How to integrate the North with the rest of the economy

I visited Jaffna last week along with some prospective investors and members of the trade chambers affiliated to the Business for Peace Alliance. Despite the much touted Northern Re-awakening or Northern Spring, there is hardly any evidence of reconstruction - at least not in the Vanni. Of course there are complex problems such as mine clearing before the IDPs can be re-settled in their former habitations.

Firstly development planning requires the availability of data. There has been no data collection for the last several decades. Even the population of the Northern Province is not known for a certain. What is the density of population in the Jaffna peninsula and in the Vanni? What is the population in the Vanni? Are there figures of the number of colonists who originally held land under the major irrigation schemes like Iranamadu, Visvamadu, Kanagarayankulam, Mutthiyankaddu etc.? Where are the colonists? Are they all Internally Displaced people (IDPs)?

These major irrigation schemes have been badly damaged by the war. Several tank bunds have been damaged and require to be rebuilt. The irrigation channels taking water from these tanks to the cultivable paddy lands are in neglect and have to be cleaned up and restored. The A9 is not the only road that matters. The village roads and paths leading to the colonization schemes have to be reconstructed. The number of houses to be rebuilt for occupation by the colonists should be ascertained.

One speaker at the Jaffna forum said there are over 200,000 unemployed in Jaffna. Is this figure valid? The Department of Census & Statistics should carry out surveys to ascertain the facts. In the absence of such data how can businessmen ascertain the size of the market? In fact one local businessman said that his home appliances had sold well in the beginning but more recently his sales are stagnant. Someone pointed out that the market would have reached saturation since people do not buy several appliances for a household.

How many middle class families are resident in the Jaffna peninsula? So a priority need is for good economic statistics which could be undertaken by the Central Bank and the Department of Census & Statistics. What is the cost of transport of goods from Jaffna to Colombo and vice versa? Businessmen complain that when the LTTE was operating they extorted money from the lorries. Their complaint is that these costs have not come down. They seem to think there are levies by the Army as well. Perhaps this requires verification.

Costs can be brought down only when there is complete freedom as before for people and goods to move to and from Jaffna. The sooner this day dawns the better it would be for incomes in Jaffna. It would also bring down costs of goods brought from the South stimulate more business. The greater the trade the greater the prosperity of the regions both in the North and the South which enter into such trade for exchange enhances economic value. Trade is enhanced by reduction of costs and hence the transport costs for both goods and people must be brought down.

The tried and tested way is to allow freedom of movement without checkpoints and clearance from the Ministry of Defense. Lasting security does not arise from barbed wire fences or military checkpoints but from national reconciliation between the two major communities. These checkpoints and minor irritations they cause will be tolerated for a while but there is no doubt they will breed resentments as we all feel when we are checked in Colombo. We must build a united Sri Lanka where all have equal rights and equal opportunities without discrimination.

The blatantly unfair standardization for university entrance caused bitterness and anger among the youth. Peace can be built only on justice. The rebuilding of relations between the north and the south must begin with rebuilding economic and social relations between individuals of the two communities. There must be free interaction between them. After the A 9 was re-opened there are daily visitors to Jaffna from the south. I saw several special buses from Kandy, Negombo and Kuliyapitiya parked on the roads overnight. It would seem there are about five hundred visitors to Jaffna from the south every day.

This is a good sign. Corporate bodies in the South like Hayleys, John Keells Holdings and the commercial banks have established or re-established their business. On a trip to Point Pedro I saw the cultivation of paddy, mostly rain fed. Bananas, red onions and chillies are being grown and one conglomerate is said to be interested in purchasing bananas for export. Another big company in the chicken farming business is interested in promoting the cultivation of maize.

Fishing has always been an important source of income for the people of these areas. The fishermen have suffered much because of the restrictions on fishing which prevailed during the war. These restrictions are now withdrawn. Many fishermen from the Pallai Divisional Secretary’s area were displaced when the Army and the Navy expanded the High Security Zones. Many are still in refugee camps. The sooner they are re-settled, fishing would increase as an economic activity and increase the national Gross Domestic Product.

Indian fishermen have intruded on our fishing areas in the absence of local fishermen due to restrictions placed on them going out to sea. The fishermen among the IDPs should be re-settled in their former habitations as soon as possible. They cannot be re-settled except in the coastal areas to carry out their occupation. There is a need for deep sea-going fishing vessels and ways and means of meeting the demand for them have to be explored. The fish could be canned and a local canning factory would be the most economically viable.

There is a shortage of capital. Although the Investor Forum hoped to attract expatriate Tamils, there were hardly any. Two expatriates from Australia were both Sinhalese. Apparently the expatriate community lacks confidence in the policies of the government and the restrictions on freedom would have to be removed and normalcy of the past should be restored before we can expect foreign investors to come in.

The foreigners who participated at the Investors forum were not allowed to travel by road and had to fly. Why is this restriction? Some say it is to prevent them seeing the destruction in the Vanni. But the foreign media are perhaps already aware of such conditions. Complete freedom of movement should include freedom for NGOs and INGOs to visit the Vanni and Jaffna freely without seeking the approval of the Ministry of Defense. The government just doesn’t have the kind of money that is required to carry out the reconstruction and resettlement work in the Vanni. In any case why should the public alone have to carry the financial burden when these NGOs are willing to assist? These organizations are not willing to channel funds through the government. They want to be directly involved in the disbursement of their funds. One could hardly blame them with all these allegations of corruption being freely and even irresponsibly being flung at the government by the Opposition.

Fantastic figures of the extent of corruption are being thrown about. The usual method of estimating the extent of corruption is by determining it as a percentage of the capital expenditure of the government. According to World Bank studies the most corrupt states would have about 30% of the capital cost leaking out by way of corruption. The Annual Budget for 2008 provided for Rs 232 billion as the total Capital Expenditure. The figures touted by the Opposition are way above 30% and hence the Opposition should not mislead themselves by drawing expenditure schemes on the basis of non-existent savings by curbing corruption.

Was the Investors Forum held last week premature? Several investors thought so. Apart from the restrictions on travel requiring approval from the Ministry of Defense and the checkpoint at Omanthai, there is the military in the streets. They also carry out patrols in armored cars. All this smacks of a country which is far from normal. Foreign investors or for that matter even expatriate Tamils are unlikely to invest in this environment. There is also another danger - the military presence in the streets. Experience of the American troops in Japan, the Philippines and South Korea have shown that when the soldiers interact with civilians in the streets minor incidents can take place with individual soldiers and citizens. These could erupt into violent incidents and brawls.

Let us be careful and keep the troops as far as possible away from the civilians. If the soldiers are withdrawn from the streets and kept only to guard strategic places like the airport, the ports and bridges, the risk would be minimized. It would also remove a sense of being under military domination. If we want reconciliation we cannot afford to have the military deployed in the streets. Yes, the military is deployed in the south as well. But this doesn’t generate the same feelings. The deployment of troops in the city also should be reconsidered.

If we want to have one country for which our soldiers fought and died we need to now review our policies to the Tamil minority and address their grievances. Unfortunately both candidates have not stated how they propose to address the issue of devolution. The President keeps silent of whatever commitments he made to the Indian government. But the speeches of the loudmouthed Wimal Weerawansa will be interpreted as his sentiments by the International community and the Tamil voters as well. His campaign seems to lack coherence.

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