• Severe lack of credibility and confidence in Government
• Govt. constituted of the very people who caused crash
• Central Bank has no business in economic stimulation
• Rampant corruption prevalent in procurement processes
• Horrendous attitude among majority of public servants
• System breeds corruption, harms economic growth
• SOE reform process is not transparent enough
• Legislature has been rubber stamp to a large extent
• Aragalaya improved MP participation in Parliament

“How much more of the essential rapid reforms can the Government carry out without having social destabilisation? That is the critical point – how the Government manages,” asserted Samagi Jana Balawegaya (SJB) Member of Parliament (MP) Kabir Hashim, in an interview with The Sunday Morning. 

Pointing out that the people were going through a huge amount of social pressure, Hashim emphasised on the importance of communications and confidence-building amongst the people. “In terms of confidence and credibility, there is a severe lack of credibility, because the people feel that the Government is constituted of the very people who caused the crash. The people still feel that there isn’t an even distribution of pain – that some people are protected and some are not – and there is still corruption. With all that, we are in a dangerous place,” he added.

However, he welcomed the steps taken thus far to remedy the crisis, especially given that most of the necessary measures have proven to be extremely unpopular.

Speaking on the state of the State sector in relation to public servants, Hashim, who is also a member and a former Chairman of the Committee on Public Accounts (COPA), said: “I have great respect for some of the senior public servants who are very committed, but if you take the majority, the attitudes have been horrendous. There is a ‘don’t care’ attitude from the majority of the public service.”

He also highlighted the importance of focusing on battling corruption in a few key State-Owned Enterprises (SOEs) which bring in huge revenue, including the Inland Revenue Department, the Customs Department, the Excise Department, and the Foreign Employment Bureau.

Speaking on the current SOE reform process, Hashim said he did not think the steps taken so far were sufficient, noting that the process lacked transparency. “People like us in the Opposition are in the dark. By now they should have started an open dialogue with the public and with the Parliament. It also has to be a very transparent process.”

Following are excerpts of the interview:

How do you view the current state of the economy?

We are still in a very vulnerable position. The country has undertaken a first set of reforms but these are things that should have been done 30 or 40 years down the line. Too many things are coming at once and the Government is finding it difficult to cope with them all. It’s also in an environment where the world economy has slowed down, which is affecting the markets. 

For example, the garment industry has contracted because of the international market, which also has an impact. Based on this as well, the Sri Lankan population is going through a huge amount of social pressure. How much more of the essential rapid reforms can the Government carry out without having social destabilisation? That is the critical point – how the Government manages. 

In that respect, it’s about communications and confidence-building amongst the people, which this Government totally lacks. In terms of confidence and credibility, there is a severe lack of credibility because the people feel that the Government is constituted of the very people who caused the crash. 

The people still feel that there isn’t an even distribution of pain – that some people are protected and some are not – and there is still corruption. With all that, we are in a dangerous place.

What do you think about the steps taken so far to remedy the crisis situation?

I would say they are pretty good. Nobody wants to take unpopular measures. I must say that we as the Opposition have played a responsible role. SJB Leader Sajith Premadasa took that stand; he spoke about the International Monetary Fund (IMF) before the Government and now this Government has taken the steps. It’s not about IMF reforms, but about what’s right for the country. 

For example, the Central Bank Act was 25 years late. Then the current Bribery Act Amendment and the new bill – it is far too late, but it happened. 

I have seen that the Parliament has changed a lot; there’s been a huge amount of change. I’m also seeing some Government members becoming very involved in new bills, new acts, which should put the country back on track. There is a huge amount of effort going in, but I still feel that the public service hasn’t got on track.

With September approaching, when the IMF review is expected to take place along with the finalisation of the debt restructuring process, has Sri Lanka made sufficient strides in this regard?

In terms of the conditions that the IMF put on us, I think Sri Lanka has taken some of the major steps, including petroleum market pricing, electricity market pricing, and water market pricing – all these were tough measures which were conditions – bringing in the Central Bank Bill, cutting down on money printing, the Government getting involved in the primary market with Treasury bonds, purchasing bonds, etc.; all these have been disciplinary measures for the country and a message for the people that there is no free lunch. In that sense, the Government has done its part.

The Central Bank contracted the economy to cut down inflation – an economic tool that it uses. However, revamping the economy or stimulating it is not the job of the Central Bank; it’s the job of the Government. This is something the Government usually confuses. The Central Bank has no business getting involved in stimulation; it’s a part of the Government’s job and through fiscal measures the Government has to start pushing the stimulation. 

I can see that the Government has messed up big time in terms of policy. This Government has not shown capability. Already there are policy errors being made in the SME sector. The SME sector needs to be supported. We don’t see that coming from the Government. There is also rampant corruption in some of the procurement processes and that, I think, is the biggest issue, due to which this Government may not be able to pull through, even with the second tranche.

In your role as a former Chairman and current member of the COPA, do you see an improvement in how State finances are being managed? What has changed since you held the post?

Well, it’s like this – I’m going to be very candid. I have great respect for some of the senior public servants who are very committed, who have done a great job, who have a great amount of knowledge, but if you take the majority, the attitudes have been horrendous. 

There is a ‘don’t care’ attitude from the majority of the public service. The public service has still not got its act together. There’s still a lot of wastage and a lot of bureaucracy. Because of the way they’re acting, they have been a big obstacle to private sector investment. 

A lot of business people are pulling out because of issues in getting approvals, getting permits, and so on. The system itself breeds corruption and it’s cutting down the growth of the economy. In these terms, I think that we haven’t caught on to exactly what we should do.

When I was Chairman of the Committee on Public Accounts, I realised that we have some 800 institutions to look after. The usual procedure was to call every week to get an institution to come and then go through the mundane things like administrative issues such as ‘why did you buy a tyre, why did you waste this?’ I felt like this was not what our focus should be.

I was not happy with the evaluation framework that had been developed because we were not getting enough information. We wanted to have a proper evaluation structure, so that we would look at the 800 institutions in a more understandable way.

The Auditor General’s Department was very supportive, but my thought was to focus on four or five of the key institutions which bring in massive revenue to this country, as they were some of the worst – the Inland Revenue Department, the Customs Department, the Excise Department, Foreign Employment Bureau, a few places like that. They need to be fixed.

People don’t want to talk about the Customs Department because it’s a mafia. Not only is it corrupt, it is also a huge obstacle to development. There are a lot of industries which need to import raw materials, machinery, etc., and they get harassed. You can talk to people, but they are afraid to reveal their names because of further harassment. There are billions of rupees involved.

These things have to be addressed; we need to start a dialogue with the Customs Department and the Inland Revenue Department. However, I think the Government doesn’t have the political will to see it through.

How do you view the current SOE reform process? Will the restructuring process address the issues faced by these institutions and are the steps taken so far sufficient?

I don’t think the steps taken so far are sufficient. The process is not transparent enough. People like us in the Opposition are in the dark. A committee has been appointed by the President, with Suresh Shah as its Chair. By now they should have started an open dialogue with the public and with the Parliament. It also has to be a very transparent process.

It is about confidence – people don’t have confidence because people believe they are selling all the State assets. We still don’t know what model Sri Lanka is speaking of in terms of an SOE privatisation programme. We’ve always held that we should look at the successful models of our neighbours, like Singapore, which has Temasek, and Malaysia, which created a sovereign wealth fund known as Khazanah. These models are good and are a transition which isn’t a sell-out of State assets to private companies. 

We also think that in such instances, there must be a very strong and accountable process of selling State assets. There must be a proper explanation in Parliament on why it’s being done. It’s still very blurred. The Government needs to engage in much more communication and be much more transparent in this process, because this is a critical element.

If you look at Sri Lanka’s assets, we hold some $ 450 billion worth of assets. Our debts are only $ 81 billion. Between our assets and our debts, the problem is nothing. However, if we don’t do it right, then we can get into a bigger mess, so the privatisation programme has to be much more transparent and accountable.

The President has spoken of Parliament having supreme control of public finances and that decisions should be made in Parliament – does this happen in reality?

We’ve always had the Executive riding over us. Our system should be such that there’s a separation of powers between the Executive, Judiciary, and Legislature. However, the Legislature has only been a rubber stamp to a large extent up to the recent past. 

However, I do see that picture changing slowly, because of awareness – the Aragalaya really helped. The Aragalaya pointed fingers at Members of Parliament, saying that we were sitting and doing nothing in the House. Now you can see MPs spending a lot of time in the committee stages, getting involved in bills and acts and contributing towards them.

There is a change and Parliament sometimes has been able to block certain things and fight for amendments, where the President has had to agree on certain amendments. In the Bribery Act, we actually put in most of the amendments that we wanted as an Opposition. Therefore, I do see that the Parliament is playing a very constructive role and I think this is for the betterment of the country.