SLFP split at hand;Sirisena holds urgent talks with CBK and party seniors

  • Former President Rajapaksa says his loyalists unhappy to attend next Sunday’s party convention in Kurunegala, but large crowds to be transported
  • SLFP ministers insist on major changes to VAT, more consultations before finality is reached
  • Cabinet approves Rs 166 million for Secretariat Co-ordinating the Reconciliation Mechanism (SCRM); Tittawella, Dayananda to head it.

By Our Political Editor
Economic and political issues continue to predominate the Government agenda. Uppermost among them is legislation to give legal effect to the Value Added Tax (VAT) which was raised from 11 to 15 % in March this year. Consultations are under way with the Attorney General’s Department to re-introduce the Bill in Parliament. It was on hold after two Supreme Court rulings – one saying that the way VAT was introduced was illegal. The other declared that the procedure adopted in introducing the Bill to Parliament without the declaration that it was approved by Cabinet was not proper.

The issue figured brieflyat Tuesday’s weekly ministerial meeting. A Ministerial source said the presentation of a fresh Bill in Parliament still depended on the key partners in the Government – the United National Party (UNP) and the Sri Lanka Freedom Party (SLFP) reaching finality on the contents. They argue it imposed severe hardships on the people. The SLFP segment is strongly opposed to the VAT being enforced in its present format and insists it should be changed. The ministers also had a lengthy discussion on the controversial coal tender. It came after Minister Tilak Siyambalapitiya presented a Cabinet Memorandum. It was agreed that the contents of the memo should be examined in close detail at the Cabinet Committee on Economic Matters (CCEM) before finality is reached.

At a recent meeting ministers examined the performance for the first half of 2016. They noted that the percentage of utilization of capital allocations during the first half of 2016 by most of the Ministers and other Spending Agencies was low. Since the Government has decided to fully implement the zero based budgeting methodology from next year, Ministers and Spending Agencies have been required to complete the projects implemented through capital allocations provided in the Budget 2016, this year itself.

President Sirisena in his capacity as party leader, handing over the letter of appointment to Minister LakshmanYapa Abeywardena as the new district organiser for Matara

Ministers have now been advised to take note of this position and to have progress review meetings regularly. This is with the participation of Secretaries to Ministries, other relevant officials and stakeholders to ensure maximum utilisation of funds allocated this year for Capital Projects.

The Government is also mindful of the on-going projects. This month it granted approval to Chinese companies for the “Overlay to Runway and Associated Works of Bandaranaike International Airport (BIA).” The cost will be US $ 48,600,406.52 plus taxes.

The Airport and Aviation Services (Sri Lanka) Ltd., in terms of a decision by the Cabinet of Ministers, will award a contract and enter into a “Commercial Contract Agreement” for a joint venture with the China National Aero Technology International Engineering Group (CATIC) and Shanghai New Era Design and Reach Institute Company Ltd of the Civil Aviation Authority of China.”

Ministers have decided that Transport and Civil Aviation, Ministry Secretary should initiate action to include “appropriate provisions in the Contract Agreement” to reimburse the relevant taxes and levies to the said company for the services to be provided. The BIA will remain shut down during the day from January 5 next year for three months for work connected with the overlay. Hence, almost all flights will land or take off at night hours.
Highways and Higher Education Minister Lakshman Kiriella also sought ministerial approval to obtain a supplementary loan of US $ 14 million from the China Development Bank (CDB) or any other funding agency. He has said this is for “variations in depth” of roads now under construction and recommendations made by a Special Procurements Committee that contractors were entitled for payments due to variation orders.

The China Development Bank (CDB) provided credit facilities amounting to US $ 500 million for the Priority Roads Project 2 (PRP 2) for the rehabilitation of sections of roads selected on a priority basis. Twenty two contracts were awarded with the approval of the Cabinet of Ministers. According to Mr Kiriella, the loan was to finance 90 % of the civil works contract and a remaining 10%
was to be financed by Government funds. He has told his ministerial colleagues that due to variation orders issued and additional work added to settle all the bills, the loan amount is not sufficient.

The original scope of work consisted of rehabilitation of 601.34 kilometres of road and the reconstruction of 44 bridges, whereas at the completion of the project 626.68 kilometres of roads had been rehabilitated and 73 bridges reconstructed. Kiriella said that roads had been widened to two lane width in some areas, and the additional facilities like foot-walks and drainage systems were provided in town areas outside the original plan.

Prime Minister Wickremesinghe won ministerial approval last Tuesday for a vote of aboutRs 166 million for the Secretariat Co-ordinating the Reconciliation Mechanism (SCRM), a body function under his purview. The Cabinet of Ministers on Tuesday gave approval for this secretariat to function for two years. Mano Tittawella is the Secretary General. The primary objective of the SCRM, he told his ministerial colleagues, is to serve as the co-ordinating body of all reconciliation mechanisms. It will facilitate the exchange of information among various policy makers and implementers.

Explaining the rationale behind the move, Wickremesinghe added that Sri Lanka re-embarked on its reconciliation agenda with renewed enthusiasm following the change of Government on January 8,last year. The new Government he noted, in both its electoral and international pledges promised to uphold the right of people via revisiting the post conflict agenda as well as promoting reconciliation. A, A, Dayananda has been named the head of the Secretariat and has been selected on a two year contract for an all-inclusive monthly allowance of Rs 175,000. Other State officials are to be seconded for service from other Ministries and departments.

On the political front, the ‘Joint Opposition’ is now mulling over a number of measures after some of the MahindaRajapaksa loyalists were removed from their posts as organisers both at district and electoral levels. Former President Rajapaksa reacted to the sacking. He told the Sunday Times “many of our organisers asked me what to do about the upcoming annual convention of the SLFP on September 4. I asked them to go back and meet their balamandalasand consult them.” He said they had reported back to him that they did not want to attend the event.

They are unhappy the way the party is disintegrating with the leadership “surrendering everything to the UNP.” Asked for his response on the sacking of party organisers and President Sirisena’s threat that he would expose their secrets if they formed a new party, Rajapaksa declared “everyone has secrets,” What is this “secret” they are talking of, he asked. Commenting on media reports in Australia linking President Sirisena, when he was Minister of Agriculture under his Presidency, to a purported scam, he said “that is dittadammavedaneeyakamma.” Sirisena has denied any involvement in the alleged scam and an announcement from the Presidential Secretariat said he had asked the Attorney General to take action.

Rajapaksa said he would give a studied response to the prevailing situation in the party (SLFP) once he returned from a visit to Malaysia. He leaves on Wednesday. Rajapaksa added that “everyone was now talking about the absence of SLFP ministers in the Cabinet except for one.” It has never happened to the SLFP at anytime before, he said.

Rajapaksa’s remarks came as a Committee named by him to examine matters after the SLFP leadership suspended his loyalists who were both district and electoral level organizers met again last Thursday at the Nelumpokuna Road in Battaramulla. They decided to form a political party under Mahinda Rajapaksa’s leadership. It is not immediately clear whether they would use the SLFP name with an additional title.

The Committee is headed by Basil Rajapaksa and compries Dullas Allahapperuma, Pavithra Wanniaratchchi, Rohitha Abeygunawardena, G.L.Peiris and Mahinda Yapa Abeywardena. The decision came after a lengthy discussion of the situation within the party and Balamandalaya’s loyal to Mahinda Rajapaksa deciding to boycott the annual sessions of the party on September 4.

The Committee has decided that they will have consultations with other opposition political parties to from a “Common Front.” It will function whilst the “Joint Opposition” continues to play its own role in Parliament.

A formidable section is in favour of making a formal announcement on the formation of the party on September 4. There are also moves to demand that their group be treated as a separate entity in Parliament. Being the largest group, they contend, they should be recognized as the main opposition.

Another matter under discussion is the recent passage of the Office for the Missing Persons Act. The Government has declared that it would now entertain amendments from the JanathaVimukthiPeramuna (JVP). These amendments were not moved ahead of the Bill being passed into law due to commotion in the House. When amendments are moved, one suggestion has been for them to go to the Supreme Court using that as a platform to challenge the new law. Small group meetings are being planned in different areas to brief the people on what the ‘Joint Opposition’ calls the dangers from the Office for the Missing Persons Act.

President Sirisena who heads the Sri Lanka Freedom Party has been alive to the developments in the pro Rajapaksa faction, particularly the different measures being adopted. One such instance, reported in these columns last week, is the resignation of organisers, both district and electoral, after some were suspended. He has taken a break from his regular chores to conduct meetings with his party’s high command fuelling speculation there may be surprises at the party’s annual sessions. Among those who have been involved in a string of discussions at his Paget Road residence were one time President Chandrika Bandaranaike Kumaratunga, SLFP General Secretary DumindaDissanayake, and UPFA General Secretary MahindaAmaraweera.

There is little doubt that rivalry between the two factions within the SLFP would exacerbate, particularly with Rajapaksa loyalists deciding to boycott their annual sessions. Crowds will not be an issue at the SLFP convention in Kurunegala. Arrangements are under way by organisers to have crowds transported in buses from different parts of the country. The issue, however, is clearly the parting of the ways. If rival faction members choose to say they are going it alone in Parliament, further separation of the party will become inevitable. Even sacking those dissidents would entail a legal process, enough time for them to consolidate. Just a week away from their annual convention, there is little doubt that the SLFP is in deep crisis.

PM to introduce new Law to regulate foreign exchange
Last Tuesday, the Cabinet of Ministers gave approval for a new Bill for “the promotion of and regulation of Foreign Exchange: To vest the responsibility for promoting and regulating foreign exchange in the Ministry of Finance; to designate the Central Bank of Sri Lanka as the agent of the Ministry; to provide for the repeal of the Exchange Control Act (Chapter 423); and to provide for matters connected therewith or incidental thereto.” Approval for this was sought by Prime Minister RanilWickremesinghe in his capacity as the Minister of National Policies and Economic Affairs. The Central Bank now comes under this Ministry. Here are some highlights of the Bill which is to be gazetted shortly:

  • The Minister assigned the subject of Central Bank shall be responsible for implementation of the provisions of this Act, to ensure proper promotion and regulation of foreign exchange in Sri Lanka.
  • The Secretary to the Ministry of the Minister assigned the subject of Central Bank, may from time to time with the concurrence of the Minister, issue such directions as may be necessary for the implementation of the provisions of this Act.
  • The Central Bank shall act as agent on behalf of the Minister assigned the subject of Central Bank and be responsible for implementing the provisions of this Act, in accordance with such directions as may from time to time to be issued in that behalf in terms of this section. NOTE: The existing Exchange Control Act (Chapter 423) states that the Central Bank of Sri Lanka shall, as agent of the Government, ………….
  • Save as otherwise provided in this Act, no person shall deal in foreign exchange within or outside Sri Lanka by any act which involves the conversion of Sri Lanka rupees or assets within Sri Lanka to foreign exchange or the conversion of assets outside Sri Lanka, otherwise than through an authorised dealer, or to the extent specified in the permit, through a restricted dealer.
  • Any person in or resident in, Sri Lanka, who (a) holds foreign exchange in a bank account in Sri Lanka or outside Sri Lanka; or (b) owns any foreign assets (other than foreign exchange) not being foreign exchange or a foreign asset – (i) derived from the conversion of Sri Lanka currency or the disposal or conversion of an asset within Sri Lanka or provision of any service within Sri Lanka (other than a service referred to in terms 2A (c) of the Schedule); or (ii) derived by an authorised dealer or restricted dealer from the business of dealing in foreign exchange may utilise such foreign exchange or foreign assets for making of any payment for or in respect of, any current or capital transaction of such person, within our outside Sri Lanka.
  • The Central Bank may permit, (subject to section 11 and 12), any person, class or classes of persons (hereinafter in this Act referred to as a “restricted dealer”) not being an authorised dealer, to deal in foreign exchange within Sri Lanka for the purpose specified in the permit, subject to such terms and conditions as may be imposed by the Central Bank in that behalf.
  • Prior to dealing in foreign currency for a current transaction (under subsection 1), an authorised dealer or restricted dealer may request the person requiring foreign exchange for such transaction to provide such information or produce such documents or make such declaration as reasonably necessary, in order to satisfy himself that the requirement is in relation to a current transaction and is in conformity with any other laws regulating such transaction.
  • Save as otherwise provided in this Act, no person shall deal in foreign exchange within or outside Sri Lanka, by any act which involves the conversion of Sri Lanka rupees or assets within Sri Lanka to foreign exchange or the conversion of assets outside Sri Lanka, otherwise than through an authorised dealer, or to the extent specified in the permit, through a restricted dealer.
  • A person in, or resident in, Sri Lanka may –

(a) Export from Sri Lanka or import into Sri Lanka, any foreign exchange of Sri Lanka currency;
(b) Hold foreign exchange in or outside Sri Lanka;
(c) Acquire a foreign asset from foreign exchange obtained by the conversion of Sri Lanka currency or assets held in Sri Lanka;
(d) For such purposes, up to such limits and subject to such terms and conditions, as are specified in the Schedule to this Act.

  • The Central Bank may, at any time, cause an investigation to be made, of foreign exchange transactions or foreign assets of any authorised dealer, or restricted dealer or any other person as the case may be, by a person authorised in writing by the Central Bank (hereinafter referred in this Act as “authorized persons”) in that behalf.
  • The Board of Inquiry (appointed under sub section 1) shall) consist of the following persons appointed by the Minister.

(a) A retired Judge of the Supreme Court or of the Court of Appeal; who shall be the Chairman of the Board; and
(b) Two persons who are conversant in matters relating to international finance or exchange transactions and have had experience at a senior managerial level in the public or private sector and are of good standing and repute.

Where the report of the Board is not a unanimous report, any dissenting member may submit a separate report to the Minister. The Minister shall, after considering the report of or reports submitted by the Board and any member thereof, affirm, revoke or vary the determination of the Central Bank against which the appeal was preferred. The Minister shall in writing communicate his decision to the Central Bank and the party preferring within fourteen days of the receipt of the report or reports. The decision to the Minister under this subsection shall be binding on the Central Bank and the party preferring the appeal.

  • Where the person who is required to pay the amount or value of foreign asset and expenses incurred under section 12 (dealing in relation to foreign assets contrary to this Act or any guideline) is a body corporate or unincorporated, every director, member or partner of such body shall also be personally liable jointly and severally to pay such amount or value and expenses;
  • Provided that such director, member or partner shall not be liable to pay such amount or value if such person proves that the act or omission incurring such liability was done or omitted to be done without the knowledge of such person or that such person exercised due diligence to prevent such act or omission.
  • Where the Monetary Board advises the Minister that in the opinion of the Board, remittances of foreign exchange into or but of Sri Lanka constitute a potential threat to the financial stability of Sri Lanka, the Minister may, with the approval of the Cabinet of Ministers and notwithstanding (the provisions of sections 5,6 and 7) of this Act , by Order published in the Gazette, take such steps as may be necessary to restrict or regulate remittances of foreign exchange into or out of Sri Lanka, for such period not exceeding six months from the date of such Order.
  • No suit, prosecution or other legal proceedings shall lie against the Monetary Board or any of its members or the Central Bank or any of its employees or the Minister or the Secretary or any officials of the Ministry or any other person exercising any power or performing any duty or omission done or omitted to be done, in good faith done under this Act.
  • Where the provisions of any other written law imposes an obligation in respect of doing of any act and the permission or consent of the bank is, by virtue of this Act required for the discharge of the obligation, it shall be an implied condition of the obligation that it shall not be discharged except in so far as the permission or consent is given or is not required.
  • The Minister may make regulation in respect of all matters which are required by this Act to be prescribed or in respect of which regulations are requiredor authorized to be made under this Act.