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Saturday December 3rd, 2022

Sri Lanka’s data prices are low, but it is still expensive for low income earners due to tax

The author is a researcher working on telecom and big data projects at LIRNEasia, a regional ICT policy thinktank. She was appointed Chair of the ITU’s sub-group tasked with proposing revisions to the ITU’s ICT Price Baskets in 2017. The revised methodology was adopted in 2018 by all member states.

At the World Telecommunication/ICT Symposium (WTIS) held in Geneva, December 2018, there was a panel dedicated to affordability of ICT services. The conversations were centered on price as a key driver for adoption and use of Information and Communication Technologies (ICTs).

Price isn’t everything. But it is the most notable and distinguishable factor when purchasing a good or service and therefore is paramount. It is also the perception and value of a specific service that affords the rationale for spending. According to LIRNEasia’s recent “AfterAccess” multi-country surveys, lack of affordability is among the top three reasons that affects consumer’s choices of getting online and staying online.

With the ubiquitous nature of the Internet and the increasing dependence of services offered via mobile networks, it is important to analyze the pricing of mobile broadband plans.

Are prices in Sri Lanka high?

The International Telecommunication Union (ITU), the UN apex body on ICTs, annually benchmarks prices for voice, SMS, and fixed and mobile broadband for its member states. Sri Lanka has among the lowest prices in the world, ranked at no.21 for mobile broadband (plans with minimum 1 GB data allowance/month) out of 181 countries, based on price in USD (including taxes) as a percentage of GNI per capita.

It has the lowest prices among SAARC countries in terms of absolute prices as well as price as a percentage of GNI per capita, despite the third highest tax rate (Table 1).

Price vs. Affordability

“Price” and “affordability” are terms often confused and used interchangeably. Affordability is impacted by variations in price and income, among other things. In theory, the underlying costs of providing a service tend to decrease with time (as capabilities of newer technologies afford higher levels of efficiency). However, this may not always be reflected in the final price the consumer pays.

But how low should prices go to be affordable?

According to the new targets set in 2018 by the UN Broadband Commission for Sustainable Development, “entry-level broadband services should be made affordable in developing countries at less than two percent of monthly Gross National Income (GNI) per capita, by 2025.”

While Sri Lanka is well within the target (Table 1), a country-level average of GNI per capita does not really represent the ground reality. Further analysis on price as a percentage of household income per capita (and considering the average size of a household as 3.8 persons, based on data published by the Department of Census and Statistics), by decile (Table 2) paints a clearer picture of affordability.

Table 2: Mobile broadband basket (1 GB, 2017) price as a percentage of household income per capita, by decile.

As Table 2 shows, for the poorest in the country, 1 GB of data will cost approximately eight percent of their monthly income.

Although the Broadband Commission target is not met across all income deciles, prices in Sri Lanka are still a lot more affordable than, for example, in India.

Based on the published household income quintiles, prices in India range from five percent to 33 percent of monthly income per capita, per quintile (from the highest to lowest, respectively).

There is no doubt that low prices allow for greater adoption and use. Prices that are too low, however, can threaten long-term sustainability and are detrimental to the market.

Given the capabilities of newer technologies such as 5G that promise greater speeds at lower levels of latency (or round-trip time) while dealing with issues like congestion that current networks face, operators should to be incentivised to invest. Without regulatory certainty, it is unlike that the significant investments required will be made.

If the government wants to make Internet access more affordable, it should consider cutting taxes, which are third highest in the region, below only Pakistan and Bangladesh.

If the government wants to address the needs of those in the poorer deciles or specific market segments, it should use the revenues collected from international calls and design targeted subsidies without harming the already problematic investment environment.

(Colombo/Feb28/2019-SB)

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Sri Lanka teachers struggle to abide by saree ‘law’

ECONOMYNEXT – Sri Lanka’s school teachers are struggling to continue the service with the ongoing high inflation destroying their salaries and with on ongoing battle to wear more affordable clothing than the traditional saree while.

With the country is going through its worst currency crisis in the history of its central bank, teachers say the rapid inflation in the country has forced them to go with more affordable clothing than the traditional attire of saree.

Price Shock

“Wearing sarees are a big cost, you need to iron and we have electricity tariffs, textile industry is collapsing and in turn prices are increasing” AM Chandani, an Advanced Level teacher for Mathematics told EconomyNext.

The traditional saree, is considered as the appropriate attire for all female teachers in the country, even though it has not been officially declared under any law. Students wear frocks.

Teachers says while sarees do bring a level of respect and formality, they don’t determine productivity and the quality to education.

“Quality of education is measured through the syllabus and depends on the skills of the educator, but not on what the teacher is wearing, why is education determined by a saree?” Chandani says.

“Saree prices have risen by nearly 50 percent, electricity prices had risen by 75 percent, transportation costs are also increasing and on top of that food inflation is also present in Sri Lanka. How do you expect one to save in a condition like this?”

Pontificating Ministers

At least two ministers wearing Western jacket and tie have pontificated on teachers’ dress.

“The minister for education and other ministers are busy making proclamations on what teachers should wear to school,” Sujata Gamage & Tara de Mel Co-coordinators, Education Forum Sri Lanka said in a statement.

“There is no indication that they have consulted the main stakeholders in this case, the teachers.

There is already a guideline on attire for teachers in Section 5.1.b of Circular 2012/3 on “Code of Ethics and General Rules on the Ethical Conduct of Teachers”. Specifically, teachers are required to:

“Dress in culturally appropriate, clean, smart, and well-tailored clothing, maintaining decency and modesty, at all times.”

“Insisting that the saree is the only appropriate attire, especially at this time when the teachers are struggling to provide for their families, get to work on time, and teach kids who are very likely to come undernourished or hungry, would be inconsiderate.”

“In addition, it would be a violation of their fundamental rights and a violation of the Constitution where the transfer and disciplinary control of all educational personnel is vested with the provinces.”

Sri Lankan teachers’ salaries were increase in January 2022, after the teachers went on a continuous protest, where an allowance of 5,000 rupees was approved by the Cabinet.

Cost of Working

The electricity tariff was increased last August in order to mitigate the continuous losses made by the state-run Ceylon Electricity Board after the rupee collapse from 200 to 360 to the US dollar after macro-economists printed money to target an output gap.

Fuel, taxi and bus fares and food prices also went up with economists printing money.

Sr Lanka’s Ceylon Teachers Union (Check the exact name) said, on average, teachers get paid from 50,000 to 80,000 a month and, the union plans to go into discussions about the education system, rising cost of education as well as the salary offered to teachers.

“Teacher’s salaries are disappearing because the cost of living has risen… and the cost of working is also increasing such as buying of sarees and transport, this will cause an explosion in the education sector” Joseph Stalin, the teachers Union secretary told EconomyNext.

Meanwhile, Minister of Education Susil Premajayantha told parliament on December 01, that relief would be aided to teachers that are unable to afford sarees after media reports showed that teachers found it financially difficult. 

“Even if the government doesn’t approve allocations, I will make sure that aid is being provided to teachers finding it difficult to afford school attire,” Premajayantha said. (Colombo/Dec02/2022)

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Sri Lanka shares ends five week high on easing rate expectations

ECONOMYNEXT – Sri Lanka shares gained for the sixth session on Friday closing on positive sentiments due to expectations of easing market interest rates and generated the highest turnover in two months, brokers said.

The main All Share Price Index (ASPI) closed 0.61 percent or 65.94 points higher at 8,769.73, the highest index gain since October 27.

The market witnessed a turnover of 4 billion rupees, higher than this year’s daily average turnover of 3 billion rupees. This is the highest turnover generated since September 27.

The market saw a foreign inflow of 1 billion rupees, the highest inflow since September 27. The total net foreign inflow stood at 20.2 billion rupees so far for this year.

“Most of the treasury counters gained today with the speculation for interest rates to ease with the inflation therefore treasury shares gained,” a market analyst said.

Analysts said Lanka IOC gained with the government keeping the fuel prices unchanged while global prices fell.

Former Central Bank Governor Indrajit Coomaraswamy said in a forum on Monday that the government is in discussions with Asian Development Bank (ADB) and World Bank to get loans of 1.9 billion US dollars after a reform program with the International Monetary Fund is approved.

A policy loan now being discussed with the World Bank may bring around 700 million US dollars, Coomaraswamy told a business forum organized by CT CLSA Securities, a Colombo-based brokerage.

The Asian Development Bank may also give around 1.2 billion US dollars most of which will be budget support, he said.

In the last few sessions market gained after the Central bank governor said market rates should eventually ease despite the fears of a domestic debt restructuring as inflation falls, increased liquidity in dollar markets, and the inter-bank liquidity improves.

In the past sessions, the index continued to fall on the speculation of a local debt restructuring although no proper decision has been taken so far.

The more liquid index S&P SL20 closed 1.27 percent or 34.86 points higher at 2,774.60.

So far in December ASPI gained 1.3 percent.

The ASPI gained 0.5 percent in November after losing 13.4 percent in October.

It has lost 28.2 percent year-to-date after being one of the world’s best stock markets with an 80 percent return last year when large volumes of money were printed.

Sampath Bank pushed the index up to close at 10.8 percent to 39.9 rupees.

Other top gainers were Lanka IOC gained 6.2 percent to close at 206.8 rupees and Commercial Bank gained 1.8 percent to close at 51 rupees. (Colombo/Dec02/2022)

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Sri Lanka State Tourism Minister backs night life with with 24*7 operation of wine stores

ECONOMYNEXT – Sri Lanka’s State Tourism Minister Diana Gamage wants the island nation’s wine stores to opened all the time if the country wants to boost tourism.

Gamage has been vocal on opening up night time life to attract more tourists and boost foreign exchange revenue for the country to move out of the crisis.

“When tourists come, if all they have to do is roam around and go to sleep at 10 pm every night in front of their hotel room TV, then we will not be able to earn dollars from them,” Gamage told the parliament during the Committee Stage debate of Tourism Ministry.

“The issue with our country is, there is no place to go after 10 pm. This is a paradise. I do not know whether anyone knows the meaning of a paradise.”

“We have to keep this place open 24/7. I have spoken it about many time. Liquor is the highest tax earner in the country. In this paradise, we are closing bars after 11pm. Foreigners in hotels can’t get any alcohol if they need. Because all the places are close. We need to keep this country open 24 hours. Like Singapore and other countries. People must have to have entertainment.”

Gamage’s proposals for night life have been frowned at by some religious leaders citing that the move is against Sri Lanka’s rich and ancient culture.

“I talk about the night life, and when I talked about that earlier many criticized it and saw it as a big sin. That is ones who are incapable of understanding it,” she said.

“What we call night life is actually is a night economy. All the countries in the world have developed because of night economy. These countries get 70 percent of their income from the nigh economy. They only get 30 percent during the day time.”

“We have to develop a night economy in this country. That will earn 70 percent of the income. Only that can develop this country.”

“We can do that. And also our museum, that closes at 5 pm. In other museums earn most during night. It must be opened 24/7.  This night economy is essential for a country’s economy. People must have places t spend their money.” (Colombo/Dec02/2022)

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