Japan's Wakon-Yoosai and Sri Lankan industry

In the late 19th century, there was a leading philosophy among opinion leaders in Japan; called "Wakon-Yoosai", which means Japanese heart and Western learning. When Japan opened her door to the outside world in 1860s, is exerted a great effort to quickly learn science, technology, administrative system, etc. from the Western world in order to make the country strong enough to maintain its independence.

While this westernisation went on fairly successfully, there came out an argument that it is not a right direction to try to totally Westernize Japan, neglecting the country's valuable traditions and spirit. In order to harmonize the efforts of learning from the West while maintaining Japan's spiritual values, academics created the words "Wakon-Yoosai". "Wa" means the old Japan and "Kon" means heart or spirit. "Yoo" means Western world and "Sai" means talent, science and technology, or materialistic capability.

I personally knew the late Honourable Lakshman Kadirgamar only for one year and half. But fortunately, I could have frequent and very personal exchange with him in that short period. It is Mr. Kadirgamar who reminded me of the almost forgotten Japanese thought "Wakon-Yoosai". Nobody embodies than Mr. Lakshman Kadirgamar the Sri Lankan way of Wakon-Yoosai, a man of Sri Lankan heart with Western learning.

He took, as I saw it, the ethnic problem as purely a Sri Lankan problem, which should be solved by Sri Lankan people with a good support of the international community, but not by international community. He received the highest level of Western education and lived a life of Western civilisation. Yet, he seemed to have always thought of the dignity and sovereignty of the country. His successful initiative to protect the Buddha image from commercial abusing was a good example.

Once, I frankly told him that the bilateral relations between Japan and Sri Lanka had been too much overwhelmed by Japan's official development assistance to Sri Lanka and that we should work to depart from aid-oriented relations to people to people relations based not only on development cooperation but on cultural, business, tourism, and intellectual exchanges. Thus we could expand and deepen our mutually beneficial relations.

The Foreign Minister, being delighted by my way of thinking, completely agreed to that and said that from now on let's make "widening and deepening", the keywords of our policy on Japan-Sri Lanka relations.

He later declared this policy on September 10th, 2004 in Tokyo. I think that Mr. Kadirgamar and I shared the view that this country, though not sufficiently developed in economy and needs foreign assistance for some more time, has valuable cultures, traditions, natural environments, and potential human resources, and with them we could and should make our relation to be even more equal-footed and mutually beneficial one.

Balance

As embodied by Lakshman Kadirgamar, it seems to me that "Sri Lankan heart with Western learning" can be a useful guidance for the development of the country. The essence of this philosophy is a good balance between Western learning and Sri Lankan heart.

In the contemporary world, no country can enjoy welfare of people without developing its economy through international trade and investment. This is how both advanced and developing countries expanded their economic capacity and strengthened competitiveness. Sri Lanka also has been learning from Western (including Japan) knowledge and technology and engaging in trade and capital activities with the rest of the world.

Still, I should say, Sri Lanka has not been as successful as some of ASEAN countries in its economic development. There should be several reasons for that including the unfortunate ethnic conflict and inconsistent policy on infrastructure construction. But, I think that the underlying problem here is a difficulty of well managed balance between Sri Lankan heart and Western or foreign learning.

Japan and some ASEAN countries did not attain its advancement by just putting itself at the disposal of Western ways but by finding best mix between Western ways and its own ways.

The purpose of foreign learning should not be just to continue to learn from foreigners and create some businesses in between, but to make use of foreign knowledge and skills for the development of the country by yourselves.

Foreign capital flow and assistance is not always conducive or sometime even harmful if you don't build your own industry on them. Where money comes in, there are certain people who can make business out of that, but the question is whether and how effectively that money is utilized for development of industries and jobs of the Sri Lankan people.

Japan went through experiences of so called bubble-economy in 1980s, where companies and traders could become richer and richer by just trading lands, houses, golf-club membership, etc. Such a bubble-economy has left little substantial benefit to the people of Japan because it was driven by flow economy and not much by industrial production.

Sri Lanka is not in bubble economy now, but I see a similar problem in a part of this country. In the top ten companies in Sri Lanka, there are only two manufacturing companies and others are all banking and other services. In the top 50, there are only 17 manufacturing companies and other 33 companies are making profit in banking, insurances, trades and other sort of services.

Some businessmen may scold me for my bold argument, but by and large, banking and trading are not adding or creating much value by themselves. These services are of course indispensable for the country's economic activity, but dominance of such service sectors with relatively few manufacturing industries indicates the dependency on flow economy and very possibly on foreign capitals.

Explore potential

Sri Lanka has developed such major industries as plantation, gems, garments and tourism and smart businessmen can make a lot of profit in these industries. But there are not sufficient Sri Lankan industries on which the majority people can work and live well. For that you need more to develop a kind of industries which activate the potentials of human and natural resources of this country to the maximum extent.

They are industries of more indigenous, more manufacturing and more value-adding nature. You have to create value in this country if you like to bring welfare not to a small group of people but to the majority. People as a whole cannot live a welfare life just on flow of money coming in and out. You need Sri Lankan heart in your economy and industry. That heart can create values for Sri Lankan people and the world.

All of present major industries like tea and rubber, gems, garment, tourism, etc. will continue to be extremely important for the Sri Lanka economy. Tourism, for instance, has much bigger potential to be developed and though not a manufacturing industry, can create big values if it successfully involves more local communities and manufacturers.

In various sectors, I am sure, there should be thousands of good companies, either indigenous of foreign, which contribute to the creation of job, gain foreign currency and the economic growth in the country. Let me introduce a few examples of a Sri Lankan firm with Japanese investment which could be models for most needed industries in Sri Lanka.

FDK Lanka

FDK Lanka (Pvt) Ltd., operating in Katunayake, produces high-tech parts like floppy disk drives, rotary transformer for VTR, and optical communication components. FDK employs 2,300 workers in the Katunayake factory and records annual sales of two billion rupees, all of that are exported to US, Europe, Japan and Southeast Asia.

This company was established in 1990 by a Japanese entrepreneur, Mr. Katsuhiko Kono, the present President of the company. FDK's remarkable success in high-tech production and worldwide sales can be attributed to many reasons. But the most significant reason is the availability of labour forces of high quality. Sri Lankan workers are outstanding in their precision and persistence, which are essential to production of delicate high-tech devices. On top of that, the firm made many innovative efforts in order to strengthen its competitiveness.

It has built and keeps big space of factory dust and germ free with tight air control and multiple doors. Further, it started in last November to introduce "Kanban System" or Just in Time (JIT) system for its production line. This "Kanban System", invented by Toyota Motor in Japan, is a production control system to supply just necessary items, with just necessary quantity and just in time, as to minimise excessive stock, waste of production, and overall cost.

This system sounds simple, but requires sophisticated planning and the closest coordination between workers and teams. According to Mr. Kono, when "Kanban System" is completed (now introduced up to 30 per cent), the productivity of FDK will jump by five times or more.

Workers eagerly cooperate to complete the system because they know that the gain from a productivity hike will be reflected upon their salary. With all these challenges and success, I would say, FDK is one of the most promising models which indicates a right direction of Sri Lankan industries in future.

Noritake Lanka

Noritake Lanka Porcelain, established in 1972, is more widely known to the public than FDK because it has a way long history here and its products are familiar to households. Noritake had been contributing to Sri Lanka's industry and economy in various ways.

It has created jobs (now 1,200), it has introduced Japanese porcelain technologies and transferred them to other local firms, it gains foreign currencies by exporting 80 per cent of the total products, it uses mostly local materials except gold, thus creating additional local works. Noritake built factories in Ireland, the Philippines and Sri Lanka besides its original factory in Japan.

As I was told, among the three factories abroad, Noritake Lanka is most successful and now a major production centre for the whole Noritake Porcelain. The main reason of the success here is again high quality of labour forces, which are excellent at precise and persistent works. Noritake's success coupled with the FDKs may indicate promising possibility of new industries such as high-tech porcelain devices for electronics.

Tokyo Cement

The third example of more needed type of firms I knows Tokyo Cement. Everybody knows Tokyo Cement but it is not a high-tech company and a cement supplier may not be a very attractive industry for the younger generation.

However, firstly, cement production is a very essential industry for the development of the whole country. Tokyo Cement supplies 30 per cent of total demand in Sri Lanka. By only this fact, the company can be said to have made a great contribution to the development of this country.

Secondly, and more importantly, Tokyo Cement actually produces cement in this country rather than just importing finishing product and packing for sale. Tokyo Cement manufactures two thirds of its production in its Trincomalee factory by mixing clinker, plaster and volcanic ash then firing and processing them.

The factory's operation is short of complete production but goes through a half production, different from other many factories which just bag imported finished cement.

To rely on imported finished products is on easy way to meet demands, but it costs the country. If you don't produce or add values in the country and easily rely on imports of finished products, you have to continue to borrow from outside.

That is why value adding industry is essentially important and should be encouraged in this country. Cement industry is just one example, and there should be many industries where this country should explore possibility of full production or value adding production.