“My government believes that the Government of Sri Lanka – like all Governments – must protect its citizens against terrorism. And the United States has been pleased to help support the Government in this regard by providing maritime radars to help stop the flow of arms to the LTTE.”__________________
by Robert Blake
(April 27, Colombo, Sri Lanka Guardian) Thank you for the invitation to speak at this evening’s Forum. It is an honor to address the Federation of Chambers of Commerce & Industry of Sri Lanka and the many business and political leaders here this evening. I congratulate the FCCISL for its ongoing Business for Peace Forum series, which serves the important function of stimulating discussion on the effect of Sri Lanka's long conflict on the country's economy and growth prospects; as well as on ways the business community can help find ways forward.
I also want to commend the Federation for its initiatives to support small business in the north and east, and agri-business in the east. Providing sustainable private sector-based livelihoods is one of the best ways that we all can improve incomes and human security and thereby confront terrorism.
How to resolve the conflict is certainly a critical question and one to which there is no easy answer. My government believes that the Government of Sri Lanka – like all Governments – must protect its citizens against terrorism. And the United States has been pleased to help support the Government in this regard by providing maritime radars to help stop the flow of arms to the LTTE.
But our experience in Iraq and elsewhere has taught us that a purely military solution to conflicts such as Sri Lanka’s will not work. There must be a parallel political strategy to address the underlying grievances that have given rise to the conflict. Only by articulating and carrying out a vision for how power can be shared among Sri Lanka’s communities will Sri Lanka be able to show the Tamil, Muslim and other minority communities that they have a place of respect on this island, and that they have a role in a united Sri Lanka where they can control much of their own affairs in local regions where they predominate.
The Government has made a good start toward this by emphasizing the importance of implementing the 13th amendment to devolve power to the provincial councils, with a particular focus on the east. But more is needed to provide a positive vision of the future for Tamils and Muslims. I was pleased to read yesterday that Professor Vitharana hopes to submit the proposal of the All Parties Representative Committee soon to the President and that the APRC will try to avoid the use of divisive, emotive terms like “federalism” and “unitary.” An APRC proposal that meets the aspirations of all of Sri Lanka’s communities to have a greater say in the decisions that affect their daily lives would mark an important step forward.
I was asked to address the question of "Maintaining the Balance of Peace Building and Economic Growth." The U.S. believes that the appropriate balance lies in the government pursuing a peaceful political solution to the conflict while permitting the private sector to lead the economy by putting in place the appropriate sound economic framework.
What do I mean by letting the private sector lead the economy? Sri Lanka's government has over the years provided excellent public services to its people. It provides near-universal public education at the primary and secondary level, it delivers critical public health services, it has built major irrigation systems, and put in place social welfare systems for its poorest citizens. But no government anywhere is as good at doing what can more efficiently and effectively be done by the private sector. The most helpful role Government can play is to put in place policies that will facilitate private sector-led economic growth. The Government should not be in competition with the private sector, nor try to carry out activities that are better done by the private sector.
Unfortunately, some still question this. Winston Churchill addressed those very skeptics over fifty years ago, when he said,
"Some regard private enterprise as a predatory tiger to be shot. Others look at it as a cow that they can milk. Only a handful see it for what it really is - the strong and willing horse that pulls the whole cart along."
One recent headline offers ample evidence that Sir Winston had it exactly right: the telecom sector, which has been successfully privatized, attracted half of Sri Lanka's record $700 million in foreign direct investment last year.
That is an example of good government policy making: by getting out of the way, the government enables the private sector to pull the economy along.
Another good example is the enormous success of the garment industry in Sri Lanka. The government had a role in nurturing the garment sector, but it was a hands-off role: the government created free trade zones, waived import duties on fabric and other inputs, and offered tax holidays so that newly established companies had time to become profitable. Those incentives were enough to get Sri Lanka's nimble private sector started in what has since become the country's most profitable sector. The lesson in this is that the government can best facilitate economic growth by creating incentives and then getting out of the way.
But there are other ways in which the government and the private sector can work together to achieve national goals. Private-public partnerships combine the expertise of the private sector with the resources of government to deliver services that benefit both industry and the general public. As Minister of Enterprise Development and Investment Promotion Dr. Amunagama has said, private-public partnerships "are all about a win-win situation for both the private and public sectors."
One of the most effective types of partnerships is between corporations and universities. Universities gain resources and new ideas from the marketplace that help them advance their research programs; and they in turn produce the qualified graduates that private companies need.
A number of such partnerships exist in Sri Lanka today. I am proud that Zone 24/7, an American technology development company recently established a research and development laboratory at the University of Moratuwa. Virtusa, another American IT company with offices here in Sri Lanka, has collaborated closely with prestigious Universities like Peradeniya and Moratuwa. Virtusa invites university staff to attend its in-house IT and management courses. Virtusa also sends some of its best technical experts to teach courses at the universities.
Another private-public partnership I am excited about is USAID’s Last Mile Initiative. It has partnered with Dialog Telecom, Microsoft, Qualcomm, the National Development Bank, and Lanka Orix Leasing Company to create 35 rural internet and communication centers island-wide. We have heard from various local and international private sector firms that they expect to finance -- on their own -- an additional 450 new high speed internet centers in the next two years, now that we have demonstrated that the model is successful and viably profitable.
USAID is also partnering with a Hayleys subsidiary, Sunfrost, to implement a pilot outgrower project to benefit more than 120 farmers in Uva and Eastern provinces. This initiative promises to increase the export of high value products such as gherkins, jalapeño peppers and pineapple through commercially provided training, agriculture inputs and buy-back agreements.
In addition, USAID is building the state-of-the-art Samanturai Vocational Training Center in Ampara district. This center will train specialists for the apparel industry. While the center will be operated by the Vocational Training Authority, a partnership with the Joint Apparel Forum Association will ensure that graduates have the skills industry needs. This is an excellent example of how public-private partnerships can cooperate to develop a skilled workforce.
Indeed, many of you had heard me speak previously about my conviction that a skilled and talented young workforce is Sri Lanka’s most important asset in today's competitive, globalized economy. These partnerships are producing exactly that workforce and they are doing it by emphasizing one key ingredient: knowledge.
The World Bank recently released an important study concluding that, as agriculture and industry decline in economic importance, Sri Lanka's future lies in developing a Knowledge Economy. To do this, the Bank recommended, government must focus on investing in education, innovation, and information and communications technology.
I think this is correct. And Sri Lanka is already on the right track with many of the right ideas, but it needs to implement these ideas quickly before it gets left behind. The World Bank notes that attracting foreign direct investment is essential to this process. Again, the Bank is right on, as the government just does not have enough money on its own to rapidly make the Knowledge Economy investments that Sri Lanka needs.
That is why opening up the telecom sector was the right move, as witnessed by the hundreds of millions of FDI dollars flowing into that sector and the many development initiatives being built around growing mobile phone and internet usage. The World Bank study recommends that the government work on improving the investment climate in order to attract even more FDI.
And that brings us back to the "Balance between Peace Building and Economic Growth," because the biggest factor in improving the Sri Lanka's investment climate is of course resolving the conflict.
Business organizations like the FCCISL, the Business for Peace Alliance, and Sri Lanka First all have a key role in this, as they are natural constituents for peace. And although prospects for resolving the conflict in the near term appear limited, there is already a need and an opportunity in the East for the private sector to partner with the government in bringing the benefits of commerce, investment and the knowledge economy.
The rebuilding of the East is an important opportunity for the government to show that it can deliver opportunity and prosperity equally to all the country's ethnic groups. The government has already developed a variety of generous incentive packages for companies who invest and start production in the East. The President highlighted his "Nagenahira Udanaya" (Dawn of the East) proposals in his 2008 budget.
Those incentives reflect the fact that neither government nor business alone can bring about growth in the East. There is a role for each, and they will need to consult closely to ensure that efforts are sustainable. The government should listen to the experts -- the entrepreneurs, the companies, the chambers of commerce -- as it formulates plans for the region and creates the security and other conditions for private sector led growth. The private sector must give the government its honest and creative ideas about what needs to be done in the region to make it attractive for investment, and then you must step up to make the necessary investments once security and other conditions allow.
That partnership will produce the "Balance between Peace Building and Economic Growth" in the east and can serve as a template for building peace in the north.
Let me conclude with one of my favorite quotes from Mahatma Gandhi, a man who is as much admired in my country as yours. He advised his followers to be the change you want to see. I think that is fitting advice for people such as all of you in this room who have the power and influence to help secure a brighter future for your country.
Thank you again for the chance to speak to you today. I look forward to our discussion.
(Guest Speaker Address to the FCCISL Business for Peace Forum by Ambassador Robert Blake on “Maintaining the Balance of Peace Building and Economic Growth: the U.S. Perspective” on 24 April 2008, Union Ball Room, JAIC Hilton, Colombo)
- Sri Lanka Guardian
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