Mind the trade balance

One of the main problems the country faced last year was a large trade deficit. This together with inadequate capital inflows resulted in a serious balance of payments problem and a drain on our foreign exchange reserves. 

At the end of last year total foreign exchange reserves had fallen to US$ 2126 million with the official reserves component falling to US$ 1043 million. With January's trade performance being a further deterioration, total foreign exchange reserves have fallen to US $ 2016 million and official reserves have fallen as low as US$ 950 million. The picture emerging from the January trade statistics is in a sense more disconcerting than that of last year.

Last year the country posted a healthy growth in exports of around 20 per cent. The deficit occurred owing to the increased imports of crude oil, higher prices of crude and the increased imports of armaments.

In January this year there has been a reversal of the increasing trend in exports. In fact exports in January were 12 per cent less than in January of last year. 

The main factor for this reversal was a decline in manufactured exports from US$ 295 million to 232 million. 

This 21 per cent decline was owing to decreased exports of nearly all categories of exports, including garments. Garment exports decreased by as much as US 51 million or 25 per cent. Fortunately, total agricultural exports increased by 8 per cent owing to increased tea exports.

On the import side, imports of consumer goods increased by as much as 56.5 per cent. Intermediate or raw material imports declined by 11 per cent, reflecting a slow down in industrial production, and capital goods imports increased by nearly 28 per cent. The end result was that imports had increased by 6 per cent.

The increase in imports by 6 per cent and the decrease in exports by 12 per cent resulted in the trade gap increasing by a massive 53 per cent. 

In the single month of January we incurred a trade deficit of US 231 million, US$ 80 million higher than that of January 2000.

In contrast to the experience of last year, when the increased trade deficit was due to higher imports, the picture that emerges this year is that of sluggish exports being an important factor responsible for the increased trade deficit for January this year. This is indeed bad news. If we are unable to reverse this trend in exports and we continue to increase our imports of consumer items, then we could be facing another serious situation in our balance of payments. With foreign exchange reserves as low as they are, this would lead to further pressures on the rupee for its depreciation. This would add to the already difficult living conditions of the people.

We wish we could have dismissed the January trade picture as not necessarily what we would experience during the rest of the year. There are two reasons why we cannot adopt such a complacent attitude. One is the global recession brought about by a downturn in the US economy and an inability of the Japanese economy to recover. The other discouraging indicator is that industrial production has declined in January and intermediate goods imports have also declined. These two indicators are signals that the manufacturing sector is facing poor prospects. 

It is best that these early signs of deterioration in our trade balance are taken seriously. If the global situation does not allow us to increase our exports, then we may have to tighten our belts, especially through curtailment of unnecessary imports by the government. We must be mindful of this situation and realise that as much as global conditions are an important determinant of our trade, domestic policies have an important bearing in its outcome. Mind the trade gap.

Business Editor's note: this article was written before the Central Bank's February data, which shows a rise in exports and a decline in imports, was announced.

Can Sri Lanka bridge the knowledge gap?

Looking beyond our noses

By Nalin Jayasuriya

- Jonathan Swift

The most successful businesses of the future - bigger and more profitable than today's giants will be those that help solve crucial social crises - environmental, health and above all, the educational crisis. Education, for instance, requires deep re-conceptualisation.

Donald Langenberg, Chancellor of the University of Maryland and a former deputy director of the National Science Foundation, speculates that many universities may die or may change beyond recognition as a result of the IT (Information Technology) revolution. Some may be 'virtual universities' that are de-localised across cyberspace.

A transforming force

In a process that may be unique in the history of mankind, we have created a technological capability that is transforming the global societies it touches. Landline telephones in the 1930s and television transmissions in the 1980s provide some rough context, but those technologies were quickly placed under the lock and key of traditional power interests. Perhaps the most important aspect of today's technology is that it proliferates beyond the control of traditional regulatory and industry cliques, though no small effort and expense are being expended to change that.

Most amazing, these changes have defied experts and pundits alike by progressing outside the bounds of any grand design, galvanized in many cases by the simple availability of fax machines, cable television, satellite TV dishes, computers with CD players, and Internet connections. The change has come about at the grassroots level of the world's societies, implemented by people using these new tools to communicate about how and why to accomplish the things they care about.

Consider the change from the fast-becoming-obsolete GEO (geographically located) satellites, to the LEO (low earth orbiting) satellites. Right now, we have about 200 GEO satellites fixed 35,000 KM above the surface of the earth supporting the current e-mail, Internet, video-conferencing, broad-band transmission, etc. In 2002, we will have 1,800 Leo satellites orbiting the earth at 2,500 KM above the surface of the earth. This will reduce the globe from a global village to a global bedroom. Have you thought about that? 

Is Sri Lanka and her businesses ready for the shift? The rest of the world is conscious of the upsides and downsides of the globalisation reality. We, in Sri Lanka are too involved and engrossed with political thinking and political alignment that we have not been able to see beyond our noses. In other words, we are stupid for not being able to focus on priorities and strategies.

The knowledge society

To understand the chicken-and-egg phenomena, it is important to recognise some of the fundamental characteristics of our new knowledge society and the unique attributes that some Western and Eastern educated workers lend to society.

The knowledge society we have entered differs greatly from the industrial society we leave behind. In the industrial society the principal resource was energy, and its tools were artifacts like forklifts, cranes, trucks, trains, cars, and airplanes. Its principal characteristic was that it allowed us to extend the human body.

The knowledge society is different because the velocity of its evolution is much more rapid, and its principal resource is information. Information is a very special kind of resource where it can be weightless, invisible and in many different places at the same time. The tools of the information society drive the creation, storage, delivery, manipulation and transformation of that information. The principal characteristic of the knowledge revolution is that it allows us to dramatically extend the human mind by introducing a new model for learning. The quantum extension of the human mind, combined with the ability to extend the human body has resulted in a new reality; a reality in which the human mind, excluding religion and acts of nature, is more clearly the most powerful force on the planet.

We are all embedded in this evolution, and education has an important part to play. Education is a process. Education is how information becomes meaningful. Information without meaning is useless. 

Education converts information into knowledge, understanding and wisdom. Education is the process through which information is transformed into value systems, dignity, self-worth, freedom, and into civilization itself.

In the Sri Lanka context, it is rather difficult for many politicians, high ranking public officers and CEOs/senior managers to understand the importance of education as I have described above, and be able to identify the needs of the knowledge society. 

The reason being that they already know everything... there is nothing more to learn any more. What is worse, to learn new techniques, and to use the education process to weave information into knowledge and wisdom is seen as unbecoming of a leader, a senior manager, a high ranking public servant, a politician.

In my book of learning, such persons are brain dead and there is little or no value they add to a system or a community. Is it little wonder then that we are steadily but surely going backward in terms of social ethics, economic stability, value system, discipline, integrity and the way of doing business it self.

Economic erosion

In the 1950s and early 60s, Singapore looked upon Sri Lanka as a model to pursue in terms of infrastructure, education logistic support, etc. Where are they now and where are we? 

In 1960, the per capita GDP of Singapore was US$ 346/- while Sri Lanka was US$ 150/-. In 1999, the per capita of Singapore was US$ 21,828/-, while Sri Lanka struggled to US$ 827/-. 

We know that knowledge is wealth. How then, can Sri Lanka bridge the knowledge gap? 

Wrong kind of politics and wrong kind of economics has led to our present Northeast war, and we don't know how to get out of it. We, Sri Lankans need a Vision, not an ideology. Ideology divides people, i.e., communism, socialism, Marxism, etc. 

We have to get rid of the power pyramid if we are to succeed as a nation; the taller the pyramid, greater the corruption. 

The strategy focused to address this question will be the one that promotes the country onto the platform of planned, structured growth. With the intelligence and resources we possess, we could easily be an example to most countries in the Pacific rim. Spirituality and morality can lead us to the kind of culture we want from our communities and we need to integrate our values and culture with modern technology. What is holding us back?

The knowledge worker

Peter Drucker in his book, Landmarks of Tomorrow, and Robert Reich in his book, The Work of Nations: Preparing Ourselves for 21st Century Capitalism, describe the demand for knowledge and learning.

The knowledge worker, or symbolic analyst as labelled by Reich, is that person who can produce new designs and concepts, as opposed to following standard procedures and producing familiar products.

Will and Ariel Durant stated it well: 

"If education is the transmission of civilization, we are unquestionably progressing. Civilisation is not inherited; it has to be learned and earned by each generation anew. If transmission should be interrupted for one century, civilization would die and we would be savages again. So, our finest contemporary achievement is our unprecedented expenditure of wealth and toil in the provision of higher education for all."

While all societies contribute to the evolution of education, economic and work force experts claim that more and more workers at different levels in the organizational hierarchy seek out degrees, on site or by distance education, from Western and Australian Universities. This clearly shows the thirst for knowledge. We see the drive for foreign university education in Sri Lanka as well. It is a pity that we find it difficult to maintain our local universities as a holy breeding ground for scholars and for the dissemination of greater knowledge. After all, the ink of the scholar makes more contribution to a country, than the blood of a martyr.

Under siege

Global libraries strain under the weight of books sounding the alarms of an information revolution and the speed at which new information is being generated.

By conservative estimates, the holdings of the world's libraries are doubling in volume every 14 years. 

At the end of the day, this information must be dealt with by an electrochemical contraption that weighs three (03) pounds, more or less, takes up about half a cubic foot of space, runs on glucose at about 25 watts, processes information at the rate of approximately 100 quadrillion operations per second, looks like a big walnut and is the world's first wet computer: the human brain. That brain is under siege, bombarded from all sides by loads of new information.

The 'Distance Education for Public Servants' (DEPS) project, funded by NORAD and monitored by SLIDA, aims to bring distance education to cover over 10,000 public servants in Sri Lanka. The project has commenced and is underway. What is now important is for these public servants to extract the optimum benefit of this programme via the education distribution system.

Here is where we require the learners to have positive attitude, i.e., humility, self-motivation, self-drive to develop self, courage to apply new learning in work situations, etc. 

I am sick and tired of hearing countless hundreds say that right thinking, honest intentions, doing the right thing, making decisions and executing good ideas, taking initiative, thinking profitability, etc, can never be applied in the public service. 

The answers that I receive to my question 'WHY?' are that the systems and processes are strongly politicized, they are corrupt, the appointed 'so called' leaders know nothing about how to lead, getting penalized for doing the right things, when one stands against what is wrong, hundreds stand to do it for political favour and gain, too many political animals around, etc., etc. 

Now, what the hell are we doing about it? 

For the sake of Sri Lanka, or for the sake of saving what's left of it, why can't we hook on to education, learn new things and actively apply them consciously. Why is it that religion has not helped us to kick 'jealousy' and 'selfishness' in the nose? 

Why can't we get off the 'zombie' roles and awaken. We are sleeping with our eyes open. We must wake up, know the changes taking place around us, generate ideas, create strong teams, be customer focused and move forward.

We are blazing through an information revolution that is technology-driven. If we don't measure up to the responsibilities of leadership in the knowledge content we select and develop to distribute through our new technology, the knowledge society that awaits us will fall far below its potential.

Education challenge

The destruction and death brought about by World War II in Europe, Asia and Africa, left those continents and their societies years behind in their development of key competencies, including education and infrastructure.

The last three decades saw the demand for education evolve at an alarming rate. Between 1985 and 1992 alone, the world's total student body (pre-school through higher education) grew by 119.7 million, from 986.9 million to 1.1 billion. That's a 12% increase in just seven years.

Driven by world population growth, improving literacy rates and desire for growth in personal incomes, the demand for higher education continues to grow.

Tragedy of Athens

Let's take our minds back to the vibrant energy and intellect of Athens during the time of Socrates and Plato. It is only the ruins of Athens, the 'ghost of Athens' that we see today. What is the lesson we can learn from it?

According to Plato, when the Athenians decided they didn't want to give to society, but wanted society to give to them, when the freedom they wished for most was freedom from responsibility, then Athens ceased to be free.

It has been said that Plato, in all his strivings to imagine an ideal training school, failed to notice that Athens itself was a greater school than even he could dream of.

Let us notice our environment. "...critical times hard to deal with are here. Men will be lovers of themselves, lovers of money, self-assuming, haughty, disobedient to parents, unthankful, disloyal, having no natural affection, not open to agreement, slanderers without self control, fierce, betrayers, head strong, puffed up with pride, having a form of godly devotion but proving false to its power.." [2 Timothy 3:1-5, Holy Bible]

It is time to create a country that is, like Athens was, a great school, a country vibrant with interest and excitement about education, a country where educational opportunity is visible to all - no false hype and entertainment, but where hope is alive with rich and useful content, a country that sees the wilderness of information as our new frontier.
The author

Nalin Jayasuriya is the Managing Director/CEO of Worldview Global Education Ltd. and Group Director Corporate Planning, Worldview Global Media Ltd. He is a Consultant to the ADB project for 'Reconfiguration and Enhancing Systems for Expenditure' in the Ministry of Finance (2001). 

He is also Consultant to the UNDP for the Operational and Organisational Architecture and the introduction of a Performance Management System (Dec 2000 to April, 2001). 

He has, previously, led regional HR assignments for Sterling Winthrop, East Africa region, based in Kenya, and was formerly, the Regional HR consultant and Special Projects Manager, Smithkline Beecham International, Southeast Asia and India region, based in Indonesia.

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