Benefits of telecom reform

Posted on November 2, 2006  /  0 Comments

Sri Lanka’s infrastructure industries are in very bad shape, with reforms postponed, billion-rupee losses in electricity and petroleum and predictions of power cuts in 2007. In the blog of one of the business publications we read regularly, the following comment had been made by a reader. What is interesting is that she/he points to the good conditions in the telecom industry, no strikes, lower prices, etc.


If you had more competitive markets, without the government trying to control everything, you would have immediate price reductions. The producer that passes on the benefits to the consumer will have higher sales, if he beats his competitiors to the price-cut.One reason we dont have enough domestic competition is perhaps bureaucratic barriers to entry.

Look at the telecom industry – Sri Lankas IDD rates are some of the cheapest in the world. That wasnt the case before the industry was privatized.

Also, petrol or diesel isnt part of the index – kerosine oil and electricity are. Kerosine is a subsidised fuel with a lower rate of fluctuation than petrol and diesel.

Electricity is subsidised as well – CEB sells a unit at less than the cost to produce it, the difference is cushioned by loans from state banks flloated by the treasury.

this process can’t be changed coz our beloved JVP keeps blocking the reforms, coz they see the SLT staff and see how happy they are without union-dependent strikes and dont want to lose that control. mutts.

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