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by Lionel Gulavita

Many States categorised as 'developing countries' during not so long ago have become Newly Industrialised Countries and are forging ahead for greater prosperity. They included countries smaller and less resourceful than Sri Lanka.

Before the World Wars Japan and Hong Kong were weak and the two countries commenced building up after World War II and soared into rich economies. South Korea, Taiwan and Malaysia followed them much later in 1960s and have now become highly industrialised Nations. So are USSR and India. India shed its 'socialism' and 'Russia its communism' in 1991.

China took up the reins and rode steady after 1979 and is now a strong economy fast developing into a major economic powerhouse in the world. China's wonder growth has resulted in a massive trading surplus to that country in a sum of US $ 30 b last year. These countries now connected to global economy did not mix up their economic development with politics.

Russia has lately liberalised the freedoms of businessmen and allowed them to gain legal ownership of their shop and office premises. This fundamental right of the Western World Russia did not enjoy from 1917. India has abolished quota on all imports and freely allowed the people to go for any product foreign made. The liberalisation includes purchase of foreign cars the importation of which was restricted up to recent times.

India has even practically moved to buy more of Sri Lankan good by reducing the tariff by 50 to 90% on residual list products with effect from March 1, 2002. This was a long awaited response and a significant gloablisation strategy by Indian Government. In December 2001, China became a member of the World Trade Organisation too disregarding the party ideology.

Each of these countries and their successive Governments acted wise on their export economy for the well-being of the people. Had Sri Lanka vigorously continued with the principles of 'Open Economy' the country would have been economically stronger today.

However, with our internal politics now turning development conscious, we should marshal our efforts to seize the opportunities and utilise talents of the people for sustainable export led growth. Sri Lanka's import bill is tremendously higher than the value of her exports. For instance Indian goods Sri Lanka imported during 1999 was valued at SL Rs. 36,012.9 millions while Sri Lanka during the same period exported to India goods to the value of SL Rs. 320.3 millions only.

The favourable trading balance in favour of India was SL Rs. 32,629.6 millions. In the year 2001, Sri Lanka imported from India goods to the value of SL Rs. 53.6 b while our exports to India was only SL Rs. 6.2 b. To bring about equilibrium in Indo-Sri Lanka trading in the short run is impracticable. Neither could we ask India to wipe out Sri Lanka's adverse trade balance buying more of our exports. Cutting down imports or resorting to an import substitution program to bridge the colossal gap is a poor approach.

On the contrary, such a program will put the exports too on a reverse gear. It has so happened in many countries in their experiments. The only effective strategy to make a headway is to continue with the principles of 'open economy' and liberalise imports and exports of the country. Sri Lanka has gone far too long with the above donor-dependent economy to an extent that when the budget time is around the corner, many of us wonder as to how many billions would roll into the budget deficit and what foreign source would be obliged to bridge the gap. This from another angle mean that everyone of us are aware that the budget carries a deficit and generally the people live beyond their means.

A further deduction that could be advanced is that Sri Lankans as a nation is sluggish and expects outside sources to pay for their under-performance.

The people of Sri Lanka generally and characteristically forget the past soon. They expect quick results to generate. Those suffered long politically and economically could invariably be impatient in looking forward to receive some relief they anticipated. Hence the need is pressing to accelerate all projects and National Development endeavour in the country on a fast track. Acceleration should begin from the Planning process into all other departments setting and achieving the quantitative and qualitative targets on time.

In the meantime, however it is feasible for the political leadership to put the people into appropriate mind sets and turn the economy into the right orientation.

It is useful to recall how the Greater Colombo Economic Commission (GCEC) functioned and what achievements it reaped in Sri Lanka's economy. The GCEC was established in 1978 and it spearheaded the export led economic growth in the country.

GCEC established a number of Export Processing Zones commencing Katunayake EPZ. Biyagama and Koggala EPZs followed. Foreign investments began to flow into these EPZs and hundreds of foreign industries were located in them. Garment factories are a notable industry in these Zones and even outside them.

The employment problem in the country was minimized to a large extent through this industrialisation process led by GCEC encouraging both the foreign and local industrialists. Sri Lanka's first Economic Commission was thus a grand success and the country would have been very much poorer and economically much weaker today if not for the achievements of the GCEC. Under such economic zone programs it was planned for Sri Lanka to reach NIC status by the year 2000. Unfortunately the development orientation of the country was disrupted due to assassination of a leader and change in ruling politics.

The appropriate ground is being set for the development and large-scale international credit outlay. Sri Lanka's Governance, internal democracy rules and regulations, labour laws, human rights situation etc is sound. With the new Government in saddle, investor confidence has risen remarkably well.

The industrialists in large number are ready to install their industries using BoI incentives. The country is poised and the people enthusiastic on the new economic order to work hard and economically forge ahead. The Ceasefire Agreement paves way for the inflow of Foreign Direct Investment into the country.

The peace initiative is an added motivation to the foreign investors to open up export industries to cater to the potential dollar-rich markets abroad. Tourism that suffered many a setback in the recent past has turned round with increasing tourist arrival.

Further, agriculture, industry and the service sectors should be managerially efficient and productivity conscious to move ahead into NIC status promoting country's exports at least to tally the import bill.

It is necessary to declare the Year of Exports and arrange the launching pad for Sri Lanka to leapfrog into NIC status. Exhibitions, fairs, export seminars, large-scale enterprise development, development of small-scale industries and similar activities not only create the requisite awareness but also result in heightening the morale of exporters and the individual countrymen to step up the production of goods for the foreign market.

At awareness programs they will be aware of what goods to produce for which market, technical guidelines and assistance, production incentives, credit facilities available and the benefits to them and the country's economy from developing of exports etc.

Encourage Lanka's exquisite exports

Other than our tea, rubber, coconut and garments, Sri Lanka has a variety of non-traditional exports which include gems, jewellery, vegetable, fruits and nuts, cut flowers, foliage plants, aquarium fish, leather goods, value added goods, furniture, handicrafts etc attract considerable demand abroad. Sri Lanka earned SL Rs. 50 billion on non-traditional exports in 1990, in a preliminary year before we reached the Year of Exports in 1992. Sri Lanka's handcrafts are of high quality and attract up market prices abroad.

The World Trade Centre and EDB assistance and guidance to the producers are vital for the product promotion abroad.

Knowledge and innovation are keys to the future development. Sri Lanka's economy depends on the quality human resources available. Human resources development centres are hence necessary in each electorate to develop.

a. trade - specific skills through different technical courses

b. to provide talent-based opportunities of advanced training for the youth.

c. to promote small industries and employment of technicians and technocrats in townships.

The courses offered to the youth may include civil construction, motor mechanism, welding, house wiring, industrial electricity, technical drawing, electronics, information technology, entrepreneurial development, vocational English, entrepreneurial training, machining, air-conditioning general and auto, accounts keeping etc.

The training would also be a short-term strategy to create employment for the unemployed and also to increase the number of youth employable in countries abroad.

Economic Commissions

Prime Minister Ranil Wcikremesinghe's ambitious plan to develop the country under 5 Economic Commissions is creditable. The proposal though gigantic is a pragmatic strategy. The Prime Minister is aware that large-scale development is the solution for the economic ills the country is facing and the butterfly industries are no answer to a run down economy.

So we need to think in terms of big business and move into worksites not with wheelbarrows but with bulldozers to speed up the development. Many countries have done so with tangible results.

5. Economic Commissions to be established will open up great possibilities for large-scale production and employment. The re-energised economic activity under the said 5 economic zones will enhance the production many fold. Export Development and Market Promotion should therefore be our main strategy for faster growth.

The proposed 5 Economic Commissions are to takeover all development activity involving every electorate in Sri Lanka. Inter-zonal consultations, sharing innovative skills and experience. Healthy competition will promote productivity and production within the zones.

Prime Minister has succeeded in the neighbourhood consultations receiving the positive nod for joint collaboration from friendly nations.

Australia is a live example of enormous 'success' on the concept of economic zones.

After the model was developed and put into implementation the outcome over two decades showed an exhilarating effect on all the territories. Australia succeeded in this strategy and each territory in it today is a resource-rich economic model in the whole with every citizen enjoying the fruits of development.

The country has been in the forefront in technologies with several hundreds of 'world first', which included the black box flight recorder, differential gears, bionic ears, etc. Australia is well ahead of France, the Netherlands, Taiwan and Italy in many economic indicators. Australian companies and their technologies developed under economic (territories) zones are globally known and acknowledged.

They are in the fields of health, entertainment bioscience, biotechnololgy, media, entertainment, agriculture, agribusiness, telecommunications, education, tourism, public service, environment, financial service sand public services etc. Australia's short history of development under separate economic zones provides Sri Lanka many lessons worthy of emulation.

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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