My actions impact the equilibrium

The Prince of Kandy

In the study of certain subjects, there are certain universal truths that teachers try to instil in their students. In medicine there is ‘first do no harm’, in accounting there is the notion of double-entry, and in economics (and important to this piece) there is the concept of demand and supply.

Though we may all understand these things we at certain points tend to forget them in our actions and revert to our instinctive mindset. This manifests itself for instance in medicine where the treatment is worse than the diseases. These truths also help the weaker students direct their focus in a manner that makes them productive.

The point of the study of demand and supply and the various arduous graphing tasks children are put through in the field of economics is to instil in them the understanding that economic producers and consumers come together to create a price. Factors inducing higher demand and lower supply will increase the price while factors inducing lower demand and higher supply will reduce the price.


This piece is written in contrast to the mass misinformation campaign being run on the state of the value of condominium apartments in Colombo. The Central Bank of Sri Lanka, which is not necessarily the bastion of trustworthiness over the decades, has come out with information suggesting that condominium prices in Colombo remain robust.

The recent Condominium Market Survey does little to showcase how much excess supply is about to hit the market. This alongside the large speculative holding which that very data show is going to cause huge impacts on the financial system. To put it simply no one seems to be calling out the widely advertised fact that the Colombo City Centre by Abans which has been completed is still offering prospective buyers the opportunity to purchase apartments with a 20% downpayment and the balance in 2 years. Even monthly maintenance costs have been foregone.

Analogous case


To come back to the point underlying demand and supply let us return to the story of a farmer which illustrates the fundamental principle of demand and supply. There was once was a farmer who was barely making any profits on his hard labour.

This farmer though hard-working and diligent was plagued by external factors beyond his own control harming his payout. Over the years the farmer had faced issues like drought, disease, and a lack of fertilizer destroying his harvest.

The farmer was however was a religious man and the greater powers were for this season willing to lend a sympathetic ear. The farmer being the hard worker instead of praying directly for increased wealth asked that there be increased rainfall and sunshine for him to grow his crop. He prayed that borrowing costs be reduced and support services for his industry be extended. He further prayed for all the other factors to bring about a bountiful harvest and his wishes were granted.

The farmer was elated and with no uncertainty, he could bank on an exceptional harvest this season. On coming to market the farmer was warmed to see that all his colleagues (the farmer was obviously not based in Colombo) had also benefited from his prayers and received stellar harvests.


As the market opened the farmer’s joyful mood was quickly turned sour as the Colombo based merchants who he actively mistrusted were even more joyful than he was. These were people who had monopsony power (like monopoly power but for a purchaser i.e.- a single purchaser and many suppliers) and had taken advantage of the farmer on previous occasions. Though the farmer thought that with such a bountiful harvest he may even be in a position to turn away the merchants he over time realized that his bountiful harvest was not moving.

The merchants hadn’t even bothered to approach most of the stalls to negotiate prices and were sitting by the food stalls. A few customers may have purchased more than they usually do at higher prices but this was not enough revenue to cover the costs of production. The farmer and his colleagues quickly began to panic. As the day ended the merchants came and offered below cost to buy out the entire harvest.

The merchant later on passed on his purchased produce to an export firm at a handsome profit. The farmer on being completely wiped out and with no financial prospects took his own life later that day.

Stating the obvious

You can not increase supply without impacting the price. From the increase in the amount of BOI agreements, to the number of projects being vested with the UDA, to the huge amount of land just recently added to the map of Colombo, a lot of our financial interests are more aligned to the side of the farmer than of the merchant.

Even if we are to take the wild assumption that hyper proximity to the entrance of the Colombo Port City is important, we are not acknowledging the fact that large amounts of buildable (yes brownfield) land exist in the vicinity as evidenced in the picture.
The assumption is also wild as distance in the local market is usually to a local amenity or service and not a postcode. 2 kilometres to Royal College has more meaning than 2 kilometres to Colombo 07.

The density of our built-up area does not warrant a changing of that metric. Any spot in Sri Lanka is less than a small radius from a region that is not so heavily built up.

Sri Lanka is not Dubai. We do not have rich friends to bail ourselves out and have a large population to think of. Affordable housing is increasingly becoming an issue and it can not succeed if this property development boom is to succeed.

Signs of a bubble

The most obvious and glaring sign of the bubble is the fact that the rental yield on these apartments is paying out a lower figure than the government securities that share a similar liquidity profile. Our government securities market is jealously guarded by a highly profitable and very poorly regulated primary dealer network but does have a shorter time span of convertibility into money than some of these apartments in the current market. Also, government securities tend not to have monthly maintenance charges.

The asking monthly rental (can be negotiated downwards in the current market) for a 3-bedroom 7th Sense apartment is Rs 710,000 quoted as US$ 3,500 a month. A similar apartment has an asking price of Rs 175,000,000 (again can be negotiated downwards). Even under the ridiculous assumption that apartments are always rented and there are no maintenance costs, this leaves the landlord with a rental yield of 4.86%. A treasury bond with a 1-year yield (basically a treasury bill) is yielding 7.49% as of 30.09.2021.

I don’t know what value one can place on the social status of owning a 7th Sense apartment brings in a venomous Colombo shindig but it sure as hell can’t be 263 basis points.

Replacement cost principle

The current marketing ploy by the increasingly desperate real estate developer is to offer these newly constructed apartments as a mechanism to shield your net worth from the impending currency depreciation.

Though this is a compelling sell and the vehicle market has surely seen great success with this line it is difficult to see why people with money who are more sophisticated should fall for the replacement cost fallacy.

People buying vehicles in a panic are doing so as they see themselves needing a vehicle in the future. People buying apartments, as many as 30% according to the Condominium Market Survey, are doing so for a secondary income stream. As I have argued before most of them do not need an apartment and as mentioned before would be better off renting and placing the saved funds in Treasury Bonds.

The value of these apartments

The value of these apartments is not in the quality of their finishing. Apartments in Cinnamon Grand which are now quite dated are still going at prices similar to the much newer apartments in Monarch. The value is tied to the location.

As evidenced in the picture even prime locations as close to Cinnamon Life are now opening up. Though there is a shortage of financially secure developers in the current marketplace, there isn’t a shortage of land.

The conspiracy behind the toppling of the building in the image is interesting as like the story of the farmer’s prayers it will backfire on the prospective sales on the newly constructed buildings. If Cinnamon Life was to position itself as a prime location instead of targeting a row of buildings with significant architectural value should have looked to prevent the Tata Housing complex that popped up a few hundred metres to the right which currently houses blue-collar Indian labour for the construction projects such as ITC.

That old building

This is an argument that should be screeched at anyone who suggests this speculative property boom is about tourism. That old building is something that over a long period of time would have garnered a premium in terms of rental. It does not take an international traveller to realize that sometimes the best parts of a city are the old parts. All tourists flock to the likes of the Dutch Hospital region to partake in the unique atmosphere that section of the city brings about.

Check your Instagram! The mosque in Pettah is a huge draw as evidenced by the many new social media posts in the region. Colombo City Centre on the other hand peaked a few years ago and is now of no interest except to the occasional moviegoer.
Further development can be made to the entire Fort region if the Central Bank stopped pushing its weight and allowed that section of road outside its building to open up. It doesn’t take a student of architecture to realize that the Stuart is supposed to open up facing the ocean and it is a crime to our battered tourist sector to maintain those horrid grills.

How we got here

Basically, greed and weird risk appetites. To recall something that I wrote in February 2020;

The Beira Lake Conspiracy
You and I do not have land around the Beira Lake. Some of you, if you are lucky, might have ownership of some apartment in the area. The land in that area is inherited and is artificially inflated in value due to the hoarding nature of the holders and the enabling tax structure.

John Keells and Browns Holdings, for instance, had so much land that it was weighing down on their financial performance. To rectify this corporate Colombo conspired with the authorities to spark a highly speculative property development boom with incredible concessions on tax.
Tax from actual work can be taxed as high as 24 per cent but when one of Mangala’s dimwit friends’ makes it through sitting on their ass with the property they inherited they pay capital gains at 10 per cent. Municipal tax is negligible and municipal works in the Beira area are anyway funded either centrally or through apparent aid .
The development of the area is being heavily pushed through the channelling of credit and tax concessions into the area. Given all of this how politically sustainable will the impending bailout be? Especially when the SMEs realize that they were left out of the recent SME bailout scheme.

Accounting fraud

As mentioned before the entire property sector is quite low yielding. The city hotels even before the pandemic were operating at a loss. This boom was made possible by the lax attitude of the Central Bank and more importantly the Insurance Regulatory Commission of Sri Lanka. The investment by Sri Lanka Insurance into the failed Ceylinco Celestial Tower (now the Grand Hyatt Regency) allowed the accounting standard to take into their books very high values for buildings. If that building had to be auctioned off instead of sitting on the balance sheet of Sri Lanka Insurance and consequently the Life Fund, we would have realigned our developments.

Currently, early withdrawals from the Life Fund would benefit more so than later withdrawals because at some point that investment will have to face market realities and be written off.

How many prospective buyers?

How many people in Sri Lanka can afford an apartment that costs in excess of Rs 25 million? Under the assumption that you can borrow at 7.5% that would mean an interest outflow of Rs 145,833 a month. As the Household Income and Expenditure Survey does not give a strong sense of the distribution at the end of the spectrum it is difficult to see how many people are there who have incomes that are 3X of the median.

Given that people do not intend to spend their entire income on housing let us assume as with Norway and Sweden Sri Lankans tend to spend 30% of their income on housing. That would mean that a person would need an income of about Rs 486,111 a month to have a lifestyle that fits into the lifestyle that goes with the apartment.
This makes our calculation easier as that income figure would have to cross the tax threshold. There are 292,712 individual tax files open in the country. Here if you are a taxpayer you should congratulate yourself as you are technically more or less in the 1%. As I have mentioned earlier these 292,712 people probably do have homes and are unlikely to purchase for their own consumption the rest of the housing stock. If it at all they will be purchasing to rent to foreigners who are currently in short supply.

Resorting to accounting fraud

Take the recent IPO that is going to happen for Expack Corrugated Cartons. The company is in a competitive business market and isn’t that highly profitable. The company as with many Colombo corporates is heavily geared probably as well at the level of the parent company.

They have been paying out the extra cashflows from their operations out of their business as dividends. The accounting standard allows them to do this as they have made book profits and probably not appropriately written down their property, plant, and machinery. As with many manufacturing industries, they have huge assets proportionate to their balance sheet in property, plant, and equipment.

As machines deteriorate over time they are now trying to keep their dividend machine flowing by raising public funds to replace their plant and equipment. Careful investors would note that they are not trying to grow their business substantially and intend to sell off the old plant. Don’t be fooled as if the returns from the venture were as high as the CAL report suggests they would use internally generated funds for investment.

Here it must be repeated time and time again that it is possible under Sri Lankan Accounting Standards to put in any damn figure in a valuation document. Many of the failed institutions on the CSE have done the same.


If companies like Ceylinco that have genuine long term investment needs entered the property sector and were honestly managed we would have a continuous stream of nice developments. No one would make a killing but at the same time, no one would make a loss.

However, if they get too risk-averse and instead let their historical turf get invaded by the likes of the Prime Group which notably have taken over failed Ceylinco institutions and are going on a rampant expansion, we will end up in a situation like this. If the farmer hadn’t prayed for mega-profits he wouldn’t have ended in that mess. If all you really want to do is save then a Treasury Bond performs better than the current condominium market.

Much like our currently overvalued stock exchange the saying ‘all fictitious value must be a loss to some person… the only way to prevent it is to sell out and so let the Devil take the hindmost,’ holds. Interests rates will have to rise over the medium term further hurting the discount rate on future cash flows which in the case of rental income have no prospect for an increase in terms of Rs per sqft.


Against the consensus view

The Prince of Kandy

Given the recent passing of Mangala Samaraweera, it is important to set out at least a few things so as to show disagreement with the consensus view. Samaraweera was a polarizing figure with his stance on ethnic reconciliation drawing adoration from some and hatred from others. Here I will contend that those adoring him and those hating are both misconceived in their views of Samaraweera.

Samaraweera in his own words was defending the armed forces from a more thorough investigation of their actions in the conflict. His establishment of the Office of Missing Persons, various nuances in the co-sponsored resolution, and backroom dealings all helped Sri Lanka buy for time. Though much of the foreign policy victory should be given to Wickremesinghe there is no doubt that Samaraweera though a horrible finance minister was a very adept diplomat.

People with actual power in positions of public interest are rarely put under much public scrutiny in our country. A recent piece I wrote on recently deceased Rajendran Rajamahendran was very difficult to get published but was done so here[i]. The sickening deification of people recently passed is not out of our forgiving and understanding nature but rather our sycophancy and the hope that we too receive such treatment in our own passing. I am far from a saint but at least I am not a moron.

Personal View

The United National Party has by far the worst record on ethnic harmony. The UNP though antecedent of the Ceylon National Congress was behind much of the racial tension in Sri Lankan history. Through extremely divisive policies the UNP created both the JVP and LTTE.

Beginning from the 1980s the UNP used state-backed violence to create communal disharmony in such a manner as to retain power. The UNP of the time embodied, contrary to the principles of the Ceylon National Congress and the notion of a United Nation within its name, the very ethnocentric elements of the SLFP.

This worked wonders as any intelligent criticism of the government would also probably be by someone who would be easily castigated as being against the majoritarianism of the government. In other words, people like Cyril Mathew could be used to reign in any elements averse to the brazen corruption of the executive presidency. This trend continues today with the likes of the Jathika Hela Urumaya and Bodu Bala Sena being propped up by the major two parties (which represent broadly one set of policies). The SLFP could and should have thrown the UNP under the bus when facing international pressures on the outcomes of the war. This alongside the brazen Western alignment of the government in the 1980s would have gone a long way to allay pressure on the country.

Though I have great respect for Ranil Wickremesinghe I do not think by any metric he or even Mangala Samaraweera made a tangible difference to ethnic reconciliation. The UNP making bigger admission of its role in state-backed violence against minority communities would go a long way in coming to a long-term solution.

Wickremesinghe being a member of the government in the 1980s is unlikely to admit at best his government’s blatant cowardice and at worst obvious complicity in the incidents that took place. In politics, you have to be pragmatic. The Tamil polity should build ties not with the policies but with the people of the JVP and form a united movement against the Executive Presidency.

Back to Mangala

Samaraweera’s political journey has been quite different. He was a human rights campaigner in the 1980s during the Ranasinghe Premadasa presidency. But as a member of President Chandrika Kumaratunga’s inner circle, Samaraweera was known for his cut-throat political style and his markedly illiberal approach to governance. In 2005, when he served as manager for Mahinda Rajapaksa’s presidential campaign, Samaraweera ran a nationalist electoral battle that alienated moderates and ethnic minorities.[ii]– Mangala’s moment?

The above quote was from a piece published this July. In contrast to the sentiment expressed in recent opinion pieces Mangala’s politics rarely if ever seem to show a large principled stand on political issues. Think about how ridiculous it is to deify Mangala Samaraweera as a champion of ethnic harmony.

Samaraweera owes his beginning in politics largely to the Bandaranaike family who he actively supported even while within the UNP. He and his personal staff sing the praises of Sirimavo Bandaranaike. Need I tell you that the Bandaranaike’s were behind the Sinhala only policy.

Though his budgets gave large reference to the Northern regions, the elements that were implemented largely took the form of huge tax breaks to those that have historically backed the UNP and are currently bank-rolling the SJB. Nowhere did he create expenditure (the most effective way) that brought about investment in the Northern regions.

How can people without any concern for plausibility suggest that Samaraweera or for that matter any politician believes in their own rhetoric? Do these same idiots believe Mrs Perera who recommends[iii] that we drink Rathi milk powder? The latter being an Indian female actress pushing a brand owned by a New Zealand based multinational. Given the advertising revenue model, the television waves only broadcast what the powerful want you to hear.

Samaraweera championed what suited him at the time. The Premadasa’s tendency for brutality (Sajith has come out fervently in support of capital punishment[iv]) has both been ignored and wildly confronted by this one man.

The War

Though there is a lot of advertising and political interest in painting a certain historic view of the war think about how deluded it is? UNP leaning individuals fervently believe that it was Wickremesinghe’s splitting of the Karuna faction and international diplomacy that isolated the LTTE and lead to the war victory. Rajapaksa loyalists believe that it was the bravery and resolve of the leadership that brought about the victory.

No one stops to think that the tsunami of 2004 had a major impact in weakening the LTTE. No one within this shameless vote grabbing rhetoric further stops to acknowledge the massive costs paid by our armed forces in delivering that victory.

Chief amongst those ignored is one Dr Amith Munindradasa without whom Sri Lanka would not have had the long-range weaponry that gave the country the edge required to continue advancing. The entire notion of ‘No-Fire Zone’ is a testament to how effective Sri Lanka’s long-range equipment was in defeating the guerilla tactics of the LTTE. Interested parties can read War Games by Leo Murray which details how suppressive fire causes enemy soldiers to either fuss, flee, or freeze.

Dr Munindradasa though a national hero does not have proportionate appreciation by the general public. Many don’t know that he died in Israel, one of the leading centres for arms dealers, under very suspicious circumstances.


Head of USAID Samantha Power with Mangala Samaraweera.

Mangala’s death was more concerning to the establishment than it was to the general public. The elite liked him as they knew he would not go against their interests. Amongst the most powerful messages of condolence was from one Samantha Power who currently heads USAID. To quote the tweet[v] released on an official USAID social media account.

Mangala fought for justice & for reconciliation. As Foreign Minister, he pushed to create the Office on Missing Persons, & for reparations to war victims and survivors. As Finance Minister, he orchestrated the forgiveness of loans taken out by desperate families after the war.

As alluded to before the Office of Missing Persons is a dud institution. Further under the Yahapalanaya government microfinance ballooned and most people are aware of its nefarious impacts on society. Those with an anti-Western bent will go so far as to point that it was the IFC that helped create many of these highly predatory instruments and that they also back the large corporations that administer them.

USAID is an organization that has nefarious impacts and funds a lot of the so-called ‘Think Tanks’ in our country. They have targeted spending to influence key people in the media, judiciary, and policymaking of the country. Contrary to the name they aren’t allocating a serious amount of money to the building of wells in rural schools.

To quote research: Human Rights Practices and the Distribution of U.S. Foreign Aid to Latin American Countries[vi]

“The distribution of U.S. foreign aid among Latin Ameri- can countries has tended to reward human rights violators and punish human rights champion.”

Samantha Power addressing an event in Sri Lanka celebrating Samaraweera’s 30 years in politics.


Former Minister of International Development of Norway Erik Solheim came out with a message of condolence for Samaraweera. Solheim was a key player in Wickremesinghe’s ploy to pivot the Western agenda against the LTTE.

Wickremesinghe picked Norway as it is notably both a member of NATO and also a country that is insignificant. Norwegians in the bid to seem important were invited to play a role in the Sri Lankan conflict.

Norway also interestingly is a country with a horrible track record against minorities. Norway’s long history of actions against the Sámi people is atrocious. They were very unlikely to bring about definitions and mechanisms that would in any way be used against themselves.

If the war had escalated before the tsunami it is unlikely that Sri Lanka would have won. Given that it isn’t even alleged that Wickremesinghe as opposition leader called on Rajapaksa to stop the advancing forces we must assume that he too was in support of the actions of the armed forces.

Given that Rajapaksa and Wickremesinghe get on so well it should be assumed that they don’t expect to tarnish each other’s reputation. As mentioned before it is unlikely that the SLPP will push the UNP under the bus in terms of its record on ethnic reconciliation and it is unlikely that Wickremesinghe would question in any serious manner the actions of the armed forces.

True Patriots

Samaraweera’s last venture in politics was the True Patriots organization. A self-proclaimed non-partisan front with no transparency on funding that existed with no clear purpose (largely rhetoric) and no desire to contest elections. The organization was largely a joke which without Samaraweera will become obsolete. The headline however stands as it contends that Samaraweera as Foreign Minister stood by the armed forces.

In the long run, it would be beneficial for Sri Lanka to acknowledge and come to terms with its very violent and deep-rooted system of state violence. However, for the sake of national interest, the ending of the civil conflict can only really be questioned by the citizens of that country. Any system of punishment or inquiry will invariably have to cut both ways (inclusive of released LTTE cadres) creating deeper fractions within society.

To paraphrase what Wickremesinghe said once when abroad when questioned on the fact that Sri Lanka had done little to live up to its commitments at the UN. He noted that at the end of the day it was up to the Americans to come to terms with what they had done to the Japanese American population during the second world war.

On this issue, one can not deny that Samaraweera was deeply a patriot. Those arguing otherwise should point to where he actually failed the Sri Lankan armed forces on their track record during combat. Broader society would probably feel that Samaraweera committed a necessary evil in his actions.

Is convincing the Tamil polity to engage with the fruitless venture of the Office of Missing Persons, morally right? Is promising economic prosperity to war-torn regions and then creating tax incentives for the Colombo elite who control sentiment expressed by human rights institutions morally justified? The issue of whether Patriotism is virtuous is something that you will have to decide for yourself. You would however have to be stark raving mad to assume that Samaraweera is not burning somewhere in hell or has in any way attained enlightenment.








Shall we decide?

The Prince of Kandy

Also published at

This is being written in two veins. One to point out the massive corporate hypocrisy of our media landscape. Secondly and most importantly to at least maintain the adversarial façade of our political landscape.

Rajandram Rajamahendran was not a nice man. His achievements in cricket are mainly due to his privileged position in society and not due to his leadership talent. His media empire though seemingly brave in their reporting only really does so for the subsequent benefit of political clout. Given the massive failings in our society in any real democracy, the coverage should be far worse.

As Sri Lankan politics have nothing to do with policy Rajamahendran’s death will open new dynamics in our highly interpersonal networks of political clout. As with new people, there can be new beginnings, the Capital Maharaja media empire can and probably will broker some form of peace with the UNP and SLPP.

Rift with Ranil

At the last General election, Kili Raja Mahendran of the Maharaja Organization requested two slots in the National list of MPs at the general elections to which I did not agree. Therefore, his Sirasa media has turned hostile to me and my party, and have started a campaign to attack us

Opposition leader Ranil Wickremesinghe[i]

Though not acknowledged Ranil has an admirable track record of standing against media conglomerates. In backroom dealings, he seems to have made few friends and many enemies. Notable among his enemies are the likes of Hiru, Ceylon Today, Derana, and Sirasa.

In all these feuds there are great moral underpinnings. It was his government that jailed the brother of the Hiru group owner whose release according to sentiments expressed online is considered a miscarriage of justice. It is not for newspaper owners to play an active role in the suppression of voter rights[ii]. With Derana though the relationship has turned somewhat more convivial lately the UNP under Ranil has stood firm on a pluralistic Sri Lanka. Derana is highly intertwined with the Rajapaksa family and it is under Wickremesinghe’s government that considerable corruption scandals came to public attention.

Actual bravery

All major media institutions in Sri Lanka operate on an advertising model. There are large groups of people that have already made up their minds on who to vote for. These people are served by media platforms that reconfirm their biases and help them decide on which brand of soap, piping, and or flavoured beverage they should consume.

Partisan viewpoints, therefore, are good for business. On top of this, it is highly likely that under a Premadasa government there will be considerable benefits to the privately held Capital Maharaja organization.

Why not have a proportionate celebration of journalists who have been killed by the government? A man so thickly a part of the establishment that national leaders have to issue statements on their deaths in a country as corrupt as Sri Lanka is probably not a good human being.

Attacks and coverage of non-entities

As most statements are public the general populace can make up their own minds on who is a sickening sycophant to a media organization. However, amongst yesterday’s coverage, it was interesting to note that the Sinhala Ravaya came out in praise of the late Rajamahendran. This is an institution that short of the coverage given by the corporate media does not have any traction in other platforms. Their social media reach and any other metric of public engagement are poor.

Individuals with some knowledge of how the Central Bank has arranged the payments system would also see that the Sirasa based attack on Muhunthan Canagey was highly misleading. Pricing of payments products in Sri Lanka as set by the National Payments Commission are very much against the digitization of the payments ecosystem. Competition in the payments space through ICTA would have been beneficial to all of us.

With apologies to Canagey, it is odd to see why people of such little interest to the general public are given such prominent coverage by Sirasa.


The UNP was probably under duress in issuing yesterday’s statement. Aligning with Capital Maharaja organization regardless of their new political alignment is not in the public interest. Recent polling still shows that Premadasa can not win a general or presidential election. However, many will defend this action as favourable coverage is a necessity for political survival.

To solve this, following an electoral victory, the UNP can then look to vest one of the state media broadcasting channels (either ITN or Rupavahini) with the leader of the opposition. Given the way newspapers work, the deputy editor at the state paper can be appointed by the leader of the opposition. Laws can also be enacted forcing independent media outlets to have balanced coverage. At the end of the day, it is us the general public who should decide on who gets elected.




Sounding poor

The Prince of Kandy

Also available at

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.


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).