The Golden Bowl We Left to Rust in Trincomalee

By Dhananath Fernando

Originally appeared on The Morning

There was a recent news story that the Government is looking for investors to develop some of the oil tanks in the Trincomalee Oil Tank Farm on a long-term basis. When I saw the news, I was reminded of the Serivānija Jātaka.

The story is about a grandmother and granddaughter from a once-wealthy family who had fallen into poverty. Among the old pots and pans in their house was a bowl covered in dirt. They did not know that underneath all that dirt, the bowl was made of gold.

One travelling merchant realised its true value but tried to cheat them by claiming it was worthless. Later, another merchant came along, recognised that it was gold, and dealt with them fairly.

In some ways, the story of the Trincomalee Oil Tank Farm is similar. We have spent decades sitting on something enormously valuable without fully understanding what makes it valuable.

A national asset left to deteriorate

The Trincomalee complex originally had 101 tanks. Today, 99 remain. Construction began under the British in the 1920s and continued into the 1930s. Each tank was designed to hold roughly 12,000 MT of petroleum products, giving the entire complex a theoretical storage capacity of close to 1.2 million MT.

Of course, this does not mean we can fill all 99 tanks tomorrow. Many have remained unused for decades and require significant refurbishment, supporting pipelines, loading facilities, and other infrastructure before they can operate commercially.

That distinction is important. We sometimes speak about an asset as though its value comes simply from owning it. But in economics, an asset becomes truly valuable when it can be put to productive use.

A useful comparison is Muthurajawela. Sri Lanka developed the Muthurajawela Oil Tank Farm in the early 2000s, adding around 250,000 tonnes of petroleum storage capacity. The project was supported by a $ 72 million Export-Import (Exim) Bank of China loan. In other words, creating even a fraction of the storage capacity that already physically exists in Trincomalee required substantial new investment.

Yet for decades our main debate over Trincomalee was not about how to generate value from it. It was about who should be allowed to touch it.

Every time an investor or joint venture was discussed, slogans about ‘national assets’ appeared. Political protests followed. Different governments moved forward and backwards. Meanwhile, much of the infrastructure simply remained unused.

A national asset that is allowed to deteriorate is not becoming more national. It is simply becoming less valuable.

Why Trinco matters

The present arrangement is clearer than what existed before. Of the 99 tanks, 24 have been allocated to the Ceylon Petroleum Corporation (CPC), while Lanka IOC (LIOC) has 14 tanks. The remaining 61 are under Trinco Petroleum Terminal Ltd. (TPTL), a joint venture in which the CPC holds 51% and LIOC holds 49%.

The latest proposal is to bring investors into the development of 29 of those 61 tanks on a long-term basis. It has taken us almost a century from the construction of these tanks to reach this point. Better late than never.

But we should also understand why Trincomalee matters. This is not merely about storing Sri Lanka’s diesel and petrol. If that is the only objective, we are thinking too small.

Sri Lanka sits along one of the world’s important maritime routes. Trincomalee has a natural harbour and significant petroleum storage infrastructure already in place. Properly developed, the area can support petroleum storage, bunkering, trading, and re-export while strengthening Sri Lanka’s own energy security.

That wider strategic potential is already recognised. In April 2025, Sri Lanka, India, and the United Arab Emirates signed a Memorandum of Understanding (MOU) to cooperate in developing Trincomalee as an energy hub, including the tank farm, bunker fuel operations, and the possibility of a refinery.

Converting ownership into value

The recent instability in the Middle East is another reminder that energy security does not mean having one government company controlling everything. We learnt that painfully during the economic crisis.

Before the crisis, Sri Lanka’s fuel market was heavily concentrated around the CPC, with LIOC operating as the other established retail player. When foreign exchange disappeared and the country struggled to import fuel, being Government-owned did not magically create energy security.

Eventually, Sri Lanka opened the market further.

The same principle applies to storage. Security comes from having sufficient capacity, diversified suppliers, reliable infrastructure, access to capital, and alternative supply routes. Competition and private investment can strengthen those things rather than weaken them.

Of course, Trincomalee is strategically sensitive. That means investors must be selected through transparent and competitive procurement. Agreements should protect Sri Lanka’s security interests, provide fair commercial returns, establish clear access arrangements, and prevent the creation of another monopoly.

But ‘strategic’ should not automatically mean ‘the State must operate everything’. There is an opportunity cost to leaving assets idle. Every year a tank is unused, Sri Lanka loses potential storage income, investment, jobs, bunkering opportunities, and economic activity while the physical asset continues to deteriorate.

The real debate, therefore, should not be whether these tanks belong to us. They do. The question is whether we are capable of converting ownership into value.

The grandmother and granddaughter in the Serivānija Jātaka were poor while a golden bowl was sitting among their ordinary pots and pans because they did not know what they owned.

Sri Lanka knows what it owns in Trincomalee. Our problem is that for far too long, we have behaved as though we do not.

Forty Is Not a Road Safety Policy

By Dhananath Fernando

Originally appeared on The Morning

There is now a conversation about introducing a minimum age of 40 for those who drive three-wheelers as an occupation. The Government has subsequently clarified that no decision has been made. But the proposal itself is worth discussing because it reflects a much broader problem in the way we approach public policy. 

Whenever we see a problem, our first instinct is often to regulate it. Over the years, there have been many proposals to regulate three-wheelers, including a separate regulatory authority, registration systems, and different licensing arrangements. In fact, Parliament amended the National Transport Commission (NTC) Act in 2025, expanding the NTC’s mandate to cover three-wheelers and other forms of passenger transport. 

Therefore, the question today is not whether the Government has the power to regulate. The real question is how that power should be used. 

A Sri Lankan success story 

In a market economy, regulation should have a clear purpose. We regulate where there is a genuine safety issue, fraud, information failure, or harm to others. We should not regulate simply because we do not like the employment choice someone has made. 

In many ways, the three-wheeler is actually a Sri Lankan success story. 

According to the Department of Motor Traffic, Sri Lanka had 1.2 million registered three-wheelers by the end of 2025. They have created an entire ecosystem around leasing, insurance, repairs, spare parts, tourism, and, more recently, digital mobility platforms. 

The reason three-wheelers became so popular is quite simple. Entry is relatively easy. Compared with starting many other businesses, someone can obtain a three-wheeler, find customers, and start earning an income relatively quickly. That flexibility matters, particularly in an economy where formal employment opportunities are limited. 

Three-wheelers also fill a gap left by our public transport system. A bus or train can take you along a main route. But getting from your house to the railway station, from the bus stop to your office, or travelling between two places that are poorly connected is a different problem. The three-wheeler has solved part of that problem without waiting for a government master plan. 

The missing economic point 

This is why the proposal to keep people below 40 away from the occupation misses the economic point. 

If young people are choosing to drive three-wheelers because better-paying jobs are unavailable, banning them from driving a tuk-tuk does not magically create a better-paying job. The solution is to create an economy where a 25-year-old has better alternatives. 

If manufacturing expands, tourism grows, construction improves, businesses invest, and new companies are created, wages will rise and people will move naturally towards better opportunities. We should make better jobs more attractive, rather than making existing livelihoods illegal. 

The same principle applies to proposals for additional licences and permits. Every extra licence has a cost. There is the fee, the time spent obtaining it, and the discretion given to an official to approve or reject it. For someone earning a daily income, even losing one working day matters. 

Technology has already solved many of the problems policymakers are trying to solve through regulation. 

Ride-hailing platforms identify the driver and vehicle, display the fare or an estimate, track the journey through GPS, and allow passengers to rate drivers. Payments can be digital. A passenger has a record of the trip before, during, and after the journey. 

Ratings also create incentives. A driver who repeatedly provides poor service risks losing customers and earning opportunities. A good driver can build a reputation. This is market regulation through information and consumer choice. 

One major Sri Lankan platform, PickMe, reported more than 167,000 independent drivers and delivery riders by March this year. It also reported that driver net earnings increased by more than 14% during the financial year. That does not mean every driver is earning well, but it demonstrates the scale at which technology is now organising what was previously a highly informal market. 

The question of safety 

Then there is road safety. There is a popular belief that three-wheelers are among the main causes of fatal accidents. Three-wheeler drivers certainly are not famous for perfect lane discipline. But policy should be based on evidence rather than reputation. 

Table 1 containing Ministry of Transport data shows the number of vehicles involved in fatal accidents. There are two important qualifications. First, these statistics show vehicles involved in fatal accidents. They do not tell us which vehicle caused the accident. 

Second, raw numbers alone are not sufficient to calculate risk. We should ideally compare accidents against the number of active vehicles and, more importantly, kilometres travelled. A commercial three-wheeler may travel many more kilometres every day than a privately owned vehicle. 

So these numbers cannot prove that three-wheelers are perfectly safe. But they certainly cannot justify an arbitrary minimum age of 40 either. 

Regulation must target the problem 

Three-wheelers remain an important part of Sri Lanka’s mobility system. National transport statistics for 2025 puts their passenger modal share at around 20% in 2024. That is still a substantial share of how Sri Lankans move. 

Of course, basic safety standards, vehicle fitness, insurance, enforcement of road rules, and protection against fraud are necessary. Dangerous driving should be punished regardless of whether the driver is 22, 42, or 62. 

But regulation should target the problem. If the problem is reckless driving, enforce traffic laws. If the problem is poor vehicle condition, enforce fitness standards. If the problem is youth unemployment, create an economy that generates better jobs. 

Keeping a 25-year-old away from a three-wheeler until his 40th birthday solves none of those problems. 

Sometimes the best thing a government can do is not to create another barrier, but to allow people to work, compete, earn, and move when a better opportunity comes along. 

Fixing the checkout bottleneck

By Dhananath Fernando

Originally appeared on the Morning

• Time to modernise e-commerce taxation

Delays in delivery and regulatory confusion around e-commerce platforms have become a pressing concern for consumers and small businesses across Sri Lanka. As parcels pile up at Customs and prices surge unexpectedly, it is time to take a step back and understand the root of the problem – and the economics behind it – before rushing to find solutions.

Many wonder how e-commerce platforms like Temu, AliExpress, and eBay offer such a vast variety of goods at prices far below those in local retail shops. The answer lies in a concept known as ‘long tail economics,’ popularised by Chris Anderson in 2004. 

Unlike traditional retail models that rely on selling large quantities of a few popular products, long tail economics thrive by offering a wide range of niche items in small volumes. Digital platforms are well suited for this, as they don’t bear the physical storage and shelf-space constraints that burden brick-and-mortar stores.

In conventional retail, stocking niche items is often unprofitable; they take up space and sell slowly. But online marketplaces can list millions of such products without significant overheads. Their costs are further reduced by economies of scale in shipping, especially when handling a large number of small parcels.

Until recently, Sri Lanka allowed such parcels to enter under a simplified flat-rate tariff system – typically around Rs. 850 per parcel – based on weight rather than the Harmonised System (HS) code. For low-weight or low-value items, some tariffs were not imposed at all. 

This system made cross-border e-commerce accessible and affordable, and in doing so, empowered many Sri Lankan entrepreneurs and gave consumers access to a wider variety of goods at lower prices.

However, it also led to concerns. The simplified system was being exploited by some to bring in commercial-scale shipments disguised as personal use, thereby bypassing higher taxes. Customs officials and industry stakeholders raised questions about revenue loss and the legality of weight-based tariffs under the Customs Ordinance. 

As a result, authorities moved to tighten the rules: now, all parcels must be declared by HS code and taxed accordingly, regardless of weight.

The unintended consequence? Long delays at Customs, consumer frustration, rising costs, and uncertainty for both consumers and e-commerce platforms. The system, simply put, is not ready to handle such granular processing at high volumes.

So what is the way forward?

The answer isn’t to block e-commerce; it’s to build a smarter system.

Create a legal framework for vendor tax collection

Globally, many countries have adopted a vendor collection model, where e-commerce platforms collect taxes at the point of sale and remit them to the authorities. But in Sri Lanka, this isn’t legally possible yet. First, the Government must establish a clear legal mechanism for platforms to collect tariffs and remit them to Customs or the Inland Revenue Department.

In implementing a vendor collection model, Sri Lanka can also introduce a minimum threshold, requiring only platforms that handle a certain number of parcels per month to participate in the scheme. This ensures that the system is manageable and initially applies to larger platforms with sufficient volume and technical capacity, avoiding undue burden on small or infrequent operators.

Integrate Customs tariff systems via API

Even if legally allowed, platforms must be able to accurately determine the applicable tariff at the time of purchase. That is where Application Programming Interface (API) integration becomes essential. 

Most e-commerce platforms already tag products with HS codes. If Sri Lanka Customs’ Automated System for Customs Data (ASYCUDA) system is integrated with these platforms via API, tariff rates can be automatically calculated during checkout. 

The buyer would then see the full landed price, including taxes, before paying. The platform would act as a collection agent and remit the amount to Customs, minimising leakage and increasing transparency.

Simplify and rationalise tariffs

At the heart of the issue lies another critical challenge: Sri Lanka’s tariff structure is overly complex. We apply Customs duty, PAL, CESS, and VAT, often with wildly varying rates depending on product specifications. 

For example, tissue paper and wet wipes carry different rates, and the difference is even starker between wet wipes with fragrance and those without. This complexity makes compliance difficult and systems integration nearly impossible.

A long-term solution would be to rationalise and simplify tariffs, bringing rates down and harmonising classifications. Simpler tariffs would mean lower prices for consumers, less room for manipulation, and more efficient revenue collection. In fact, a digital tax model could bring in more transparent revenue over time.

Let the consumer decide

Some argue that e-commerce platforms threaten local manufacturers or offer low-quality goods. But quality is a judgement for the consumer to make. If an item is poor in quality, buyers won’t return to it. 

Attempts to block platforms in the name of protectionism will hurt entrepreneurs who use these platforms and rob consumers of choice. A better approach is to let competition and transparency decide what thrives in the market.

The real issue isn’t e-commerce; it’s outdated regulation. With the right legal and technological framework, Sri Lanka can embrace global trade, empower local businesses, and ensure fairness in taxation. It’s time to stop punishing what works and modernise the system that supports it.

Competition: The way forward

Originally appeared on The Morning

By Dhananath Fernando

The recent conversation on taxi services at the Bandaranaike International Airport brought back memories of one of the times I travelled overseas as a youth. The Colombo-Katunayake Highway construction was not yet completed and I had just finished university.

I did not have the means to hire a vehicle to travel from Moratuwa to Katunayake in order to catch a flight, nor did Sri Lanka have the infrastructure or many affordable choices for a poor boy like me to reach the airport quickly at a reasonable cost. There was no PickMe nor Uber, and neither did I have a smartphone.

I left home early with my borrowed luggage from a friend and came to the Moratuwa Railway Station. I took the train from there to Pettah. From Pettah, I took an air-conditioned bus, paying extra to keep my luggage in the front of the bus and took a tuk from the bus depot to the airport departure terminal. I think the time I took to travel from home to the airport was just about 30 minutes less than the travel time of my flight.

All that I went through was due to unaffordability as well as the unavailability of affordable choices to travel. If there had been proper modes of public transport available connecting trains and airports, the lives of people like me, who could not afford a taxi to the airport, could have been easier. In the context of the availability of choices, we have to evaluate whether to allow mobile app-based and registered taxi services at the airport.

It is obvious why registered taxi services at the airport charge a higher rate. Their reasons to charge a higher rate include the cost to operate at the airport by paying rent for their operating offices and keeping an adequate fleet of vehicles. Further, their cost also includes licence fees and bribes that they have to pay to obtain the licence to operate at the airport.

However, their business model has been challenged by a more technologically-advanced operation where customers can choose the type of vehicle they want and are given the ability to check the rate for the journey prior to booking the taxi. This offers many more options including safety measures, such as the ability to contact the driver after the ride in case something is left behind after long hours of travel time.

While the operation of registered taxi services is perfectly reasonable, preventing someone else with an alternative solution from entering the market will make the lives of people more difficult. In a competitive world, competition should be encouraged.

The solutions suggested by our policymakers are absurd. Certain policymakers have wished to prevent the operation of mobile app-based taxi services at the airport. Others have suggested that the airport registered taxis should also register with mobile app-based taxi services. While the second option is somewhat reasonable, a business model being rendered uncompetitive due to the development of technology is not a problem for policymakers in the first place. Imagine bullock cart owners claiming that they are being impacted by engine-driven vehicles?

Simply, this is the evolution of the world and we have to adapt or we will lose in the market. Unfortunately, airport-based taxi services are becoming uncompetitive and more importantly, customers do not see any value in their services. If a customer sees the comparative value of one service being better than the other, they should be given the opportunity to make a choice based on the available options. This service should be valid even for customers whose hotel travel is coordinated directly.

Once we look beyond this and decide to connect our airport to multimodal transportation systems (such as connecting railways and highway buses to the airport), the airport-registered vehicles as well as Uber and PickMe taxis will witness an impact on the number of hires they receive.

Will policymakers delay connecting the airport to multimodal transport systems merely in order to protect our taxi services and drivers, overlooking affordable options for consumers?

In most airports around the world, the terminals are connected to some form of public transport while any type of taxi service is allowed. In fact, the infrastructure and signage enables mobile app-based taxis and other taxi services to pick up and drop off passengers at specific points. All modifications have been undertaken to make the lives of travellers easy, affordable, and safe, instead of protecting a group of politically-affiliated rent-seekers.

The manner in which our policymakers treat this issue is a good indication of how the majority’s choices have been compromised for political reasons, for the benefit of a few who are unproductive and uncompetitive.

This norm is not only seen in this particular scenario, but everywhere in our economy, including the State sector. Similar to how registered taxi drivers are objecting to mobile app-based taxi services, the Ceylon Petroleum Corporation wishes to keep other private companies out of the market. Some tile and bathroom fitting manufacturers wish for import bans on tiles and bathroom fittings, simply for their own benefit, as do aluminium manufacturers.

Things are the same in politics. They are all basically asking Sri Lankans and tourists who arrive in the country to take long journeys, wasting a lot of their precious time and call it a ‘beautiful life in the paradise island or Asia’s little miracle’.

‘So Sri Lanka’; is it actually a miracle?

Killing aspirations by regulating tuk-tuks

Originally appeared on The Daily FT

By Dhananath Fernando

What do regulations enforced after the 1st of August mean for tuk-tuks?

I live in Moratuwa, down Diggala road, a 2 km by-road from Keselwaata Junction on the Old Galle road. In my little hamlet, there are only two mini Lanka Ashok Leyland busses that operate in synchronization with the train time table from the Moratuwa Railway station to Diggala Road. Regardless of this inefficient bus operation, my saviors are an efficient and unique operation of tuk-tuks that cover a 2km radius from the railway station, enabling the commuting needs of the neighborhood. 

MAPPING OUT THE TUK-TUK OPERATION

In terms of the cost, the three wheelers engaged in this operation on this route only charge a ‘per passenger’ rate instead of a ‘per Km’ rate or a standard hire fare like almost all other tuk-tuks in the country. This means that each person has to only pay a fare of Rs.20 (despite the distance) and they take 3 passengers at a time in a single tuk. In simple words, it is a three-passenger bus system operating at every 10-minutes intervals. Their services are available until about 11.00 pm and I am very grateful to all the drivers operating their three-wheelers in the route and for providing us daily commuters with such an honorable and sustainable service.

You could even call me an over-satisfied customer as the journey is comfortable than the bus in many aspects. Seating facility, availability, frequency, reliability and ability to get off the vehicle right near the gate of my house are just a few advantages of this service. All this, is just Rs.5 higher than the bus fare (which is unreliable and mostly unavailable).

This is one, of the many services rendered by tuk-tuks that fail to reach mainstream newspaper headlines. Hence why it worries me of the adverse impacts that would overcome the industry when strict regulations are imposed by the “National Council for Road Safety” where they plan to regulate three-wheelers to have a meter with printed bills starting from the 1st of August, 2018. On the surface it looks like a step right direction as it seems to protect a consumer using this service, but in a practical world there would be many unintended consequences. Let’s analyse how these regulations would affect the tuk-tuk service in my area.

THE ADVERSE IMPACT OF REGULATIONS ON TUK-TUKS

If the tuks in my area were to adhere to new regulations and introduce a meter and a printed bill, they will no longer be able to charge a per passenger rate. Instead they have to charge a fare as per the standard meter rate. This results in someone like me, who initially only paid a Rs.20 for a one-way fare from the railway station to my house, now paying up to Rs.60 a ride, a price hike of 300%. Personally, I don’t think that I should bare this extra cost for the sake of receiving a standard fare rate and a printed bill. Eventually, this will result in me limiting my usage of tuk-tuks as a consumer. I know that the demand for tuks in my neighborhood would reduce and this isn’t a phenomena only limited to my area.

There is also a second possible outcome scenario of these regulations. The issue with regulations is the limited capabilities and downfalls of the government in terms of endorsing them. Most tuk-tuks will continue to operate as they do now, automatically creating a black market supply in tuk-tuk services. I am not arguing against regulations because of the inefficiencies in endorsing them, I am arguing against the case of regulations because regulations are not the best way to achieve the stated objectives; a standardized tuk-tuk fare across the country

UNLOCKING INNOVATION THROUGH COMPETITION, NOT REGULATION

Most Sri Lankan state institutions and politicians, across all parties, believe that state intervention and regulation is the only solution for public concerns as this. The practicality of regulations and its eventual reality does not agree. We often forget that the innovations made in the taxi services industry, like telephone call based taxi services such as “Budget Taxi”, “Fair Taxi” or taxi services utilizing the use of mobile phone and app technology, such as “Pick me” were not a result of regulation or strict control over the industry. These innovations were a result of minimum regulation and the presence of competition in the free market provision of tuk-tuk and taxi services. It was simply the freedom and space to innovate and serve customers and taxi drivers better to meet higher profit targets that drove these businesses to create such innovative solutions in the industry.

The world and markets evolve based on the needs of consumers and there needs to be market freedom to ensure innovative solutions to meet these needs. This is a fundamental in economics theory and not a concept of rocket science, or as some may call it, a “foreign conspiracy”.  

Additionally, according to the guidelines of the new regulations, every tuk-tuk must have a meter and should issue a printed receipt to the customer at the end of every ride. Does this mean that the many mobile app taxi services that generally provide an SMS receipt now require to provide a printed bill? When the entire world is going green, why an extra hassle for the driver to print a bill out at an extra cost?

As a passenger and a consumer there are services I expect a receipt for and there are services a receipt is not an expectation. If it is a household electronic item, I will definitely demand a receipt for warranty and returns purposes but from a taxi driver, the least I expect is a receipt. Rather I expect a safe and quick ride to my destination. This is not the first time the current government made attempts at regulating tuk-tuks. They imposed a minimum age ceiling for tuk-tuk drivers to be over 35 years of age. The justification behind this was apparently that three-wheelers contributed to the most number of road accidents of the recent past. However, as the data below shows, this was not the case.

LEAVE TUK-TUKS ALONE

Three-wheelers are not just merely a mode of transport. It means different things to those from different walks of life. For a rural commoner, it is an ambulance in a time of emergency. It is equivalent to a VIP Defender for an office worker, in a rush for his afternoon meeting. It is wedding car for a poor household. For entrepreneurs in urban and rural parts of the country, it is their mini lorry and companion. More than everything, it is an aspiration and product of pride for more than 1 million households in Sri Lanka. A poor man has to shoulder a tax of Rs. LKR 420,000 on a tuk-tuk. This tax, is then used to fund loss making state-owned enterprises; provide for the excess of government sector employee’s salaries and pensions; and a continuing list of unnecessary provisions. It is not rare to find tuk-tuks with logos of European cars pasted on its body. You’d see “Audi” to “BMW” stickers galore in some tuk-tuks. This sends a strong message to the rest of society. To a poor man, it is his BMW and his Audi. In other words, it is his aspiration and it is his world. Killing these aspirations with unnecessary regulations is never the solution, restructuring the service provided through competition and innovation, is.