The open economy of ’78 and thereafter

Thursday, 7 August 2014 00:50 -     - {{hitsCtrl.values.hits}}

By K. Godage The past My thoughts go back to 1978 and the opening of the economy after over 20 years of socialist economic policies, which had brought down our GDP to 2% in 1977 and virtually pauperised the country. I was Head of our Mission in the Philippines when I was summoned back and appointed as the Secretary General of the first Board of Investment, the Greater Colombo Economic Commission or the GCEC as we became known, which was directly under the President himself, the Chairman of which was none other than Sri Lanka’s most successful entrepreneur at the time, Upali Wijewardena, the Deputies were Raju Coomaraswamy who was also the Economic Advisor to the President whom he trusted implicitly and Paul Perera, a successful lawyer who incidentally lived across the road from President JR at Ward Place. Whilst I never quite knew as to the reason for my appointment (it was perhaps because I had regularly sent reports on the economic policies being followed by the Philippines Government to my friend the late Minister Lalith Athulathmudali, he may have mentioned me to the President). The GCEC was a ‘one stop shop’ for approving foreign investment and we had an excellent team of professionals with D.H.N. Perera who was Senior Manager Project Appraisal, Rohan Weerasinghe SM Investment Promotion, G.L. Perera Chief Engineer amongst others. We looked after investors from the time of their arrival till they left; this was much appreciated by them. “Go to the West” The Export Processing Zone also referred to as the Free Trade Zone was the first-of-its-kind in this country. Shortly after it was established Upali, Raju Coomaraswamy and I were summoned by President JR and told: “Go to the West, that is where the Capital, the technology and the markets are – I don’t wish us to belong to the poor man’s club” (we were in the Chair of the Non Aligned Movement at the time). This was completely misinterpreted by then Indian Prime Minister Indira Gandhi, (this was during the Cold War and India was close to the then Soviet Union and Indira Gandhi decided to destabilise this country by arming and training Tamil militants and letting them loose on our country.  Incidentally President JR is said to have hated Indira and she (who was very close to Sirimavo Bandaranaike) reciprocated in the same measure and we had to suffer the consequences for 30 years! Creation of the first EPZ To revert to the subject of the opening of the economy and the creation of the first Export Processing Zone – we created over 3,000 jobs in the first three years in the first Zone in Katunayake. We were the envy of some Asian countries at the time. I also recall Upali calling me and Raju Coomaraswamy to his office and telling us we are being referred to as the Tailoring Zone – we must move forward into the Information Age and get the IT from the US and technology-based companies” and this we sought to do with the help of two US PR and marketing companies; we visited the US no less than four times and signed agreements with four big computer chip manufacturing companies in the US including Motorola and Harris, to put us on a new road, moving up into the knowledge-based industries, sadly as explained later, our efforts did not come to fruition for no fault of ours. It was also Upali who suggested to the President that we have an expressway from the zone to the port and I was directed by the President to visit Japan and to ask them as to whether they would help to build the expressway; they came and did a feasibility study and towards the end of 1981 were prepared to discuss the matter further with the Government but at this stage both Upali and I left the GCEC and I reverted back to the Foreign Service. The Expressway became a reality only three decades later! What we have missed due to July 1983 To conclude this chapter I need to flag an important happening: In 1982 I was posted to our Mission in Washington. In September of 1983 the Senior Vice President of Motorola who knew me as I had visited their offices and met him came to the Embassy along with the VP of Harris and another IT company and told me that they were pulling out of Sri Lanka, I was surprised as I knew that both Motorola and Harris had begun construction work on their factories. When I inquired as to the reason for this decision I was told by the SVP of Motorola that their representative who was supervising the construction work on their factories had been killed in July during the pogrom against the Tamils and that therefore they had decided to leave, and where did they go? It was to KL, Malaysia where there are no less than 12 chip manufacturing companies each employing hundreds, this is besides the related research companies that have established there. This is only a small part of what we have missed because of July 1983. In 1981 we were about to embark into the ‘knowledge industry’ and information production and dissemination, but we have been left behind. These new technologies have expanded with the proliferation of personal computers, and then surged dramatically with the widespread use of email and the internet. It is now an established fact they have considerable potential. The future To recall, we, quite understandably, first started by promoting labour intensive industries and as stated earlier we were on the verge of moving into the higher sector namely into knowledge intensive industries at the end of 1981 but two and a half decades later I do see only some evidence of that, but it is essentially in the software and marketing sectors. We seem to have missed the early ‘R& D Bus’ but it is never too late, for not a day passes when we read of new products being manufactured with new technology. New industries are all knowledge-intensive, so the nature of work is totally different from what it used to be, it could be a growth industry providing professional services to organisations and nations to assist them in the transition to knowledge modes of production. This is where our future lies. Let us hope that our Minister of Investment Promotion Lakshman Yapa Abeywardena, Secretary to the President Lalith Weeratunga, the pioneer leader in this field and senior advisors of the President such as Milinda Moragoda, and persons such as David Dominique, Mano Sekaram, Kris Canekaratne, Dr. Harsha Subasinghe and the ICTA CEO Roshan Devapura along with others in both the software and computer hardware sectors will not only guide the government and advise it to offer handsome incentives to lure the right investors but themselves bring new investors to our country. Meeting Information Age needs We need also to tailor our education system – particularly our technical education – to meet the needs of the Information Age, yes let us build a knowledge-based economy, and to do that we must accept the fact that we would need to enthrone the world language English, the language must be taught from the Kindergarten upwards in all our schools (this would require a long term plan and a total commitment to ‘build’ the necessary teachers) and empower our children to be able to lead a good life in the emerging world; the English language will also help to unify our country in more ways than one.