Economic heavyweights box in COL ring

The Sinhala and Tamil New Year season is coming up. There is going to be a big demand for food, other consumer items and garments. Though prices of several essential items have come down, people still complain about rising cost of living. We spoke to Minister of Trade , Marketing Development, Co-operatives and Consumer Services, Bandula Gunawardena and former Minister of Trade and Commerce Ravi Karunanayake.

What steps have you taken to protect the consumer and offer them these items at competitive rates, especially during the festive season?

BG: We have increased the number of essential items which has a price control from four to ten. That includes sugar, dhal, big onions, sprats, canned fish, green gram, dhal and chicken. After a successful round of meetings with importers and wholesalers, we have been able to come to an greement. We have passed that benefit on to consumers. As a result, price per kilogram for dried chilies has been reduced by Rs.100, sprats by a similar margin and canned fish by Rs. 25. In fact, prices of sugar and big onion are even less than the prices what we have agreed upon. We have so far opened 53 Lak Sathosa branches. In addition we have 9,000 co-operative outlets to support.

RK: There is no point in taking just one festive season. They take people for a season and after that they don't bother to see whether the people are dead or alive. Reducing a few essentials for a particular season is not good enough. That's absolutely ridiculous. Cost of living is cost of living; there is no festive season cost of living. It's not confined to a particular period.

The once famous CWE, or Sathosa as it was better known amongst rural people, is no more. There was a time that the CWE competed like a supermarket and even offered round the clock service. What happened to CWE?

BG: During the late Minister Lalith Athulathumudali's time, CWE had Asia's most reputed dealer network with over 7,000 workers. But people who don't feel the pulse of rural economy completely destroyed that. Today, they have left Rs 5 billion in debts, plus compensation to be paid. We were forced to sell CWE's Union Place land to NSB to find finances and pay compensation.

RK: CWE did not fall. It's the then PA Government, with the support of JVP, got-together in September/ October, 2004 and closed down the CWE. Then President Chandrika Bandaranaike Kumaratunga brought a Cabinet paper to give bread at Rs. 3.50 and CWE had no way to finance that. When we took over in 2001, we turned CWE into a commercial and viable venture. CWE gave a good run to private sector supermarkets.

Who is responsible for the downfall of the CWE, which played a key role during crisis situation? Sathosa Retail too could not achieve its intended goals?

BG: Ravi Karunanayake should be held responsible. He did not consult anybody and went ahead with the CWE restructuring program on his own. All of us know what happened and what a big failure that was. It's an incomparable loss that makes it hard to put Sathosa back on the right track. Sathosa Retail became an utter failure due to huge operational costs.

RK: Today everybody goes to supermarkets because CWE attracted people to a new supermarket concept. They wanted to help private sector by closing down the CWE. It's the PA and JVP govt. that was responsible for the downfall of Sathosa. Ask Arpico, Sri Krishnan and Carsons who bought CWE. It's nothing but political interference that forced CWE to close down.

Prices of over ten essential items have come down significantly. Do you think people enjoy this benefit? Has this contributed in any way to reduce the cost of living?

BG: There are various people, who have been badly hit by our consumer friendly moves, who are obstructing. We will have to protect consumers from those extremists. In Sri Lanka, people try to work for a political agenda. Those who are hurt and affected due to our far reaching moves, suppliers to Government and other institutions are badly hit.

RK: The government of PA, JVP and JHU feed people through television and reduce cost of living through newspapers. Go to Lak Sathosa and when you look for essential items for the prices publicised, they ask to get goods for those prices from the Minister. People don't live with just ten essential items. That's a negligible factor. Petrol went up by Rs. 7 per litre. The Government reduced the VAT component on the electricity bill and increased the fuel surcharge, which is higher than VAT. Whom are they trying to fool?

Lak Sathosa, which replaced Sathosa Retail is trying to ease the burden of the consumer. But with limited number of outlets, to which extend could Lak Sathosa achieve its goals?

BG: Together with Transport Minister Dalles Alapapperuma, we have drawn a new program to sell essential items at main Railway stations, mainly in places like Colombo, Kandy, Galle, Matara, Anuradhapura, Badulla and Kurunegala. Workers on their way back home could buy provisions at low prices. There would be no high operational costs and both the Ministries could share profits. Unlike during the UNP time, we don't obtain business premises on high rents due to political affiliations.

RK: It's a hilarious operation. This government is three years old. During this time, they said they would remove the 'plug' and reduce cost of living. They brought lorries in front of Fort Railway station to sell goods but they failed. When the world prices are going down, we increase local prices. At the same time, the Government is frightening suppliers like Prima and LIOC. Then they appoint committees and now scold 'nattamis'. What do they offer at Lak Sathosa' Just a name change. It?s a mockery in the eyes of consumers.

CWE had a special project to bring down vegetables from Dambulla and sell them at reasonable wholesale prices. Why cant Lak Sathosa or any other Government business venture work out a plan to market rural vegetable production, thereby giving a good market to farmers and a reasonable price to the consumer?

BG: That's difficult. We can't do that through an establishment like CWE. But we could do that through ten economic centres we have. There you get the cheapest price. We could let the private sector handle that at competitive and reasonable prices.

RK: The Government does not know how to run a business, a ministry or anything. They are good to come before TV, hold placards, scolds the UNP even if a coconut falls in London. The Government does not understand how to run a business. We brought people who have never been to supermarkets to CWE outlets. We changed the culture and gave an opportunity to consumer. Demand and supply theory is the only way to reduce cost of living, not price controls.

What immediate steps could the Government take to reduce cost of living?

BG: We are doing it with great difficulty. Interest rates are going up and the Rupee is depreciating. Hence, it?s a huge challenge to reduce cost of living altogether. But we have put a safety net with the help of the private sector to protect consumers and the general public and bring stability.

RK: There is only one step that I believe. I have told this over and over from time to time. They tried to do their own with price controls and failed. The only way is to hand it over to the UNP and we could do it. Cost of living is two way local and foreign. When world oil prices come down, we increase it here. There should be financial discipline. You can't give everything for nothing, everyday to everybody. This is what the Government does.

We also need a mechanism to protect consumer, protect middlemen and pass on that benefit to the consumer?

BG: The late Minister Lalith Athulathmudali implemented the Fair Trading Commission. Then in 2003, Consumer Protection Authority was established. It has a huge power vested in it, almost similar to that of a court of law. But they have not fully exercised the powers vested.

RK: It's the Government that exploit, nobody else. Prices of electricity are well above normal, petrol prices go up though the world crude oil prices come down. They can't control the budget deficit. Through these acts, it is the government of SLFP, JHU and JVP 'Wimal faction' who exploit the consumer.

What steps should the Government take or implement to uplift rural economy?

BG: Steps are being taken to uplift the rural economy through 'Gama Neguma' project, implemented under the guidance of Senior Presidential Advisor, Basil Rajapaksa. We plan to form a Gama Neguma Co-operative to improve production, buy that, store and distribute. It's a small economic unit and a true multi purpose co-operative society. Even in countries like Switzerland, Denmark and Sweden, which have a strong open economy, the co-operative movement is strong.

RK: The government should ensure that there is proper implementation of economic activities in rural areas, not just through TV or by laying foundation stones. We should make capital transfer into those areas. Developing this would take years and it takes just seconds to destroy it. UNP took trouble to develop rural economy for years and the PA government, supported by JVP and JHU, destroyed it in a flash.

Do you think essential goods would be available in plenty at reasonable prices for the coming festive season?

BG: Yes, there would be in plenty. Under the CPA Act No.26, retailers should display a price index. From tomorrow, we would be very strict on this. All those who break this rule would be charged. Consumers could complain to the CPA against any violations and we would strictly implement the law. Consumers should stand strong to protect their own right, not politicians.

RK: For those who are dreaming, there would be in plenty. But for the people who are living, who can't find a square meal, there would be a absolute destitute situation. There would be absolutely nothing. On the other hand, there is a disgusting situation in Pettah market as traders are not opening letters of credit (LCs). They are scared they would be hijacked in white vans by gangs to get ransom.