Bangkok Post
Table of Content
1. Is struggling Sri Lanka salvageable?
April 8, 2022
Syed Munir Khasru, Chairman, IPAG
Last Sunday -- with two notable exceptions -- Sri Lanka's cabinet resigned en masse in protest against the government's handling of the worst economic crisis to hit the island in decades, which has sparked widespread rioting, unrest, and arson attacks on police property.
The two men stayed put were President Gotabaya Rajapaksa and Prime Minister Mahinda Rajapaksa, scions and brothers of the powerful Rajapaksa clan.
The prime minister's son, Namal Rajapaksa, was among those who resigned, however, explaining via Twitter that the move would "help the President and PM to establish stability for the people and the government". President Gotabaya imposed a 36-hour curfew on Friday, a day after protesters clashed near his residence.
The economic downfall started with a changeover from an international trade strategy to focusing on domestic economy development. It resulted in shrinking trade as exports declined as a percentage of GDP -- 26% in 2005, 15% in 2010, 13% in 2015; and by 2020 at 12%. The domestic economy could not create demand to stimulate economic growth, which fell from 9% in 2012 to 2.3% in 2019.
Income tax concessions led to significant revenue loss of Rs 500 billion (55.8 billion baht; or 4% GDP). A ban on chemical fertiliser imports to promote organic farming led to crop failure and the country ended up importing staples such as rice, draining foreign reserves. By December 2019, the borrowing had shot up by Rs 4.2 trillion (173%) within two years. This is the country's worst economic crisis with rolling power blackouts, shortage of cooking gas and essential goods including food.
Borrowings from China to finance infrastructure projects such as a $1.4-billion port construction project left a hole in the reserves. Sri Lanka owes $35 billion (10% of its foreign debt) to China, by April 2021. Foreign reserves fell to $2.3 billion by 2022 and after removing illiquid balances from China, Sri Lanka is left with only $400 million. The government imposed an import ban in 2020 shooting up food prices up by 25% as overall inflation touched 17.5%. Rising prices coupled with high debt concretised the lack of essentials, with staples like rice, milk and sugar being rationed, and a ripple effect followed for most food items.
The economy remained vulnerable to external shocks as foreign reserves were based on foreign borrowings rather than export earnings. The government spent forex on debt repayment, depleting central reserves and drying up funds for food imports. Other external shocks affected the volatile economy, primarily the Covid-19 pandemic that contracted the economy by 3.6% in 2020. Foreign migrant worker remittances also declined, adding to the woes.
The pandemic was a blow to the country's tourism-dependent economy which has been on pause since 2020. Some 30% of Sri Lankan tourism depends on visitors from Russia, Ukraine, Poland and Belarus, which is now at an additional risk due to the Ukraine war. Petroleum products accounted for 20% of Sri Lanka's imports in December --having risen 88% compared to a year earlier. The Russia-Ukraine conflict is worsening fuel prices; adding to an already fragile economy that has only $2 billion in reserves, but $7 billion in debt payments.
High unemployment and skyrocketing inflation have prompted some Tamils to flee northern Sri Lanka to Tamil Nadu in India. Some refugees ended up stranded and later rescued by the Indian Coast Guard. Critical foreign currency shortages have left traders unable to finance imports as banks remain unable to finance the imports of food, fuel and medicines.
Sri Lankans have resorted to kerosene and firewood for cooking. Exams were cancelled for millions of students due to a printing paper shortage. The situation is dire with food being rationed at supermarkets and a shortage of essential goods. The price of food has increased more than 30%, and the price of some vegetables have quintupled. Poor availability and a price hike of milk powder has made young children's nutrition difficult. People have cut down their meals, with some sacrificing their meals to feed their children.
Sri Lanka's public debt increased from 94% in 2019 to 119% of GDP in 2021. Neighbours like China, India and Bangladesh have come to assist. In 2021, China swapped $1.5 billion to help reduce fluctuating exchange rates. India announced a credit of $1 billion for procuring food, medicines and essentials; $500 million was extended for petroleum purchase. Bangladesh offered a credit of $200 million to Sri Lanka in 2021. Pakistan and Qatar have also offered support.
The government took additional policy measures to reduce capital outflow; increasing investors' confidence by not defaulting debt-servicing; introducing import restrictions on luxury vehicles, fertilisers and food items to prevent currency outflows; restrictions on forward contracts foreign exchange; policies for improving foreign remittance inflow, such as diversifying foreign employment market, introducing a contributory pension and pay remittances above the normal exchange rate; boosting investors' confidence by offering provisions for Special Deposit Accounts. Although the country had earlier been sceptical of an IMF bail-out, it will now discuss an IMF rescue plan in addition to seeking World Bank support.
As an alternative to borrowing by way of increasing taxes and investments in healthcare and education, social protection can improve public financing and boost the economy for a lower-middle-income country like Sri Lanka. Strengthening offshore financial centres and addressing tax evasion should go hand in hand. However, collections from tax may not suffice as the current income levels may only yield proportionately low taxes.
A comprehensive policy is required for the country to bail itself out. Firstly, management of borrowings must be bettered. This includes addressing demand side issues, improving accountability and political commitment. Options such as diversifying and divestments may be explored in addressing issues that require immediate resolution. It is important to strengthen accountability of borrowers and lenders by bringing transparency in debt, so citizens and other civil bodies can collaborate for contingent liabilities management.
Debt reframing is a possible policy option that may be used in combination. Debt restructuring and rescheduling may be pursued by the renegotiation and modification of contract terms with lenders, while requesting concessions and extensions for tackling debt pay-outs. Renegotiations may also consolidate many debts into few.
Debt conversion is another way to ensure that local currency pay-out is not large -- this can be achieved through conversions of assets (such as debt for equity swaps) in place of cash and increase domestic money supply. It can be managed through schemes involving issuance of government bonds to strengthen domestic capital markets.
Sri Lanka must strengthen its shock and crisis management, and make the economy resilient to external shocks by introducing permanent mechanisms. The road ahead will be rocky but not insurmountable with some belt tightening, economic reforms and most importantly -- prudent political leadership.
Link: https://www.bangkokpost.com/opinion/opinion/2292054/is-struggling-sri-lanka-salvageable
2. Little hope for Rohingya repatriation
June 19, 2019
Syed Munir Khasru, Chairman, IPAG
Background:
As Myanmar refuses to acknowledge responsibility for the atrocities committed against the Rohingya refugees sheltered in Bangladesh, their safe repatriation to Rakhine remains a distant possibility. This article analyses the challenges in overcoming obstacles in resolving the prolonged Rohingya crisis.
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After some 740,000 Rohingya fled Myanmar's northern Rakhine State to live in camps in Bangladesh following the start of the 2017 military campaign against them, the Rohingya crisis today still shows no signs of abating.
A leaked report by the Asean Coordinating Centre for Humanitarian Assistance on disaster management's (AHA Centre) Emergency Response and Assessment Team (Erat), which has evaluated Myanmar's efforts to entice Rohingya refugees to return from Bangladesh, offers more factual failures than any objective framework for repatriation.
The report not only downplays the severity of the persecution faced by the Rohingya community, but also fails to recognise them as Rohingya, thus infringing on their ethnic status and putting a misplaced focus on their religious identity as Muslims.
The report, criticised by human rights groups, conveniently omits information that may paint Myanmar in an undesirable light.
Immediately following the report that was leaked earlier this month, Aung San Suu Kyi, the State Counsellor of Myanmar, met with Hungarian Prime Minister Viktor Orban in Budapest, where the two exchanged their common and rather controversial views on both Muslims and migration.
These talks reflect how the tables have turned for Ms Suu Kyi, once an icon of democracy, who views her meeting with Europe's most xenophobic leader as an important accomplishment.
This meeting, close on the heels of the report, renders Myanmar's assertion that they can safely repatriate the Rohingya, the majority of whom are Muslims, somewhat obsolete.
Following the outcry from international organisations and human rights agencies, Erat has tried in vain to paint a polished picture of a complex exercise in what the UNHCR has dubbed "ethnic cleansing".
Queries about why the term Muslim was used instead of "Rohingya" were batted away by the AHA Centre's executive director Adelina Kamal, as she tried to divert attention to coming up with constructive solutions to the matter and helping Myanmar.
Indeed, Erat does not have the autonomy to focus on issues not delegated by Myanmar or Asean, including investigating allegations of human rights atrocities committed by the Myanmar army.
This obviously raises questions on the report's objectivity and reliability, as well as the motives behind the timing.
If it is the case that Erat is unable to fulfil its obligations to offer unbiased and unrestricted recommendations, this begs the question of why they had to undertake this exercise and offer a limited and inaccurate analysis of the ongoing crisis.
The report has, instead, shed light on the failure of Asean to play an effective role in resolving the crisis.
The report, titled the "Preliminary Needs Assessment for Repatriation in Rakhine State, Myanmar", avoids mentioning the human rights abuses committed against the Rohingya during the military crackdown of 2017.
There is no recognition that the refugees have been enclosed in fetid, cramped camps in Bangladesh, nor of the reality in Rakhine State, where an estimated 400,000 Rohingya still live with meagre access to basic necessities such as health care and education, and which Amnesty International has dubbed "open-air prisons".
In a travesty of truth, the report claims that the local communities felt safe around the Border Guard Police units that have been accused of committing the violent atrocities that drove the Rohingya into Bangladesh.
The Rohingya crisis has escalated to such a level that UN Secretary-General Antonio Guterres paid a rare visit, along with World Bank President Jim Yong Kim, to the Bangladeshi Rohingya camps.
Ironically, the report praises Myanmar's scant efforts to ensure "smooth and orderly" returns, and faults the Bangladeshi bureaucracy and complicated paperwork for the delay in Rohingya repatriation.
There is no mention of Myanmar's consistent failure to address the preconditions of repatriation, including a guarantee of citizenship and freedom of movement and safety once back in their homeland.
It underestimates the barriers that Myanmar has set up to frustrate the safe and equitable repatriation of the Rohingya.
Praising Myanmar's "efforts" to facilitate repatriation, the report forecasts a timeline of two years for half a million refugees to return, with the number cited well below UN estimates, making the premise of the report imprecise and invalid.
Amnesty International heavily criticised the report, terming it "ludicrous to think that returns in this context could be safe, voluntary or dignified".
The reality is that even though the plan was for the first refugees to return in November last year, Myanmar has yet to take any concrete steps to meet the refugees' demands, which is fuelling the consistent refusal by the Rohingya to return.
Rather than offering constructive recommendations and a resolution framework, the report seems to be more focused on whitewashing the accusations of genocide faced by the Myanmar army.
While it has covered important aspects of the Rohingya after they are repatriated, including physical and material safety, it has overlooked critical factors like citizenship, equal rights, education and healthcare facilities that are essential to ensuring successful repatriation and rehabilitation.
Following the AHA Centre report, the ironic transformation of Ms Suu Kyi, once the embodiment of human rights advocacy and a former Nobel Peace Prize winner heightened when she bonded with Hungary's openly anti-immigrant prime minister.
Once considered the "darling of the EU and the US", Ms Suu Kyi today finds a common bond with Europe's most controversial anti-migrant leader. Today, Mr Orban and Ms Suu Kyi are advocates of the growing cross-continental political faith movement that views Islam as a major threat. Both leaders agreed that they were facing challenges on how to "co-exist" with "continuously growing Muslim populations".
They also pinpointed one of the common challenges facing their nations: migration. Human Rights Watch termed Ms Suu Kyi's meeting as "glad-handing and making friends with Europe's most xenophobic, anti-democratic leader".
In light of these talks, Ms Suu Kyi's insistence that Myanmar is taking steps to integrate the Rohingya falls miles too short and portrays a nationalist propaganda. One thing is for sure: The Rohingya refugee crisis is far from over and the sign that are emerging give very little hope to the world's most persecuted minority.
As Asean's image suffers because of this indefensible report, the Rohingya can only see a future of despondency as their hopes dwindle while the Myanmar military procrastinates and deceives.
As far as the Nobel laureate is concerned, her image is now that of an opportunistic politician who is the public face of a brutal regime, and a leader who represents values contrary to what she used to stand for in her golden days.
These politicians do indeed make strange bedfellows from whom misery often summons very little sympathy or support, as is the case with the Rohingya.
Link: https://www.bangkokpost.com/opinion/opinion/1697736/little-hope-for-rohingya-repatriation
3. Bangsamoro referendum a breath of fresh air
February 19, 2019
Syed Munir Khasru, Chairman, IPAG
Background:
As Muslims in Mindanao voted to become part of the Bangsamoro Autonomous Region, the region can finally find long-expected peace and security. Here’re my thoughts on how Duterte’s empowerment of the Muslims in this impoverished region of Philippines can end decades of bloodshed and secure the entire region.
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On Jan 21, voters in the Mindanao autonomous region in the Philippines voted overwhelmingly in a referendum to become a part of the Bangsamoro Autonomous Region, a self-administered area to be created for Mindanao's Muslims.
Six municipalities in Lanao del Norte province, however, decided against being included in the second Bangsamoro plebiscite on Feb 6.
The Mindanao referendum is a welcome development, both for the Philippines and the region.
Mindanao, the Philippines' second-largest island located the south of the country, has been in turmoil for the past four decades. The autonomous region in Mindanao -- where around 90% of the population is Muslim, or Moro, as they are locally called -- has been struggling for decades to gain more autonomy from Manila, to establish Bangsamoro, literally, the Nation of the Moro. The Moro are not asking for full sovereignty as a state, but an autonomous state that is free to govern as per their own laws and customs.
Muslim missionaries started arriving on the island during the 13th century, but the island was later colonised by the Spanish, who arrived in the 15th century. While the Moro once constituted the majority in Mindanao, their numbers and influence have been curtailed for decades -- first by the Spanish settlers, then by the Japanese for a brief period, followed by the United States. Last but not least, under the state mandated "Homestead Program" instituted by the Christian majority.
Since the departure of the Americans, the Moro have been tussling with the Philippine government to seek an autonomous status. Leading the struggle was the Moro National Liberation Front (MNLF), which engaged in both peaceful dialogues and violent struggles with government forces.
The MNLF was recognised by the Organisation of Islamic Cooperation (OIC), and supported by the Libyan and Indonesian governments in the 1980s, and talks of allowing it to function as the administrator of an autonomous region went on for decades. This culminated with the signing of the Jakarta Peace Agreement in 1996.
The front, however, was later overcome by the more radical Moro Islamic Liberation Front (MILF), which is more active in pursuing the autonomy agenda.
While peace agreements have been signed, the implementation of its deals remains slow -- agitating the MNLF, MILF, and other fringe organisations fighting for greater autonomy. Banking on the dissatisfaction of the Moro over the slow progress towards real autonomy, smaller, more radical groups with links to the Islamic State (IS) -- often also patronised by the MILF -- have emerged to make matters worse.
Foreign fighters then began coming to the island to train fringe militant groups, and as per a report by the Guardian, between 40 to 100 foreign fighters have travelled to Mindanao to drum up support for the IS.
During President Rodrigo Duterte's term, local terrorists with links to the IS stormed the city of Marawi, which forced him to place Mindanao under martial law for a year. Hailing from Mindanao himself, Mr Duterte have been pushing for the ratification of the Bangsamoro Organic Law and the formation of the Bangsamoro Autonomous Region, which has helped him win the support from the Moro in Mindanao.
In a rather swift turn of events, a reluctant congress ratified the Bangsamoro Organic Law on July 26 last year. Under the law, the rebels agree to give up their pursuit of an independent state, in exchange for broader autonomy. Between 30,000 to 40,000 fighters will be demobilised, and by 2022, the region will have its own elections -- and its constituents will vote in the members of their own parliament, as well as chief minister.
The central government, however, will remain in charge of policing and security.
The plebiscite will end decades of violence, help quell threats of radicalisation, and bring about peace, prosperity, and the rule of law.
Murad Ibrahim, MILF leader and the incumbent head of the Bangsamoro Transition Authority, said upon casting his vote, "This solifidies the transformation from armed struggle to democratic politics."
Mr Duterte argues that this referendum -- which in essence, is his first move towards establishing federalism in the Philippines -- will lead to a more equal distribution of funds for impoverished provinces in the country, who will have the freedom to decide their fate.
Sceptics fear that Mr Duterte's push towards federalism is aimed at extending his stay in office beyond 2022, although Mr Duterte himself said that he will not stay beyond his current term.
For Asean -- a unified region with highly porous borders -- the threat of foreign fighters and elements like the IS entering their territory has always been a great concern. Further escalation in the Philippines would have eventually seeped through to Malaysia, Indonesia and Brunei -- all Muslim nations with sea borders with the Philippines.
As such, Mr Duterte's move to give the Moro people more voice, power and autonomy -- which will end decades of bloodshed and help secure the entire region -- will go down well with its Asean neighbours. The Moro will finally be able to chart the courses of their own future, and those who belong to other faiths on the island will hopefully be freed from the cycle of poverty, violence and infighting.
Link: https://www.bangkokpost.com/opinion/opinion/1631258/bangsamoro-referendum-a-breath-of-fresh-air