Sri Lankan Culture,
Personal Attributes, Capital Investments
By Engr. Kanthar Balanathan
DipEE (UK),
GradCert (RelEng-Monash), DipBus&Adm (Finance-Massey), C.Eng., MIEE,
Former
Director of Power Engineering Solutions Pty Ltd, Consulting Electrical
Engineers
Leading
Engineer of the World 2006, UK Authority Award
1. General
This article is scripted with a focus on innovative,
creative, inventive, flexible, and productive perspectives for the Sri Lankans
to cognise and apprehend to make Sri Lanka a prosperous and scientific state
for growth. People also must not focus everything on a political and
racial perspective. Today the majority of educated people are leaving SL for
wealth and money which can be earned in SL with mental satisfaction in their
community.
This paper discusses the various forms of investments and
their advantages, the inflation factor, the Net Present Value and the benefits
in its measurements. This paper is not written with a racial focus but to
alleviate from a racial perspective.
2. Ideologies and their detriments
This section discusses the differences between Capitalism and
Communism and their underperformances.
Quote: Capitalism is often
thought of as an economic system in which private actors own and control
property in accord with their interests, and demand and supply freely set
prices in markets in a way that can serve the best interests of society.
The essential feature of capitalism is the
motive to make a profit while maintaining the acceptable quality of the
products. As Adam Smith, the 18th-century philosopher and father of modern
economics, said: “It is not from the benevolence of the butcher, the brewer, or
the baker that we expect our dinner, but from their regard to their interest.”
Both parties to a voluntary exchange transaction have their interest in the
outcome, but neither can obtain what he or she wants without addressing what
the other wants. It is this rational self-interest that can lead to economic
prosperity.
Communism is the political and
economic doctrine that aims to replace private property and a
profit-based economy with public ownership and communal
control of at least the major means of production (e.g., mines, mills, and
factories) and the natural resources of a society.
Communism is thus a form of socialism—a higher and more
advanced form, according to its advocates. Exactly how communism differs from
socialism has long been a matter of debate, but the distinction rests largely
on the communists’ adherence to the
revolutionary socialism of Karl Marx.
Well, the Russian war
on Ukraine is an example of Communism.
Sri Lanka started as an agrarian land and
destroyed itself through the socialistic and communistic approach of the political
sector.
3. SriLankan - Theme
The prime idea buried in the minds of
third-world people (Sri Lanka) is racism, fundamentalism, and selfish/self-centred
doctrine. This applies to all three races in SLK. I.e., Sinhalese, Tamils, and
Muslims. The best-behaved race is the real Burgers.
2.1 Fundamentalism
Quote:
·
Jewish fundamentalism has
been used to characterize militant religious Zionism.
· Fundamentalism within Islam goes back to the early history of Islam in the 7th century, to the time of the Kharijites. From
their essentially political position, they developed extreme doctrines that set
them apart from both mainstream Shia and Sunni Muslims.
· The existence of fundamentalism in Hinduism is a
complex and contradictory phenomenon.
·
George
Marsden has defined Christian fundamentalism as
the demand for strict adherence to certain theological doctrines, in opposition
to Modernist theology.
·
Buddhist fundamentalism has
targeted other religious and ethnic groups, as
in Myanmar.
With the above differences in religious
practice can we ascertain that any country will have economic growth via
technology or personal contribution?
4. Economic and Financial Expertise
In my previous article, I stated about the
production possibilities curve.
Quote:
The production possibilities curve (PPC) is a graph that shows all of the different combinations of output
that can be produced given current resources and technology. Sometimes called the production possibilities
frontier (PPF), the PPC illustrates scarcity and trade-offs.
This applies to human resources in a
country. The different specialists and technical personnel in human resources can
be combined and utilised to give maximum output. The Central Bank (Reserve
Bank) is a typical example where different specialists are absorbed and
utilised for their function effectively and efficiently which transpires in Sri
Lanka. It's like the various neurotransmitters make the functions balanced.
Quote:
Neurotransmitters are your body’s chemical messengers. They carry messages from
one nerve cell across a space to the next nerve, muscle, or gland cell. These
messages help you move your limbs, feel sensations, keep your heart beating,
and take in and respond to all information your body receives from other internal
parts of your body and your environment.
Please
refer: https://www.ncbi.nlm.nih.gov/books/NBK539894/
5.
Investments
Investments
can be (i) Capital and (ii) Major Maintenance. It is a school of thought
dedicated to growth that the Central Bank should be drawn into the process
where they have to be part of the process to govern expenses and approve capital
projects. A certain amount can be fixed (ex. $ X million) where they have
to review the need for the project and approve. Central Bank is a complex
network organisation where the organisation have specialists in a multitude of
financial areas they can contribute.
5.1 Capital
Capital expenditure costs are drawn from
funds disbursed to improve the performance of assets beyond their original
benefits. The expenditure cannot be expensed in the year itself. i.e.It cannot
be expensed in the P&L for the year.
5.2 Major Maintenance
Repairs/Maintenance/Overhaul costs are
for routine maintenance to maintain the assets operating in the current state,
which can be expensed in the year itself. I.e inflation does not come into the
picture.
6. Financial & Investment Analysis
Sri Lankans are historically entrepreneurs. In
the 50s They run their own business for growth. They are skilled in some areas
when they can have raw materials and produce goods. Somehow over the period
they enjoyed luxury and have been driven to laziness. Knowledge of Inflation,
discount Rate, Interest rate, and tax systems is required to do investment
analysis. Investment analysis is an accounting process to calculate the Net
Present Value (NPV) of future cash flows for a project. The Internal Rate of
Return is calculated from the cost-benefit analysis. The mathematics of the CBA
is not discussed in this article.
Costs: Direct costs, Indirect costs, Intangible
costs, Opportunity costs, potential risk costs
Benefits: Direct Benefits, Indirect
benefits, Total Benefits, Net benefits.
7.
Conclusion:
(i)
Sri Lanka is faced with illiteracy in the government in accounting
and finances. Most of the Ministers like Wimal Weerawansa, Namal Rajapaksa etc.
and others have no understanding of accounting and Finance. Investments by such
portfolio members are carried out from a political perspective to collect votes
in the name of Democracy. Most proletariat in SL have no understanding of
Investments and the benefits accrued thereon.
(ii)
The Central Bank is the only authority which has a multitude of
professionals with a Finance person as the Governor. They also deal and manage
with finances.
(iii)
It's beneficial from an economic perspective for Sri Lanka that
all Capital projects are REVIEWED by the competent authorities at the
Central Bank before it is approved by the Governor of the CB and the President
of SL. Some of the major maintenance projects could also be reviewed by the CB.
(iv)
Fools in paradise shall not engage in capital projects. Only the
Central Bank.
