Open Sesame Understanding the importance of opening up and the ETCA

The Prime Minister’s plan to create jobs

I would like to highlight the first of the ideas expressed by the PM, which is the creation of one million jobs. 

These jobs are to be created in a mix of manufacturing, services, trading, agriculture and rural development sectors. This is quite a big task which would require quite an input.

Though the path to develop the economy requires many reforms in the education, financial and labour sectors, these are more medium to long term objectives. What I assume the PM is thinking about is the immediate requirement to get the thrust industries, off the ground.

What one has to keep in mind is the fact that when an industry is to be set up or an existing one is to be expanded, often there would be a situation where the required human resources are not available in the country. One has to then decide if the project is to go ahead with the requirement met from outside or if it should be put on hold, until the local human resource is available.

Let me give an example, if we decide that we would set up a base for aircraft maintenance, apart from the massive investment, we would undoubtedly require professionals from outside. They would remain 

until the locals are able to fill the slots. As the industry grows, so would the revenue as well as opening a new opportunity for our youth to pursue.

I remember when Air Lanka was formed, we had many Singaporeans here to set it up. As we did not have sufficient pilots to fly the state of the art aircraft at the time, we flew alongside Singaporeans, Americans, Brits, Indians, Pakistanis, Iranians, Canadians and a whole lot more. 

As the locals got more experience, the foreign component was reduced. This is how any industry works.

No government is going to open job opportunities to foreigners keeping the locals out, provided they meet the standards. 

"The media too has not been very fair in understanding the Prime Ministers effort in trying to get the message across. However picking a fight with the media is certainly not the path to tread."

Therefore this imagined fear of Indians flooding the job market is being silly to say the least. However, there seems to be many who do not seem to know what its purpose is.

The Middle East is a classic example of how this system works. Have not the expatriates contributed towards the growth? Could they have grown without the expatriates? Did they have fears that Indians, Sri Lankans, Pakistanis and Brits would take their jobs?
Just for a moment think what would happen if we want to unleash the potential that lies in Trincomalee? 

Leave the professionals that would be required aside, hundreds of thousands of workers would be required to realize the potential. Just as much as the Middle East now employs outside workers, we too would have to seek those who would come and work here, as we would not have enough of our own to drive our path to development.

The Prime Minister did not really explain himself well, when he asked if those who opposed the ECTA or the Economic and Technical Cooperation Agreement, was against development. 

I guess what he meant was that those who opposed, knew exactly what the agreement is supposed to bring about, but sees a political opportunity to scuttle the government’s efforts, by spreading falsehoods, which in reality highlight the level of South Asian politics.

Thrust industries

Two thrust industries that have been identified are ship repair/building and the IT sector. I have been advocating ship building/repair for over two decades which many thought was a mad idea. I am glad that the Prime Minister has taken this up even at this late stage.

Ship repair though carried out in the country for quite some time has hardly grown as an industry, even after Dockyard was privatised. It is absolutely necessary to look into the reason why this industry of ship repair did not proliferate. One should also realise that it was the government that invested in the construction of the Dry Dock, where Colombo Dockyard operates from. 

I myself formed a company to undertake sub contract work from CDL (Ceylon Dockyards Limited), which was quite profitable.

The ship building industry is quite a different ball game from that of repairs. This is where the question of qualified manpower comes in. The required professionals for ship building hardly exist in the country. I think only the Moratuwa  University has a diploma course for Naval Architects and maybe some course within the SLN. 

The only naval architect that I knew was my friend Viraj Fernando of the 1971 JVP fame. This field of study is not a common field for locals and it would be sometime before locals enter this field. If shipyards and dry docks are established in a planned manner, what does one do to obtain the required professionals? The welders and fitters could be trained in the country, but would require trainers to come from outside. 

What about the naval architects and engineers etc? Do we wait for years until locals find this field of study attractive or do we obtain these professionals from outside?

It is my thought that the Prime Minister is quite right in wanting to obtain these professionals from India, in order to get this industry off the ground. The question of investment and funding though is not quite clear.

The IT sector

With regard to the IT sector the country is better off, as more institutions are turning out more professionals in this field. The PM has correctly identified this too as a growth industry. The plan the local IT industry has set itself is to increase the earnings of this sector to $1B. I think the PM is of the opinion that this could be further increased, by bringing in IT professionals from India. I however doubt if the Indian IT professionals would find SL attractive, as they mostly wish to have a stint in the west. Therefore it may be necessary to add some other benefits in order to make it attractive.

I cannot understand why the local professionals are worried about other professionals coming over to work in this country.  If one is a professional and is confident about one’s professional ability, the arrival of someone of the same profession only helps to raise the bar of that profession.

If on the other hand professionals do not want someone with more knowledge or better professional ability, it will only lower the professional standard in the country. With special reference to the IT sector, let me point out one important fact. Most gain knowledge in their fields of study and we are quite happy when we pass out as professionals. 

In my experience I have noticed amongst many that though they have knowledge, unless that knowledge is used in conjunction with one’s own imagination, that knowledge is not put to good use.
That imagination comes from one’s own upbringing as our education system kills the natural ability of a child to think. Some develop this ability on their own with experience. An important element in the IT sector is to be creative, some have it some do not.

What one needs to understand is that if we are to increase our capacity in this sector, the industry has to grow, and if that growth is obtained, with the participation of foreign professionals, what’s wrong with that?

The true test of professionalism is the ability to compete with the best in the world. As long as we are able to do so, we would be constantly raising our own standards.

Communicating the message

Having known the Prime Minister long time ago, he is not a fool and I found him to be an intelligent person, who has a deep concern for his country. He however was not quite interested in details, but would see the big picture. Therefore one should have a good set of officials, given the poor quality of the cabinet, to get things moving as it has already taken far too long to get started. Communicating is not one of the strong points of the Prime Minister and therefore a good idea could very easily be stillborn, as it has not been communicated in a manner that could be understood.

The media too has not been very fair in understanding the Prime Ministers effort in trying to get the message across. However picking a fight with the media is certainly not the path to tread.

My opinion is that the local media never understood what development was and how to get going on that path. 

It is due to that fact that the media only plays on hypothetical negatives. I, in fact started a newspaper to correct this situation, however the government at that time refused any form of advertising, thereby killing the paper.Even a good idea such as the Para-medic service which is to be launched with Indian assistance has not been communicated to the people and various conspiracy theories are abundant in the public domain. This highlights my point that even something that is planned in good faith can be turned into a conspiracy by ineffective communication and the media having its own agenda. There are many areas in which many may not agree with the Prime Minister, the way to express ones disagreement would be by arguing ones case based on solid substance and not on hypothetical jargon. The media for a start should try this method, which would draw a positive response from all concerned and move the debate to a higher level, rather than letting it go haywire, negative and purposeless.
 

Trade agreements

One important feature of the Prime Ministers plan involves Trade agreements to enhance trade and industry. It is a fact that these trade agreements are like putting the cart before the horse. Though we have been aware that the CEPA was initiated almost over a decade ago, and we have known that such an agreement would come in to force some day, what have we done to get ourselves ready for it? Absolutely nothing.

Having such a large market next door, obviously requires mechanisms to exploit such. This however has to be done in such a manner that our companies or companies that operate from Sri Lanka could benefit from such agreements. 

This is quite a different project which takes some time, as we have neglected this aspect completely in not developing strong local companies to meet this challenge.

The present situation of limited human resources to develop the above mentioned sectors as well as capital infusion would be required urgently. The framework agreement seems essential for Sri Lanka at this stage, and the fact that it is limited to the two mentioned sectors, should not be a reason for concern due to the above mentioned reasons. However the possibilities within the BOI framework should also be considered, before signing agreements in a rush.

I think just as much as we have this ECTA framework agreement with India for the two sectors mentioned, we should have one with China/Japan/Korea, for ship building, while ship repair could be spread a bit.

Reforms needed

I am certain the Prime Minister realizes that reforms in education are of primary importance to ensure the success of an economic plan. This however is a medium to long term objective as the immediate requires solutions now. There is also a little talked about enormous problem in the country which needs to be sorted out with much thought and tact. The question of negative attitude. Everyone notices it, most know it exists, but very few talk about it. Indiscipline amongst the people causes this negative attitude to proliferate among society.  This is a politically unpopular aspect to even try to solve. However, if left unattended, it would cause the development effort to suffer. Like the icing on the cake of negative attitude and in discipline, lies the fact of dishonesty. The moral decay in society is so great that many are of the opinion that it is correct, as no one has shown that it is wrong. Even the media reports things as they are, without mentioning what should be the correct thing to do. The reforms in the financial and banking sectors too need immediate attention as the financial system, with special reference to banking is not geared to industrial growth. Without reforms in this sector it is certain that no proper industrial development would take place.

If any government is serious about accelerating growth and development, an essential exercise would be to examine the causes that local companies in important sectors failed. One would then see that wrong government policies have had a direct impact on such failures. (The inadequacies of the banking sector as well as the poor standard of available human resources have been contributory factors for these failures. 

Therefore it would be unwise to neglect such an exercise as the same mistakes would be repeated over and over again.)

"Communicating is not one of the strong points of the Prime Minister and therefore a good idea could very easily be stillborn, as it has not been communicated in a manner that could be understood."

Some other quick starters

Mattala Airport could be turned into an aircraft maintenance facility, by establishing joint ventures with global reputed maintenance facilities with the likes of Hayco, Lufthansa, Singapore Airlines or even Airbus itself. 

The Oil Tank farm in Trincomalee could be refurbished and with refining capacity, which could increase the GDP quite a bit. Both these projects could be operative within two years if one wants it to bring returns soon.

I mentioned these two projects among many others, just to impress the need for a proper plan, which I think would come out, hopefully soon. The government should understand that time is of essence not only for them but for the people as well and therefore time should not be wasted by various political distractions. We have constantly been a nation in waiting, let us wait no more.

Conclusion

Though the Prime Minister has mentioned the government’s economic plan, he should subject it to the process of formulating a proper five year plan. Governments in Sri Lanka have often misled themselves often, by sighting a single swallow and thinking that summer had arrived. I hope they do not do the same with Shipbuilding. I would like to point out that the Philippines has over 150 ship yards in the country, with an abundance of welders, having been a late starter, while Sri Lanka has only one. The setting up of these ship yards takes time and construction of Dry Docks even longer. Therefore, while ship building is an industry that should be encouraged, weather it would be a quick starter and employment creator for the short term plan would mean that double the effort would have to be put in to meet the timeframe. One could see that establishing shipyards is a challenging enterprise, creating the institutions staffed by officials with a broad and positive outlook is in itself a challenge. I hope it is achieved in this short time frame.

In keeping economic plans alive, it may be necessary to arrive at some sort of understanding with the opposition with regard to the economic development plan, so that it would continue even with a change of administration, which would ensure growth for the country.  At the end of the day what matters is not how many multi-national companies came and invested in our country, but if we had created a system that paved the way for ordinary people to do extra ordinary things.

Let me end by saying that over the years, Sri Lankans have been made to understand that one could have the benefits of development, without development. The reality is that there are no short cuts to development; it requires intelligence, hard work, dedication and determination. Therefore let us keep an open mind and use our common sense for the good of all in this country.