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| Thursday, 13 May 2004 |
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Please forward your letters to [email protected] in plain text format within the e-mail message, since as a policy we do not open any attachments. Maintaining a strong economic policy At present I observe several letters appearing in the newspapers analysing as to how the UNF had lost at the recent parliamentary elections. The executive committee of the UNF for its future benefit could carry out a post mortem and act accordingly. It is the paramount duty of the economic experts, professional institutions and trade chambers to assist the new Government to maintain an economic policy which will benefit the country at large. The following matters are to be considered in maintaining a strong economic policy: (1) Reduction in the cost of living which is the current burning factor. (2) Disciplining the balances of trade and payment of the country (3) Creating job opportunities (4)Streamlining the exchange rate With regard to reducing the cost of living, the contribution of private enterprises has to be recognised. Our importers, manufacturers, service centres etc. should ensure that goods and service are made available to the general public at reasonable prices. In the case of importers, it is very essential that a proper fiscal policy is drafted and maintained. Prices of imported goods mainly depend on the following: (a) Import price. ie; CIF, C&F and FOB. The importers will definitely make maximum effort to buy at the minimum price. (b) Duty structure. ie; Duty, Surcharge, PAL etc. (c) VAT (d) Exchange rate It is always advisable to maintain a policy without changes for at least two years, so that prices could be kept uniformly. Frequent changes will upset the selling prices. I quote the following examples: VAT VAT was introduced effective 1.8.2002 at 0%, 10% and 20%. Essential goods were given fair recognition. However, within 17 months these rates were reshuffled and new rates of 0% and 15% were introduced with effect from 1.1.2004. We have to admit that several essential items which enjoyed the concessionary rate of 10% had become liable at 15% due to this change. Accordingly, the cost of essential items increased which earned the dissatisfaction of the public. Duty We were informed in the November 2003 budget that Surcharge on Customs Duty would be reduced from 20% to 10% effective 1.1.2004 and this move was welcomed by the importers. Prices of imported goods were reduced taking into consideration of the new surcharge and VAT rates. However, we were surprised to observe that Duty rates had increased which not only off-set the surcharge benefit, but also increased the cost further. For eg: goods which were liable for 10% Duty became liable at 16%. Exchange rate Material increase in exchange rates also upset the selling price. During the first week of November 2003 the US Dollar was equivalent to Rs. 94.60. Thereafter, it shot up to Rs. 98.60 and still remains in that region. You will appreciate that it is not possible for the importers to fix uniform prices for their products with the exchange rate varying materially. The Consumer Affairs Authority had requested importers to reduce the price of canned fish considering the reduction in VAT rate from 20% to 15%. Importers made suitable representations and explained to the Authority that due to material increase in the exchange rate and Duty rate, a price increase was inevitable. With regard to exchange rate, the Government should adopt a constructive policy. Several reasons are given to the importers explaining the increase in exchange rate on a particular day: a. Payment of massive petrol bills result in shortage of exchange available to the public. b. Exporters are reluctant to release currencies expecting profit by speculation and banks are compelled to borrow within themselves to fulfil the requirement of the importers. Since, ours is an import oriented country, we are at the mercy of the exporters who decide on the release of foreign exchange. Therefore, the Government has to adopt a proper policy to make foreign exchange available to importers at particular uniform rates. This policy with proper fiscal measures would assist the importers and even others to maintain the prices of goods at a reasonable level. It should be clearly understood that my intention is not to criticise the exporters. After all, we are thankful to them for earning valuable foreign exchange. However, the inflow of exchange into the country has to be streamlined. Some of my observations may not be acceptable to economic experts. However, if they could come forward and make their comments in public and assist the Government to build a strong economic policy, then I would be happy that my target has been achieved. S. R. BALACHANDRAN, Council Member, The National Chamber of Commerce of Sri Lanka Implementation of Sri Lanka post code Few years back in all the Post Offices and Sub Post Offices, post code was written very clearly on the entrance of the wall for the information of the public and could be seen still in many post offices. The Postal Department also printed Sri Lanka Post Code and was on sale in many post offices on a nominal rate. Later nothing was heard about the implementation of the post code and the public are unaware about it. In Sri Lanka, there are more than 2,300 mail delivery offices spread over the country and some in remotest areas with identical names. The post code will definitely help in addressing the letters correctly, legibly and having the benefit of overcoming the language problems and spelling errors, thereby postal authorities could sort out the letters and deliver them accurately and expeditiously. A post code is a pre-requisite for mechanized sorting as done in other countries. This will enable our postal services to be on par with international standard. Since Sri Lanka being a highly literate country, there will not be any difficulty in the change of modernization programmed for an efficient postal service. Hope the Minister of Post and Telecommunication will take efforts to implement post code system for the benefit of citizens of Sri Lanka. V. SAKTHIVEL, Paradekka Relief for house builders With the drastic reduction in bank interest, followed by similar reductions in interest on housing loans, many of the middle classes who were suffering from the acute shortage of housing rushed to get plans drawn up, estimates prepared, went through the hassle of getting plans passed by local authorities to get the loans passed. Then they looked for a contractor or house builder (bass) and having found one, commenced laying the foundation. To their consternation they found that the price of building materials from the iron nail to steel rods have gone up and continue to do so almost daily as in the case of cement and steel rods. Some builders had to get into further debt or abandon the construction and still have to pay the loan installments. It therefore seems that eventually the benefit of the reduction of interest rates went to suppliers of building materials. This seems obviously the result of closing down and privatising the Steel Corporation, the Building Materials Corporation and the State Hardware Corporation, the latter which produced mammoties which were the choice of many farmers. This has a parallel to the government expecting the reduction of bank interest rates generating jobs by the private sector to ease the unemployment problem. Has it? On this score, the pleas of retired private sector employees and pensioners who put their retirement benefits to bank and other financial institutions, to have their interest in deposits which has now halved, reasonably increased as the banks are making substantial profits have been ignored. Anyhow, it behoves the new ministry of Housing and Construction to give relief to house builders. TISSA AMARASEKERA, Kandy Eco systems on the block In 1869 Haeckel in Germany proposed "oecology" a Greek word meaning 'household' to designate the science of relationships of organisms to the environment. Of the organisms, a single species -man- has become dominant worldwide. He uses energy stored in wood, coal and oil by plant life to transcend the barriers of climate. (Paul B Sears, 1962). Of the wastes of his endeavours, only a fraction is reused. Taken as a whole, the land, water, vegetation, bio diversity can be called the solar driven eco system. This can be broadly split into Terrestrial eco system and the Aquatic eco system. Man interferes with throwing dams across rivers in a given watershed. The most documented and researched such example of eco system disruption is the case of the Aral sea disaster. In this case, the two rivers Amu Darya and the Syr Darya rivers flowing to the Aral sea were diverted to provide irrigation for a massive cotton cultivation project by the Soviets. The above rivers ceased flowing into the Aral sea which caused its water level drop sharply exposing seabed covered with salt. Today many scientists are struggling to restore at least a part of the salt laced landscape. Irrigation projects consume about 70 per cent of the water resources in a given development project. Some of the storage is used for evapotranspiration by the crop, some evaporate into the atmosphere, some are lost to other aquifers and go for groundwater storage. The storage reservoir itself produces 'green house gases' by submerged plant life. The eco system downstream of the dam is drastically reduced. Instead of a flowing stream, the stream bed breaks up into discontinuous pools, the ideal habitat for mosquito larvae. The biota and aquatic life is severely starved of water in the river reach downstream accompanied by falling ground water tables. Upstream of dam, the water spread destroys everything including human settlement. Ground water levels rise in the periphery of lake. Land use changes take place starting with deforestation, followed by new road constructions and establishing settlements and crop cultivation, with least respect for the conservation expected in a watershed. Under such circumstances the most vulnerable montane regions in a watershed are laid bare for soil erosion and haphazard road construction promote land slides. In Sri Lanka, development means getting the utmost of the available resources. Therefore it was not surprising for the State Gems and Jewellery Authority to call for bids from public and sell 49 blocks of the best tea estates in Bogawantalawa for the purpose of gem mining for Rs. 34.3 Million. (vide DN Dec. 22, 2003). Situated at 1230 metres above sea level, this will be the beginning of a senseless exercise to promote further landslides and generate enough erosion products to fill reservoirs and other storages downstream. S. H. C. DE SILVA |
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