Provisions for advanced technologies

Budget speech of Minister of Technology and Research Prof. Tissa Vitarana

The achievements of the President, as Finance Minister and members of the Government and the Treasury during the past four years should be commended. In the context of the global economic crisis, the oil and food crises, and the cost of the war against the LTTE, commendable economic development has been achieved. In particular the sustained growth exceeding 6% which only went down to 3.6% in 2009, when USA, UK and other European countries dipped into negative growth, is a significant achievement, specially for a small country with a limited market. The degree of infrastructure development had laid the foundation for future economic takeoff. The subsidies and welfare measures were not cut and the burden of the economic crisis on the people was bearable.

During this period, and in the preparation of the present Budget, we are also happy that the Government has discarded neo-liberal policies and not fallen a prey to IMF conditionalities. The fact that the IMF has given a US$ 2.6 billion tranche has been the basis of the Opposition's accusations that the Government has succumbed to IMF conditionalities. In fact the IMF of today is not the IMF that dictated terms to previous UNP Governments and actually stationed their economists in our Treasury to draw up the Budgets of the previous UNP Governments. Not only has the IMF come in for heavy criticism for its role in causing the global economic downturn, but its pro-US imperialist teeth have been lost due to the shift in the balance of global economic power away from the US Empire. We are glad that the IMF is acting in a more rational manner and it is on the basis of the Government's good management of the economy that the tranche support has been extended.

The LSSP wishes to commenced the Government for resisting the efforts of the UN and the EU to interfere in Sri Lanka's internal affairs, whether it be for economics, social or political reasons.

Development

The present Budget is really a bridging process between the 2009 and 2011 Budgets, with a vote on account and a Presidential intervention already covering seven months of the year 2010. This limited Budget has followed the line of economic development of the UPFA Government under the leadership of the President, Mahinda Rajapaksa that has been embodied in the Mahinda Chinthanaya.

It could therefore be described as the "UPFA development model". This model tends to approximately to the capitalist East Asian Development Model, which South Korea and Taiwan followed, but in reality lacks some of the key features of that model. Basically an attempt is being made for the state to intervene to regulate the market forces, both local and foreign, so that they can be harnessed in the national economic interests.

There is a combination of export promotion and import substitution. The Government has instituted direct and selective measures to establish and promote industries of its choice.

Knowledge

In the case of Korea and Taiwan the state has concentrated scant capital resources to develop strategic industries that would utilize the raw-materials and skills within the country so as to optimize the benefit to the economy. Accordingly some industries have been highly subsidized and directed by the Government. For instance emerging advanced technologies like Electronics, Information Communication Technology (ICT), and Advanced Materials were chosen.

Their own scientists and researchers, specially those working in USA and other countries abroad, were given the necessary facilities and encouragement to become world leaders in those technologies. The related industries were developed around this.

The Socialist Development State Model followed by China and Vietnam have in a similar manner achieved success. The basis of the success of all four countries mentioned has been the promotion of science, technology and innovation to achieve industrialization of optimally and in time, with maximal Government support, catching the new waves of advanced technology sweeping the world, such as electronics, ICT and biotechnology.

The present Budget has identified ICT as the technology to be selectively developed. While strongly supporting this move and accepting that it would create more jobs, both in the ICT field itself and through related services (BSO), by itself it would not suffice to make Sri Lanka a knowledge hub, as envisaged in the Mahinda Chinthanaya. New knowledge has to be created through scientific research and innovation. To achieve economic development on the East Asian model it is necessary to develop industries based on advanced technologies that result from scientific research and innovation. Thus in Sri Lanka besides turning to other advanced technologies like Electronics, Biotechnology and Mechatronics, we would do well to catch the new wave of technology that is sweeping the world - Nanotechnology

Rich

The rich countries as well as those that are rapidly developing into rich countries like Korea, Malaysia and Taiwan have all turned to advanced technologies as the basis for industrialization. These enable a huge return to be obtained for a given investment, far exceeding ordinary technologies. Thus while Sri Lanka has only utilized advanced technologies in 1.5% of its manufactured exports, Thailand has used 27%, Singapore and Malaysia have exceeded 50%, South Korea 70% and Japan 80%. Therefore it is vitally necessary that budgetary provision should be made to develop advanced technologies in Sri Lanka. I am happy to state that through the Ministry of Science and Technology, which is now continuing as the Ministry of Technology and Research, a public private partnership BOI enterprise, the Sri Lanka Institute of Nanotechnology (SLINTEC) has been established, with 15 local Nanotechnology scientists. Already within 9 months they have come up with technologies that can be the basis of value added industries, and 4 patent applications have been lodged in the USA.

For instance instead of exporting ilmenite as a low value raw-material, and importing value added products like Titanium Dioxide at high cost of our paint industry etc., it would be possible to produce our own Titanium dioxide and save foreign exchange while also earning a much larger income through its export.

While appreciating the special mention in the Budget speech of the importance of science, technology and research, it is regrettable that there has been no increase in the investment in science and technology related research and development, which remains at 0.13% of GDP. It is our hope that in the November budget this will be increased to at least 0.4%, with a future target of 1% of GDP. If this is done the reversal of the brain drain that is envisaged in the Mahinda Chinthanaya could be achieved in the scientific field.

Support

The importance given to the development and promotion of the Small and Medium Enterprise (SME) sector in the Budget is very welcome. It is recognized even in developed rich countries that more employment can be generated for a much lower investment by promoting the SME sector. In Sri Lanka like in most countries, despite the investment to promote this sector the outcome has been disappointing as the enterprise tend to collapse with time in the face of better lower price products entering the market using newer technology.

To meet this challenge and also compliment the President's attempt to achieve rural uplift through the "Gama Naguma" program, the Ministry of Technology and Research has been carrying out the "Vidatha" program throughout the country. Vidatha Resource Centres have been established in 257 of the 331 administrative divisions in the country, to transfer modern technology to the village SMEs. Though due to financial constraints, only 100 of them have been fully staffed, the outcomes have been satisfactory. More than 4000 existing entrepreneurs whose enterprises were collapsing have been able to acquire better technology through the Vidatha Centres and revive their ventures. In addition more than 7000 new entrepreneurs have emerged during the past 5 years. 136 technologies developed by scientists in the research institutions and the universities, which were not reaching the village entreprenerus, have been effectively transferred to them.

In addition through the Vidatha centres the quality has been improved by the SLSI, the packaging by the ITI, and the entrepreneurship by the IDB. Banking support has been provided by the People's Bank and also through the Savidana Cooperative Bank, set up among the Vidatha society members as part of the Vidatha program. Marketing support has resulted in Vidatha products reaching the super markets locally, and also foreign markets in Korea, Japan, the Middle-East and Australia. More than 26,000 mainly rural young people have had a free computer training, so that they can access new knowledge and also obtain scientific advice through direct contacts with the researchers. The Vidatha program too should receive more funding.

Implementation

The Budget proposals must be properly implemented throughout the country if the necessary benefit is to be achieved. One of the major factors that has contributed to the breakdown in Governance and the increase in crime, bribery and corruption and poor administrative performance, besides the war and the culture of violence, has been the 1978 Constitution. The replacement of this Constitution has become essential also from the point of view of getting the cooperation all citizens for the development effort. To achieve this, the people must be united, free of racism, religious and caste animosity on the basis of a truly Sri Lankan identity. Therefore the LSSP strongly urges that the APC/APRC process be continued to its conclusion drawing in the newly elected representatives of the Tamil and Muslim people, free of LTTE terror.