Tackling
MNCs and consumer needs
By Naomi Gunasekara
- In
a recent interview with the Lankadeepa you had mentioned that
the government was considering the introduction of a common gas
cylinder to the market. Why do you think introducing a common
gas cylinder is important? How will it benefit the consumer?
When we came
in we found that Shell had a relatively good monopoly. It controlled
about 85 percent of the market and obstinately held the price at
Rs. 509 a cylinder. Lanka Auto Gas was getting into the market and
selling at Rs. 409.
Minister
Ravi Karunanayake
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We tried to
get them to reduce gas prices but they refused to comply. What they
tried to do was block that way out. So what we tried to do was bring
in competition.
So we thought of introducing a common filling operation where one
would be able to go to any filling station and get a cylinder filled.
At the same
time we were able to succeed with Munda Gas. They will be in operation
from June and sell gas at Rs. 325 in Galle, Hambantota and Kalutara.
In Colombo, a cylinder may be about Rs. 335. When they start we
will have more competition coming in so that the monopoly will be
broken.
The common use
of a cylinder will certainly be useful because the consumer will
be able to go to any filler and buy the gas.
- Has
this idea been communicated to the industry? What sort of response
have you had?
We are not interested
in what the industry thinks. We are only interested in what the
consumer thinks. If he is happy, we are happy.
Gas monopoly
- Will
any legislation be introduced to eradicate the monopoly in the
gas industry and impose some sort of control to provide the consumer
with gas at a reasonable price?
My feeling is
that regulations are self-defeating and bringing in competition
is the need of the hour. Through that process you will be able to
ensure a decent rate. Competition is the best way of eradicating
price increases.
-
The budget proposal to impose a five percent tax on gas will
undoubtedly increase gas prices. How do you think the consumer
is going to cope with such an increase?
What we are
trying to do is see whether there is an absolute necessity to increase
gas prices. If the increase comes as a Finance Ministry decision
then there is nothing that can be done. But I am trying to see that
there is no increase.
It is a little
premature for me to say what the impact of the tax would be, but
my feeling is that there would not be any increase for the simple
reason that the reduction in world prices will help us obviate a
possible increase.
- Why
do you think it is important to establish a Consumer Protection
and Fair Trading Commission? What will be its functions and how
do you think it will help the consumer?
We want the
consumer to come forward and say, "We also have a right"
and exercise his right legitimately. When this is done the sellers
and the manufacturers will not get the feeling that they can dump
anything onto the consumer.
What we want
is to ensure that there is a complete de-centralisation of the operation
by bringing in consumer resistance and giving a legitimate right
to the consumer.
The consumer
is often taken for granted and that should be prevented through
regulation. We are going to regulate services such as telephones,
water and petroleum and beat government monopolies because there
is no point in bullying five or ten private sector companies when
the biggest offenders are the government sector companies.
Fair Trading
Commission
If you consider
petroleum prices, they were increased simply due to mismanagement
of the previous administration. So those are the things that are
going to be corrected when the Fair Trading Commission is brought
in. It is not operational at the present. An Act will be placed
before Parliament by mid-May.
- You
introduced the mall concept to Sathosa and kept them open round
the clock. What has been the response to the 24-hour concept?
Excellent. I
found last week that the cost of administration islandwide has reduced
by 5.3 percent and the turnover has gone up by 18-21 percent. We
have got a new market segment coming in and now there is customer
confidence. People have the perception and confidence that we always
provide a better deal.
If you look
at any private sector supermarket and compare it with Sathosa there
is at least a 15 percent overall price difference. So I guess the
public is capitalising on that advantage.
- What
other development plans do you have for Sathosa?
When you say
the 'mall concept' I am trying to ensure that we have airline counters,
laundries, pharmacies, banks, bakeries, internet cafes, e-mail facilities,
e-consultancy and courier packaging at Sathosa so that it becomes
a one-stop shop for all your needs.
That is the
concept that is developing and it should generate consumer loyalty
that will help in the long run. We feel that Sathosa can diversify
into providing other services. The only problem we have right now
is that our staff is not adaptable to the changing environment.
That is our biggest drawback. What we intend doing is using the
private sector knowledge to overcome these problems.
Expand Sathosa
- Are
you planning to recruit any private sector oriented staff in order
to expand Sathosa and overcome problems with regard to the adaptability
of staff to a private sector environment?
Yes and no.
Because of the over-staffing situation we are not planning to take
in new minor staff. We have hundreds of peons and labourers when
we require managers and assistant managers. So when it comes to
managers and assistant managers, we will certainly have to look
at recruitment but in the other area we will have to increase the
labour-intensity operations and overcome the problems by converting
them commercially instead of sending them home.
- How
long will it take for such a transformation to happen?
The transformation
is already taking place but the private sector fusion will take
three to four months more. We don't want to just get any party.
We want to get the best and ensure that he is socially responsible.
We are not going
to privatise the whole of Sathosa. We are only going to form a new
subsidiary for Sathosa Retail. It will have all retail outlets linked
up to the subsidiary and the service providing aspect will be privatised.
So it is not
Sathosa privatisation that we are talking about but a strategic
partnership because we believe that it is essential for us to have
Sathosa Wholesale, Sathosa General, Sathosa Retail and Sathosa Distributions
for purposes of social responsibility.
The aspect we
are looking at for privatisation is Sathosa Retail and 60 percent
will be held by us and 30 percent will go to one major strategic
partner. The other 10 percent will go to each of the service providers.
So it is this 30 percent that we are talking about. It has no assets
- it is only the trading arm that will be given.
New Consumer
Protection Act
- Your
ministry has a mandate to deal with matters relating to commerce
and consumer affairs, export and local trade, marketing, consumer
protection, intellectual property, Mahapola and the department
of internal trade. Which are the areas that need immediate attention?
What will the changes be?
Like you said,
this ministry has no beginning or end. Everything that is related
to trading and everything that is not so related come to us. But
one of the main areas my ministry is concerned about is consumer
protection and we are going to bring in a new Consumer Protection
Act. Registration of Companies also comes under my ministry and
a new Act will replace the existing one.
Salu Sala is
certainly going to have a new orientation. A defunct company at
the moment, it will be converted and made to compete with the likes
of Odel and House of Fashions in order to serve the consumer better.
Lanka General,
which is looked at from a general items point of view like electronics,
and CWE, which is looked at in a consumer point of view, will be
joined with Salu Sala to introduce a hypermarket, which will be
like a huge shopping mall. And this will be established at the Sathosa
warehouse at D. R. Wijewardene Mawatha.
Then we have
Mahapola, which was started to help and nurture children. I would
like to look at it from an educational and training point of view.
Then there is intellectual property, which is another important
area. We will bring in legislation that is in line with the region
and derive maximum advantages to our country.
Nurturing
new talent
Sri Lanka Inventors'
Commission also comes within our purview and we are looking at nurturing
our talent. We have a lot of good talent but unfortunately they
are not nurtured and we are going to bring out this talent.
Then we have
the Department of Commerce. My feeling is that it is a gold mine
that has been totally neglected. We will be completely re-orienting
the Department of Internal Trade and Commerce and have directors
stationed here dealing with internal trade.
We will also
have permanent people abroad who will look into matters overseas.
That's going to be the change. We are also going to have a very
proactive approach. At the moment we have a very introverted approach
and we want to change it.
Through this
process, my belief is that we will have a very strong and responsive
Department of Commerce, which will have every single exporter, manufacturer
and service provider linked to the web.
- You
had admitted that there is widespread corruption in most of the
trading institutions that came within the purview of your ministry.
What steps have you taken to curb such corruption? How successful
has your attempt at eradicating corruption been?
I introduced
this system where I and the heads of the institutions that come
under my ministry can be probed by the media. We also have an internal
information system which helps us to decide how to improve existing
systems and practices.
When I say that it is utterly corrupt, there are things that have
gone on that's unbelievable.
What could be
bought for one rupee is bought for fifteen rupees. What could be
sold for five rupees is sold for fifty cents. All these things are
judgmental factors and the offenders will give various excuses like
'the food was not good' or 'the commodity was not good'.
All those processes
are being looked at and people are being held responsible. If a
guy has bought something for five rupees and if he can't sell it
at six, why should he be here? So we tell him that we don't need
him.
We have basically
been having a very hard look at things because we find that the
system from top to bottom is in bad shape. We want to ensure that
this type of nonsense does not go on any longer.
Open
economy
-
In dealing with consumer affairs, one of the problems that often
arise is maintaining a balance between the demands of the open
economy on the one hand and adopting a national-minded approach
on the other. How successful have you been in maintaining this
balance?
Being the minister
of trade and commerce I have a twin problem. One is ensuring that
the domestic industry does not get wiped out and the other is ensuring
that the consumer gets a decent rate. Look at a commodity like potatoes:
we can import it and sell it at Rs. 35. but the local producer sells
it at Rs. 50. Are we going to cut off the local producer and say
'go to hell' or are we going to protect him?
Assuming we
cut off the local producer, if the exchange rates keep fluctuating
we will be at a disadvantage. Also if there is a war or something
we will get affected. The next thing is that we will lose out on
the rural economy.
That is where
the balance is required and we thought of considering the equitable
return to the farmer in deciding on the prices. If you look at rice,
we can import rice at Rs. 13 and sell at Rs. 21 but the cost of
production here is Rs. 27. The prime minister, agriculture minister
and myself sat and discussed what the national policy is in this
regard and we will decide on it soon.
- What
changes do you foresee in the area of international trade that
will affect Sri Lanka?
On the one hand
we have countries like China, Indonesia and Vietnam standing against
us while on the other we have a very liberal and proactive government
that is willing to challenge the rest of the world in order to ensure
our manufacturers are given an opportunity (to compete).
The opportunities
that are there for the private sector are very risky and that is
one of the main problems that we have. So we are hoping to encourage
the private sector by getting them the benefit of multilateral,
bilateral and free trade agreements in order to ensure that we get
in there. They know that the government is serious and we have a
coherent, consistent policy. Once our work is done, it is up to
the private sector to get the engine moving.
If the private
sector does not come in we will ensure that foreign direct investments
come in because we must have a growth rate of 10 percent within
the next two years and to get that we have to be really vibrant.
Indo-Lanka
pact
- Is
your ministry planning to re-negotiate the Indo-Lanka Free Trade
Agreement in order to help Sri Lanka gain more benefits from the
agreement? What changes are you looking at?
The two prime
ministers of India and Sri Lanka have such a good relationship that
it has made our life easier. What happened in the past was that
India did what was good for them while unfortunately our predecessors
also did what was good for India. We have been discussing this and
there has been a very good response from the Indian embassy and
the Indian government. We appealed for equal benefits.
- You
had said in a recent interview that "my job is to ensure
that the consumer is king". Are you satisfied with the services
received by the consumer? How do you propose to ensure that the
consumer remains king?
The consumer
is treated on a take it or leave it basis. When the Consumer Affairs
Ministry was created by the prime minister, there was a necessity
to look into the consumers' needs first. We revolve around the consumer
and our policies should be consumer-led rather than government-led
because the consumer is the final decision maker.
Just as companies
are held responsible to the stakeholder, we are held responsible
to the stakeholder who is the voter, so we believe that a consumer-oriented
policy will certainly be for their betterment and we design our
policy on that basis.
There may be
certain areas where we will have to take a lead and say this is
the way to do things. For example, if people are drinking polluted
water we will have to say, "look you'll have to pay five rupees
more but drink clean water".
Now that is
a policy change. Otherwise we will have to look at consumer-led
development.
- You
had also expressed a desire to deregulate labour markets and generate
new employment opportunities?
As a government
we have a responsibility to create employment. But our present laws
are archaic. We need to create jobs by having a more proactive policy.
Labour laws
- Does
this mean that any changes will be made to the existing labour
laws?
From a job creation
point of view, yes.
- In
retrospect, what do you feel about your achievements during the
100-day programme?
I am certainly
happy that we have been able to put the ministry on the map. I would
have loved to have done much more although we are well ahead of
what we had planned to do.
We were going
to do 15 projects but we have done 25. But coming from the private
sector I would have been happier had there been a more coordinated
approach from the bureaucracy.
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