LTTE boycott and foreign aid
The timing of the LTTE's partial withdrawal from the peace process indicates that their aim was to put pressure on the government just before the crucial Tokyo aid meeting at which the government was expecting pledges of at least three billion dollars over the next three years. The Tigers' boycott of the peace talks is probably to win further concessions like the recognition of the Sea Tigers and the further weakening of the military's position in Jaffna.

The aid pledges expected in Tokyo were seen as critical for the economy. For not only would the money provide a much-needed kick-start to a spluttering economy, barely coming out of recession, but they would also be seen as a confidence signal by foreign investors. Without foreign direct investment this country would not be able to accelerate economic growth to the levels required to make an immediate and visible impact on the lives of ordinary people, and especially the poor. And without making that immediate and visible impact the government risks losing popularity and the support required to push through the peace process.

Already Norwegian special envoy Erik Solheim has warned that Sri Lanka cannot expect significant amounts of foreign aid and investment if the LTTE stays away from the peace process. Jeffrey Sachs, the internationally known academic advising the government on economic reforms, has also pointed out that foreign investors are waiting for a final peace deal to be signed before committing large sums of money in direct investments.

The LTTE's boycott of peace talks undoubtedly has serious implications for the effort to revive the economy and speed up economic growth, as well as rebuild the devastated north and east.

The fact that the LTTE supremo Velupillai Prabhakaran last week indicated to the Japanese peace envoy to Sri Lanka, Yasushi Akashi, that the rebels have no intention of going back to war - at least at this stage - is indeed reassuring.

The government should take a firm stand with the LTTE and point out their own lapses and transgressions of the ceasefire agreement - lapses and transgressions which now have been accepted and publicly acknowledged by such influential players as the outgoing American ambassador Ashley Wills and the Sri Lanka Monitoring Mission, albeit belatedly. The most obvious and glaring transgression is the killing of informants and political rivals in the past year in violation of the truce that was initiated in February 2002. The Scandinavian monitoring mission has said the killings have undermined the ceasefire.

From the time this government started the peace process it has been accused of bending over-backwards to please the LTTE, even to the extent of endangering national security and sovereignty. If, as the government spokesman Industries Minister Prof. G.L. Peiris says, what needs to be sorted out are some "practical problems" before the Tigers resume peace talks, that should not be too difficult. The government should leave no room for the LTTE to accuse it of not doing enough to care for the Tamil people, especially the large number of long-suffering displaced people.

It can easily cut through the red tape that seems to be holding up the rehabilitation effort, if it has the will. After all, this was the position on which the government embarked on the peace process in the first place - to sort out the immediate day-to-day issues affecting the Tamil people and thereby build confidence. That this effort has lost momentum is inexplicable. What is at stake is the future of the country, billions of dollars in aid and investment and the whole reconstruction effort.

Build large reservoir of Sri Lankan talent
A top professional, now heading the country's biggest bank, has suggested that one of the ways of tackling some of Sri Lanka's problems is to build a reservoir of talent and future leaders who have schooled at the best western universities - with help from the state.

Sumi Moonasinghe, chairperson of the Bank of Ceylon, in a recent speech to the American Chamber of Commerce of Sri Lanka also urged the business community to lobby the government to recruit the best Sri Lankan talent available abroad and pay them global market wages.

Here are excerpts of her presentation which was based on the knowledge economy:

The new wave of development has brought with it a genuinely new way of life based on diversified, renewable energy sources, on methods of production that make most factory assembly lines obsolete, on a novel institution called the electronic cottage and on radically changed schools and corporations.

This newly emerged civilisation has written a new code of behaviour for us and carries us beyond the concentration of energy, money and power. It has its own principles for the politics of the future.

This confrontation between the vested interests of the second wave and the people of the third wave already runs like an electric current through the political life of every nation.

Cheap labour
In this trisected world the first wave sector supplies agricultural and mineral resources the second sector cheap labour and mass production, and a rapidly expanding third wave rises to dominance by creating and exploiting knowledge.

Third wave nations sell information, innovation, management, culture, advanced technology software, education, training, medical care and financial services and military protection as we just saw in the recent war in Iraq. Although a staggering $ 85 billion was spent the war which was won in three weeks, allowing the Iraqi natural resource to enter the world market within a short period of time, therefore recouping this vast investment as opposed to conventional warfare which may have taken years with many lives lost and unable to use the resources of Iraq for many years due to the vast destruction.

Third wave countries become less dependent on the first and second wave partners except for markets. More and more they do business with each other. Eventually, their highly capitalised, knowledge based technology will take over many tasks done by the cheap labour countries and actually do them faster, better and cheaper.

Meeting challenges
What have we as responsible people in society done to meet these challenges? In the name of globalisation, these third wave companies are accessing our markets effortlessly and sometimes we have even created monopolies for them.

We have opened the most vital sectors such as all imported essential food items, oil, telecommunications, financial services and now we are about to open up electricity.

These companies are driven by profits and therefore we can't expect much from them individually. However, as a body I am sure you all can do something to help our future generation.

When the World Bank and the IMF give us any assistance it is tied up to us meeting certain goals specified by them. Liberalise, open the economy, level playing field with no protectionism, downsize and retrench staff, etc. We as CEOs' of companies are fully aware that this is what we have to do because we have studied overseas, travelled or learnt the best practices. But what about our bureaucracy?

Have they been trained in negotiating skills to get the best deal for our country? We hear about bad privatisations.

What is the reason for this? Shouldn't we as a body lobby with these institutions that we must have access to this knowledge economy in return for the market we are offering them? How many of our clever students can afford to study at Oxbridge or the Ivy league colleges or for that matter how many of our public sector officials have been sent out to learn and experience this third wave we are talking about? Do we have properly trained regulators to monitor these privatised entities? The US, which is the most advanced nation, could not regulate Enron. When Asian economies crashed they attributed it to corruption but when long term capital funds crashed they bailed them out without a murmur.

The river cannot flow back. We are in a global village and we cannot control this momentum of globalisation.

But who is studying the shadows of globalisation and taking action to minimise them?

Our institutions have invested very large sums of money in the last five years to computerise and still we are unable to get them working to our satisfaction whilst the foreign institutions in the same business are racing ahead because of the knowledge they brought in with them and the human resources needed.

Human resource development
We are willing to pay mega bucks to consultants but unwilling to invest in our most valuable asset - educated youth - who will grasp the third wave effortlessly. Human resource development must first begin with the public sector and sector reforms must be installed on a priority basis.

Performance related reward systems must be in place and we must give all the incentives for our young executives who have experience in the knowledge economy to return, to help our nation to embrace this third wave without much conflict. We need to invest a very large sum of money to access this knowledge if we are to survive.

But we are not allowed to spend because of the outdated rules and regulations we are burdened with. If we calculate the total sum of money spent as management fees and consultancy fees I am sure that if that money is invested in exposing our clever youth to access this knowledge we can at least expect a return on that investment within the next five years.

As a first step let us lobby to get 500 best performers in the country, based on the A-Level results, into the first class universities in the west, with specific courses identified so that on their return they know exactly what they will be called upon to do and in which government institution they would be working and for what salary. Another 500 best performing students passing out of the universities or the recognised professional institutions should be helped in work experience and post-graduate studies.

All this should be funded by the donors in return for opening up the markets to the rest of the world. We will then be laying the foundation for building our future leaders.

Pay market salaries
To solve our immediate problem we must lobby with the government to recruit Sri Lankan working overseas to return to the country while paying them market salaries and encourage them by assuring empowerment so that they do not get frustrated in trying to beat the system that is so hierarchical and old-fashioned. We must first create the proper environment to entice them.

I am sure if we recruit these skilled people as middle managers in the public sector after installing administrative service reforms, and empower them fully with accountability they could be change agents. We hear of many Sri Lankan achievers all over the world but have we stopped to think why they can't achieve their full potential here?

We have to invest in human capital if we are to survive. We do not have the skills especially in the public sector to obtain the best value for our assets - when they are being sold - as we don't possess the negotiating skills.

The public sector can be made to compete with the private sector if the administrative reforms remove the control and the procedural blocks which have been installed 50 years ago, which are now completely outdated.

A tender for the purchase of PC's in the public sector takes one year for evaluation and award which means 18 months for receipt of goods by which time these machines are obsolete.

Why can't we do the whole thing very transparently and conveniently on the web? The tenderers can answer all the queries on the web, and they can also point out any irregularities if it is published on the web.

At present these are done in a secretive manner and there are so many allegations of corruption after a tender award, even if the best product has been ordered, due to this non-transparent method.

We must, as a first step, launch the widest possible public debate over the need for a new administrative and political system attuned to the needs of the third wave.

We need conferences, TV programmes, contests and simulation exercises to generate the broadest array of imaginative proposals for restructuring our educational system to unleash an outpouring of fresh ideas. The responsibility for change therefore lies with us.

Time to reduce holidays

Asian holidays
Sri Lanka 25
Australia 15
China 13
Hong Kong 18
India 16
Indonesia 17
Japan 13
Malaysia 16
New Zealand 10
Pakistan 13
Philippines 12
Singapore 11
South Korea 15
Taiwan 7
Thailand 18

There is little doubt that Sri Lanka has too many holidays. The business community has for many years asked governments - without success however - to rationalise holidays because it affects productivity. This year the holiday season gets longer with two holiday weeks in April and May. This week for instance has only two working days and given the Sri Lankan tradition, many workers are going to skip these days and take the whole week off! The Ceylon National Chamber of Industries (CNCI) is the latest chamber to raise concerns over holidays and in this special report to The Sunday Times it shows how holidays could be rationalised in a sensible way.

Sri Lanka is becoming very popular as a nation which struggles at decision making in most matters and famous for postponing decisions on matters of prime importance even at national level for a multitude of invalid reasons. As highlighted by a funding agency recently, Thailand takes only six months to decide on a highway construction whereas Sri Lanka would take 24 to 36 months to make such a decision. Our country has suffered for nearly two decades due to prolonged ethnic strife mainly due to improper and hasty decisions or indecisiveness of people of authority.

The power generation crisis in the country is a classic example of incapability of the decision makers to find a lasting solution to the ever worsening power shortages and failures which seriously affect trade and industry in the country. Though the dark days of continuous and regular power cuts that had adverse effects on the country's economy are over, we are still doing patchwork to the problem without focusing our attention on a definite solution. It is a fact that whether it is hydro, thermal or nuclear - any power generation has an impact on the environment. While nuclear energy is unimaginable for a tiny developing nation like Sri Lanka, we are in a position to develop our hydro and thermal energy though at high cost. Proposed coal power plants keeps shifting locations from Mawella to Norochcholai to Trincomalee due to either political, social or environmental reasons. Tropical conditions in the country are ideal for solar power generation but it would have its own limitations.

The latest thinking by the policy makers is to generate power along with oil refineries. However, the fact remains that if Sri Lanka is to progress industrially and economically, the government must institute urgent measures to overcome the power crisis in the country by providing power at a competitive rate. The business community in the country and the general public now need action instead of words.

In addition to the power crisis another major reason for the low productivity in the country is the excessive holidays enjoyed by the working community. Sri Lanka tops the list where public holidays are concerned in our region or perhaps in the whole world. One could imagine the opposition that may arise from trade unions and other pressure groups if the public holidays are to be curtailed. However, it is imperative that the government should restructure the holiday calendar for the year without being complacent about the sentimental factors. After all it is the duty of the government to apprise the people how the benefits of higher productivity could have direct and indirect benefits to all. As a first step the government could restructure the holiday schedule of the private sector enabling them to increase productivity and thereby support the economy. Our industrial sector could certainly show remarkable progress and keep pace with the global industrial giants if these measures are taken.

Necessary amendments should brought in to the Shop and Office Act which governs the private sector with regard to the holiday calendar to be in line with some of the developing countries in Asia such as China, Singapore and Malaysia where they have only one stretch of holidays during the Chinese New Year. In Thailand the main stretch of public holidays is the "Sonkran". In China their golden week holiday commences on May 1 but this year the holidays have been curtailed to catch up for the production lost due to the SARS epidemic, an example that should be followed by us. In almost all European countries, the stretch of holidays is taken during the summer and no one is inconvenienced by the annual shutdown.

Our chamber, the CNCI, wishes to make the following proposals in restructuring the holiday calendar for the private sector:

* Introduce two 7-day stretches of holidays during the Sinhala/Tamil New Year and during Christmas. All manufacturing units will shut down simultaneously, thus using up the annual entitlement of 14 days as per the Shop and Office Act.

1) Advantages - All employees will be on leave together with no loss or retardation in production.

2) Local/export production planning could be done in advance taking into consideration the proposed one time shut downs. Delivery schedules would remain unchanged and no danger to loss of business.

3) No production losses or idle labour resulting from skeleton staff situations arising from indefinite holiday schedules.

4) Annual maintenance of the manufacturing units could be scheduled during the proposed stretches of holidays which will help minimise the loss of production due to machinery breakdowns.

5) Children, parents and family members get the opportunity to enjoy the two national festivals in each other's company.

6) Annual family picnics/holiday excursions could be planned ahead. This will have direct and indirect benefits on local tourism and business. (It is said that over a million holiday makers use Air Travel in China during the long vacation; What a wonderful business opportunity!)

In the Sri Lankan context, in April this year if the private manufacturing units had been closed for business officially - taking advantage of the two annual entitlement holidays - April 14 to 20- would have been a holiday week. In December this year if we use the six days of annual entitlement of holidays, all private sector manufacturing establishment employees could avail themselves of a 10-day stretch of holidays from December 22 to 31.

Going by these examples, private sector employees would still be left with five days unutilised leave which they could use for other personal needs.

Initially we do not discuss or propose amending the luxurious holiday pattern of the public sector but why not we start with the private sector? It would certainly help to improve the already lagging productivity in the private sector in Sri Lanka and move towards the country's goals in "Regaining Sri Lanka". We are confident that these would definitely help to reduce our industrial absenteeism which currently averages between 7% and 12%.

It would contribute largely towards the productivity improvement and enhanced profitability. This will have a significant impact on the growth of GDP thus benefiting the entire nation.

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