Sri Lanka needs to put more money into agriculture and ‘aggressively’ pursue a political solution – BPA chairman

Putting more and more money vigorously into agriculture and enabling the once-fallow lands of Sri Lanka’s North-East to live-up to their reputation of being the ‘Rice Bowl’ of the country, are two options this country could avail of to offset the ill-effects of the growing global economic crisis, The Business for Peace Alliance chairman Suresh D. de Mel said.

He explains to this journalist in an interview that while everyone needs to heed President Rajapaksa’s call to rally round him in his national development effort, there needs to be an ‘aggressive’ push towards a political solution on the part of all because the state winning the war would bring little or no benefit if Sri Lankan society remains disunited.

Excerpts of interview:

Q: What are the current obstacles to local business growth?

A: The number one problem is the lack of human resources. Starting from the middle management to blue collar labour, this drawback applies. In Hambantota in the South where I have based my business, this is certainly true.

Q: What are the categories of labour that are currently required by enterprises?

A: This labour shortage extends from plantations to fisheries, and the need is great for both skilled and unskilled labour.

Q: What accounts for the dearth in these categories of labour?

A: I think they have just moved out of town. Either they are working in other parts of Sri Lanka or they have moved overseas. A lot of construction workers come out of the South but most of them are now in the Middle East.

We have been trying to make representations to the government to find a solution to this problem. In the factory that I run, I have a lot of issues with the turnover of labour and training. Because a lot of the labour is interested in office jobs or computer jobs. When they do come to work they are more in a ‘five days a week, seven hours a day’ kind of mentality rather than have the mindset we need for industry. However, we need persons who are willing to work six days a week and do a turn of overtime every once in a while. That is the way to meeting the demands on us.

Q:Do you see the current defence budget hampering economic growth in the medium and long terms?

A: Sure, it will. Defence budgets have all along affected growth. We really need to see an end to this cost. The phenomenon of our human resources leaving this country too is tied up with this conflict. I am of the view that there ought to be a more aggressive drive to bring about a political solution. I believe this is an opportunity to put some resources into a non-violent solution. It may be easy for us to say this, but I feel not enough is going into a political solution.

Q: But what if the government takes up the position that the LTTE has been invited to the negotiating table but that the Tigers have been continually shunning negotiations?

A: President Rajapaksa was sincere when he called on the LTTE to enter the negotiating process, while delivering the budget speech recently. This is something the LTTE has to listen to. He even spoke in the Tamil language and called on them to down arms. It may not be practicable for the LTTE to give up arms overnight but there could be some ‘in-between steps’ where they may not give-up arms now totally but eventually do so.

Even in the East the parties that came to the government did not give-up arms totally. These are complicated deals it is true, but for a sustainable peace there should be a negotiated settlement. A military victory alone would not help reconcile the existing differences. If you consider South Africa, Northern Ireland, Nepal etc., there was considerable civil society involvement in bringing about social harmony. If we win the war and society remains in a state of disharmony, I don’t think we have won the battle. So, for a sustainable peace, I believe there has to be a ‘bottom-up’ peace process.

Q: Would you consider the 2009 budget as having a positive orientation?

A: The reduction in fuel prices is bound to help in reducing the cost of living. There were also measures to encourage local businesses. This is something we were clamouring for, for a long time. When we opened our economy in the mid-seventies I believe we opened it far too wide. Our products had to compete with a wide range of imports. We didn’t protect our local industries. A good example is the local handloom industry. Not only had they to compete in the labour market, they also had to compete with foreign yarns which were flooding the market. Therefore, the cess on imported clothing is a positive move because it will help in further developing the local handloom and garment industries.

On the other hand, when the state increases the taxes on imported salt we need to be concerned. Salt is not something you and I could produce. It is a big business and not a small or medium-scale one. Just because the tax has been increased on imported salt, I am not sure whether local production of salt will improve rapidly. I believe, before local production in salt increases we are going to see a rise in the cost of living on that account. This is because of the insufficiency of local production. This would not happen in the case of the garments industry because we have a local production capacity in garments.

There is also going to be a tax on wheat. We all know that bread is almost a staple diet here. So, lf wheat prices rise, bread prices would also follow suit. Eventually, local rice production may increase in response to this development but in the short term we may have an inflationary situation.

State reasoning behind these measures is apparently good, because what is intended is a rise in local production But it is the last sentence in the budget proposals where the President invites the country to join in the national development effort which is of crucial importance. No matter what the government gave or did not give, if the people do not rally round the government and see it through, if half the country is going to pull in a different direction, we are not likely to get anywhere.

This is what I tell the business community too: let’s join in and work very hard in helping the government. If the business community works with the President I am sure he will work with us.

The budget has set aside a lot of money for export development. This is a good thing. In the eighties it was the incentives for exports that brought about the industrial revolution of those times. President Premadasa took the process to another extreme by taking industries out of Colombo. But this policy did not enjoy any continuity. Subsequent governments did not have the vision of moving out and giving of their best. Then the trend came about of everyone going overseas. This is where things went wrong. It is frightening to see the number of innocent local girls on any flight abroad. This is the labour market I am in. I employ 300 such workers, and they could be migrant workers in the Middle East. I feel so sad to see the mind-set of these persons. I could pay much more than what one of these migrant workers earns if I am not saddled with the present cost of training and retraining. Even as things stand, I think my female employees earn as much as any migrant worker. Migrant workers, perhaps, may be able to save more, but they cannot avail of any leave for two years. The lot of a local female employee is much better.

Q: Do you see the current global financial crisis affecting Sri Lanka?

A: I am sure it would. We are not immune to its effects. First, if our export markets shrink there is not going to be any growth in the local exports sector. Second, we are very dependent on donor money. Donors may have pledged funds to Sri Lanka for the next couple of years, but three or four years down the road such funds may dry up. So, I think in that sense the situation for Sri Lanka is going to be critical.

Besides, the growth in the Middle-East is going to slow-down. The labour requirement there might decrease. There are a number of issues of this kind. There was an overheated economy in Asia sometime back. Because Sri Lanka was not that overheated, we became somewhat competitive, in regard to labour. There was an impression that this country was a pretty good place for labour, since labour costs were high in the more fast-growing economies. The belief among investors was that our growth was slow enough to enable them to get a quick return on their investment. Now growth is going to slow down in Asia and other countries in Asia are going to be as good as Sri Lanka, in terms of investment. So, these are indirect issues which, I believe, would affect investment and business in Sri Lanka.

Nevertheless, I see tremendous opportunities for growth in Sri Lanka’s North-East whose full economic potential went untapped over the past 30 years. These areas, after all, were referred to as our ‘Rice Bowl’. One could grow anything anywhere in this country. There is no reason why Sri Lanka should starve, given the extent of our agricultural resources. So, putting money into agriculture is the need of the hour, and the 2009 budget too makes provision for this. Every budget has encouraged agriculture and if investments are from now on made in agriculture we have a fabulous opportunity for growth. This would enable us to offset any global recession.

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