Tirani Kulathunge  00:11
In millions of developing countries, many access homes and even runs businesses, but legally they are not really-you know-they don't exist in practice, right? But what we also know is that they can't access credit. They can't because they don't legally own this. They can't access for credit, or even perform well in the economy. So to explain all of this with the payer case study, we have Elena Panaritis. The she's a very well-known economist and policy reform expert specialising in property rights and institutional change. She has held senior roles at World Bank, served on the IMF board, and was a member of the Greek Parliament during the country's financial crisis. And also, she's best known for leading landmark property rights in reforms in Peru that helped millions enter the formal economy and developing the reality check analysis methodology to address institutional barriers to growth. Welcome, Elena, to Advocata Studios conversation. So, before we get into the policy, what first made you realise that informality was, you know, the issue that everyone was missing.

Speaker 1  01:26
Actually, I should make a clarification of first design, first defining what is informality. So informality is not illegality. So it's not that somebody does not have something legally right. It it means that the right of the existence of the asset, in order for an asset to be traded in the market, and the right of the existence of the labour of the person, is not very clear. It's either misdocumented, or it has way too many restrictions, so it's overregulated. So it's really not used, not usable in the market, or it is completely undocumented. Yeah. So none of the three suggests that it's not legal, right? Yeah, it's very important to make as a definition, because one of the misconceptions out there is that informality is illegality equals to illegality. In my book Prosperity Unbound, which I believe you have in your library, but if you don't have, maybe I think somebody's getting it. It's explaining very clearly the definition, the distinction between illegal and informal. Right, because as a matter of fact, you may have a lot of legal documentation that is not matching with each other, and as a result, you have restrictions in participating in the formal market, so every restriction generating generated from laws or regulations or bad documentation leads to informality, which basically means lack of security. The individuals do not feel secure. They do not feel secure to leave their homes because maybe somebody may take their homes and they have no ability of proving that this belongs to them. Very quickly, right? Some people may not have the ability to prove themselves who they are, their own existence, because their documentation is messed up, and some people do not have the ability to work, or to prove that their businesses exist, because they really work out there. You know, the licencing is very complicated to get, or they get a little bit of a permit with a licence, but it's only just for this thing and not that thing and not something else. And then every year this changes. So the original licence was good, but then a year later was bad again. So who is it to blame? So you asked me, how did I find out that this thing exists? I found out that this thing exists after the fact that I am a Greek, born Greek, educated in Europe and in the United States, and then started working at the World Bank, and went to developing countries to work, and realised all what I just explained to you, and I realised all that and remembered when I was a kid living in some parts of Europe, in south of Italy, in Naples, in some parts of Greece, and that informality is very strong also in the first world. And I thought it was just a marginal. I thought when I was getting educated. This is just a little marginal percentage,

Tirani Kulathunge  05:03
okay,

Speaker 1  05:04
but it's not. It's 5.8 billion people on this planet that have some sort of informality that they suffer from it, and they cannot participate in the market. It's 70% plus of the world's population.

Tirani Kulathunge  05:20
Okay, that's grand. That's grand indeed. That's

Speaker 1  05:23
massive, isn't it? It

Tirani Kulathunge  05:24
is. It

Speaker 1  05:25
makes you. It makes you wonder. Wow, is it really marginal?

Tirani Kulathunge  05:28
So there was this part in I think in one of your books as well that you argue that informality isn't just a symptom of poverty, but it's also let's say a structural failure of institutions, and so the question is: What do most policymakers still misunderstand about this? And there's also this part where you know we also tend to see that again: Why do we tend to blame people instead of institutions? I just thinking out loud as well, right? So, like,

Speaker 1  06:00
okay, one thing at a time because you touch too many things. Okay, so so that it is useful, like we're saying. So we first defined informality, right?

Tirani Kulathunge  06:09
Yeah.

Speaker 1  06:10
So we define informality as an ecosystem that produces insecurity for who you are, your identity, your civil registry is not well defining your own your ownership of yourself. Informality is insecurity of what you own, whether it is immovable or movable, whether it is your home, your car, or something else. And informality is giving you insecurity about the contracts of what it is owed to you after a contract, right? Okay. So what there is a bit of a let me clarify of what you said. I did not say that poverty results in informality. It's the opposite. Okay. Informality generates insecurity, doubt. Can generate poverty, right? Can generate marginalisation of people because they do not participate in the market, in the formal market. So they cannot even be protected. So when people around say, "Big government is good because it protects you. Well, I don't care if it's big or small. When you have over half of your population informal, that means your government is not doing its work well. It can be huge. It can be small. I don't care what it is. What I care is it doesn't do its job. It doesn't even protect your people because it because if you cannot participate, you cannot you cannot you cannot even have any demands from it. Or if you do have demands, you don't receive anything back. Okay. One of the mis. So this is the first definition, and then the misconception is by policymakers. Until even until today, no one understands that property rights is the key element that defines, that cleans up all of that. That redefines your who you are, what you own, and what it is owed to you. Right? Property right is what reduces the insecurity, reduces your risk of existence. Yeah, of your assets, of yourself, of your contracts. So that is the first thing that is not understood at all. Why? Because we are not educated in our in our classical way, in our MBAs, in our economic degrees, in our financial. We are not educated. We assume all of these structures to be there. We are. assume that's the sort

Tirani Kulathunge  09:03
of ideal world. Always, well,

Speaker 1  09:05
we always in economics you say in an ideal world, if this would do, that would do. Like in an ideal world, if you reduce the price of a good, then you will sell more goods. Yeah, yeah. If you reduce wages, you will have more employment. I still haven't seen one country where wages have been reduced and employment immediately grew. Why? Because you have to deal with contracts, you have to deal with humans, you have to deal with with government, right? You have to deal with all sorts of individuals involved in these bloody contracts. That it's not automatic, and equivalently, financial markets also assume that this doesn't exist. Once they identify that it exists, they try to make money out of it instead of instead they try to to trade into that insecurity. Right. Instead of. Incorporating it into the formal because they cannot. That's not their job. The financial financial economics is not there to iron out informality. The second issue: first, we don't understand it because we haven't been educated to understand. The second issue is because we also assume that it is there. Property rights is a very boring subject. It's not sexy. It's not climate change,

Tirani Kulathunge  10:29
right? It's not venture capital. Is it because it has been ignored so far, like it's all this time?

Speaker 1  10:37
Because it has been assumed,

Tirani Kulathunge  10:39
right? It

Speaker 1  10:40
has been assumed out because when we created the development economic paradigm, if we want to call that we developed, or we just drafted the Bretton Woods Agreement, 1945, the focus was the restructuring of Europe. No one was, everybody was thinking we need to rebuild the infrastructure of of European countries that had been devastated by the bombings of the war, both sides. So no one was thinking, oh, we we need to rebuild, say Austria, or we need to rebuild France, or we need to rebuild Italy, or we need to rebuild Britain. No one was thinking we need to fix the judicial and the law, the the rule of law of Britain, or the rule of law of Germany, or the rule of law. No, because this was there already. Now what happens is that as these organis these countries got themselves together, and now they're the part of the group of seven countries that kind of like lead the economic development and the economics of the world. We have other countries that participate now in the economics of the World Bank, the IMF, the economics of the Bretton Woods, which were not part of Europe then, right? They were former colonies that now are independent, including Sri Lanka. So it is wrong to assume that these new countries, after independence, had institutions that worked, had property rights that were established, right, and had a rule of law that was all well defined. As you remember, Tyrney, in a meeting we had a few days ago, we just decided. We I was listening. You were saying that you have several different law,

Tirani Kulathunge  12:38
almost 36 laws, 36

Speaker 1  12:41
different, you say, from from legal traditions-Roman, Dutch, British-I don't know. So, so all of that was never taken into account. So now, the easy thing to say is, informals are those who don't want to pay taxes, right? Yeah,

Tirani Kulathunge  13:02
I think that's also where people tend to blame the people easily, and then you

Speaker 1  13:06
tend to blame. And then you, I have been in in meetings in the early 90s when I tried to understand this concept of. I was trying to understand this dead weight loss because that's what it is. It's a lot of assets, a lot of factors of production, land and labour in its majority, that is not getting counted. I mean, these people work; these people produce whatever. They produce a service. They build. They they cook lunch for the workers in the streets. They are they are producing something. Right. Whatever they produce, it does not get counted in the GDP growth of the country. Yeah. So to just say that they don't pay taxes, I would like to ask the following: Has anybody looked at how taxful it is to survive in this space? And how many taxes they pay? Taxes they pay to non-government security to provide these people security. They have really a parallel system of operating, which is the informal ecosystem, and what I am very surprised was I was very surprised. Not anymore, of course, because it's been 30 years I'm working on this. I had people say to to major major conferences, "This is the culture of these people. Latin Americans are corrupt. It's in in culture. I'm thinking, wow, that is really an interesting theoretical approach to a real problem. So I start to understand a bit of all that, and then realise that it's not that we are bad. People, policymakers, is that we were not well trained to understand that concept, and property rights were never part of our core business. So that is the gap that exists and still does. So we basically look at it now into areas that we think we can fix. Okay. So we say housing. Oh, there are all these people that are in slums. Let's build them a house. So we create a housing project. We're not fixing the institutions. We're not checking the rules. We're not identifying behaviours, and we do not check what incentive structures is out there that is broken for these people to not be in it, and think about this.

Tirani Kulathunge  15:47
It's again treating the symptoms rather than the real issue again. Precisely. So

Speaker 1  15:50
poverty is a symptom.

Tirani Kulathunge  15:52
Okay.

Speaker 1  15:52
Another symptom is what is very much very strong now in the first world, immigration and refugees. Yeah, and now we try to say all because of climate, global climate change, or because of wars, or because of whatever. These people cannot stay in their countries, and they come over for whatever reason. They do come over, true, but that's not my point. Why they're coming over because of climate change? I would like to know. Climate change also exists in in the first world, but no one is looking at is no one is immigrating from the first world to go to another part of the. You understand what I'm saying? Because they are having stakes; they are stakeholders of their countries. So what we need to establish is a home, a connection with credit, generational wealth, and then I will tell you that these individuals, which are 5.8 billion people, have plenty of stakes to stay where they are and to reduce poverty and become members of the middle class.

Tirani Kulathunge  17:04
Understand?

Speaker 1  17:05
I hope it yes. It did. It

Tirani Kulathunge  17:06
did. So with the case study on Peru, right? So like, I think on land precisely, millions had lands but no recognised ownership. And let's say, why is a piece of paper formally

Speaker 1  17:20
recognised? Formally

Tirani Kulathunge  17:22
recognised, right? So again, it's just to the point where why is a piece of paper, let's say, a title, was so transformative economically and socially, and it's also relating to let's say, is it about access to credit or something deeper like identity and dignity. I'm just relating the payroll case study.

Speaker 1  17:44
Yeah. Okay. So there again, there are some elements that need to be clarified. It is not one piece of paper.

Tirani Kulathunge  17:51
Right. It

Speaker 1  17:52
is irrelevant because what what you need to have a formal economy is to have the factors of production recognised in a tradable manner within the community we're dealing with. So the major factors of production are land and labour to start with. Let's not complicate it with capital, land, and labour. Okay, if these two factors of production are not tradable, in other words, they are not recognised within the community in a fashion which is undoubtable, then they're not tradable. Right? Are we okay until then? Yeah. Okay. Now the community is no longer a community in a village. The community is a country now, with a budget, with a parliament, with parliament sometimes, sometimes not. Whatever you may have a different whatever, usually a permit with with liabilities towards its service provision, and with with promises to the WTO, the World Trade Organisation. So, so you have a country now that needs to recognise the land and labour, and that's where the divorce happens. The structures, the the processes the country has put in place in order to take this land and labour from factors of productions and turn them into assets in a recognisable, undoubtable, and secure way is failing to occur. Do you follow what I'm trying to say? It's failing to occur, which means you. You may find a lot of paper, whether you call it title, whether you call it deed, whether you call it anything. A title, really, what it is, is it's a contract between two individuals. We call it a title. A contract between two individuals. What matters is this contract between two individuals is not necessarily an asset.

Tirani Kulathunge  20:25
Right.

Speaker 1  20:25
What turns it into an asset is that this, because it's a land, it's immovable, and you cannot put land in your bag and go home and say, "Mom, look what I bought! I bought this amazing house or piece of land. You need to bring a Recognisable proof, proof that it now belongs to you. What makes what makes this agreement between the buyer and the seller a recognisable proof that this now belongs to you, the buyer? What makes it? Do you know what it is? Is the publication of this contract to the third parties to the world, and this happens only with the registry. So the registry publicises to the world, to the billions of people out there, that now the new owner of this immovable asset is tyranny. You understand? So you you take a picture of the movable property and you take that little piece of paper that could sometimes be even digitised and it's just like an entry on a cell. And you go to your mom and you say, "Mom, look what I bought. Yeah, you don't need to put this in your bag. Okay, which of course it's ludicrous. So the question here is, how do you manage to do that in an in countries that have already too much paper, too many digital entries, right, too much happening that in the end it bogs it down and it doesn't allow ever the factors of production to become tradable assets. So that's where reality check analysis comes in.

Tirani Kulathunge  22:12
Okay, I can I

Speaker 1  22:14
can explain to you a little bit about how. So what is

Tirani Kulathunge  22:16
the reality check analysis and how did you come about with the Peru case study that you're in Peru,

Speaker 1  22:21
it has become a case study. It was a real thing. It is a real thing. So, you need in institutional economics, you need to follow different procedures of policy making. It's very different from macroeconomic adjustments, it's very different from microeconomic adjustments. So it's not like fiscal or macro adjustment, microcontroller. So institutional economics, you need to deal with the behaviour of individuals and the understanding of the incentives. Why would an individual want to be involved in a specific transaction? So, in the Peru case, I noticed that when we did, we had a crisis like the one you had in 2022. We had a very big crisis, very big recession. Yeah, and they were not interested in participating. They had they had defaulted in their debt, not interested in. They were not interested anymore in participating. So they stayed out of the world global markets until the early 90s. They decided to adjust, reform the macro economy, and. then they got involved with the World Bank and the IMF. So when we did the adjustment of the of the currency, the hyperinflation was fixed. Very difficult structure. Very difficult. Very painful for the people. We then started thinking about privatising. Right, and it was impossible to privatise, especially the mining sector, because they had no property rights. So we could privatise, if you like, a company, but we could not easily because they had worked already in the registry of companies, but we could not privatise the land that the company was sitting on. Okay, we could not privatise the mining sector mainly because there was a lack of knowledge of the whole space and the ores that were part of it. So that's how I got about to understand the importance of property rights. Not it's not that I was not aware of the importance of property rights, and no economist is not aware. All of us are aware, is that we were not realising that they were missing. They were they were jumbled. They were they there was a law, there was a registry, there was an enforcement mechanism, but it was there for only from the whole country, only 100. 100,000 properties were registered. 100,000 owners with their properties had registration. So these were the only ones that had

Tirani Kulathunge  25:08
in Peru, right? Yeah. The only

Speaker 1  25:09
one that had undoubtable title, what I say, property right over their right over their property. Guess what, though. Although they had undoubtable right over their property, they only had 100,000 of them in a 26 million people. Okay. So, in the theory of numbers, the majority eats up the minority. So, even though you had the most secure, the most accurate, the most whatever legally defined, you know. The majority had taken over, so they had gone into these properties. These were 100,000 properties from the feudal times. These properties were subdivided, were given back again to they they they had been transferred informally, so you had a major informal market, which is what you also have in this country as well, right? To to just bring a little parallel. Yeah. So, reality check tried to do the following. It said, let's go check what's happening in the reality on the ground, and let's go and find out why these people right now, although they get subsidies from the from the Ministry of Agriculture for seeds, for water, for irrigation, whatever, or people that are in the human settlements, they would get electricity. Sometimes they would get water.

Tirani Kulathunge  26:37
Just to tap back very quickly, so the reality check answers. Where do you start? Is it from the institutions or is it from the people who receive the benefits from these institutions?

Speaker 1  26:47
No, no, none of the who receives anything.

Tirani Kulathunge  26:50
Okay,

Speaker 1  26:50
you forget about what is out there.

Tirani Kulathunge  26:52
Right.

Speaker 1  26:53
You forget, you forget of what ought to be.

Tirani Kulathunge  26:57
Okay. The

Speaker 1  26:58
normative, and you go to the positive, and you go and see what it is, right? So you go out there and you see where do you live, in a place that they call some name, yeah? Right. Where is this? Where is this? It's there. Okay. Let me go check. How many of you are there? So many. Where? What do you have a parcel? Each one of you. Do you live on a house, or what do you do? We live in a house, a parcel, and they have chiefs. Like here, you have villagers with chiefs. They have chiefs, and the chiefs know very well what they what who owns what. Yes. Okay. So we have we take account of that. Then we go to the law, and we go to identify how law treats this piece of land.

Tirani Kulathunge  27:47
Okay,

Speaker 1  27:48
and we identify that there are many organisations involved, and we find out that there are many different sources of law that guide these organisations. Some of these organisations are latent and hidden. They're lost. They're they're not used anymore, but they're still alive legally. Right. Some of the laws are not used anymore, but they have issued titles over these laws. So the the title is not is not. You see, there are two types of lives: the legal life of a right or of a title. Two different things. A title is for two people. A right is for the contract to become known to to the to the public. Right. So, the the the reality on the ground is a complete different reality for towards the reality in laws. I'll give you an example. We had in some other country in Bulgaria. I found mines. Bulgaria was under the communist former Soviet Soviet Union satellite communist country, so they had mine. They had a lot of state companies, and they gave them out for privatisation. So some of the privatise without real clear top property titles. Very very confusing how they privatise.

Speaker 1  29:14
So then one, I give you the very simple example. There was a mine, and they gave a concession for 15 years or 12 years of that mine, the concession finished.

Tirani Kulathunge  29:24
The

Speaker 1  29:24
privatisation was done of that concession. Nobody bothered to close that concession in any registry or any court.

Tirani Kulathunge  29:33
Okay. So

Speaker 1  29:34
that that concession was still alive, and kicking. No one knew, and the municipality was selling out the land, so somebody purchased the land. So you still had a title, right? It was still registered in the registry of titles. The concession was missing from all the registrations, so suddenly somebody shows up and says, "We cannot really do anything because there is this thing coming out." That's what I'm. That's what reality check does. Reality check peels out every single element that is like an onion. You take one layer and another layer, and and you know what? Exactly like the onion, you sometimes have to cry because you don't even realise what you find out. Now, where you cry is while you peel the onion on the legal institutional side, and then you try to see how now you can very quickly administer all the overlaps legal existence that are not in reality on the ground, and how can you administratively, hopefully administratively as much as you can, eliminate the bottlenecks and streamline the process with just do it in half a day? So that's what we managed in Peru instead of 14 agencies and 1000s of processes, 1000s of processes, which cost time and money that, in the end, was a disincentive for anybody to be involved. We eliminated with one, sorry, with two, with two agencies and half a day process, and $12 instead of 1000s, and that's what brought all of this into the market in no time.

Tirani Kulathunge  31:26
Now we're talking about the whole country is formalised. As you mentioned, it was like 200 titles in just a few years, correct?

Speaker 1  31:34
Not 200 titles. I mean, 200

Tirani Kulathunge  31:36
1000s,

Speaker 1  31:37
150,000 title, Not titles. 100 and take out the word title. It's wrong because it confuses everybody. Okay, sure. 150,000 properties

Tirani Kulathunge  31:50
right

Speaker 1  31:51
were registered. I always say the word registered. I transform the registration process. The registration process has maps, has surveys, has titles, has deeds, has whatever you want. In the end of the day, you have a registry. You have an entry in the registry. That's what matters. That entry in the registry is what guarantees your ownership. Right. You understand? Yes. Is not the deed, not the title, not the whatever you want to call in the process. What guarantees is whether or not the data you have put in there is 100% clean, secure, and when you want to mutate, in other words, you want to do transfers, you want to sell, you want to do an investment, you want to get a credit. It doesn't take another 1000s of years and 14 agencies. It takes again

Tirani Kulathunge  32:41
one

Speaker 1  32:41
agency or two agencies, the registry and the titling office, two ag two agencies, and half a day maximum, and $12. It to us it was 12 to $24, depending on how difficult or how far the the property was from the registry. So the registry is an active registry. In the registry, you have lawyers and surveyors in the registry, belonging to the registry, and they have a registry verification approval. So they're the ones going out there when you want to do a transaction, and they make sure that you haven't changed your boundaries. Make sure that the law, the lawyer says you are indeed the owner. You bought it from this other person or whatever. You have liens. You don't have liens, mortgages, or whatever credits. And then you go to the registry, and you register. You don't have to go to 15 other places.

Tirani Kulathunge  33:37
Right? Does it make sense? Yes, it did. It did. I just had this question now. Of course, you know, untangling all of this mess. You probably worked with a special team with the government, right? What did that team look like? How did that come into play? Okay,

Speaker 1  33:50
so that's chapter six of my book. I really, I really, because you're about to do this, and you're about to embark in this whole process. I strongly recommend you get that, and you it's a it's a small 150 page book. You can highlight it, read it. I'll be back to I'll be happy to to answer all your questions. Chapter six says, what are the principles to have a successful reform?

Tirani Kulathunge  34:13
Right.

Speaker 1  34:13
So number one is you don't work with a team in the government, and the government is is out there having lunch, not interested, yeah, because this is never going to happen. Because obviously, if you have so many laws and so many organisations that you need to streamline, right? They are not, as I said, they are they are in existence legally. They are not always. You may have overlapping claims, for instance, and the majority of the overlapping claims were paper claims,

Tirani Kulathunge  34:41
okay,

Speaker 1  34:42
right? Because these people were living on the land. All right, so, and the majority of them who were living on the land had certifications of possession from the government, or they already had been formalised or regularised, if you want to use, because they were given public utility. So you can really move them easily. You see, so so the the you start first the reform by doing the reality check starts like this. You have a survey of full identification of the incentives out there and the bottlenecks and the players. So this is a household survey of like you usually do 1000 to 2000 households. This is a method that there was a Nobel Prize on that on surveying economics. Super important because it's no longer theory that applies policy. Number two, presenting this information to the government, you now have to identify a champion. So usually, the government should have a champion that gets it, right, and says, "You know what? I want to empower my country with the input of my people and of my assets. So I want to empower my people and empower my assets, right? So, if if this is very clear and that becomes a champion, that's very important. That's built. That's called usually political will, but political will is a lot of hot talk. So political will. I've talked to many leaders that have political will, but they have no interest. They are not hungry to do the change. So what you need to identify is the political will together with appetite for reform, hunger to do it, and that is identified from the team that leader has around him.

Tirani Kulathunge  36:44
Okay,

Speaker 1  36:44
so if you, if I come to your office and you're the leader of a country, and you say, Miss Panaritis, you're absolutely right. It's amazing. I'm so happy you're here. Let's really do

Speaker 2  36:55
it.

Speaker 1  36:56
And your secretary doesn't have any clue of what we are talking about, and your advisor is somewhere else, and he's economic, or he doesn't have anybody, or she doesn't have anybody around. Then you know that this was just like interest conversation, right? So you, we had that in Peru. The whole government was reform oriented, of course, not at the same level. All of them. Okay. So you needed to still have. So we found a champion, the same champion who did the privatisations, the same champion who was our counterpart with Peru and the World Bank. Yeah. And that champion, together with a four or five lawyers, a couple of two engineers that we found surveyors, and very good economic think tank that was working with them helped. I was just leading the process, but I was not doing it. Yeah, I designed it together with them. They are. It's their process. We hired 1780 people.

Tirani Kulathunge  38:10
Okay.

Speaker 1  38:11
Yeah, because you have to go down. There are brigades. You have to go down. You have to collect, on the one hand, all the laws and the regulations, and find out exactly, and read and identify all the pile, all the cobweb, and then also identify what's happening on the ground, and then all the problematic cases identify if they're paper problematic cases, which means that we can resolve them with a with a with a with on on a desk, right? Or we really need to go on the ground, identify how to negotiate real conflicting claims.

Tirani Kulathunge  38:47
Okay,

Speaker 1  38:48
yeah. I'm giving you too much.

Tirani Kulathunge  38:51
No, no, it's definitely things that you know Sri Lanka. I mean, we can relate a lot with all the complexity, with the legality and all informality in Sri Lanka, but just want to bring it closer again to home. Let's say if you were to apply RCA or real check analysis to Sri Lanka, like you know,

Speaker 1  39:11
how would you do it?

Tirani Kulathunge  39:12
Yes, where would you start? You will

Speaker 1  39:15
start, as I said, with a very quick. It's not quick. It's a thorough survey of rural urban areas with a control group, and you do a baseline survey. In that survey, you need to triangulate it with other surveys that it's living standards survey and so on, and then identify who is right now? What are the players in the market? Because you and I can sit on a beautiful piece of table and with a lot of advisors and lawyers and others and economists and policy analysts and so on, even with ministers and design. You know there. Listen, we sat in that meeting room and we learned already too much. Yes, yes, in like four hours. Imagine just doing this properly, right? But still, you need to go out there and find out how all these information lands to the people. So I'll give you an example. I ask people, do you register your property? I did that in many countries, and it is tailored to the country. By the way, it is not one survey for every country the same. If you go to an Arab country, you cannot ask the question: Do you trust the government? Yes, sensitive. Of course, yeah. So you have to know how to actually find the the the use triangulation to find the answer that it becomes as more approximate to the to to to answer the question of trust and confidence. Right. So we would go there and say, you know, how are you? How are you doing? Obviously, very upset, not really willing to talk. Many of them, others did, and they would say, "No, we we have everything. So they would come with a pack of a black plastic bag in Russia, for instance, plastic bag. These are all the papers I have that prove my ownership.

Tirani Kulathunge  41:10
Right.

Speaker 1  41:11
All sorts of titles, titles, all sorts of deeds, all together mixed, all sorts of contracts, all sorts of paper trail. You'd say, "Have you registered this piece of documentation? Are you crazy? Gonna go where? I don't trust any of them. So then you have to actually count. So from from zero to five, you know how do, and that is how you find out who is involved. What are the groups that may be interested? You identify the players. You identify the depth of the market and the breadth of the market.

Tirani Kulathunge  41:55
Right.

Speaker 1  41:56
Yeah. You identify where they're getting loans from. You identify whether or not the regular banks are the ones that matter, or maybe the SME banks, or maybe just the government banks, or maybe a shark or a shark lender, or or maybe they don't get any loans. You know, they just just live with whatever they have or whatever they produce. So this is the first thing you do with that information. Then you go back to the table. You analyse the information, and you-I cannot tell you how much you find.

Tirani Kulathunge  42:32
Right.

Speaker 1  42:32
Level of confidence to the to the organisations. Maybe there is a high level of confidence to the president, but not a high level of confidence to the organisations of the state, which suggests that the government is very different from the president. So the people have a different view of the president and a different view of the organisations. Maybe they trust one specific organisation more than another.

Tirani Kulathunge  42:54
Right. So

Speaker 1  42:55
they say, "I try to avoid the the justice department as much as possible. I don't want to be anywhere close to the the police and the justice department, for example, what happened when we formalised? You will not believe all these shanty towns, human settlements, slum areas, whatever you want to call them, which before did not want to have any relationship with the judiciary, any relationship with the judges, any relationship with the police, they have a police department every corner. They have a square with a court. I was like, "Wow, that's formalisation! Right. They became middle class, proud members, inviting me to have lunch with them at the corner restaurant with grass on the, I was just having live music and saying we're so happy to have the team that came from abroad when the abroad at the time was people coming from another city close to them, not even from another country. Right. So amazing. So this is a country that has GDP growth positive for the last. We finished this work in 2002. Okay, 20 plus years. They changed a lot of. They had corruption issues. They have people who don't like to pay corruption issues on the government side, they do have people who do not like to pay taxes, but this is illegality. Is they call it informality? They confuse, right? But this is illegality. People who don't pay taxes are illegal.

Tirani Kulathunge  44:35
Fair point. I think in Sri Lanka also, I think the narrative we have is that we fear the tax department more than anything.

Speaker 1  44:43
Forgive me to interrupt you here. Yeah, in Greece is the same,

Tirani Kulathunge  44:47
right?

Speaker 1  44:47
So every and in other countries. So when when the people on the floor on the ground here, we're gonna give titles, we're gonna create land rights, we're gonna do cadasters. We're gonna give you this. We're gonna do that, so you can have access to credit. You know what they hear? You want to tax

Tirani Kulathunge  45:06
us? Yeah.

Speaker 1  45:06
So they they don't give you the information. They just say no, no. I'm not really the owner. I'm not. We're just a small piece. Right. So then you you you have limited information. So you put so much effort. You get so much support from international organisations, you get the country indebted again, and it still doesn't give you the result you want to.

Tirani Kulathunge  45:28
Right, Elena. Just you know, because we spent I think more than 30 minutes already. If you have any last thoughts, let's say for Sri Lanka, on let's say the next phase on how things would look like if we start now, if we prioritise now, any last thoughts on you could share this.

Speaker 1  45:48
I I would strongly recommend that you spend a lot of time in in preparing and in designing the reform. The reform has to end up. You have to look at the registry as the central bank of lands of immovable property, wherein and and the inputs need to be the basic two: the legal ownership and the boundaries. Very. You can improve the level of verification of not verification. You can improve the level of specificity of the map to plus or one plus or minus one centimetres. But right now, the the it's not that important to have such high level of accuracy of your mapping. What is important is to recognise you don't need these two ownership and the boundaries. Put a lot of effort in what I told you in the household survey. Put a lot of effort in the design because that will close the gap of implementation. And if we do reality check, which you can do in a different way, but once you have this information, then you can bring the two together, right? The the the the the proper the the legal reality with the with the living reality. So I would just go one, design very carefully. Spend a little more time. Design very carefully the reform. Have in mind that you need to have a registry with these two major points. Don't make it originally super defined, scientifically impossible to to you know technically. In other words, because I heard in our meeting last time that the surveys are extremely accurate. Yeah, this is important, but it is a second layer or a third layer of importance. The first, yeah. So you want to do quick results because you want to bring the people that are the owners on the side of the reform. You don't want to waste time and then people lose their lose their spirit and and hope. Oh, another one of those that never in Greece we've been doing land reform, land cadastral work, and property rights work since 1924. It is still not done, right? Okay, it is still not finished. It is highly bureaucratic. It is very complicated. That doesn't mean we don't have a market. Of course, we have a market. People go, but the market is more cumbersome. The prices are not in the in the level that they should be. They should be much higher, but they're not because there is the price is getting reduced by the risk and the brokers.

Tirani Kulathunge  48:52
Noted, Elena. Once again, thank you so much for joining this podcast. Yes, it

Speaker 1  48:57
was helpful.

Tirani Kulathunge  48:58
It was. It was, and definitely, I'm going to take all these ideas and try to push Advocata with this agenda because we also promote, you know, trying to accelerate BIM survey as a programme. But of course, there are some limitations within that. We're trying to correct that, see what we can do among that. Again, thank you so much, Elena, and

Speaker 1  49:15
listen a lot to your economist that you have in your in your office, Doctor Saraz Razapatira, yes, a former colleague of mine at the World Bank. If nothing else, economists are like physicists, right? The laws are the same, dependently of the ideology of the government, independent of ideologies out there. You know, the importance is to to increase sustainably your middle class, to to increase the growth of your country,

Tirani Kulathunge  49:49
right,

Speaker 1  49:50
and reduce the risk of any possible new crisis.

Tirani Kulathunge  49:54
Definitely, thank you so much, Elena. Thank you, and thank you for everyone who joined this. Conversation for any more new in-depth conversations that you want to listen into, please follow Advocata and subscribe below. Thank you.


Transcribed by https://otter.ai