Friday Sep 20, 2024
Friday Sep 20, 2024
Friday, 20 November 2015 00:00 - - {{hitsCtrl.values.hits}}
By Kulathunga Rajapaksa
As industrialists sometimes we get into a serious dilemma when we go through the articles published by our own economists. We always feel they think the best remedy for Sri Lankan revival is to close down all local industries. Even Subashini Abeysinghe’s article (appeared on 3 November, FT) is no different to the above thinking. They always want to open the gates and invite all foreign producers to flood with foreign goods with free access to the market. They always want Sri Lanka to open the economy even surpassing USA free trade practices. They always believe in ‘survival of the fittest’. That prevails only in the law ‘books’ in the jungles!
The biggest mistake we observe in her article is that she is really looking only in one direction. That is to open our economy in whatever manner without looking into the future of Sri Lanka. We wish to invite her to look into the incentives and facilities provided by all the governing parties towards the development of local industry, since independence. Have they followed safeguard measures which are commonly practiced by developing economies in the world? Below the given list will show where we are with reference to the local industry.
At any level we haven’t campaigned to promote local industries – ‘Be Sri Lankan buy Sri Lankan’ campaigns other than Tibetan Mahinda thero or Anagarika Dharmapala. We were not lucky enough to have Mahatma Gandhi to boost local industries.
Still our industrialist and local economist has failed to campaign in an impressive manner to introduce anti dumping laws. So the anti dumping laws are hidden inside a cupboard safely.
Still we are struggling to stop pesticide that is detrimental to the poor farmer family’s health. Now even this issue has reached a level beyond the control of our Government. This alone, shows how MNCs are carrying on regardless and are concerned only with their business prosperity and profits.
On how many imported items are the quality standards checked at the point of import? Even we do not have sufficient infrastructure to carry out the necessary tests in a speedy mode.
Our labelling policies have two standards; one for local and none for imports. Whatever efforts we carried on introduction of MRP for all imported items are still not implemented. Restriction of items near expiry date is not considered at all. Specified date limitation on the expiry date is not implemented. If MRP implements even under invoicing can be controlled to a certain degree.
When imports are entering with blessings from all authorities our exports are compelled to achieve very rigorous compliance that is not even visible in factories in the Asian ‘tiger countries’.
When rich countries look after farmers up to now with various ‘giveaways and subsidies’ our economists are keen to see the withdrawal of whatever few safety measures aimed at safeguarding local industries.
When fresh milk is more expensive in foreign countries than Sri Lankan prices how do the same countries export milk powder at a lesser cost of a litre of milk? In addition our bread prices may be still one of the lowest prices compared to the outside world. This cannot happen as wheat flour is either imported or is produced on imported bran. Therefore major wheat producers must be definitely enjoying a hidden subsidiary.
I do not think we can find a single country where they have not enforced control measures when the production is at the infantry stage. They have provided all necessary requirements and nurtured their industries until they reached the take off stage. The above milk food and wheat flour example even gives an idea of how the state is giving continued support even evading WTO rulings etc.
In the case of sick industries if the employment generation capacity is high even certain countries adopt measures to safe guard sick industries and revive it.
Unfortunately our labour laws are cannot be found even in developed countries. We are much more advanced. This has a very big impact on our cost of production.
Inconsistency in policies and sudden changes has effected drastically towards certain industries that has lead to termination of business ventures.
Everybody is aware that our cost of electricity is one of the highest in the region. Without correcting these disparities how can we be cost effective in Sri Lanka?
Have the patience to listen to business personalities
Always economists must have the patience to listen to business personalities to share the difficulties they have undergone to bring up certain local industries. The Government must request the economist to carry out case studies on successful local business ventures and it must be made compulsory to read material at local universities. If we practice this it will help us to build up so called economists with a love towards the mother country.
They must build up the practice of presenting local case studies to highlight how they have achieved success and how they have survived during the good times and bad times without a single job termination.
We as the business community are fairly satisfied with the current customs duty structure (accept a few handpicked errors and omissions); though we have reservations of enforcing certain prescribed duties. The customs duty must never be looked as a source income to the Government. We think duty structures to be aimed towards the growth of the industry. At the moment import duty is categorised on the following basis:
In Sri Lanka we haven’t heard about non tariff barriers. Even countries like Japan still adopt and India is a leading example for it. This point alone depicts how much our Chambers have failed playing the role of a ‘god father’ towards the local industries. This is a fact that all business personalities must feel shy about. In addition it shows how the trading community has overtaken and managed to become champions of opinion makers with the utmost help from our so called economist.
In addition in her article she is trying to highlight that the Government has imposed taxes to deprived customers from the availability of low price imports. This is in addition to the common argument of safeguarding inefficient industries. But when you look into some taxes, how they are called alone is itself explanatory about the weakness of this argument:
NBT – Nation Building tax
PAL – Airport Development Levy
CESS – Under Sri Lanka export development act
Instead of we must move towards encouraging and guiding selected industries where we can reach world standards. If these selected industries are given proper guidance we will be in a position to earn the same prestige and demand enjoyed by Sri Lankan Tea. The garment industry reached this level mainly because of the safety net provided at the initial stage. The quota system prevailed at the primary stage was a big boost. If these facilities were not available definitely we will be not be privileged to witness the current production from Sri Lanka targeting the leading giant brand names in the clothing industry.
In addition now we can see the emergence of our brands in the clothing sector outside Sri Lanka. It was mainly due to the correct action observed at the initial stage from the 200 factory concept and taking the industry to villages. If we have listened to the early critics of the garment industry the current development we achieved will be not a reality. Now the time has come to look at TPP (Trans Pacific Partnership) and what infarct it will have towards our garment industry from countries like Vietnam. We feel our economist must get involved with industries to develop our own strategy to find our way forward for similar issues important to Sri Lankan economy.
(The writer is the Managing Director, D Samson Group Ltd. He could be reached via email
[email protected].)
