charindra chandrasena 00:04 Hi Dhananath Fernando 00:05 Dana. charindra chandrasena 00:05 Hi Jarina. Hi Riyadh. Hi Jari. So we have come to the end of the year, and Speaker 1 00:10 yeah, charindra chandrasena 00:11 we are one day away. What plans? How are you going to end the year? Riyadh, Dhananath Fernando 00:17 you are the party. No, I'm Speaker 1 00:19 not the party person. The Dhananath Fernando 00:20 party person. Yeah, for Speaker 1 00:21 the I don't know. I'm just going to go probably have dinner and just sleep early. I don't know. Ah, dinner and sleep charindra chandrasena 00:26 early. Dhananath Fernando 00:26 You know, Jari, I'm from Morodos. And this year it's how shall I say unusually sort of a long, long because after Christmas the the the dates are quite in a way like it's a weekend and all that we are starting yeah Dhananath Fernando 00:45 pretty much after a few days so yeah so so it's been yeah pretty much time with in moro tour and yeah didn't really go out anyway so nice yeah charindra chandrasena 00:57 so as I said we are coming to the end of the year and in terms of Dhananath Fernando 01:03 in in in general, it was said in Moratuwa the Christmas finishes with the Saint Sebastian's Church. Yeah, I think it's the festival and the feast. So so it goes up to like mid January actually. Speaker 1 01:18 Oh, okay, okay. Yeah, Dhananath Fernando 01:19 because people from Christmas till the so Dana, Speaker 1 01:23 you're going to be a busy boy. charindra chandrasena 01:26 I thought Nigambo had the best Christmas in China. I don't think we can Dhananath Fernando 01:30 compete with Nigambo, but still. charindra chandrasena 01:31 But if it goes up to up to January, my God. But yeah, so we've had a had a quite an interesting and action packed year. Yeah. Just to to start off because we are going to be talking about the year today. To start off, what was the best thing that happened this year? And I'm not talking in terms of something natural happening. So, what's the best thing that happened, and what's the worst thing that happened? I'll start with Dana. What what was the so these are the highlights and the lowlights? What was the highlight for you? Dhananath Fernando 02:16 Um, I think this I will get a lot of negative comments on what I'm going to say, in my view, it is the relaxation of the vehicle imports is one of the best things that I think that happened. Not because I bought a vehicle or anything. It is because if you look at the logic, everything like after the the fiscal performance that we have achieved is mainly came from that vehicle imports. It doesn't mean that too many vehicles are good or anything like that. But actually, if you look at the logic, what what we did was we sold the dollars at an exorbitant price, which you cannot do for anything else, because what we did was in a way when someone is importing a vehicle, you have to buy the dollars to import the vehicle, but you have to buy it at a 200% margin. But if the same person is going to buy the same dollars to let's say import dal or rice or something, you cannot really keep that margin. So all the relief measures that we are providing and everything, our fiscal performance, everything came with that. Speaker 1 03:25 Yeah. Dhananath Fernando 03:25 So I think in a way, while it is looks like in a way ridiculous, a lot of people were quite generous to pay 200% So while people complain about too many vehicles on the road, it is those who paid fancy taxes. Who are basically shouldered the burden? Speaker 1 03:44 Yeah. Dhananath Fernando 03:45 Maybe to I don't know for what reason why they pay 200% But you also have to be thankful. So that's because I feel if you look at because they were they were without charindra chandrasena 03:55 the ability to buy a vehicle for four years. Yeah. Is it four five Speaker 1 04:00 years? Yeah. And they bought another thing is because of that the secondary, the the second hand market also the price dipped because there is new inventory that came into the system, so that gave people who couldn't afford to buy a vehicle, even a used one, it gave them a kind of a new perspective where you can at least buy something used or second hand from the market because even the second hand market in Sri Lanka because I mean it's just demand and supply. When supply doesn't come in, obviously demand goes up and with demand going up, prices go up. So when vehicles started coming in in in the in the in the hundreds or at least in the 1000s, what happened was it actually helped the second-hand market also. Still the second market, but lot of guys say still overpriced, but still there was a dip. There was at least maybe I I don't know about a number, but there was a dip. So that is also a good thing because end of the day, it allowed a segment of society who couldn't afford even a old car. It gave them opportunity. So yeah, so I'm comparative. Dhananath Fernando 05:01 But again, it doesn't mean that we do not invest in public accounts for both. Yeah, absolutely. Definitely have to. But I'm considering it with an if scenario. If we haven't charindra chandrasena 05:11 done it, if we had not done it, how would the revenue have come? Absolutely. Dhananath Fernando 05:14 And then when we hit this cyclone and all that, things could have been in a very very difficult. Speaker 1 05:20 Yeah. So the only that's the thing. The thing is, then like the only thing in government, like government's main revenue is taxes, right? So you have apart from import taxes and all that, and all these comes through the gate. But if you look at, if you look at the direct most easiest way for the government to get revenue is VAT. It's nothing. The system takes care, takes care, takes care of itself, and there's 18% sorry, 19% return on that, right? But vehicles is 200 plus 250. So for you know the the ratio is you know that is 18% This is 250% So for the government for doing nothing because you can't you can't abscond anything. No, no. For example, income tax and all that you have to go after people, you need to all that you need to have officers who go after and try to get the tax revenue. That is pretty straightforward. But then another one is it comes through the customs. So the so the money just comes in, just reeks in. So for them, looking at that point, like what Dana was saying, the government's what you call 1 trillion surplus. Basically, this was one of the driving factors. So, yeah, it was good. It was yeah. It was it was you know the opening of the vehicle imports was like a really good thing what they did. But again, again reiterating public transport has to be fixed. Yes, yes, to be done, and we can with pledging money from India. Yeah, Dhananath Fernando 06:38 it means mainly also for rail, track, and public transport. We can utilise some of that money actually to to do that. Speaker 1 06:44 Okay, actually, I'll move to Riyadh to highlight. Okay, what is your highlight? The best thing for you. Best thing for me. I think the best thing is in if you look at the government procurement system. I think lot of procurement. There were some hiccups at the beginning. It normally happens, but even recently there was a huge tender that went through. I know I through certain certain people that I spoke to, they all said it happened without any kickbacks or anything like that. So I think the tendering procedure when we are looking at which was a huge problem for continuous governments was the tendering process because tendering was done in such a way that it you know it it basically helps one particular guy or either they fix it from inside or whatever you call it. So I think this time at least what has happened is I think the tendering process or the government procurement process has been relatively clean compared to the past. So I think that is a good thing that has happened because that has been the epitome of a lot of the corruption in Sri Lanka, where we we had all we had all these things, where even some where we had all these things in the past, like you know the the lot of the scams that have happened. So I think I'm not saying anything is 100% You can't have 100% clean society. That doesn't happen because end of the day, you're all dealing with people, right? But what you can do is you can have people who are who who are pretty transparent, and you can have systems which actually promotes transparency. I think that should be the government's next next move. Should be basically how do you make it even more transparent? It's a it's a much more transparent, let's say tendering or procurement process. So I think that's how they're going. But currently, I feel that the procurement process has been relatively to the past with this government, especially with the president at the helm of it. I think it has been relatively cleaner than the past. So that's like, charindra chandrasena 08:32 and and I I've heard from people that some officials are less inclined to take kickbacks now. Speaker 1 08:42 Yes, charindra chandrasena 08:43 even if they offered. Yes, because they are worried about what Speaker 1 08:46 exactly will charindra chandrasena 08:47 happen, and that's a good kind of fear. Speaker 1 08:49 Exactly. Yeah. So I think things like, for example, you know, income declaration and all these things are part of it. No. So I think that also helps the whole ecosystem of the keeping things clean because in the past you take 10 years back, the I mean income declaration and all was there. I mean there was not even income tax files properly. So now I think that was the whole ecosystem has kind of changed. Yeah, especially Dhananath Fernando 09:11 on on that point, I think the next step is. I'm not sure I'm jumping the gun. The this has to be supported with the public sector reforms because ultimately probably the official who is now reluctant to take a bribe, he's basically you know he probably he may have this was like his gig job no gig job in the sense you know he's this is this bribing taking bribes this is supplementary income so when you okay now when you have that fear you have to restructure the public sector that you pay them a decent salary. Speaker 1 09:43 Yeah. Dhananath Fernando 09:44 So you, of course, you may not be able to, to the extent that they are, you know, taking the bribes. But you supplement it with the proper structure, qualification. You get a decent salary. You get the decent people. That has to be supported through because otherwise, they will check the system. Speaker 1 09:58 Yeah. Dhananath Fernando 09:58 Even you know these. Time period would be limited. Yeah, charindra chandrasena 10:02 in terms of public sector salaries, right? Now we have been talking for a long time about either cutting the public sector down or increasing the salaries, and maybe you know whittling it down to the best people without just you know packing it in like like in a salmon tin, right? But what has there been a scientific sort of research done on what the ideal salary scale should be for the public sector compared to the cost of living, right? Because I'm I'm I. haven't I don't know you guys might have more access to that kind of research, but I'm thinking okay. So increase public sector salaries. What is done now is when it looks like absolutely gutter level salaries, then it's increased. That increment is provided and may be provided in stages, right? As as it was done early this year, but in terms of a scientific method, is there Dhananath Fernando 11:13 one? Not. I don't know actually. I Speaker 1 11:15 don't think anything has been done. Yeah, been done or Dhananath Fernando 11:17 not? Actually, I am aware that there was. And this should be charindra chandrasena 11:20 a dynamic study, right? It would change every year, maybe. Dhananath Fernando 11:23 I am aware that there was a study was done on the pension reforms some time ago, but not to my knowledge on the public sector reforms on how the salary should be Speaker 1 11:33 salary should be priced out. Yeah, but Dhananath Fernando 11:35 what I think the general I think there was a McKinsey study. I think for private sector and all that, but generally it was said was your salary has to be benchmarked with the cost of living. Yeah, exactly my my point. Absolutely, and your I mean if you are incentivizing the performance, it has to be a promotion. So people who are performing Speaker 1 11:53 yeah Dhananath Fernando 11:54 will climb up the ladder, and the others will get a you know salary which is manageable with the cost of living. Speaker 1 12:02 Yeah, Dhananath Fernando 12:03 not to my knowledge. I I don't know. They may have been done. I don't know. We don't know, and I think Speaker 1 12:07 worldwide also. I'm not exactly sure because incomes vary and depends on where you live. For example, Sri Lanka is a small place. Now, if you take a huge country like the U.S. living in the Midwest, living in living in the Midwest, and living in California and living in New York is completely different, right? The pricing. So Sri Lanka also you get the very Sri charindra chandrasena 12:28 Lanka is living in Kalam. Kalam is much more expensive than say living in Amparo or wherever. Exactly. So Speaker 1 12:34 I think living in like grand spec middle of the city is probably Colombo and probably Candy. To be honest, because in charindra chandrasena 12:41 Colombo, I mean, a regular bath patter even is like 500. No, that's the thing. So in other Speaker 1 12:46 countries, you have ballpark figures. Now, for example, in the US, you get something called the Big Mac Index. So you can figure out on that income, you can figure out how and what affordability is. But in Sri Lanka, you don't have anything. Only thing is, I think the closest what we have is probably the Badkar index that we do, yeah, yeah, right. So we are the only people who do something like that. So that is something I suppose for the government to ponder. Like now, for example, I would look at something that when when I was in media with another colleague of us, where we did something called the Koto Index. Just for the fun of it, we just did. It's not based on any economic, maybe some very loosely based on economic fundamentals. But the thing is, you get these things like that, which sometimes it doesn't show you 100 percent. Like it's not 100 percent accurate. But if you're in the ballpark, 60, 70 percent, it's good enough. Then you can kind of figure out where you need to go. So I think there is something up to the government and the central bank and all to get together and see, but I, I don't know. I mean, I don't know. Even if it's done in other countries, I think it is done in some some other countries. But it charindra chandrasena 13:48 has to be more more scientific than this. No, that's my point. No, but right now it's like okay, it looks low and therefore will increase. No, Speaker 1 13:55 the problem is sorry because the Gini coefficient. So you take the you take the disparity. So if you look at that way, it's there's a huge variance, and that is something which I have kind of argued also because of the. I think the last programmers we spoke little bit on it is the before the financial crisis, 87 billion went on to about 73, 74,000,000,070, 3 billion, I think. Can't remember, 7372, somewhere there, like early 70s. So after that, now we are 100 billion. Like after three years, 2022, not three, four years, we are at 100 billion. So in that four years, 100 billion, poverty is still at 22. Am I correct? Poverty is still at 22. It's now Dhananath Fernando 14:33 14 percent. It has up to 14 percent, is it? Speaker 1 14:36 Okay, but it was 22 some time ago, right? So that means a lot of the income that an economy grew by more than 25 percent. I'm looking from the from the base, from the from the drop to where it is now. Now it's 100 plus. Where is that money gone? I mean, huge income disparity, right? So even the vehicles that have been bought, probably what a lot of people argue is probably the one or maybe 2% of the country. Who can afford it? High-end professionals, businessmen, and all that. So I mean, you don't get normal people who have bought, right? And you have seen the vehicles that have come. Nothing, nothing. I'm nothing against them. And we have seen the Ferraris, the Land Rovers, the the the high-end vehicles that what you call the G waggons and all that. That is fine. They are paying taxes and bringing it. That's absolutely okay. But the thing is that money from that 74 when we fell to up to now we are 100 plus that money I think proportionately it has gone it has been more upwards mobilisation than downwards so I think that's going to be a huge problem to address in the future taxation is one taxation is one method but then again that's other side of taxation also you need to bring the taxes on essentials also, like for example, building a house, right? Where a construction cost is. I mean, then I will can go into much more granular than me. That is one. Second is food. I mean, some of the imported food to Sri Lanka is like the taxation is ridiculous. I mean, it's it's it's it's almost in. I mean, I think not not almost. I think it's inhuman. So I think those are the things that have to happen because if the taxes come down, it's the masses that can afford it, affordability. So then the price of food would come down. Building a house, everyone's in Sri Lanka. Everyone's dream. I always say is two things. You know, is one thing is buying a car that you have you have mobility in four wheels. That where you go up, you go upward from two wheels into two wheels, three wheel into four wheel, right? And the other one is building a house, having your own place, right? So those are things for if you want to do that. One thing is just go through everything. Cars are taxed at 200% I think Dana, you are more, you are more, you are more district construction. I think Dada knows this better than me. Dhananath Fernando 16:42 Yeah, yeah. It's like how much is it like? Yeah, it's about 79% on tiles, about 33% on steel. About cement teas. Yeah, cement is also, if I remember right, 33% Yeah, yeah, tiles charindra chandrasena 16:55 are crazy, and that adds so much to the criminal cost. Speaker 1 17:00 Exactly, everyone who builds a house, what they say is, you know, the bathroom only kills them. Yeah. Right. So bathroom basically kills them. Yeah. So I mean, I have enough friends who have got stuck. They are saying, you know, we went like this and then we ran out. Yeah. So Dhananath Fernando 17:10 basically, tiles are for 80% 79.9% Roofing tiles are 78% Wow. Cement is 64% Steel bars are 33 percent, and sanitary via is 46 percent. So aluminium is 49 percent, 50 percent. So that's a totally bad. So Speaker 1 17:29 that's another one. So when the when the whole rebuilding, whole rebuilding thing goes off, one thing is it's very expensive to do it, and the other part is from the rebuilding, the money actually goes back to the government. Dhananath Fernando 17:39 Not this is not the even this is not going to the government. Yeah, this this is going to a few individuals. Individuals. Speaker 1 17:44 I mean, the people who profit will be the government will be getting because the high taxes. Oh no! Actually, you're right. Actually, because some of the thing is actually domestically produced. So then what happens is the pricing is lopsided. Yeah. Because they are not competing with the they're not competing on par with what you call on on par on trade. So what happens is you make supernormal profits. So there are particular people in the industry and all that in particular industries that actually have supernormal profits from this. I mean, it's very straightforward. Yeah. charindra chandrasena 18:13 Okay. Moving on to the low lights. Speaker 1 18:18 Okay. charindra chandrasena 18:18 Starting with Dana. Dhananath Fernando 18:20 Yeah, I think actually I have two, but I'll share the first charindra chandrasena 18:25 one. No, you can share both. Dhananath Fernando 18:26 Share both, okay. Yeah. I think the first one is the gambling act. I think they could have done a better job. In fact, I was quite surprised that we went to Parliament. We present not because we presented it, but I think it was commonly agreed that the need for a proper gambling sort of you know gaming regulatory authority, and this could have been a sunrise industry to earn forex. I'm of course not promoting anyone to gamble, but this could have been a golden opportunity for Sri Lanka to earn this tourism and all that. Everyone complains about low spending tourism, all that you could have actually fixed it, and we missed that opportunity because it ticks most of the boxes. Everyone wants forex revenue. Everyone wants to boost tourism. Everyone wants high spending tourists. Everyone wants the I mean the SMEs to align. No, charindra chandrasena 19:19 but for our viewers also tell us what happened exactly. Dhananath Fernando 19:23 There was this gambling act which was passed in the parliament. charindra chandrasena 19:26 Yeah, Dhananath Fernando 19:26 but it was a pretty much A level students' job, which didn't which hasn't covered most of the key areas. It hasn't looked at the gaming overall. charindra chandrasena 19:40 Did it cover online? It hasn't covered Dhananath Fernando 19:43 online. No, it has. What they are, what they are saying is, when the regulation being gazetted, that can be covered. But that could have been more broad, and we could have easily get the support from Singapore or from the World Bank or multilateral agencies to do a better draft and to pass it because now. You are not going to get what we expected to get. So I'm. That's I think a low point because it could have been a great opportunity for a lot of industries, lot of forex. I think the estimation was about a billion dollars. But now I think we will be leaking out because all these transactions happens in somewhere else. You are just getting like because even you are paying for what you bet there, your price money will also be taken there. Yeah. So nothing is coming into the chart. Speaker 1 20:34 Yeah. So the chips are basically issued. I mean, gambling works on gambling get chips, right? So basically, what happens is the chips are actually issued in another country, because these guys they come down. These all, these are all the what do you call the high ballers, right? So they come down here, they do the thing, and when they win, know they lose. Whatever chips what they have left, they can go back to their country and settle it. And so that's am I correct? Yeah, yeah, yeah. So yeah, no, but charindra chandrasena 20:58 but how how would the act have kept it in Sri Lanka. Yeah, so the act Dhananath Fernando 21:02 could have basically have charindra chandrasena 21:04 easy regulation, more regulation, and therefore there is an environment here for Dhananath Fernando 21:09 absolutely. Yeah. So the basically what we recommended was it has to be pretty much like every the regulator has to regulate having an online, I mean a digital system on all the bets, because then you know exactly how much bets that was pretty much produced per a day or per a month or a year, which is all digitally recorded. Yeah, so the revenue has to be paid on that basis, because now what they are declaring as revenue is completely like I mean, we all know how they do it. So, but we need. So, was there charindra chandrasena 21:42 a case of the casino owners in the country at the moment lobbying for the act not to go through? Dhananath Fernando 21:50 Maybe that may be one option, one one scenario. But I think at the same time, if we were to attract a better, I mean, better operators like what Cinnamon Life has done, you also need to have a proper regulatory mechanism because no one, I mean, proper operators really do not want to come and operate in a grey set of dodgy setup. Dodgy setup. So that could have been a golden exactly. So then also the revenue government revenue could have been increased, like the vehicles. That could have been actually a real, you know, we could have bridged the gap. Yeah, how far we are losing out from? I mean, not to that same extent, but to an extent. Speaker 1 22:30 And then another one is, I mean, you are you are much more knowledgeable in this. The online beating, that's another huge, yeah, that's another huge market actually. Yeah, yeah. So Dhananath Fernando 22:40 that's something that we again you need Speaker 1 22:42 regulation for that. And the other thing is you you have to think about when it comes to gambling. I mean, India is a massive market, billion like 1.3 billion market. China is another market. So in China, a lot of the gambling actually happens in Macau. Macaw, yeah. Yeah. So the idea was the charindra chandrasena 22:58 vision was for Sri Lanka or a part of Sri Lanka to be the South Asian Macau, Speaker 1 23:02 yeah. And we are Dhananath Fernando 23:03 benefiting purely because of India is gambling is not allowed. Speaker 1 23:06 Yeah. Dhananath Fernando 23:07 So a lot of Indians are moving here. Exactly. For that, it's easier. So we are basically benefiting from from that regulatory framework. Yeah. Speaker 1 23:14 So the thing is two huge markets, and the other one is like you unlike unlike Macawini kami, you can convert when you are done with your whole pitting scenario. If you want, you can convert it into holiday and go and see the country where Macau is just a city, right? And they just gamble and they kind of go off. So those are the things I think that we would have benefited, like Padana said. But throw such a regulatory framework. Yeah, yeah, yeah, yeah. Dhananath Fernando 23:39 Okay. Second low light. Yeah. Second one is on the electricity act amendment. I thought it could have, it should have kept as it was before without the amendment, because now I am not very sure about whether we can attract investment. Only time will tell whether actually this has the potential or not. Yeah. But I think this could have been a opportunity that we just charindra chandrasena 24:08 just briefly there are again people might not be yeah people might not yeah so Dhananath Fernando 24:12 electricity we the there was a new act in 2024 which is first to unbundle unbundle generation transmission and distribution, and the 2024 Act was further unbundling the generation, coal, wind, hydro, yeah. So all the generation sources, Speaker 1 24:36 fossil and non-fusing, yeah, for the unbundled. Dhananath Fernando 24:38 But the new act, there was an amendment actually already puts everything Speaker 1 24:42 into yeah. So basically, Dhananath Fernando 24:43 re I mean, okay, they are unbundling it generation transmission institution. It is good, Speaker 1 24:48 but yeah. But Dhananath Fernando 24:49 again, all the generation based on the sources are bringing under the same same Speaker 2 24:53 yeah Dhananath Fernando 24:54 same company that couldn't have shouldn't have been done. Because I think that would limit the investment opportunities. Speaker 2 25:02 Yeah. Dhananath Fernando 25:03 Same with on the on the distribution. But I think we had multiple conversations. But the the the new architects of the act says no. We have more provisions like retail market, proper retail market, which is more competitive than the previous the provisions of the previous act. So it has options. So we had to wait and see. I also didn't understand some of the specs on a more engineering point of view. What they explain, but only time will tell whether we can attract that 5 billion or 6 billion US dollars to really upgrade the system and provide quality electricity. I think I'm sure most of who are watching may experience under nose power cuts, power Speaker 1 25:45 cuts, the the frequency is not fluctuation from fluctuation. I mean, charindra chandrasena 25:49 I think there are enough stories to tell about you know features that have got burned, TVs that have got burned because of you know that doesn't get talked about enough. Yeah, because we we we are proudly the only nation in South Asia, so-called, no, that has uninterrupted electricity supply. Speaker 1 26:06 Yeah. charindra chandrasena 26:06 So then people point to Pakistan, which has you know regular. But even Speaker 1 26:11 India has its own problems. Exactly. Yeah. charindra chandrasena 26:12 So yes. So we should be proud of that, but also the bar is low. Speaker 1 26:17 Exactly. charindra chandrasena 26:18 Right. So can we actually provide high quality, like you said, high quality electricity without those frequency, you know, fluctuations like that. Speaker 1 26:27 So it became a big issue because I last week I went for this forum, which was on renewable energy, and they said that Sri Lanka per capita, if I'm I stand to be corrected, but I remember they were saying that Sri Lanka per capita has overtaken China on solar on generation of solar energy, so solar because now Sri charindra chandrasena 26:45 Lanka per capita has overtaken China Speaker 1 26:47 on on solar energy. So what they were saying is that Sri Lanka they expected something like I can't exactly remember the number. I think it's four times or they or three times or something, but they expected solar. That's why now this because of rooftop solar. Because the rooftop. That's the reason now because sometimes they tell you, you know, a poet. Can you please switch off your roof roof solar? Because of that. Because what happens is they can't load balance because this generating this generating from this end. Yes. And then you have to manage the load balance. So in Sri Lanka, the I think the load balancing management is done somewhere in Malabar somewhere. That's where the epicentre is. That's where the unit is. Where they have to generate from the base power. So what happens is normally in any country the base power is normally coal, and then on top of that you layer it with the other sources you have. So in Sri Lanka, obviously, and the thing is the coal plant you can't stop it. I mean, if you start a coal plant, it has to keep on going. You can't switch it off and switch it on like a diesel plant. You can't. So that's the reason where on a poor day, where industrial production is low, where people are just at home, there is a oversupply. So what they are saying currently is Sri Lanka, the power generation has currently there is no like there is no huge demand. It's currently okay, but the problem is the the the energy sources that come in is kind of disrupting the system, especially with this roof solar because roof solar is entirely financed by private. Nothing to be the government. I mean, obviously there'll be a couple of government buildings having it, but 99% is private and it keeps growing. Everyone is going into that. So because of that, they are saying there is an issue like that. Yeah, but but it's very interesting that that per capita we are. Yeah, per capita. That's what they say. charindra chandrasena 28:27 I mean, head of China. Yeah, China is obviously. I mean, huge population and all of that. Yeah. But China is going to be the global leader in so absolutely. Speaker 1 28:37 But the thing is, Chari, you know, China is a country that actually produces the panels. We buy it from China, right? So obviously, China. That means this could be so much cost, and plus you start import taxes and all that. China is not going to have those taxes because domestically produced. Absolutely. So it's going to be what cost is going to be a fraction of the cost here. But even with that, the reason why we are having so much a roof solar is simple reason is our electric electricity production and our cost of electricity per kilowatt is very high. I think it's the highest in the region, right? So last year charindra chandrasena 29:06 Verite did a study and which which proved that we were the highest in South Asia. In the Speaker 1 29:11 region, I think in certain industrial applications we are a little bit lower. But then again, it's the household household consumers that pay for that, yeah, yeah, yeah. Cross subsidy. Dhananath Fernando 29:24 There's a cross subsidy. There's a cross Speaker 1 29:25 subsidiary going on. So whether it's a household guys, people who have houses and all that. I mean, people who you are basically paying for the industrial production. Where in other countries sometimes it's a cross subsidies the other way around. The industrial guys sometimes pay for the this thing. But I'm not saying even that is correct because then there's no true price reflection. Because when it comes to industrial production, the more key thing is electricity. Because without electricity, you can't do anything. Yeah. I mean, you mean as a factory, you go back to the stone age. So those are the things that that I would kind of tell the government to kind of look at. Yeah. As Dana very rightly said. That unbundling thing that got rebundled that has really bungled things up now. charindra chandrasena 30:05 That's the thing. Yeah. Over to you, Riyad. Oh yeah. What is your low light? The worst thing that happened this year. Speaker 1 30:14 Okay, so I will go back to Ditwa, but it's nothing to do with Ditwa, where the budget was passed just there, right? So I have I found a huge problem with the budget on on the military because Sri Lankan military budget is for the three armed forces for 407 billion. Out of that, 89% is recurrent expenditure. 9% is capital expenditure, right? Sorry, hang on. It's either 9% or 11% Can't be corrected, but sorry, sorry, it's 89% is recurrent. is recurrent and 11% is yeah that's right 11% is 11% is basically capital expenditure. So I'll just go comparing the Sri Lankan Air Force, which which was at the helm of operations because this time the flood was such landslides and all that you can't even send a boat there because it is too team too dangerous and lot of the guys couldn't get. So it was basically an air operation. The Sri Lankan Air Force won the budget allocation for capital expenditure is 16.8 billion rupees, not in dollars. Sri Lankan Airlines bailout was 20 billion, which was greatly passed under the taxpayers, so you can see the problem. That's why we we we always speak about this. We need the SOA reforms because the reason is you can't keep this going. The air force didn't have enough equipment. That's why they said no. We are having having a massive standing army. You need the equipment equipment to mobilise them. I mean, you can't expect battalion at Paragoda to get on the road and march to Candino. This is this is not you know this is not the 18th century warfare, right? So the thing is, you need to have the you need to have the hardware to to basically utilise the military that you have, and we have a per capita a very large military, right? I think even though the British, I think one to one, I think what they say is the Sri Lankan army is bigger than bigger than the British army, which is an active worldwide force. So, but the thing is, they have the equipment, they have the ships, they have the planes, they have the rescue, they have everything. So the Sri Lankan air force didn't have enough helicopter because you can't land a helicopter in a flooded area, right? Because one thing moving what you can't land it in unless there's a helipad you can land it on a building. So it's basically a specialised helicopter for rescue, which has a side crane, right? Which goes down. There's a harness. You go down. You put a harness and you bring one by one up. So a lot of the helicopters, what we have, we are doing a huge roof rescue or flooded rescue. We don't have the endurance for that. There are specified helicopters which do this kind of work, right? We don't have enough of them, right? And because of that, it became a big issue. That was the reason why in some places it was a massive operation just to evacuate people in other countries, let's say country with the right equipment, they would have done it much easier. So Sri Lanka is again going back numbers, 20 billion, which was basically which was basically handed over to the taxpayer, and the Sri Lankan air post capital expenditure 16 point 8 billion. So I mean that itself shows now something is wrong, Dhananath Fernando 33:20 exactly. But interestingly, there's a new will provide some advertisements. No, for Sri Lanka Airlines, they have they have advertised for a new CEO. Ah, okay, that's a good thing. Okay, okay. After eight nine months again, they have re-advertised. I think. Yeah. So we'll we'll we'll see whether we can attract a better. I mean, but I think on Riyadh, whether charindra chandrasena 33:43 they'll be open to a foreigner or whether it has to be a respective foreign or local. Yeah, it doesn't really. Yeah, but I think Dhananath Fernando 33:50 on Riyadh's point, I remember my mentor, Captain Elmo, once writing about this because you remember, Chari, there are multiple times these helicopter crashes took place and some pilots actually passed away and all. Yeah, they paid with their life. Yeah, they paid with their lives. So I think he has pointed out the absence of the proper. I don't know the equipment or this terminology, but to the the equipment which is required and how old that they're outdated, charindra chandrasena 34:17 that they're not advanced enough for for the modern for modern cruise. Yeah, that's problematic. So before we wind up, just in terms of sectors, guys, right? Did any sectors surprise you? Now we've spoken about the car imports, right, and how how much that pent up demand was. Maybe some people were surprised by that, but beyond that, are there any sectors that that surprised you in terms of the amount of revenue it generated, the performance? Was it exports? Was it remittances? Was it tourism? Was it what was it, or any any others, or customs? Dhananath Fernando 35:00 Yeah, in terms of revenue, definitely customs will be medical imports. But in terms of sector, I think it's like pretty much the slow and steady general growth that what brought us where we are today. It's exports about 5% 6% growth. Actually, tourism while the numbers crew, the average earning earnings charindra chandrasena 35:20 are not, yeah. Dhananath Fernando 35:21 Not up. But charindra chandrasena 35:21 but did remittances surprise? Yes, remittances. Remittances because and and and does that say what the government says it says? Dhananath Fernando 35:30 No, maybe that charindra chandrasena 35:31 that that there is more confidence among the the expats and the diaspora and the foreign workers about sending money through legal channels now and not going undeal. Yeah, Dhananath Fernando 35:44 maybe two things. Yes, one thing definitely whether it's maybe reflection of confidence or also it can be also a lot of people actually left the country. So there may be some. Of course, everyone who left for the crisis may not be sending. I mean, there may be some minor proportion, but it may also impact. And also the third one could be I don't I don't know don't hold me into this that you remember there as a 15% tax on dollar earnings which imposed newly earlier there was all export services exports were exempted yeah so maybe I don't know some being categorised or like some are sending it under the remittances channel, maybe I'm not saying it is the case. There may be cases, but I I know the central bank now has very strict way to pretty much monitor it. But definitely there may be there may be confidence, no doubt about it. Riyad, Speaker 1 36:38 you have a sector that surprised you in a good way or bad way? No, I mean a lot of the sectors have done relatively okay. I think agriculture did quite well, looking at the numbers. But then again, on the fourth quarter, of course, it's probably going to paint a very exact opposite of it. So that is something to look forward to and see how fast they recover, right? Because I think agricultural recovery they can do it relatively fast. I think I don't know about the period because I am not a agrarian. But the the thing is, what I when I speak to people who understand the the topic, what they say is the recovery can be fast as long as they do it quick because you're growing it. I would say surprise financial services has done well. That's that was actually there was no surprise because with the vehicles coming in, that's why a lot of things are based on that vehicles coming in. Obviously, bank loans, leases, finances, insurance, all that is part of that package, right? So all of them are going to do well. Dhananath Fernando 37:38 Actually, the surprise was I didn't expect this number of vehicles to come. Yeah, exactly. That's that's a certain surprise for a lot of people. Speaker 1 37:45 Yeah, charindra chandrasena 37:46 for me the surprise was tourism actually in terms of how much better it could have done. Could have done. Yeah, we had that very initial podcast. I'm still on that. Right, you can you can beat 100 drums about exceeding the 2018 figures, Speaker 1 38:04 right? charindra chandrasena 38:04 But that doesn't really mean anything because this year was it was primed to to shatter all records. Reports just go above. Speaker 1 38:12 And to be honest, I think and the charindra chandrasena 38:14 earnings are not that amazing, huh? No, the numbers are amazing. The earnings are not that. No, so the thing Speaker 1 38:20 is very simple. If you look at, I mean, if you go to YouTube and check and click and all these YouTubers from overseas who do their travel experiences here, most of them are not these high-end guys and all that, right? So they are putting their reviews actually. I think bought in the guys. And one thing when they start, so what they do is every time they go to a restaurant, right? They go to a nice one. I mean, not to a typical pilau place. They do the costing for that also. They say kotu. They say kotu. I bought a kottu 1000 baht. Putang. It comes saying dollar so much. Then they say I bought this so much. I bought this so much. Then they go to a high end or relatively good hotel. Let's say three star hotel, and they say you look look at this guy. It's really nice room, big bathroom, pool, amazing food, everything. The whole thing just costs us $100. So from that one, so good and bad of that is one thing is the YouTubers have basically kept Sri Lanka alive with the foreign money. Yeah, I think it's a really good place to come, especially saying Kalambo is a clean city. charindra chandrasena 39:17 That's my point exactly. How much, for how long are you going to rely on user-generated content on on the goodwill of people to come on the reviews? Exactly, you know there has to be a so they Speaker 1 39:28 come here. They know it's a budget destination, and for example, even things that trickle, good or bad, like even for transport, first thing they say, come there's a you know there's a pick me up there's YouTube sort of YouTube sorry, what's other one? Pick me and Uber. Uber, yeah. They say Uber works here perfectly if you if you already have the Uber app. So let's come to Kalamu, it works perfectly where you want to go and all that. So, but the thing is, what happens is it's a good experience for them because their cost comes down. When their cost comes down, what happens is our income goes down. Yeah. So for that, I don't know the government. Should do something, maybe talk to the the big boys in the industry through the jet wings, through the eight conspensers, the John Keels, and all that. All right, and try to figure out what to do. Yeah, charindra chandrasena 40:09 so we have to wind down, but just briefly, the performance of the government. Not we did a one-year performance thing, but this year was the year where everything was settled. The house was sort of put in order. The settling in had happened. All of that, right? The furniture was in the right place, so it was about getting things done. Yeah. Good or bad? Dhananath Fernando 40:37 I would say good. And interestingly, not many people have realised 25% of president's time period has already been passed. 1/4 is already gone. 60 months, 15 months have gone. Correct. So first 25% is now done. Done. So you have 75% So I think they haven't done anything drastically wrong. There was a. It's a challenging year. You should not forget the U.S. tariffs. Of course, the unfortunately cyclone and charindra chandrasena 41:08 20% of the 25% of the term, no Dhananath Fernando 41:11 of the term. charindra chandrasena 41:12 Yeah, 20% of the term. Dhananath Fernando 41:13 25% no? Because 60 months, five years, five years, yeah. So 60 months. Yeah, Speaker 1 41:18 he's right. charindra chandrasena 41:19 Yeah, yeah, yeah. Ah, because now it's okay. Yeah, it's 14 months now. It's Dhananath Fernando 41:26 almost 50 years. Yeah, 15 months. Yeah, yeah, it's a Speaker 1 41:28 shade behind 50. Yeah, charindra chandrasena 41:29 yeah. Dhananath Fernando 41:30 So 1/4 has already gone. Obviously, so I think the next 75% probably another 25% will go for like you know battling with the aftermath of the natural disaster, Speaker 1 41:44 yeah, Dhananath Fernando 41:44 and then I think the rest of it, and when you are getting closer to the last 25% it's a election for next year. You know, next term comes in charindra chandrasena 41:53 exactly. Dhananath Fernando 41:54 So it's interesting, but yes, no, no. I think the recommendation could be: do not, you know, our rescue will be not based on IMF, as I have always been saying, not because of any bilateral support. There's all would be like you know supplementary reasons. It will always be on reforms, and we should not forget about the land reforms, the labour reforms, the capital market reforms, the productivity reforms, bringing the competition, the trade reforms, the custom reforms-all that is where if Sri Lankans want to see a prosperous country, it is not because IMF extending 200 million. It is not because Dr. Jaya Shanga extending 450 million. It is not about anything else. It is all about what we get, how we get our work done. So that's where I'm going to put my weight, even for 2026. charindra chandrasena 42:48 All right, we'll talk about 2026 in detail next week. Yeah, same question. Good or bad? Government's performance 2024 only. Sorry, 2025 only. I Speaker 1 42:58 think it's good. I think it's. I won't say it's pretty good, but it's good. I mean, in in in all sense. But with that, I'm seeing one problem also. The government's performance is largely circle around the president, right? President is the so at the moment, president is the bowler, president is the batsman, president is the keeper, and president is the field also because he's playing. I mean, to the point. Anyone who has seen that interview, I mean, that press conference or whatever little gathering that he had in Kennedy. I can't remember one of the disaster areas, and all the questions that were coming to were coming to him are things like some guy asked something about a bouser. Yeah, that's not something you ask from the country. Yeah, right. So, so I think charindra chandrasena 43:41 we did a whole show about whether he's micromanaging Speaker 1 43:43 exactly and somebody he Dhananath Fernando 43:45 commented also you know accusing us like oh no yeah exactly Speaker 1 43:49 yeah so the thing is okay he is handling everything that's a good part but he's he's doing the job but the problem is suddenly let's say God forbid but let's say something happens and he's not there in the picture. I would say tell everyone if you all watched that there was a TV miniseries called a dark comedy called Death of Stalin. You know, I think I think some people wouldn't have watched it and they saw the commotion that happened when Stalin died. Right. So I just hope it doesn't work because there is no proper chain of command or some. That's what I see. Like no, no, it's it's entirely entirely his government. His government in a way charindra chandrasena 44:28 that it has not been with any other exactly for him. Speaker 1 44:31 And and whatever influence that comes from Palavata, also good or bad, I think he's kind of managing it because Palavata is also powerful. charindra chandrasena 44:39 That's the only thing I would say to wind up Riyadh is that when people say that he it's a one man show and why doesn't he have anybody and the other side of it is how much pressure is he managing exactly in terms of balancing exactly the two factions of the government exactly the NPP faction and the JVP Speaker 1 44:58 faction yeah charindra chandrasena 44:59 and. So when when an incident like MP Ranvalas happens, then he has to really put his weight there. Let's not go into that incident. But what I'm saying is then then he has to balance between the carder and the the new wing. Yeah. So the thing is Speaker 1 45:19 just to just to bring back to I think one of the questions that you started right at the beginning is basically on I said really the good part is on the corruption part and all that and I think he has been one of the cornerstones of actually limiting corruption right even there were some recent tenders and all that that he was clean on he said no follow a process right so that's what I'm saying without him it's very difficult to judge this government. You know, the proposition charindra chandrasena 45:44 was saying before the election, before the presidential election, was that this government will fall in six months. Yeah, and some people are saying three months, and some people are saying nine months, one year like that. Dhananath Fernando 45:52 Yeah, charindra chandrasena 45:52 if not for AKD, Speaker 1 45:54 probably might could have would have happened. Could have happened. Could have happened. Yeah, arguably, charindra chandrasena 45:56 yeah. Yes. So we have to wind up now, Dara. Anything you want to say? Dhananath Fernando 46:02 Yes, of course. Oh my goodness! Yeah, I will forget that. So you can become an Advocata insider. It's just 12,000 rupees per year, 1000 rupees per month. So if you are an Advocata insider, you get exclusive content on currency depreciation, or appreciation, or vehicle markets, gold market, stock market. That's new segment coming in next year on the stock market, and anything that relates to your business. And you should not. I mean, we are not talking about these 1 billion rupees companies. Like we are talking about the tailors, the barbers, who really the economic decisions are going to impact, but they really do not know how to make. I mean how to connect the dots, so we are providing that that explanation in simple terms and bringing you up to date, and it will be mainly Sinhala, and it's targeted for pretty much the common man. But what we want to do is to build a community who support reforms, because as I mentioned short while ago, our rescue I mean our way out is through reforms, so please consider to become an Advocata Institute. You will get exclusive content weekly, and we are looking forward to have more networking sessions and things like that. You will get like an insider, actually an inside review of how policy is being drafted and things like that. So become a supporter that your your support rather than your exclusive content will help to upgrade the economic literacy of Sri Lankans and to get this conversation going and to provide content like this, which is completely free of charge. Speaker 1 47:30 And and your support actually helps us to be truly independent, where we can speak our mind. So please do subscribe. Dhananath Fernando 47:37 Absolutely. charindra chandrasena 47:38 All right. So we just finished our last programme for Speaker 1 47:43 the year. Yeah. charindra chandrasena 47:43 So before we wind up, just want to say to our viewers, if you are new here or if you've been here from the first show, thank you so much for being a part of this and following us, liking us, and listening to us and watching us. We wish you joyful Nivea, happy 31st night. It's not ideal circumstances, but we hope you have a great year coming up in 2026. Thank you everybody, and thanks Dana, and thanks Riyad. Yes, being part of this show for the past few episodes. Hope to see more of you guys in the new year. All Speaker 1 48:22 right. All right. Wishing Dhananath Fernando 48:23 you the team also all the very best. Speaker 1 48:26 And wishing the public all all the people who subscribe to all the people who watch us happy new year. charindra chandrasena 48:31 Happy new year to everybody. All right. Cheers, mate. Speaker 1 48:34 Bye Unknown Speaker 48:34 bye. Bye. Transcribed by https://otter.ai