Category Archives: economy

Time for privatization again

We have a popular government at the moment. A government that keep on repeating that it doesn’t believe in privatization and that privatization is bad in general but a government that doesn’t believe in any of that. Those are just rhetoric to come into power and to stay in power. I firmly believe that when the need arises and when the hard reality hits these malfunctioning brains they will start with privatization. That is what should happen, and by looking at recently passed CEB bill and negotiations with the IMF for a whopping Rs 210 billion it seems like that is exactly what is happening.

Privatization is not bad. It amuses me when some people tell that private enterprise is good and the engine of growth is the private sector but that privatization is bad. How come that be? If private enterprise is good, handing the ownership of state enterprises to private sector should also be good. Having said that government retaining the ownership of some enterprises is ok. It should be case by case rather than privatizing all and everything or the complete opposite. If the ownership of the government doesn’t make any sense privatize them, those that have a direct impact on the public, retain the ownership but make them independent corporations. Have the Ceylon Petroleum Corporation (CPC) which is managed by the government had any positive impact on the public? No. Have the State Pharmaceutical Corporation (SPC) had any positive impact on the public? Indeed yes. Have the privatization of Sri Lanka Telecom had any positive impact on the public? Of course. So why can’t we come into an agreement that corporations such as SPC¬† would not be privatized by any means but something like the petroleum sector would be liberalized and more competition be attracted and if the CPC cannot compete let it go bust. That should be one objective of privatization, getting inefficient businesses out of the market.

This government is in a historic position to challenge popular beliefs and take the country in a new path. If they have the will, they can convince the public that privatization is not so evil (as they also painted it some time back), open economy is the only way forward for a tiny market as ourselves, economic reforms are a must for an economic revival, our state sector is way too big and those cheap talks about an agriculture based economy were not very serious. They can declare they will privatize these institutions because of these reasons and they will not privatize these ones for these reasons. I see no better time for that than this. So gentlemen in the government, my vote is always open, dare to grab it?

Hands off petroleum please

We have a petroleum economy. In short if we are to run out of petroleum this moment the whole system would collapse. The importance of fuel is such but what does our government do? It creates a monopoly for petroleum products and grants it to a private company(ex shell) or keeps the monopoly to itself. Not to stop at that the government has imposed a criminal tax on petroleum. That means the whole economy would have to bear the high costs of the petroleum sector. Every  Sri Lankan product or service that uses a petroleum product, that means a huge majority of products would have an cost disadvantage against foreign products. Cost of living would be higher, that means increased salaries for people and that is another spiral of costs for the economy. A cost increase in the petroleum sector would not stop at it, it would have a spiraling cost effect on the whole economy. That is why it makes perfect sense to cut down taxes on petroleum and make cheap energy available as much as possible. The consumer affairs authority would never act on behalf of the people on this matter because the corporation in question is on the government side. That is why i guess the Supreme Court had to intervene.

I guess the lost taxes would have to be collected from somewhere else and at the same time government expenses should be cut. Before the government reminds us through its pacha wahini that we need to pay taxes there are many expenses to be cut from the government side. For example do we know how much advices our president has or our ministers have or at least the salary and benefits of a adviser? A majority of these advisers could be removed because normally an adviser means family, friend or a lost politician. Again our president doesn’t seem to be someone who listens does he? Building that mega Airport in Hambantota is a good example as to why Our president doesn’t need any advisers, either he doesn’t listen to anyone or there is no one to point out the uselessness of the project. This is only one thing, we all know where the cuts could be made.

Those who lobby for a manufacturing economy or a strong national economy should be critical on the governments ineffiecient handling of the petroleum sector and electricity sector through CPC and CEB. You can’t have both, it’s either cheap energy or cost disadvantage for our products. So yes rather than coming up with the all too familiar cheap conspiracy theories bring down the price of petroleum as the SC demanded and then make sure cheap energy is available.