Sri Lanka is facing perhaps the most difficult and challenging economic, political and socially decisive times in its peacetime history, marked by depletion of foreign exchange reserves and Government revenue, and a sovereign debt crisis. The crisis has had a devastating impact on the lives of the people, and its magnitude and potential demand immediate remedial action to ease the painful burden on the general public. The current crisis is principally due to the lack of a rational, consistent and coherent national policy, besides several decades of mismanagement of the economy. Recent events such as the Easter Sunday bombings and the Covid-19 pandemic have exacerbated the situation with escalation of the Ukraine-Russia conflict and accompanying rises in food and fuel and shortages in world market posing further threats.
Thus, there is an urgent need to get on with medium to long-term steps to resurrect the economy while providing essential immediate relief to the victims of the unprecedented crisis. We should recognize that the current monetary problems of the Government and the sufferings of the people are symptoms of a deeper malaise in the real economy. It is of paramount importance to correctly determine the causes of the malaise in order to overcome the prevailing lackadaisical attitudes and attend to the real economy and its determinant factors.
Science and technology (S&T) is the prime driver of and key to development in the three main sectors of the economy, namely Agriculture, Manufacturing and Services. Hence, the National Science Foundation, the premier national institution mandated to promote S&T for the socio-economic development of the country and well-being of its people, has assembled a team of senior scientists, technologists, professionals, entrepreneurs and community leaders in the country with expertise and experience in the relevant fields to deliberate on the state of the economy and ways to overcome the crisis and rebuild the economy through immediate, short- and medium-term interventions. They are indicative of direction. Details have to be worked on in the process of implementation.
Overarching and sector-specific recommendations that emanated from the deliberations are presented below for due attention of and action by the relevant authorities.
1. Immediate adoption of an evidence-based policy making approach
Political expediency rather than economic imperatives have driven national policies since Independence, making them ad hoc and aimed to address short-term issues superficially in order to secure and consolidate political power at the cost of long-term damage to the economy. Where foreign aid was involved, policies tended to be donor-driven and top-down with minimal local stakeholder consultation, lack of transparency and inadequacy of safety nets. Lack of coherence and cohesion of policy, policy uncertainty and policy instability are factors that inhibited FDI for economic development as investors look to consistency in policy regardless of change of Government. Hence the following are of prime importance:
Evidence-based policy formulation drawing upon scientific and professional knowledge and experience available in the country.
Appointment of a high-powered multi-disciplinary advisory body comprising competent members from relevant institutions such as the Institute of Policy Studies (IPS), National Science Foundation (NSF), Sri Lanka Association for the Advancement of Science (SLAAS), National Academy of Sciences (NAS), National Research Council (NRC) and National Innovation Agency (NIA) as well as from relevant professional bodies, academia and industry.
2. Introduction of STEAM education in schools
Introduction of STEAM (Science, Technology, Engineering, Arts and Mathematics) education in schools is important to provide students with crucial future-ready skills and an array of new career possibilities. Integrating enterprise and entrepreneurship programmes into the concepts of STEAM education will enable students to critically analyze problems and create real-world applications leading to business start-ups and wealth creation. Thus, STEAM education constitutes the bedrock of industrial growth and sustainable economic development, and it should be incorporated into the national school curriculum without delay.
3. Infusion of science and technology to development
Sri Lanka spends only about 0.1% of the GDP on R&D and its high-tech exports account for only about 1% of total exports, which are abysmally low compared with those in most of the countries, even in Asia. Hence, the following are crucially important to set the country on an upward trajectory of development:
i. Increase expenditure on R&D up to 1% of GDP over the next five years.
ii. Bring all R&D and allied institutions which are currently compartmentalized and scattered across several ministries onto one platform or coordinated network, thereby facilitating transformation of inventions into innovations and developing multidisciplinary value chains for commercial and social benefit.
iii. Bring all R&D institutions under the Sri Lanka Scientific Service in order to advance the cause of science for national development. Personnel from any other service or profession can be co-opted as and when necessary and relevant.
iv. Build capacity and capabilities in product design engineering (PDE)
Most high-income economies have a strong PDE and manufacturing company base. Well known high revenue PDE companies such as Toyota, Volkswagen, Apple and Boeing drive national economies through high-tech exports. They are not R&D companies, but relentlessly customer-focused PDE companies which use commercially available technologies (e.g. carbon fibre cloth, high-strength aluminium, computer chips, sensors etc.) “to design and certify a product once, and build and sell millions” to customers worldwide. Sri Lanka has only a few successful PDE companies such as Lanka Transformers, Neil Marine, and Orange Electric. This narrow manufacturing base should be expanded as a matter of high priority through introduction of PDE-based economic growth policies and production of mechatronics product design engineers. This will pay rich dividends in the medium term.
v. Establish dedicated recycling industrial facilities to transform Sri Lanka from a linear to circular economy thereby ensuring zero waste and eco-friendly development.
vi. Establish a conducive and enabling environment for research by eliminating impediments to international cooperation, granting tax incentives for R&D including advanced laboratory equipment and introducing a green channel to expedite the funding and procurement processes related to R&D.
vii. Establish a mechanism to productively utilize all national R&D facilities and resources to address national R&D needs and channel solutions and innovations emanating from such efforts for national development through a smooth and cohesive value chain.
4. Export facilitation and prudent utilization of foreign exchange
i. Negotiations with bi-lateral and multi-lateral organisations and appropriate global funding organisations to attract investment with high ROI.
ii. Use of foreign exchange especially targeted to meet the essential needs of high priority areas such as agriculture, food, energy, pharmaceuticals and raw materials for industry during the crisis phase.
iii. Facilitation and promotion of import substitution industrialization and export-oriented industrialization (i.e. rubber products, coconut related products, electronics and electrical components, boat and ship building, food and beverages, including engagement in specific segment/s of the global manufacturing value chain etc. paying attention to core competencies and competitive advantages.
iv. Introduction of a new export development plan under the aegis of the Export Development Board incorporating incentives and mechanisms to fast track export processes, paying special attention to value addition and market potential.
v. Setting floor prices for commodity exports to avoid under-invoicing and over-invoicing of imports.
vi. Introduction of a mechanism to buy pawned gold when auctioned by local banks to prevent it from being lost to the country through various channels, thereby enhancing the national gold reserve.
5. Governance, procurement, productivity and efficiency
The following are proposed to deal with the key issues and maladies due to poor governance.
i. Introduction of e-governance in a way that ensures transparency, which will enable cost effectiveness and improved performance of SOEs.
ii. Mandatory publishing of financial accounts of all SOEs, along with the audit queries of the Auditor General and the responses thereto with provision for people to raise questions and suggestions about their performance on the respective websites or a dedicated website for Government accounts.
iii. Strict and regular monitoring and evaluation of progress of major and medium-sized public projects using governance scorecards. Public sector institutions should publish data on physical and financial progress and the impact of projects in electronic and print media at appropriate times in order to enable public scrutiny. Names of all key officials including the minister and secretary in charge should also be given. The Ministry in charge of the subject of Planning and Project Implementation should be adequately staffed with competent persons to carry out the above task assessment effectively and meaningfully.
iv. Introduce a whistleblower policy so that any corruption or fraud can be promptly investigated and appropriate action taken irrespective of the position and rank held.
v. A Central Agency should be immediately set up for review of all public expenditure. Efficiency and productivity processes should be set in motion in public institutions with the immediate introduction of performance management systems.
vi. All ministers should have an expert advisory body including specialists and policy analysts to advise them on crucial decision making. The NSF along with relevant institutions can propose the composition of such an advisory body for the ministries relevant to S&T.
vii. Appointment and recruitment to key positions in public sector institutions and statutory bodies should be strictly based on merit without exception. Moreover, there should be no more MP’s or Minister’s list when filling public vacancies which are tantamount to a violation of fundamental rights.
6. Value chain approach to development
A value chain deals with the full range of activities that are required to bring a product or service from conception, through the intermediary phases of production, to delivery to final consumers, and final disposal after use. This is a holistic and integrated approach needed to achieve success in any enterprise. However, most of the interventions in Sri Lanka have been made in an ad hoc and piecemeal manner resulting in lackluster performance in practically all sectors of the economy which comprises almost 50 main clustered areas of production. Analysis of the already available data will show areas with high growth potential. Therefore, it is proposed to establish a “Value Chain Task Force” for formulation of a comprehensive development strategy and mechanism along with an action plan for the high-priority, high-impact interventions needed at this critical juncture with the participation of the key stakeholders.
7. Inclusiveness and competent youth representation
Inclusive political participation is not only a fundamental political and democratic right but also is crucial to building stable and peaceful societies and developing policies that respond to the specific needs of younger generations. It is essential that young people are engaged in formal political processes and have a say in formulating today’s and tomorrow’s policies in order to make a difference in the longer term. For young people to be adequately represented in political institutions, processes, and decision-making, and in particular in elections, they must know their rights and be given the necessary knowledge and capacity to participate in a meaningful way at all levels. Therefore, inclusion of adequate youth representation in an appropriate manner in all institutions in the political, social, economic and technological fabric of the country should be ensured.
8. Circumventing and managing anarchical conditions
If addressing the immediate issues of reduced/non-availability of gas, fuel, food, medicines and other essential items is not done immediately, an anarchical situation could engulf the whole country. Symptoms of such a situation are already manifesting itself with an increase in violent and aggressive conduct and a breakdown in law and order. If the situation persists, a state of anarchy could erupt. It can be unintended and spontaneous or preplanned and organised.
Therefore, we strongly recommend immediate discussion with mainstream print and electronic media and those who create and manage social media content and delivery to deliver non-sensational information. They should provide balanced coverage including some of the positive developments and innovative solutions. They should also contain a sociological content to help people manage emotions and interpersonal relationships. Support mechanisms via social institutions such as Sarvodaya, SANASA and other community-based organisations should be used, and their experience and standing utilized. However, this should in no way be used as a pretext to curtail the freedom of expression and to have political control over free media.
9. Immediate address of power and energy availability
Consumption and efficient use of energy will remain central to future efforts to promote economic and social growth in developing countries.
i. Holding direct negotiations with oil-producing countries by a high-powered competent negotiating team.
ii Fast tracking solar, wind, bio-energy and mini-hydro projects in the pipeline and new projects with credible private sector institutions to promote and produce green energy
iii. Transport of fuel and other cargo must be done by railway at night instead of by bowsers and lorries, to save fuel and reduce distribution cost.
iv. Quickly develop a supply chain for charcoal, pellets, briquettes and such value-added products as well as for bio-ethanol, bio-diesel and biogas through focused R&D for use as an alternative to LPG and petroleum fuel. Use of wood charcoal in place of coconut shell charcoal should be promoted, since the latter is a foreign exchange spinner.
v. Establish energy plantations (4th plantation crop), particularly in degraded land for production of dendro-thermal energy, using fast-growing tree species such as Gliricidia and early successional species which can also serve as Lungs of the Earth in order to gain carbon credit.
vi. Promote the use of biogas, making use of household and municipal waste, as is done at the Kaduwela Municipal Council. Other MCs can embark upon similar projects to generate electricity from municipal waste. This, besides offering a sustainable and rewarding solution to municipal waste management, will earn carbon credit, and hence Dollars, for the country.
10. Immediate and short term interventions for improved food and nutrition security
Sri Lanka has around two million farmers comprising mainly small holders who contribute about 80% of the food production. Agriculture accounts for 25% of the workforce of the country, yet contributes only about 6% of the GDP due to its low productivity and poor value addition. Hence, ensuring food security under the present circumstances is a formidable challenge. Adoption of the following will mitigate the impact of the current crisis on food and nutrition security.
i. Determination of food and feed requirements, food production and food deficit/surplus in respect of the major food crops at district and national levels. This is required to understand the magnitude and gravity of food and nutritional insecurity and its spatial variation and to ensure equitable food distribution. (For instance, only about 10% of the food requirement of the Western Province is produced within the Province and the deficit, i.e. 90%, is met by food produced in other areas and imports.)
ii. Identification of food crops and their varieties, i.e. cereals, pulses, yams, vegetables and fruits, that are most essential to food and nutritional security and import substitution.
iii. Determination of the agro-climatically and edaphically most suitable areas/fields for cultivation of the crops and their varieties identified under (ii), to enable matching of crop and land for optimum yield.
iv. A rapid multiplication programme of high-quality planting material to meet the increased demand. This is extremely important for paddy and due attention should be paid to collect adequate seed paddy from this year’s Yala season harvest to meet the need in the coming Maha season which is about 80,000 metric tons.
v. Identification of outstanding enterprising farmers in each AGA division who have consistently produced relatively high yields, particularly those who adopt good agricultural practices (GAPs), including integrated farming and integrated nutrient management with the support of relevant institutions and promoting outgrower schemes.
vi. Making available expensive limited inputs, e.g. chemical fertilizers, pesticides, weedicides, fuel for machinery etc., on a priority basis to the most outstanding selected farmers in areas with high agricultural potential for the crops/varieties in each district. This will ensure maximum Return On Investment (ROI) and minimize unregulated, uncoordinated, ad hoc crop production for commercial purposes under sub-optimal and marginal conditions.
11. Develop a roadmap for critical export-oriented manufacturing
Sri Lanka is endowed with valuable natural resources including Graphite, Ilmenite, Rutile, Zircon, Quartz, Feldspar, Clay, Kaolin, Apatite, Silica Sand, Garnet, Mica, Calcite and Dolomite. However, presently, large quantities of these minerals are exported with hardly any value addition, thereby the country loses a great opportunity to earn considerable amounts of foreign exchange; therefore, setting up a basic Chemical Process Industry (CPI) in Sri Lanka is a high priority concern. Two of the on-going industrial revolutions in the world are presently on our soil, namely Biotechnology and Nanotechnology, thanks to some strategic investments. These two investments can significantly add value to our minerals as well as bio resources. With a concerted policy drive, it is feasible for those industries to contribute about 5% to the GDP in the medium term.
The recommendations and observations above are derived from our deep concern over the unprecedented nature of the crisis and existential issues involved. The recommendations are science-based, data driven and above all, politically neutral and objective. They do not seek to supplant inputs by other professional sources, but rather to add to and complement them.
Given the dire situation and the urgency of its resolution, it is imperative that the political authorities, both the Government as well as the Opposition, shed partisan postures and cooperate towards adopting the above recommendations and other desired public policy decisions through an all-party consensual approach involving consultation and compromise including, but not limited to, the Parliamentary Consultative Committee System.
This consensual approach is not some idealistic dream, but a hard-nosed imperative of the hour and for two reasons. It is needed to restore confidence among a skeptical public that those responsible for the crisis are now contemplating serious steps towards reform, normalcy and a road map to growth. Equally, it will demonstrate to our foreign interlocutors, whose taxpayers are asked to remit their hard earned money to help Sri Lanka out of this self-made crisis, that our commitment to recovery and reform is backed by a national consensus, and is therefore sustainable. Such a process of confidence building will ideally begin with a truly representative multi-party, if not all party, interim governance arrangement based on consensual decision making as articulated by many segments of society, especially religious leaders, minority parties, the youth, civil society, professionals etc.
Everyone agrees that external assistance is a sine qua non for our recovery, especially in the short term. Those willing to consider assisting the country must, therefore, have the assurance that the succeeding Government will not renege on the agreed programmes of reform and recovery. Such confidence building, derived from a national consensus, is a must if negotiations with our bilateral and multilateral interlocutors are to be concluded successfully.
Finally, we must emphasize that there is no quick fix available to resolve the problems in a modern economy in a fast developing world. A programme of development and renewal will involve unremitting hard work, consistency and early responses based on proper analysis and evaluation of emerging problems. To our knowledge, no country in the world has developed without sustained hard work over an extended period of time. It is imperative therefore, that we get away from politics and devote our sustained attention to governance. Politics could be conducted within parties. But, it has to be always remembered, that parties are elected by the people to govern, not to pursue party politics, the pursuit of which has brought the country to its present state.
(Contributed by- Prof. Ranjith Senaratne, Chairman, National Science Foundation and former Vice-Chancellor, University of Ruhuna, Dr. Sepalika Sudasinghe, Director General, National Science Foundation and Visiting Professor in Management, Management and Science University of Malaysia, Desamanya M.D.D. Pieris, former Secretary to the Prime Minister and several ministries and currently serving on some professional bodies and committees, C. Maliyadde, Vice President, Sri Lanka Economic Association and former Secretary to several ministries, H.M.G.S. Palihakkara, former Foreign Secretary, Ambassador and former Governor, Northern Province. Dr. Chandra Embuldeniya, Chairman, Technology Development and Innovations Arm of the NSF, Founder, Vice-Chancellor, Uva Wellassa University, and Past President, The National Chamber of Commerce of Sri Lanka, Prof. A.K.W. Jayawardane, Senior Professor in Civil Engineering, University of Moratuwa, Chairman, Commercial Bank of Ceylon PLC and former Vice-Chancellor, University of Moratuwa, D.K RAJAPAKSA BSc (Hons) Ceylon, Emeritus Managing Director DSI Samson Group (Pvt.) Ltd, Dr. P.A. Kiriwandeniya, Founder of SANASA Movement, Rizvi Zaheed, BA Hons. MBA, Chairman, Sri Lanka Agripreneurs’ Forum, Professor Saroj Jayasinghe, Professor Emeritus of Medicine, University of Colombo, Prof. Ajith de Alwis, Senior Professor of Chemical and Process Engineering, University of Moratuwa and Chief Innovation Officer (Actg.), National Innovation Agency)
<div class="views-lazy-load">Loading...</div>
© The Associated Newspapers of Ceylon Ltd., 1995–2022. All rights reserved.