Power supply plans for Colombo Port City revealed

Developer ends radio silence as resumption of work nears

With the decks cleared for the resumption of work on the Colombo Port City project in the coming weeks, the developer, China Harbor Engineering Company Ltd. (CHEC), last week revealed that the Sri Lanka Government has entered into an agreement with Japan International Corporation Agency (JICA) to obtain a soft loan under Japanese Official Development Assistance (ODA) for funding several power requirements of the Greater Colombo and Colombo Business District area which includes Port City.

“Under this project, capacity for the Colombo power network will be doubled through a new 220kV underground transmission cable network,” the CHEC statement said. “Further, the project would improve the existing power network by construction of four new grid substations, augmentation of the existing grid substations, laying of 37.7 km of underground transmission cables, laying 92 km of underground distribution cables and an installation of 86 new 11 kV distribution panels.”

The developer said that the CEB has confirmed that it will build a new 500 MVA primary substation at Chaitya Road and the tender for this construction is targeted to be finalized before the end of this year with commissioning scheduled for 2019.

“Up to 250 MVA from the completed substation is to be allocated to Colombo Port City,” the developer said.

CHEC had maintained a strict tight-lipped policy on the stalled project by agreement with the government that both sides will keep ongoing negotiations under wraps. But last week the developer issued a news release declaring that “Port City will be eco-friendly.”

Prime Minister Ranil Wickremesinghe has already gone public saying that reclamation work will resume soon and the Supplementary Environment Impact Assessment has already been released and commented upon by various interested parties. It is widely expected that this work will start by the end of the first quarter of 2016.

CHEC said in its statement that that the CEB has recognized that the Greater Colombo and Colombo Business District (CBD) area “will have the most rapidly increasing electricity demand

as a consequence of investments and developments such as Shangri-La, ITC hotels and Port City.”

“Consequently, the GOSL has entered into an agreement (SL-P107) with JICA to obtain a soft loan under Japanese ODA scheme for funding several projects to cater to the above requirements,” the statement said.

It further said that Colombo Port City (CPC) on completion of reclamation works will incorporate solutions for integrated management of energy, water and waste for long-term environmental sustainability and for creating a comfortable environment for its occupants according to an eco-cycle concept.

This would include reduced demand side and highly developed supply systems to ensure lowest possible demand for electricity and fossil fuel for transport, fresh water in buildings and public areas and a lower demand of energy for heating and cooling.

During the building and operations phases, CPC will reduce dependence on fossil fuels by the combination of minimizing cooling demand through energy efficient building design like solar shading, using solar heaters and photovoltaic cells on roof-tops.

Back-pedaling budget

Port City Project will be handed over to UDA – Minister

ISIS recruiting agent in SRi Lanka!

A Sri Lankan national has been identified as an Islamic State of Iraq and al-Sham (ISIS) recruiting agent in Sri Lanka by the Indian Police. Last week, a 16-year-old from Pune had wanted to join the IS after being ‘radicalized’ by IS sympathizers and radicals on several social media networks such as Twitter, Facebook ,Whatsapp and other human resources via which she managed to trace an ‘IS recruiting agent’ in Sri Lanka.

Assistant Commissioner Anti-Terrorist Squad (ATS) Bhanupratap Barge in Maharashtra told Ceylon Today over the phone that the Central Agency has provided all information pertaining to the ‘Sri Lankan agent’ to the Sri Lankan Consulate and ‘action has been already taken’.

He said the girl is in the process of being ‘de-radicalized’ at the moment.
“The matter is of serious concern but we have traced the persons and inquiries are proceeding” he said.
“Mohamed Sirajuddin, an employer of the Indian Oil Company allegedly had given details of the Sri Lankan man to the girl and is under surveillance now” he said.

Reportedly the girl was assured by ISIS sympathizers that she will get admission to a medical college in Syria.
During investigations, the anti-terrorist squad had discovered that she was regularly interacting with IS sympathizers on WhatsApp and Twitter and exchanging mail with people in Maharashtra, Rajasthan, Andhra Pradesh, Tamil Nadu, Jammu and Kashmir and Karnataka, and countries such as the Philippines, Sri Lanka, Dubai, Saudi Arabia, Kenya and some in Europe.

The girl has been moved to her family and religious leaders are constantly helping her to ‘recover’.
In July this year, a karate instructor named Sharfaz Nilam Muhshin (37), an IS radical, managed to obtain a tourist visa to Turkey from the Embassy of Turkey in Colombo and joined the IS in Syria.

“The usual route to enter Syria is Turkey and one of the ‘gateways’ to Syria is Sri Lanka” the source said.
The Turkish Embassy in July told Ceylon Today that Nilam Muhshin and his entire family entered Turkey as he showed ownership of a company and had sufficient funds to travel to Turkey.

The IS are funding people who would want to enter the Islamic State and many youngsters after being radicalized through various sources are trying ways and means of going there, a senior member of a Muslim institution said.
He pointed out that such visas are usually obtained by travel agents who are ‘capable’ of ‘producing relevant documents’ to obtain visas to go to the Islamic State.

He pointed out that no one could cross the borders of Saudi Arabia or any other Middle Eastern country due to installation of high surveillance equipment. The IS are targeting South Asians and South East Asians.


Budget 2016 passed with a majority of 109 votes

The third reading of the Budget 2016 passed in Parliament with a majority of 109 votes with 160 votes in favour and 51 votes against it while 13 members were absent.

Members of the Janatha Vimukthi Peramuna and common opposition voted against the Budget, while opposition MPs Douglas Devananda, Arumugam Thondaman and Lakshman Seneviratne voted in favour of the budget.

Among the 13 Members absent at the time of voting were parliamentarians Mahinda Rajapaksa, Pavithra Wanniarachchi, Wimal Weerawansa, Janaka Bandara Tennakoon, Thenuka Vidanagamage, Manusha Nanayakkara, Siripala Gamlath, Premalal Jayasekera, Geetha Kumarasinghe, MKDS Gunawardane, Selvam Adaikkalanathan, Shivashakthi Anandan and Ali Saheer Maulana.

Bashar al-Assad’s crimes against humanity, caught on camera

A trove of pictures of atrocious abuse is pronounced genuine

LIKE many refugees, Caesar had terrible tales to tell when he slipped out of Syria in August 2013. Less typically he also had pictures to document his story: 53,275 of them, to be exact. From shortly after the eruption of civil war in the spring of 2011 until his flight, Caesar (a pseudonym) worked for government security forces as a forensic photographer. The photos he took, and surreptitiously copied, were of thousands of corpses. Some were of fallen soldiers or war victims, but most were of young men who had spent their last days in the dungeons and torture chambers of the Syrian regime.

The pictures show that thousands of prisoners died of fatal neglect, vicious abuse or straightforward murder by beatings or gunshots. Some images reveal groups of naked, emaciated bodies, each tagged with numbers, splayed on the dirt floor of a hospital garage. But because Caesar entrusted his grisly trove to Syrian opposition groups that publicised the atrocities via a London law firm hired by the government of Qatar, which is hostile to the Syrian regime, some have questioned its authenticity. “You can bring photographs from anyone and say this is torture,” said Bashar al-Assad, Syria’s president, in an interview earlier this year. “So it’s all allegations without evidence.”

Related topics
  • Human Rights Watch
  • Syria
  • Bashar Assad
  • Politics
  • Government and politics

Such doubts should now be laid to rest. Following a six-month investigation that included dozens of interviews with former prisoners, defectors who had worked in Syrian military hospitals or intelligence agencies, forensic experts and families of the disappeared, Human Rights Watch (HRW), an independent watchdog group, says it is satisfied that the photos are indeed genuine. In a report published on December 16th it says that Caesar’s work suggests that Syrian officials should be tried for crimes against humanity.

Among other confirmatory evidence, HRW researchers traced the cases of 27 individual victims back to their families, matching Caesar’s pictures with family photos and tallying the dates and places of their arrest against details recorded by Caesar. Forensic analysis of pictures revealed not only telltale signs of starvation, severe skin infections and bruising, but of “chronic venous insufficiency in the lower extremities”, the medical term for legs swollen by being forced to stand for long periods, a detail that confirms former prisoners’ stories of crowding so severe that being taken out for torture was seen as a welcome chance for fresh air. Numerous families also testified to paying government officials extortionate bribes for news of imprisoned relatives, only to discover from the pictures that they had long been dead.

Judging from the picture sets, which often include several of the same corpse, it appears that Caesar photographed more than 6,000 dead prisoners. These represent most, but not all, of those he witnessed during his shifts at two military hospitals in the Syrian capital, Damascus, over a 27-month period. But Syria’s war has lasted more than twice that long. Damascus, where there are other military hospitals that similarly ‘processed’ prisoners’ corpses, holds just a quarter of the country’s people. The full scale of the carnage in Mr Assad’s prisons may never be known.

Economic reforms in budget sine qua non

Budget 2016 had raised many concerns to many in the country, which subsequently resulted in changes in the budget proposals. Ceylon FT looks at the economic aspect of the budget and how it affects the country’s long term economic development in the country. This newspaper interviewed Ceylon Chamber of Commerce Chief Economist Anushka Wijesinha in this regard. Following are excerpts of the interview.
Q: Many changes were made to the budget after trade unions threatened strike action. How do you see this as an economist?

A: It’s inevitable that when Budget proposals are announced, particular interest groups would object to certain proposals that aren’t favourable to them.

This Budget, in particular, has attempted to take on some challenging reform areas that hadn’t been touched for some time, as they are politically sensitive. But these are essential issues where change needs to happen. How the government resolves these will give us an indication of how serious it is about getting tricky but essential reforms done. Will there be policy paralysis and little reform getting passed? Or will there be policy bargaining where some reforms get through but the tricky ones are placed on hold?

Domestic and foreign investors are looking for clarity in policymaking and they will be closely watching the nature of policy cohesion among the key economic decision makers in the government – both in Budget 2016 and its aftermath.

Q: The government is in a desperate need of tax revenue. In that context they expect over a Rs 200 billion increase in non-tax revenue. How practical is this?

A: Sri Lanka has struggled with uplifting tax revenue for some time now. Our tax to GDP ratio is now below 11% and is well below our middle-income peers. So the need to raise revenue now is actually a culmination of years of putting off tax reforms. In Budget 2016 a substantial increase in government spending on several social sectors is envisaged, and that would necessarily mean an increase in revenue collection. Depending heavily for this revenue on non-tax sources is neither sustainable nor is it progressive. But it may be easier to collect and meet the revenue needs. We need to move towards a more robust tax system.

Q: How to sustain tax revenue increase which aims at reducing budget deficit?

A: The estimated increase in tax revenue for next year is 38%, while the average for the past few years have been only around 10%. This sums up the uphill task. There is a range of indirect taxes that have been raised or introduced. This will boost revenue. It’s not ideal, though, because indirect taxes are regressive in that it hurts less wealthy households more. Alongside this direct tax rates have been substantially cut. This is the challenge of Budget 2016 – maintaining high social sector spending, while cutting direct tax rates and raising thresholds. The way it can work is if it spurs a massive increase in private sector economic activity, new domestic and foreign investment and entrepreneurship. The government is also hoping that the new IRD IT system as well as the unique number identifier will help improve tax compliance and reduce evasion. But the deficit targets are certainly ambitious.

Q: Prime minister suggested to reduce indirect tax percentage from 80% to 60%. It had not been done from this budget. Instead indirect tax percentage has increased. How should the government approach this issue?

A: The focus needs to be on expanding the direct tax base and collecting direct taxes better. Improving compliance, audits, intelligence – all of this can help improve tax collection. I believe the new IT system can begin an important journey towards a better and smarter tax administration. The continued heavy reliance on indirect taxes is not ideal – but this problem cannot be fixed overnight. The PM’s statement is a five year vision and it cannot be achieved through one budget. But yes, the journey to tilt the balance must begin now.

Q: How is the Budget 2016 for the private sector?

A: The Budget hit many of the right notes in terms of private sector activity. It announced the opening up of new spaces for private investment – in railways, in public infrastructure projects, in education, industrial zones, in State land, etc. So that is certainly positive. But at the same time many proposals would need reworking to take cognizance of industry realities.
Particularly some of the proposals regarding the financial sector. But overall, the Budget moves in the right direction in terms of private sector development in general and foreign investment in particular.

Q: How do you see the vehicle tax increase?

A: It may not be the most ideal way to manage vehicle imports, but I can see where the government is coming from. There is a desperate need to reduce congestion on city roads and the substantial increase in new vehicles is not easy for existing infrastructure to cope with. But the problem is twofold.

Firstly, the continued under-investment in public transport; something we all agree and I will not dwell on.
Without this, there is nothing to shift behaviour away from private and towards public transport. Secondly, the problem of ‘sharp swings’ in tax policy regarding vehicles; ad hoc shifts from one year to another and even during the year that causes severe uncertainties for both motor industry actors as well as aspiring vehicle owners and businesses.

We need a more sustainable and well thought out strategy. What happens now is that in one year taxes are slashed on a certain category of vehicles to promote their use, consumers then respond to that incentive and purchase those vehicles, government then comes under pressure either on balance of payments reasons or for congestion reasons and decides to curb imports by increasing taxes on those vehicles. And this cycle repeats every few years. It especially hurts middle class families and small businesses, as they are unable to plan and adjust.

The Treasury and Customs needs technical capacity to analyse the optimal rates of vehicle import tax and estimate demand elasticities, so that policies are formulated in a way that balances competing considerations – vehicle numbers/congestion on the road, raising tax revenue and allowing consumer freedoms.

Q: There was a suggestion to set up an export import bank. How important is that?

A: I am not an expert on this – a banker may have more informed responses. But we need to evaluate whether existing banks are not able to provide these services, and whether our export sector is truly constrained by the lack of an EXIM Bank. Sri Lanka should go ahead once a gap analysis is done. And if one is set up, it should not be yet another State bank – it should truly be a private public partnership.

Q: Do you agree with fertilizer subsidies being replaced by cash transfers?

A: Any effort to cut down on inefficient subsidies is a good thing. I am yet to learn how the new cash grant scheme will work. But several studies indicate that the fertilizer subsidy in its current form wasn’t meeting the intended objectives. A cash grant to farmers can be good in improving agricultural productivity if farmers use the grant to purchase inputs that they feel are important for their fields – whether this is equipment, better seed varieties, irrigation or even fertilizer, they get to choose what to spend it on.

Rather than previous strategies of ad hoc handouts to boost the rural agricultural economy, which has had limited success, the focus of the Budget when it comes to agriculture seems to be to promote agri-entrepreneurship, value addition, technology adoption and reducing post-harvest losses by setting up cold-storage warehouses. The agriculture sector, while employing 30% of the workforce, produces less than 10% of GDP. These new measures can provide the opportunity to transform this.

Moreover, subsidies mask the true prices of things. So, hopefully this shift can also tackle the problem of heavy fertilizer overuse, which is having negative implications for water quality and health in farming communities. In the past few budgets, a lot of emphasis was placed on subsidies and welfare transfers that have the consequence of keeping people in low productivity and low income-generating economic activities.

Q: There are some changes on Research and Development (R&D) tax benefits – are these positive?

A: There is a new stipulation that the current R&D triple tax deduction will only be allowed if a technology advancement is achieved or there is a yield on the R&D. This proposal is problematic as it does not appreciate how innovation works. By its very nature, an R&D process is undertaken with little certainty that it will yield results or a commercial product at the end. Even if there is a commercial result, it may be several years after the original R&D spending was made. The idea behind an R&D tax credit is to incentivize companies to take risk and invest in R&D even with many unknowns.
There is also a proposal to extend the triple deduction to cover endowments to national universities. This must be extended beyond universities to cover research institutions like SLINTEC, ITI, etc.

They are already familiar with industry interaction, are more ready to absorb this money and can have faster impact. But tax breaks alone may not help boost industry-relevant research in universities. The example of Moratuwa University suggests that industry is closely interacting with them – through industry research cells and innovation centres– not because of tax breaks, but because of the talent and capability that companies see in that university.

Q: What are your views on the overall Budget 2016 and the deficit outlook for next year?

A: Ultimately, the credibility of a Budget lies in whether revenue targets are met, whether the spending plans go ahead on time, whether the proposals are implemented and whether the budget deficit is more or less on track.

The income tax cuts and other measures to encourage FDI can boost economic activity and have a positive knock on effect on tax revenue. But, more broadly, if the government fails to meet the ambitious revenue targets, it will impact on private sector credit availability as the government will need to borrow more from the domestic banking system. If the government decides to borrow abroad instead, this will also be tricky – as it will be in a higher global interest rate environment. The key issue that global ratings agencies keep highlighting for Sri Lanka is the budget – missing targets and not enough effort on fiscal consolidation. Even if Sri Lanka meets the budget’s ambitious 16.4% of GDP target next year, it will still be below the median for countries that have B-rated sovereign debt, which is 21.4%.

But maybe we have to see this year as an experiment. The Finance Ministry has gone out on a limb to initiate quite a few ambitious and innovative things. They are taking a chance on the private sector to deliver the goods. Many of these initiatives can herald in a new era of private sector and investment-led growth and make Sri Lanka truly outward oriented and globally competitive. The question is, which parts of the experiment will pay off? Which ones won’t? We will have to see the same time next year.


President appoints constitutional committee

President Maithripala Sirisena appointed a committee to obtain necessary suggestions to amend the Constitution or identify the needs to formulate a fresh constitution, Highways State Minister Dilan Perera said.

The minister was addressing the media yesterday in Colombo.

Perera said the committee will be chaired by Minister Nimal Siripala de Silva. The other members are Mahinda Samarasinghe, Dilan Perera, Faizser Musthapha, S. B. Dissanayake, Angajan Ramanadan, Hisbulah, Pavithra Wanniarchchi, Keheliya Rambukwella, A. H. M. Fowzie and Bandula Gunawardena.

The Committee will decide whether the prevailing constitution should be amended or create a new constitution, he said.

-Dharma Sri Abeyratne