Tuesday, April 28, 2009

The deadly outbreak of swine flu and its economic impact

According to BBC, 103 people have died in Mexico but 20 of them are confirmed to have died from the swine flu. There are 20 confirmed cased of swine flu in USA, 6 in Canada, 1 in Spain, and suspected cases are being tested in UK, Israel, Brazil, Australia, and New Zealand.

As a result of this deadly outbreak, the economy of Mexico has come to a halt, as schools, restaurants, and other public buildings are being closed and many people are staying indoors.

BBC further reports that already shares of airlines have fallen, and many tourists are expected to cancel their holidays or travel plans.

As we are very much dependent on the tourism receipts, any negative shock on the world travel and tourism can have a devastating impact on our economy. The annual growth in tourist bed nights has started to fall in December 2008, and in February 2009 there was a 12% decline and a 13% decline in March. Tourist arrivals forecast for this year is already in the negative, and with the swine flu outbreak, we may expect further decline in tourist arrivals, hence reduced tourism revenue, import duty revenue, and other forms of government revenue. This could also badly affect our foreign currency position, and the government deficit.

The economic impacts of this flu world wide may also be devastating. The World Bank has already given $200 million to Mexico to combat the flu domestically. Similar assistance may be required by many other countries if it continues to spread across borders.

Economists and analysts have been forecasting world economic growth to improve by the end of 2009 and at the start of 2010. However, with the swine flu in the horizon, we are talking about possible decline in world travel and other economic activities on top of the money to be spent on curative and preventative measures. This could mean that the world economies may remain in a recession through 2010.

Sunday, April 26, 2009

A million dollars per month: price of political reform

With the new parliament of 77 members, we will be spending for their salaries, more than Rf4.6 million every month, so Rf55.4 million annually. With the current 50 members, we are spending Rf3 million a month, hence Rf36 million per year.

For all the political posts, we are spending more than Rf 7 million a month, meaning about Rf83.5 million a year for their salaries. How do we get this figure? There are 37 state ministers earning more than Rf40,000 per month, 51 deputy ministers or in the same rank as a deputy ministers, 19 atoll councilors, and 172 island councilors. The number of political posts is expected increase even further.

Considering the newly formed independent institutions or commissions, we are spending Rf1.25 million per month, or Rf 15 million per year on the salaries of the senior posts approved by the parliament. We have an Auditor General earning Rf100,000 per month, five Supreme Court judges earning Rf50,000 per month, and a president in the Human Rights Commission, Elections Commission, Civil Service Commission, and the Judicial Service Commission. All of them earns about Rf50,000 per month.

The grand total that we are spending on the political posts, independent institutions, and the parliamentarians is about Rf11.2 million per month or Rf134.5 million per year. This means we are spending more than USD10.5 million an year on the salaries of all these people. With the new parliament, we would be spending more than a million dollars per month, hence more than 12 million dollars every year. And the number keeps on increasing with the increase in the number of political posts. The question is, is it worth it? I mean spending all this money on all those politicians? Are we getting an effective economic return from all this spending?

There will be an additional Rf19.4 million that we would be spending with the increase in the number of parliamentarians to 77 from 50. There are more than 400 candidates contesting for these 77 seats. I say, if the salary is about 30,000 instead of 60,000 will there be so much candidates wanting to become a parliamentarian? I don’t think so. Probably we should reduce the salary to 30,000 so that we would be able to save at least Rf27 million every year.

Tuesday, April 21, 2009

Change we need

Aiman, a 30 year old civil servant, obtained his tertiary education through a government scholarship. After finishing his bachelors degree, he was offered a highly paid job in Australia. However, Aiman chose to return back to Maldives, as he had an obligation to serve the government for almost 7 years. In order to serve this ‘bond’, he started work in the government, in a low paid job, not being able to make use of or apply the skills and knowledge obtained in his bachelors degree. Almost six and a half years have passed since then. Aiman is afraid to accept any Masters degree scholarship from the government, as it would add to the existing ‘bond’.

Haneef, a doctor by profession, also with a similar story; obtained a scholarship from the government, had to return back home soon after graduation, to serve the country. In return, the government provides a relatively low salary. Haneef says the work is not challenging enough, and not adding much value to his professional career. Many of his friends have chosen to find PG opportunity is USA, and settled down there with an attractive income package.

Musaid, 25 years old, a teacher, working in one of the atolls, as he has a ‘bond’ too. Day in and day out, goes into a classroom of 20 students, supervises sports activities, and ‘marks’ exercise books every night. He wants to achieve more, contribute more to his country.

The place I work, there are almost 50 graduates, or even more. Most of the government ministries and departments also have many graduates. Most of us are engulfed in the existing corporate culture, and end up trapped in a system that doesn’t promote our own personal or professional development.

The reason for telling all these stories is not to prove that they all are being stupid, or that the government is being stupid, or that the services of them are not valuable. We need services of people like Aiman, Haneef and Musaid. However, we need in Maldives a change in the way do things in government ministries, organizations, or departments. We need to revisit the corporate cultures, work ethics and human resource management. I say, this has to come from somewhere. And one way we can bring this change is through transfer of management know-how or transfer to know how, work ethics, and many more. We need to provide our graduates with first hand experience, by providing them the opportunity to work in another country for at least 2 years before they return back home.

If the scholarship assistance MOUs with the foreign countries can have such a condition, whereby Aiman, Haneef, Musaid and many others can obtain work experience, and learn how things are done in other countries, they could add more value to their work, and contribute to the development of the corporate culture of Maldivian organizations.

Sunday, April 12, 2009

Does anyone care?

Last night, a dangerous accident occurred in Chandhanee Magu. Four people were injured. Last week in Male’, a 51 year old man died after a motorcycle hitting him while he was walking on Medhu Ziyaaraiy Magu (http://www.miadhu.com.mv/div/news.php?id=17001).
It has become almost impossible to walk around the streets of Male’. The number of motorcycles in Male’ has increased disastrously in the past 2-3 years. The number of ‘private’ cars has increased alarmingly. There’s hardly any space for anyone to walk. Does anyone care?
Male’, being a highly populated city, among cities with the highest population densities in the world, requires special attention, as far as importing vehicles to this small island are concerned. Thanks to Sheesha, and many other importers, who provide easier installment terms, making a brand new motorcycle affordable to almost anybody with a fixed income. However, we do have a Transport Ministry as well, who should be worrying about the growing traffic problems, and devising policies that could address the increasing number of vehicles being imported into the island. I say, we need urgent action; imposing a strict quota on imported motorcycles and cars; and if possible increase the import duty on all these vehicles, so that the numbers can start to fall.
According to news reports, some 521 vehicles parked illegally have been penalized by the traffic police ( you can see them busy every night around the streets of Male’, towing vehicles). Again, the best solution would be to control the importing of these vehicles.
It’s not safe to be out on the streets anymore. No matter you walk, ride or drive.