Economic development in post-war Sri Lanka:

Challenging but rewarding task

Sam Samarasinhe, Director, Techno Management Consultants

How a country that has won the most difficult of battles - the battle against terrorism - would approach its next obstacle - economic development - in the wake of a global economic crisis is under the scrutiny of many economic experts. However, developing an economy that has been nearly crippled by a three-decade-old war is easier said than done. Many economists have presented proposals that are too unrealistic for our country.

Sam Samarasinhe, Director, Techno Management Consultants (Pvt) Ltd, shared with us the approach he would adopt for economic development in post-war Sri Lanka, with his many years of experience working in many countries. An engineer by profession, Samarasinhe played a major role in the economic development of Singapore in the 70s. He is also a member of MENSA.

"In the 70s, Sri Lanka was more developed than Malaysia and Singapore", explained Samarasinhe. But in a matter of decades this has changed." Sri Lanka has overcome the biggest hindrance to economic development - terrorism. But the development of the Sri Lankan economy will be challenging", said Samarasinhe. "The President has started developing ports, airports and the transport sector under his own initiative and foreign funding", but much more needs to be done in other sectors, he said.

He explained that this is due to the inefficiency of most Government ministries and departments. "Most senior officials of ministries and departments are inefficient and completely uninterested in the development of the country", said Samarasinhe. He explained that facts are often swept under the carpet by some corrupt individuals.

Samarasinhe explained that to develop Sri Lanka's economy, 12 sectors have to receive attention simultaneously. Any lapse in maintaining a parallel would result in irreversible repercussions.

Education

Ninety percent literacy rate would be of no meaning if tertiary education is available to only three percent of school-leavers, as is the case now. "This should be increased to at least 20 percent in the short term and 30 percent in the long term", explained Samarasinhe.

In the 60s and 70s Sri Lanka was a country famous for producing intellectuals for the world. But today Sri Lanka has come to be well-known for producing housemaids and labourers. The only way to remedy this, as Samarasinhe explained, is to establish private universities.

Although this may seem like an unwise decision, it would bring guaranteed beneficial results in the long run. And although it may seem that students who are incapable of affording high profile private universities are at a disadvantage, in the long run government universities would be forced to raise their standards to be able to compete with private universities. "This is exactly what happened in Singapore and Malaysia" explained, Samarasinhe.

According to him a country such as Sri Lanka would require at least 50 such universities fulfil the needs of the job market Samarasinhe emphasised that 10 to 20 percent of the allocations of these universities should be reserved for poor children.

"A housemaid can be turned into a doctor with as little as Rs. 600,000, he said. "Rather than sending uneducated and undereducated individuals, abroad it would bring in huge amounts of foreign revenue to send abroad well-trained and educated individuals."

Research and development

Sri Lanka's allocation for research and development is 0.14 percent (Rs. 56 million) of the gross domestic product. "This is just enough to pay the salaries and cover the day-to-day expenses of personnel involved in the field of research and development", said Samarasinhe. Singapore has allocated US $ 2.6 million from its gross domestic product for research and development.

Import of manufactured goods

"If we are to be called a developed country this should be increased to 0.5 percent immediately and 1 percent within three to four years." In fact, Samarasinhe pointed out that low funding in this particular field is a major reason for the brain drain and collapse of industry's in Sri Lanka.

Export of manufactured goods

High-tech exports are a key indicator of the development of a country.

More than 60 percent of manufactured goods exported in Singapore and Malaysia are high-tech. Only 3 percent of all manufactured goods exported from Sri Lanka is high-tech. Samarasinhe recommended that this should be immediately increased to 20 percent in the short term and 50 percent in the long term.

"Sri Lanka can easily manufacture high-tech goods like mobile phones. But we choose to spend millions annually on importing such goods", said Samarasinhe.

However, this is easier said than done. In a country where the consumer is used to high-quality imports, will they be willing to settle for anything less? Samarasinhe says that it would not be easy. When the manufacturing standards are raised and the local market is secured, Samarasinhe said that the world market is not too far off.

"We must learn to value Sri Lankan goods, even if they are of somewhat low quality at first. The quality would have to be raised according to increasing demands. This is exactly what happened in India", said Samarasinhe. The Singapore government owns over 65 percent of the economy, revealed Samarasinhe. Only 35 percent is owned by the private sector.

Health

One person in every family in Sri Lanka is sick. This was not so 40 years ago. The main reason for this, as pointed out by Samarasinhe, is the soaring price of drugs. A viable solution to this problem would be to convert 20 percent of government hospital beds into paying wards. "But the rate should be half of that of private hospitals", he said. And also, the profits should be made available to poor people.

Samarasinhe also emphasised the significance of conducting studies in alternative medicine for common illnesses such as high blood pressure, diabetes and cancer. "There are many herbs, spices and fruits generally available in Sri Lanka that have amazing healing properties.

The Department of Ayurveda should explore every possibility to develop alternate local cures for at least these common illnesses," he said.

Transport

This is a sector in which Sri Lankan development has shown very low productivity. To increase its productivity the number of vehicles entering the city should be restricted as well as the number of passengers in private vehicles such as cars increased. Three-wheelers should contain at least three passengers.

Samarasinhe explained that Sri Lanka could, due to its location be a major oil refining country. "There are many other advantages to developing oil refineries in Sri Lanka. We can save on imports and can become a leading exporter of petro-chemicals, some of the most expensive products that come from oil refining."

Planning implementation

"Every developed country has achieved its development according to a set of development plans", explained Samarasinhe. "For every ministry there is a development plan spanning five to 10 years. In Sri Lanka most development is ad hoc."

He stressed the need to plan and develop Sri Lanka according to a proper long-term plan.

Security

To keep such threats to national security such as the LTTE at bay, Sri Lanka should have development committees at every Grama Sevaka division, suggested Samarasinhe. "These committees should produce development plans for local authorities. Voluntary work in the committee by various development officials in the area should be made compulsory."

Small and medium industry

Seventy percent of Sri Lanka's workforce in the industry comprises small and medium industry labour. "The development of any country depends on its government's support for small and medium industry", explained Samarasinhe. This could be in the form of finance, business development, research and development and marketing. Samarasinhe warned that if the situation is not immediately dealt with the whole industry could collapse in a matter of years.

Agriculture

With no seasonal changes and plenty of sun and rain, Sri Lanka is one of the best places for agriculture. But according to Samarasinhe the agricultural methods we have adopted are rather backward and inefficient. "We have many experts, but no support or authority", said Samarasinhe. "Sri Lanka has 1.8 million acres of cultivable bare land."

The Department of Agriculture should develop a master plan for all land, recommending suitable crops for every piece of land, while also providing technical, financial and marketing assistance. He also recommended that inter-cropping be made mandatory especially for coconut and rubber estates due to the limited land.

Alternative energy

Substitutes for petrol, kerosene and gas could easily be manufactured with the technical know-how available in Sri Lanka. Raw material required for alternative energy development, such as sugarcane, manioc, sweet sorghum and castor, is easily cultivable.

Samarasinhe explained that other alternative energy sources such as biogas, solar and wind power would be expensive in the initial stages, but once the infrastructure is in place power generation expenses are minimal. "We could use the money we spend on crude oil to obtain technology; besides technology is getting cheaper by the day."

Construction

Samarasinhe recommended that every divisional secretariat contain a housing scheme, for which the plan should spread over ten years. "This would provide job opportunities for skilled workers in the area."

Foreign investment

The current form of foreign investment - where only labour is paid for and no technology transfer takes place - is hardly beneficial. "In countries like Malaysia, Singapore and Thailand most investors subcontract their work to local industrialists, facilitating technology transfer,"he said.

Embassies

Samarasinhe emphasised the importance of embassies as links between development in foreign countries and Sri Lanka. This is currently not visible, he said.

Contribution by the educated and intellectuals to development

Within the last 30 to 40 years, thousands of individuals have left the country, because they felt that their suggestions for Sri Lanka's development were neglected. To prevent this situation from continuing, Samarasinhe suggested that a committee consisting of a group of educated intellectuals be appointed to consider and monitor its implementation.

Sri Lankans abroad

More than two million - 90 percent of Sri Lanka's intellectuals - are domiciled in various foreign countries. "We have never attempted to tap this resource for the development of the country. This should be done through embassies," Samarasinhe said.

Customs

Import of manufactured goods is a major problem for industrialists in Sri Lanka. "While some industrialists pay taxes and levies for raw material some racketeers get away without paying a cent," said Samarasinhe.

Wind power would be expensive in the initial stages, but once the infrastructure is in place power generation expenses are minimal.

He said that not only should this be stopped immediately, but also heavy taxes imposed on the import of manufactured goods.

Holidays and productivity

Sri Lanka has a large number of holidays. As a first step towards development, Samarasinhe suggested that this should be cut down by 70 percent and a program introduced to increase the productivity of Sri Lankan workers especially in the public sector.

Quoting Minister Champika Ranawaka, Samarasinhe said that only a handful of intellectuals in Sri Lanka are capable of providing knowledge and advice towards the country's well-being. And even fewer can actively implement such plans with dedication. Only a few officials who had been appointed as decision makers are educated, intelligent, honest and capable of fulfilling their tasks.

Most senior appointees are between 50 and 55 and have economic, health, mental and other social problems, said Samarasinhe. "At a time when they are struggling to solve their own problems, matters of national development would be of little interest to them."

Samarasinhe explained that countries such as Thailand, Malaysia and Singapore solved this problem by appointing honest and efficient individuals as young as 30 years of age to high positions in ministries, government departments and other organisations. The same could be applied to Sri Lanka, he said.

Samarasinhe said that it is the duty of all intellectuals in Sri Lanka to provide the Government with accurate facts on Sri Lanka's development. "If this happens the President would be able to develop the country in as little as five years."

- SP