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Relocating Industries A Failure

Aug 14, 2010 3:10:37 PM - thesundayleader.lk

Dr. Somik V. Lall and Indrajit Coomaraswamy

A World Bank (WB) study released on Monday said that taking industries to the peripheries in Sri Lanka to accelerate development does not work, but rather what was required was to make accessibility easier for those in the periphery to come to the centre for employment, whilst at the same time making good health, education, roads and similar such services available islandwide.
Indrajit Coomaraswamy, former Director Economic Affairs, Commonwealth Secretariat, speaking at the release of this report said that statistics revealed that in 2007, inland remittances, ie those working within the island and sending money back to their homes scattered islandwide were equivalent to that of foreign remittances.
The vast majority of Sri Lanka’s inland migrant labour is concentrated in the rich Western Province (WP).
“What is of concern is child malnourishment in the country,” he said. According to statistics, malnourishment in South Asian countries such as Sri Lanka was higher than that of Sub Saharan Africa.
“This is serious when considering the fact that the crucial period for brain development is from the age of 0-2 years, he said.
Dr. Somik V. Lall, Co-author of the booklet, “Sri Lanka: Reshaping Economic Geography Connecting People To Prosperity,” in his speech said that the 200 garment factories programme which meant to take development to the periphery was a failure as most of those factories were located in the WP.
Likewise the present Government’s 300 Factories Programme that provide companies with tax breaks if they went rural, has however resulted in Rs. 21 billion of the Rs. 44 billion investments made, being concentrated in the North Western Province, a province bordering the WP, which could not be considered a peripheral area.
Lall further said that goods transport costs in Sri Lanka, probably due to poor road conditions, were more than double than that of the USA. A round trip for a 20 foot container between Batticaloa and Colombo, a 330 kilometre distance, would cost Rs. 110,000 (Rs. 330 km. cost) or US$ 2.90 a km., in contrast a similar trip in the USA would cost US$ 1.25 a km.
And if Colombo is considered expensive, land prices in the other major cities in the region are far higher, paling Colombo into insignificance, he said.
On the issue of finding the necessary monies to fund needed infrastructure development works, Ceylon Chamber of Commerce Chairman Dr. Anura Ekanayake suggested to make the ambit of education in the WP a private sector domain, with the Government providing this free service elsewhere in the country, so that the monies so saved could be rechannelled for infrastructure development works in the village, such as the building of good roads.
The study however pointed out that though poverty was the least in the WP, poverty density was however highest in the WP, compared to the island’s poorest province, Uva.
Ekanayake said that that matter could not be ignored, in his suggestion of the redirection of state funds in education.
Dr. Muttukrishna Sarvanathan, Principal Researcher, Point Pedro Institute of Development, emphasizing the parlous state of Government revenue said that it was not even sufficient to service Government debt.
The report also spoke of unlocking the country’s land market, where much of it is concentrated with the state, as a means to increase labour mobility, so that subsistence farmers could dispose of such properties and seek gainful employment elsewhere.
The possible lack of political will to make the necessary changes which may not be politically expedient, was however glossed over at this seminar.