period. It's not free Tirani Kulathunge 20:33 trade. Well, I would like to bring that up as well. But the question I have is that most of the negotiations that we have done so far, the you know six rounds with China, with the GSP Plus or whatnot, we have a lot of opportunities. But all of these negotiations aren't you know closed, as in like they are not completed. They're only half baked. Dr. Sarath Rajapatirana 20:56 Yeah, you think they can complete and bring from Tirani Kulathunge 20:59 it? I don't know. Let let us know, doctor. Yeah. So, would you also like to explain why would you say that free trade agreement is not free trade at all? No, Dr. Sarath Rajapatirana 21:09 because if you have agreement, we we call it free trade. Free trade. It is not free. That is the first. Okay. Yeah. Tirani Kulathunge 21:17 Because you're binded by some constraints within the agreement. No, binded by constraints. Dr. Sarath Rajapatirana 21:21 Yeah. You know. Yeah. The thing is that if you give give more access to other people to go out, come in, buy, sell, then it is being solved by is not being solved by the agreements. Number one, number two, agreements are you know very wishy washy. You think these people who go and get an idea in economics how to do it? No, they don't. I see in other countries, other countries in the world where they don't need it. They don't need it. There's no free trade. No free trade. The thing is that the moment you have free trade, then you have other things coming in. You have to, you have to have different system of which protects both sides equally. You know, which we don't have. Tirani Kulathunge 22:10 Yeah. Dr. Sarath Rajapatirana 22:11 Actually, don't. I I would say don't depend on free trade to improve your problem. That's the wrong way. Tirani Kulathunge 22:17 Riyadh. So just bringing up to you as well. Do you think we may have now? Of course, Doctor R by default mentioned that you know free trade is not really free, but of course we still have opportunities to get at least some facilities done. Like benefit, we do have benefits if it's not being free. But like, do you think we may have missed a lot of opportunities to make things much more affordable by not completing all of these negotiations. What are your thoughts? Speaker 2 22:45 Yeah, possibly only problem what I see is almost like what Dr. Har said. Lot of the people who go for the negotiations, I think, don't know what they are negotiating on. So, so that's where the problem is because one thing is you do one thing where the government overestimates itself is on capacity. Government doesn't have capacity when it comes to lot of things, right? So if that is the case, no doctor. I mean, if you have to get someone from outside at least to come and do your, yeah, yeah, to do it. But then again, when you get someone from outside, also then there are certain political repercussions and all that come with it. So it's a very tight roped balance. But you need that now. For example, coming back to especially on tariffs and all that, if you come back and para tariffs, building a house, right? Right. The main things that go into building a house are labour. Then you get the particular raw materials which are source of like sand and all this source of beer. Then you get cement, which has a huge import component. Then you have paint, which has a big import component. And then the final one is the sandwich wear. That is the what you call the the fittings and the tiles. Yeah. Right. And if you do all the taxes and plus sorry, that the steel that goes in exactly aluminium fitting on some cases, no. Let's say even the timber, we get it from here. Like things like the what you call the buy and all the reinforcement, the rebuy and all that, right? So if you look at all that, tiles are taxed at almost 100% right? I think you guys will know the numbers better. Tirani Kulathunge 24:14 100.63% was the number that was cement was how much was being Speaker 1 24:20 cement back in 2024 when we did a report was 120 percent more expensive than in China. Speaker 2 24:26 Right. Okay. Speaker 1 24:27 Our cement price. These are Tirani Kulathunge 24:28 bagged cement. Yes, Speaker 1 24:29 these are bagged. Yes. So bagged cement has a lot is is punished a lot more than bulk. So Tirani Kulathunge 24:37 also the fact that you know despite this bat and cess on you know imported bag cement, it's still much more cheaper than domestically produced one apparently. Speaker 2 24:46 Okay, can be can be right, but then exactly. So the thing is, and and the final one is the steel. I think steel is taxed at steel Speaker 1 24:55 is also somewhere around 80% 80% over 80 in the report time, right? So. Speaker 2 25:00 So if you look at that, I mean, for example, I mean, okay, import is something you need to have a tax structure. Yeah. But these are like very ad hoc numbers, which definitely help particular local producers. There's no question about it. No. Yeah. Right. They are the people who benefit from that. Right. And it has always been when you put high taxes on particular import imported goods, what they say is helping the what you call infant industry. Infant industry, and these industries have been there for last 3035, years. So is there like so they are like they are like always like a stillborn child. They are always stuck in one year. Yeah. So we Speaker 1 25:34 say I'm I'm coming to the question of whether there's like an age. Okay, you're not an infant industry anymore. Is there some sort of mechanism, doctor. That you can say, okay, you are an infant industry. You are not going to protect you. Infant Dr. Sarath Rajapatirana 25:45 industry requires so many things to to be acceptable to your economists. Number one, first of all, how do we know it's an infant? How do we know it's an infant? The proper way to think about it is that here we start an industry. We are expecting some return in the future over the over the period. Now that could be good in fund, right? But we have to be able to tell in the next five years we are earning so much we can pay it off. We don't have such infunds. They are they are actually they are they are old people, right? There are no infants here, definitely. Tirani Kulathunge 26:23 So now, when Speaker 1 26:24 it comes to these tariff taxes that we were talking about, para tariffs, right? So the government has come up with a plan of like a four-year plan of phasing it out. Yeah. So phasing it out in the sense, one year they are going to reduce. You know. Can you say Dr. Sarath Rajapatirana 26:38 that's really? I was in the in the area when my discuss this discuss. They want to do slowly. I said, "What do you mean? You want to do slowly? You are telling you are not very much interested in this. Why slowly? Exactly. You can do it fast. Why buy slowly? So they were pretty annoyed with me because there are some people around. I said, "This is all wrong. Do you want to Tirani Kulathunge 27:01 explain to us? Because I'm also curious, right? I mean, of course, I wouldn't assume that they had a rationale behind to do it slowly. But do could you explain the cost of doing it slowly comparatively to you know do it online? Why are we doing it slowly? Dr. Sarath Rajapatirana 27:19 Let me start from the very beginning. You are doing slowly means you are not very much interested. You are sending a message to everybody around saying, "Oh, we are not really interested. Wrong signals. Yeah, if you are doing it fast, then you can get the benefits fast. Fast. Why slowly? Speaker 1 27:34 Why slowly? Dr. Sarath Rajapatirana 27:34 So why are you postponing the? So the Speaker 1 27:36 government's, I think, excuse for this was the fact that you know they want to do it slowly and you know face by face to you know not give the big direct impact to the businesses, local industries. All of a sudden, they want they don't want the heat for the industries to come. Is that a valid excuse? Because reading on the report, Dr. Sarath Rajapatirana 27:55 no, there is no economic reason. You can have any other thing. Yeah, to say doing slowly is better than doing fast. Speaker 1 28:03 So looking at the report, I think they are reducing 25% some some percentage, and the final reduction happens in 2029, and that's a 50% So 50% is going to be removed in 2029 April. Yeah. So technically half until that we'll still have to keep paying over 50% It's still the Tirani Kulathunge 28:24 removal of cys and pal only, right? That's not which is a relatively Speaker 2 28:28 small component. Yeah, Tirani Kulathunge 28:31 Doctor Har, one final question is that phasing our para tariffs. I think all of us agree. Why do we agree? Dr. Sarath Rajapatirana 28:38 Pray. Tirani Kulathunge 28:41 It's basically to have more, much more better competitive pricing on developing. I think this Dr. Sarath Rajapatirana 28:47 is true. Tirani Kulathunge 28:48 Okay, if you tell us, Dr. Sarath Rajapatirana 28:50 but I want to know that government was when we were running war, right? He needed the money for the war. I'm saying the good and bad thing. He shouldn't have had war anyway. Now, so they do it slow, fast, because they can get it done. But actually, doing it is fast is to get get rid of the parasari of there when certain administration came and they, that's a revenue measure for them. The government wants their money, right? And they they had say say 30% Listen, they made it 60% Tirani Kulathunge 29:30 Yes, Dr. Sarath Rajapatirana 29:31 and Polish para, if you can see all the literature of economics, nobody refers to para. Sorry, para was created by Sri Lanka, Sri Lanka, Tirani Kulathunge 29:41 right? Tara, Dr. Sarath Rajapatirana 29:42 Tara. So I Tirani Kulathunge 29:43 think we Speaker 1 29:44 are very good in creating new things to Tirani Kulathunge 29:47 cater, cater to the Speaker 1 29:49 government's revenue to activities. Speaker 2 29:52 Yeah, and the other thing is the government also now should be looking at basically adjusting taxes because if you look at the tax structure now, first thing was. They said because fiscally they were very weak. Now the fiscal problem is going. They are running a massive primary surplus where I used to be, right? Deficit. Dr. Sarath Rajapatirana 30:07 Not a massive primary surplus. No, Speaker 2 30:09 it's quite. It's about no home. It's about three, three. Speaker 1 30:11 I didn't have a look. I think they are Speaker 2 30:13 running a relatively high primary surplus. But the thing is, the thing is, they are running a budget surplus, right? I think the first. Dr. Sarath Rajapatirana 30:20 Yeah. Now. Yeah. Now they are running Speaker 2 30:21 a budget, sir. Plus, is Speaker 1 30:22 it bigger than the vehicles Speaker 2 30:23 or? Yeah, you know, one thing is the vehicles, and plus they open the tap and all that. So because of that, the money is coming, right? So no, overall taxes have gone. But the problem is the tax structures are too long because we have one good thing is these para travs are coming off. Of course, you know we can don't Dr. Sarath Rajapatirana 30:38 use the word good with para travis. Speaker 2 30:40 No, I'm saying actually they're removing it. No, I'm saying it's good, but at least they're looking to remove it, Dr. Sarath Rajapatirana 30:45 right? Yeah, they should have removed it sometime ago. Yeah, it Speaker 2 30:49 was more like a doctor RZ. It was more like a war tax. Yeah, and the war finished what? Dr. Sarath Rajapatirana 30:56 Yeah, Speaker 2 30:56 like many many months ago. Yeah, so as I said many moons ago. So thing is you know after 17 years also we are just holding on to it because it's like this for where someone is getting money you don't let it go on home Tirani Kulathunge 31:11 you know if you can keep next generation I'll do that too yeah right so Speaker 2 31:15 that is one and the other one is if you look at the tax structure also which needs to be you know for example corporate taxes are 30% plus. There's a dividend tax of 15% So you're technically looking at 45% Tirani Kulathunge 31:24 Yeah. Speaker 2 31:25 Right. Where in England tax corporate taxes are 19% Right. So these are things they had to look. I mean, British UK is the seventh biggest, almost six or seventh biggest economy in the world. Right. So Sri Lanka is relatively not even in the top 150. I think. Right. So the thing is, we really need to look into that. Then, if you look at personal income tax, is 36% Then we have a vector of 18% Like all the numbers, all the numbers are of Scandinavian proportion, right? This is an Asian country, right, with just over $100 billion economy, where the taxes of Scandinavian proportion. Scandinavian countries pay the highest taxes, right? They have the best living standards. They have the best modelling standards. They have the best of everything, right? Because their economies are geared at that level. Now we have our taxes at that level. We are living in Sri Lanka, so that is something I think the government might have to look at. Dr. Sarath Rajapatirana 32:22 Also, those people in the entire part of things they pay their taxes. Yeah, same if they are shown to not pay their taxes, it's a big thing. Yeah, it's a big social taboo. Yeah, yeah. Speaker 2 32:37 So I mean, that's I think I think that's a personality, and I think that's a cultural thing. Here you get millions and millions who don't pay you don't pay any taxes, right? So you get that. But the government is currently looking at you know bringing everyone to the net, missing by going on the digital listing. So I think a lot of people will be bought in. But still, our tax proportions are very high. Tirani Kulathunge 32:58 So definitely that's a good topic for next discussion. What do I get Speaker 2 33:04 instruction? Yes, what do I get for my tax? I think definitely. Yeah, exactly. But Tirani Kulathunge 33:09 I just want to highlight and give a massive shout out to our Advocata insiders for supporting our channel, our institution. Because of you, we are able to discuss all of these important topics and also have Dr. R in our conversation and you know get all of his insights that he had experienced back then relating to all of issues today and yes thank you so much for everyone who joined this conversation Anushka any last words not Speaker 1 33:39 really it was really nice to have you know a whole you know different generational perspective you know to because the whole thing that we wanna wanna you know understand it's like what what it was back then for you guys and what it is like for us now. What will it be? What will what will it be in the future when we you know get there. You know, hopefully. So yeah, I think it was a good discussion. I think we have a lot to talk about. I wish we had a lot more time. Yeah, just to Tirani Kulathunge 34:08 put one liner. You know, just to end the conversation on this topic. What is something important that you know you want to address within a Speaker 1 34:16 sentence? Tirani Kulathunge 34:16 Within a sentence. Dr. Sarath Rajapatirana 34:18 On on the line of what? Tirani Kulathunge 34:20 Trade. Trade. Dr. Sarath Rajapatirana 34:21 I say we have more free trade. If you want to grow fast, have more free trade. Tirani Kulathunge 34:27 Right. Dr. Sarath Rajapatirana 34:27 In fact, I have been talking all over saying, do another taking out the controls to the extent possible. I think 7777, Tirani Kulathunge 34:42 Make that possible, right? We had any anything from. I Speaker 2 34:45 would say just taxes because one thing is the domestic taxes and plus the taxes that we use for trade. I think those really need to go into a into into into into like serious discussion. Another thing is when it comes to trade, we really need to look at for example. How we can integrate to India, especially the South, right? Because if you look at India now, the fastest growth is coming from the South, right? And the South of India and Sri Lanka, we have a lot of things that are very common, right? Culturally and you know we eat and all that. Yeah, and that's Dr. Sarath Rajapatirana 35:16 country going to grow. That it's going to grow. Its current person started exactly, and it's going to be the largest producer of motor cars in the world. Yeah, bar none. We should be friendly with them and encourage them to come here. Now we are taking the first step by saying no, they don't have to pay visa fees to come in Sri Lanka, right? Speaker 1 35:39 Okay, I'll be right. Super. Yeah. Let's hope Tirani Kulathunge 35:42 for our next tax conversation to cover all of our issues. Then. Yeah. Thank you. Dr. Sarath Rajapatirana 35:47 I don't like the tax. I don't like taxes as as much as he does. Who likes taxes, right? And I know I have a benefiting promise. Absolutely. Right. Transcribed by https://otter.ai