“Land like no other” in a trance
View(s):It was as if Kussi Amma Sera had gone into a trance. She kept on mumbling, “Ehe yanawa, mehe yanawa … ehe yanawa, mehe yanawa (Going here, going there)”, while preparing the morning tea in a smoke-filled kitchen.
Puzzled at first and about to ask what she meant, I recalled a friend saying that the struggle by ruling politicians to form a new government and Cabinet was like the back-and-forth swing of a pendulum in an old grandfather’s clock.
“Apey desapalagnayin ratata-nung adare neha (Our politicians have no love for our country),” she said in resignation, bringing the morning tea as I prepared my weekly writing sojourn into cuckoo-land (trying to make Sri Lanka a perfect place to live but alas an impossible dream just like Frank Sinatra’s classic ‘The impossible dream’).
Leaving Kussi Amma Sera to her thoughts and another day of juicy gossip with her comrade-in-arms Serapina on the, this-way-that-way, political turbulence, I was more interested in the latest economic data released by the Central Bank (CB) on Thursday.
The CB’s economic numbers for the whole of 2017 culminating with the December statistics were released coincidentally against the backdrop of “alarm bells” from its Governor Dr. Indrajith Coomaraswamy that political instability will endanger the economic reforms programme. And, as if rubbing salt into the wound (of an economy trying hard to cut spending as part of debt management)), the back-to-the-wall government – desperately seeking to woo back waning public support – offers concessionary vehicles to public servants!
In a February 16 order, Finance Minister Mangala Samaraweera gazetted regulations offering public servants a tax deduction of Rs. 5 million (per vehicle) under the concessionary duty permit. Tax revenue down the drain!
In another obvious sop, Agriculture Minister Duminda Dissanayake has said the government “will deposit cash for the full market value of fertiliser in the bank accounts of farmers, starting from the next cultivation season” in addition to providing them free agriculture insurance cover of Rs. 40,000 per acre.
How many more hand-outs will be doled out in the coming days is anybody’s guess and add further headaches to the Central Bank and the Treasury, inevitably putting the brakes on tight fiscal management policies. The Government seems to left with no choice just like one respondent, in a Business Times (BT) opinion on the shaky administration, pointed out: “Sustainability (of the government) will depend entirely on the performance of the new administration. If they continue the same way that they did for the last three years, they are doomed.”
Many people, as the BT poll reveals, are unclear about the state of play in a government where the ruling politicians don’t know whether ‘they are coming or going’!
These unexpected changes in the economic landscape with more concessions to farmers, fishermen and others who matter in the voting population just as the economy had shown some progress and belt-tightening measures were to continue in 2018, are similar to the political uncertainty in the Maldives.
There, just as tourism was recovering after a bad year in 2016 and for three quarters of 2017, a political crisis triggered by a Supreme Court decision to free political prisoners led to the imposition of a state of emergency resulting in a wave of travel warnings from key tourism markets like China, the UK and Germany. Hundreds of cancellations were reported, millions of dollars in revenue lost and industry bodies are pleading with the authorities to lift emergency rule.
In Sri Lanka, while the projected economic numbers were looking good for 2018 — after a reasonable 2017 – the pendulum could be swinging the other way if spending on unproductive items rises.
Back to the numbers game and economic data (not lies, damned lies and statistics, as the saying goes), the top three foreign exchange earners in 2017 were remittances from migrant workers at US$7.2 billion (a drop of 1.1 per cent from 2016, a trend seen across 2017), textiles and garments $5 billion (up by 3 per cent) and tourism, up by 3.2 per cent to $3.6 billion.
While known in economic and academic circles but not clearly explained in the common public space, both garments’ exports and tourism revenue have an imported component. In the CB data, under the import category of intermediate goods (which is imported inputs), textiles and “textile articles” cost $2.7 billion (more than half the value of exports). So if you subtract this figure from $5 billion, the net foreign earnings for garments is $2.3 billion.
The same equation applies to tourism, though to what extent cannot be quantified since the tourism input component comes under the general import categories of food and beverages, etc.
Just at this moment, Kussi Amma Sera comes running with my mobile phone, shouting, “Sir … call … call … apey Mahattaya line-ekay. (Our Sir is on the line).”
It was Pedris Appo, a retired agriculture expert who does a little farming, whom I have occasional chats with and who likes to be called “Appo”, short for Appuhamy.
“Machan, now the fellows are blaming the farmer for their defeat. Politicians use the farmer to win an election and (also) blame the farmer when they lose.”
“Ah … what …,” I asked.
“Agriculture can do well and we can export high quality surplus if only the policies were right. The politicians bring people from abroad with theories (in every economic sphere including agriculture) to tell us what we already know, even better.” (At this instance, I remembered reading a comment by economist Prof. Razeen Sally that Sri Lanka unfortunately loves the “white fellow” at the expense of a greater depth and quality of local expertise).
“But if the farmer becomes rich and powerful like the Colombo resident, politicians won’t be able to win elections? Farmers are deliberately kept poor and needy so that politicians can give handouts and win votes,” I counter.
“Yep… you’re right. Sadly, only D.S. Senanayake had a vision for agriculture in the country and no one can beat that vision or even come near it. Here, we are heralding sectors like garments and tourism with tax breaks, concessions and deshamanayas when agriculture doesn’t get the same prominence except at an election. I am not against these sectors and not asking for tax breaks or special treatment, but equality,” Appo notes, rather sadly reflecting on the rich sources that the country has but not utilising its potential in a sustainable way.
Sri Lanka’s agriculture and its value-added products are still a mainstay in the export economy and can do much better with the right policies. For the record, tea revenue rose by 20.5 per cent to $1.5 billion, rubber products rose by 8.8 per cent to $835.4 million. Spices with a revenue rise of 28 per cent to $406 million beat coconut (earlier the third largest agriculture export) which saw negative growth of 4.9 per cent to $348 million.
Seafood also showed some strong numbers, with revenue rising by 42 per cent to $240.6 million. If only Sri Lanka is able to maximise fish production being surrounded by sea, local fish prices will come down and reciprocally reduce the cost of living.
Sound agriculture policies, as pointed out by Appo without leaning on foreign expertise, will ensure more crops, more productivity and drastically cut the high cost of production. The private sector is driving agriculture growth in the country with companies like Cargills, CIC, Renuka, Nestle, Pelawatte and many others showing the way; they need to be recognised even more than garments and tourism barons.
Simple, down to earth economics will help increase yields in farms and help reduce prices and export the surplus. As Kussi Amma Sera often says, “Apita baara dunnoth, api hariyata karanawa. (Hand it over to us and we’ll do it well”.