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Wednesday June 7th, 2023

Regulating tuk-tuks is tougher than you think

TukTuks in Colombo, should they be disciplined and regulated?/Amitha Thennekoon EconomyNext

Is bringing some discipline to the tuk-tuks and making them charge uniform rates even possible and therefore should they be regulated?

Clearly some regulation is called for.

In the Western province most tuk-tuks have meters, although the flagfall charge, that’s the charge for the first kilometer, may differ.

Tuk-tuks running for Ride Hailing companies are possibly the cheapest.

But in metros like Jaffna, Kandy and Galle, the tuks are a law on to themselves. A ride that would cost Rs.60 in Colombo will set you back 250 in Galle or Kandy because none of the three-wheelers have meters.

Earlier this month, a collective of three-wheeler driver associations requested Transport Management Minister Mahinda Amaraweera to establish a provincial-level regulatory authority for three-wheelers engaged in passenger transport services.

Among other things, the associations recommended the introduction of a uniform to distinguish professional, full-time three-wheeler drivers from other individuals driving three-wheelers or those working for ride-hailing companies.

According to a statement from the Transport Management Ministry released January 17, they also made a case for registering full-time professionals and for determining a minimum age for driving a three-wheeler as a taxi.

Three-wheeler drivers claim they have been agitating for a regulatory body for years, a demand they say was ignored by successive governments.

The All-Island Three-Wheeler Drivers Union Chairman Lalith Dharmasekara told EconomyNext that successive transport ministers have failed to implement three extraordinary gazettes pertaining to regulations for three-wheelers to date, Namely extra-ordinary gazette no 1821/31 of 2013, no 2001/2 of 2017 and no 2035/51 of 2017.

The Yahapalana cabinet had appointed an eight-member technical committee to prepare a report with recommendations for regulating the three-wheel drivers’ profession in Sri Lanka, said Dharmasekara.

After the report was submitted to the cabinet, he said, the government never took steps to implement its recommendations.

Dharmasekara complained that incumbent minister Amaraweera, too, is trying to avoid the issue.

But does the three-wheeler taxi service in Sri Lanka really need regulation?

Founding Chair of LIRNEAsia Rohan Samarajiva calls for a minimalist regulatory structure.

As all regulation must be done with care so as not to cause any harm to the sector being regulated, Samarajiva told EconomyNext, minimal regulation of three-wheelers ought to be employed.

Explaining the processes and problems that need to be addressed in relation to three-wheeler driving in Sri Lanka, he said that according to the Constitution of Sri Lanka, only inter-provincial transportation is within the purview of the central government. This means that any regulation should be carried out at the provincial level.

If local government authorities are going to set standards and regulations then they would come under the provincial commissioner of the local government which is connected to the Ministry of Local Government.

Which, according to Samarajiva, is how it should be done if regulations were to be set.

“In setting up standards or regulations there are two problems that need to be addressed: price surging as three-wheelers charge a fare to go from point A to point B and the quality of service provided by the three-wheelers,” he said.

Though he recommends a price regulation as a possible solution to these two problems, Samarajiva argues that such a move could prove tricky. He also advocates setting quality standards.

“If the standards are not in place, it becomes somewhat meaningless,” he said.

For example, in most three-wheelers, the roadside passenger exits are closed in order to prevent injuries from accidents.

“There are two ways to enforce these quality standards: one way is for the government to be proactive by doing random inspections and the other is for the government to be reactive by putting out telephone numbers or some other mechanism so that passengers can complain and the relevant authorities can take action,” said Samarajiva.

Generally the reactive approach is better as it consumes fewer resources, he added.

On the issue of pricing, Samarajiva believes the system had somewhat worked out even without any regulation as meters are installed in pretty much every three-wheeler in the city now since most drivers felt pressured to install meters.

In the case of premium pricing, he said, three-wheeler drivers should be allowed to charge a premium for rides at night in order to incentivise night-time hires. Though there are three-wheelers available during the day, it is hard to catch one at night due to a limited number of three-wheelers running at that time, leading to increased demand.

The premium pricing could also be applied to rides during rough weather conditions, said the professor, as drivers are putting themselves and their vehicle at unnecessary risk.

“This is the whole business of surge pricing,” he said.

However, some are of the opinion that it is unfair to charge such higher prices. The premium could therefore be added to the meter itself and the higher charge made legal rather than compelling people to violate the rules.

“Both price and quality can be handled in this way,” said Samarajiva.

The former chair of the Information and Communication Technology Agency (ICTA) is also opposed to the calls for an age limit.

“A lot of middle-class people want to put age limits on the three-wheeler profession which makes no sense at all and is totally against the constitution and fundamental rights,” he said, stressing that anybody with proper driver training would be qualified for the job.

On overall regulation, Samarajiva isn’t all that enthused.

“I personally don’t think it is the highest priority in the world. A lot of things need fixing. There are three-wheeler mafias in places like Jaffna and in front of the Fort Railway station that need a crackdown. Meters must be installed in those three-wheelers since they tend to charge excessive fares,” he said.

However, he added, there is no need need for a regulatory authority to implement legislation.


Comments (1)

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  1. Lalsiri de silva says:

    Give this to NTC to see FUN. We have seen that bus conductors going to NTC inspectors with Rs. 100 note and returning to the bus within a minute.

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  1. Lalsiri de silva says:

    Give this to NTC to see FUN. We have seen that bus conductors going to NTC inspectors with Rs. 100 note and returning to the bus within a minute.

Sri Lanka’s shares slip on profit taking and selling pressure

ECONOMYNEXT – Sri Lanka’s shares closed lower on Wednesday after four consecutive gains in previous sessions spiraled into selling interest and profit taking, an analyst said.

The main All Share Price Index was down 0.28 percent or 24.39 points to 8,722.06, this is the lowest the index has been since May 02, while the most liquid index S&P SL20 was down 0.40 percent or 9.92 points to 2,468.44.

“The market was gaining in the previous sessions and there is selling and profit taking present today, due to continuously being on green,” an analyst said.

In the previous sessions the market was seeing gains, due to lowered policy rates and low inflation stimulating buying interest and driving the sentiment up, an analyst said.

Sri Lanka’s inflation in the 12-months to May 2023 has eased to 25.2 percent from 35.3 percent a month earlier according to a revised Colombo Consumer Price Index calculated by the state statistics office.

The central bank cut the key policy rates by 250 basis points to spur a faltering economic growth as inflation was decelerating faster than it projected.

“There are gradual improvements in the market sentiment, with positive sentiments coming in from lowered policy rates and inflation,” an analyst said.

The market generated foreign inflows of 12 million rupees and received a net foreign inflow of 18 million rupees, due to low share prices and discounted shares followed by a dividend announcement.

The market generated a revenue of 554 million rupees, this is the lowest the turnover has been since May 10, while the daily turnover average was 1 billion rupees. From the total generated revenue, the banking sector contributed 120 million rupees, Diversified Banks contributed 115 million rupees and the Capital Goods Industry generated 78 million rupees.

Top losers during trade were Sampath Bank, Commercial Bank and Aitken Spence. (Colombo/June06/2023)

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Sri Lanka Treasuries yields plunge, 12-month down 318bp

ECONOMYNEXT – Sri Lanka’s Treasuries yields plunged across maturities at Wednesday’s auction with the 12-month yield falling 318 basis points, in one of the biggest one day falls, data from the state debt office showed.

The 3-month yield fell 244 basis points to 23.21 percent.

The 6-mont yield fell 339 basis points to 21.90 percent, along with the 12 months to 19.10 percent.

The short-term yield curve is inverted.

The central bank last week cut its policy rate 250 basis points in a signaling move but is not printing money to enforce the rate cut.

The debt office sold all 140 billion rupees of offered securities. (Colombo/June07/2023)

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Sri Lanka forex reserves rise US$722mn in May 2023

ECONOMYNEXT – Sri Lanka’s foreign reserves grew 722 million US dollars to 3,483 million US dollars in May 2023 from 2,761 million US dollars in April, official data showed amid weak credit and better inflows.

Sri Lanka lost almost all its reserve in over two years as the central bank sold reserves and printed money to keep rates down (sterilized reserves sales) including borrowed dollars from India.

Gross official reserves fell to a low of 1,705 million US dollars in September 2022.

Sri Lanka’s central bank hiked rates in April 2022 to slow credit and also stopped printing money after it ran out of borrowed Asian Clearing Union dollars from India.

Sri Lanka’s gross official reserves are made up of both monetary reserves of the central bank and any balances of the Treasury account from loans or grants it gets.

The central bank’s net foreign reserves are still negative after busting up borrowed reserves to suppress rates. By April (before the collection of reserves in May) the central bank’s net reserves were negative by 3.7 billion US dollars.

In May alone 662 million US dollars were bought from the market, Central Bank Governor Nandalal Weerasinghe said.


No pre-determined level to stop Sri Lanka rupee appreciation: CB Governor

Borrowing dollars through swaps and busting them up, was invented by the US Federal Reserve as it was printing money and breaking the Bretton Woods system in the early 1970s.

Sri Lanka received a 350 million US dollar tranche from the Asian Development Bank and 331 million US dollars from the IMF to the Treasury for budget support.

The loans can be sold to the central bank by the government to generate rupees and spend. However, since credit is weak, not all the inflows go out of the country particularly as the central bank is conducting deflationary open market operations on a net basis.

By allowing the rupee to appreciate unlike in previous episodes of recovery in an IMF program, after a bout of money printing, the central bank is bringing down inflation – in some cases absolute prices – and restoring confidence and easing the ‘pain’ of ‘monetary policy’ or stimulus.


Why is Sri Lanka’s rupee appreciating?

Though exports are falling, tourism revenues are also picking up.

The budget support loans, tourism receipts less the reserve collected will widen the trade deficit. Building foreign reserves involves lending money to the US or other western nations and is similar to repaying foreign debt. (Colombo/June07/2023)

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