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by S. Wijesiri

Generally the difference between major cities and small townships and countryside is very high. Due to the poor social infrastructure especially in the sphere of eduction of children, professional and technical staffs are reluctant to move to country towns. This situation has significantly effected in obtaining expertise knowledge, which is an essential factor in an era of knowledge-based economy. Ultimate result is the negative impact on promotion of rural industrial estates

Rural Industrial Estate Development Programs, an essential component in rural industrialisation had been a favourite proposal forwarded from time to time, as a solution to the unemployment problem. Proposed Industrial Park for printing and allied industries at Panaluwa is a latest in these regional development programs. Although massive investments have been incurred in these rural industrial development projects, the overall objectives have not been achieved so far in number of cases.

There are about 32 rural industrial estates developed and managed by the Industrial Development Board (IDB), Ministry of Enterprise Development, Industrial Policy and Investment Promotion (MEDIPIP), Southern Provincial Council and Mahaweli Authority. Extends of these estates vary from 2 acres to 50 acres. (Approx). Occupancy rate of some of these are very low even after nearly a decade from the commencement of the estates. Rural Industrial Estate Development Programs were expanded in early 90s and IDB and MEDIPIP have played a major role in these programs.

Employment generation while promoting balanced regional development is the main objective of the Rural Industrialisation Programs. Strengths and weakness of these programs directly contribute to the success of the Rural Industrial Estate Development Programs. Since Rural Industrialisation Programs are essentially to be incorporated with the National Industrial Development Plan any initiative has to be started from it.

In any of the project, viability has to be pre-assessed before implementation. Pre-feasibility studies without any interference is an essential factor for the success of the project. In the private sector since the beneficiary has the direct impact and sometimes immediate impact, viability in much concerned. However in public investments decision markers of the projects and programs have less impact with wrong decisions and as a result the attempts for the accuracy for pre-assessments are insufficient in some instances. In the planning of industrial estates the first stop is to find out the segments, which it caters to be. Resources availability is a prime factor in promoting the industrial ventures.

Local area markets create opportunities for small and medium projects. Ready-made garments projects give an example for the industrial projects promoted under special incentive schemes. This category is determined by the National Industrial Policies, where long-term forecasting is rather difficult. Potential for other two categories could be more accurately assessed and size of an industrial estate would be mainly decided by these two segments. Distance from ports and airports is correlated with the scale of potential investments as well as the sectoral factors.

Inadequate pre-assessment for the land requirement has been a reason for waste of funds., as in developing rural industrial estates, infrastructure cost, compared to the land cost is very high. Phased - out basis development avoids these massive wastes, while keeping space for future demand.

Distance from the townships affects the industrial ventures, which depend on the local area market, where in most cases which belongs to the tiny and small categories. In some cases the mini rural industrial states planned mainly for this category had to wait for 15-20 years for fully or nearly fully occupancy, as the result of this locational disadvantage.

The industrial projects based on resources or promoted under special incentive schemes even though not depend on the local area market, experience difficulties in staff transportation, access to other services etc. It has to be noted that even the limited facilities available such as postal, health, in rural areas are concentrated to the hearts of townships. As such it is strongly recommended to locate rural industrial estates much closer to the townships, preferably within the townships.

In rural areas although an increase in awareness on environmental aspects is observed, establishing industrial units in residential areas is still common. As locating a project in an industrial estate is comparatively costly rather than establishing in his own land, especially for Small and Medium Enterprises (SMEs) there is no reason to look for an industrial estate. Utilisation of family labour in SMEs is easy when locating an industry in own home yard. This factor further discourages the interest for the industrial estates.

Generally the difference between major cities and small townships and countryside is very high. Due to the poor social infrastructure especially in the sphere of eduction of children, professional and technical staffs are reluctant to move to country towns. This situation has significantly effected in obtaining expertise knowledge, which is an essential factor in an era of knowledge-based economy. Ultimate result is the negative impact on promotion of rural industrial estates.

As it mentioned at the beginning, rural industrial development programs are only a component in Rural Industrialisation Program, unless the comparative disadvantages in Rural Industrialisation Programs are adequately compensated the expected achievement will not be reached. Usually the start-up cost of an industrial unit is too much high and if this could be borne by the authorities a certain increase in percentage of progress will be shown. At the stage, the project reached, with the strength of facing the competitiveness, the entrepreneur will start his project in a land allocated to him. In the case of small sector industries, the incubator concept associated with the Rural Industrial Estate Development Programs will be more result oriented.

Sector-specific clusters of industrial units scattered in the country are primary based on tacit and accumulated knowledge gained by doing and learning by interaction. Markets have been created naturally. Programs of mini-rural industrial estates for these clusters followed by back-up services such as infusion of technologies will improve the overall output of the clusters. Especially access to the markets will be easier, when industrial estates are established to cater to the clusters. Spatial clusters of small production units engaged in black-smithy, pottery, brass products, aluminium and cast-iron are some of the areas with potential for development.

Generally in all organisations engaged in development and management of industrial estates criteria of selection of investors have similarities. Rules, regulations and procedures all have similarities. However sometimes long delays from selection of investors to allocations of lands and inadequate evaluation process could be observed. Minimal formalities for lands make attractive for investors. Further some degree of testing is needed to weed out potential failures.

Another one important area is ownership of land. In the industrial estates developed by the public organisations lands are generally allocated under the long-term lease, which vary from 30 years to 50 years. Although long-term leases are a necessity for obtaining bank loans, these leases are issued based on the progress of the projects. In rural areas where private lands are available in plenty, unless special benefits available in the industrial estates investors prefer the private lands.

In most of the projects and programs under the public sector unnecessary influences are unavoidable. Cancellation of lands, given for the industrial ventures with poor performance is even difficult. Lands allocated are sometimes utilised for, merely residential purposes. Selection of investors is influenced.

Private sector participation in development and management of the rural industrial estates will overcome these problems to certain extent. Mechanism of management designed for executing the functions independently is a necessity. Governing Council consisting of relevant government institutions, chamber of industries and the private sector will be beneficial rather than public sector management. Further the private sector participation from the planning stage limits the opportunities for biased feasibility and pre-investment studies, where the problem starts.

However in the case of private sector participation, the comparative disadvantages in rural industrialisation, which hinder the viability of industrial estates development projects, have to be compensated. Finally it has to be mentioned that the importance of the Rural Industrial Estate Development Programs under Rural Industrialisation Programs are to be clearly understood but without any over estimation.

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