Can we respond to the challenges?

The year may also be remembered as one when the responses to the challenges were weak and when the constitutional and political structures compounded the economic problems. The national tragedy is surely the fact that the crisis did not bring together the divisive political forces, but became an opportunity to wrangle over the situation for partisan gain and power. Consequently the economic crisis deepened.

It was a year when the international economy fared badly and began to continuously affect our trade dependent economy adversely. In contrast to a 20 percent growth in exports in 2000, the first half of the year registered a 1.5 decline in exports. Most disconcerting was the fact that industrial exports fared badly with a decline of 2.6 percent in the first half of the year. Garments, the mainstay of our exports, decreased by 4.3 percent. The prospects for our exports during the rest of the year appear even less promising. It is decisively bleak with the developed countries, especially the United States, moving into a recession.

The drought conditions at first affected paddy production. Later it was to be so severe that there was inadequate water for even basic living needs in some parts of the country. The human tragedy and social costs are dismal to recount. It was a further strain on meagre resources as well. Then the drought affected the reservoirs. Their water levels were inadequate to provide power. A blow to industry as well.

The drop in both agricultural and industrial production cannot be solely attributed to either the drop in international demand or the climatic factors. There were more fundamental reasons as well. Industrialists were moving out of the country owing to the law and order situation and industrial disputes. Agricultural producers were becoming less viable. This was particularly so with respect to food crops. Tea was affected by political disruptions, while rubber production has been on a declining trend owing to structural problems in the industry. The result of all this was a drop in production of paddy, tea, rubber and coconut. There is a prospect that production of some crops would revive next year, but one cannot expect the same with industrial manufacture.

The big blow to the economy came with the attack on the airport and its attendant problems of freight increases, increased air fares, reduced flights to the country and a drastic reduction in tourism and loss of business confidence. The political crisis compounded it all. The economic costs and repercussions of the bomb blast are yet to have its toll on the balance of payments and the budgetary outturn.

It is at a time of economic crisis when a strong and decisive government is most needed, not at times when the economy is cruising smoothly. The tragedy for the country was that at this hour of need the political and constitutional crises compounded the problems, disrupted economic activities and eroded business confidence further.

Are we any nearer a political solution that would enable us to cope with the multidimensional crises? Is it not a time to design a constitutional framework that would enable the country to avoid political disruptions that would seriously damage the economy? Can we respond to the challenge in such a manner as to address fundamental weaknesses in the body politic and the economy?

Looking beyond

Recessionomics: Moving hopelessly from tragedy to farce

By Arjuna Mahendran

Clearly, the economic backdrop of a looming recession hangs heavy on everyone's mind. It's partly a case of America sneezing and us catching pneumonia. Right now, even Europe and Japan are showing signs of acute economic recession ahead. Economic interdependance among the G7 economies has reached unprecedented levels, fuelled perhaps by the 5-year-old obsession of over-investing in technology. Looking back with the advantage of hindsight, the returns were simply not forthcoming either in terms of profits or enhanced labour productivity. So we have the current slashing of investment by major global corporations and multinationals causing rising unemployment everywhere.

This has meant that economic growth in the US this year will subside to 1.5%, with most of that residual impetus coming from consumer spending. Since Sri Lanka only produces consumer goods and hasn't invested much in technology and machinery manufacture, we could have got away lightly. Under normal circumstances, the Sri Lankan economy might have even posted growth of up to 4%, which isn't bad in a global recession.

But all bad things come in droves. To compound the ill effects of global recession, we have the worst drought in more than a decade and the Katunayake debacle. The combined effect of these two events will probably wipe out the 4% growth that could have been. So we have to be content with near-zero or maybe negative growth.

But that is not the important issue, since there isn't so much we can do to reverse the ill-effects of these natural and man-made disasters in the short-term. More important is the need to learn from our mistakes of the past and redress them for the future. But this does not seem to be happening.

For starters, let's hear what the future policy makers, i.e. the JVP, who are about to lecture the probationary government on the November budget, have to say. Frankly not a lot. I have been leafing through the newspaper interviews given by several senior JVPers in recent months, but precious little is stated about their economic policy outlook for the country.

Some of our wiser capitalist roaders shake their wise heads in despair, saying this leopard hasn't changed its spots. The JVP is all out to mobilise the proletariat to agitate in the workplace and eventually nationalise all private enterprise. The closure of the Unilever ice cream factory and Munchee biscuits fleeing its native production site is the cutting edge of a dire anachronistic Marxist wedge, say the doomsayers.

Nevertheless, a senior member of the JVP had an interesting rationale for NOT pursuing privatisation as an economic strategy. If I read him right, his contention was that since China was the fastest growing economy in the world today, and since its economy was run by state-owned enterprises, Sri Lanka should emulate this model. Refreshing change in ideological slant indeed, even if factually wrong.

China's economy has grown at an average of 8-9% over the last two decades because she managed to attract mind-boggling amounts of foreign direct investment; USD 40 billion in 2000 alone. Overseas Chinese investments back into the homeland account for a large measure of this. Unlike us South Asians who go overseas to become professional economists, housemaids, doctors etc. the Chinese went into business in the West and thrived. It's their hard-earned cash that has returned to transform North Asia into the fastest growing region of the world - NOT the state-owned enterprises so beloved of our local Marxists which, in fact, are being shut down and/or privatised by none other than the Communist Party of China. 

President Jiang Zemin is currently attempting to bring successful private businessmen into the politbureau of the Communist Party. This is the strongest evidence we have that the private sector is indeed the engine of growth in China today.

In South Asia, however, the bulk of the savings of our migrant workers is unlikely to return. Our migrant populations simply do not trust their governments to protect their investments, and perhaps justifiably so. India, though comparable to China in terms of its population and size, is struggling to get USD 2 billion of investment this year. In Sri Lanka, inward remittances have fallen 10% in the first half of this year. The JVP is thus far away from their dream of recreating a Chinese economic miracle in Sri Lanka.

Deng Xiao Ping, the architect of China's economic miracle, once said he didn't care whether a cat was black or white so long as it caught mice. The JVP would do well to study his strategy for integrating capitalist modes of production into the command economy. Deng would not have approved of chasing multinationals away from Sri Lanka.

So, the first step in redressing our economic woes is to drive some sense into the JVP. The private sector has to become more vocal and active in this regard. In the Philippines, it was the big business groups who did most of the spadework to achieve the People Power 2 ouster of the Estrada regime; the Church and the armed forces merely sanctioned it. Perhaps our business leaders might better spend their time engaging the JVP in serious and hopefully productive discussions rather than wringing their hands and crying out for national governments and peace. We need to develop a vision fast for 2002, not 2010 or 2020. Otherwise the tragedy of 2001 might lapse back into a farce of dialectic materialism.

The author, who plans to contribute a regular weekly column on economic issues, is a well-known Sri Lankan economist currently based in Singapore where he heads Asian Economic Research for Societe Generale, a French bank. Before that he worked with various government agencies in Sri Lanka.

The delegation phobia facing many Sri Lankans

By Ms. Chula Perera (Senior manager and a professional engineer)

Managers be(A)ware

Causes

These germs, slowly get into the mind of the manager subconsciously, during the early stage of his career and forms a merger with the "EGO." The germ is activated when the breeding enzyme called the "authority" starts generating in the blood stream, There is another enzyme which plays a vital role here, "Influence of superiors". It could act in both ways, either positively or negatively, i.e. to accelerate or retard the breeding of the germs. Development of the germ in the presence of the secreted enzymes will lead to the disastrous disease, "Delegation phobia", over time. There may be many other internal and external causes which contribute to the development of the germs.

* Workoholism.

* Low values and negative mental attitudes.

* Lack of confidence, internal strengths, talents and capacities.

* Lack of leadership qualities.

* Internal threats to promotional prospects.

* Lack of social interactions.

* To make others feel "I am indispensable".

* Inability to tolerate/accept the innovative or creative ideas from the subordinates (Inferiority complex).

* To create "I am the man" impression on the top management and outsiders (Superiority complex).

* "Nobody", "no time", no patience" to delegate; Everything is urgent mania.

* Ignore the layer of immediate subordinates, as you fear that "they will shine better than you" or fear that" they cannot be relied upon".

* To hide from subordinates, decisions taken at meetings, as you believe that "Everybody need not know everything".

* Subordinates who are involved in the work are not allowed to participate at meetings because, "Rallying at the meeting is totally unnecessary" and "Only I should participate".

* Feeling that the "Career development activities of subordinates are totally outside the office activities and that they should find their own time to attend to such activities".

Diagnosis

If your answer to one or more question is "YES", you are already attacked by the disease! Still, do not worry! The health services are so advanced that all you need to do is to follow the prescription strictly and swallow the pills daily, until you are recovered completely.

Prescriptions

The following pills are prescribed for daily use in the mornings, before coming to the office.

* The strong pill: "Determination for elimination of the disease", 'if you think you can: YOU CAN!"

* Equally strong pill: Cultivation of values, positive attitudes and leadership qualities". The key to success is knowing yourself.

The following three capsules must be taken immediately after coming to the office. The absorption or the effectiveness of the capsules will depend greatly on the proper usage of the two pills prescribed above.

* Give up control of part of your job. Give your subordinates responsibility and authority and trust them. "People work for challenge, satisfaction and recognition".

* Monitor carefully but don't over monitor. "With a smile, working together works faster, better, smoother".

* Praise them in public; reprimand in private. Condemn actions, not people.

The capsules prescribed below are strictly recommended to be taken at least eight times a day.

* "When your heart swells, the brain shrinks", so be simple and positive in your thinking".

*Though "smarter than you" learn to accept and appreciate innovative and creative ideas though it may come from your juniors. Admit your mistakes gracefully. "Should you differ, differ with dignity, but be disciplined"

* Ensure that you "develop the team spirit of subordinates", Do not forget the "Theory of Synergy, 1+1=2".

* Ensure that your "subordinates are aware of what is happening in the department", the work involved, the decisions taken and the targets to be achieved. "People want to work and they want to work purposefully".

* "Develop mentality" to enjoy and appreciate others achievements. "Don't worry, be happy".

* To the best of your ability, "Help career development of subordinates, "while attending to your own career development". "Helping people, helps in the long run".

Proposed computer crimes bill to help rapid development of IT

By Sonali Siriwardena

The proposed Computer Crimes Bill – drafted under the aegis of the Computer and Information Technology Council of Sri Lanka (CINTEC) hopes to bridge the yawning gap between the available statutory provisions and the rapid development of technology.

"The basic problem with the present law stems from the fact that under the Penal Code of 1883 'property' is defined as something tangible be it movable or immovable. This means that even when proving a case of fraud, the law is structured in such a way the conditions that need to be fulfilled are based on the assumption that they are tangible.

But the element of 'intangibility' of property, which has now crept in with the growth of E-commerce transactions has changed the whole concept of property," explained Attorney-at-law, Mr. Kolitha Dharmawardena.

An expert in the filed of Cyber Law and a main player in the formulation of the draft bill, Mr. Dharmawardena stated that the statute, which took over six years to formulate, is in response to the realisation that existing laws do not adequately cover certain criminal offences. Section 2.3 of the Computer Crimes Bill contains the principle omnibus offences such as the unauthorised access to a computer whereas Section 4 and 5 criminalises an attempt by an unauthorised person to cause a computer to perform any function. More substantial specific offences are laid out after Section 5, which even border on issues pertaining to copyright. One of the more important clauses is Section 7 where 14 sub-sections aptly cover a wide range of offences including computer piracy and defamation.

"This bill comprising 27 sections, is fairly comprehensive in relation to substantive law, but the trouble lies in the procedural side of things," said Mr. Dharmawardena. Thus although Section 18 of the bill states that the Inspector General of Police may, in consultation with CINTEC, constitute a panel of experts to assist in the investigation of offences under this Act, finding a pool of experts, willing to render their expertise to a protracted court case, is no easy task. The need to have IT trained police personnel and judges also make the problem appear well nigh impossible for resolution.

The law relating to evidence is another glaring problem. Mr. Dharmawardena explained that the Evidence (Special Provisions) Law provides for material to be produced in court only when certain conditions are satisfied such as the proper functioning of a computer, etc. But when dealing with computer related crimes the problem is converse because it is difficult to establish the conditions of admissibility. Thus a different approach to evidence must be adopted if the bill is to be effective.

In relation to implementation, the pressing issue is the blatant lack of completing E-commerce legislation in Sri Lanka such as data protection and information technology laws to bolster the provisions in related statues. The applicability of extradition laws is a possible remedial measure to be considered in this respect.

The granting of extra-territorial jurisdiction to the High Court in respect of offences committed in Sri Lanka is another welcome addition to the bill. A provision enabling the Minister of Justice to make regulations in terms of implementation is also to be included in the final draft of the statute.

In terms of our Asian counterparts, Sri Lanka is lagging behind with the likes of Bangladesh and Nepal in relation to the law on IT and modern industry. Mr. Dharmawardena stated that the growth of E-commerce in countries such as Malaysia is because they regard electronic law as an area of high priority. Even India has responded to the need with an Information Technology Act in year 2000. "We cannot afford to lie complacent but establish a proper legal environment to cater to the technical and legal challenges posed by electronic transactions," he said.

The business community meanwhile has expressed cynicism regarding the proper implementation of this law. Speaking at a recent discussion on the subject at the Law and Society Trust Centre in Colombo, attorney-at-law Mr. Aritha Wickramanayake said the loss of faith in the efficacy of the legal framework especially in regard to offences of this nature has resulted in the corporate sector adopting defensive strategies. The question of practicality is of primary importance due to the lack of developed legal mechanisms or supportable legal analogs, for the E-commerce infrastructure in the country, he said.

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