Crescat Scare

1573672-crescat_boulevard-colombo.jpgThis is to update our visitors and readers that there has just been a bomb scare at the Crescat Boulevard. It was at approximately 1.45pm. Patrons of the food court, including contributors to this blog who were present at the time, and shoppers in the others areas of Crescat were evacuated immediately. The Crescat City Security team and Bomb Disposal unit were instrumental in facilitating this evacuation. At this time we do not know the credibility level of the threat, or how it originated.

Crescat food court is patronized by many of Colpetty’s white collar workers with diners coming from many nearby business establishments. Bomb scares such as this one, and the likes of what was seen at the Immigration and Passport Office recently, are, to put it simply, bad for
Colombo’s business activity. The level of uncertainty and uneasiness gradually hits home more often, through incidents such as this.

In an update of the markets today, the All Share Price Index was up 11.17 points (+0.52%) and the Milanka was up by 19.44 points (+0.71%) – a positive outlook, depsite further mine attacks by the LTTE in the North

Update on TV tax issue: We do not have more in depth information on the President’s or the Ministry’s response to the request for revising/revisiting this policy yet. Inquiries will continue.

kicking television

kicking televisionThe private television industry is up in arms over government plans to impose a controversial film tax on imported Hollywood and
Hollywood programming on local TV. The government has, very autocratically, decided to enforce this law from yesterday (16th July) on all imported TV series, films, dubbed programmes, sitcoms, comedies etc. Here is a summary of key facts: 

The main TV stations affected by this will be Sirasa TV, Channel One MTV, ETV, ARTv, TNL and Swarnawahini.  

On average, an imported English sitcom or comedy costs US$ 200 per episode. The proposed tax on such programmes is US$750 (LKR 75 000) per 30 minutes.  

Imported Hindi programmes from our neighbouring
India, which are either broadcasted in the same language or dubbed locally will be taxed a thumping US$900 per 30 minutes.  

The local dubbing industry employees over 350 artists, and once technical crew, script writers etc are included, that number edges close to 1000. 

Foreign advertisements shown on local television station are to be taxed a million rupees or US$ 10,000 dollars each year

What’s the rationale? (if any..)

The government and film industry claim that this tax will seek to protect and develop the local national film industry which has is currently facing severe difficulty. The industry claims there are over 300 films, teledramas and mini series pending telecast. The government claims that this tax will give an opportunity for these to gain more exposure, thus helping the film industry grow and develop more. On the other hand the TV industry point out that the reason these shows have not been telecast is due to a lack of sponsors for them, reflecting their poor quality and lack of appeal. In their defence, they point out that the tv stations are in the habit of telecasting popular films and teledrams of local origin, if they feel they are popular and profitable on air time. After all, these are legitimate businesses, with bottom lines to consider and wages to pay. 

Last night, in a historical and breakthrough move, private TV stations joined together under the banner of ‘Television Industry Joint Action Committee’ and held a press conference to educate the public and the media regarding this government action. Very strong sentiments were expressed by well known representatives from Sirasa TV, Channel One MTV, ETV and ARTv. The facts were highlighted and the concerns of the industry were well voiced. These private players vehemently opposed this very arbitrary and autocratic move by the government, and claimed that it is aimed at destroying one industry with a view to attempt to develop another, despite no evidence to prove that the local film industry will benefit much. 

The industry will have to retrench many employees in various fields ranging from dubbing artists and producers to technical staff and crew. This will have a negative multiplier on the economy, albeit on a relatively small scale.  

Speculation is rife as to underlying reasons for this sudden government move in the middle of a fiscal year. As per a question by an audience member, is this stemming from a personal grudge the government holds against the Maharaja group, which is undoubtedly the Goliath amongst the private players? (this was quickly dismissed by the MTV rep, Chevaan Daniel, stating that it is detrimental to the entire industry, and no single player will be affected discriminatorily)Is there some hidden government agenda to gradually stomp out the private TV stations by running them into bankruptcy, so that only the govt stations will reign supreme? 

If the bill is passed, it will be discriminatory to the English speaking minorities of the country not to mention reduce the quality of life of ordinary working class citizens. Why the latter? They are not privileged to have cable TV, and after a hard days work, the only fringe enjoyment they have is the variety of entertainment at the flick of a remote. Whether it is an imported and dubbed serial like ‘Maha Gedara’ or a late night English thriller, it’s a matter of quality of life and consumer choice. Taking that away from the people is just plain stupid and unfair, let alone being politically unpopular and financially idiotic.  

A verdict is expected during the course of today (Monday). The joint action committee is expecting a favourable response. Let’s hope that SOME good sense will prevail amidst such irrational decision making, and the H.E. will intervene and rectify the matter personally. Unless of course….

Of course we’ve tried powering up!

111334367_07a3ddc6f1.jpegWe saw this particular post on Kottu this morning, referring to the 'govt-says-go-to-sleep-by-10pm' issue. The following article is a reproduction of the extended comment/repsonse left by PopularEconomix on that post.

The original article refferred to the supposed severe shortage of electrcity and the government's order for people to tuck in by 10pm – an electricity saving measure. It was mentioned that 3 strategies/solutions to this are very apparent, suggesting that these have, hitherto, been failed to consider. These 3 strategies and our comments on each, are reproduced here. 

Quote:"General knowledge of economics will suggest you strategies like,
1) Improving production capacity of CEB
2) Licencing Private companies to supply the excess demand
3) Alternative energy etc."

General knowledge of economics could suggest these strategies, but one must question as to whether or not these strategies have already been explored. Allow us to answer that one oursleves. Yes. All 3 of these have been looked into at great length, with significant steps taken to activate relevant policies for their implementation. Let's take each point individually.

1. Improving capacity of CEB – hell yeah!

It's abso-bloomin-lutely the 1st thing we should do. Of course it's been attempted. In fact, it's ongoing. Significant restructure of the CEB is already underway, but as you would've read in the news, the parliamentary paper approving further restructure of the CEB has been stalled by the unions and the JVP. A few nights ago President MR withdrew the CEB paper on the very day to was to be taken to parliament. He felt that more dialogue with unions and other relevant stakeholders was needed.
2. Licencing Private companies to supply the excess demand

This is stale news. The CEB purchases quite a bit of its electricity for the national grid from private electricity companies. This was started many years ago when we had the ultimate electricity shortage and strike in the late 90’s. The project was further explored by Hon. Karu J during his term as Power & Energy Minister under the UNP regime. It was how we pulled out of that energy crisis. It was also why LECO (Lanka Electricity Company) was set up. You might say, "ok then…just flippin' get out there and buy more electricity from them!" Firstly, the CEB cannot afford this. It already pays a premium price per-electricity unit when buying from these pvt electricity suppliers. This was the only way these companies could be incentivised during the crisis of a few yrs ago. It has remained so ever since. Secondly, it seems like the capacity of these private companies have been somewhat exhausted, and the possibility of them contributing more to the national grid is unlikely. But this latter point is debatable.

3. Alternative energy?

Yes, this has been looked into. Duh. Many times. By many people. Local authorities. And keen foreign investors. With lots’ve money going into fancy feasibility studies. Norochcholai is underway, after much “hoo-haa” and seemingly endless delays. Next, Sri Lankan industries are actively looking into Dendro power. It’s absurdly abundant and access is easy. Setting up Dendro-power plants requires relatively less capital outlay. It’s cheap. Not so environmentally friendly. But you're missing the point, it’s cheap. Just this week, President MR announced that arrangements will be made to provide loans at concessionary rates for starting up alternative-power projects, especially solar power.

I understand all this was probably not the heart of your post, and you were more on the issue of the ‘go-to-bed-by-10pm’ story. But I was compelled to comment on the 3 strategies you mentioned as it seemed as if you suggested they had never been considered. If this was not the case, may that (exceedingly large) comment serve as enlightenment to those who think a ‘quick-fix’ to this electricity issue exists, and the only reason they haven’t been implemented was because the people entrusted with the job, are a bunch of lemons. But let's not dwell on that bit.

Until we have the coal power plant up and running, we are, to put it very bluntly, screwd. If the Upper Kotmale project goes ahead this screwed-factor might be slightly dampened, albeit at a huge ecological cost. (Personally, I’m not a major fan of cutting off the water to the lovely St. Clair’s Falls). PS – In a news update here at home, the CEB has announced a tariff hike, effective from August this year. The last hike was in 1992. There is not enough power being generated in the national grid, and the price of existing power is far to high. This has become a severe dis-incentive for production, falling profitability, and a serious loss in competitiveness in the int’l trade arena. Worst of all, it is the biggest cloud hovering over Sri Lanka’s fragile investment climate.

Netting some work

With Sri Lanka’s unemployment level stealthily creeping up to undesirable levels, the Jobs Net programme was launched in 2002 with the aim to abate it. It was the brain child of the then Labour and Employment Minister Mahinda Samarasinghe under the Ranil Wickremasinghe UNP government. The objective of this device was to be an electronic resource base for employers to list any job vacancies they have, which is matched by any unemployed individuals who have registered as looking for jobs. When the search criteria and listed criteria match, the registered individual is informed of the vacancy, and he or she is able to further pursue that opening. Most developed countries have an efficient and effectively functioning jobs search service. In Britain, job centres provide a massive resource base for all unemployed labour to find jobs suited to their skills and interests. It is also based on their performance in the job search programme that determines the unemployment benefits they’re entitled to. With no such unemployment benefit programme existing in Sri Lanka, the only incentive for unemployed people to register under Jobs Net is sheer desperation to find employment. One would think that such a tried and tested system used in many countries today would work well in Sri Lanka too, where the asymmetries of job vacancy information desperately need to be bridged, and the unemployed population would hail this as a very useful device in their search for work. However, this has not been the case. Initial reports suggest that only 10% of the 180,000 unemployed who registered with Jobs Net since its inception, were actually found work. Despite the many regional centres that were set up, and the extent to which the government went to streamline the device to make it very user friendly, Jobs Net has failed to reap the desired results. Jobs Net is a private-public partnership mechanism. Bodies like the Employers’ Federation of Ceylon, the Chambers of Commerce and other private business bodies would register under Jobs Net and its members would be requested to list any vacancies they may have, on the Jobs Net database. Simultaneously, the government opened up walk-in centres for the public to register themselves in the database giving all relevant applicant detail.

Ugh, our mindset…

The Sri Lankan work ethic and mentality is such that, for most graduates seeking employment the most favoured jobs are positions in government departments and offices, where productivity is low, work is slack, tour seat is safe once you get it, and you take a pay packet home at the end of the month. No (performance-based) questions asked. Therein lays the downfall of Jobs Net. It seems that the only applications entered in the database are by graduates looking for government employment. Whereas, the matching up of those, with actual vacancies in those offices are seemingly non-existent, owing to the fact that our govt depts are already choked with an over capacity of workforce, with tens of others (mostly ministerial henchman) merely employed as letter boys, tea boys and clerks just to satisfy a cheap political fancy.

Trying it again….

In the past week, Jobs Net came into focus once more, with the present government deciding to revive it and make it more dynamic. The private sector has assured the government that most of their members do actively part take in the programme, and do constantly register job opportunities with them, if and when they arise. However, they have cited severe difficulty in finding the workers they look for. For example, a showroom may register as requiring sales girls to serve customers, but hardly anyone has registered under jobs net to become sales girls. If someone was looking to be a sales person, they would be content with waiting for an opening to appear in the vacancies page in the daily papers. Those who register with Jobs Net seem to be only the very desperate of the unemployed, who have limited skills, and have limited experience, thus rendering little service to the private sector’s specific labour supply needs.

What needs morphing?

Until a few conditions are satisfied, Jobs Net will show limited results in the game of matching up skills to vacancies in the Sri Lankan job market. The mindset of the unemployed (or as I like to call it ‘yet-to-be-employed’) must change. They need to be willing to move away from the age-old yearning to be in govt employment for the sheer convenience of it, and take up more diverse employment options. Also, Jobs Net needs to be more robust, to ensure that it appeals to not only the most desperate searchers, but also to those who are temporarily shopping around for another job, whether it be a free lance web designer looking for his next assignment or a part time copywriter looking for some extra work.

Why it’s so vital…

Sri Lanka experiences a huge loss in productive output on a daily basis owing to the number of people unable to find suitable employment, those engaging in search unemployment and those suffering from a mismatch of skills. This can be largely attributed to asymmetric information within the job market. Jobs Net has placed the first steps towards breaking this down. It is now upto the private-public partnership to ensure it becomes the effective and efficient model it was intended to be. This is particularly important at a time when Sri Lanka is aiming to provide more BPO services to global businesses. With the advent of flexible labour markets and the breakdown of traditional, rigid, hiring and firing procedures around the world, Sri Lanka needs to adapt. A more detailed discussion on this to follow….

Why we shouldn’t set our clocks back

The issue of changing our clocks back to the GMT+5 1/2 time has been one of much discussion and contempt over the last few weeks. In the mid 1990’s Sri Lanka set its clocks forward by a half hour (corresponding to a GMT+6 time zone) on the directive of then President CBK, with one’ve the main reasons being the severe energy crisis faced by the nation at the time. It was hoped that the additional half hour of daylight in the evenings would reduce electricity consumption significantly, thereby somewhat easing the burden faced by the national grid. While the premier insists that the time change has not resulted in much of a power saving and the benefits of the earlier time are greater, and tech guru Arthur C. Clarke vehemently opposing the taking back of the clocks, it has been decided that from the 14th of April our clocks will indeed be pushed back by an hour. It will correspond to the time of the astrological ‘litha’ as well as the standard time observed in the Tiger controlled areas of the North and East. All this is very sweet and convenient, but how much consideration has the premier put into this in terms of the impact it has on the economy?

Sri Lanka is very much integrated in the global business arena. Whether it’s shipping and air freight or an international BPO centre, the time change affects business activity in a seemingly infinite number of ways.

Banks and other financial institutions that run their own Treasury and Trading departments will have to change their clocks, readjust their trading times, re-evaluate the global market synchronisation strategies and do a bit of an overhaul to their systems. These treasuries are where all the biggest and most lucrative FOREX trading takes place. Being in sync with different time zones is crucial to them, and a change such as this, does little help.

Other sectors affected by the times change would be airlines and tourism. Airlines will be compelled to revise their entire flight reschedule, carry out revisions with international air traffic control, and revise there systems to suit the new time of the country. Many airlines have already expressed their disappointment that the time change is being enacted without much consultation with affected parties like themselves.

Another very significant change would be seen in the computer systems sector, where all the new computers running MS Windows have been programmed with Sri Lanka being GMT+6 in their internal clocks. The revision of this will be a costly and cumbersome effort, no doubt.

However, the president stands by his argument that the energy saved by the time change has not been significant enough to warrant the continuation of this time. Right. So assume we didn’t save more than a couple of thousand mega watt hours per month. But we SAVED a couple of thousand mega watt hours a month! – a massive saving for a country neck-deep in a severe power shortage and sky-rocketing energy prices! Those of you in industry will know how burdening this crisis has come to be. Over the last decade, this issue of high energy prices and the national grid being choked to capacity has resulted in a rise in cost of production for factories, adversely affected competitiveness of exporting industries, and severely hindered foreign investment prospects. With Norochcholai still in development and Dendro power still in its infancy, the existing hydro and diesel power plants can barely cope with the national energy demand. Now is certainly not the time to throttle our national grid with an additional hour of power guzzling every evening, everyday.

Again, he reiterates that the move by CBK at the time may have seemed the logical step to conserve energy, but according to him, it caused more inconvenience than did good. This next argument is not exactly an economic one, and hence I will not dwell on it in detail. The president claims that much inconvenience is caused to school children by the current time. They are required to wake up much earlier, and go to school while it is still dark outside. But wouldn’t it be an even bigger hassle to get your children adjusted to yet another new time? How long do you think it’ll take? Also consider the fact that the lost daylight in the morning is well compensated for by the fact that school’s now begin at 8am and not at the previous time of 7.30am.
This also applies to the labour force of the country, especially in highly commercialised areas. The inconvenience caused to them by having to completely revamp their daily travel and living timings has been ignored.

The children-having-to-wake-up-early argument seems the only one being voiced by the president and others advocating this change. Personal opinion: that argument is far too trivial to be the basis of such a dramatic decision. Carry out a small poll, a referendum maybe. See what the general public actually feel about it. Do they agree with your conception that the time should be pushed back just to suit this purpose? Surely, there must be some economic reasoning behind it, considering the economic impacts the change would have? Even if it is the most convincing argument to the general public, isn’t it a minor trade-off to have to make? Considering how much more is actually at stake? Altering and re-altering major national features of a country which is quite integrated in the global economy is not a very prudent move. In our quest to become a more investor-friendly, stable and business-conducive economy, this time change will not go down as one’ve our smartest moves.