My wish list

The fourth industrial revolution is enabled by the combining of both established and emerging technologies – including artificial intelligence, the Internet of Things, advanced data analytics, robotic process automation, blockchain, robotics, cloud computing, virtual and augmented reality, 3D printing and drones 

People mainly expect a Government to drive the economy and ensure economic prosperity for the country and its people. Indeed, we are reminded of the famous saying “it’s the economy stupid” which James Carville coined as a campaign strategist of Bill Clinton›s successful 1992 presidential campaign against President George H. W. Bush. 

Therefore, ‘My wish list’ given below deals with this single most important aspiration of the people. In fulfilling this fundamental aspiration it will be useful to keep in mind the development framework that I had proposed in my previous article, viz. 3Cs – creativity, connectivity and convenience.  

Enhancing computer literacy and providing broadband connectivity for all with a view to successfully ride the wave of 4IR

These days if you give a person a computer and also give him access to broadband connectivity, he will not have to go unemployed provided that he has some computer literacy. This is because he/she will be able to provide fee based services to both local and global entities, by combining those elements. 

This shows that broadband services should be accessible for everyone. Therefore, only very low taxes should be applied on broadband services if not no taxes at all. In this regard it would be advisable to take a leaf out of Vietnam which has invested heavily in infrastructure, ensuring cheap mass access to the internet.

The State of the Economy report 2019 published by the IPS has noted that in Sri Lanka there are significant disparities in IT literacy levels between the urban (36.9%), rural (22%) and estate (8.6%) sectors, thereby indicating significant structural weaknesses of Sri Lanka’s digital readiness for the Fourth Industrial Revolution (4IR) era. 

The fourth industrial revolution (4IR) is enabled by the combining of both established and emerging technologies – including artificial intelligence (AI), the Internet of Things (IoT), advanced data analytics, robotic process automation, blockchain, robotics, cloud computing, virtual and augmented reality, 3D printing and drones. The 4IR era ushers in real-time data gathering, analysis, and decision and prediction-making capabilities (PwC). 

As highlighted in the IPS report, at its most basic level, a significant proportion of 4IR technologies are emerging around the use of computers and the IoT. Therefore, low levels of computer literacy and internet access create considerable obstacles for Sri Lanka to absorb, implement and leverage 4IR technology. 

The report further notes that basic literacy and numeracy-based employment are likely to suffer most due to 4IR. Therefore, Sri Lanka’s relatively low level of enrolment in tertiary education makes the country badly placed in terms of responding to disruptions caused by the 4IR. 

Since Sri Lanka’s labour force lacks the skills required by high-tech, 4IR-based industries and investments, the economy will find it challenging to benefit from technology spill-overs and other ancillary benefits that may accrue from foreign direct investment (FDI) and integration into global value chains (IPS: State of the Economy-2019).

Therefore, Sri Lanka should make a concerted effort to enhance the computer literacy and Science, Technology, Engineering, and Mathematics (STEM) related skills of its people. If otherwise, the country may miss yet another opportunity, viz. leveraging 4IR to the maximum advantage of the country.  

Positioning ICT as a major foreign exchange earner

The major challenge for Sri Lanka in expanding her ICT industry is finding the required skilled labour. More than 350 companies and 85,000 professionals are employed in the sector. As per the Sri Lanka Association of Software and Service Companies (SLASSCOM) the ICT/BPM export figure for Sri Lanka in 2018 was $ 1.2 billion. 

The ICT sector is targeting to achieve $ 5 billion in export earnings, to provide 200,000 direct jobs and establish 1,000 start-ups by 2022. This is because compared to other industries, the tech industry needs a lot of start-ups for it to develop and grow. (Echelon-June, 2018: Wanted Skilled Migrants; EDB). 

To begin with, what a tech start-up needs is a good idea, and the supporting infrastructure including a place for them to work and play. This is why places like Trace IT Park, Orion City and Hatch become crucial. Every encouragement should be provided for these start-ups. Access to finance, and in particular, access to venture capital, would be crucial for these tech start-ups. 

Taking a page from Abu Dhabi

Abu Dhabi is doubling down on its push into the technology sector with a $ 250 million investment to support start-ups from the Middle East and North Africa (MENA) region. Mubadala, Abu Dhabi’s state investment arm, announced its new MENA tech funds will invest in companies and venture funds that help boost local tech incubator ‘Hub71’.  

Hub71 was launched earlier this year as part of a broader effort by the Government of the United Arab Emirates (UAE) to diversify its economy. Microsoft and SoftBank are also partners in the Abu Dhabi-based scheme. Hub71 offers incentives like office space and health care coverage to encourage start-ups to set up shop in the region. 

Importing skilled migrants 

Sri Lanka too could encourage foreign tech professionals to start their businesses in Sri Lanka by granting concessions. After all foreign talent helped build successful Lankan tech companies like Virtusa, Millennium IT and WSO2. Opening doors to foreign talent is not just crucial to drive innovation in the tech industry; foreign professionals living here will attract investments into consumption, real estate, education and healthcare and the multiplier-effects on the economy is another important gain. 

As per the Central Bank of Sri Lanka, in 2018 private consumption accounted for 69.8% of GDP. Attracting foreign professionals for local tech industries will result in an increase in consumption, which in turn will help to boost GDP growth. 

Energising Sri Lanka

If we do not generate adequate electricity then industries will not be able to expand. Sri Lanka is a tropical island blessed with abundant wind and sunshine. By combining creativity and imagination we should be able to figure out the best possible ways to generate electricity from these resources (not forgetting other renewable energy sources too). We as a country have made some progress on these lines. What is required is to accelerate the efforts. 

A sea of opportunities

We have the sea all around us but do we catch the fish in adequate quantities or have we thought about creating fish canning industries targeting both local as well as export markets, thereby saving as well as earning valuable foreign exchange? In addition to the fish that it provides, the sea is a vast repository of many other marine resources too. Sri Lanka should make good use of these opportunities without wasting time.    

Sri Lanka at the centre of the world

Sri Lanka’s unique selling proposition (USP) is its strategic location which places it on six of the 10 largest trade routes in the world and within reach of over 26% of all of the world’s container traffic. Given this nature’s gift, the Government and the private sector should make every effort to leverage on this USP to position Sri Lanka as a maritime and logistics hub for the region following the examples of Dubai and Singapore. 

Productivity, productivity, productivity

We have to launch a major productivity drive. In a situation where Sri Lanka’s population is rapidly aging we have no option but to enhance productivity if we are keen on accelerating growth and getting out of the middle income trap. Enhancing the skills of the labour force will be crucial in enhancing productivity. This has been a critical element of other countries that have broken out of the middle income trap. 

Improve public transport

I am waiting for the day when I will be able to leave my car at home and travel to work by monorail or in a comfortable bus. Improved train services would be another option that would induce me to leave my car at home. 

The benefits of these would be many. The country will be able to save valuable foreign exchange by being able to cut down on fuel imports, and the people will be freed from the stress of driving on congested roads while also enabling them to save more time, thereby boosting their productivity.  

Harness women’s power

As per the results of the quarterly labour force survey of the Department of Census and Statistics, in the second quarter of 2019 unemployment among females was higher in all age groups, and the youth and female unemployment contributed more to the overall unemployment of the country. 

“The survey results further show that the problem of unemployment is more acute in the case of educated females than educated males, which was observed consistently over the results of previous survey rounds as well.” 

Besides constituting 57% of Sri Lanka’s population, women are generally better than men at multitasking. Further, studies have shown that maintaining a gender balance at workplaces helps to enhance productivity. 

However, Sri Lanka has the 14th-largest gender gap in labour force participation globally (WEF 2016). Even as the economy expanded, female labour force participation (FLFP) in Sri Lanka had declined from 41% in 2010 to 36% in 2016, while men’s participation remained above 75% during the same time period (The World Bank, 2017). 

In view of the above, we as a country will have to take steps to implement a safe and sound crèche system providing safe childcare and day care for children, thereby encouraging more women to contribute to the labour force. 

Providing flexible working hours and safe transport (including safe public transport), creating a safe working environment for women by implementing measures that would prevent harassment, offering young women professional career and health/hygiene counselling and designing study courses that would better equip them to meet workplace challenges are some of the other steps that could be taken to boost female labour force participation.

Education reforms

It is absolutely important to impart education and skills to our people that will enable them to be gainfully employed. Then they will not have to hold placards and toil in the hot sun demanding jobs from the government while frightening away precious prospective foreign investors.  

Greater emphasis will have to be given to teaching of STEM subjects and English. Further, vocational training and skill development will be crucial if the country is serious about increasing labour productivity which will lead to higher economic growth rates. 

Our education system should create entrepreneurs who are risk takers and who can stand up on their own feet. We need to encourage people to take calculated risks in the true entrepreneurial spirit. In other words we need to unleash the animal spirits in our people.  

In Chile, education reforms were aimed at feeding the tech industry. Nearly 90% of Chilean high school students gain admission to university (compared to less than 20% in Sri Lanka) and 94% of its IT graduates manage to obtain jobs within a year of graduating (Launchway Media).

A massive nationwide drive to improve English language skills 

English is the key to knowledge. A person with good English language skills can get a job without much difficulty. Therefore, a nationwide program should be implemented to enhance the English language skills of the people. The tourism industry too will surely benefit from it. This and other spin-off benefits associated with good English language skills will also help people to become more productive.

Efficient delivery of public services

Sri Lankans should be able to obtain public services without any hassle. The public service should be free of corruption and red tape. Delivery of public services should be transparent and efficient. By delivering public services efficiently, the Government will help to save people’s time, thereby having a direct positive impact on enhancing productivity. Wherever possible, online submissions should be encouraged. While helping to enhance the speed of delivery, this will also help to eliminate corruption.   

Efficient delivery of public services will also help to attract greater volumes of Foreign Direct Investments (FDI). 

An all-out effort to attract FDI

Political stability, policy consistency, national security and rule of law are absolute musts in attracting FDI. Policy uncertainty in Sri Lanka has proven to be daunting for investors, with a lack of information on regulations, high fragmentation in policymaking, frequent policy changes and slow policy implementation being the accompanying ill effects. 

Reforms are needed to address impediments related to land ownership. Land is primarily State-owned in Sri Lanka, and administration of land is weak and cumbersome. FDI projects are often discouraged due to land issues. 

Further, Sri Lanka needs to improve her rankings in the World Bank (WB) Group’s Doing Business Index (DBI) if we are serious about attracting FDI. Sri Lanka’s overall rank was 99 out of 190 countries in the DBI 2020 which was one notch higher than the ranking of 100 recorded in DBI 2019.  

The economies in South Asian sub-region had carried out 17 reforms to improve the business climate for domestic small and medium-sized enterprises during the past year. However, Sri Lanka, along with a few other nations, had failed to carry out any business reforms during the period. 

As per DBI 2020 Sri Lanka was one of worst in terms of enforcing contracts (ranked at 164 out of 190 economies). According to the report, it takes 1,318 days or 3.6 years on average to resolve a commercial dispute through a local first-instance court, while it takes 1,101.6 days in South Asia, and only 120 days in Singapore. 

Sri Lanka was ranked at 142nd position in terms of paying taxes mainly due to the number of tax payments and high tax rates. The number of tax payments was at 36 on average per annum in Sri Lanka compared with 26.7 payments in South Asia and 10.3 in OECD economies. The total tax and contribution rate as a percentage of profit was recorded at 55.2% on average in Sri Lanka compared to 43.9% in South Asia and 39.9% in OECD countries. 

Sri Lanka also lagged behind in the registering property sub-index, which was mainly due to poor quality land administration. The country was ranked 138 in the registering property sub-index. Similarly, Sri Lanka’s ranking in other sub-indices which include starting a business, dealing with construction permits, getting credit, trading across borders and resolving insolvency also fell as several other economies made progress surpassing Sri Lanka. 

Sri Lanka was placed at 140th position out of 141 countries in terms of trade openness, which is one of the criteria considered in the Global Competitiveness Index 2019. Therefore, this is also an area that needs to be addressed if we are serious about attracting FDI. 

Sri Lanka will have to take steps to improve her rankings in the above areas if we are serious about attracting FDI. 

Conclusion

‘My wish list’ presented above constitutes a program of action which I feel is important for sustained growth and development. 

I am aware that my ‘wish list’ presented above is not an exhaustive list. Nevertheless, I believe it contains a practical and implementable program of action. This program of action should be consistently pursued if we are keen to achieve the desired results. Political stability, political will and policy consistency will be crucial in this process. Visionary and purposive leadership is also required in executing the program effectively and efficiently and with a sense of urgency. 

(The writer counts over two-and-a-half decades of experience in the field of economic research in the private sector. He has earned a BA (Hons) in Economics, an MA in Economics and a PhD in Economics at the Department of Economics of the University of Colombo. He can be reached at [email protected].)