14 August, 2020

Blog

SME – Innovations Are A Must For Delivering Economic Prosperity

By W.A Wijewardena

Dr. W.A Wijewardena

Dr. W.A Wijewardena

Need for modelling growth on knowledge

As pointed out in the previous two parts ( click here and here), Social Market Economy to be set up in Sri Lanka has been qualified by two attributes by its proponents. It is to be ‘knowledge-based’ and it is to be ‘competitive’.

‘Knowledge-based’ means that the economy will be dependent on ‘the quantity, quality and accessibility of information available instead of traditional means of production’ that are normally used for economic activities.

Sri Lanka being a relatively resource-poor country has to model its future economic growth on its knowledge base which has to be accumulated through education, training and research and development. Competition will create an enabling environment for productive use of that knowledge base across the economy by offering fair opportunities for everyone to engage in economic activities.

Knowledge should be relevant as well as applicable

Creation of knowledge is one thing but using that knowledge for economic activities is another. London University’s Education Professor Alison Wolf in her 2002 book ‘Does Education Matter? Myths about Education and Economic Growth’ says that education or knowledge matters if there is relevant knowledge and if there is an enabling environment for using that knowledge productively.

This was elaborated in economic terms by Austrian-American economist Joseph Schumpeter in his 1911 book ‘The Theory of Economic Development’ and in his subsequent publications. According to Schumpeter, continuous economic growth comes from innovation which is different from invention, the creation of an output of knowledge.

Inventions do not help unless they are used commercially

Knowledge will enable researchers, engineers and scientists to create new things which are known as inventions. There are thousands of such inventions made by knowledgeable people every day but not all these inventions lead to creating a commercially viable new product or service.

For instance, there are stories of some Sri Lankan youth inventing remarkable new products such as a sea-water driven motor car or a multi-tasked paddy-thresher. While such inventions have their own merit, they may not be commercially viable at the current stage of technology due to a higher cost of production than available alternatives.

Hence, they just remain as prototype inventions incapable of going through an assembly line of a factory that depends on commercial viability for its survival. Schumpeter says that these inventions are used by entrepreneurs by converting them into commercial production lines. That process is called innovation.

Researchers lack capacity to use inventions commercially

According to Schumpeter, innovation leading to the continuous economic growth of a country is a process and it consists of four stages. The first stage is the invention where a researcher or a scientist, through elaborate experiments, comes up with a prototype of a new product.

At the time of creating these inventions, the scientist or the researcher concerned has no idea about whether they will be commercially viable. He only knows that it will change the prevailing world habits or systems.

Commercial viability comes from two other factors. One is that there should be a demand for the new product in preference to what is presently available in the market. The other is that the producers should be able to produce it at a cost that would generate a profit when sold at prevailing market prices. If these two conditions are not met, the prototype invention will just remain an invention only on paper.

It is entrepreneurs that generate innovations

In the second stage known as innovation, enterprising people will draw, according to Schumpeter, on the discoveries of scientists or inventors and convert them into commercially viable products or services.

By doing so, they create new opportunities for investment, growth and employment. But for them to do so there should be mechanisms for making such new discoveries available to them for use in commercial production and a guarantee of their right to use them, known in economics as ‘property rights’.

This involves linking research institutions with business. In the case of private research institutions, the question does not arise since private researchers should necessarily have to sell their research outputs to those who could use them productively.

The problem arises with respect to State-owned universities and research institutions which are normally reluctant to pass their research outputs to private sector-owned businesses. Though such disabilities are not there in the case of State-owned businesses, such businesses do not have proper business acumen to convert a research output into a viable market product.

Steve Jobs innovated the Macintosh desktop invented by Stephan Wozniak

Hence, inventions per se do not lead to economic prosperity. There should be entrepreneurs who are willing and able to convert such inventions into marketable products. A good example is provided by Apple products.

According to the biographer of Steve Jobs, Walter Isaacson, the first Apple Macintosh Desktop was invented by engineer Stephan Wozniak. However, he was not an entrepreneur but a shy engineer. It was the enterprising Steve Jobs who carried the project forward and mobilised the resources needed for producing the Macintosh desktop computer on a commercial basis.

So, if the innovator Steve Jobs were not there, the world would not have had the path-breaking Apple products that revolutionised the world’s information and communication technology applications.

Innovations should get diffused

The third stage is called ‘diffusion’ or making such knowledge available to interested parties through the market mechanism. According to Schumpeter, it is the entrepreneur who performs this task as well.

Diffusion is a concept first put forward by researcher Gabriel Tarde in 1903 when he said that knowledge disseminates over time taking the shape of a slanted English letter ‘S’. This is because every new product has its own ‘product life’ growing rapidly in the initial stage and then coming to a peak before it starts to decline again. At this stage, a new product will take the place of the old discarded product.

Tarde identified five stages of the innovation process: Initial knowledge from the invention done by a researcher, forming an attitude of the invention, deciding whether to adopt or ignore the invention, using the invention in a commercial production and confirming the decision to adopt the invention continuously. Once one innovator comes to the market, there will be others who will follow his lead. It then leads to more inventions and innovations.

Successful innovations are imitated like a pandemic

The final stage arises from diffusion where other entrepreneurs will imitate the initial innovation. At this stage, innovation spreads across the economy like a pandemic. There will be hundreds and thousands of new entrepreneurs who will imitate the initial trailblazers.

This was evident in the computer industry. Before the 1970s, it was the mainframe computers that ruled the world. But after Stephan Wozniak and Steve Jobs broke the rules by producing the first Apple Macintosh desktop, a new desktop computer industry was developed throughout the globe. Then, it was a series of new inventions and innovations that started to supply the world with laptops, tablets, phablets and now hybrid tablets.

Government’s role is to promote innovations

Thus, it is not knowledge per se that will usher prosperity to Sri Lanka. It is the conversion of knowledge into marketable goods and services through innovation, spread of the information on innovation through diffusion and imitation of such innovators that will bring continuous high economic growth to a country.

Hence, the role of the Government is to create an environment conducive for invention, innovation, diffusion and imitation. This is where Sri Lanka lags behind many nations in the world as revealed by the latest Global Innovation Index or GII published by Cornell University, INSEAD and World Intellectual Property Organisation for 2015.

Sri Lanka is a laggard in the global innovation club

Taking into account some 79 different aspects relating to an innovation economy, GII has calculated an innovation score for 141 countries. Of them, Sri Lanka has scored 30.79 marks out of 100, ranking 85th globally.

Historically, Sri Lanka has been a low-level innovation economy and the current GII has confirmed it, though its score and ranking have slightly improved in 2015 compared to 2013. In the latter year, Sri Lanka’s score was 30.4 and its raking was 98. Hence, Sri Lanka’s current position is an eye-opener for the Government which is interested in establishing a ‘knowledge-based competitive social market economy in the country’.

Sri Lanka’s innovation efficiency is low

The index value is the combined outcome of two sub-indices, one on innovation inputs and the other on innovation outputs. The ratio of outputs to inputs depicts the innovative efficiency of a country. If a country has an innovative efficiency ratio of more than or close to one, that country has a high innovative efficiency.

Sri Lanka in this case has an efficiency ratio of 0.76, needing much improvement in the innovation front. The innovation inputs consist of five broad categories, namely, institutional structure, human capital and research, infrastructure, market sophistication and business sophistication.

In innovation outputs, there are two categories, namely, knowledge and technology and creativity. In all these categories, Sri Lanka’s performance as an innovative economy has been far from laudable. It also opens a wide policy corridor for the Sri Lanka Government to adopt for implementation if it is really interested in building its knowledge base and its application in business.

Spend more on research and development

The report has highlighted that it is research and development that lead to technological inventions. A country should secure its technological potential by investing a sufficient amount of resources in R&D. Sri Lanka’s current R&D expenditure stands at 0.2% of its GDP in 2013 in comparison to a world average of 1.7%.

In the case of highly innovative countries like Israel, R&D expenditure has been as high as 4% of GDP. Sri Lanka is currently planning to increase its expenditure on education progressively to 6% of GDP. It is necessary that at least a half of this expenditure be incurred in the R&D area in order to gain the full technological potential that is necessary for Sri Lanka to elevate its status from a lower middle income country to a higher middle income country within the next decade.

The report has also presented six key principles which a country has to follow in order to make it an innovative nation.

Introduce innovations across all industries

Principle 1 requires a country to have an innovation policy aiming at improving innovation in all industries. A country seeking to move from an upper middle income country to a rich country should improve innovations in the manufacturing industry in general and high-tech industry in particular.

However, for a developing country like Sri Lanka where innovations are at a low level, it is necessary at first to improve innovations across the economy.

Don’t allow inefficiency of one sector to rub off onto others

Principle 2 is a further development of Principle 1. It highlights that a country should support through its innovation policy all types and phases of innovation, not necessarily confining itself to high-tech industries. This is because the innovation gains in high-tech industries are negated if other sectors in the economy are lagging behind, causing their inefficiencies to rub off onto improved sectors as well.

Go for disruptive innovations

Principle 3 requires a country to adopt what is known as ‘disruptive innovations’ so that it can directly get itself linked to the advanced economies in the world. This is what Joseph Schumpeter termed as ‘creative destruction’.

The mistake which many countries commit in introducing innovations is to go for marginal improvements in the existing industries.

On the one hand, such marginal improvements are incapable of generating a sufficient prosperity for the nation. On the other, they also widen the technological and innovation gap between the country concerned and other competitors making it difficult to compete with them in global markets.

Make capital goods available at an affordable price

Principle 4 relates to making capital goods imports available, especially those products relating to information and communication technology, at an affordable price keeping such prices low. This is to enable a country to replenish its worn-out capital quickly.

If this is not done, innovation processes started by the country lose steam, productivity improvements stagnate and competitiveness started by businesses starts declining. The way out for countries to do this, according to the report, is to keep tariff and trade barriers low.

Support key innovation inputs as well

Principle 5 highlights the need for supporting the key innovation inputs on a wider scale. In addition to the availability of ‘best-in-class’ ICT, the other inputs such as reliable digital infrastructure, a skilled workforce and new knowledge should also be available to businesses.

It is necessary to support both the production and the transfer of such key innovation inputs to businesses. For instance, if a State-owned research institution comes up with an invention, the Government should have clearly laid out policy principles for private businesses to acquire such inventions having paid the due amounts.

Create a dedicated outfit to implement national innovation strategy

Principle 6 is concerned with developing a national innovation strategy and suitable organisational structures to implement such strategies.

Successful innovation nations have benefited from the creation of such dedicated organisations to carry their national innovation strategies forward.

If such organisations are established under the direct supervision of the head of the state, it would immensely facilitate them to attain their goals easily by coordinating with other State and private organisations.

One innovative businessman is worth more than 100 bureaucrats

Sri Lanka is ranked very low on the global innovators’ scale. If the country is to rescue itself from the depths to which it has fallen, it is necessary for Sri Lanka to produce not only knowledge but also create an environment conducive for it to innovate such knowledge in commercial enterprises.

This is to be done by private entrepreneurs and not by Government bureaucrats. In this context, creating one innovative private businessman is better than producing a hundred Government bureaucrats.

*W.A Wijewardena, a former Deputy Governor of the Central Bank of Sri Lanka, can be reached at waw1949@gmail.com

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Latest comments

  • 1
    1

    How wonderfully out of touch the author is.

    He is talking about innovation and SRI LANKANS. He is gloriously western educated and western thinking.

    For a country to prosper we need to have good political leadership in the first place. All our politicians are only concerned with nepotistic glory and acquiring wealth on a massive scale by all means, mainly by corrupt means. Their minds are full time occupied by these lowly issues. Innovation or economic prosperity or for that matter ‘Yahapalanaya’ are only words that they now and then spew out without attaching any significance.

    When the world has moved forward towards interplanetary travel, we have not even innovated a machine to make either a shirt button or a ‘alpaneththak’.
    [Edited out]

    • 1
      1

      Quite right!
      Ranil should first impeach so-called governor of Central Bank, the corrupt insider trader Arjuna Mahendra, who must be investigated along with his son-in-law Aloysius and his firm Perpetual Traders.

      Mahendran has NOT got the qualifications to run the Central Bank and hence lacks the LEGITIMACY and the respect of the CB senior professional staff and there is a lot of conflict there, meanwhile the rupee is in free fall.
      The Central Bank is too important an institution to be run by a corrupt bond trader who is NOT a properly qualified economist. The rupee is depreciating also because the CB lacks credibility and is now a tainted institution like the Judicial system which need reform. With Mahendran who is implicated in insider trading the CB is is a Crisis. Corruption is rife today even as the rupee is in free fall and it is the sri Lanka citizen and economy that is suffering. Please CT editors do a story on the stuggle in the CB against Mahendran and his corrupt dictatorship at that institution which is a DISGRACE to Sri Lanka and bad for the economy.

    • 1
      0

      Very true in what you are saying.I experienced the stupidity and utter corruption of the country government by self seeking politicians in 1960 and I had to leave the country and done well in UK.Sadly since then I have invested a considerable time and money in SL,taking me nowhere. This the worst country to invest as the people from the bottom to the top are hopeless.
      Those who were given an opportunity to work for me had let me down very badly since I left my business in their hand as the4y have reversed back to their old monkey tricks.I was watching them every minute I was there in UK.But my other business which is run by the indigenous Britons are even doing better without me being there.
      We are been brain washed from the young to be religious but not to be tolerant,respectful,hardworking and be honest.You could experience this at the road level to the offices of the government,perhaps to the politicians.
      Since I am the youngest I have to stay back and do some vital construction in SL on our family land where the mason and his co workers failed to turn up as agreed.There excuse was that they had to take their children to the Daham Pasala,but never mentioned that only the night before.This type of deceit is plentiful as the crooked politicians have set a bad example,running to temples,just to deceive the people.
      I will close down several business outlets where the staff don’t turn up on some days attending a christian festival or another Buddhist festival,where I simply can’t criticize them.Therefore I will sack the lot who is taking me for a ride and retain the dedicated.I admire the private firms who are struggling to maintain standards that are required to run a business.I Truly regret investing in SL and the politicans are to be blamed for the sorry state.

  • 2
    0

    Firstly, thank you for this eye opening article.

    What should be added here is the cultural change. We have a good population with very good tech knowledge. We are pretty capable of learning the ins and outs of any new technology. At the end though we end up with a very few who are brave enough to venture into the wild world of innovation. The reason: we have been raised in a culture that prevents us from being taking risks. Stability, settling in life with a “great job” is the norm. There is no encouragement for risk taking from families, schools or even Universities.
    Being a developing country there is very little available in the form of a safety net for those who take risks. Where is the framework for this cultural change? Who should sponsor it?

  • 2
    0

    Dr. W.A Wijewardena

    RE: SME – Innovations Are A Must For Delivering Economic Prosperity

    “As pointed out in the previous two parts ( click here and here), Social Market Economy to be set up in Sri Lanka has been qualified by two attributes by its proponents. It is to be ‘knowledge-based’ and it is to be ‘competitive’.”

    “This was elaborated in economic terms by Austrian-American economist Joseph Schumpeter in his 1911 book ‘The Theory of Economic Development’ and in his subsequent publications. According to Schumpeter, continuous economic growth comes from innovation which is different from invention, the creation of an output of knowledge”

    “Knowledge will enable researchers, engineers and scientists to create new things which are known as inventions. There are thousands of such inventions made by knowledgeable people every day but not all these inventions lead to creating a commercially viable new product or service”

    This is called value proposition or customer value preposition. This takes knowledge. Technical,and market, but innovation requires intelligence.

    My question to you is that to what degree will Sri Lanka fall behind the other countries when the average IQ of Sri Lanka is 79, that of US 99 and that of Singapore , south Korea and Japan are around 106-108?

    Singapore is almost 2 Standard Deviations above Sri Lanka in IQ.

  • 1
    0

    A just economic system will bring prosperity to a nation. Money is sterile; it doesn’t beget more money the way cows beget more cows. Money exists not by nature but by law. The most hated sort of wealth accumulation is usury, which makes a gain out of money itself and not from the natural process. For money was intended to be used in exchange but not to increase at interest and the term interest, which means the birth of money from money is applied to the breeding of money; because the offspring resembles the parent. The pitfall in Islamic finance / economy which are designed to imitate the conventional methods, will gravitate towards the main stream banking.

    • 1
      1

      Maghribi

      “The pitfall in Islamic finance / economy which are designed to imitate the conventional methods, will gravitate towards the main stream banking.”

      Very interesting comment.

      This is called regression to the mean. Once those who are brainwashed in religion die out, and they are replaced by less brainwashed people, the value proposition for each party will prevail based on purely economic terms, not religious terms of getting entry into heaven.

  • 2
    0

    An enlightening and useful article except for some minor errors such as the mention of a sea water driven motor as a local invention which is a myth. Also a correlation between innovation and the use of appropriate technology for a country like Sri Lanka would have been useful.
    Sengodan. M

    • 1
      0

      The spread of knowledge and information is growing exponentially in the world, thanks to the internet. Unfortunately it appears that internet access is available today to less than 10% of the population in Sri Lanka. This has to be enhanced to at least 50% or even more without delay. Alongside, the knowledge of English also should become widespread. It will also be very helpful to have relevant articles of interest written by experts in the Sinhala and Tamil media and spread through internet. Such activities will enhance and quicken the growth of knowledge based industries which would require much less Capitol than heavy industries.
      India is planning to make a leap in this sphere over the next five years!
      Sengodan. M

  • 1
    0

    The spread of knowledge and information is growing exponentially in the world, thanks to the internet. Unfortunately it appears that internet access is available today to less than 10% of the population in Sri Lanka. This has to be enhanced to at least 50% or even more without delay. Alongside, the knowledge of English also should become widespread. It will also be very helpful to have relevant articles of interest written by experts in the Sinhala and Tamil media and spread through internet. Such activities will enhance and quicken the growth of knowledge based industries which would require much less Capitol than heavy industries.
    India is planning to make a leap in this sphere over the next five years!
    Sengodan. M

  • 0
    0

    Thanks to Mr. Wijewardene for enlightening us. The government must be more supportive of innovators.
    One case comes to mind. A young man in Kohuwela is turning our an electric car. He has waited for 4 years and still not obtained a patent. Such cases are many. And then such inventors do not have money to commercialise their inventions. They need support for doing feasibility studies, formulating project proposals for raising funds etc.

    • 2
      0

      We shouldn’t rush to believe these stories about locally turned out electric cars and sea water powered cars. Different types of electric cars are of course already there in the market. There are also hybrid cars that are partly fuel consuming and partly electric. Yet it may take a few more years for them to become competitive with the traditional fuel consuming cars. Water, whether it is sea water or otherwise is not a fuel. It is like ash that is obtained by burning firewood. Hydrogen is a fuel. When it is oxidant end, it becomes water just like firewood becoming ash when burnt. It is unfortunate that it was left to Arthur Clarke, a foreigner resident in Sri Lanka to clarify this simple scientific fact. Our own scientists were perhaps listening to the story like ‘godayata magic’!
      Sengodan. M

    • 2
      0

      Electric cars have been around since the late 19th century, so no one can take out a patent on one. In any case, the purpose of a patent is to prevent other people copying the invention.
      The last locally built electric car I heard of used lead-acid batteries and was claimed to recharge itself while running, which is clearly impossible. Another inventor took the incumbent PM for a ride with his water-powered car. Only Kumar David had the guts to speak up about this.Sri Lankan inventors should avoid such charlatanry

      • 0
        0

        old codger

        “The last locally built electric car I heard of used lead-acid batteries and was claimed to recharge itself while running, which is clearly impossible. Another inventor took the incumbent PM for a ride with his water-powered car.”

        Perpetual machines, that contradict the First Law of thermodynamics.

        The politicians do not know science and scientific principles, the so-called inventors do not know the scientific principles, and fooling each other with perpetual machines.

  • 3
    0

    Local Entrepreneurial Industrial Development – Sri Lanka
    Problems and corrective Initiatives
    Good governance is by men/women of character, culture, wisdom, spirituality, who are living ones, in words, deeds, thoughts, without any dichotomy, nor parroting sweet, words, of do gooders for popularity amongst ignoramus masses.
    Promises cannot be deliver, targets achieved by men/women who are incompetent, ignoramus, dishonest, insincere, and who do not have specialized knowledge, in-depth understanding of problem, stake holders, approach to solutions, methodologies, to work.
    Creation of employment, how and what way. Out of box thinking and path finding. The following writer up spells out some light, a model for in-depth reflection and discussion. Will it clear the bottle necks, obstructions and facilitate all who are at micro level with little skills to bloom their potentials and contribute in a big way may be after ten years to make the country to vibrate.
    Development, Manufacturing, Implementation of Law, Interpretation of Law, Inadequacy of Knowledge of Implementers of Law, and Analytical capacity of local establishments and personal and interpretation inadequacies, damages caused to local initiatives leading to stifling, abandoning projects and programs are areas, subjects to be seriously studied and considered by planers, promoters of development in the interest of National/Nation by the G.O. S.L
    National initiatives should be based on nations needs, market volume and value, capabilities on knowledge, skills, institutional and related supporting units to perform supportive functions whether the objectives are initiated by Govt. or by private sector, to achieve goals of economic targets.
    Who can mobilize resources, capacity or capacity build, assemble various, inputs and will to perform the objective and sustain for the target period.
    The question arise whether Sri Lankan Leadership at various levels, political, technocratic, Buracratic, planners, knowledge leaders, have the objective and will to support such initiative and sort out problems find way out to overcome obstacles and road blocks to facilitate such developmental initiatives.
    This is a soul searching question to be introspected and hard objective, ultruistic dispassionate answers have to be found – by all concerned. Empty irresponsible statements, slogans at various levels of power and platforms will deliver nothing.
    The knowledge on every developmental sphere is exploding. Do we have the strength and will, to harness, to solve our problems, microscopically and macroscopically, overcoming, human emotional and intellectual inadequacies.
    Economic development. What Should be done – Some Thoughts.
    A. Import substitution .
    The objective of imports substitution is to create production of goods and services locally in Sri Lanka, for creating talents, mobilizing and net working skills , capacity build local institution, research and development activity for productive business, economic production , This will catalyze ancillary service activities and employment opportunities.
    B. Capacity build. Individuals, collective groups , establishments .
    Lessons are available throughout the world re, this objective. There is not enough concerted coordinated effort by the Govt., ministries depts. Plans should be developed to work on a systematic way with set time frame , to create new activities. Private sector works on set, limited objective, on specific items or areas of their activities . They also create ancillary activities for their needs and purposes. G.O.S.l Operates on mega projects and areas of regulatory, supervisory role.

    C. Imports – statistics – Data – information
    Sri Lanka imports large volume of various goods for its needs. Statistics are not available for specific individual items for potential entrepreneurs to understand on the value or volume, scope of feasibility to venture , create economic activity for production . H.S. code classification from the customs is not helpful for individual item wise identification, decision making for specific product. Even, if it may be available in some quarters , these are not available from bureaucrats or technocrats for the use , of knowledge for promotors, potential developers. These information’s should be made public as a policy by the Govt., item wise and value as in India. These information’s are made public , export, imports, country of origin value, volume, name an address of the importer, exporter by trade sectoral magazines, publications on a regular basis, periodically on an individual specific item.
    This should be the first step in this holistic approach for mobilizing various levels of entrepreneurs from lowest levels to highest professional levels of persons and establishments which will give an insight and feasibility idea for venture initiatives.
    D. Tenders for procurements, procedures, problems.
    Newer approaches for future with the objective for creating activities within Sri Lanka
    Guide lines for tenders had been developed to promote and streamline local construction industries, initially , and expanded for other activities as Well. These guidelines needs in-depth studies in relation to the present situation to facilitate local production and participation.
    For low level, middle level import supply items and provision of samples for tenders
    The time duration given has to be thought in terms of logistics, customs handling at both sides and handling periods by the air lines on both sides. Certain items raw materials inputs are detained at entry points for irrational reasons.
    There is a practice, that the tenders are evaluated on a package basis, where number of items are clubbed together , out of which might have a few items, which could be manufactured by local enterprises . In such situation, there should be provision , to accommodate , facilitate local initiatives, whenever, wherever , there are such opportunities for promotion of local economic activity.
    Tenders require samples for evaluation.
    Procurement, Tender participants local and foreign established participants have knowledge experience and understanding of the requirements and thinking of the procedures . They are prepared and await for the tender initiatives. New comers will know only , when the tender is advertised re number/ volume of each item of the tender individually and collectively.
    To initiate, prepare and submit tender samples by local initiators.
    Generally, the period is 20 days, out of which four to five days will be non working public holidays. To work on costing of tenders, pricing has to be done, based on some parts ,items for the. Manufacture the end product , Present period of submission of such samples, 20 days is not enough, which will preclude new comers , if samples have to be submitted before tender opening.
    It may be useful , this information of pre tender of Items, is given in advance by publishing in daily papers, at least ahead, to facilitate locals to gear up for such opportunity. Regular foreign participants of such items will have Items ready in their shelves for such activity, participation.

    Tender awards publishing
    Earlier times, in 1980s the awards of international tenders, value, volume, successful tenders name and addresses were published in daily papers for the information, for all concerned
    This was a useful practice to promote new comers / establishments. Non access /available of this information to local entrepreneurs, existent or potential, will only be helpful for foreign manufacturers and tenderers and will prevent long term development initiatives. Policy decision makers will have to give thoughts on this aspects/ matters.

    Tender awards
    Criteria / eligibility for supply of good are based on credentials of the firm, financial viability, experiences of previous supply. For new comers, the above criteria may not be helpful. New norms may have to be worked out to promote , potential manufacturers, initiators to attract them, to further developing their skills, talents and capacities for working together as team members by prospective tenderers, depts. in assisting , sorting out problems, facilitating, issues of bottle necks and blocks with various related agencies, establishments namely , banks , local bodies, testing laboratories, regulating bodies etc.
    Finance
    Foreign successful tenderers being in the trade/Manufacturing, for long years apart from their own financial muscle, are assisted by their financial institutions, export development boards, insurance companies etc for manufacture, export and supply, based on the awards of tenders. These facilities are not available for successful local tenderers. This is one of the main reason, why local initiators do not come forward for local creativity and expansion into new areas.
    Finance assistance.
    The banks are not geared and in not their objective to assist for developmental needs but lend on 100% gurentees. Local initiators ,present and prospective , are mostly handicapped due to inability to mobilise finances to compete with foreign suppliers who are well organised and assisted by the host country mechanisms. New methods have to be evolved by G.O.S.L. In collaboration with international funding organisations like A.D.B. world bank etc.

    Interest / Financial cost
    With high rates of interest by financial institutions , manufacturers are unable to compete with foreign suppliers. Banks must be made to lend at low interest, based on tender awards, where the risk factor to banks, lending institutions are minimal.

    Incentives
    The extra 20 percent incentive consideration for local manufacturers , at the time of tender evaluation awarding , are not given to locals and it is always tenderers negotiate , equates the locals with the foreign pricing and do not provide the extra, 20% provided by policy by treasury, in practice. This will preclude locals as the value of the tender of each item duties imposed on raw materials etc. and value of items is very small, unlike high value single items such as high scientific , technical machinery and equipments. This area has to be thought for small, medium, low technical items of scientific nature, managed by professional entrepreneurs , establishments
    Various slabs of extra incentive consideration based on the knowledge level, scientific input, professional human power, and the R & D work involved has to be assessed for such products and services worked out.

    Technological, scientific inputs for product development

    Is not considered by the tender board during negotiations, which is a negative disincentive for innovation and research and development for manufacturing newer products, items for which high skills, technology are critical factors. Unless this anomaly is corrected, newer areas of manufacturing /production / innovation will not happen and Sri Lanka will never become global players in business. G.O.S.L. Will have to take a lead decision on this matter, and a fresh directives to include the new technological component in the evaluation of tenders, arbitration and supports and facilitation directive has to be issued by the secretary to treasury after due consultations with all relevant authorities.

    Persons sitting on judgment without specialized skills and knowledge of the product is not justifiable in selection of supply/ier,

    Are fair trading norms applied/adhered during decision making between foreign and local manufacture supplier.

    Migrant Workers
    There is a dearth for skill scientific personal to develop high tech scientific productive industries.
    The G.O.S.L should facilitate high skill migrant workers to work in Sri Lankan industries.
    Facilitations for locals
    If equal competitors on skills , values, and other considerations, had participated, awards must be discussed with the participants, negotiated, extra, consideration with conditions, should, could be worked out to promote the local initiatives.
    New codes for development,, manufacturers, entrepreneurs, facilitation, will have to be worked out, by policy makers, in consultation with trade, industrial chambers, bankers and other stake holders.
    Pricing of products depends on the quality of raw materials used, skills and technological inputs and other related factors. These aspects will have to be taken/given due consideration.
    Specification/grades are not taken into consideration by evaluators. Lot of conditions/Laws are applicable for local manufacture which are not applied for import and supply, Foreign manufacturers suppliers.
    Unfair pricing done by foreign participants with a view to stifle, break eliminate local development, and initiatives This aspect has to be considered while evaluating tenders for fair trading and unequal competition.
    Price Comparison : Criteria has to be defined and amplified. In certain cases, customs’ duty is charged for raw materials and not for finished products, of the same components.
    Promotion, Capacity Build local potentials, persons, institutions.
    This is an important area to bring more new comers and set them in motion for activities, which will catalyze long term positive development

    Development saboteurs.
    In certain tenders, though local capability, capacity, proven technology and performed track records are available with local establishments, awards had been done to foreign participants. The reasons for such awards are not known or made public. If reasons are made known, the local initiators could correct themselves, perfect their processes and performances for the subsequent tenders. This aspect should be thought seriously to build capacity and capability, continuously to further R. and D, of such institutions. Corrective and continuous improvements are integral factors of capacity building of institutions.

    CONSUMERS INTEREST AND PROTECTION OF LOCAL INITIATIVES
    Local entrepreneurs. Establishments and small scale operators are the dynamic participants at various levels and act as catalysts for economic development, growth, employment creation and livelihood developments. If they make mistakes, inadequacies in their operations, products, skills, it is the duty, obligation of the government to advice, correct, give guidance and training to them to elevate their standards and make them to grow. Taking note of, and considering inadequacies of testing facilities in the country, supporting Institutions and their role, unavailability of critical components, raw materials, restrictions on of various imports, difficulty in procurement logistics, lack of understanding of difficulty of the developers, indifference in attitude, hostile policing, punishing attitude by implementers of law are hindrance in making Sri Lanka as a notable partner in the world of future.
    The thinking must be based in relation to future trends, innovations for the purpose of economic development of Sri Lanka and its people, and rid of the thinking from the obsolete laws and regulations as all norms have changed ten years of facilitation and assistance to all new entrants of innovation technology.
    Attitudinal changes : the participants, stakeholders, Bureaucrats, Technocrats, policy developers, and others should think and execute their role with the team spirit, objective of local national development, rather not with hostile, attitudes.

    This for the reflection by all concerned

    Old Yarlppanathan

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