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Amunugama unveils investment promotion plans

Investment Promotion Minister Sarath Amunugama last week outlined his future plan on the promotion of investment in the country. Since there is no national plan for any sector the plan is what the minister deems best and it changes each time a new minister assumes office.

However, Minister Amunugama's vision seems more practical and timely. He has given priority to the IT industry and has moved into action already and issued approval letters for several IT projects and signed two contracts.

The Minister has also reintroduced many initiatives that had to be taken many years ago - an IT park close to the Katunayake Airport, fiscal and other incentives for investors and more importantly strict instructions to clear the BOI bottlenecks and approve any prospective IT project within 48 hours.

The minister says that the IT and tourism industries are the thrust industries for Sri Lanka. However, the real need is that this stance should remain unchanged at least until the term of the government is over. If the thrust industries of any economy change with the change of ministers, it will not help achieve any economic target.

Therefore our wish is that at least these policy initiatives continue for the remaining years of the government.

The minister's discussion with the business delegates was open to the media. During the discussion, we witnessed how the different agencies in the government follow different paths to achieve the same objective.

At the meeting, the chairman of the ICT Agency Prof. V.K. Samaranayake disclosed programs carried out by the ICTA for the development of the IT industry. The ICTA comes under the purview of the President.

He spoke of his planned tour to India within the next few weeks to discuss with the Indian Government to get support for the IT industry. Minister Amunugama also plans to visit India for the same purpose to discuss collaboration with private sector IT companies.

There was no prior communication between the two institutions and finally both agreed to meet in India and work together.

This is neither new nor strange phenomena in this country. This is especially so when subjects and responsibilities are divided into the smallest segment among the large cabinet of ministers. The problem is how this affects the overall development effort of the country. Therefore these plans will materialise only if he could streamline the dispersed strength in the sector.

On the other hand the planning of the IT industry should be done by the professionals in the field because the sector is entirely different, purely technical and changing rapidly. Selecting the location for the IT Park is questionable when the nature of the business is considered.

Because no physical output is exported or imported as well as within the industry the physical movement of the professionals is also minimal. Teleconferencing facilities can be used to totally eliminate the physical movement of professionals.

Easy access to and from the airport is important for everybody, but there is no particular importance for the IT industry. Today economists propose the IT industry to overcome hard economic barriers of land lock pockets where export, import and movement of people are extremely difficult. In the IT industry both ends are connected by fibre optic networks or satellite technology.

Therefore the location of an IT park should be decided on considering other vital aspects of the industry such as supply of human resources, proper environment for these knowledge workers, capacity to expand R&D and accommodation facilities.

Kandy or Peradeniya which are nearby towns to Minister Amunugama's village would be more suitable for this IT park than the busy industrial city of Katunayake. However, the decision to follow the proven Vipro model in the construction of the IT Park and all other considerations is commendable.

Last week the World Bank released a book titled "From Envisioning to Designing e-Development" by Dr. Nagy K. Hanna based on a study he carried out on e-Sri Lanka and the IT sector of Sri Lanka. The book gives valuable insights of what the IT industry of Sri Lanka needs today.

The business opportunities in the industry include primary software products and service and IT enabled information services - call centres, data entry, data processing centres and BPO and business support services.

The book says that opportunities in the industry are vast and expanding. The global outsourcing market grows at an annual rate of 30%. By 2008, BPO and software offshoring together are projected to reach US$ 300 billion.

The book recognises the following key advantages that Sri Lanka possesses for ICT development; comparatively open economy, attractive fiscal incentives and talented labour pool. Education standards are already higher compared to the region and labour cost is lower.

However, the telecommunication and education remain the biggest constraints in the industry. Though the telecommunication and Internet access charges have reduced the rate remains high compared to India. Lack of international bandwidth has been a major issue.

Poor quality of telecommunication is another issue. Limitations and deficiencies in IT and English education are also recognised as a major issue.

Business delegates too raised these issues at the meeting with the Minister. Some said that the bandwidth cost alone accounts for 30% of the cost and as a result the investment is not viable. Lack of human resources is a major constraint and the country produces less than 50% of what the industry demands.

Hence the solution for the issues lies with more diversified areas and the responsibilities are with many ministries. Solutions are also within controversial reforms that have been proposed for many decades.

The government alone will never be able to solve the issues at the speed the industry demands. Therefore for the Investment Promotion Minister's plans to materialise much has to be done with the blessings of the authorities of the entire political and economic frontiers.