As a scientific citizen with a firm belief that the way out from this ‘economic near mess’ is by way of rapid use of science and innovation, I believe firmly that the Budget for 2016 presented last year had so many positive ideas and action statements on S&T, R&D, startup eco system and for manufacturing-led growth. One blemish was on vehicle taxation and concessions where there was serious lack of scientific rigour.
The growth strategy which factored in these ingredients certainly can deliver with the populace tuned on by right messaging. For articulating this no one will be able to win an economics Nobel Prize as already the American miracle had been explained by Robert Solow and for the pains he took in elucidating the process he won the 1987 Nobel Prize in Economics.
It is strange however that these lessons are not strictly embodied in the economics curricula of majority of the economists in our country. The love of only playing with tax, VAT and rates by the community is tad frustrating.
The Budget for 2016 as presented in the Parliament had many statements and suggestions worthy of speedier execution, unfortunately for the country they are yet to see the light of day. As a scientific citizen I can definitely state that the last Budget was exceptional on that particular front.
Processes over progress
There were excellent concepts and plans – albeit quite briefly, outlined in that Budget which perhaps made that Budget standout for its attempt to contribute to the innovation economy of Sri Lanka. Much time has passed and quite a few of these statements and good intentions are yet to materialise and may not forever as we plan the next budget. Now all eyes and efforts are on another document. The question begs why? We appear to be keen on processes rather than on progress.
It is the intention of this column to extract and place to wider readership what we read as policy and Government directions from the last Budget. The execution however had not been successful. We do have a habit of forgetting the last one and working hard to ensure that we have another budget and thereupon wait with bated breath to sense the pulse of the constituency upon presenting and debating.
Why cannot we elaborate on some of the successes based on these and ensure that this budget too will carry the same program with much more rigour? Can we get out of the trap of brand new budget every year by planting some projects with tenure?
As you can see from the extracts pertaining to this particular sphere of activities, there had been some important and interesting concepts and budgetary allocations. We never hear of a gap analysis when listening to the next budget on what was stated in the last and why things really did not move forward. We hear too much about the car permit fiascos and fracas over selfish aspects.
Even though we appear to have entered a low middle income status our behaviours do not indicate nor convey our adjustment to that particular position as subsidies, permits, pay rises, grants are still the words that rings as music to our ears.
When the Budget carried a statement such as “the country also needs a sustainable industrial policy focusing more on an upward movement of the manufacturing sector improving the value chain from light industrial products towards the manufacture of high-tech products. Adaptation of technology as well as introduction of innovative options, backed by proper research and development is an essential ingredient” is lost in the milieu when bickering over permits erupt.
Hardly a discussion though this is exactly what we should be having. These concepts die without a whimper! I have in this column taken the time to extract some and place than write and analyse and hope the embedded extracts stir someone’s conscious that positive, essential elements presented in the last budget will not get lost a year later.
A reminder is while we admit that implementation is really missing in our Government what steps we are taking to remedy that ill. The extracts hopefully are another telling reminder on the need for execution going beyond the policy rhetoric.
Some important extracts from Budget 2016
On need for modern technologies and entrepreneurship
Use of modern technology is vital in maintaining security in the country.
Small and Medium Scale Enterprises (SMEs) will also have to be nurtured, developed and facilitated to build up linkages with large enterprises, which will provide opportunities to interface with larger supply chains.
Improve the local industry by way of providing support to develop local entrepreneurship.
It is time to move out from the age old economic options and focus on new and innovative measures as practiced by many developing and developed nations.
Our investment in Science, Technology and Innovation has failed to keep up with the growth in GDP. Its impact is evident in the low percentage of high tech value addition to our manufactured exports (0.9% in Sri Lanka compared to 50-75% in developed industrialised countries) poor contribution of patents and research based service industry to our economy. This has to change rapidly if our economy is to be led by innovation. We expect high tech manufactured exports constitute at least 10% of our exports by 2020.
Manufacturing and industrial parks
Construct mini industrial parks which will be incubators in Moneragala, Puttalam, Jaffna/Wanni, and Ampara.
Private sector to partner the public sector in manufacturing Triple Super Phosphate (TSP) in the country.
Form a Primary Industry Council consisting of industry experts who will create strategies to meet the challenges faced by primary industries
Aquaculture Park in Batticaloa District by providing an enabling environment for the potential private sector investors to develop coastal aquaculture without causing environmental degradation.
I invite private sector to venture into establishing Pharmaceutical Zones as PPPs.
Establish Industrial Development Zones (IDZs), in Hambantota, Raigama, Mahaoya and Trincomalee along with Information and Agricultural Technology Zones (IATZs) in Kandy.
Industrial parks be created along the proposed expressways, thereby adding value to the expressway. Accordingly, it is proposed to set up a Bio Technology Park which will house pharmaceutical companies, a product design engineering manufacturing park and an IT park and also agro and aqua culture parks along the expressway.
Targeted Research and Development
Strengthen the Tea Research Institute, Rubber Research Institute and Coconut Research Institute, so that they can engage in research in improving productivity, finding new varieties, etc. For this purpose, I propose to allocate a sum of Rs. 200 million within a period of two years.
Sugarcane Research Institute and the Palmyrah Research Institute will be strengthened for which I propose to allocate a sum of Rs. 100 million. Allocate Rs. 50 million to strengthen the Cinnamon Research Unit at the Department of Export Agriculture. Allocate a sum of Rs. 50 million to National Science Foundation to fund research undertaken on cinnamon and cinnamon related activities.
Research and development is an important element of our health sector strategy. Our health sector professionals do engage in R&D and innovation with little or no support from the Government. In fact, I commend the gold medallists of the International Exhibition of Inventions in Geneva 2015, Dr. Thusitha Kahaduwa for the invention of the device ‘Footie,’ Dr. Anupa Herath for the invention of the peripheral nerve stimulator needle and Dr. Anura Wickramasinghe who was awarded the World Federation of Societies of Anaesthesiologists (WFSA) Innovation award for his creation of a new low cost video laryngoscope.
Allocate Rs. 250 million to the National Science Foundation (NSF) to support and assist research in diabetes, dengue, CKDU and cancer.
Ensure the quality of imported products such as milk powder, cosmetics, toiletries, shampoos etc., I propose that Sri Lanka Standards Institute, Industrial Technological Institute and Pharmaceuticals Research Laboratory be strengthened by increasing the technical cadre and the laboratory facilities for which I allocate Rs. 200 million
Curricula development, addressing brain drain and institutional upgrading with an economic focus
The implementation of the national big data platform.
Some of our universities have taken the lead to introduce new courses into their curricula such as data science, actuarial science, bioinformatics, business analytics, quantity surveying, etc. To encourage such initiatives I propose to provide such universities with the necessary infrastructure facilities. These will include the provision of facilities such as buildings, laboratories, equipment, etc.
Attracting and retaining top notch faculty into our universities has been a cause for concern. Many global universities have addressed this issue through endowed chairs or distinguished professorships. The endowments allow such faculty the freedom to engage in research that adds value to the economy. Therefore, to encourage private individuals and companies to be part of the country’s higher education revolution, I propose that the expenditure incurred for the endowments be allowed to be deducted for tax purpose granted to our national universities as well.
Institutions are encouraged to seek accreditation with professional bodies of international repute with a view to grant professional qualifications and I propose to extend financial assistance to such initiatives.
Propose to extend the same methodology adopted in giving extra points to those who excel in sports, for those students who have invented a new product or service, created a startup, participated in international competitions such as Math Olympiad, etc. when considered for university admission.
Propose to introduce new degree courses in marine biology, marine recreation and sea port, boat/ship building, integrated coastal resource management, etc. by the Ocean University.
Propose to develop the curricular of these university colleges to include courses in polymer technology, renewable energy technology, plantation crop technology, journalism, etc. and also to upgrade the Colleges of Technology to the status of university colleges to produce middle level technicians.
We will also establish techno-based campuses and vocational training institutions alongside current universities. Introduce a voucher system to talented students from low-income categories to enter into these techno-based campuses and vocational training institutions.
Venture funding, startups and Intellectual Property
Initiate a venture capital approach for providing equity financing facilities to SMEs through the establishment of one fund that will be a “Fund of Funds”.
For Sri Lanka to develop high margin, value added, branded export products, registering trademarks overseas has become a necessity. To expedite the registration process and to reduce the cost of registration, it is proposed that Sri Lanka become a member of the Madrid System for international registration of trademarks, a body administered by the International Bureau of the Word Intellectual Property Organization (WIPO). This was a request made by the industry. As such, I propose to allocate a sum of Rs. 100 million to the Intellectual Property Office so that it can facilitate the accession to the Madrid system by amending the trade mark law and upgrading of physical and human capital.
Sri Lanka Inventors Commission (SIC) to formulate a strategy for promoting patent applications worldwide by promoting awareness among inventors on benefits of international patent rights and identify prospective inventions to obtain international patent rights and make arrangements to provide financial and technical support to facilitate obtaining international patent rights. In this regard, I propose that the cost incurred by the inventors to be borne by the government up to a maximum of $ 100,000.
Growth cannot be achieved without innovation and entrepreneurship. Our young graduates who are the cream of the crop possess innovative ideas but since accessing capital in Sri Lanka is a difficult task, majority of such entrepreneurial ideas do not get translated into a commercial venture. Proposed to initiate a loan scheme through the state banks that provides loans up to a maximum of Rs. 1.5 million per viable idea per person with a tenure of three years. The facility to be made available to at least 1,000 graduates. These advances will be granted based purely on the business plans and will not require any collateral. The proposed business plans will be evaluated by a committee consisting of university professors, industry professionals and government officials operating under the EDB. The loans will be fully guaranteed by the government. It is hoped that we will be able to create at least 100 business start-ups per annum.
Innovation eco system
I propose to set up an Innovation Accelerator, a platform that will combine the National Innovation Programmes (NIPs) of the Coordinating Secretariat for Science Technology and Innovation (COSTI) and the National Thematic Research Programme (NTRP) and the technology support schemes of the National Science Foundation (NSF), with clear deliverables directed towards three pillars of sustainability; economic development, social justice and the environmental quality set up a National
Innovation Centre in the Ministry of Science, Technology and Research which will manage the Innovation Accelerator Fund set up as a revolving fund. It is proposed to allocate Rs. 100 million as seed capital to this Centre while another Rs. 3,000 million will also be provided within a period of three years innovations are ultimately transferred into commercial successes.
COSTI has identified 25 such projects that have the potential to succeed commercially. Some of these innovations include GoviNena, a mobile application to support efficient agricultural commodity production, energy storage systems, etc. Such innovations have a direct impact on the industry concerned as well as contributing to the sustainability of target sectors. High end equipment acquisition supported with accelerated depreciation etc. will be made available to any company that will partner these innovations to be monetised. The Government will also facilitate these ventures by providing land or any other resource based on the type of project.
Nenasalas be upgraded to be Public Innovation Centres for entrepreneurship. As such Nenasala centres should be upgraded to include a 3D printer, laser cutters and engravers, and other power tools which are vital for a typical fabrication lab. As such I propose to allocate Rs. 100 million to upgrade selected Nenasala centres in 2016. These upgraded centres in addition to their usual task of facilitating ICT empowerment will also drive local entrepreneurship and provide technology support to SMEs.