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Tuesday March 28th, 2023

Discrimination against minorities what is the endgame?

#Stopforcedcremations – Demonstrations against the forced cremations of Muslims who die of Covid have popped up across the North and East

ECONOMYNEXT – Parliamentarian Harin Fernando’s now-famous speech delivered last week was, in many ways, a reflection of the deep anguish religious and ethnic minorities are dealing with the overtly discriminatory attitudes of the authorities.

In his role as the enfant terrible of the Samagi Jana Balavegaya, Fernando spoke primarily of the fallacy of the government’s slogan of “one country one law” and drew the ire of President Gotabaya Rajapaksa himself.

But Fernando also went on to make a more important point that the religious and ethnic minorities have to accept a subject-hood under the Sinhala-Buddhist majoritarian rule in this country.

He told Parliament that “when (Cricketer) Fairooz Maharoof hits a six, we all applauded, when Mutthiah Muralidaran took 800 wickets we lit firecrackers, but could either of them be appointed captain of the national Cricket team? The answer, he said is ‘No, because of their ethnicity.”

“We are all Sri Lankans who have different beliefs. I am a Roman Catholic Sri Lankan and (pointing to Justice Minister Ali Sabry) you are a Sri Lankan Muslim.”

This subject-hood is being reinforced by none other than the Catholic Archbishop of Colombo Malcolm Cardinal Ranjith who has said that Buddhism is “the greatest gift that Sri Lanka has received” when he spoke at the Payagala Buddhist temple on January 2.

He has on previous occasions too, implied that we the minorities must live under the benign Buddhist tent totally accepting the subject-hood of the Roman Catholics to the Sinhala Buddhist state.

Constitutionalist Dr Asanga Welikala recently commenting on the detention of leading lawyer Hijaz Hizbullah tweeted that he is a victim of “institutionalized discrimination.”

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Riling up the Tamils

Bulldozer tears apart war memorial in Jaffna/Twitter.com

Students of the Jaffna University, Human Rights activists and political leaders have been protesting throughout the weekend, the destruction of a monument for the people who died in the separatist war, erected at the University.

The monument, built by the University Council in 2019, had been bulldozed on the orders of Vice-Chancellor Prof S Srisatkunarajah who says he was “pressured by the University Grants Commission (UGC)” to do so.

Columnist Ananth Palakidnar told EconomyNext that the structure, dubbed the Mullivaikkal monument, had no reference to LTTE fighters nor did it glorify them.

“It only remembered those who died in the final fighting, which included a number of students in the University,” he said.

The UGC Chairman, Senior Prof Sampath Amarathunge in a statement released on Saturday said the monument was removed because it is not “suitable for the Sri Lanka of today and tomorrow.”

He added that the memorial “could be a barrier to peace between North and South,” emphasizing that Sri Lanka’s universities now have a healthy mix of students from all regions and all ethnicities and religious backgrounds.

While the authorities may seek to indicate unity amongst the people, this incident only helped bring disparate Tamil political groups together to protest the destruction of the monument.

Palakidnar observed that “it has given these activists a cause again.”

It also caused the Sri Lanka Muslim Congress to call on its supporters across the North and East to stand together with their Tamil brethren and oppose the destruction of the monument.

However, by Monday the University authorities appeared to have second thoughts and the Vice-Chancellor has promised to rebuild the monument. Whether this is a ploy to stave off the wave of protests or not, is a matter left to be seen.

Muslims pushed to the wall

The most egregious example of minority bashing that we are experiencing right now is the issue of the compulsory cremation of the remains of people who die of Covid 19.

Despite assurances by expert committees that the virus cannot spread when the affected individual dies, and the WHO guidelines permitting burial, and close to 200 other countries burying their Covid 19 dead, Sri Lanka will not budge.

Various “Expert Committees” have been appointed to advise the government on the cremation issue and as far as the World Health Organisation, the College of Community Medicine of Sri Lanka (CCPSL) and the Committee led by Prof Jennifer Perera are concerned burial is safe.

Prof Malik Peiris, a world-renowned expert on the virus has pronounced that once dead, a cadaver cannot transmit a virus and Prof Tissa Vitharana, a member of the current administration agrees.

Vitharana too is a well-known Virologist, who has headed institutions in Edinburgh, Melbourne and the Medical Research Institute in Sri Lanka. Despite all that, he claims he has never been consulted on managing the pandemic.

For Muslims to whom burying their dead is of utmost importance as part of the duties toward the dead, this attitude of the government is deeply traumatizing. They now seem to have reached the end of their tether, where an unflinching government continues to ride roughshod over the pleas of the Muslims. Their attempt for relief through the Judiciary never got a hearing.

For a short while, it seemed the government was waffling and groping in the dark, having run out of ideas even as the pandemic shows no signs of abating. The one thing that is clear is the devastating effect it has had on lives and livelihoods, and here too the government seems to ignore the plight of daily wage earners and low-income families who are placed in lockdown and complain they have little or no access to getting their daily needs.

In North America, the term waffling means someone is struggling to make a decision with no clue what to do.

At the beginning of the pandemic, no less a person than Dr Anil Jasinghe said burials would not be an issue. However, soon after a Gazette notification said only cremations will be allowed. This is not an issue that affects only Muslims, as for all communities that follow Abrahamic religions, burial is the accepted method. Cremation was permitted for Catholics only in 1963 and only under special circumstances.

Those of Abrahamic faiths such as Muslims and Christians believe in the resurrection “on the day of judgement” and therefore place much importance in ensuring that bodies are buried intact.

For those of the animist tradition, usually among aborigines, including the Veddas or to use the Hindi term Adivasis of Sri Lanka returning one’s body on death to Mother Earth is an offering where the remains will help a new life flourish.

What seems to be happening is that the administration is unable to stand firm against an onslaught from the majority Buddhist groups, who helped the government to win power, and is now vehemently opposing burials.

That is baffling, as the people believed they were electing a strong and decisive leader, one who led the nation to victory in the war against separatist forces. What’s more, the administration has the backing and advice of those described to be the brightest minds in the country, members of Viyath Maga.

There are two current situations where ethnic and religious minorities are now compelled to accept subject-hood. The Muslims like it or not they must cremate those of their community who succumb to Covid 19, while the Tamils cannot memorialize their dead. It seems that a benign attitude towards remembering the dead is applied only to Sinhalese.

In her most recent pronouncement in Parliament, Health Minister Pavithra Wanniarachchi said that the Prof Perera-led committee was “not official and the decision has to be made by the main committee headed by Pathologist Dr Channa Perera.” This, despite there being a letter issued by the Secretary of Health, appointing the Perera committee!

“When faced with such a serious pandemic situation we cannot take actions based on the social or political feelings of groups, but have to be guided by science,” she said.

But the science, according to the three main professional bodies, the CCPSL, the Perera committee and top international experts including the WHO runs against the Minister’s decision. What’s more, the Perera –led committee is made up of eminent scientists.

Such deliberate disregard to scientific opinion is yet another example of institutionalized discrimination Welikala talks about.

Such anti-minority policies and actions need an explanation. Why is the government hell-bent on creating more discontent when it is already battling the negative effects of the pandemic, a failing economy and rising unemployment?

Supporters of the administration, university lecturers no less argue that it is far more important to save the living than the dead. They insist the virus will contaminate water while overlooking the many instances, where the living have been placed in danger when attending political gatherings and funerals and most recently the jostling crowds wanting to get their hands on the ‘miracle paniya.’

Of course, it goes without saying that the current government and all those in their ranks are masters in the art of distracting the masses!

Another question is whether ultra-right-wing supremacists are influencing policy.

For most people who are looking for answers are trying to figure out the government’s end-game. Where is it headed with this?

Last week, Vice President of the Muslim Council of Sri Lanka, Hilmy Ahamed told EconomyNext that he believes the government wants to “radicalize the Muslim youth and push them to do something rash.”

An unsettling thought indeed!

For his part, Ahamed says he has pleaded with Muslim parents to talk to their children and to pray that such a situation could be averted.

In the case of the University memorial, protesters have been calmed down, for now, with a promise of building a new one. Then why demolish the other in the first place?

All in all, it is clear this administration supports the idea of subject-hood of the other. What it plans to gain, is left to be seen.

(Colombo, January 11, 2021)

By Arjuna Ranawana

Comments (3)

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  1. MdC says:

    Maybe the Buddhists are in want of more land, cemeteries, to sell to the new colonizers funnelling yuan to their greedy masters?

  2. Sam says:

    Very good analysis of what is happening in Sri Lanka.

    All Sri Lankans will pay the price if this trend continues.

  3. M.A Sona says:

    Please understand this is the country of the Sinhala, by the Sinhala for the Sinhala. We accept others also like our land and may want to stay with us. But let there be no doubt who owns this country. Many wars have been fought to take our land from us, but we have prevailed. Various foreign-funded NGOs like EconomyNext better be careful with what they say

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Your email address will not be published. Required fields are marked *

  1. MdC says:

    Maybe the Buddhists are in want of more land, cemeteries, to sell to the new colonizers funnelling yuan to their greedy masters?

  2. Sam says:

    Very good analysis of what is happening in Sri Lanka.

    All Sri Lankans will pay the price if this trend continues.

  3. M.A Sona says:

    Please understand this is the country of the Sinhala, by the Sinhala for the Sinhala. We accept others also like our land and may want to stay with us. But let there be no doubt who owns this country. Many wars have been fought to take our land from us, but we have prevailed. Various foreign-funded NGOs like EconomyNext better be careful with what they say

Sri Lanka stocks weaken for the second session on profit taking

ECONOMYNEXT – Sri Lanka’s stocks closed weaker on Tuesday for the second consecutive session mainly driven by month-end profit-taking by investors, according to brokers.

The main All Share Price Index (ASPI) closed down 0.56 percent or 51.81 points to 9,233.40.

The market has been on a downward trend since last week as investors are adopting a wait-and-see approach until more clarity is given regarding local debt restructuring after the International Monetary Fund approved the extended loan facility.

“The market is down as the selling trend continues,” said Ranjan Ranatunga of First Capital Holdings, speaking to EconomyNext.

“As there is a price decline in all shares across the board, combined with the month ending followed by margin calls, the market continued on a downward trend.”

The market generated a slow and thin turnover of 860 million rupees.

The main contributor to the turnover is Lanka IOC, following news that the Sri Lanka cabinet has granted approval for three oil companies from China, the United States, and Australia in collaboration with Shell Pl to lease 150 fuel stations for each company to operate in the local market.

The fears of debt restructuring mainly affected the banking and financial sectors, which dragged the index down for the day.

The market saw a net foreign inflow of 30.9 million rupees, and the total offshore inflows recorded so far in 2023 are 1.01 billion rupees.

The most liquid index, S&P SL20, closed 0.81 percent or 21.68 points down at 2,656.30.

The market saw a turnover of 860 million on Tuesday, below this year’s daily average of 1.8 billion rupees.

Top losers were Vallibel One, John Keells Holdings, and Hatton National Bank.

Analysts said the downward trend is expected to continue for the rest of the week as profit-taking is expected to continue. (Colombo/March28/2023)

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Sri Lanka rupee closes weaker at 325/328 to dollar, bond yields up

ECONOMYNEXT – Sri Lanka’s treasury bond yields were up at close on Tuesday and the rupee closed weaker in the spot market, dealers said.

A 01.07.2025 bond was quoted at 31.20/60 percent on Tuesday, up from 30.75/31.00 percent on Monday.

A 15.09.2027 bond was quoted at 28.25/29.00 percent, up from 28.10/60 percent from Monday.

Sri Lanka rupee opened at 325/328 against the US dollar steady, from 322/325 from a day earlier. (Colombo/ March28/2023)

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Sri Lanka Telecom on track rating upgrade track on planned stake sale: Fitch

ECONOMYNEXT – Sri Lanka Telecom has been place on watch for a possible rating upgrade after the government, which has defaulted on its sovereign debt said it will sell down its majority stake.

“The rating reflects the potential rating upside due to weakening linkages with SLT’s parent, the government of Sri Lanka (Long-Term Local-Currency Issuer Default Rating: CC), due to the government’s plan to sell its 49.5 percent stake in the company,” the rating agency said.

“Fitch will resolve the RWP when the proposed disposal becomes practically unconditional, which
may take more than six months.”

The agency said it expect SLT’s revenue growth to slow to a low single-digit percentage in 2023 amid weakening consumer spending due to consumers increasingly prioritising essential needs, such as food and medicine, as real income has fallen significantly following the currency depreciation and unprecedently high inflation.

The full statement is reproduced below;

Fitch Places Sri Lanka Telecom’s ‘A(lka)’ Rating on Watch Positive

Fitch Ratings – Colombo – 27 Mar 2023: Fitch Ratings has placed Sri Lanka Telecom PLC’s (SLT) National Long-Term Rating of ‘A(lka)’ on Rating Watch Positive (RWP).

The RWP reflects the potential rating upside due to weakening linkages with SLT’s parent, the government of Sri Lanka (Long-Term Local-Currency Issuer Default Rating: CC), due to the government’s plan to sell its 49.5% stake in the company. Fitch will resolve the RWP when the proposed disposal becomes practically unconditional, which may take more than six months.

SLT’s ratings are currently constrained by its parent’s weak credit profile under Fitch’s Parent and Subsidiary Linkage (PSL) Rating Criteria. SLT’s Standalone Credit Profile (SCP) is stronger than that of the state, reflecting the company’s market leadership in fixed-line services, second-largest share in mobile, ownership of an extensive optical fibre network and a strong financial profile. The extent of SLT’s rating upside, following the proposed disposal, will depend on the credit profile of its new parent, the linkage strength with SLT according to our PSL criteria, and the proposed funding structure.

KEY RATING DRIVERS

Disposal Plan: SLT announced on 20 March 2023 that the Sri Lankan cabinet has granted in-principle approval to sell the 49.5% stake in SLT held by the state. The disposal is part of a plan to restructure state-owned entities (SOEs) to improve the state’s financial position. SLT said steps have yet to be taken to identify potential buyers and it will take at least eight to 12 months to finalise the transaction. We believe the government will push through the disposal as SOE restructuring is an integral part of the IMF’s financial support to Sri Lanka.

Sovereign Ownership Pressures Rating: We assess the legal ring-fencing and access and control between SLT and the state as ‘Open’ under the PSL criteria, given the absence of regulatory or self-imposed ring-fencing of SLT’s cash flow and the government’s significant influence over the subsidiary’s operating and financial profile. SLT’s second- biggest shareholder, Malaysia-based Usaha Tegas Sdn Bhd with a 44.9% stake, has no special provisions in its shareholder agreement to dilute the government’s influence over SLT.

Higher Rating: However, the PSL criteria allows for a stronger subsidiary to be notched above the weaker parent’s consolidated profile in extreme situations, such as when a parent is in financial distress but the subsidiary continues to operate independently and its banking access appears unaffected. We do not believe SLT is at risk of default in the next 12 months, as it has sufficient liquidity and its debt does not carry cross-default clauses that can be triggered by the parent’s distress.

SLT’s ‘A(lka)’ rating therefore reflects its relativities with national peers, but is still below its SCP due to the drag from state ownership. We apply our PSL criteria because our Government-Related Entities (GRE) Rating Criteria states that in cases where the SCP of the GRE is higher than the government’s IDR, the relevant considerations of the PSL criteria will be applied to determine whether the IDR of the GRE is constrained or capped at the government’s rating level.

Weak Demand in 2023: We expect SLT’s revenue growth to slow to a low single-digit percentage in 2023 amid weakening consumer spending. Consumers are increasingly prioritising essential needs, such as food and medicine, as real income has fallen significantly following the currency depreciation and unprecedently high inflation. SLT’s subscriber numbers and minutes of usage have already fallen in 2022. Competition has also intensified, especially in the mobile segment, leading to lower realisation of recently introduced tariff hikes.

Weak demand should be offset to an extent by increased migration to SLT’s fibre-to-the- home (FTTH) network, from its own copper network, and subscriber additions. FTTH carries higher revenue per user than the copper network. SLT had 475,000 FTTH connections, a 35% increase yoy, by end-2022.

Weakening Profitability: We expect SLT’s EBITDA margin to narrow to around 34% in 2023 (2022: 35.6%) amid lower demand and ongoing cost escalations. All telecom operators increased tariffs by 20%-25% in late 2022 to tackle falling margins. However, the realisation into revenue remains weak, especially in the mobile segment, due to deep price cuts by one of the smaller operators and falling demand. SLT’s fixed-line business is able to maintain stable EBITDA margins due to the recent tariff hike and the FTTH segment’s higher revenue per user.

Leverage to Stabilise: We expect SLT’s EBITDA net leverage to remain around 1.3x in 2023 (2021: 0.9x, 2022: 1.3x) amid falling profitability. However, its leverage is strong for the rating. We expect capex of around LKR25.0 billion annually over 2023-2024 on network upgrades and expanding its fibre infrastructure.

Interest-Rate Hikes, Currency Depreciation Manageable: We expect SLT to maintain its EBITDA interest coverage closer to 4.0x over 2023-2024 (2022: 4.4x) despite interest rates rising almost threefold. Most of SLT’s debt is on variable interest rates, which will raise costs. SLT’s foreign-currency revenue, which accounts for 10%-12% of group revenue, is more than sufficient to meet the group’s foreign-currency operating expenses and interest costs. SLT had around USD10 million in foreign-currency debt at end-
December 2022, compared with USD40 million in foreign-currency cash deposits.

Sector Outlook Deteriorating: Fitch expects the average 2023 net debt/EBITDA ratio for SLT and mobile leader Dialog Axiata PLC (AAA(lka)/Stable) to remain around 1.3x (2022: 1.3x) amid weak margins and high capex. We expect sector revenue growth to slow to 8% in 2023 (2022: 15%), while the average 2023 EBITDA margin for SLT and Dialog should narrow to 31% (2022: 32%) amid low usage and high costs.

DERIVATION SUMMARY
SLT’s SCP benefits from market leadership in fixed-line services and the second-largest position in mobile, along with ownership of an extensive optical fibre network. SLT has lower exposure to the crowded mobile market and has more diverse service platforms than Dialog. However, Dialog has a larger revenue base, lower forecast EBITDA net leverage and a better free cash flow (FCF) profile than SLT. Dialog is rated at ‘AAA(lka)’, while SLT’s rating is under pressure because of the state’s weak credit profile.

SLT has a larger operating scale than leading alcoholic-beverage manufacturer Melstacorp PLC (AAA(lka)/Stable), which distributes spirits in Sri Lanka through its subsidiary, Distilleries Company of Sri Lanka PLC (AAA(lka)/Stable). Melstacorp is exposed to more regulatory risk in its spirits business because of increases in the excise tax, but this is counterbalanced by its entrenched market position and high entry barriers.

Consequently, the company can pass on cost inflation and maintain its operating EBITDA margin, supporting substantially stronger FCF generation than SLT.

KEY ASSUMPTIONS

Fitch’s Key Assumptions within Our Rating Case for the Issuer:

– Revenue growth to slow to 4% in 2023 amid falling subscriber numbers and lower usage due to weakening consumer spending;

– Operating EBITDA margin to narrow by 150bp to 34% in 2023 due to higher costs and lower volume;

– SLT to continue capex on expanding its fibre and 4G network with LKR25 billion spent annually in 2023 and 2024;

– Effective tax rate of 28% from 2023;

– Dividend payout of 33% of net income over 2024-2025

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to positive rating action/upgrade:

– Fitch will resolve the RWP when the proposed disposal becomes practically unconditional, which may take more than six months, and once Fitch has sufficient information on the new majority shareholder’s credit profile and linkages with SLT and the proposed funding structure.

Factors that could, individually or collectively, lead to negative rating action/downgrade:

– Fitch would remove the RWP and affirm the National Long-Term Rating at ‘A(lka)’ with a Stable Outlook if the proposed disposal does not proceed and the linkages with the state remain intact.

LIQUIDITY AND DEBT STRUCTURE

Manageable Liquidity: SLT’s unrestricted cash balance of LKR14 billion at end- December 2022 was sufficient to redeem its contractual maturities of around LKR11 billion. SLT’s short-term working-capital debt amounted to another LKR10.0 billion and we expect the company to roll over the facilities given its solid access to local banks.

Liquidity is further enhanced by about LKR15 billion in undrawn bank credit facilities, although these are uncommitted. SLT typically does not pay commitment fees on its undrawn lines, although we believe most banks will allow the company to draw down the funds because of its healthy credit profile.

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