Chamber of Small Industry celebrates 44:

Government must support export promotion incubator system

“If the Government can support and make sure that the export promotion incubator concept works properly, then the stakeholders of small and medium sized industries will have a brighter future, said President Sri Lanka Chamber of Small Industry Aloy Jayawardene at their 44th anniversary celebrations at the Water’s Edge recently.

The country’s foreign trade deficit and foreign borrowings are growing rapidly year after year and we have observed a general tendency to send our human resources out of the country with a view to bridging this deficit.
 

But, the repercussions of that is, we are losing the services of our most valuable human resources to develop our own economy, leaving aside the social impacts of keeping them away from their own families.

“We are already facing the direct consequences of the loss of human resources with only a 3.6 million effective labour force left in our country for the development of our own economy.

Today our members are facing problems of finding suitable Sri Lankan employees to fill their existing vacancies, as 1.5 million of our labour force has been already sent out to develop other nations.

“We have seen excellent talents in marketing various products by all our importers. We also have talented entrepreneurs in this country who are capable of building business empires in various fields.

All we need is to create an atmosphere which will attract all these people to focus their attention and skills on exports. The only way this can be achieved is by way of offering generous export incentives for exporters.

All incentives need to be given exclusively to 100 per cent Sri Lankan owned organisations engaged in the manufacture and export of non traditional export goods. With a minimum value addition of 35 per cent such offers by the State will attract and prompt the highly skilled entrepreneurs to immediately act on utilising their talents in export activities.

This will certainly result in bridging the foreign trade deficit, enable higher remuneration to Sri Lankan employees and minimise the out flow of our human resources.

It will also attract the migrant labour force to return to Sri Lanka and make a much larger contribution to our own economy.

“Our proposals to encourage exports which we have told the Government is to reduce the corporate tax from 15 per cent to 7.5 per cent for exporters, offer duty free vehicles, introduce a export grant of 7.5 per cent of the total invoiced value in cash, dividends to be exempted from tax and introduce special interest rates. Since exporters are always on the global move, to provide them VIP facilities at airports.

To compete in the global markets the high energy cost is one of the significant barriers, that exporters be provided electricity at special rates. Dahas Diriya programme of the Export Development Board to be re-activated.

Remove the UDA levy of 4 per cent for new buildings to export oriented enterprises. This levy could apply to property developers, as the country is already flooded with them, building apartments in abundance.

None of our proposals placed before Government have been reflected in the recent budget for the development of SME exports. If the Government fails to give a hearing to the SME exporters, the foreign trade gap will increase further and it would be detrimental to the country’s future economic development.

Whether we like it or not, the reality is that the country is today in the throes of an armed conflict that consumes much of its revenue. There are many other areas of economic activity that have suffered set backs on account of the armed conflict.

A fortnight ago in San Francisco in the United States, a once, small start-up company staged the world’s biggest conference cum exhibition, stopping traffic, closing some streets.

The traffic stops and temporary inconveniences was so unlike the daily inconveniences we undergo in Colombo to allow ‘powerful’ politicians to have their say and way.

Oracle - the small start-up operation which began in 1977, in 30 years emerged as the world’s largest enterprise software company. How many of our SMEs can boast of reaching even national status?

This is due to the inability of our start-ups unable to get the momentary going, due to lack of State support. It was only at our 43rd anniversary celebrations last year that the Chamber of Small Industry signed a ‘Memorandum of Understanding’ with the SME Bank for assistance to our membership.

This was the only institution that would have jointly undertaken risks with the entrepreneur, which is now no more.

It is unfortunately how policies such as this kill the very essence of the country’s economy where more than 70 per cent on its development is driven by the small and medium sized enterprises. It was my personal cry at every forum for a number of years that the SME Bank was established.

Development of SME’s is the lifeblood of the nation. But to what extent this would actually happen, is a billion rupee question. The ‘Oracle’ experience in San Francisco of how a small start-up became a world leader is a lesson for our policy makers and an eye opener on how to develop the SME sector. But will we ever learn.

Over 1,600 trade unions exist in Sri Lanka.

Three space travellers aboard a rocket to the moon where explaining the reasons for their voyage. The American astronaut says “My country intends to dominate outer space”.

The Russian astronaut says “My country must compete against the Americans.” The Sri Lankan trade unionist says “In my country, full moon days are holidays and on the moon, every day is a full moon day.”

Trade unions can carry out a very important function in Sri Lanka, they should be social partners whose role is to ensure productivity and enhance workers standard of living. They have become political stooges of the government. As a consequence even legitimate rights of workers are subjugated for political reasons, to appease the government.

Labour law is the most dynamic area of law in the world today. Labour law affects the entire society through the working class. Our labour legislation being over 50 years old is outmoded. India has a National Labour Commission under the stewardship of a retired Chief Justice.

The National Labour Commission measures, changes in global labour standards, based on which it makes amendments and places them before the Government for consideration.

Hence labour legislation in India is brought up to the required standards through amendments that are appropriate for the evolving environment.

Sri Lanka too should follow India’s pattern. A National Labour Commission on the footing of the Indian model is imperative. Sri Lanka have many eminent scholars, judges and trade union leaders who can serve on the Commission and evolve a Law that is compatible with the changing circumstances.

Sri Lanka borrowed heavily to finance development and imports once the economy was opened up but now finds paying back these debts which are growing burden.

The Government is now facing the problem of finding ways to fund imports and prevent shortages. The IMF the cheapest source of funds has insisted that the Government takes hard economic decisions if it wants to keep borrowing.

These decisions are politically difficult for a Government under much pressure but it does not seem to have any other option. Most believe that if political stability returns to the island nation it will again be able to enjoy the high growth rates of 1977 to 1983 period.

The last 44 years have seen our Chamber grow from a small industries association to its present status in our land. The names of its members who have passed into the halls of fame are many and also are the industries they launched, as truly small, and have now reached the zenith of corporate success.

We are no longer an association but a chamber with power and capacity, standing shoulder to shoulder with the nation’s leaders of industry.

The Ministry of Industrial Development has prepared a Cabinet paper to be presented to Parliament to add to our name ‘Medium’. We are grateful to Nirupama Rajapaksa, who agreed to move this in Parliament.

Once other formalities are completed, we will be then known ‘Sri Lanka Chamber of Small and Medium Industry’. We hope to achieve this before our 45th anniversary in 2008.