Export promotion or import substitution?

I was listening to a recent discussion on TV where a Sri Lankan, working in Saudi called the discussion panel and commented that Sri Lanka was a country where everything is imported from other countries; not even a simple bicycle is made here. The panel members also took the comment as an important intervention and started harping about Sri Lanka not being able to produce what is required by its people.

The next day I had the chance to listen to the Secretary General of the ASEAN over a video conference, where he said the success of the ASEAN countries was due to their export orientation. Elaborating his point he said, unlike producing for a local market, producing for a foreign market is challenging. The quality, cost and timing are important and in the process of meeting these demands, the industries learn to become more productive and efficient.

So while we are lamenting on not being able to produce for the local market the others are seeing producing for the export market as the key for economic take-off.

How come such a drastic difference exists; how could that be explained, especially when the Sri Lankan making the comment is also a person who has been exposed to the world (at least part of it), working in Middle East and the panel that was present that day consisted of well known personalities that influence the thinking of people.

If producing goods for the local market is the solution as recomended 30 years back that would have been considered an acceptable contribution. In 1977 change opened the gates. It removed all protection to local industries. Not only Sri Lanka, except a few countries, others too have converted, including those who were in the socialist block. It may be true that we opened the economy too quickly, in 1977, without allowing the local industries to adjust. As a result many players that could have been developed into international businessmen would have wiped out totally from the market. But that is the past. We cannot reverse the history. We cannot resurrect those dead industries.

Though a sensible person would agree that we opened too quickly (it would have been phased out he would say) very few would say opening itself is bad; anyone saying that today, must be out of his/her mind. Other than in verandah discussions where the ignorant are present, no serious person would talk of having a closed economy today; only Burma and few other countries see any appeal in such.

We all know that there are few industries that are doing well in spite of the open economy. They produce goods that are in demand elsewhere in the world. Our clothes are found in all major cities and all major super markets. We produce furniture that is demanded very much in India. We produce activated carbon that is very popular and Sri Lanka is the number one supplier in the whole world. There are software companies that have produced software for large corporations working across shores. There is even a local car manufacturer who is exporting for the Indian market and is already thinking of expanding to other regions of the world.

Why can’t people see these developments? Are they blind or do they see only what they want to see?

I have not heard a single European complaining about not producing their clothes within their national boundaries other than who lost their jobs as a result of companies moving to Asia for cloth manufacturing. Most of those who lost their jobs also have stopped complaining since they are gainfully employed in other sectors by now. Singapore which does not produce a single grain has not complained that they have not been able to produce their staple food within their boundaries.

They enjoy a per capita income of US$ 30,000 currently and are free to import whatever they want, unlike us who produce 90% of our staple food, earning less than 1/10 of that. It is pity that people still live in the past even after seeing the world passing them.

Who is responsible for the ignorance of our people? Is it the politicians who keep on chanting the same old slogans with patriotic flavour or is it the education system that has been blind to what is happening elsewhere in the world? Is it the media that provide what people want to hear or is it the people who are preoccupied with history refusing to see the world? Is it because knowledge available to the elite (through video conferencing and in English) is not available to the majority (through normal media and in Sinhala), or is it because there is counter knowledge available that make people to think otherwise?

You might ask why I wrote this in English; the reason is that this is unlikely to be published in the Sinhala media; for them this has no appeal.Loving the country is a good thing. But it should not be used to cover one’s ignorance. People who love the country should look at the world carefully; not with the intention of seeing what they want to see but to see the world as it is. The problem is that the self-proclaimed patriots are very much blind; they also refuse to look. They keep on chanting the slogan; long live ‘patriotism’; without knowing that it is the ‘last refuge of a scoundrel’!At this rate it seems that we are going to wait until the last country on earth to pass us to see the reality.