Saturday, June 25, 2022

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The way forward from here

By: Damien Fernando, MBA (Sri.J), FCMA


Before 1972, the parliament was mainly responsible for governance. 1972 and 1977 constitutions made politics encroach day to day lives. To depoliticize the country’s main sectors, such as education, higher education, agriculture, health, and labour, should be brought under powerful commissions with long-term planning for each sector together with milestones and goals. 

Once these commissions are established, the relevant minister should represent the interests and funding for the sector in the cabinet. This is the opposite of sectors being dominated or directed by the minister. 

Licensing politicians

This is a method wherein a license is given to people who intend to contest elections and hold office. Only a person with such a license should be allowed to contest in any election for public office. An independent licensing agency has to be established. Any person without a criminal record would be able to apply for the license. All assets have to be declared to obtain the license, and an annual asset declaration should be made to renew the license. If there is an inquiry for misconduct or a criminal offense with prima facie evidence, the authority could suspend the person’s license.

While it is hard to expect these changes from the current politicians, the following are some changes that we can demand from them.

Financial assistance to the lower-income households

The current system is politicized, and hence mostly the party supporters get the income support. The basic model should change to one similar to the ‘kapakaru mapiya’ system during the Premadasa regime. The top 20-30 percent of the society can spare, say, Rs. 10,000/= a month to support the bottom 30% of the families. Some will volunteer to finance more than one family. Also, the state and private sector institutions would allocate sponsorships for tens of families through their CSR budget. The state will provide the monitoring infrastructure to the program but does not need to finance it. The main benefit is that the sponsorship would help the families in directing the children for the acquisition of the skills, help with clothes and even furniture, etc., in addition to the monthly support. Some sponsors will be able to find employment for the members of the family they sponsor.

Online bidding for state and local government tenders and supplies

State institutions, departments, and local government bodies should implement a common portal for online bidding for purchases and contracts. This will enable the producers (and not intermediaries) to bid for supplies and increase manufacturers’ revenue. The program would be able to analyze the usage of items and the costs incurred. This will reduce usage and costs and also reduce corruption in purchasing goods and services in the state sector.

Student loan system (similar to developed countries)

The ‘free education’ has made it difficult for the state to increase higher education seats. The only way to change the fortunes of a low-income family is to ensure their children are given opportunities for higher education. Wealthy parents could send their children to private institutions or overseas universities. The proposal is to convert NSB into a savings and skills bank with a student loan scheme. 

Concurrently, the large state banks and private sector institutions should be given 25 acres each (close to a highway exit) to establish universities. A separate UGC should be set to guide and monitor the universities. A University entrance exam similar to SAT is to be introduced, and anyone with three credit passes would be eligible to sit for the exam. The top 2% of the students from this exam could be given scholarships and the balance a student loan. The eligibility for a student loan is limited to students whose average family income is less than Rs. 100,000/= or the net assets are below Rs. 20 million. False income and asset declarations to obtain loans should be made a criminal offence.

The private universities will have a long-term (10-year) target of attracting an average of 100,000 overseas students annually. This will create an additional foreign exchange income of approximately USD 10 million a year. Private universities will also reduce the outflow of foreign exchange now spent sending students to foreign universities. 

The benefit to the Sri Lankan students is that they could also spend time in sports, aesthetic studies, etc. The academic requirement to sit for the Entrance exam is only three passes. This will also reduce or eliminate the tuition menace. Allocating additional marks for sports and aesthetic skills for university admissions will expose the students to these areas and contribute to a healthier future generation.

Vocational training bodies such as the nursing schools, German tech, etc., should be attached to a university so that the students can obtain university degrees and diplomas. In addition, diplomas for skills such as bricklaying, hairdressing, bakery, seafarers, and other skills should also be introduced. There is a high demand for these skills in the international job markets.

At present, the employees pay 10% of their salary to EPF. The employer contributes 15%. This amount (which is 25%) of the salary could be directed to the student loan repayment. 

Reorganization of the school’s system and admission to schools

The school system in Sri Lanka has many issues, including corruption in the admission of students to the disparity of the facilities in smaller schools. There are approximately 9,000 schools in Sri Lanka. This should be converted to 2,500 larger schools with several satellite campuses. For example, 3-5 smaller schools around Dharmapala Vidyalaya can be converted into primary/secondary sections of the main school. The names of the smaller schools are changed to Dharmapala Vidyalaya south campus or Dharmapala Vidyalaya Primary section etc. Once all 5-6 schools are made into one larger school, they could share the infrastructure, furniture, teachers, and other facilities. This way, all 2,500 schools will have similar facilities. Each larger school will have a Chief Principal, and the satellites will have Principals reporting to the Chief principal. It would be easy to monitor and communicate among the satellites and the main campus with today’s communication technology.

Once this is done, there will not be a rush to find the best schools for the children. In addition, a proactive system could be implemented for school admissions. When a child is born, the parents will have to online register the child in the National Education Portal. The system will match the child to the closest school using map technology. This will enable the school to know the capacity requirement in each of its satellite campuses at least four years in advance.

Improving the foreign exchange position

This has to be done by reducing the foreign exchange expenditure and increasing the avenues of income.

Increasing the income

As mentioned earlier, by establishing university diplomas for bricklaying, hairdressing, motor mechanics, etc., we will be able to send qualified people for foreign jobs. These skills could earn 2-3 times the income of a housemaid.

There is an insatiable demand for nurses in western countries. India and the Philippines are monopolizing this area. Along with the private universities, several nursing training schools should also train students in English. The hospitals in the country should provide training to these students. With a 4-year degree (with some other foreign qualifying exams), we would be able to send qualified nurses to the world. The salary of a nurse would be around ten times that of a housemaid. If we could send 400,000 nurses over a period, that would earn USD 10 billion a year. (Nore. Some nurses will obtain residency in those countries and may not send their full salary).

The second avenue is to attract 400,000 international students to Sri Lanka’s proposed private universities. (Average of 100,000 first-year students for 4-year degrees) This will earn a minimum of USD 10 billion a year.

Similar to nurses, the country should identify the avenues for foreign jobs. There is a demand for seafarers, fishing vessel crew, cruise ship crew, bakery professionals, motor mechanics, ship mechanics, aircraft technicians, heavy equipment operators, laboratory technicians, age care personnel, airline cabin crew, etc. There should be a system of formal training and awarding of recognized diplomas (from reputed universities) for these areas to compete with the others in the world job market. Over a few years, if we could send 400,000 people for foreign jobs in these areas, that will earn USD 10 billion a year

Exporting fish and vegetables are two areas that can earn large volumes of foreign exchange. The way forward is to identify suitable land and allocate them for export crops with extensive support from the agriculture department. Manufacturing trawlers through the Sri Lankan-owned Colombo Dockyard and arranging to finance for large companies or established businesses to carry out deep sea fishing will increase fish production. A central body for export (along the lines of the New Zealand Dairy Board) to market and link producers and buyers for RSi Lankan products is a must. The target for vegetables and fish should be USD 5 billion a year.

Saving foreign exchange

Discontinuation of duty-free or duty concession vehicles for politicians and govt sector employees. Each vehicle costs USD 25,000 to 60,000. The govt sector employees could be given an interest-free loan to purchase a motor vehicle. The politicians could be given a government-owned and maintained car that has to be returned after leaving office.

Private universities will substantially reduce the dollars spent on overseas education.

Prohibit foreign investors from borrowing in Sri Lanka. The companies with majority foreign ownership should bring in foreign funds for additional investments. For some reason, Sri Lanka allows this. 

Identifying the other areas of large foreign exchange outflows, such as import of food items, etc., and encouraging established businesses to commence import substitution supported with higher import tariffs.

Increasing rupee income and reducing the expenditures

Increasing income

The system of providing free services for everyone irrespective of income is one of the reasons for the high state expenditure and budget deficits.

Levy a fee of Rs. 3,000 to Rs. 5,000 monthly for every student for govt school education. This is to be limited to families with an income over Rs. 100,000/- per month of net assets of over Rs. 25 million. Also, all private schools are to be charged the same amount as a tax based on the school’s capacity. There are 350,000 students in each age group. If one assumes that 20% of the students come from above thresholds families, the government could earn Rs. 30 -50 billion a year. This will reduce the govt expenditure by half.

Similarly, free healthcare should be limited to the population with less than Rs. 100,000 monthly income or less than Rs. 25 million in net assets. For others, the usual private sector fees should be charged for laboratory and exploratory tests. Inpatients should be charged Rs. 2,000/= a day for hospitalization and an average of 50% of the surgery prices of the private hospitals. At a later stage, the land available in state hospitals could be used to build fee levying hospitals where the doctors of the relevant hospital could carry out private practice. Such state-owned fee levying units could have a better demand than private hospitals as, unlike most private hospitals, specialist doctors are available 24/7 on the state-owned hospital premises. Similarly, nurses could take turns in working in the fee levying section.

Apart from the motorways, other main roads could be made into toll roads (Busses, three-wheelers, and motorbikes exempted). The tolls could be 40% of that of the per km fee of motorways. Local loans for road construction and maintenance costs can be met with the income.

Reducing expenditure

Discontinue the pension system for politicians and make all levels of politics an honourary service without benefits. 

All state boards and institutions (other than state departments) have back-office human resources, legal, and financial services. An institution similar to Attorney General Department should be established by pooling the professionals of all institutions. This support service department would provide legal, financial, administration, and other back-office facilities. Also, by making the non-department sector a transferable service, the staff can be transferred from overstaffed departments to those needing additional staff or incurring high overtime costs. 

Establish a transport management company under SLCTB to own and operate all vehicles of govt and state sector, and local government institutions. All transport-related technical staff, drivers, etc., must be transferred to the new institution. The user departments could pre-order rides through an app similar to Uber. As this will substantially reduce the number of vehicles needed, the additional vehicles could be auctioned and sold. The institutions could hire the vehicles required for senior management entitled to such perks full-time. This new institution could also provide ride services to private sector companies and individuals. This will significantly reduce the vehicle requirement of the state sector (saving future foreign exchange) and make the highest utilization of the available vehicles. As the vehicles would have tracking devices and the entire transport system would be computerized, the public could have access to analyze the usage of vehicles. Hence, this would eliminate the abuse of government vehicles. 

Developing the Railway Stations as transport and business centers. Selected railway stations in major cities to be leased to Bank of Ceylon, Peoples Bank, National Savings Bank, Insurance corporation, etc., to build transport and commercial centers. Separate floors for supermarkets, banks, other financial sector institutions, eateries, fashion shoes and clothes, Cinemas and other entertainment, indoor sports centers, etc. Several floors for all govt sector organizations in the city will enable the public to obtain the services under one roof. A bus stand, a taxi stand, and a private car park on the ground floor will provide a seamless connection from the railway station to other destinations in the periphery. The rents paid to private buildings for state institutions could be saved or paid to the state-owned banks. The number of people using public transport will increase as the buses terminate at the transportation and commercial centers. In addition, the public will have a modern railway station. 

Public convenience 

At present, people from all over the country need to come to Colombo to obtain a passport. The government could establish service centers in all major towns using the excess state employees. At this service center, the public should be applying for a new passport, renew a passport, renew a driver’s license, register motor vehicles, obtain or renew identity cards, and obtain copies of birth certificates; This will require building electronic databases for the NIC, Passport, and registration of Motor vehicles. 

Implement a trade authorization for shops that border main roads. At present shops are operated without any parking facilities for the customers. Some shops and their activities encroach on the streets and result in traffic congestion and waste of fuel. A new authorization method should be introduced if anyone wants to use a property bordering the main road for any business activities. To obtain such authorization, the shop should have a predetermined space between the center of the road. (In the case of a 60 ft road, the business premises should be at least 50 ft away from the center of the road. This will enable parking and other shop activities without hindering traffic flow. Shop owners should be given a time of, say, 12 months to adhere to this, and after that, the trade authorization should be canceled. 

In many countries, there are times when parking is prohibited during office starting and closing times. The left side of the roads towards the city should be made no parking from 6-10 AM. Similarly, the left side of the road going away from the city should be made no parking from 4-7 PM. This will significantly reduce traffic congestion. 

Beautification of the country

In many countries, the properties bordering roads have to maintain the buildings or land in good order or face a hefty fine. In Sri Lanka, one could see many unpainted walls and dilapidated buildings and shops with a large number of signage boards. A law should be passed requiring the local govt institutions to monitor and ensure that the properties bordering the roads are properly maintained. Also, the law should cover the number of signage and promotional boards a property could display, and there should be limited standard sizes for such signage. The schools and state institutions could obtain private sector sponsoring and allocate 10% of the space for advertising for the sponsor. 

Implement a trade authorization for shops that border main roads. At present shops are operated without any parking facilities for the customers. Some shops and their activities encroach on the streets and result in traffic congestion and waste of fuel. A new authorization method should be introduced if anyone wants to use a property bordering the main road for any business activities. To obtain such authorization, the shop should have a predetermined space between the center of the road. (In the case of a 60 ft road, the business premises should be at least 50 ft away from the center of the road. This will enable parking and other shop activities without hindering traffic flow. Shop owners should be given a time of 12 months to adhere to this, and after that, the trade authorization should be canceled.

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