Public-private sector partnership in regional development

Address delivered by Senior Consultant/Economic Affairs, Federation of Chambers of Commerce and Industry of Sri Lanka, Jagath C. Savanadasa at the SMED Advanced Administrative Training Programme for partners of GTZ in the Ampara District at Hotel Hill Top, Kandy recently.

The regional machinery of the State in which you are involved depends to a great degree on the efficiency, dedication and attitude of key Government officials. And since such officials handle a plethora of tasks in regard to not only administration but also in respect of other areas like maintenance of infrastructure, education, provision of facilities and approvals in regard to business activities and regional integration, you additionally play a pivotal role in the progress of your respective regions.

It is necessary to state that Sri Lanka is a mixed economy. It has been so since time immemorial. In a mixed economy those who govern and those who are governed have almost as equal role to play in the life of the nation.

Whilst it is accepted that the State through the different layers of the provincial administration largely have regulatory functions to perform so, as to maintain an order and a system, the Private Sector irrespective of whether it is formal or informal keeps the wheels of the economy turning.

The rural economy

It is good to remind ourselves of a few realities of rural life. 80% of the nation's population is in the regions. But the bulk of the population yet live in abject poverty. In point of fact 30% is mired in deep poverty.

It is in this context that all of us irrespective of the sector we belong to have to think seriously as to how we could alleviate poverty. It cannot be done in isolation. Nor overnight. It could only be achieved as a result of a collaborative endeavour between the private and public sectors.

We need to improve the economy re-distribute, the gains thereby achieved and generate rural well-being I am glad to say that already as a result of the efforts of both Government and Private Sectors poverty has been reduced by about 5% during the last three years. However much remains to be done and we have a long road ahead.

There is a wide gap between the individual incomes of the Western Province as opposed, to those in other provinces in this country. Such huge disparities in income levels of one province in contrast to all other provinces is grossly unfair and iniquitous by the vast majority of this country's population.

It is owing to the total mismatch between one province and the other provinces that the Government as well as responsible sections of Private enterprise has thought in terms of making a concerted and joint effort to bring about a profound change.

One of the most fundamental inputs necessary to bring about a social and economic revolution that is required to effect changes to the lives of the rural people is to provide them with a conduit to development.

It is true that if you look at the broader picture of the world today Globalisation has created some ill-effects like favouring the more competitive of nations and people, the discarding of certain age old values as a result of which the weak and those who cannot drive themselves forward are affected.

On the other hand look at what it has done in terms of vast benefits that it has heaped on nations and people who are strong enough to meet the challenges of change.

Globalisation has enabled the integration of nations to an unprecedented level. This has given opportunity to those who are inclined to grab opportunity for their own advancement. It has lifted the lives of whole communities and nations and driven out poverty. Just take the example of India. Extensive poverty yet prevails in India.

But India has also benefited from opportunities created by the information revolution that the world underwent in the 1980s.

India has generated employment for millions of young people as a result of their taking advantage of outsourcing in the information sector, especially afforded by nations such as USA.

Education

Some of you present today are directly involved in education. As you all would agree every child in this country is entitled to a good education. It is a fundamental right for every child in a democratic society such as ours to have access to education.

Education provides opportunity and exposure. It is the duty of all officials in regional administration to ensure maximum opportunity is provided to educate children. The regions in Sri Lanka as many international organizations have discovered possess enormous untapped resources of human talent. Such talent has not reached anywhere their full potential.

The State and local Government officials could form an excellent partnership with the Private sector in ensuring that the talent of rural youth is exploited to the maximum for their own good as well as the good of the country.

I am aware that many Chambers of Commerce and our Federation would be only too happy to provide opportunity to youth. Especially those who are technically inclined and innovative.

Indeed identifying such talent in association with private enterprise is already under way. For example many big firms now have launched competitions which are opened to students specially from rural areas who could demonstrate their ability and, not only win awards but also to secure assistance from the coperate sector to develop their abilities on a long-term basis.

As you know many nations recognise and facilitate the development of talent. Sri Lanka as a nation has been rather slow to do this. But now we are gradually advancing in this direction. Education we must all remember is the most effective means of advancement socially and economically.

Infrastructure

A better Public / Private partnership is needed to improve infrastructure of the regions, which is the backbone of the economy. We shall only discuss one area of infrastructure today- roads.

As you know any regional and local administration has a particularly important responsibility in respect of the development and maintenance of public roads of all types and grades. This responsibility covers the task of delegating the building and maintenance of such roads.

The local administration has to adopt open and transparent policies in this regard and ensure that the most acceptable private sector parties are assigned the task of road construction and maintenance, whenever the private sector is afforded the opportunity of participating in these projects.

Our Federation as an institution promoting industrial development in the country especially small and medium industry is frequently subjected to complaints by the private sector that both rural and urban roads are badly maintained and as a result transportation of both people and goods is seriously affected.

In these circumstances it is imperative that the district administration works hand-in-hand with those assigned with the task of maintaining roads to ensure that they are always well and suitably maintained. This is an essential part of good governance that will also contribute towards the progress of trade and industry in the regions.

Transportation is connected to all economic activity and even education. The existence of good and well maintained roads could also help eliminate delays encountered in the transportation of perishable goods. Today it is estimated that 30% of fruits and vegetables are spoiled mainly due to bad transportation.

Agriculture and small-scale industry

As you know agriculture yet remains the main economic activity in rural Sri Lanka accounting for about 30 % of the self employed in this country.

Agriculture almost entirely is private sector oriented. But small-scale agriculturalists and farmers have never be able to overcome poverty. And the label subsistence farmer is permanently attached to them. Indebtedness remains a perennial problem of the farmer and his inability to obtain financial assistance within reasonable time is a matter of great concern to him.

Another major issue that affects the paddy farmer is the marketing of paddy. In time of yield and disposal obtaining a reasonable price remains a formidable barrier to the farmer.

The district administration should look at the aspect of marketing of paddy. Earlier the Paddy Marketing Board a State organisation was in existence to regulate the aspects of marketing and pricing of paddy. But such a body no longer exists to help the farmer.

In view of this the regional administration should in cooperation with the private sector establish a new mechanism and a scheme to overcome problem in paddy marketing.

Approvals, licensing and facilitations

Some of you gentlemen are directly involved in yet another key service that has a definite and positive impact on industrial and trade advancement in the regions and districts.

This relates to the approval of trade licenses and other similar permits needed to run industry, trade or business.

We all need to appreciate the importance of expeditious completion of the processes involved in such approval relating the establishment and renewals required for business to operate.

Frequent complaints are made by the business community in regard to delays and the other difficulties experienced by them in this regard.

This is where the public sector especially the district administration needs an attitudinal change. Such a change incorporating a business friendly approach could have a far-reaching beneficial impact on the development of business and industry in the districts.

Since regional economic advancement is vital to generate more income and will help raise the living standards of the people, providing a platform for growth should be a primary concern not only to you but to all of us.

Employment

Generating rural employment is yet to another area that is crucial to the total well-being of the country, since the effects of unemployment are far-reaching and are pervasive in terms of individuals and also families.

The worst form of unemployment is those who are educated, namely young women and men with a degree, with the G.C.E. (Advance Level,) or G.C.E. (O/L).

When educated classes are unemployed for a considerable period of time, say for a period exceeding one year, it leads to frustration. Quite when standably since they would feel strongly that justice is not done to them and that their efforts at studying have all been futile. Many of those educated and unemployed place faith and belief that the State could give them employment.

Financial constraints and limitations in the capacity of the State to absorb all or the majority of the unemployed is a reality all of us need to accept.

As I said at the outset the State is only a regulatory and a governing organ. On the other hand the Private Sector is the engine of economic growth. If the Private Sector could function with greater efficiency and expand with speed unemployment will be reduced not completely but to a high degree. As you all know complete and total employment is a myth and is not practically possible even in the most developed of economies.

Therefore, the main responsibility for the generation of employment rests with the private enterprises whether they are large public companies of which there are nearly 300 in the country and the private limited liability companies which today number over 50,000.

Fortunately for this country even since economic liberalization began in the 1970s we have had a lively and growing private enterprise system which apart from the two groups mentioned above cover partnerships, family owned small business like retailers and individuals in business as well.

If you look at the total picture of the economy in this country it will be realised that it is the small and medium sector that forms the backbone of the economy. More than 70% of the economic activity rests with the nation's small sector. This is not something unique to Sri Lanka.

A similar scenario prevails in the most advanced countries like Japan and Germany. However the single difference between SME's in the two countries mentioned above and Sri Lanka is that in the former the SME's function in a climate and environment that greatly facilitates their effective functioning whereas in Sri Lanka thy lack that kind of environment.

As I said at the outset the efficiency of the district administration enables a healthy functioning of the economies in such districts. Therefore a greater responsibility is cast on you to ensure that you create the environment through a regulatory process to help especially SME's to operate smoothly.

An effective partnership for development also depends to a significant degree on the way in which collaboration and co-operation takes place with a host of private sector institutions, NGOs, the banking system and other such institutions engaged in developmental activity.

Perhaps the most effective of all these institutions for rural and regional collaboration with the public sector are the Chambers of Commerce as also the banking system.