Thursday Nov 28, 2024
Thursday Nov 28, 2024
Friday, 4 May 2018 00:00 - - {{hitsCtrl.values.hits}}
By Upali S. Wickramasinghe
This is in connection with Prof. Ajith de Alwis’s column in the Daily FT of 12 April. I am in agreement with what he had expressed, but have reservations on the example he had selected in relation to exporting rubber and importing erasures.
On my own, I would have included: we disposed the fertiliser manufacturing factory, brick by brick, within three years of commissioning it, and import fertiliser; we ban the paddy farmer from growing paddy and import 250,000 tons of rice and offer a market for 350,000 tons of paddy to the farmer in Country X. With a 2,500-year-old history, we are the greatest.
When this country exports rubber, there is a concomitant income, which goes to finance the necessary imports. Selecting import of erasers is a figurative example. We should be big in the production of rubber-based products – tyres and tubes for vehicles.
Though we are present in the market, our factories churn out only a meagre quantum of the country’s requirement since the tyre factory was set up during 1970-’77 period. Governments in power since then, headed by the UNP and the SLFP, have treated this industry as a poor relation to be shown the door.
The blame for not improving the rubber industry rests on the shoulders of the Ministry of Planning, Ministry of Plan Implementation, the Rubber Research Board of Sri Lanka, Rubber Research Institute and the plethora of other public institutions involved in research and development.
There is a plethora of universities with faculties involved in management, which include marketing as a field of study. The faculties of Engineering and Chemistry could provide the basics for the study and R&D work involved. The Institute of Marketing should make its own contribution. Unfortunately, I have not come across an Institute of Production. There was a department called the Department of Rubber Control – I do not find it listed in SLT’s Directory.
Though I have included many bodies which should be held responsible for this neglect, I believe the prime fault lies with the Ministry of Planning or Ministry of Plan Implementation. Prior to 1994, until one critical official came to control the country’s finances, the Ministry of Planning was staffed by officials from varying fields well versed in their particular field of speciality. Since this said official assumed duties as the head, the Ministry of Planning has been transformed in to a sub-department of economic sans all other specialities, which had resulted in the inability of the country to identify weak centres and remedy them. Years ago, the said official undertook to provide the President with a White Paper on Alternate Fuels - it rested with the undertaking.
The cancer had spread downwards. By now, the policies of the 1977 Government should have been revisited to help the economic wellbeing of the citizens of this country, and not those of other countries. We famously look after the economies of China and South Korea, and sometimes Taiwan, India and Malaysia. To join the queue is Vietnam – yes, the Vietnam of Kim Phuc, the seven-year-old girl who ran naked when napalm was dropped. When we should encourage our farmers to grow paddy, at least for the sake of food security, we ban paddy farmers from cultivating paddy and import 250,000 tons of rice, as happened in 2017 and has been happening over the years.
With a fast-growing population, we attempt to replace chemical fertiliser with compost, without taking into consideration the logistics of nutrition for plants. It has taken just three years for our politicians to learn a lesson – thank you to the voting population of Sri Lanka for bringing this foolish factor into focus – the first time that our voting population had done so, in the 70 years of franchise. Now I request the voting population to seek the help of the Gods they believe in – and they do believe in Gods – to send the person/s responsible for this foolish act to the tenth hell to enjoy the benefits of what they propagated.
I know that the traditional varieties are far superior to the common varieties found in the market, because I consume that rice. I purchase a particular variety at Rs. 165.00 per kg. Working out the economics, I find the price attractive. I accept that the traditional varieties of rice are superior in quality and usefulness compared with the fast-growing varieties, which are mostly genetically-modified varieties, but the technology to increase yield per acre, to reduce the lead time between planting and harvest should have been attended to before discouraging the farmer from the cultivation of popular varieties was proceeded with.
Having said that, I must also note that Ven. Athureliye Rathana and Asoka Abeygunawardena of SEMA promised to provide rice from the traditional varieties at Rs 60.00 per kilo in the not too distant future. That was three years ago, but three years later the price per kilo is Rs 220.00 – 225.00 or more, whereas the popular varieties which were selling at Rs 60.00 per kg now retail at about Rs 100.00 per kg.
Those are the areas where I agree with Prof de Alwis. There are areas that I do not agree. Those involves his comments on the (i) State Industrial Corporations (ii) This country being an agriculture-based country.
Let us take the (i) State industrial corporations:
I will deal with the comment made by Naylor on Technology. Yes, the Government of the day made terrible mistakes in the technology paid for. The decision to framework the type of technology and the machinery was left to local engineers without the proper exposure to the project for which they were seeking equipment. Sometimes the local engineers seems to have been over slung by the foreigners who installed the factories. The other course adopted seems to have been to get at manufacturers’ brochures and prepare the tender documents accordingly. The possibility of consulting people who were in the know – e.g. India, which had a more widespread and experienced industrial base – never entered the equation.
I will refer to two examples: (a) when the steam line to an industrial establishment was being laid the expatriate engineer who installed the factory, laid the steam lines underground, without any insulation. When the factory went into production, the steam lines had to be relaid. This was told to me by an engineer who worked at the NIBM. Apparently the engineer who installed the factory was familiar with the ground situation in the hot Middle Eastern desert. The local engineers who had to certify the work as being properly carried out prior to the final tranche of the payment, was either overruled by the expatriate Engineer or was not interested.
Example (b) is connected with the factories where I worked – the distilleries of the Sri Lanka Sugar Corporation, both at Hingurana and Kantale. Some peculiar reason made the engineers who prepared the specifications for the two distilleries call for a power alcohol producing factory – in other words, a factory that could produce dehydrated ethanol. That was in the late 1950s and early 1960s. Dehydrated ethanol is used today to blend E85, a fuel mix with 85% dehydrated ethanol and 15% petrol. The additional cost of producing dehydrated ethanol is in par or higher than producing 96% ethanol, furthermore, dehydrated ethanol is very unstable.
India, from whom we could have sought advice, had been in the ethanol and dehydrated ethanol industry since World War II. In fact, Sri Lankan engineers attended two seminars held in India, sponsored by the UN, well before the quotations for the two distilleries were sought.
The said factories were equipped to manufacture dehydrated ethanol but not retain the ethanol produced in that state, even though within five seconds of production the dehydrated ethanol deteriorates. Years later, it was reported that there was a demand for very clean alcohol for many purposes, cosmetics, medicine and even to manufacture gin and vodka. The party that supplied the factories had a very easy solution, an activated carbon column and a rectifying column – all money. This factory, were finally in possession of three rectifying columns.
The State-owned industrial institutions had a further weakness. The top management i.e. the Board of Directors was made up of people, not based on their qualifications or abilities, but on the connections with the party in power or with the Minister. I was “fortunate” enough to have (a) an alcoholic with no educational qualifications – not even GCE (OL), (b) a tailor, (c) a Karawadu mudalali, (d) a pimp (I mean this literally) and also (e) a stockist for a multinational corporation, as Directors. Only on two occasions was an employee of a State-owned industrial concern ever raised to the Board of Directors. One example was the CTB – he was pushed out with the change of the Government in 1970; and the other was at the National Paper Corporation: he faced exit with the change in the Government in 1977.
Things have not changed even today. If one peruses the composition of the Board of Directors of an economically critical Government-owned Institution, one has to be happy that it is still operational. The Auditor General had commented on such a weakness embedded in the Board of Directors of the Petroleum Corporation. The mantra offered to correct the weakness is to sell them to the private sector or to a foreign party. The better alternative, of correcting the messy local top management by appointing professionals from within the institution to the Board of Directors and holding the them responsible for the wellbeing of the institution, never enters the equation. Such solutions never whisk past the noses of those in power, leaving aside whisking past the brains of the politicians or the economic advisors to those politicians. Our politicians joins the cabal of Don Pofiro Diaz who famously said “Everything for my friends: to my enemies, the law,” and that of General Obregon, who said “No one can resist a cannonball of 50,000 pesos.”
No doubt we are in this pathetic plight. Which such profound thinking we do not need enemies.
Let us now come to (ii) this country being an agriculture-based country.
Against all publications to the contrary, and the efforts of politicians and economists of the Liberal school, I believe that this is an agriculture-based country and our wellbeing lies there. Once again, our downfall started with the liberal economics of 1977, which neither of the post-1977 Governments, be they of the UNP or of the SLFP, had a desire to correct. The only person who attempted to rectify the situation, somewhat, was late President Premadasa.
Yesterday, during a conversation with a friend, the problems involving the supply of raw materials to a coconut arrack distillery came up. This is a problem faced by all the distillers who use coconut toddy as a base. It seems to reverberate even in the Jaffna peninsula, going by the heartrending plea by S. Sivamohan of the TNA. If properly developed, the coconut and palmyrah industry can help to offset a major portion of our national debt. They could be money spinners. The expatriate Tamil and the expatriate Sinhalese could be the key via media to build a lucrative export industry. The majority of expatriates do consume alcohol, which is in keeping with the culture in those countries.
The supply of palmyrah toddy had been crippled as a result of the proposals in the national budget of 2015, and the supply of coconut toddy had been crippled by the fast-creeping hotel industry, which is clearing coconut lands to build hotels. The coconut arrack industry now faces a problem with the lands for replanting coconut, resources for tapping etc. The Tapper’s Training School that was established by the 1970-77 Government was abolished no sooner than the Government changed in 1977. It should have been refurbished, providing the tapper with dignity or finding people who were willing to get into the profession. An attractive income from the occupation is one way of providing the dignity that had disappeared. The work of the tapper could be promoted by replanting so that short plants, easily accessible, are tapped.
I am still to hear of any person questioning the bonafides of the UDA, the Local Authorities, the Finance Ministry, the Planning Ministry, the Divisional Secretariat, the Provincial Secretariat or even the Members of Presidential Secretariat or of the Cabinet in permitting the hotel trade to destroy coconut plantations and depriving raw materials for a traditional industry with great export potential.
On the other hand, what do the trillions that are dumped on the hotel industry contribute to the nation’s coffers and as sources of employment? These so-called investments carry many a tax concession, which the local industry is deprived of. Take any of the recently-built hotels where billions had been spent. How many units of employment are provided for the locals per billion of rupees invested, 100 or 200? Leaving aside the visible labour how many women are provided – another 40-60 per billion spent as capital? Make no mistake, supply of sex partners is a part of this industry. Keeping track of employment for the women in the Sri Lankan travel sector, what is visible is that expatriate women are dominating the trade.
With the change to a liberal economy, one sector that suffered was the paddy sector. The Government determined to curtail the cultivation of paddy with the 2015 budget. The inability to sell to obtain a reasonable price for the produce and storage facilities for the produce hampered the progress of the sector through the last 30-40 years or so.
There was the Paddy Marketing Board, which was supposed to purchase the farmer’s paddy and store them in the interim. That work was hampered by the disposal of the storage facilities which the Paddy Marketing Board had. This problem was worsened by the mismanagement within the Board. Proper administration would have been the solution to the mismanagement. Cultivation of specified varieties of paddy, determined by the market forces, would have been another part of the solution. If that was done, the farmers could resort to milling and selling paddy from their area without resorting to the services of the middleman, i.e., the mill owner. The majority of undergraduates and graduates originate from these families. Their services should be obtained to help the farmer with the post-farming sector.
One area that the farmer complains is over the cost of harvesting. The Japanese have modified the grass-cutting machine to harvest paddy. I believe with this minor modification one man could harvest more than five acres per day at a lower cost than when using the tractor based machine used today. These are possibilities that the Agrarian Services department, The Department of Agriculture and the faculties of Agriculture should concentrate on.
Now to come to my main argument.
A book published in 1949, identifies 162 industries and uses for ethanol, i.e. where ethanol is a raw intermediate material. Since 1949, petroleum-based material would have replaced ethanol in some of those industries. If we could develop at least ten of those industries, where ethanol is used, we could develop a flourishing agro-industrial base. An agro-industrial base, based on paddy, which is a material suitable for the ethanol industry.
The post-1977 liberal economics has destroyed the balance social structure we had. The destruction of the agro-based economy and the fast increase in the population has resulted in the migration to the cities, in our case Colombo. This has resulted in slum dwelling – both among the poor viz Slave Island, and among the rich, the apartments that are attempting to reach the sun/moon in height. What happens if there is an earthquake?
What all this means is that our administrators have failed in their duties. Since the administrators are university graduates, the universities too have failed. Prior to the Local Government elections I saw two advertisements with the signatures of university lecturers, whom I identify as being from the various Faculties of Arts, canvassing for a particular political party. Except for a few, perhaps six, none of them have ever raised their voice regarding the problems of major scale that our country and society is faced with. Another proof that the Faculties concerned have failed.
The taxpayer pays for the education of about 35,000 or more undergraduates at the moment. It is expected to upped to 50,000 in the near future. Is the country getting its money’s worth?
(The writer can be reached at [email protected].)
