Uncertain future for the entire world

Even President George Bush's description of the tragedy that struck America as "horrific" is inadequate to describe the human misery of thousands and the iconoclasm. The financial and economic repercussions, however, remain uncertain. One thing, however, is certain. It is not only the United States that would be affected but also the entire world.

Much of that uncertainty is owing to what sort of retaliation the US expects to unleash. It has "declared war"; we are told it would be " a new kind of war". Yet the nature and extent of this war remains to be known. It could range from a strike at specific targets, a particular nation, several countries or even a nuclear holocaust in a region of the world. It could result in a division of the world into war camps with many nations of the world being drawn into the battles, some even unwillingly, yet inevitably.

The economic repercussion would no doubt depend on what responses would be forthcoming from the United States and other countries.

A war situation can in the first instance result in a rise in international commodity prices due to panic as well as disruptions in transport and increased demand of certain goods. Sri Lanka is likely to suffer from these rather than benefit. Food imports are likely to increase in cost. Wheat, sugar, milk, rice and several other essential food imports are likely to shoot up, even shortages could occur. Recent discussions on food security hardly envisaged such a situation in so short a time.

The parlous foreign exchange situation would lead to an even more severe strain on our reserves and a consequent depreciation, if not a devaluation, of the currency. This in turn would imply that domestic prices of these essentials would rise both due to increased international prices as well as the higher rupee conversions of these. Unfortunately this impact comes at a time when domestic production of food crops has also dipped owing to the drought and other fundamental weaknesses in our agrarian economy.

Another significant impact would no doubt be due to higher crude oil prices. This is inevitable with the likely repercussions or even the expectation of repercussions in the oil producing regions of the world. Again it comes at a time when we can hardly afford such increases. This impact could be nothing less than critical. Once again we are likely to face a situation when there is a need for higher imports of oil at a time of higher prices with a low capacity to incur such expenditure.

On the side of exports too we are likely to be severely affected. Our Middle Eastern market for tea is likely to be reduced and prices are likely to plummet. Though rubber prices may rise, we are hardly in a position to gain much from this owing to the low level of rubber production in the country. Garment exports facing a serious recession in global markets already would face a severe drop in demand under wartime conditions. Other minor exports too would face similar disruptions and reduced demand and lower prices.

The recession in the United States may take a turn for the worse owing to the reconstruction effort, preparation for war and the Federal Reserve (US Central Bank) adopting an expansionary monetary policy to cope with the new conditions. Whether this would necessarily have a beneficial impact on the rest of the world is not clear. The increased expenditure would be more specific and its multiplier effects on the economy may be dampened by shrinkage of expenditure in several areas like air travel and holidays. Reduced employment in other areas of the economy may offset the expansionary financing.

There is little that we could benefit from wartime conditions. There is much to lose. The Sri Lankan economy is so weak and its administration so debilitated that the unfolding events are likely to lead us to even more difficult days ahead. Let us hope that the American vengeance would not disrupt the international economy too much and for too long.

'SLS' the national symbol of quality

By Dr. Srilal de Silva, Director (Quality Assurance), Sri Lanka Standards Institution

The Product Certification Scheme (PCS) operated by the Sri Lanka Standards Institution (SLSI) is one of the most important schemes designed by the state to focus attention on customer safety. Even though this scheme was in operation for the last 18 years the impact of the scheme is hardly felt as it covers nearly 180 items for 75 products manufactured by 100 industries.

This scheme is basically operated on a voluntary basis and the legal statutes for implementation is derived from the Sri Lanka Institution Act. The SLS mark was made mandatory for 20 items based on health and safety issues in 1993, under the provisions of the Consumer Protection Act (CPA). It has now been now decided to bring all items covered under the import inspection of the SLSI under the SLS mark scheme. This will lead to gazetting 75 items (including the 20 already gazetted) under the CPA as mandatory SLS mark products before the end of 2001.

This scheme is now expanded to cover imports and overseas manufacturers could also use this mark to demonstrate the safety of their products. Further this scheme will be developed with international recognition and with accreditation to cover exports so that this sector will also be benefited.

The weaknesses of the broader operation of the scheme have been identified and action is being taken to implement the scheme using all the resources of the Sri Lanka Standards Institution (SLSI). This scheme will be developed to be a major marketing tool for manufacturers and consumers would be benefited by having a range of essential products in the market.

It is proposed to issue 500 permits by the year 2005 covering all types of products so that consumers would have a opportunity to buy the products whose quality is certified by the SLSI as an independent third party. Emphasis would be made to cover all consumer items and also items with health and safety concerns.

The SLSI has now developed a vision for the development of this scheme for the next few years and re-structure it for achieving the objectives. Wider participation by research institutions and universities in finding solutions to specific issues connected with the quality of the products is expected to lead to greater industrial progress with improved quality.

Availability of international financial support for infrastructure development and training will make the scheme the most important tool for industrial development in Sri Lanka.

The SLSI holds the monopoly of operating this scheme and as such has an obligation to operate the scheme in a more effective manner using internationally accepted quality systems and auditing procedures and eventually will be developed as a mechanism for wider industrial development in Sri Lanka. This restructured scheme will eventually make the SLS mark the national symbol of quality.

Private Sector participation

It is proposed to establish an independent Product Quality Certification Central Committee (PQCCC) by the council of the SLSI with representations from the state, private sectors and chambers. This will make the scheme more acceptable and increase transparency of the operation. The PQCCC will keep the SLSI council informed of the progress achieved periodically.

This will be the policy-making body for effective implementation of the PSC and will make recommendations for making this scheme a tool for national industrial growth.

The PQCCC will appoint advisory committees based on industry groups to provide advice with regard to special conditions or procedures to be adopted to enhance the effectiveness and the flexibility of operation depending on the complexity, size, and safety factors associated with the products covered. The services of experts both in the private and state sector will be invited to serve in these advisory committees which will provide the technical backup for development and the implementation of policies most suitable for effective implementation of the scheme taking national interests into consideration.

With the expected expansion of the scheme it will require the use of other state and private sector organisations whose services will be used on a sub-contract basis. This will involve some inspections and testing done on behalf of the SLSI by these organisations on sub-contract under internationally agreed guidelines.

Research and development

A coordinated effort will be launched to obtain the services of universities and other research institutes in the country to participate in projects geared to meet specific technological and quality requirements in the industry and also develop standards and testing methods to meet the local requirements.

The high cost of equipment was one of the major drawbacks faced by the industry in seeking the SLS mark. The development of testing equipment at low cost will certainly support the expansion of the SLS scheme.

Financial support

The SLSI has already finalised an agreement with the National Development Bank (NDB) to channel funds through other banks provided by the Asian Development Bank (ADB) to support the SMI sector to develop the infrastructure i.e. technology improvement, laboratory development, quality systems, training, etc. A portion of these funds is available as a grant and the balance at low interest and with a long-term recovery period. The SLSI resource base consists of competent and well-trained scientists in all industry sectors and the scheme will be developed to utilise their services in monitoring the SLS mark.

Use of a wider resource base

In special instances where experienced staff is not available outside experts will be invited to join the SLSI team of auditors.

All technically competent staff in the SLSI will be used for auditing purposes under the scheme which will greatly improve the quality of auditing the products under this scheme.

Development of a strong resource base will back the accurate interpretation of standards and judgements based on the findings. This will make the scheme more useful to industry.

Improved credibility

The establishment of an independent committee to operate the scheme with private sector participation will enhance the impartiality and the transparency of the scheme. Also this will look after the industry and consumer interests and make this scheme the most important in terms of consumer protection.

In this regard the following structural changes will be introduced in implementing the scheme:

1. Introduction of regular internal audits following international standards i.e. ISO 10011, the transparency of the scheme will then be guaranteed.

2. Centralised administration and removal of administrative barriers to reduce the delays in awarding the mark and also lead to effective monitoring after the award of the mark.

3. Use of a quality system based on ISO Guide 65 (general requirements for bodies operating product certification systems) and introduction of auditing will ensure the effective implementation of the system.

4. Directing advisory and consultancy services and exploring the possibility of using outside laboratories and the availability of funds will reduce the preparative work for receiving the SLS mark. (The present average time taken for processing an application and granting the mark range around 12 months. This will be reduced to less than 6 months with the new structural arrangements and facilities).

The lack of advisory services both on infrastructure, technology and training is considered the main difficulty faced by the industry to gear itself to meet the requirements for obtaining the SLS mark.

The use of all technically competent staff in operating the scheme and the use of internationally accepted guidelines in auditing (ISO 10011) would make the auditors more recognised and effective. All auditors will be classified based on their technical competency, trained in auditing and approved by PQCCC before using them for auditing products under that particular scope sector. More senior and experienced staff will be used for more complicated audits.

More samples will be drawn from the market for testing and this will further strengthen the credibility and effectiveness of the scheme.

Flexible quality systems

The practical problems faced by different industry groups and also the criticality of health safety factors will be considered by the technical advisory groups in advising the PQCCC in determining policies for implementation of the scheme. The PQCCC will approve the required quality systems for industry group on the recommendations of the advisory committees. In this situation similar practices adopted in the issue of other product marks, i.e. the EU will be considered.

The present requirement of the ISO 9000 system for receiving the SLS mark will be reviewed and the use of type testing simple quality systems, safety systems for food processing i.e. Hazard Analysis of Critical Control Points (HACCP) will make the scheme more acceptable and reliable.

The procedure operated in granting other product marks such as the CE mark by the EU could be taken as a model where different levels of stringency are attached depending on the safety aspects involved. This will enhance the flexibility of operation of the scheme.

Advisory and consultancy services

As a step in meeting the industry need for consultancy and advisory services, the SLSI will work closely with other bodies such as the Sri Lanka Skills Development and the Sri Lanka Association for Quality (SLAQ) so that the services of the consultants approved by these agencies will be made available to meet this demand.

For maintaining the impartiality of operation of the scheme, the SLSI will not offer any individual consultancy or in-house training to individual industries. But would offer well- coordinated group training programmes designed to assist the industry to improve quality management and other technological aspects.

Imports and exports

Industries located outside Sri Lanka will be allowed to join the scheme and use the SLS mark in exporting to Sri Lanka thereby the consumers could identify the safe products in the markets. The SLSI will enter into MOU's with overseas inspection bodies using internationally approved guidelines to facilitate the award of the mark.

Moves are already underway with the Bureau of Indian Standards (BIS) and the Malaysian Standards Institute (SIRIM) to issue the SLS mark for products imported from India and Malaysia.

MOUs will be signed to operate product marks of other national and international bodies such as the British Standards Institute (BSI), the Bureau of Indian Standards (BIS), the Singapore Standards and Productivity Board (SISIR), the Malaysian Standards Institution (SIRIM), Standards Australia and the European Union. The system based on guidelines issued by the International Organisation for Standardisation (ISO), ISO Guide 65 (general requirements for bodies operating product certification systems).

Development as a marketing tool

The use of a customer- focused and manufacturer- friendly scheme will make both parties develop confidence in the scheme and manufacturers would be encouraged to use this scheme as a major marketing tool.

The use of a pool of competent auditors with the enhanced transparency of the scheme will make this scheme more marketable and also acceptable by the industry.

These advantages will be marketed by the SLSI and the use of technically competent auditors will definitely be more acceptable to the industry.

With more organised marketing that project the SLSI resource base, the SLS mark is bound to attract the interest of consumers and the industry. Further the monopoly enjoyed by the SLSI in operating a product mark for the benefit of all parties concerned i.e. the SLSI, consumers and the industry should project the SLS mark as the national symbol of quality.

The state sector should be encouraged to purchase products with the SLS Mark. The SLSI should follow up state tenders and consideration given to SLS marked products in the final selection.

Wide publicity

Wide publicity would encompass consumers, trade associations, e.g. the Employers' Federation, professional bodies, e.g. Associations of Construction Contractors, industry associations and chambers highlighting the new approach.

Strong emphasis to be made on the impartiality of operations and also the competency of the auditors and the other resources available at the SLSI. Regular discussions and meetings are proposed to maintain a closer dialogue with the industry and also clarify matters connected with the scheme.

Publicity brochures and promotional leaflets to be prepared and made available freely to those interested parties. The media to be encouraged to consider this as a national project aimed at consumer protection.

With this proposed expansion of the scheme a major drive in promoting quality is expected and this will make industries competitive.

More Business

Return to Business Contents