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Serving Sri Lanka

This web log is a news and views blog. The primary aim is to provide an avenue for the expression and collection of ideas on sustainable, fair, and just, grassroot level development. Some of the topics that the blog will specifically address are: poverty reduction, rural development, educational issues, social empowerment, post-Tsunami relief and reconstruction, livelihood development, environmental conservation and bio-diversity. 

Saturday, April 08, 2006

Muslim tsunami victims face discrimination in East

The Island: 20/03/2006" By M. I. M. Mohideen

It is widely claimed that the government has not treated the Muslim Tsunami victims fairly. According to statistics maintained by the Task Force to Rebuild the Nation (TAFREN) not a single house has been constructed during the last one year to resettle those Muslim ‘Tsunami’ victims within the 200 meter area from the sea in the Ampara, Batticaloa and Trincomalee Districts in the Eastern Province.

The situation in the South is different. In Hambantota, the need is only 1,057 houses. But the donors have been allocated 4,852 houses. A recent internal memo said that the number of houses donors have been assigned was 11 times more than what was required within Hambantota.

Thousands of Muslim Tsunami victims in the Eastern Province have been languishing in several temporary camps without sufficient food, medicines and other basic facilities. Muslims who are trying to resettle in their own land are still receiving threats from the government bureaucracy. In fact they are deprived of their fundamental human rights.

In the three districts of Ampara, Batticaloa and Trincomalee alone there are 22,644 houses to be reconstructed. In Batticaloa the need is for 4,426 houses while in Ampara, the worst affected district, the need is for 12,481. While construction has commenced on 1,200 houses in Ampara, in Batticaloa only 511 units are under construction according to figures maintained by TAFREN and Housing Ministry.

Ampara, the country’s worst affected district is a glaring example of how ineffective institutions, political rivalries and misinformation can make a mockery of disaster management. Not a single house has been built within the 200 meters from the sea in the coastal Muslim areas of Maruthamunai, Kalmunai, Sainthamaruthu, Ninthavur, Oluvil, Addalachchenai, Akkaraipattu and Pottuvil.

In the LTTE controlled areas of Batticaloa District, the TRO (Tamil Rehabilitation Organisation) a LTTE-backed organisation has been channelling funds to resettle the affected Tamil people. But Kattankudy’s coastal villages such as New Kattankudy, Palamunai and other Muslim areas still remain untouched.

Mutur, Kinniya, Kuchchaveli Pulmoddai and Trincomalee town are the Divisional Secretariats Divisions in the Trincomalee District where thousands of Muslims have been affected by the Tsunami. Political confusion has greatly contributed to the mismanagement of relief. LTTE held areas in the district have come under LTTE-backed relief and resettlement programmes. But Muslim areas are still suffering without adequate infrastructure development.

Assessment Survey

The Muslim Reconstruction and Resettlement Organisation - MRRO conducted a survey by visiting each and every family in the Tsunami effected Muslim areas in the Eastern Province to assess the damages to houses.

Over 8,000 tsunami survivors have complained to the Disaster Relief Monitoring Unit (DRMU) of the Human Rights Commission of Sri Lanka about the delay and the violation of their rights.

UN Guiding Principles

The Guiding Principles on Internal Displacement were adopted by the UN Commission on Human Rights and Economic and Social Council in 1998.

Rights of IDPs

Persons who have been forced to flee or to leave their homes or place of habitual residence, as a result of armed conflict, violence, natural or man-made disaster and who have not crossed an internationally recognised State border, are known as Internally Displaced Persons. Those who have been displaced due to Tsunami fall into the category of IDPs. They are entitled to all human rights enjoyed by the other citizens. In addition, they have special needs which should be addressed by the state authorities.

Choice of Residence

Principle 15: The IDPs have the right to remain in the area they used to reside before the displacement or have the right to move to any other part of the country or another country on their free will. This right is crucial for those who have lost their families, homes and belongings and have completely been uprooted.

Property Rights

The IDPs have abandoned their property in haste and are not able to secure them. Especially, the boundaries of the lands may not be visible due to natural disasters such as the Tsunami. The property remaining in the possession of the IDPs is also prone to theft. The responsible authorities have to take steps to protect the property of the IDPs against such occurrences.

Right to Return or Resettle

IDPs have the right to return voluntarily, in safety and with dignity, to their previous homes or resettle voluntarily in another area of the country. Right to return or resettle is vital especially when the cause of the displacement is ceased. For example, Tsunami victims are entitled to return or resettle if the danger of another Tsunami is absent.

After resettlement, the IDPs should not face discrimination as a result of having been displaced. They, like all other citizens, have an equal right to participate in public affairs and to have access to public services.

Land available to resettle the Muslim Tsunami victims

The government has relaxed the hotly-debated 200 metre buffer zone in the coastal areas due to the difficulties in finding alternate land to resettle the Tsunami affected people.

The buffer zone in Mutur, Kinniya, Kuchchaveli in the Trincomalee District has been reduced to 60 metres, Kattankudy in Batticlao District to 80 metres, Pottuvil and Arugambay to 50 metres, and Kalmunai to 65 metres in the Ampara District.

Urban Development Ministry Secretary confirming the relaxation of the buffer zone regulations said that the revisions came after representations from various quarters seeking permission for construction purposes.

More than 2,000 Acres owned by Muslim Tsunami Victims are available within the 200 meters from the sea in the Eastern Province:

Ampara District - 1,000 Acres - Maruthamunai 120 Acres, Kalmunai 220 Acres, Sainthamaruthu 20 Acres, Ninthavur 220 Acres, Oluvil 20 Acres, Addalachchenai 50 Acres, Akkaraipattu 70 Acres and Pottuvil 280 Acres

Batticaloa District - 300 Acres - Kattankudy 240 Acres, Palamunai 40 Acres and Poonochchimunai 20 Acres

Trincomalee District - 700 Acres - Mutur 140 Acres, Kinniya 435 Acres, Kuchchaveli90 Acres and Trincomalee Town 35 Acres

Reconstruction and Resettlement

Tsunami has affected only the coastal belt. For almost all those who were affected, only what they were left with was the plot of land they lived in. It is not proper for the government to adopt a policy of frightening people with warnings of future tsunamis.

The victims of Tsunami should be consulted and treated with dignity. This consultation should not only be with those in refugee camps, but also with those who have been displaced, made destitute and live with friends and relations.

Involving the victims in re-building the coastal areas has to be given the highest priority. Village level welfare committees should be established including all stake holders.

This disaster should be turned into an opportunity for planned reconstruction and resettlement in the coastal areas.

When we talk about planned resettlement of Tsunami victims within the 200 meter areas, we are talking about an extremely diverse population. In addition to their socio-economic differences, there are also other characteristics that need to be taken in to account. These include ethnicity, religion, culture, age, health condition, and gender. All these factors need careful attention in the process of resettlement. If not, it can lead to serious problems.

The biggest challenge the Government is facing to-day is to rebuild the lives of the tsunami affected. This requires reconstruction of their damaged houses and providing them with the means of earning a living.

For planning the rebuilding and resettlement programme in the 200 metre buffer zone area, it is essential to have reliable and accurate information about the impact on the lives and properties destroyed by the "Tsunami". It is a complex process that should be handled with care with the full participation of all stakeholders at the grass roots level. If this is not done properly, it can have adverse effects on the quality of life of the victims.

The extent and the value of land and other assets owned by the affected families cannot be ignored in finding solutions to their resettlement problems. No arbitrarily designed resettlement should be imposed on helpless victims of Tsunami, as such solutions are likely to aggravate the problems of the people who are already traumatised. Makeshift housing should be replaced by permanent structures at a reasonable distance from the beach.

The Muslim areas and the families affected by the Tsunami in the Eastern Province are within the administrative and security control of Sri Lanka Government (GOSL). All those who are engaged in resettlement related activities should work within the framework of the local bodies. At present all the local bodies in the predominant Muslim Area in the Eastern Province do not have the capacity to manage a massive planed resettlement and reconstruction programme of this magnitude.

The people affected expect individual attention and specific solutions to suit different families. The agencies that deal with issues of livelihood restoration will be required to visit each family and or household to find out how best they can be assisted.

This is a painstaking exercise but we have no choice in the matter if the objective is to help the people who lost their livelihood regain their economic strength within a reasonable period of time.

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Friday, April 07, 2006

Can we look ahead to an agricultural revival?

Sunday Times: 19/03/2006"

Does the agricultural growth achieved last year herald a progressive trend for the future? Last year (2005) saw a revival of agriculture. In contrast to recent experience agriculture performed well with an estimated growth of around 7 per cent in the agriculture sector. Last year saw the highest growth in agricultural output in several key crops in recent years.

There was a peak production of 314.8 million kilograms of tea, paddy production increased by about 17 per cent from a low in 2004, rubber bounced with a growth of 10 per cent taking rubber production to over 100 million kilograms. This was after several decades of declining rubber production. Coconut alone fared badly, but this was mainly a cyclic phenomenon and can be expected to change this year.

However in the interpretation of these growth figures one has to be cautious as they are against poor earlier production figures. Last year’s agricultural growth of 7 per cent was after a decline of nearly 1 per cent the previous year (2004). The exception being in the case of tea that has shown a continuous increasing trend since the privatisation of the estates and more so with the growth in smallholdings tea production. The latter now contributes about two thirds of the country’s tea production and has doubled the yield levels of the estates.

Paradoxically, there is some reason for optimism for the same reason. Since the performance of Agriculture in the last two decades has been disappointing there is potential for its resuscitation and high growth is realistic. Last year’s upsurge and the government’s priority for agricultural development and improvement of rural infrastructure generate expectations for an agricultural revival. However there are serious constraints that have to be removed if this is to be achieved.

First let us look at the performance of the key agricultural crops. Tea, the country’s main agricultural export fared badly since the mid sixties till the mid 1990s. Tea production that reached 225 million kilograms in 1968 declined then onwards till 1990 when it barely exceeded the 1963 production of 233 million kilograms. Since then there has been a trend of increasing production. Yet, even the peak production of 314.8 million kilograms in 2005 was only about 37 per cent more than the production 34 years before. In the intervening period, especially between 1968 and 1990, tea production was sluggish.

The performance in rubber has been particularly bad. Rubber production declined since 1960. Even with the 10 per cent increase in rubber production last year rubber production in 2005 was only 60 per cent of what it was in 1970. Rubber is now not only an export commodity but a significant input into industry. Nearly half (43%) of rubber production is used in local industry.

The increased production of natural rubber and its use in domestic industries for manufactured exports is a useful contribution that the rubber industry could make. The decreased production in recent years has deprived the country of this contribution. Coconut production too has not even kept pace with the increase in domestic consumption resulting in a lower exportable surplus, on the one hand, and higher imports of other edible oils, on the other.

This has meant lower agricultural export earnings as well as higher agricultural imports. Both these have denied the country resources, especially foreign exchange resources. This implies a significant decrease in the exportable surplus of the country’s main agricultural exports. Although the country achieved a high growth in paddy production last year, the performance over the last three decades has been disappointing. Increased rice production contributed significantly to meeting the increased demands of food in the 1950s, 1960s and 1970s when population growth was high. Between 1950 and 1970 paddy production increased by over three-fold (352 per cent) thereby saving funds in the import of rice. In contrast between 1981 and 2000, paddy production increased by only about 32 per cent.

The performance in other food crops has also not been adequate especially in the 1990s. Subsidiary food crops increased four fold between 1960 and 1980. In contrast, between 1990 and 2000 subsidiary food crop production declined by 60 per cent. Had food crop production continued its earlier increasing trend, the import costs of the country would have been reduced significantly. The production trends in minor export crops are also disappointing. Minor export crop production in 2000 was only 43 per cent of the production in 1963.

The position has not improved since then. The yields in most crops are below their potential and in some crops much lower than what the yields were. However to achieve higher yields the constraints require to be removed. Several crops are not grown in the optimum manner. The extension services are ineffective. Consequently farmers practise unsatisfactory methods of land preparation, do not use adequate and appropriate fertiliser, lack credit facilities and cannot market their crops at reasonable prices. Post harvest losses are high due to inadequate storage and processing facilities and unsatisfactory packing that results in damage to produce in transit.

The inability to market produce at reasonable prices has led to farmgate prices sometimes falling below costs of production. Most farmers face a cost price squeeze as costs of cultivation have risen sharply while prices have not risen commensurately. Despite decades of agricultural credit programmes, institutional credit serves only a small proportion of farmers. Agricultural insurance is a farce.

These constraints have to be removed if we are to achieve a sustained revival in agriculture. Is the government willing and able to extend the required assistance for agricultural development?

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Thursday, April 06, 2006

How uninformed SA govts’ squander money on fuel subsidies and hurt the poor

Sunday Island: 19/03/2006"

In 2004 Sri Lanka’s government, abandoned automatic fuel price adjustments and printed money to the equivalent of 3 percent of GDP, to subsidize a range of imported commodities including oil and fertilizer under a new home-grown economic policy framework, which was aimed at insulating the country from world market prices.

The use of excessive Central Bank credit promptly pushed year-on-year consumer inflation up to 18 percent and plunged the country into a balance of payments crisis.

The World Bank has found that in many South Asian countries, more than 30 percent of the subsidy is going to high income earners.

Mel Gunasekera spoke to Shantayan Devarajan, a World Bank economist specializing in South Asia, to find out more about the problem.

Given below are some of the excerpts of the interview, which was telecast on ETV’s Money Report program.

Q: Who usually gets subsidies?

A: Many countries in the South Asian region subsidize oil products like diesel petrol, kerosene, Liquefied Petroleum Gas and so on. The point is that in general the benefits of these subsidies accrue to the richer people of the population and the reason is very simple; if you subsidize the price of something then anybody who buys it can benefit from it. And since the rich buy more of these goods, they benefit more than the poor.

Q: What about gas?

A: Well, Liquefied Petroleum Gas (LPG) is consumed by the very richest parts of the population. We’ve done some studies in India, Pakistan and Bangladesh that show that 92% of the consumption of LPG is by the richest 40% of the population. Even diesel, which is a little bit more broadly used, since it is used for transportation, tends to be consumed more by wealthier people than poorer people. In the poll we found that 57% of the diesel subsidy goes to the richest 40% of the population.

Q: Why are subsidies really bad especially when there is a deficit?

A: When there is an increase in the world price of oil, then the size of the subsidy increases, which contributes to the fiscal deficit: which means even more spending by the government. But even if there were no fiscal deficit to start with, subsidies can be harmful because they give bad price signals to producers and consumers. Say the price of oil domestically, or even electricity, is subsidized. That gives consumers the incentive to consume more of it, which means that we have a much more energy intensive economy.

Q: So what are the options of raising money to pay for subsidies?

A: It is not a question of raising money to pay for subsidies but a question that if the purpose of the subsidy is to protect the poor, then there are other ways in which you can protect poor people at much lower cost. So you can actually save money. For instance take the kerosene subsidy; say you eliminate the kerosene subsidy, take the money you save from that and give it as a cash grand just like a transfer payment to people. Even if there is a leakage of 40% of that cash grant, which is a lot, you still will be helping the poor more than you would with the kerosene subsidy.

Q: Could you explain the negative effects of financing a subsidy?

A: Well the negative effects of financing a subsidy are no different from the negative effects of financing any fiscal deficit. Basically there are three or four different ways to finance a fiscal deficit; one is by increasing taxes, the other is by borrowing both domestically and abroad, and the third is essentially by borrowing from the Central Bank which is equivalent to printing money. Now all of these have negative effects. If you raise taxes of course the people who pay the taxes are unable to spend that money on other things which may crowd out private spending. If you borrow it, you have to pay back the loans and that at high interest rates so it can create debt problems.

The Need to Get

If you borrow it domestically from the Central Bank that can create inflation and inflation can actually hurt the poor. It’s a very difficult choice and countries always have to balance among these three. But we have to always look at which of these are the least damaging to poor people, particularly in a country with so many poor people such as Sri Lanka.

Q: How are automatic price adjustments least damaging to poor people?

A: Well it’s what we were talking about earlier, which is that the subsidy is not benefiting the poor people. When there is an automatic price adjustment, that means that when the world price of oil goes up, it automatically gets transmitted as a price adjustment to the domestic price which means that the subsidy does not increase. In fact it decreases, so that actually helps the poor because you reduce the subsidy that they are not getting anyway. You also reduce the need to finance the fiscal deficit by a little bit which means that you might have lower inflation or lower taxes or less borrowing.

Q: What are the long term effects of having subsidies in your system?

A: The long term effects are that subsidies provide bad price signals, less incentive for conserving energy as well as seeking out alternate energy sources. So because the price of oil is so low, countries like Sri Lanka and India have actually invested in technologies that use more oil than they need to. You compare it to countries in East Asia or in Western Europe where the domestic price of oil is so high that they have invested in energy conservation and alternate sources of energy.

Q: Are there countries that have made use of some of these theories. Have you seen less leakages and some of the benefits been passed on?

A: Well absolutely. I think three East Asian countries; the Philippines, Thailand and Indonesia have all adjusted their domestic prices of oil products to international price levels. Indonesia was the last to do it. They suffered badly by continuing to subsidize. Indonesia used to be an oil exporter but they subsidized so much that they became a net oil importer. Because they consumed so much oil that when the price of oil went up they suffered a huge deficit that was unsustainable so they quickly adjusted the domestic prices to world price levels. Philippines and Thailand now have automotive adjustments so that whenever the price of oil goes up in the world it goes up domestically as well.

Q: If as you say this information is available why don’t most governments take these things seriously?

A: I think the reason is that it’s politically very difficult. Even if the subsidies are not benefiting the poor, they are likely to elect that government back into office. Let me give you India as an example. In India some states have a policy of giving free power to farmers. Some of these subsidies are of the order of 1% of state GDP. And these are not poor farmers who are benefiting from it, it is usually rich farmers benefiting because they use more water and more of the electricity than the poor farmers. Yet whenever a government tries to reform that policy by increasing the price of farmers from zero to some positive amount they get thrown out of office. Recently in Undra Pradesh a reformist government raised prices and then the opposition ran on a campaign that if elected they would restore free power to farmers and they won the election.

Q: Do you think there is education going down to users and the general public of the cause-and-effects of what is happening, or do they prefer to believe that free and cheap power is the way to go?

A: Well this information needs to be made more broadly available and accessible to the people. But I think that we also have to understand what are the incentives facing politicians. If doesn’t help for us to tell them ‘you should reform this policy’ if they are going to lose the election when they do so. I think by getting this information out and more importantly by having a public debate about it, so that people are actually discussing it in public, based on information, we might increase the chances of pro-poor reforms.

Q: Do you have any comparable data on expenditure on oil compared with social spending, like health?

A: The size of oil subsidies in countries like Sri Lanka, India, Bangladesh and Pakistan is of the order of 1% GDP. In India it is of 1.2% of GDP which is more than their entire spending on health, the public spending on health. Closer to home in Sri Lanka, the size of the power subsidy, or the losses of the Ceylon Electricity Board, which is just one part of the subsidy system, is Rs. 50 million a day. That’s the cost of one rural hospital a day. So if you didn’t have that subsidy you could build 365 hospitals in a year.

Q: What is actually the win-win situation for governments like these? Is there some way of helping to bring about an equitable solution?

A: This is a government that was elected on a platform that it was there to help the poor. I think the election platform of this government is wonderful because Sri Lanka has too many poor people and we should help them come out of poverty. I think this is an opportunity with this new government that if it is seriously concerned about helping the poor of Sri Lanka that we should be discussing and having a public debate about these reforms like the reform of the Ceylon Electricity Board or the reform of oil subsidies, which if we can design them properly, can actually end up helping the poor.

...in Sri Lanka, the size of the power subsidy, or the losses of the Ceylon Electricity Board, which is just one part of the subsidy system, is Rs. 50 million a day. That’s the cost of one rural hospital a day. So if you didn’t have that subsidy you could build 365 hospitals in a year.

Shantayan Devaranjan,

Chief Economist — South Asia, World Bank

Devaranjan: Pro-poor governments should help the poor.

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Facing Increasingly Difficult Economic Conditions: The Need to Get Back to Economic Fundamentals

Sunday Island: 19/03/2006" By Mahoshada

"While average growth has remained about 5 percent, this has not been adequate for significantly reducing poverty beyond urban areas. There are vast differences among regions and sectors, and between the rich and the poor — inequality has risen sharply. Macroeconomic performance weakened in 2004 and the fiscal situation remains under severe stress. Needed reforms have proven elusive in the face of the political instability and the challenge of recovering from the tsunami. Economic performance continues below the potential and the reform agenda remains on the back burner." The World Bank, "Country Assistance Strategy Progress Report", February 2006.

This is the rather dismal assessment by the World Bank of the economic climate prevailing in Sri Lanka today. And as much as the government might wish to dismiss or deflect this criticism, they cannot avoid the conclusion that it has been their own poor management of the economy that has been a major factor causing the increasingly difficult economic conditions now facing the country. Unfortunately, there seems to be little prospect for any substantial improvement in the foreseeable future unless there are major changes.

The World Bank’s assessment makes clear that economic growth at current rates will do little to reduce poverty, especially in rural areas or in substantially reducing overall inequality in incomes. Addressing the disparities in economic progress between the Western Province and the rest of the country was one of the central economic issues raised by the UPFA in the 2004 general election. The World Bank’s statement makes clear that under current circumstances, little if any progress can be expected in fulfilling this promise and closing the gap between Colombo and the rural economy despite the rhetoric.

During the recent presidential election both of the main party candidates accepted the inescapable fact that substantially higher sustained rates of economic growth are going to be required if poverty is to be significantly reduced. President Rajapaksa made a commitment to reach 8 percent growth while his opponent Ranil Wickremesinghe promised to aim for 10 percent. In light of this unusual convergence of views on the overriding importance of substantially increasing the country’s economic growth rate, the voters might have expected that steps would be taken to fulfill this commitment. It looks as though once again, the public will be disappointed with the lack of economic progress.

Other Signs of Difficulty

One does not have to take the word of the World Bank to realize that the country is facing increasingly difficult economic conditions — despite the continual assurances of politicians and officials to the contrary. One only has to look around, go to the market or read the newspapers. There are more negative signs than positive.

The cost of living continues to rise rapidly, making the struggle to make ends meet ever more difficult. Every year around this time the prices of key commodities, especially rice, tend to come down as domestic supplies from farmers generally increase leading to falling prices in the market. But despite this brief seasonal relief for consumers, other prices have continued to rise. As a result, the underlying inflation rate has remained higher than should be the case. The most recent estimates, for February 2006, by the Central Bank of the average rate of increase in the prices of the goods that the average family buys are in the 8 to 10 percent range. One year ago, the same inflation indices were at about the same level, or even slightly lower.

It is true that there has been some progress in reducing the rate of inflation, following the very sharp increases after the UPFA assumed power in April. But this progress has been too little and too slow in coming and these are few signs that it will continue.

One of the consequences of the falling rice prices is that it puts pressure on farmers’ incomes. Recent reports suggest that farmers are selling paddy at Rs. 9 or 10 per kilo, well below the prices promised by the government — Rs. 17. It is good for consumers, but bad for farmers and bad for the rural economy. This situation typically results in the government trying to give the impression that it is doing something useful to resolve the problem, such as intervening in the paddy market by purchasing what are only marginal amounts of the available supply. This rarely if ever has much of an impact on prices. However, nearly every year, by April or May the price of rice will begin to rise again because the local supplies coming to the market will begin to decline. There may be some who are fooled into believing that this is the result of government actions, when it is simply the usual seasonal fluctuations in supply and demand.

The recent strike by public sector workers and threats of further such actions offers another sign of economic troubles ahead. There have also been increasing numbers of workers in the private sector striking or threatening strikes. While there is undoubtedly a political dimension to these actions, it is also a reflection of the growing desperation of workers arising from the increasing cost of living. There have been substantial annual increases in the salaries of public sector employees in recent years. Yet because of the rapid increases in prices, there has been little if any real improvement in the incomes of people working for the government. Now they are demanding a substantial 65 percent pay increase — an increase the government simply cannot afford.

There is no doubt that some in the public sector warrant higher salaries that better reflect their education and experience. But substantially higher salaries cannot be paid to the one million public sector employees without bankrupting the country, which would quickly lead to a national financial crisis that will affect everyone. Higher salaries can only be justified if there are real, sustainable increases in productivity and a significant reduction in the size of the public sector. Nevertheless, few politicians seem willing to address this problem directly, preferring to promise what they should know they cannot deliver.

In response to this weeks strike action, the President has named yet another salary commission, expected to make recommendations on public sector salary levels later this year. It remains to be seen whether it will follow the last salary commission appointed during the PA government, which recommended substantial cuts in the numbers of employees along with significant pay increases.

In other areas the current government continues to raise taxes in various ad hoc ways, including increases in customs duties which leads to even more pressure on the cost of living. And to try to make ends meet, the Treasury continues to increase the public sector debt, now relying much more on offshore borrowing. It has been the case for the a number of years that much of the government’s borrowing has been to fund day to day operating expenses and meeting the costs of subsidies rather than for investment in projects. There seems to be no sign that this approach to managing the public finances is going to change voluntarily. It is clear, however, that this sort of thing cannot continue indefinitely. Sooner or later there will come a point where the government will have to face the difficult financial reality that it cannot spend more than it can take in revenues. Unfortunately, it will be the poor and middle class that will eventually have to pay the price for fiscal indiscipline.

Economic Fundamentals

Why is the country seemingly unable to achieve the much stronger economic results that most economists believe are attainable? One of the chief reasons is the unchecked ability of politicians to get away with making promises during election campaigns that make no economic sense. Time after time, candidates promise the sun and the moon to voters, with no pain or sacrifice required. And time after time, they are rewarded at the ballot box.

It would be foolish to expect politicians to give up something that is working well for them. This will only begin to change when voters demonstrate that they are unwilling to swallow whole some of the unrealistic promises being offered. And for this to happen, there needs to be a much wider and more vigorous debate of economic issues in the public press and media. In this writer’s opinion, the central focus of this debate ought to be on the economic fundamentals underlying growth and development. This should include discussions on how best to meet the government’s revenue requirements and how this burden should be shared. This debate should also pay much more attention to how the government spends the money collected from the people. Right now, most of the budget is devoted to servicing the enormous public debt and paying public employees salaries and pensions. Finally, this debate ought to raise public understanding of the dire implications of a government continuing to live far beyond its means.

Only if the public comes to appreciate the economic fundamentals that govern all countries can we expect to see the stronger sustained economic performance that is possible. Only then will the ambitious targets of 8 to 10 percent growth be attainable. Mahoshada@gmail.com — comments and earlier articles can be obtained at www.mahoshada.com)

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Tuesday, April 04, 2006

New art of corporate governance: Learning the need to give from Sri Lanka

Sunday Times: 19/03/2006" By Mahesh Bhatt

Its dark... still very dark. I’m on my way from the airport to the heart of Colombo city. I’m here in war-worn Sri Lanka as UNICEF’s special envoy to promote the corporate sector’s awareness of social responsibility and education.

The first thing I notice in Colombo is the children who are on their way to school with knapsacks, even before dawn breaks. Their body language indicates that they are happy.

“Do you know that while education opportunities are a serious problem in South Asia, in Sri Lanka school enrolments are around 98 percent for both boys and girls,” says the petite, pretty Japanese Communication officer from UNICEF, Junko Mitani.

Later that evening, as I sit down with the whose-who of Sri Lanka at a function honouring those corporates who have contributed to the field of education, I’m moved by their enthusiasm to invest in quality education. What is heartening is to see them engaged with the formidable task of re-structuring the education system to meet with the demands of the modern world; something we could do with here in India.

I am also struck by their desire to give back to society from which they have received so much. I’m reminded of what the Turkish mystic Rumi said, “My lamp was lit by another.”

Those who realise that what they flaunt as their own prized treasures, are in fact what they have been fortunate enough to receive from the world, are perhaps motivated to carry on the tradition of “giving”, and that was what was happening here in Sri Lanka.

Humans have a need to give, to show compassion, to comfort, to bestow healing and to help. Some scholars say this seemingly unselfish urge stems from a collective instinct of self preservation. A young CEO of a corporate house rightly said that the need to give connects us to the society we live in. Companies who give realize that they are getting as much out of giving as the receiver is. Do you know that McDonald’s has awarded over hundred and $50 million in grants to thousands of organisations serving children?

This is because the company wants to be thought of as an organisation that not only makes money, but also has its heart in the right place. And insiders say that this message is aimed not only at the customers but at the employees as well, so that every McDonald’s employee can take pride in knowing that his work goes way beyond making money for the share holders.
Marketers for a long time now have exploited the yearning in the human heart to give and to care. The care market alone is a multi-billion dollar industry. Experts say that the sales volume in the US pet market lies close to $12 billion! Do you know that they also have pet insurance?

My wife has not recovered from her obsession with the long haired Barbie doll that she cared for as a young girl, and that was re-ignited when she rushed out and bought the same doll for her daughters. The need in young children to care is also very apparent when little girls play with baby dolls and toy feeding bottles. The market in these goods is massive and becoming more “life-like” every year.

The global toy market is valued in the US alone at $30 billion. This market is built on the bedrock of the everlasting impulse in parents and grand parents to provide joy and experience it themselves through the delight of their children. These are the pivotal symbols of our care and our love for our offspring.

Showing care is an important part of life and of being a human being. All successful humanitarian organisations like the Red Cross are built around a simple principle and a firm belief that human beings are willing to provide care for those in distress.

The care market is also driven by the human need to receive. These are of course two aspects of the same thing. But it is important to distinguish among the compelling forces that create such a market. A leading film distributor who has invested crores of rupees recently in the digital theatre sector told me the other day - two businesses will boom in India in this century. entertainment and the health business.

The world health market is valued in excess of trillions of dollars. As affluence rises, and prosperity increases, people begin to spend less and less on basic requirements and more and more on purchasing entertainment and acquiring longevity for themselves.

We at times take it for granted that everyone simply wants a bigger piece of the pie. Sitting down amongst the movers and shakers of Sri Lanka I found myself thinking that the maxim that “he who dies with the most toys wins”, was not squaring up with the behaviour of those guys.

These people had perhaps realized that societies which only pursue self - gratification at the cost of the lower strata of society, is a society on the road to isolation, obesity and disease, and doomed to a feudalistic schism, where the rich get richer and the poor get poorer.

They have also realised that the home is not a castle or better, a fortress in which each filthy rich family barricades itself in, away from the squalor and poverty, venturing out only to buy more consumer goods to gratify and numb. They were stepping out and investing, perhaps realizsing that we all make it together, or none of us really does.

Maybe the 70,000 millionaires in India, along with the entrepreneurs and the middle classes, who are the engine drivers of our economy, and are euphoric about India’s so called prosperity, need to learn a thing or two from our Sri Lankan neighbours.

(This article appeared in the Indian Express written by the author, giving his impressions on Sri Lanka during a recent visit. He was in Colombo as UNICEF Special Envoy for the Community Leader Awards organised by CIMA-The Sunday Times Business Club. Awards were presented to companies that have excelled in supporting education in schools.)

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Monday, April 03, 2006

Sri Lanka: Post-Tsunami Update Jan/Feb 2006

ReliefWeb - Document Preview: Source: United Nations Office for the Coordination of Humanitarian Affairs (OCHA), Date: 17 Mar 2006,

Successes to build upon
As reported in this issue the Reconstruction and Development Agency (RADA) is reviewing the housing sector in order to clarify policy issues and strengthen coordination mechanisms between Colombo and the Districts. This should translate into more coordinated support for the districts, improved communication and faster progress on the whole reconstruction process.
We are seeing slow but steady recovery in the livelihoods sector. Finding both short-term employment and longer term sustainable opportunities was always going to present one of the greatest challenges. However, as can be seen by initiatives discussed in this Post Tsunami Update, progress is being made with both training and real job creation. It is essential that the successes to date are built upon and that positive models are replicated in all tsunami affected areas.
Obviously challenges will remain. But with initiatives like the Disaster Relief Monitoring Unit of the Human Rights Commission (HRC) of Sri Lanka partnering with UNDP to establish Help-Desks in the affected districts, this will increase awareness among tsunami-affected persons on their rights and entitlements. The UN remains committed to supporting the government in its efforts to ensure that those rights and entitlements are realized.
Miguel BermeoUN Humanitarian and Resident Coordinator for Sri Lanka
Focus on Housing Policy Bears Fruit
A recent sharper focus on housing has produced a flurry of positive policy activity which will lead to families receiving housing solutions sooner rather than later.
The home-owner driven housing programme, building back on the home owner's original land, continues at a steady pace with government sources predicting that all the partially damaged house owners outside of the original buffer zone will receive their final grant payment before the end of May 2006. Including those affected by the December 2005 'buffer zone' changes, more than 60,000 families have received first installment housing cash grants (fully and partially damaged).
As a result of the December changes it is now estimated that there are an additional 15,000 families who have the opportunity to return to their original land (assuming that they have not already been housed). Currently they would receive the government grant of either Rs. 250, 000 for a fully damaged house or 100,000 for a partially damaged house. Many NGOs have also made additional payments or provided labour and materials to support families rebuilding their own homes. When full surveys of the new 'buffer zone' are completed it is likely the 15,000 figure will increase, which may reduce the number of houses required in the new relocation sites (donor-driven programme).
The government is also actively seeking NGO assistance to supplement the home-owner grant in order to get families back in to houses as quickly as possible. Home-owner driven housing is increasingly seen as far better value for money, and some argue that the quality is higher as families participate in the whole building process. In addition, the active engagement of families is seen as a positive developmental approach to reducing some of the dependency created by the tsunami. Clearly some professional and technical support is required as many families will not have individual capacities to rebuild their own houses and it is imperative that quality standards are maintained through active monitoring.
The authorities are keen to ensure that beneficiary lists, clearly showing the names of all families entitled to housing, are transparently developed and displayed in appropriate locations in the districts. There is an urgent need to ensure that every family entitled to a house is informed of which housing solution is available to them, and approximately when that family could expect to move in to the new house.
There will continue to be a large number of families whose houses are still in the new 'buffer zone' and these will have to be relocated to land further from the sea. These donor-driven relocation scheme sites will therefore be made up of all the families from within the new buffer zone (as defined in December 2006), plus any other categories of beneficiaries who are entitled to a donor-driven relocation house.
Housing policy is complex and there are several types of beneficiary depending both upon where they lived in relation to the 'buffer zone' and also what type of land tenure 'agreement' was in force at the time of the tsunami (owner, renter etc). Depending on policy, some beneficiaries will clearly be presented with a choice regarding what type of housing scheme they join. To enable people to make the right choice it is important that they have the correct information on any entitlements or support that they will receive, either from the government or from donors/NGOs. In the absence of such clear information people will be unable to decide which choice is most appropriate for them, and the delay caused will not be in the interest of families, the authorities or the donors. A large number of housing agencies are now strongly advocating for a clear nation-wide public information campaign to begin as soon as policies have been clarified.
The government's current estimate is that approximately 30,000 houses are required to be built in the donor-driven relocation programme. To date 5,481 houses have been completed and a further 8,582 are under construction. In the Home-owner driven programme almost 20,000 houses are now estimated to be complete (both partially and fully damaged houses). Construction is expected to significantly increase throughout 2006 and further increase in 2007.
The Reconstruction and Development Agency (RADA) is reviewing the housing sector in order to clarify policy issues and strengthen coordination mechanisms between Colombo and the Districts. This should translate into more coordinated support for the districts, improved communication and faster progress on the whole reconstruction process.
(Accurate at time of going to press)
Calming Down the Fear
Adults and children around the country continue to suffer the psychological impact of the tsunami. Guidance and counselling programmes in Sri Lankan schools are providing long-term assistance to teachers and students in providing emergency preparedness skills and training people to address and support the well-being of teachers and students affected by the tsunami.
The training programme implemented in 423 tsunami-affected schools around the country is part of the Ministry of Education's National Plan to Mainstream Psycho-social Well-being Through the Educational System, which will support 2,500 schools from across the Island.
It provides teachers with the skills to develop supportive relationships with their peers and students, initiate a school based emergency preparedness programme, as well as identifying vulnerable students in need of additional support, says UNICEF Psycho-social Advisor, Sarah Graham.
"The training tools allow teachers to develop relationships with students who are still coming to terms with the ordeal of the tsunami. They are based on materials developed in other disaster situations, but are specifically tailored to meet the needs of Sri Lankan students and teachers .
"The creative activities allow children to share their thoughts, fears and aspirations in a safe environment which in turn, leads to a better understanding of one another. It allows children and teachers to see that their reactions to and interpretations of events are normal and with a supportive network, the majority of children can thrive. Children identified as needing additional help are referred on to appropriate support networks".
The Devi Balika girls' school in Galle is one school that is benefiting from psycho-social training. On a morning in February, a bell rings in the school yard and children stop their activities to follow an emergency drill. The movements are familiar to the children now but, say teachers, their confidence in knowing what to do has empowered them to take responsibility if another tsunami should happen. The drills build confidence among children and teachers and calms their fears, says the Guidance Teacher at Devi Balika School, Ms. K.A. Chitra
"The psycho-social training we received after the tsunami has improved the level of support we can provide to children. If there is another tsunami, we can overcome fear and anxiety sooner. We can also identify specific problems among individual children, Mrs. Chitra says. "I've found that talking to a child is often the most important, and most effective, approach to the problem."
And getting teachers trained in this area is important not only in improving academic but also social outcomes, says Graham.
"By developing a teacher's communication skills, we improve the full learning environment. This allows not only for academic learning but the social development of all children," she says.
(By Jens Laerke and Leanne Mitchell, UNICEF)
The Tsunami Recovery Impact Assessment & Monitoring System (TRIAMS)
The tsunami witnessed an unprecedented multi-stakeholder effort to ensure a stronger level of accountability to the beneficiaries and donors as well as the general public alike, which was demonstrated in all the progress reports presented at both country and international levels on the occasion of the one year anniversary. Furthermore, there is a consensus among most tsunami recovery agencies that concern should not only be with operational outputs but also with the impact of our efforts on the lives of the population affected by the tsunami.
'Tsunami Recovery Impact Assessment & Monitoring System' (TRIAMS) is a World Health Organisation (WHO) /International Federation of the Red Cross (IFRC) joint initiative in close collaboration with the Office of the Special Envoy to the Secretary General (OSE), which was presented by WHO at the Global Consortium for Tsunami-affected Countries held in Washington DC on 22 September 2005. This initiative has also been given a special recognition in the one year report of the Special Envoy to the Secretary General, where it is listed as one of the priority activities to be undertaken in 2006. This project covers the five tsunami-affected countries in South-East Asia over the period 2006 to 2010. The project aims at assessing and monitoring the impact of tsunami recovery efforts, using various data collection methods, and will consist of core common indicators for five countries, and additional indicators that are country specific. IFRC and WHO in Geneva will coordinate at the global level with the political support of OSE, and each Office of the Resident Coordinator's of the UN will coordinate the activities at the country level. The policy and technical details of the initiative will be discussed among the five countries and other partners involved during a meeting in Bangkok to be held from 2-4 May 2006.
Full report (pdf* format - 413 KB)

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Sunday, April 02, 2006

Forgery of title deeds and the state of administration of land

Daily News: 18/03/2006" Kirthimala GUNASEKERA, Attorney -at-Law

LAND OWNERSHIP: Forging signatures of the owners of lands and attesting documents is now a common occurrence in our country. This is in addition to our deteriorating land policies which have caused an unfriendly investor environment.

Acquisitions at random change of polices without proper knowledge enacting and withdrawing laws relating to land have all diminished the value of ownership and today we have more rejected title than those accepted titles to land.

It is a task for any Notary to recommend title today as it would not be known which Authority would have rights over land, what are the forged deeds etc. this is a major draw back for entrepreneurship.

Success of the new Titling Act which has come into operation is dependent on the Government Departments and the administration dealing with the prevailing laws.

Thus for the next twenty years until the Act is fully established serious thought should be given to the conditions prevailing in the administration procedures of the relevant departments especially the Land Registries.

The Land Titling program in Thailand has been a success as the government of Thailand and the relevant departments concerned together with officials took serious measures and interest to monitor the administration.

There was public debate and serious notice of same by the government of Thailand it was not left in isolation.

The owners of lands should be more aware of their rights and duties and be vigilant of procedure under the law with regard to issuing copies of their Title Deeds and exercise of the possessory rights.

I could state many examples of pending cases. Recently a caretaker obtained a copy of the Deed and acted as the broker to the owner.

A Notary connived with him executed a Deed of Declaration stating that the caretaker is the owner. Thereafter sold the land without the knowledge of the owner, with the signature of the caretaker.

The owners should know that their Title Deeds should not be given to any one unless through ones Lawyer or Notary. Who will then be responsible for any forgery.

Photocopies are very often issued to third parties from which forgeries are made, properties are transferred without the knowledge of the owner.

The deeds of Declaration confirming illegal title, vesting title together with forgeries will have its consequences. The new Titling Act depends totally on the Land Registries. Over a period of 20 years one could imagine the state under prevailing malpractices.

Even to day the law relating to Land is sufficient. It is very essential to administer the law to keep the books in the Land Registries in order without extra legal practices.

In the years to come the documents will be badly handled under prevailing conditions in the Land Registries. Success of the new Titling Act will bear the consequences. Serious consequences could be envisaged if we ignore the prevailing systems and conditions of the Land Registries.

Notaries are attesting the forged deeds in spite of the strong provisions that are available to protect land title.

Notaries Ordinance, Prevention of Frauds Ordinance and Registration of Documents Ordinance empowers Notaries and the Registrars of Land to safeguard the Land Titles of the country.

In fact the responsibility under the Notaries Ordinance is judicial, as it states that a Notary cannot authenticate or permit change of ownership to land or execute a deed unless the Notary ascertains that the person who claims to be the owner or signs as the owner has been identified.

The law states:-

"A Notary shall not attest any deed or Instrument in any case in which the person who claims to be the owner is unknown the exception being Notary should be well acquainted with the witnesses there to who signs the deeds, in which event burden of identification of the owner is left to the witnesses."

Notarial practice has gained momentum with expansion of the economy. Institutions such as Banks, Financial Companies and Property Sale Companies are established where, Notarial work has to be speedily carried out.

In such circumstances it would be a task to know each client required by law. However there should be sufficient enquiry and investigation with regard to ownership. Due diligence should be exercised by a Notary regarding identification of the owner to comply with the law.

If however such a Notary is exposed or has inadvertently attested a Deed where ownership is in dispute the punishment under the same Ordinance is extremely severe. It can be imprisonment simple or rigorous for any period up to five years.

Notarial practice requires experience, knowledge of drafting and the knowledge of Laws relating to land. The Law requires that Notarial work should be done in a Notary's office.

All parties signing that is Notary, executants, witnesses should be present together in the office of the Notary when signing documents. These laws were carefully drafted and they enabled the identification of parties to prevent forgery.

Those who practice as Notaries especially the juniors tend to perfect printed forms to execute deeds. Performing Notarial practice without proper knowledge and with disregard to the existing laws, has caused sever problems today with regard to validity of Deeds.

Monetary gain has overlooked all principles, Generations grow up accustomed as it is to greater emancipation of habits and thoughts lean less heavily on Law wisdom and advice of its forebears.

I have met junior Notaries who have told me that they have obtained signatures by sending documents through clients to private houses. In fact printed forms are perfected without any knowledge of the above.

Therefore this is a suitable time for those in authority to make a move to establish a proper Land policy with the help of the new Act.

Land Registries
The statutory duty extends thereafter to the Land Registries, which register and store the deeds. The Registrars and their respective officers are expected statutorily to perform an important role in maintaining discipline to ensure and establish the rights of ownership to land.

Registration of Documents Ordinance confirms many statutory obligations.

These Institutions however have lost their credibility. They do not operate in the best interest of the owners, to protect land rights.

The Land Registries are the guardians of all documents relating to land. All Land Registries are custodian of copies of Deeds which bear stamp duty. They maintain a specified set of books from which devolution of title could be obtained and the ownership to land could be established.

All deeds executed by Notaries are expected statutorily to be in to volumes consecutively numbered and be available for examination in the respective Land Registries. Unfortunately the land Registries do not follow the law.

In the early days the officials operated with responsibility to safeguard the documents. I must place on record the valuable contribution made by past Registrars which enabled our fore fathers to maintain title to lands. If the existing law was properly executed we would perhaps not require the new Titling Act.

There was a time junior Lawyers entered the Land Registry with the seniors who passed on the ethics with regard to examination of books in the Land Registry. Maintained silence and if we required any document or books tapping slowly on the table with a pencil was the procedure.

The examination of documents were done with care and responsibility under supervision to prevent any malpractices. The procedure and the responsibility of those in charge was similar to a public library.

People now walk in and out of these Land Registries. Documents are issued for monetary gain.

Police Officers investigating cases relating to Forgery have informed that they cannot obtain a copy of a Deed, from the Land Registry to prove ownership. They report they are lost. Even to court it is reported lost. This explanation is similar to explaining that artifacts are lost in a museum and nothing can be done.

Whilst the registration of Documents Ordinance status:-

"Every Registrar shall from time to time cause all duplicates and copies transmitted or delivered by any Notary under the provisions of the Notaries Ordinance, to be bound in convenient volumes shall keep and preserve the same in his office."

The deeds are not bound and are kept in enclosures that are unkempt. A copy of all deeds executed by every Notary compulsorily has to be forward to the Land Registry under Notaries Ordinance.

Even if a Notary dies the copies retained by the Notary has to be delivered by the heirs to the Land Registry, such that they are kept under proper custody. The heirs do not have a right to keep them.

The above Laws relating to Title to Land shows the responsibility of the Legislature who has made adequate laws to establish and maintain a proper land titling system.

The above indicates the standards the law makers required from the Land Registry and the practising Notaries with regard to their integrity and knowledge.

Business of Real Estate is not regulated nor governed by rules. Anyone is authorized to sell land and operate without any licence. They themselves do not realise the gravity of handling Title Deeds or their copies.

The deeds of Declaration vesting title together with forgeries will have its consequences. The new Titling Act which depends on the Land Registries will take a long period may be over 20 years to give us the benefit.

In the meantime the documents will be badly handled under prevailing conditions in the Land Registries. The result would be very detrimental to the titling Act as it has to depend on the books of the Land Registry to operate. May be we will require more amendments.

Apart from the above all Authorities without notice have rights over land

Eg. Environmental Authority; Coast Conservation Dept.; Road Development Authority; UDA; NHDA; Wild Life Dept.;

Fauna and Flora Protection Ordinance and Reclamation Board.

(Which has acquired land and has not activated a program for years)

Therefore all parties handling the land policy in the country should be alert and contribute with public debate. Public debate is very essential to arrest this situation. As collective responsibility of the people, administration and the government is essential.

Secret of development
In conclusion it could be said that for any Document under the new Titling Act to be a success as in the developed world or as in Thailand, monitoring the existing laws and preventing all extra legal methods adopted to established title to land is imperative.

Further a knowledge of all the prevailing methods of title acceptance should also be studied such as Insurance etc. which presently safeguard possessory rights rather than rights of ownership.

The secret of development in the developed countries is the strong land policy. Their forefathers planned for the future.

In these countries any business could commence with the title deed of the person which is reduced to one page. The searching for the previous owners or title searches are not heard of. Deeds are not subordinate nor are they devalued by acquisitions or over taken by any other authorities.

The Title Act may formulate a document but still one would have to search for the subordination of the document if we do not rectify and take notice of above.

Fifty years ago the rulers of developed nations were focused, they considered title to land as a source of wealth, a stake in society, a voice in politics and refuge in market storms.

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