Long run growth, development, and prosperity is achieved through supply side factors like education and health. Better quality education and health services provide productive workers and responsible citizens, thereby leading to higher economic growth. Various empirical studies support this, and there are many examples like Singapore, Japan, and South Korea, where huge investments were made on education and research.
In our case, we have achieved universal primary and secondary education, and our literacy rate is relatively high compared to other developing nations. However, our tertiary education system has been very much neglected for a long time. The Institute for Teacher Education was established in 1984, and laid the foundation for producing quality teachers to teach in our primary and secondary schools. A few years later, in 1987, the School of Hotel and catering services was established, and provided the opportunity to train people for the tourism industry. In 1991, the Maldives Center for Management and Administration (MCMA) was established, and started providing valuable management and accounting courses. In 1998, the government formed the Maldives College of Higher Education (MCHE), and the previously mentioned institutions were changed into faculties and brought into the umbrella of the college.
Since then it has been 12 years. The academic standard of our college has not been improving year by year, rather it has been deteriorating. The college has not been able to create an intellectual environment, with academic debates and discussions, extremely vital for the developmental policies of this country. The country needs a strong academia with research, so that evidence-based decisions are made, and policies are formulated accordingly. The college has not been able to develop its standards so that it can achieve the University status. I remember back in 2004, the Faculty of Management and Computing (FMC), did not have a enough full time lecturers for microeconomics & macroeconomics (because I had to work as a part-time lecturer at that time). Six years on, even now the faculty is in the same situation. When I compare the overall standard now and back then, it has deteriorated alarmingly now. The situation is no better in the Faculty of Education.
Why has the College not performed to our expectations? What are the reasons for not having a strong pool of lecturers/professors after all these years? I dont know the exact answers for these questions. But, for a start, the admission criteria and procedures need to be reviewed in most of the college faculties, since the quality of graduating students can be maintained only if the college adheres to such criteria. Government needs to review the situation and find out the reasons why academic staff are not retained in the college, and implement measures to improve the situation. Government also needs to review the performance of the top management of the College, the College Council, and bring about necessary changes. Most of all, the government needs to acknowledge the importance of tertiary education, a strong academia, and credible research for the development of the country.
What we see are large, nice buildings that have been built with the loan assistance of international institutions, however, the quality of education, and the quality of the courses do not match up to the architectural quality of the buildings. We always tend to give too much emphasis on the physical infrastructure (hardware), rather than the quality of service or human resource (software). As a result, we've got modern physical infrastructure, but very weak software to operate this hardware.
Thursday, September 16, 2010
Monday, September 13, 2010
Privatize Bank of Maldives
Bank of Maldives - as it appears in their latest Annual Report, is the Nation's Bank. The only domestic commercial bank in the country, with over 27 years of banking service with 260,000 deposit account holders. The bank has achieved many over the years, and has 25 branches and 37 ATMs, provides electronic banking, and works on the financial inclusion aspect through its branches and 'dhoni' service in the atolls.
However, last two years have not been such favourable years for the bank, and this was made worse by the negative publicity in the media about the health of the bank. Recently, with the publication of its 2009 Annual Report, we have been hearing more about the bank, especially when it was revealed that the bank's earnings and profits fell during last year.
Briefly looking at the financial statements, we see that although deposits have increased, lending of the bank has fallen by almost 17 percent. Earnings per share has fallen to Rf9.3 in 2009 from Rf50.2 in 2008 (an 82% reduction). The bank has increased its investments on government securities despite its low appetite on commercial lending. All these factors remind me of only one thing, once again; that our bank should not be owned by the government.
As at now, the government directly holds 51 percent of the bank, while the public holds only 29.3 percent. Which means, there are 8 directors nominated by the government, and 3 elected by the public shares holders, in the board of directors. The fact that the government has the control of the bank, has led to the bank doing many mistakes in the past, like engaging in 'connected-lending', where lending has been done to politically connected people. Some of these connected people have less probability of repaying their loans on time, as a result, the bank's profits will be affected. Another drawback of the government ownership is its influence on the bank regarding investments on government securities. Since, the Ministry of Finance is the owner of the bank, and the ministry is also the seller of government treasury bills, the Ministry is in a position to instruct the bank to invest on these securities, when the government is in need to finance its budget shortfalls. In this case, the bank is not acting in the best interest of its share holders and its core business, further, the private sector will be deprived of its borrowings.
For this reason, it is always advised that commercial banks are freed from government ownership; instead, they be better regulated, monitored and supervised by the state. I don't seem to understand why the government has been so keen to privatize places like Ghiyasuddin, or the Islamiyya School, when these places are public education schools, with relatively good standards of education. If the government genuinely believes that the role of a government should not be conducting businesses, privatization of Bank of Maldives should be on the top of their privatization list. With limited government ownership, and strong regulation by the MMA and CMDA, the bank can be strengthened, and be able to serve its purpose better and effectively.
However, last two years have not been such favourable years for the bank, and this was made worse by the negative publicity in the media about the health of the bank. Recently, with the publication of its 2009 Annual Report, we have been hearing more about the bank, especially when it was revealed that the bank's earnings and profits fell during last year.
Briefly looking at the financial statements, we see that although deposits have increased, lending of the bank has fallen by almost 17 percent. Earnings per share has fallen to Rf9.3 in 2009 from Rf50.2 in 2008 (an 82% reduction). The bank has increased its investments on government securities despite its low appetite on commercial lending. All these factors remind me of only one thing, once again; that our bank should not be owned by the government.
As at now, the government directly holds 51 percent of the bank, while the public holds only 29.3 percent. Which means, there are 8 directors nominated by the government, and 3 elected by the public shares holders, in the board of directors. The fact that the government has the control of the bank, has led to the bank doing many mistakes in the past, like engaging in 'connected-lending', where lending has been done to politically connected people. Some of these connected people have less probability of repaying their loans on time, as a result, the bank's profits will be affected. Another drawback of the government ownership is its influence on the bank regarding investments on government securities. Since, the Ministry of Finance is the owner of the bank, and the ministry is also the seller of government treasury bills, the Ministry is in a position to instruct the bank to invest on these securities, when the government is in need to finance its budget shortfalls. In this case, the bank is not acting in the best interest of its share holders and its core business, further, the private sector will be deprived of its borrowings.
For this reason, it is always advised that commercial banks are freed from government ownership; instead, they be better regulated, monitored and supervised by the state. I don't seem to understand why the government has been so keen to privatize places like Ghiyasuddin, or the Islamiyya School, when these places are public education schools, with relatively good standards of education. If the government genuinely believes that the role of a government should not be conducting businesses, privatization of Bank of Maldives should be on the top of their privatization list. With limited government ownership, and strong regulation by the MMA and CMDA, the bank can be strengthened, and be able to serve its purpose better and effectively.
Thursday, September 9, 2010
Why we need a United Maldives
Recently, during the Independence Day, I heard this famous song, "Minivan kamun alhuvethi kamah dhaanan hey? Nudhaanamey!", when translated it means something like: 'Will you go from independence to suppression (or colonialism), No, (I) won't go!'. The has many other such examples, mostly asking the question whether we'd choose a negative for something positive. Today, I've been asking myself and many others, similar type of questions.
From our very early childhood, we've been reading and hearing about the uniqueness of our country, Maldives. I've always been proud to say 'I'm from Maldives', whenever I get introduced to someone while abroad. We have been unique not only due to the geography or the natural beauty of our islands, lagoons and seas; but also due to the homogeneity of the population. We've been boasting about this 'one-ness' all the time, saying that we speak the same language, we are the same race, we have the same religion. And until recently, we always had the same President. So, we were 'unique', and that's the story of Maldives. That's not all, we've also been talking about the peacefulness of our islands, with no violence, no protests, and very less crimes; almost a 'Pleasant-ville' kinda place, where people have been kind, polite, obedient, and well-behaved. I can still remember those days., and I'm not that old.
But now? Do we still have that one-ness? I dont think so. Our society has been transformed in many ways, socially and economically. Every day we hear about an incident of either a gang fight, or a person being killed, or a person dead being over-dozed, or a political protest, or a mass demonstration, or tourist resort being shut-down because of a strike, or a Supreme Court being hi-jacked by the Police, or a cabinet submitting mass resignation, and the list goes on.
I agree that we've obtained many civil liberties that were non-existent earlier; we've now got freedom of expression, we've got a free media, we've got a separation of powers, and independent Judiciary, a Supreme Court, political parties, a human rights commission, a police integrity commission, and most of all, a brand new Constitution with many political and governance reforms. However, I still wonder, are we 'better-off'? Will you choose violence for peace and harmony? Will you choose polarization and political dividedness to national unity? Will you choose gang violence to the peacefulness we had in Maldives? I don't know about you, I surely dont want most of the reforms at the expense of the uniqueness and the one-ness that we had.
From an economic and developmental point of view; why do you think most of the African countries are still lagging behind on economic development? According to two famous economists Easterly and Levine, ethnic fragmentation has been a big impediment to economic growth in Africa. Many other factors like corruption, mis-trust to the institutions, the judicial system, and higher authority, are all impediments to growth and development. Today, we see similar characteristics in our society. The country is becoming fragmented and polarized. There people of different political parties, with different opinions or personal grudges. There are people following different sects of the religion, or having their own 'group' of friends with their own style of dressing. There are many expatriates, with their own set of beliefs and culture. There are 'gangs' with their rival other 'gangs'. There are many independent and autonomous institutions or commissions working 'on their own', without any regard to others. With all these, I dont see many possibilities of our country moving forward with further economic growth and development, unless somebody somewhere does something to unite us all once again.
From our very early childhood, we've been reading and hearing about the uniqueness of our country, Maldives. I've always been proud to say 'I'm from Maldives', whenever I get introduced to someone while abroad. We have been unique not only due to the geography or the natural beauty of our islands, lagoons and seas; but also due to the homogeneity of the population. We've been boasting about this 'one-ness' all the time, saying that we speak the same language, we are the same race, we have the same religion. And until recently, we always had the same President. So, we were 'unique', and that's the story of Maldives. That's not all, we've also been talking about the peacefulness of our islands, with no violence, no protests, and very less crimes; almost a 'Pleasant-ville' kinda place, where people have been kind, polite, obedient, and well-behaved. I can still remember those days., and I'm not that old.
But now? Do we still have that one-ness? I dont think so. Our society has been transformed in many ways, socially and economically. Every day we hear about an incident of either a gang fight, or a person being killed, or a person dead being over-dozed, or a political protest, or a mass demonstration, or tourist resort being shut-down because of a strike, or a Supreme Court being hi-jacked by the Police, or a cabinet submitting mass resignation, and the list goes on.
I agree that we've obtained many civil liberties that were non-existent earlier; we've now got freedom of expression, we've got a free media, we've got a separation of powers, and independent Judiciary, a Supreme Court, political parties, a human rights commission, a police integrity commission, and most of all, a brand new Constitution with many political and governance reforms. However, I still wonder, are we 'better-off'? Will you choose violence for peace and harmony? Will you choose polarization and political dividedness to national unity? Will you choose gang violence to the peacefulness we had in Maldives? I don't know about you, I surely dont want most of the reforms at the expense of the uniqueness and the one-ness that we had.
From an economic and developmental point of view; why do you think most of the African countries are still lagging behind on economic development? According to two famous economists Easterly and Levine, ethnic fragmentation has been a big impediment to economic growth in Africa. Many other factors like corruption, mis-trust to the institutions, the judicial system, and higher authority, are all impediments to growth and development. Today, we see similar characteristics in our society. The country is becoming fragmented and polarized. There people of different political parties, with different opinions or personal grudges. There are people following different sects of the religion, or having their own 'group' of friends with their own style of dressing. There are many expatriates, with their own set of beliefs and culture. There are 'gangs' with their rival other 'gangs'. There are many independent and autonomous institutions or commissions working 'on their own', without any regard to others. With all these, I dont see many possibilities of our country moving forward with further economic growth and development, unless somebody somewhere does something to unite us all once again.
Tuesday, September 7, 2010
Local Councils - can we afford these governance reforms?
The Parliament has passed a Bill on Decentralization, and formation of Atoll Councils, Island Councils, and a Local Government Authority. According to this Act, there will be an Atoll Council in every atoll to replace the existing Atoll Offices, and a minimum of 6 (six) Atoll Councilors will be elected to run the Affairs of the Atoll, and a Chairperson from these Councilors will be nominated as the head of the Atoll. As we are moving towards to decentralisation and empowering the local communities, these Atoll Councils are separate legal entities, and Councilors are elected by the people. An estimated Rf4 million per month will be incurred only to the salaries of the Atoll Councilors.
We are also getting Island Councils to replace the Island Offices, and each Island Council is to be run by Island Councilors. A minimum of 5 (five) Councilors will be there in each Island, some islands having 7 (seven) depending on their population size. So we would expect a minimum total of one thousand Island Councilors to be elected in the whole country. With a salary of Rf15,000 each, it would come to Rf15 million per month in salaries for only Island Councilors.
In total we will be spending about Rf19 million per month only on the salaries of these Atoll and Island Councilors. On top of that, there will be a new institution, the Local Government Authority, with a new set of staff and other expenditure.
End result? The Island Councilors will be from different political parties, even the Atoll Councilors will be from different political parties. The Local Government Authority will have members from different parties, and in the end, just like our Parliament, there will be minimal productive work done in all these institutions. The politicians in the Councils will get monthly fat salaries, and they will argue, fight, conspire, and promote their party policies. We would have a textbook model of democracy, local government, or decentralization, however, in practical terms, I don't envisage a situation where things would run as smoothly as they are outlined in the Act. Main reason is that we dont have enough people who are sincere, competent and with the will to govern, and make things better. Most of all, I don't think our country can afford it economically.
We are also getting Island Councils to replace the Island Offices, and each Island Council is to be run by Island Councilors. A minimum of 5 (five) Councilors will be there in each Island, some islands having 7 (seven) depending on their population size. So we would expect a minimum total of one thousand Island Councilors to be elected in the whole country. With a salary of Rf15,000 each, it would come to Rf15 million per month in salaries for only Island Councilors.
In total we will be spending about Rf19 million per month only on the salaries of these Atoll and Island Councilors. On top of that, there will be a new institution, the Local Government Authority, with a new set of staff and other expenditure.
End result? The Island Councilors will be from different political parties, even the Atoll Councilors will be from different political parties. The Local Government Authority will have members from different parties, and in the end, just like our Parliament, there will be minimal productive work done in all these institutions. The politicians in the Councils will get monthly fat salaries, and they will argue, fight, conspire, and promote their party policies. We would have a textbook model of democracy, local government, or decentralization, however, in practical terms, I don't envisage a situation where things would run as smoothly as they are outlined in the Act. Main reason is that we dont have enough people who are sincere, competent and with the will to govern, and make things better. Most of all, I don't think our country can afford it economically.
Monday, September 6, 2010
You wanna be a Parliamentarian?
Do you know that our Parliamentarians or Majlis members are required to work only eight (8) months per year! According to the Majlis Qawaid (which the members themselves have formulated of course), the first term of Majlis is from March 1st to April end - meaning they get May off. The second term is from June through August - hence September off. The third term from October through December - so January and February off again!! Can you believe this? Four months of holidays per year. That's not all, they can take leave even during those eight months, on top of the four months holiday. They get to choose how many days they gonna work. They get to choose how much salary they gonna get. They get to choose their own code of conduct.
That's not all. They get to choose the Supreme Court Judges, Civil Service Commission, Human Rights Commission, and all the other Commissions, plus the Broadcasting Corporation board directors. They can question the Ministers, well, almost anybody in this country. And they get Rf 62,000 per month as a salary with many other benefits like health insurance, sick leave. What more can you ask for?
The Parliament is considered as one of the three 'powers' according to the Constitution. The President doesn't get four months holiday, and the Judges dont get four months holiday. The Majlis is supposed to supervise, and oversee the work of the government, independent commissions, and the judiciary, yet, the Majlis is on leave most of the year?
That's not all. They get to choose the Supreme Court Judges, Civil Service Commission, Human Rights Commission, and all the other Commissions, plus the Broadcasting Corporation board directors. They can question the Ministers, well, almost anybody in this country. And they get Rf 62,000 per month as a salary with many other benefits like health insurance, sick leave. What more can you ask for?
The Parliament is considered as one of the three 'powers' according to the Constitution. The President doesn't get four months holiday, and the Judges dont get four months holiday. The Majlis is supposed to supervise, and oversee the work of the government, independent commissions, and the judiciary, yet, the Majlis is on leave most of the year?
Thursday, September 2, 2010
Can you believe it? People gather at President's Residence to protest about 'Baibalaa'
It seems that more than a 150 people gathered at the President's Residence, Mulee-aage' on Tuesday. These people were protesting, bringing to the attention of the President that they need to play 'Bai-balaa' during Eid I guess. It seems that the Police is cautious about the implications of the this game, as competition or rivalry between gangs has lead to violence in the past.
So, considering all the various social and economic problems facing today, I just couldn't believe that priorities could become Bai-balaa all of a sudden. Apparently the President came out and met the crowd, assured that he will look into the matter. (http://www.sunfmlive.mv/beta/?page=details&id=2161)
So, considering all the various social and economic problems facing today, I just couldn't believe that priorities could become Bai-balaa all of a sudden. Apparently the President came out and met the crowd, assured that he will look into the matter. (http://www.sunfmlive.mv/beta/?page=details&id=2161)
Monday, August 30, 2010
We are heading into another recession?
Just when we thought the American economy is on the path of recovery, and hence there is hope for the world economy, we have started to see signs of a second recession - what we normally call a 'double-dip' recession.Many economists have tried to study the impact of the stimulus spending by the US government on the actual GDP growth. And from what we know, close to $800 billion has already been spent since the second quarter of 2009. Many are now predicting a slow down in the American economy as these stimulus spending has already run out, and this is evident from the predictions shown on the chart above.
The Fed Chairman Ben Bernanke last Friday expressed some hope for the year 2011, however, he also acknowledged that the economy was weaker than hoped and promised additional measures.
However, there is serious doubt as to how much intervention Bernanke is referring to, as the politicians at the Congress are less willing to spend additional money as stimulus, despite policy recommendations by some economists like Krugman and Stigilitz, on continuing the stimulus spending.
Hence, with low investor confidence and a dearth of policy interventions, there is every reason to believe that we are headed into a double-dip recession. What's more disturbing is the fact that many have started to predict that this recession could turn into a prolonged depression, similar to that experienced by Japan recently for a decade. “There are many ways in which you can see us almost surely being in a Japan-style malaise,” said the Nobel-laureate economist Joseph Stiglitz,
Sunday, August 22, 2010
Reminding ourselves about the 'Asaasee's
Total Number of gang-violence within the last three weeks: 5
Number of deaths within last three weeks: 1
Total injured within last three weeks: 8
Source: Haveeru
Last thursday, a 16 year old boy was attacked by knife. Male' streets have become unsafe, and what are the authorities doing about it? We have all hired a President, and paying him Rf100,000 every month. We have hired 77 Parliamentarians, and paying them all Rf4.8 million every month, and all these people have appointed and put in charge Judges, and we are spending more than Rf700,000 every month to all of them. On top of that, we have at our service Police, and a Defense force, and I'm not sure how we are spending in total every month on them. Yet, our streets are unsafe, young children are being killed.
...And we are being told that we have a new Qanoon Asaasee, and with the new Qanoon Asaasee, we have a better governing system; we have a separate Executive, a separate Legislature, and a Separate Judiciary. With new political and governance reforms, things are ought to get better. Maybe, we need to revisit to the basics: Qanoon Asaasee also means the 'basic or primary law'. When I say returning to the basics, I am referring to the main objectives we are trying to achieve. The only reason we want political reforms or governance reforms, or democracy, is for us to achieve some basic objectives. We need to achieve some outcomes, and in order to get there, we have all agreed on to form some basic laws, and then enact other laws and regulations. Then we have all agreed to hire some people according to these laws, and allow these people to serve us; to uphold the laws and regulations, to work for us in order to achieve those objectives that all want to achieve.
So what are those objectives? I'm guessing one of them could be, a safer society with less crimes. A society where people do not have a fear that they could be attacked by another and killed on the street. A society where, even if somebody harms another, that person is properly punished, and such acts are prevented. I'm also guessing that we want to respect the human dignity. I'm also guessing we want to achieve economic prosperity, ensure that people are properly fed, appropriate clothing, and shelter is provided. Appropriate education and health services are provided. We want to have a decent job, and earn a living. So, these are some of the basic objectives we want to achieve, and everything else is just a means to achieving these objectives. So, be that the Qanoon Asaasee, or any other law or regulation. If, the Qanoon Asaasee, the Laws, the Regulations, the President, the Parliamentarians, the Judges, the Police, and whoever I've left out, cannot work together to achieve these objectives, then I'm thinking,...we have serious problems to rethink about.
Number of deaths within last three weeks: 1
Total injured within last three weeks: 8
Source: Haveeru
Last thursday, a 16 year old boy was attacked by knife. Male' streets have become unsafe, and what are the authorities doing about it? We have all hired a President, and paying him Rf100,000 every month. We have hired 77 Parliamentarians, and paying them all Rf4.8 million every month, and all these people have appointed and put in charge Judges, and we are spending more than Rf700,000 every month to all of them. On top of that, we have at our service Police, and a Defense force, and I'm not sure how we are spending in total every month on them. Yet, our streets are unsafe, young children are being killed.
...And we are being told that we have a new Qanoon Asaasee, and with the new Qanoon Asaasee, we have a better governing system; we have a separate Executive, a separate Legislature, and a Separate Judiciary. With new political and governance reforms, things are ought to get better. Maybe, we need to revisit to the basics: Qanoon Asaasee also means the 'basic or primary law'. When I say returning to the basics, I am referring to the main objectives we are trying to achieve. The only reason we want political reforms or governance reforms, or democracy, is for us to achieve some basic objectives. We need to achieve some outcomes, and in order to get there, we have all agreed on to form some basic laws, and then enact other laws and regulations. Then we have all agreed to hire some people according to these laws, and allow these people to serve us; to uphold the laws and regulations, to work for us in order to achieve those objectives that all want to achieve.
So what are those objectives? I'm guessing one of them could be, a safer society with less crimes. A society where people do not have a fear that they could be attacked by another and killed on the street. A society where, even if somebody harms another, that person is properly punished, and such acts are prevented. I'm also guessing that we want to respect the human dignity. I'm also guessing we want to achieve economic prosperity, ensure that people are properly fed, appropriate clothing, and shelter is provided. Appropriate education and health services are provided. We want to have a decent job, and earn a living. So, these are some of the basic objectives we want to achieve, and everything else is just a means to achieving these objectives. So, be that the Qanoon Asaasee, or any other law or regulation. If, the Qanoon Asaasee, the Laws, the Regulations, the President, the Parliamentarians, the Judges, the Police, and whoever I've left out, cannot work together to achieve these objectives, then I'm thinking,...we have serious problems to rethink about.
Thursday, August 19, 2010
Sin City
Two days back, one of the suspected drug dealer, Hussein Mohamed Manik was found innocent by the Court. According to the Police, he's one of the six main dealers in the country. Early March this year, another suspected dealer among the six, Adam Naseer was also not convicted. Here, we are talking about "MAJOR" crimes. It's well-known in this country that 'if you are arrested today- you'll be released tomorrow' - no matter the type of crime you've committed. It is also public knowledge that the prisoners, or inmates at Maafushi Jail have their own demands and these demands are very easily met, or they go on strike and even destroy the premises. Bottom line: the Police, Prosecutor General, Parliament, and the Courts are unable to work together to bring about a solution to this. They are unable to restore law and order in this country. They are unable to punish, rehabilitate, or keep wrong-doers away from the rest of the society. Why?
The Courts or the Judges might say, there is not enough evidence to convict according the existing laws. The Police might say, the Courts are not doing their job, and Parliament doesn't provide appropriate laws to do their job. The Executive has been blaming the Judiciary on this matter.
In another case, within this week, two men serving their 15 year sentence were released, saying that they get a 3 year probation, and if they do not commit any crime during this period, their sentence is pardoned. And these two guys are those involved in the Sultan Park bombing. Unlike in the first case, these two guys have been already convicted, and serving their sentence. And just like that, the government decides to pardon them, those who have committed acts of terrorism, and as a result our country suffered immeasurable damage in the international forefront.
So, Maldives has become a haven for anybody with a mind and will to commit crimes, hu? There's less chance you'll be convicted, and even if did get a sentence, the government will pardon you within 2-3 years.
The Courts or the Judges might say, there is not enough evidence to convict according the existing laws. The Police might say, the Courts are not doing their job, and Parliament doesn't provide appropriate laws to do their job. The Executive has been blaming the Judiciary on this matter.
In another case, within this week, two men serving their 15 year sentence were released, saying that they get a 3 year probation, and if they do not commit any crime during this period, their sentence is pardoned. And these two guys are those involved in the Sultan Park bombing. Unlike in the first case, these two guys have been already convicted, and serving their sentence. And just like that, the government decides to pardon them, those who have committed acts of terrorism, and as a result our country suffered immeasurable damage in the international forefront.
So, Maldives has become a haven for anybody with a mind and will to commit crimes, hu? There's less chance you'll be convicted, and even if did get a sentence, the government will pardon you within 2-3 years.
Thursday, June 17, 2010
How is the approval rating of the present government's policies?
Please take part in this survey, and express your opinion.
Friday, June 11, 2010
Strengthening the private sector
With our major political transformations or reforms, many things did change in our country's institutions and governance. I've talked about them even earlier in various posts. One of the significant ones is the formation of the Civil Service Commission under the Civil Service Act. Deputy ministers and sate ministers became political posts overnight. Unfortunately (I would say), there were many in such posts who got promoted to those posts over time, and these people are educated, professionals with technical knowledge in their fields. This group also includes some cabinet ministers as well. So, with the change in government, a bunch of seasoned-educated people suddenly got unemployed. All their life, they had worked in the government sector, so it was very much of a shock for them; losing their jobs, and having to stay home. Our system was not prepared for this; as we do not have a vibrant private sector, or research instituties, or civil society organizations.
I am talking about talented people who contributed a lot to our country, and who had sacrificed a lot, and worked dedicately to the development of our society. They are still at the prime of their career, as far as the age is concerned.
Some of them chose to start thier work of coming back to power, and became politically active in political parties. Some chose to get seats in the parliament. Some have left the country with their families, simply having a peaceful time abroad. Some are still staying home, still trying to digest the reality, and wondering what else to do with their life. They were ministers, state ministers, or deputy ministers. So their next job definitely has to be still ministership or state ministership, eh?
Ok, here I come to the main point, at last. Can we only contribute to our country through a job in the government, (or to be precise, a job in the state or public sector)? Well, I guess many have this illusion, that a job is not a job if it's not in the public sector. Our country has got many talented, well-trained, intellingent group of people who are unemployed, and if they can be utilised in the private sector we would be adding up to our productivity, and at the same time saving a lot of foreign currency outflow through expatriate workers.
Looking at the current government, there are some officials in politicals posts, who can be better utilised in the private sector, who used to be in the private sector and earning a decent income. It seems that some political posts have been allocated as 'gifts' or 'recognition' in their political efforts inside the party. Which cannot be avoided in a multi-party democratic system, however much we say it is totally wrong. But, we can still urge the President to at least consider people's technical know-how before allocating them to various posts. Further, get rid of people who cannot perform.
My message to all: jobs in the private sector are also noble jobs, and we can contribute equally, or even better in the private sector.
I am talking about talented people who contributed a lot to our country, and who had sacrificed a lot, and worked dedicately to the development of our society. They are still at the prime of their career, as far as the age is concerned.
Some of them chose to start thier work of coming back to power, and became politically active in political parties. Some chose to get seats in the parliament. Some have left the country with their families, simply having a peaceful time abroad. Some are still staying home, still trying to digest the reality, and wondering what else to do with their life. They were ministers, state ministers, or deputy ministers. So their next job definitely has to be still ministership or state ministership, eh?
Ok, here I come to the main point, at last. Can we only contribute to our country through a job in the government, (or to be precise, a job in the state or public sector)? Well, I guess many have this illusion, that a job is not a job if it's not in the public sector. Our country has got many talented, well-trained, intellingent group of people who are unemployed, and if they can be utilised in the private sector we would be adding up to our productivity, and at the same time saving a lot of foreign currency outflow through expatriate workers.
Looking at the current government, there are some officials in politicals posts, who can be better utilised in the private sector, who used to be in the private sector and earning a decent income. It seems that some political posts have been allocated as 'gifts' or 'recognition' in their political efforts inside the party. Which cannot be avoided in a multi-party democratic system, however much we say it is totally wrong. But, we can still urge the President to at least consider people's technical know-how before allocating them to various posts. Further, get rid of people who cannot perform.
My message to all: jobs in the private sector are also noble jobs, and we can contribute equally, or even better in the private sector.
Wednesday, June 9, 2010
Do we Maldivians want economic development?
In an earlier post, I talked about the importance of developing the private sector in our country. We need to urgently focus our attention on this for many reasons; one, our fiscal expenditure and deficit is already extremely high, and unsustainable; two, in order to achieve economic growth we need investments in the private sector. We are already very heavily reliant on the tourism sector, and so in order to diversify our economy we need to increase investments in other sectors.
It's disheartening that our focus has shifted more on politics, rather than reforming our economy, and improving productivity in the country. There are many important issues and obstacles for economic growth in our country, and we need to talk about it, address them as soon as we can. Maybe most of the politicians do not understand fully the real consequences, and dangers of economic hardships. When the public comes out, and demonstrates on the road due to economic harships, even the military or police may not be able to stop them. My point is, it's time we all debated about improving our economy, increasing incomes, and achieving economic development. The Parliament must be now debating bills and passing legislation in order to bring about economic reforms and increasing government revenue, reducing government expenditure, and developing the private sector. The government needs to formulate a reform bill and present to the parliament, ways to reduce government expenditure, especially, a detailed plan to reduce government employees and wage bill. Such a plan should have details of compensation packages for those who get unemployed in the short run. It also needs to include plans to developing the private sector, and job creation. The point is, any austerity plan put forward by the government needs to be transparent, and so the parliament and the public endorse it.
The Parliamentarians need to believe that our fiscal deficit was above 20 percent of GDP last year, and the state wage bill is extremely high and unsustainable.
Talking about developing the private sector, there are many talented businessmen as parliamentarians. I'm sure the country would be able to get a better contribution from them, if they were concentrating full time on their private businesses.
The media needs to focus more and divert the public's attention more on the economic issues, instead of wasting resources and time on useless and unproductive battles between DRP and MDP.
Some times I just wonder, do we really want economic development?
It's disheartening that our focus has shifted more on politics, rather than reforming our economy, and improving productivity in the country. There are many important issues and obstacles for economic growth in our country, and we need to talk about it, address them as soon as we can. Maybe most of the politicians do not understand fully the real consequences, and dangers of economic hardships. When the public comes out, and demonstrates on the road due to economic harships, even the military or police may not be able to stop them. My point is, it's time we all debated about improving our economy, increasing incomes, and achieving economic development. The Parliament must be now debating bills and passing legislation in order to bring about economic reforms and increasing government revenue, reducing government expenditure, and developing the private sector. The government needs to formulate a reform bill and present to the parliament, ways to reduce government expenditure, especially, a detailed plan to reduce government employees and wage bill. Such a plan should have details of compensation packages for those who get unemployed in the short run. It also needs to include plans to developing the private sector, and job creation. The point is, any austerity plan put forward by the government needs to be transparent, and so the parliament and the public endorse it.
The Parliamentarians need to believe that our fiscal deficit was above 20 percent of GDP last year, and the state wage bill is extremely high and unsustainable.
Talking about developing the private sector, there are many talented businessmen as parliamentarians. I'm sure the country would be able to get a better contribution from them, if they were concentrating full time on their private businesses.
The media needs to focus more and divert the public's attention more on the economic issues, instead of wasting resources and time on useless and unproductive battles between DRP and MDP.
Some times I just wonder, do we really want economic development?
Thursday, June 3, 2010
What a crisis world...
The recent events in the world financial markets are worth reflecting on, as we have been seeing times of extreme riskiness. On May 6th, the S&P500 fell from 1165 to 1065 within one day. The following day it was again back at 1135. Since then, the commodity markets, equity markets, and the currency markets are in high volatility, and investors have become very risk averse.
For the last two years (almost), we have been hearing about economic crisis, financial crisis, banking crisis, current-account crisis; it has become a crisis world. Looking at past crises, we saw the ‘Black Monday’ in 1987 when the Dow Jones plummeted almost 508 points and the S&P 500 declined by 20.4 percent within one day. In 1997, there was the East Asian financial crisis, when currencies of Thailand, Malaysia and Indonesia depreciated significantly within weeks. In 1999 we had the Argentine economic crisis. In 2007, we started hearing about the signs of a major financial crisis, the one we are still experiencing today.
When USA was almost on the verge of economic recovery, the debt problem of Greece led to a sudden panic in the markets, and Euro has fallen to 1.21 against the US Dollar.
Whenever there is an economic or a financial crisis, many people lose their jobs and income, banks fail, and companies go bankrupt, and so crises are definitely bad for societies. I wonder why we get so much of these crises, in the first place.
Well, we all know how the financial crisis started in USA; with the banks lending excessively to the Americans at low interest rates for home ownership. Most of these mortgage loans were made to the ‘sub-prime’ market, a group of people who had the lowest possibility and capability of repaying the loan. These banks and financial institutions then sold these debt to other institutions, and in this way, new financial products were innovated. Bright minds working in fund management firms came up with ideas like the ‘Credit Default Swaps’ (CDS), which are still another form of financial product, that acts as an insurance to those banks that hold mortgage debt. Trading in equity markets have become too much sophisticated, and mostly has become just numbers in computer systems.
In order to address some of the problems of this sophisticated system, on 24th May, Germany has banned naked short-selling of certain sovereign debt instruments and shares of selected German banks. Although some investors are unhappy about this, I guess, the current crisis originated from actions of many investors trying to make gains in the very short run through short-selling of shares and other financial products.
The whole objective of a financial system is intermediation of finance from savers to investments. We buy shares in order to have ownership of a certain company, and when the firm makes a profit, we get a dividend from it. The company gets the benefit of obtaining finance for its needed investments. Whenever we deviate from this basic fundamental objective, and when financial system is dominated by just hypothetical numbers in electronic devices, we will always be prone to crises.
Talking about sovereign debt problems, the one Greece is facing right now, is again a major reason for an economic crisis. Most of the analysts may be talking about the US economic recovery, what they dont talk about is the US debt problem. As at end 2009, the US debt stood at 83 percent of GDP. Hence, in order to prevent yet another crisis, it has to address its debt problem soon in order to avoid America turning into Greece.
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