'Peace is good business'

There is more than the moral and ethical imperative for peace in our country. There is very sound economic good sense about it and it is for this reason that I wanted to use the theme 'Peace is good business'.

We all know about war profiteering and the way in which weapons manufacturers profit from conflict. It is our duty as responsible citizens, as part of the corporate responsibility that all of us as business leaders pledge to uphold, to ensure that peace can be more profitable than war. Not only will it benefit the common citizens of our country and will have a durable value added to our society, but it will also ensure that war is unlikely to return ever again to our beautiful land.

We have today, the examples of many groups in conflict situations in countries in the international community who have themselves renounced violence and taken to the path of peace. Yesterday the Irish Republican Army announced that after 36 years it was going to abandon armed struggle, in order to achieve its political objectives.

This is a very significant moment in the history of that country and the Northern Ireland conflict will make a radical turn for the better as a consequence of what the IRA has done.

Not so long ago following discussions going on in Helsinki between GAM, the rebel movement in Aceh, and the government of Indonesia, both sides announced that they had reached success and that very soon they would sign a peace agreement bringing to an end that separatist movement in an important part of Indonesia.

It is not unlikely that the same good news can take place in our country with the right political will and the right decisions made by the parties to the conflict that has plagued our country for so long. But the incentive for that must come from you.

The peace process belongs to the public of Sri Lanka . It is not the exclusive property of the Government of Sri Lanka or of the LTTE. The stakeholders are you, the people of Sri Lanka and the business leaders and the private sector have a very important role to play in this process and this is why I feel it is important that your Investors for Peace Dialogue and your Alliance for Peace must take more bold steps in your pursuit to link the economy of the country, the economic development of the country with the peace process in our country.

We are at a very important stage in the peace process. We did have, of course, a Ceasefire Agreement at the beginning of 2002 and it is now three and half years into a ceasefire which, despite the many violations, continues to hold substantially. We have not had open conflict, we have not had the scale of death and destruction that we had when the conflict was going on. This is the longest ceasefire that we have had todate and everyday of the ceasefire means an additional investment in peace.

We should be grateful that the ceasefire continues, but we must not take the ceasefire for granted. We have to be able to use the ceasefire as an opportunity to make a durable peace and sometimes we unfortunately do not do that.

We have attempted to use the opportunity of the natural disaster that befell us all on December 26. in order to devise a structure where we could engage the LTTE and the Muslim parties in a partnership endeavour to have an equitable allocation of the foreign aid that has generously come in from the international community for post-Tsunami reconstruction.

That structure has substantially been endorsed by the Supreme Court of Sri Lanka. It has upheld in its interim order two fundamental principles : one is that the President of Sri Lanka was entirely constitutional and legal in concluding such an agreement and in delegating one of her Secretaries to sign such an agreement.

Secondly, that it was entirely legal and constitutional for the President of Sri Lanka to conclude an agreement with the LTTE as the premier protagonist in the conflict and as a body that has effective physical control of certain parts of our country.

There are of course certain elements with regard to the Regional Committee's functions and the Regional Fund that have been stayed by the Supreme Court. Today the government lawyers are filing objections to that interim order and these objections together with the responses of the petitioners will be heard by the Supreme Court on September 12. I do not wish to speak more on the subject, but the Supreme Court, I am sure, will evaluate the objections of the government lawyers and the petitioners and come to the right decision at the right time.

But meanwhile there are substantial aspects of the Post-Tsunami Operational Management Structure that can be implemented and it is here that you have a very important role to play. P-TOMS is a vehicle for development, for Post-Tsunami reconstruction. It is reconstruction in which you have a role to play.

The construction industry and many other parts of economy can be galvanized by this huge infusion of foreign assistance that is coming into the country and the six districts which are involved in the Post-Tsunami Operational Management Structure are districts that have already been affected by the conflict, by 20 years of conflict, and they have now been affected by the Tsunami.

The people living in those districts of all ethnic groups, all religious groups desperately need assistance and it is the conviction of the government that all of us should unite in order to ensure that the Post-Tsunami assistance that we have received should go directly to these people and we need to, therefore, work in partnership with all organisations including private business leaders in order to ensure that this is done.

There is therefore a great opportunity here for business leaders to participate in project proposals and their formulation at the district committees in which you can actively play a role with the GAs involved, with the other representatives of the government departments, with NGOs, including international NGOs and the representatives of the UN system who are represented on the district committees.

You can also help in the Regional Committee and finally in the High Level Committee. But most important of all, you can help in the implementation of the project proposals when the implementing agencies are given the contracts by the Regional Fund whose custodians will be the World Bank to ensure that those projects are implemented successfully for the direct benefit of the people.

As I have said peace is not the exclusive task of the government. It is the public who are the stakeholders and it is here that you have a very important role to play. What I propose to say this morning is broadly divided into four sections, (1) I want to talk about regional development, that's a very important component of the peace process and of the peace dividend that is so important. (2) I want to also mention something about the private sector and its role in the North and the East. (3) the global context and finally (4) I would make some concluding remarks.

We are all familiar with the refrain Colombata Kiri Apata Kekiri. This was something that was used as a theme in the Report on Youth Unrest some years ago. But it is unfortunately a refrain that we must continue to remind ourselves about because of the essentially Colombo-centric and Western province-centric skewed development that we have with us.

The Finance Minister in his budget speech last year talked about the share of the poorest 40 per cent in the national income having declined from 21 per cent in 1980 to 14 per cent in 2002, whereas the richest 20 per cent increased to 54 per cent.

There is a heavy preponderance of the Western province in its share of the national GDP, 43 to 49 per cent in the 1996 to 2003 period. The Northern Province in contrast had the lowest per capita of GDP of the country.

So it is important for our economic development planners not only to have pro-poor development strategies but also to have regional development strategies with their fundamental implications in the Sri Lankan context of meeting the aspirations of minority ethnic groups, especially in the North and the East. We are all familiar with the entitlement theory of the distinguished economist Amartya Sen.

It is upto us to ensure that this entitlement of the minorities in the North and the East and in the other regions as well are, in fact, met and I think regional leaders can by talking freely and frankly, as Mr. Tissa Jayaweera said, ensure that our policy-makers are able to take these considerations into account when the plans of our country are formulated, particularly, at Budget time.

Now there are many who claim that the peace dividend has not, in fact, reached the people and here the research done by the Economic Division of the Peace Secretariat tends to disprove this and I am grateful to Seneka Abeyratna and Rajith Lakshman of my Peace Secretariat who have made an analysis of the post-ceasefire situation and has shown that, in fact, it has triggered economic growth in the North and the East.

Of course it is only the beginning and much more can be achieved, but if you look at the GDP of the Northern province it grew by an average of 12.6 per cent during the post-ceasefire period compared to 3.4 per cent during the pre-ceasefire period. In the Eastern province the gross domestic product increased by 10.1 per cent per annum during the post-ceasefire period compared to 4.6 per cent during the pre-ceasefire period.

And in the North Central province which shares common borders with both the Northern province and the Eastern province, there was an increase of 8.2 per cent in the post-ceasefire period when you compare it with the -0.2 per cent in the pre-ceasefire period. The Northern province grew twice as fast as the Western province in respect of the annual post-ceasefire GDP growth 12.6 per cent vs. 6.2 per cent.

Of course it can be argued that they were starting from a lower base, but these are not the only three regions to have realised significantly higher GDP growth rates during the post-ceasefire period compared to the pre-ceasefire period.

I think it is plausible to argue that the increase in the average GDP growth rate of Sri Lanka as a whole from 3.9 per cent to 5 per cent in the post-ceasefire period was due largely to the exceptionally high growth rates realised collectively by the Northern, Eastern and North Central provinces.

So these findings are compelling evidence that the transition from war to peace has realised a substantial economic dividend in the three main provinces affected by the civil conflict from which the entire country has also benefited to some extent as reflected in the National GDP growth rate.

But there is an important sector-wide illustration that I would like to come to. There has been a phenomenal growth in the agricultural sector in real terms in the Northern province, 32 per cent per annum, and in the Eastern province 19 per cent per annum, compared to 4.3 per cent and 4.9 per cent respectively in the pre-ceasefire period.

Now data published by the Department of Census and Statistics shows a marked increase in paddy production in the affected areas during the transition period. In the Northern province paddy production annually average 138,000 metric tonnes during the post-ceasefire period compared to, something like half that, 65,000 metric tonnes during the pre-ceasefire period and in the Eastern province the post-ceasefire average was 752,000 metric tonnes compared to 619,000 metric tonnes before the ceasefire.

So the combined share of the North and the East in national paddy production is also significantly higher in the post-ceasefire period amounting to 31 per cent than in the pre-ceasefire period. The contribution of the North and the East towards food security of the country has also been very considerable.

Now I think it's important that in the sectors of industry and services also, you have a positive growth and that means a creation of employment opportunities in these two sectors as well.

Let me now move on to the private sector's role in the North and the East, because I believe that the Chambers can help, not only in providing an impetus for this growth, but in also getting us the data that we need on private investment, because comprehensive data on pre and post-ceasefire private investments are not easily available.

But in some sectors like banking, retail trade, information communication technologies, there is certainly an indication of private sector activity in the conflict affected areas. In the communications sector we looked into what Dialog Telecom has done as they were not operating in the North and the East before the ceasefire. But have now invested more than one million US dollars in the North and the East.

Of the 1.5 million Dialog mobile users in the country, 250,000 or 17 per cent are located in the North and the East alone. This is a very interesting statistic because the population of the North and the East combined is only 13 per cent of the entire country.

To be continued