Political stability essential for business and economic growth

Political stability is a pre-requisite for business confidence.The prospect of political instability affects business confidence in many different ways. Rapid economic growth is unattainable in situations of political uncertainty. An unstable government is not likely to take important decisions needed for an improvement of business conditions.A government lacking a clear majority in parliament is likely to favour popular short term policies,rather than adopt realistic sound policies which would bring long term benefits.The search for popularity and compromise by an unstable government is likely to lead to an erosion of economic fundamentals. The capacity to implement economic reforms could be greatly weakened if the government's primary concern is to find political alliances which would enable it to retain power.

In fact such weaknesses were there in the coalition of parties which constituted the People's Alliance.The constituent elements espoused widely varying policies.

These could have incapacitated it.It is in fact surprising that despite this weakness, it had the capacity to proceed with some its policies,such as the privatisation of the estates and telecommunications.Perhaps the power of the Executive Presidency, as well as the fact that the parties which disagreed with these policies had little political support in the country on their own steam, made them confine themselves to loud hollow noises.

This election was looked upon with a great deal of anxiety. There was always the fear of an unstable government.The current composition of parliament does not augur well for political stability and the pursuance of clear cut economic policies. In fact at the time of writing this Comment, we are not certain of who would form the next government.

The People's Alliance coalition has a greater degree of unity in policy within itself than in the last government,but lacks an adequate control of parliament. The dissident elements like the Samasamajists are toothless.

The election results have shown very clearly that the people endorse the mainstream economic policies of the government. Those who opposed some of the economic policies of the government and contested separately have lost their seats in parliament. This is a clear endorsement of the government's capitalist policies of the last six years.

The question however is not one of continuity of the general thrust economic policies,as the United National Party is also committed to similar economic policies. The important question is whether the lack of an adequate majority and the need to seek alliances would sap the capacity of the government to effectively implement economic policies.

Will economic policies be pursued vigorously? Will the effective implementation of economic policies be impeded by political preoccupations to remain in office? Will the new government be preoccupied with various political manoeuvre rather than economic concerns? Most important, would the political instability be viewed unfavourably by foreign investors? if so much needed foreign investment would be denied us.This would indeed be an economic factor in reducing the momentum of economic growth for some time.

We can only hope that the political and constitutional issues would be resolved speedily and that the country would return to the serious tasks of building the economy. If the government is to give a leadership to economic development and achieve a growth rate of 8 per cent per year during the next six year period of office,it is vital for the government's budgets to achieve financial discipline and keep the budget deficits within acceptable levels.

In the previous six years the government steadfastly maintained that keeping the budget deficits to low levels was a centre piece of its policies. It enshrined this in the several budgets,but expenditure overruns made the actual deficits to be much larger. In fact this year the deficit is likely to be around 10 per cent of GDP, rather than the estimated 8 per cent of GDP. The excuse is of course the war.The war expenditure must be accepted and other ways and means of curtailing expenditure must be found. Now that the election is over every effort must be made to cut wasteful expenditure,however unpopular these may be.The massive expenditure on Samurdhi is a case in point.

The country has been pre-occupied with politics for far too long. Now that a parliament has been elected,a new cabinet has to be sworn in and a Budget for 2001 has to be presented soon. We hope some means would be found to establish a stable government, whatever its composition. It is of course most opportune to form a serious national government which will look at national political and economic issues in a non-partisan and pragmatic manner. Considering the history of cooperation among different political parties on key questions of national importance,it is difficult to envisage a cooperation of the two main parties to ensure a smooth functioning of government.

Investing in foreign education

By Gamini Rajakaruna

Open any English newspaper. See the amount of advertisements under the heading "Study Abroad." It provides a dream to our youth. Hope for the parents for the future of their children.

But it is a known fact that educating children abroad is generally quite an expensive affair. In fact it is the same to an average citizen in countries like USA, England and Australia.

With my first hand experience, I find USA to be the best place to invest in a foreign education programme.

In USA, if any parent wants to give an university education to their children they must be prepared to pay for the education. But a non-American parent must be prepared to pay more than five times for his child's education in an average US university, compared to what an American parent pays.

For example one year's tuition fee for an American student at an average US university will be around, 1800 US$. But an overseas student who is studying in the same stream, at the same university, has to pay an annual tuition fee of around 9000 US$ or nearly Rs. 700,000/= per year in Sri Lanka terms.

Therefore to earn a four year degree for a Sri Lankan student, it will cost Rs. 2,800,000/= for tuition fees alone. Therefore any parent who is planning to send his child to earn a degree to US will ask the very same question, which I have asked from myself prior to sending my only child to a US university.

"Is it worthwhile to spend over two and a half million rupees to earn a degree?

Foreign education as an investment

Today the US economy is booming as never before. Industries are expanding. For an example the present turnover of Installshield Software Corporation is 38 Million US$. They have projected to increase their turnover to 500 Million US$ within the next five years. This is a good indication of future growth potential in the US Software Industry.

So, it is with the other related industries. This means more and more employment, in the field of information technology, and related fields such as finance, marketing, international business and human resource management etc. A recent interview on US TV revealed that head hunters are unable to cope with the demand for adequately qualified personnel in these fields. This has given an opportunity for suitably qualified Sri Lankans graduating from an US university, to enter the US job market in these fields.

My recent visit to USA revealed that just passed out Sri Lankans graduating from a US University with bachelor's degree in computer science, or computer information systems earns as much as 40,000 US$ per year.

This is equivalent to Rs. 3,120,000/- per year in terms of Sri Lankan currency. In addition to their annual salaries, they also enjoy other benefits such as year end bonuses, health insurance and life insurance etc. Also most employers are encouraging them to pursue further studies in work related areas, by offering educational allowances. Such training programmes can be part time studies at graduate schools or in distant learning programmes in universities. The entry level salary for someone with a masters degree in the same fields is around 55,000 US$ per year. (Rs.4,290,000).

The entry level salaries for other graduates in the fields such as finance, marketing etc. are in the range of 25,000US$ to 35,000US$. More and more graduates in these fields are seeking post graduate qualifications such as masters degrees to get better entry level salaries.

Then you may ask:

Is it worthwhile to invest in a US degree for my child in an appropriate study field?

From an investment point of view the answer is "Yes". This is on the basis of, if you invest two and a half million rupees for you child's education in a US university, with the assumption that after graduation he will get a job in the US industry with a salary of about Rs. 3,000,000/= per year. (40,000 US$ per year).

The next question is:

How many of us in Sri Lanka have two and a half million rupees to invest on a child's education?

Unless you are a top businessman or high ranking professional you will find a problem, financing your child's education in a foreign country such as US.

But only a few know that US also provides financial aid programmes to skilfull and needy students to pursue their studies at Under Graduate and Graduate Levels. Recent statistics show that US has allocated over 500 Million US$ per year as financial aid for needy students and only a few know how to obtain such financial aid for their education programmes. The good news for Sri Lankan parents is that some of the US universities are extending their financial aid programmes to overseas students.

What is financial aid?

Financial aid is a form of financial assistance that students will receive outside the financial help from their parents. In broad terms financial aid covers, many federal and state and campus programmes. It can include grants, loans, scholarships, tuition waivers and campus jobs.

Only US students will qualify for federal student aid, grants and loans.

But overseas students can apply for scholarships, tuition waivers and on-campus part time jobs, as a part of financial aid.

Scholarship is a cash award based on student's academic merit. Scholarships are awarded by sources such as community groups and professional organisations.

Some universities offer up to 50% education in tuition fees to overseas students whom they feel are worthwhile for a tuition waiver. If your child is entitled to such a tuition waiver, it will have a dramatic effect on your cash flow.

Most of the universities offer employment opportunities to overseas students, as financial aid. This will help the student to earn money to meet their living expenses while they are studying. But working hours are limited to 20 hours per week for an overseas student and current wages range from 5 US$ to 7 US$ per hour. The type of work ranging from catering assistants - to work in the university canteen, residential hall assistants - to working in university's student dormitories and computer lab assistants - to help new students in their computer related practical work. Individual student's leadership skills, his ability to work as a "team player," and in case of computer related jobs the students previous hands on experience on computers are helpful in securing such "on-campus" jobs.

Overseas students of Asian origin who properly planned their finances, pay their room rents and meet the meal expenses from money earned from part time work. If your child is capable of working 20 hours per week in the campus as well as maintaining the "gradings" of his study programme, at a reasonable level, then it will be an added bonus to ease up your cash flow.

US universities offer thousands of degree programmes. A student with four "A" Levels passes obtains a TOFFEL score of 550 and he or she will qualify for admission. Alternatively students without "A" Levels, but with a SAT score of 1110 and TOFFEL score of 550 also will be considered for entry.

But the university will issue the relevant 1-20 document, which is needed to obtain the student visa from the US Embassy, only after they receive the duly certified sponsorship from the parents or the sponsor. Normally this is a guarantee from the parent's or sponsor's bank, confirming that the parent or the sponsor has the finanical capability to find up to 14,000 US$ per year for the prospective student's tuition fees as well his maintenance during his stay in US.

If a student receives a tuition wavier of up to 50% then this amount will reduce to some where around 7200 US$. This is where the parent gets the ease in his cash flow due to financial aid.

According to US universities only "deserving" students will qualify for a tuition wavier. Who are these "deserving" students? In the US education system, students capabilities are NOT evaluated only on the basis of academic qualification. Of course high academic merit always qualifies a student as a "deserving student". But the US Education System also values a student with average academic qualifications PLUS personal qualities such as "leadership" as well as the appropriate "aptitude" for a particular field.

Very often students belonging to the second category have shown excellent performance during their university career in US, and in job interviews after their graduation.

Some aspects of planning

If you know that your child is academically qualified for entry to a US university, it is worthwhile to consider the following aspects, prior to investing on your child's education in USA.

* Find out your child's "natural aptitude" prior to his or her selection of a "major" for the US university programme.

By "natural aptitude" what is meant is, what your child is capable of doing now and what he will be able to do in the future, if given the opportunity to learn. This is very different from what he "thinks" he might "like" to do or just blindly following what his best friend is going to do.

Such an evaluation will help you to understand his "natural strengths" and will direct your child to the areas in which his/her abilities can be developed best. Thus selecting his university study programme without resort to trial and error methods. It will also help your child to save precious years and you to save thousands of dollars, by directing him/her to the area he/she should "major" in, based on his/her natural aptitude.

In USA most of the parents, evaluate their children's Natural Aptitudes using Career Aptitude Testing Systems, prior to their selection of a higher education programmes. If you wish to get your child's: "Natural Aptitudes" evaluated through similar system in Sri Lanka, you may contact Miss. Ermila Jayasuriya of Worldview Institute, Havelock Road, Colombo-5. (Phone:074-514143).

* Short list the universities which offer the selected "major".

There are thousands of US universities offering thousands of degree programmes in various subjects. The important thing is to identify the universities which offer the "major" selected by your child.

* From short listed universities find out which universities are offering financial aid to overseas students.

Some of the short listed universities may not offer financial aid. Therefore you search for an university should cover both these aspects.

Your ability to find a university which caters to the "major" selected by your child and the availability of financial aid, will enable you to plan your financial commitment and your cash flow accordingly.

Visa Statutes

When an university accepts your child for admission they will issue a document called 1-20. To obtain the student visa your child has to face an interview at the US Embassy and submit this document as well as other relevant documents requested by the US Embassy to process the visa application. The Embassy will issue an F-1 visa, to the successful applicant.

One of the conditions of F-1 visa, is that a student cannot work for more than 20 hours per week during the study period and working is limited to "on-campus" jobs. Students who violate this condition and do "out of campus" jobs will be liable for deportation. International students advisors in US universities strictly monitor this situation. Therefore your child should be extremely careful when selecting a Part Time job as a student, and not be tempted to go for the hundreds of jobs available outside campus.

No sooner your child graduates, his or her students visa will expire on that day. It means either he or she has to come back home or if he or she wants to remain in the US, they must enroll for a further education programme such as masters degree to maintain the F-1 visa statues. This is dependent on the "majors" they select for their bachelor's degree.

There are internship programmes available in several areas for those who graduate at bachelor's level. The purpose of these internship programmes is to gain some practical experience after graduation. These internship programmes vary from three months to 12 months.

The three months internship programme is know as "Certified Practical Training" or CPT. Granting of CPT visa will be decided by the university itself. Granting of "Optional Practical Training" or OPT visa for a 12 months period will be decided by the INS authorities based on the recommendation of the university which awards the degree.

Graduates get paid during these internship prgrammes and generally wages vary from 7.50 US$ to 10 US$ per hour. If your child is on an OPT visa, after the 12 months internship period, he cannot stay in US any longer, because OPT visas is issued only for a period of 12 months. OPT visa's are not renewable. Therefore most of the students on OPT visas enroll for masters degree programmes after completing their 12 months internships and regain their F-1 student visa status, if they cannot find an employer who agrees to sponsor for the H-1B visa.

If any employer is satisfied with the performance of your child during his CPT or OPT visa period they may sponsor him for H-1B visa status. Under H-1B visa your child will receive a work permit valid for a period of three years. These work permits are renewable. Most Sri Lankan graduates who obtain their H-1B apply for the US "Green Card" status. The discretion of issuing the Green Card is mainly dependent on the US government authorities.

US authorities recognise certain professions as qualification for Green Card and IT profession is one of them. In case your child cannot qualify for the Green Card, he/she can come home with a substantial amount of savings and useful practical experience in their profession. Who knows, with the positive attitudes learnt during their university career they may be a future industrialist in Sri Lanka or anywhere else in the word.

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