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Sounding poor

The Prince of Kandy

Also available at https://www.colombotelegraph.com/index.php/sounding-poor/

We live in a nation where actual political choice, which lies between the SJB and SLPP, have at least from a media image perspective pivoted themselves to the lower ranks along our socio-economic spectrum. The two major parties in rhetoric pander to the poor.

This takes the form of large public gatherings, rhetoric lacking economic feasibility, and a lack of discourse on public policy. There is such a lack of differentiation in the rhetoric that people have started calling the SJB, SLPP Lite. I, and I assume the people willing to read my pieces, am not a champion of poor people’s rights over that of the majority.

My take is that pro-poor policies like changing the curriculum towards the vernacular, the take‐over of private estates under land reform, and the vast spread nationalization of major industries is actually bad for the broader society. The impact though perceived as being favourable to the poorest may only be slightly beneficial or in most instances actively against their own long-term interests.

Context

This piece is being written partly in response to the very well written piece in Economy Next titled ‘Classist, (an) aristocratic cabal in Sri Lanka conspiring to prevent Premadasa presidency: MP[i]’ by Imesh Ranasinghe. This is the sort of rhetoric that helped bring about the first Premadasa presidency and I am concerned given Sri Lanka’s cultural biases it will lead to a second Premadasa presidency.

Historically I come from a mix of people but there is a notable few that I would consider in the elite. On both sides of my family, there were members of the Senate and also other notable subsequent descendants. As people tended to marry within wealthy circles it is very likely that a large proportion of my ancestry including all my grandparents spoke English and had land.

Wealth is not a strong predictor of policy acumen. A lot of my relatives are idiots. My grandparents land holdings of which I have none should not disqualify me from the capacity to impact public policy.

Here I feel I must also tell female readers that I currently am more towards the poorer end of the spectrum and have done things that I deeply regret.

The Pro-Poor policy

SWRD Bandaranaike’s children famously were not educated in the vernacular for their tertiary education. Changing the medium of instruction in most major schools to the vernacular in effect reduced the cost of education (and thereby subsidy to the poor) on the treasury. The students in vernacular education are less gainfully employable by their peers in private institutions.

Large tracts of estate land now lie with no clear ownership and have not been tended to properly. The banking sector is in effect the real owner of most major plantation companies who are now so riddled with debt that they can barely make operational payments.

Large nationalized industries like the CEB, CPC, and SriLankan Airlines are marred by corruption and do not offer low-cost services to the general public.

Historic wealth (land) not a predictor of current wealth

As land has become less important as a factor of production in the modern economy and credit creation has become more meritocratic there is far less of a feudal structure in Sri Lanka. After all many of the estate companies listed on the stock exchange run at a loss.

Think of the concurrent downfall of the Kotelawala empire and the rise of Dhammika Perera. Though there are some families that have notably remained wealthy throughout our independent history they do not make up the current majority of political spending.

The land reform policies of Sirimavo Bandaranaike combined with the subsequent state-sponsored unrest caused by JR Jayawardane caused a huge outflow of talented minds. People who have the capacity to make something out of nothing for many decades now have chosen to emigrate.

Our country is now in such a position of poverty that even marriage proposals advertised in the paper now tend to weigh more heavily on foreign employment opportunities than on the gift of land.

Political Spending

Historically landed people were able to influence electoral outcomes as land was the major asset class and they were able to outspend their opponents. Money is a necessary but not sufficient factor for electoral victory. The SJB outspent both the SLPP and UNP in the last two elections and did surprisingly poorly.

The SJB is backed mainly by the Apparel sector whose major players owe their fortunes to UNP policy in the 1980s that transferred huge amounts of wealth and opportunity to a very small group of people. The notable names within this mix are notably from historically poor and uneducated backgrounds. People of the time would have thought of those people as being Indian (in a derogatory minority sense) and being the sorts that would have to marry within their own very small and highly interrelated communities. This however has not impeded their meteoric rise to power.

The SLPP is backed mainly by the construction and protectionist industries. They owe their wealth to state contracts and large choice and cost taxes they put on the general public through protectionism. The people from this group even in spite of considerable wealth position themselves with the masses. Many go so far as to conflate being Sinhalese to being Sri Lankan. They remain an active threat to an indivisible and pluralistic Sri Lanka.

Aristocratic spending on elections

Assuming the aristocratic cabal in the Economy Next piece refers to Ranil Wickremesinghe supporters one must question whether the UNP will be the major spender in the next general election. Though the sale of the leader’s residence might help it is not like the UNP is going to be able to outspend either the SLPP or the SJB.

Large corporations rely heavily on credit to function. The SLPP will be in a handsome position to allocate credit through the large state-owned banking system to their supporters who will, in turn, spend lavishly on the election. Our own money will be used against us electorally.

The SJB will lean on the vast export wealth whose interests it seeks to protect if elected to power. They will benefit in the long run through a lower than the optimal rate of taxation on export sector profits again in effect robbing from the treasury.

Foreign control of policy

A large portion of the political goodwill of the Yahapalanaya government was wasted on inquiries into the armed forces. Though from a moral perspective there can be no doubt that there should be an inquiry it would be politically prudent to begin from the establishment of the Executive Presidency. It is a political reality that you will have to put Sinhalese victims before Tamil ones.

This loss of political goodwill was not out of some moral obligation as UNP crimes in the South are probably worse than those committed recently but rather for the reestablishment of GSP Plus. More ethnic reconciliation could be achieved if Wickremesinghe makes further acknowledgements of state support for the anti-Tamil riots in 1983. The Tamil diaspora was able to effectively lobby the EU to cripple our export sector.

In spite of any tangible achievement (RW fooled the West and the TNA) of the Sri Lankan government towards reconciliation, the prospect of GSP Plus remains and is stronger than ever as both major parties the SJB and SLPP are willing to act in foreign interests. This is most apparent in the passing of the Port City Law wherein Western and Chinese financiers see themselves setting up shop with the intention of controlling the growth of the broader South Asian region.

The Chinese now have a huge vested interest in our next Presidential election as it would impact appointments to the Port City commission. It was truly shameless that during the recent economic downturn the government prioritized the payment for construction work which is largely Chinese owned rather than looking to provide economic stimulus to the real economy.

Beating up the poor

It is only a partial truth that the geo-location of global services to Sri Lanka will benefit us. Take how oil spills will be treated. Will the cost of cleaning up the spill and the damage caused by the recent incident be recovered from the shipowner or borne by the state and people?

As with all things it is a balance of representing the interests of Sri Lankans while keeping the industry competitive in terms of export pricing. We can go the Chinese route of development wherein to quote the book Trade Wars are Class Wars; Chinese workers are underpaid relative to the value of what they produce. We could also go the route of the Netherlands or Switzerland wherein our value comes by acting as a haven (the word tax implied) for investors looking to capture value from the broader region.

Going down China’s route will mean that we beat up the poor while the poor in the Netherlands or Switzerland do quite well.

War on poor

From the war on drugs to the policing of prostitution, to the banning of abortion we see that the state is quite focused on actually hurting the poor. The war on drugs rarely captures the highest rungs of the ladder in the industry. The arrests are trivial and used as a media distraction when the government is unpopular.

If it is that you want to reduce the scourge of drug usage on society why don’t you treat it as a health problem which is what it is. Methadone clinics and the treatment of drug addicts would go a long way to reducing the harm caused to society. Portugal has had amazing policy outcomes through a non-criminalizing approach.

On prostitution to paraphrase the sentiment in the popular song ‘I Don’t Know Why’ it is difficult to see why the legal structure which thereby necessitates a system of pimping who bribe the police is allowed to continue. Selling sex isn’t the worst thing in the world.

On abortion young girls who have the misfortune of getting pregnant would be far better off if they were allowed to safely abort the unwanted fetus but are unallowed to do so by a state who would much rather see them become destitute.

College graduation

The above section contains values that are held by most college graduates. This is because they are exposed both to international thinking and modern thought on public policy. If Ranil Wickremesinghe the aristocrat was given absolute power some of these things might get implemented.

Wickremesinghe unlike his challengers in both Sajith Premadasa and Mahinda Rajapaksa is a college graduate. Being a college graduate helps Wickremesinghe be better at making decisions on public policy. Going to university which was within the financial means of both Sajith Premadasa and Namal Rajapaksa is an important part of one’s mental and intellectual development.

What Imesh Ranasinghe in his piece is trying to do is to bring about the politics of affinity. He is appealing to the majority of Sri Lankans who don’t have university degrees to cast aside, given the incredibly weak state of our current education system, is the last truly educated (locally) leader of a major political party.

Policy under the Aristocrat Ranil Wickremesinghe

Ranil Wickremesinghe doesn’t pretend to be poor. He is power-hungry. He doesn’t pretend to like people. These are by my count attractive qualities for a policymaker. He is also incredibly adept at foreign relations and outperforming expectations electorally. He will be the next Prime Minister.

If we take the recent discourse on both the Port City and Port terminals in the Colombo harbour we find that the major achievements touted by the government are attributable to Wickremesinghe.

The fact that the land under Port City is owned by the state[ii] is attributable to Wickremesinghe. If it wasn’t for his intervention the agreement would have reflected the Shang Ri La investment with freehold status to a foreign entity.

The fact that we even have a deepwater terminal that we can get foreign investors as opposed to our own to develop is due to the fact that Wickremesinghe had the foresight to obtain concessionary financing from the ADB.

Under Wickremesinghe, the Port City commission will be comprised of people who can actively attract investment into the country while keeping our foreign relations in balance.

Policy under Sajith Premadasa

It is a real treat to visit Sajith Premadasa’s YouTube page. His political clinics are emblematic of everything that is wrong with the Sri Lankan provision of public services. The need for a politician to make phone calls to influence the provision of public services as with the need for a politician to make decisions on the hiring of workers may be highly politically effective but it is not good public policy. It is unlikely that Premadasa as a leader will have time to deal with all our problems personally. In this Premadasa goes beyond poor (read small-minded) in his approach to politics and enters the realm of being cheap (of little worth because achieved in a discreditable way requiring little effort).


[i] https://economynext.com/classist-aristocratic-cabal-in-sri-lanka-conspiring-to-prevent-premadasa-presidency-mp-82821/

[ii] http://www.colombopage.com/archive_21A/Apr18_1618763647CH.php

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Colombo’s property woes

The Prince of Kandy

Also available at https://www.ft.lk/opinion/Colombo-s-property-woes/14-718614

Though the media and financial players in Sri Lanka will not openly admit it, we are in the middle of a property crisis. The benchmark of Commercial Property in Sri Lanka the World Trade Centre (Overseas Realty PLC) has dropped to about 80% occupancy levels from levels nearing 90% in 2019 and at about 97% in 2015.

To quote the Overseas Realty annual report; The revenue from leasing spaces at WTC decreased by 6% to Rs 2,292 Mn (2019 – Rs 2,409 Mn), due mainly to concession given to tenants and lower occupancy levels during the year.

Now, this given COVID-19 is expected and Overseas Realty remains the furthest thing from financially distressed. The crisis that this article speaks of exists in the highly leveraged inner-city developments where due to the leverage even stagnant prices should lead to insolvency and bankruptcy of many prominent developments.

Context

Over the recent period, the state has taken over the likes of Altair and Destiny. These are two prominent developments in proximity to other developments that are also facing difficulties selling. The state through captive funds has long been in the possession of the failed Ceylinco investments in the Hyatt Regency (Ceylinco Celestial Towers).

The state has also directed the banking institutions to take a lax approach to collection from major property developments. This is further compounded by the ridiculous system of valuation that the accounting standard and state have both endorsed.

Though returns from property (rent) are low yielding this should not be conflated for them being safe assets. State backing only works as a reinforcement mechanism if the state is financially strong and this is far from the case.

Not safe assets?

Property in Sri Lanka may not have yet witnessed depreciation but as seen in more advanced economies like Japan and the United States this is a possibility. Regardless there are many asset classes like fixed income that possess this property of not going down in nominal value.

Property also can not be liquidated quickly and/or does it ensure a steady stream of payments. Tenants are in short supply and the renting market is fraught with concerns like non-payment and squatting with no solutions in sight.

As this article focuses on ‘Colombo proper’ this issue is further compounded by the large disparity in property prices over a few kilometres in radius.

Difficulty in ranking the best parts

The centre of Colombo is Colombo 01. The simplicity and genius of our naming system should be appreciated. It is the heart of the city and goes for about Rs 18 Mn per perch. This in relation to the rest of the city outside Port City will not change.

The problem comes about when valuing adjacent plots of land. Colombo 03, 02, 10, and 11 go for Rs 16 Mn, Rs 12 Mn, Rs 4 Mn, and Rs 10 Mn respectively. Port City is expected[i] to be above Rs 13 Mn per perch.

There is a large buildable area in the hands of the state around the Lotus Tower (Colombo 10). The Chalmers Granaries land (Colombo 11) has been on sale for a long period of time and the Manning market was just demolished. There are still defence establishments that occupy land in Colombo 03.

All of these areas have underserved housing and underserved commercial space. Colombo’s population would have to increase by 32.8% to even touch a million residents. The majority of people in Colombo are poor.

The rich live in houses

Yes, the only real density of rich people in Sri Lanka is in Colombo proper. Sadly for real estate agents though is that they tend to already have homes. A large portion of their wealth also stems from the fact that they have land in the city.

Townhouses with proximity to leading schools and gardens will always be more sought after than high rise apartments. In London, New York, Singapore, and even the upcoming Colombo Port City, townhouses will be the most sought after real estate.

We are not in short supply of townhouses. Most townhouses are either on rent to some embassy or are being used as makeshift office space. There are many that are dilapidated with very rude signage to deter property brokers.

Property woes

To be reductive ‘Colombo proper’ apartments are overvalued. There isn’t a shortage of buildable space, yes much of it is brownfield but it is easily demolished. There isn’t a large growth in population. Most apartments are sold to people that don’t need them who either intend to rent them out or occupy them on their short visits from overseas.

Though Colombo is the largest urban centre the majority of people in the Western Province live outside Colombo. Housing, land, and apartments in those regions offer a much better return on investment.

There isn’t a shortage of apartments either. Many completed projects remain unsold and are incredibly small. Given the rental yield, people actually looking to live in the city would be better off renting and buying in the suburbs.

Property owners in Battaramulla, Rajagiriya, Moratuwa, Negombo and Wattala have done very well for themselves. 

To put it concisely; the housing stock that the private sector decided to construct was at odds with the demographic trends in the city.

Manning Market Demolished

Demographic trends

There is no Sri Lankan person willing to spend Rs 24+ million and Rs 20,000 on maintenance fees for a 650 square foot apartment in Colombo 02. That wealth bracket would buy a home/apartment in the suburbs with space for children. The foreigner looking to rent that apartment is currently spoilt for choice.

The wealth distribution increases exponentially in the upper-income brackets. There is a large gap even between the highest-paid CEOs to the people who own the enterprises.

To quote Head of John Keells Properties Nayana Mawilmada in a recent interview[ii] “affordability though is a problem. A lot of what is being built in and around the city is quite expensive. The reason for that is construction costs in the region are higher than those for the region. A lot of construction materials are taxed. Regulations tend to be difficult. Our cost of delivering something is higher than Malaysia.”

Luxury apartments in inner-city areas

This is where the crisis is concentrated. When Liberty Plaza was built it was thought to be highly sought after. It was very well located. Over time it became a bit of a dump. Residents now have to deal with a noisy environment while being in very close proximity to the vice industries.

Marina Square by Access Residencies is not in a sought after area. It is being sold on the basis that it will become a sought after area. The timeline over which it can be completed would be similar to the time it would take to build an LRT to Malabe.

The development will likely end up in the same state as Liberty Plaza is today with the sad exception that it even for a brief period of time was not a sought after area.

Last I checked though there is disagreement on the value of an LRT system there is bipartisan agreement that the broader Western Province shall have elevated highways. Regions like Wattala are well placed to both access the Port City and decent places to raise a family.

World of haves and have nots

Statistically, you are probably either in the very small class of people that can own multiple luxury properties or the very large group of people that can’t even own one. Anyone with experience in the lobbies of Colombo high rise buildings would realise that there are a lot of foreign tenants and many of them do not own cars.

Proportionate to the purchase price of these apartments the rental yield is very low. If you are just looking to profit from these purchases would you not be better off buying multiple smaller properties in the suburbs?

Inner-city areas world over offer poor capital returns to property holders. Given Port City and the existing developments in Colombo 01 won’t Colombo 03, 02, 10, and 11 quickly become more inner-city than they already are?

Inner-city amenities

Globally in certain very wealthy regions of the world, there has been urban regeneration and gentrification of inner-city areas. As mentioned before Colombo because of the lack of population growth and the availability of fiscal space that is not going to happen.

Colombo 03, 02, 10, and 11 do not have many parks or communal space. The schools where the wealthy send their kids, the three set up by Elizabeth Moir and the Overseas School of Colombo are located in proximity to where the wealthy live which is well South of the inner city.

Trying to tell a bunch of people who as previously mentioned already have accommodation that they need to buy space in the inner city is a tall order. Developments in the suburbs of Colombo and all over Sri Lanka sell out within weeks while these high-end developments remain on the market till even after completion. In the suburbs, there are multiple generic developers and a deep need for accommodation at affordable prices.

Why they developed the inner city?

The inner city was historically used for industrial production. Think of the warehouses of the John Keells Tea Broking arm in Colombo 02 to the Old Train Service Yards in Maradana. With the BOI zones and the outer circular road industrial production moved outside of the Western Province and even those within the Western Province to outside Colombo.

The land also was buildable, unlike suburban greenfield land. The companies owning the land were well connected and have access to cheap finance. They will be the major beneficiaries of the gentrification of the inner city.

Cost factor

The inability to sell and thereby obtain financing for construction makes these mega-development projects more expensive than they need be. It’s not like a building begins when all apartments have been presold. For new developers, without historical title to the land, there are also considerable costs in obtaining land and getting approvals.

As previously mentioned the quantum and cost of construction in Sri Lanka is too high for our small economy. In no other industry do we see foreign blue-collar workers in such quantity? Almost one in two workers is a foreigner.

Developments in the inner city will have to compete with developments in Port City while the developer will have to pay high import taxes and taxes on profits. This is on top of being just outside the financial centre and sought after outskirts of the city. Why buy into something that won’t be price competitive in the long run?

Port City will be amazing

The Port City legal framework is amazing. After all the government had to pull out we won the war card to get it through. It will be meticulously planned and everything will be within walking distance.

The building regulation will make sense and every new construction will complement the existing space. All the people will be slim. By virtue of the need to purchase the property need to have disposable income. This will come in stark contrast to some of the layabouts who have inherited property in Colombo 07 who can barely afford to paint the place.

Status quo

Now, most of this piece represents the status quo as understood by society. Interest rates, especially when compounded with the withdrawal of WHT and imposition of income tax on fixed deposits, offer very poor returns.

Even with this these apartments in the inner city remain unsold. Apartments that have been constructed remain empty and those nearing completion are almost immediately put on the market. Even old apartment complexes in amazing locations are on the market trying to cash in on the inflated prices.

Reporting

The accounts of the Colombo City Centre and Cinnamon Life are not available publicly. Though a part of publicly listed company and being majority-owned by the listed entity they appear in the accounts as an equity investment.

The recent Prime Residencies IPO was fraught with questionable accounting[iii]. Acuity Partners, the entity promoting the IPO, is a subsidiary of HNB and DFCC. Prime Residencies has a stake in HNB Finance and I am guessing considerable debts to HNB. These are two companies with an obvious connection to Prime Residencies.

The SEC and CSE who are going to place a bunch of dim-witted regulations on corporate governance see no problem in the Prime Residencies IPO being managed by Acuity Partners. You couldn’t even get a complete set of accounts going back over 10 years on the Prime Residencies.

Central Bank

In the interests of the financial system, the Central Bank should step in and create a mechanism for valuation. Firms are taking advantage of the current weak mechanism and creating perverse allocations of credit as can be seen from the empty apartments.

The Central Bank is further delaying the inevitable by offering guaranteed low credit to the sector through various interest rate-capping schemes. As can be seen by their public statements though the Central Bank is pro-Sirimaesque-austerity it does not feel that property developers should feel any pain.

The Central Bank could also help the municipalities set countervailing taxation to create stable property prices. Excess taxation could be used to create a property fund that invests in housing stock for rental purposes.

In theory not practice

The Central Bank could do all of this in theory but in practice, we have seen that they would be unable to do the most simple of tasks. Take for instance the payments to ETI depositors where they have failed so greatly. It is truly comical how they try to paint this as a triumph.

After having taken forever to disburse funds from the deposit guarantee mechanism they choose physical means of disbursement during a pandemic.

ETI and Swarnamahal had accepted deposits in an ad-hoc manner creating considerable administrative difficulties in selecting genuine claims. Even with this the Central Bank has in no way considered placing industry-wide standards for the issuance and maintenance of deposit certification and databases.

Conclusion

We all know that our capital markets are infiltrated by crooks. As people may accuse this article of fear-mongering let us take a historical case to illustrate the point.

Ceylon Foreign Trades PLC and related companies purchased warehouse land. They almost immediately then revalued the land and took in the surplus into their set of accounts. The banks turned a blind eye and that company went on a massive CSE investment spree on margin.

The people conducting the valuation, the accountants who signed off on the books, and the directors all remain from a legal standpoint capable of moving into property development in the inner city. It doesn’t have to be the same people as that type of person is widespread around Colombo.


[i] https://www.portcitycolombo.lk/press/2020/02/24/port-city-land-likely-to-be-priced-above-rs-13mn-per-perch-pwc-report.html

[ii] Some well thought out advice from Nayana Mawilmada during an interview on Channel Eye. – YouTube

[iii] https://www.ft.lk/financial-services/Prime-Residencies-revenue-recognition-policy-overly-conservative/42-717603

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Alas a little too much a little too late

The Prince of Kandy

The following article was also published on the Daily FT on Wednesday 21 April 2021 and at http://www.ft.lk/opinion/Alas-a-little-too-much-a-little-too-late/14-716542

The recent media focus and political activity on the Port City though incredible in terms of magnitude are far too late and sensational to have any impact on policy. What will come into law will be up to the Supreme Court. In other words, the law will unlikely be amended to help soothe public concern.

This is the second time something like this has happened. The 20th amendment to the constitution passed with initially no media speculation on what it entailed followed by media outcry again at a point too late to impact change.

This raises questions on a perverse media setup but more importantly on the state of political choice in the current system. This article hopes to contend that the SJB-SLPP set up would be the worst possible backdrop on which to pass a new constitution.

Both events

Given digitisation, interested readers could go back in time and read/watch the media content that preceded both the 20th amendment to the constitution and also to the Port City.

The 20th amendment in the final weeks to its passing was poorly discussed and overshadowed by the Brandix COVID-19 cluster. Allegations were made that management was both aware of the situation and acted in a manner that further endangered lives. Such allegations though incredibly serious have not been explored at any period afterwards by the very media institutions that were focused on the issue initially.

The Port City Agreement though released on the 28th of March was overshadowed by the Mrs World scandal and is currently going to be phased out by the Cardinals allegations on the Easter Sunday attacks. In between the 28th of March and the Wijedasa Rajapakse catalyst event, there was even a Press Release by the China Harbour Engineering Company on the proposed agreement.

We can go further back and look at the allegations on the Cricket World Cup in 2011 being fixed and how that resulted in the current Minister of Agriculture being elected on large margins. Again, this issue seems to have died once it served the purpose of distracting the people.

Not a question of reaction time

We all knew the Port City Agreement was coming. The government had suggested several months ago that it would be a major catalyst to investment and that it was due shortly.

Public opinion pieces should have been on hand on the issue. More astute readers would notice that the pieces currently published are rushed and are written by people who cannot afford to be rushed. Interested parties could have further looked to write publicly on what their concerns were beforehand and pivot policy outcomes on that basis.

Though the New Year would have resulted in a slight mellowing of the news cycle the extent to which the media ignored the issue shows collusion. The government was quite obviously trying to pull a fast one. It wasn’t that the media failed to catch it in time but rather that it didn’t inform the public of what any reasonable person would deem newsworthy.

The issue of Port City deserved at least the same amount of media resources given to the Hitler statement by Dilum Amunugama.

In comparison to the bond scam

Let’s take the Bond scam as the yardstick by which we measure media coverage. NewsFirst in its coverage of Ali Sabry’s press conference on the Port City broadcast a question linking potential foreign members of the Port City Commission with the foreign citizenship of Arjuna Mahendran.

In the same news program, they then showed Sajith Premadasa speaking in the backdrop of a wildlife setting in Hambantota (This was the electorate that he abandoned in the 2020 General Election). The backdrop was a major distraction. Why the hell was he trying to make this about environmentalism?

With the Bond scam coverage, we know what Arjuna Mahendran’s daughter looks like and even where they live. That was a blatant violation of privacy and unimportant to the coverage of the issue.

Who negotiated the Port City Agreement? Why is the Chinese Defence Minister coming to Sri Lanka? Who even are the senior members of the China Harbour Engineering Company in Sri Lanka? All things that are important but that you would not know if you take the media coverage.

Replaced by a non-current issue

The Port City Agreement is going to be replaced by the cardinal’s statements on the Easter Sunday attacks. This is already happening.

The Cardinal is a political player. If he was really just trying to be tactful on the issue, he would have rallied catholic public opinion in a manner forcing both major parties (SJB-SLPP) to promise timely action on the Easter Sunday attacks in a meaningful way before the 2019 Presidential election.

Is there some media regulation preventing a hard line of questioning on the Cardinal? Is he not available for comment? Those with access to the Messenger newspaper (Catholic weekly newspaper) can see what he is trying to do.

Pressuring Sirisena on the Provincial Councils

Sirisena though the leader of the Sri Lanka Freedom Party is the only major obstacle to the abolishment of the Provincial Councils. This is something that is not broadcast alongside the allegation that Political forces played a hand in the Easter Sunday attacks.

Sirisena does not care for the Provincial Councils but rather is playing a clever game of getting in the way. Much like he did from 2015 onwards he has continued as the major saboteur of government policy.

Why is neither of these issues brought up? Why is a Sri Lanka Freedom Party leader defending the Provincial Councils? Why is he getting in the way of government policy? What is he asking for in return?

The abolishment of the Provincial Councils would help the SLPP rebuild support from its base following this Port City agreement debacle. However, die-hard supporters must question if the government is using the issue to cover up their misdeeds and actively risking the delivery of ‘one country, one law’ by delaying implementation.

Doing it all at once

This is the real issue. If the abolishment of the Provincial Councils is bundled altogether with many other changes under a new constitution people will have to make quite a difficult decision at the time of the referendum. In other words, something SLPPers may want in the form of the abolishment of the Provincial Councils may come alongside something they don’t want like land reform.

The constitution will be the most important policy that this government aims to deliver. Why then is there more coverage favourable to the government on Pepper and Dairy than there is speculating on the constitution?

What does the SJB think the government is aiming to do with the constitution? What does civil society think? Hell, what does Viyathmaga think?

Conclusion

The SJB and SLPP are new parties with no real political ideology. Due to the Presidential system and major financial backing, they are able to continue as leadership cults.

The SJB has in no way implemented the party reform that they called for when they split from the UNP. Sajith Premadasa was not elected by the members of the SJB and it is unclear if he will continue to be the leader of the movement when he loses the next election.

The SLPP though cut from the cloth that created the Sri Lanka Freedom Party is well to the right of the United National Party. After all, in the face of considerable economic uncertainty, they have gone out of their way to promise the corporate sector guaranteed low-interest rates and taxation throughout their term in office.

All of this is of no concern to the media coverage. In a system where public opinion is not reflected in the media, it is expected that policy will be designed to benefit a select few. We collectively on both sides of the political aisle should come together and demand public discourse on the issue of the constitution or we as Sri Lankans would have fallen for the same trick three times.

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Is Port City not important?

The Prince of Kandy

The following was also published on the Daily FT on Monday 12 April and at http://www.ft.lk/columns/Is-Port-City-not-important/4-716223

To reform the proposed legislation instead of expressing an opinion on the proposed Port City framework it would be more effective to comment on the lack of media coverage on the issue. Even media content targeted at the 10% of the population to have finished high school consider it unworthy of prominent coverage.

Though many would be unable to forecast the large economic and social ramifications of the proposed legislation they are also in a position that they do not know what it is that is being proposed. This is unique for a country wherein policy very much against the public interest is masterfully interwoven with policies that focus group well (never really implemented) in manifestos obviously designed by Marketing Departments.

From NGO industry stalwarts like the Government Medical Officers Association to opinionated members of parliament like Champika Ranawaka, there seems to be no real discussion on the issue.

On the nature of political parties

Both major parties, the SJB and the SLPP, are actually highly organised and collusive institutions representing big money interests. The policy outcomes the country faces represent the views and interests of a small group of people willing to fund those parties.

This is clear from the fact that the majority of the population support the abolishment of the Executive Presidency to the fact that most do not benefit from the direction of the taxation regime. Most people though silent on the issue are averse to politicians and the major political parties.

Our working hero

Take the SLPP Gotabaya theme song. One must commend it for being an incredibly catchy tune with an amazing music video to match. It through a highly calculated representation of affinity (a relation between biological groups involving resemblance in structural plan and indicating a common origin) helped bring about a Presidential victory for the backers of the party.

The music video builds on imagery of huge infrastructure investments to, in the words of Noam Chomsky, ‘manufacture consent’ for the large construction friendly policies of the government.

No one considers or questions as to how the Central Expressway is going. To my understanding, the government is now heavily reliant on a Chinese firm for the completion of a key infrastructure project that could prove to be politically decisive.

No one even considers the fact that the Lotus Tower is mainly broadcast infrastructure. Its existence would help reduce the cost of broadcast media. It was also funded by the Chinese.

You decide on the SJB

Given that American Aid funded think tanks are working overdrive to bring into power the son of a mass murderer it would be more difficult to convince you of what an idiot Sajith Premadasa is. He seems not to have had a misstep over the last six months.

Do you honestly think there is no dirt on the person for whom there is a highly circulated video of him allocating jobs on the basis of height? Please remind yourself that this is a man who spent a considerable amount of sums earmarked for housing and cultural development on self-promotion.

The SJB let the 20th amendment pass. There are no serious questions on Sajith Premadasa’s role or lack of leadership on the issue. Members of his alliance and even his own party voted for the bill. He was warned that this would happen and was definitely in a position to reign it in.

His attacks on the government seem to be centred around environmentalism and the majoritarianism of the government. On the economic front with the help of Harsha De Silva, his party is actively fear-mongering on the state of the economy.

Not that fear isn’t warranted

The environment is important. Land allocation is a sensitive issue. People should have water, land, and the right to economic upliftment. Premadasa even as cabinet minister for housing has done little to alleviate any of these issues.

The economy is in the doldrums. Incomes especially at the lower end of the spectrum have crashed. The most obvious solution would be to increase taxation and have targeted government spending. Why is neither main party advocating such a solution?

Narrow minority interests

Mangala Samaraweera has expertly positioned himself as the champion of minority rights. The media eats this up. No one questions whether he actually is supportive of minority rights.

They take this Mandela-esque image as being true and attack him thus appealing to the Sinhala Maha Sabha base and helping position Mahinda (not Chandrika) as the leader of that movement.

Colombo based rights institutions rarely take a holistic view of government violence. Groundviews and Vikalpa for instance have nothing on the violence perpetrated against the JVP.

Anyone capable of reading the budgets that Mangala presented to parliament would see that he undid a lot of the improving trends in terms of revenue collection. The budgets did not benefit the people of the North.

Take the appointment of Prince Sarojini Manmatharajah Charles to head Sri Lanka Customs. Something hailed by the Colombo elite as being both multicultural and feminist. Her incompetence seeked to maintain the corrupt import mafia and the low effective taxation on the super-rich.

Increasing taxation

With regards to the debt sustainability instead of pushing the country into the arms of the IMF, there is ample scope to raise revenues. The favourite punching bag of the corporate media Ravi Karunanayaka did this.

In 2015 the country was put into elections because of the coming debt payments. Let us remember that Presidential elections were called early.

Having won the election, the UNP government of the time implemented; retrospective taxes, cleaned up customs and excise departments, renegotiated Chinese debt, and at the same time managed to increase salaries of the government sector.

GDP figures

GDP did not do well right after the Presidential election of 2015. Remember if a Chinese contractor builds an apartment that he sells to a Chinese investor on Sri Lankan soil then it is still counted as Sri Lankan GDP.

Over half the construction workers in the country are from abroad. As Chinese contractors are not involved in small scale projects like residential housing it is safe to assume that the government and big corporations have a higher weightage of Chinese business relations than the rest of the economy.

Therefore, one can raise the question of whether the construction bailout organised after the Presidential election of 2019 helped out the Chinese more so than the Sri Lankans. Given the structure of the bailout and the complaints of the Ceylon Institute of Builders, it should be considered.

If you are inclined to such questioning you would also then wonder to what extent the rise in GDP growth would accrue to foreign parties.

The Port City

This leads us to the question of whether Port City would benefit us? Yes, economic activity would rise. Yes, it would look really nice and bring about national pride. Yes, it would be nice to see actual urban planning.

However as with the young girl looking up at the Lotus Tower in wonderment are, we really as Sri Lankans going to benefit all that much with its construction. What would happen to wage growth? What would happen to public debt under such a low tax regime? After all Casinos outside Port City will lose customers to those within Port City. Is Colombo really that much of a tourist draw?

Conclusion

To be honest I do not know. The BOI Framework though highly feared has delivered good employment outcomes and helped keep our apparel sector competitive.

What I do know is that the son of the mass murderer is unlikely to win an election and the sooner we all just get behind Ranil the better our chances of having someone competent redraft the Port City legislation.