A Sustainable Economy by pursuing employment creation and income increases through import substitution
Posted on December 8th, 2013

By Garvin Karunaratne, Ph.D., former G.A. Matara

The warning given to Sri Lanka at the CHOGM by the British Premier tells me that the International Community wants to have a Regime Change. This can be said to be due to the fact that President Rajapaksa was firm and could not be moved to stop battling the LTTE in 2009. That also is indicative of the sinister motives of the SuperPowers. They  wanted to have an LTTE State in a portion of Sri Lanka.  Perhaps the manner in which  the LTTE diaspora is accepted with open arms by the Superpowers Canada, the USA   and the UK today indicates that the LTTE did have some sort of agreements with the International Superpowers.

 The attitude of Premier Cameron tells us that they are  yet having a colonial mentality. They yet want to control us, to structure our economies to contribute to their economies.  That is exactly what they did to all the countries in the Third World through the International Monetary Fund(IMF). The Structural Adjustment Programme is the method they used to pillage our foreign exchange and made our countries the markets to sell their manufactures. The IMF imposed a high interest policy (as high as 24%). This has caused the closure of all our manufacturers as our locals can never make things cheap and compete with manufacturers in those countries where the interest rate is only 2% or even less. Import duties were slashed or abolished. This Structural Adjustment Programme was imposed on us from 1977 and as a result we have become an indebted country where whatever income we have and all inflows of money are drained away to the Superpower countries to get imports from them

 For the future of our country we need a sustainable economy, where we can assure our own people of a fair income with which they can subsist. They have to become productive producing what the country needs. For this purpose we have to develop our production capacity to make what we need and to process the produce into consumable form. In this manner we can find employment and incomes for our people and this will also save our foreign exchange. We have to introduce controls to ensure that the foreign exchange we earn is used in the interests of the needs of the country and not allow it to be used for importing anything that the importers decide and  borrow at over 9% interest to meet this spending spree. Minister Tissa Vitharne has voiced himself that we should not import everything under the sun. I would add that we should become productive to make everything we need.  Since 1977 we have operated our economy on an import and consume basis. Instead we must have produce and consume as our motto. I have been advocating this in all my writings.

 In  reviewing my book, “Papers on the Economic Development of Sri Lanka,” Professor Chandra Dharmawardena  questioned whether the above strategy of building up our production would be feasible in these days of a non authoritarian administration.  In implementing the Divisional Development Councils Programme of 1971-1977 we were never authoritative,. We only guided community leaders to make the people productive. We only guided the youths to work on industries that brought them an income. We never ordered them; instead we worked with them. We administrators have learned the art of working with people. Some of us can even sell ice to the Eskimos.

 To my thinking there is no other way ahead. We have to muster our resources find out how things are made and get down to it. Before 1977 we did produce many items we needed. Thus if we hark back to those days we do have the expertise as well as the experience.

 Take Coffee. We produce the world’s best coffee. In my days in Kegalla where I served as Additional Government Agent  I have seen lush coffee plantations in the Kitulgala area. That is easily our coffee belt. Yet we import coffee and we import vast quantities of Nescafe.  Imported Nescafe is being sold everywhere, with small Nescafe vending machines and the earnings go abroad. The few coffee grinding companies- Harischandra, Island and a few others have never finalized the art of making instant coffee granules. It is my contention that we can easily  make coffee in instant granular form and stop the import of Nescafe.  It will not take long to find how to make instant coffee granules. This  will be a far easier task that our making crayons- the art of which was unearthed by my Planning Officer a chemistry graduate with no experience, aided by a few science teachers and a few graduate trainees, graduates who are now shunned on the basis that they cannot become productive. It was all achieved in a school science lab. (More later)

 Let us take chocolate . We produce the world’s best cocoa and export the raw product. This is snapped up by chocolate manufacturers in Switzerland, California, Europe and Britain.  We have a few manufacturers whose production is tasty and can stand comparison to reputed makes.  They require more technical guidance which the Government should provide.  It will be ideal for the Government to help the manufacturers to better their production.  More people should take up to making chocolates and the Government should guide them  further. Imports of chocolates should be entirely stopped.

 No less a person than Gotabhaya Rajapaksa, easily the Chief of the Dasa Maha Yodhayas we have today had once commented that we even import tamarind. Our tamarind trees are in full bearing but there is no plan to harvest and process it into Tamarind Paste. We fools allow the tamarind to rot under trees and import our needs!

 This story is true of many items. Take tomatoes. We produce tomatoes and there are areas like Hanguranketa and Kekirawa which can produce any amount.  When I worked in Nuwara Eliya I purchased a car  load of tomatoes from Hanguranketa and my entire house was turned into a cannery for one week working in evenings and one weekend and the sauce lasted a full year.  Now we allow the tomatoes to rot because it cannot be sold- we produce more than can be sold and then we import Heinz tomatoes sauce.  It is silly and also idiotic but that is how the IMF decided because it is on their advice that we privatized the Marketing Department Cannery  that produced tomatoe juice and tomatoe sauce. Their Plan was to close down our production so  that their manufactures can find a market.

 We then had the Marketing Department Cannery  I was working as an Assistant Commissioner in that Department. The Cannery enabled us to give floor prices for Red Pumpkin, Ash Pumpkin, where we purchased the total produce and made them into Golden Melon Jam and Silver Melon Jam.  Then on the IMF’s programme we privatized the Cannery and abolished the Marketing Department and we are no longer self sufficient in jam.  Red Pumpkin and Ash Pumpkin grows wild on chenas and imagine the money that poor village farmers made when the Marketing Department bought their entire production. Sadly we create employment for cannery workers in Australia and the USA! And the worst is our leaders either do not understand this fact or are frightened to decide to establish all those industries again.

 Then we had a developed brass foundry industry in Kelaniya and in  Pilimatalawa(Kandy). This industry was lost because of imports from China and India.  This can be easily resurrected.

Perhaps the manner in which small industries have sprung up in Marakesh in Morocco offers us ideas.  There hundreds of copper workers are at work and every tourist walks away with a lamp shade that is attractive. Sri Lanka can well do with a Craft Emporium where there are workers turning our small industry goods. Laksala is only a Sales Emporium. We should add workers making various items for sale to Laksala.

 We import  Chip Board, which is made with sawdust and timber shavings pressed with latex. We can easily make chip board. Today saw dust is even burnt. This is the base raw material for the chip board. All imports should be stopped and we should make chip board ourselves.

 I can go on for ever giving details of what we can do. Many economists will think that we cannot do what I preach. If you take a hard look at the experience these negative oriented economists have you will find that they have never done anything of that type like establishing a viable industry in their lives and therefore they do not know how it can be done. We have to get people with hands on experience at the helm.

 To convince anyone that doubts whether we can get down tp production, let me tell you the story of Coop Crayon– not a hypothetical story of fiction but something that we ourselves did  not long ago. It clearly illustrates what we can do- administrators and politicians working together. This happened in 1971 when the Sirimavo Government made a mad dash to create employment for the youth. I was one of the chief officers as I worked then as the Government Agent at Matara. We were ordered to create employment and a special budget was  created for us.  I asked for authority to make painting colour boxes, something we then imported but it was turned down by the Ministry of Plan Implementation. I asked for authority to develop the dairy industry and establish a cheese and butter creamery. All that was turned down. It came to a point where we had to go on making crafts and petty things like dresses and garments. To me that was a duplication of what the Small industries Department did and was doing successfully.  I had a team of enthusiastic officers at the kachcheri who wanted to something fantastic. We wanted to show the Ministry that we can do something worthwhile. It all began in a spare room in my Residency. We experimented to find the method of making crayons an item that we then imported.  The scientists in the team were Vetus Fernando my Planning Officer the chemistry graduate who had just passed out of the University of Colombo. He was aided by two science teachers. Then there were a few administrative officers who were encouraging the task and I guided them. When the basis equipment in my Residence was inadequate we asked for the services of the Rahula College science lab and the Principal the late Mr Ariyawamsa readily agreed.  We worked in that school lab after College closed and worked till midnight for around two months. We finalized the art of making crayons.. Once during that time Vetus Fernando went to his professors at the University of Colombo for help and advice. He  spent three days beseeching help and advice but the doors of the Chemistry Department with all their sophisticated equipment and the dons that had been even trained abroad were closed to him. He was chased away. Those are the erudite dons that now  prefer to walk and talk on the streets rather than to roll up their sleeves and establish an industry that will help the country.  He came back a broken man and narrated his tale of woe. But we were undeterred and continued burning the mid night oil till we finalized the art and made  crayons that could be easily compared with Crayola.

We made one silly mistake. We never applied and obtained a patent. Because we got into production quickly and the crayon industry was a paying concern we never thought that our industry would face a closure and that was our failing.

 I had to decide as to who would  make crayons. I decided that it should be done by one of the cooperatives and I could trust The Deniyaya Cooperatives because the President of the Cooperative Union Sumanapala Dahanayake, the Member of Parliament for Deniyaya was a maverick and someone who could be trusted with any difficult task. He was of the  dare devil type who would not take no for an answer. .  I showed him the crayons and he readily agreed to get down to manufacture and sell the product., I authorized the cooperative union to immediately purchase the equipment-pots, pans, cookers, tubes etc and the ingredients and to recruit youths and  the officers who had found the art of making crayons moved en masse to Kotapola where Sumanapala worked night and day making crayons. Vetus  controlled the quality. He was ably helped by Graduate Tranee Paliakkara and my District Land Officer the late Chandra Silva.

 I had not obtained authority from the Ministry of Plan Implementation for this. This was purposely so because they never approved any of my suggestions  to make painting colour boxes or making cheese and butter. So I was going it alone on my steam. In a few weeks Sumanapala manufactured crayons to fill two full rooms and we decided to start selling. We decided to do it in style. Sumanapala and I took a few samples and showed it to the Minister of Industries. T.B.Subasinghe who was really taken by surprise. He readily agreed to come and open up sales.  At the Opening Ceremony the industry came to function openly. It was a grand success and it became the best  and the most successful industry done during that period.

 Last year I bought some local crayons in Colombo and found that one even soiled one’s fingers and a desk and the floor had to be wiped clean. The Coop Crayon was of very high quality.

 When we established it we had to buy the dyes in the open market as the Ministry of Industries did not have a vote specifically to import ingredients for cooperative industries.  We were refused foreign exchange to import dyes  by the Ministry because we were doing it through a cooperative. We racked our brains and finally decided to get help from the Ministry of Imports.  Sumanapala and I approached the Controller of Imports, the late Harry Guneratne.  We showed  him that by allocating some foreign exchange for the import of dyes for Coop Craylon, he could make a large saving by stopping the imports of crayons. We did not have to argue for long; he had the brains to realize that we spoke sense. However he wanted us to get the approval of the Minister Illagaratne as this method had never been done earlier. Sumanapala and I went to the Ministry of Industries. Minister Illangaratne was taken aback to see the crayons we made and immediately approved the allocation of import funds for our industry. He also wanted us to establish a Coop Crayon in his electorate.

 From 1972 to 1977 that Coop Crayon did produce around a tenth of the country’s requirements.

 The industry was stopped by the UNP who wanted to abolish everything good done by the outgoing government. That is the fate that we have to face because we yet follow the party system of democracy. In nostalgia  my blood boils in me today the moment I spot a pack of crayola crayons on sale in Sri Lanka. I am taken over by thoughts of what we lost in employment and incomes as well as savings in foreign exchange.

  The details I have given of how we ourselves did produce items that we import today will convince anyone that we can even today set up industries and that the graduates of our universities and our science teachers can all get activised in the task of production. That will also save foreign exchange.  Making cheese and butter, making chip board, chocolates are all easier tasks than making crayons. We have a research and engineering institute called the Industrial Development Board which should be immediately decentralized to the Districts and put in charge of drafting industrial projects to make what we need and therby create employment and incomes for the people. In my days in 1971 the IDB sabotaged  development tasks assigned to them by me and I had to go it alone  to make crayons on our own.

 We had great politicians and administrators in the past who helped us in this task. My book:Papers on the Economic Development of Sri Lanka(Godages:2012)  was dedicated to those giants who helped the country then, those who are not with us. That was to Dr NM Perera, Minister of Finance, Minister of Industries  Mr TB Subasinghe and Sumanapala Dahanayake the Member of Parliament for Deniyaya. The two Ministers guided us while Sumanapala took charge of production, working day and night with the youths.

 It is upto our present leader- President Rajapaksa to find a paradigm for development where we can find employment and increased incomes for our own people and the past experience I have detailed may offer ideas as to how it can be achieved. Every Sri Lankan is indebted to him for delivering us out of the terrorist maniac Prabhakaran. We also look to him to make our country have a sustainable economy where our youths can become entrepreneurs instead of being menial workers in foreign countries. Moving with public sector workers even today I can vouch for the fact that the Grama Niladharis,  the graduates who have been just found employment, the Divisional Secretaries are eager to spring into action if the go ahead is given for a massive programme of import substitution.

 If  one requires a programme to offer further ideas  there is the Youth Self Employment Programme of Bangladesh, which I myself designed and established which is today the largest and most successful employment creation programme in the world. It has guided over two million youths to become self employed (by Feb 2011), a  target that has never been achieved ever. Bangladeshi administrators, lecturers of vocational training institutes and youth development workers were trained by me to work with the youths who received vocational training to motivate them to commence producing for sale and they were guided in selling their wares till they became commercially viable.  (Documented in my book: “How the IMF Ruined Sri Lanka & Alternative Programs of Success”(Godages) The closest to this in Sri Lanka is the Divisional Development Councils Programme of 1971-73 where we create employment for  33,271  youths including part timers.(“Papers on the Economic Development of Sri Lanka”(Godages).

 Let us hope that our leaders will put their shoulder to the wheel and take immediate action. We have to have a strong economy to withstand attacks from the Camerons, the Navi Pillais, the USA and India. Either we take up the challenge or slump in defeat.

 Garvin Karunaratne, former G.A. Matara

9/12.2013

10 Responses to “A Sustainable Economy by pursuing employment creation and income increases through import substitution”

  1. Susantha Wijesinghe Says:

    GARVIN, time and again, you have valiantly given very beautiful ideas how to develop the Country to be self sufficient. There is truly no one to assimilate your ideas and put into practice. We are importing even Mangoes. Why Nescafe, when we can make granular instant coffee ? If 10% of your ideas are implemented, we are getting somewhere. Iam sad, it will not happen. I remember, when I was MM at Metalix Engineering, the Company manufactured enough Instrument Boxes, for the whole country, being the only manufacturer. Then the Government allowed imports of Instrument Boxes. Now the Company is unheard of. It was a leading Industry. That is how Industries were killed. Anyway, let us pray and hope for the best.

  2. mjaya Says:

    More and more people are echoing this sentiment on Lankaweb.

    It is unlikely our idiotic politicians will ever notice, but we must do our part by boycotting Indian imports.

  3. Ananda-USA Says:

    Import substitution in key areas to protect local industries is very important, despite the US-dominated IMF (as usual) warning recently that import substitution is not in the best interest of Sri Lanka.

    Food, for example, is a key area in which local producers should be protected.

    Japan, for example, protects rice production, rice being the primary staple of the Japanese people. The United States, the world largest EXPORTER (not producer) of rice, is always criticizing and pressuring Japan to open up its rice market to US producers; this the Japanese Government has consistently REFUSED TO DO earning the wrath of successive US administrations.

    For Japan, food security is a critical national security issue; it should be so for Sri Lanka as well, for as the world’s population explodes, food will become the MOST VALUABLE GLOBALLY TRADED PRODUCT in the not too distant future.

    For the same reason, Sri Lanka MUST PROTECT its marine food resource from over exploitation by foreign countries as well, and prepare to protect, maintain and exploit it more efficiently in a sustainable way, for fish and marine vegetation will become the primary nutritious protein sources available to the Sri Lankan people in the future.

  4. Ananda-USA Says:

    Wonderful MOTTOS to be inscribed in GOLD for all Sri Lankans

    “Instead of importing everything we need, we should produce everything we need.”

    “Instead of importing and consuming, we must produce and consume.”

  5. Ananda-USA Says:

    The MOST IMPORTANT Import Substitution area for Sri Lanka is ENERGY for Electricity and for Transportation. The largest outflow of foreign exchange from Si Lanka is for petroleum (oil, natural gas, coal) purchases from foreign countries. US sanctions against Iran has forced Sri Lanka to compete for petroleum supplies at much higher prices.

    Instead of relying on imported fossil fuels the GOSL should promote solar and wind renewable energy production, using hydrogen energy storage for load levelling. When renewable energy is available in excess, use it to produce and store hydrogen through electrolysis of water. When energy is needed, run the hydrogen through fuel cells to produce electricity and water. Recycle the water to the electrolysers.

    Instead of relying SOLELY on central energy generation plants, the GOSL should promote distributed energy generation in local communities and even at the level of individual residences. Enable homeowners and small business owners to install grid-tied roof-top solar arrays without a limitation on the maximum amount of energy produced through government guaranteed low-interest loans, and pay the highest tariff for the net energy produced above consumption. The power capacity of solar panels degrade slowly at less than 1% per year, and are usually guaranteed to last for a minimum of 30 years, still producing at 80% capacity at the end of that period. The payoff-period from the avoided energy cost for a typical Sri Lankan homeowner is less than five years.

    Instead of relying SOLELY on petroleum-based transportation vehicles, the GOSL should promote fully electric and hybrid plug-in electric vehicles. Make it possible for homeowners and small businesses to charge their vehicles using the energy produced from their own roof top solar arrays.

    Instead on relying SOLELY on diesel and gas electric locomotives, use electric locomotives to run passenger and freight trains. Convert buses to hydrogen fuel cell hybrid electric vehicles. Use hydrogen generated by electrolyisis of water using renewable energy to fuel these vehicles at existing gas stations converted to dispense hydrogen and charged battery packs.

    Instead of relying on Mega-Watt Scale wind turbines in large wind farms, promote the installation of small grid-tied windturbines in local communities and rural residences, through government supported technology transfer and low-interest loans. The wind blows even at night. Wind turbines and Solar arrays complement each other beautifully to level the energy production. Hydrogen and battery storage systems coupled to wind and solar generation units can provide even the remotest villages with round-the-clock electrical power.

    Small can be beautiful and cost effective; local communities in the Netherlands and in Germany are doing it; why not Sri Lanka? BTW, I am not a novice waxing enthusiastic outside my expertise, for I am an engineering entrepreneur with decades of experience fully focused on developing small wind turbines and solar energy systems for developing countries such as Sri Lanka …. even as I write.

    In these ways, Sri Lanka can be COST-EFFECTIVELY made ENTIRELY SELF-SUFFICIENT in ENERGY sourced from our own glorious sunshine and the winds that billow through the hills and valleys of our Resplendent Island.

  6. Dilrook Says:

    For economic sustenance there must be capitalism at both private individual level and at state level. Otherwise there is no proven continuous production economic system. Government cannot do all this. They must be done by private individuals following the profit seeking capitalist model.

    The government too should seek profit as happening in Malaysia and Singapore.

    However, Sri Lanka’s largest employer is the state and the state is uninterested in profit making or even reducing losses. This causes large deficits. To cover the deficits, the government borrows. However, local capital is limited so essentially foreign borrowings become inevitable. In order to pay for these the government raises taxes which further erodes profit of successful businesses.

    This cycle must be broken for there to be incentives for wide spread import substitution industries. The 1970-77 model is not appropriate to modern economic realities as it is not economically sustainable.

    CPC should regain its monopoly over petroleum import and distribution for a start. Today this profitable industry has been sold to Indians. It is a national crime.

    A local motor vehicle manufacturing industry is also needed. Self sufficiency in milk is another avenue.

  7. Lorenzo Says:

    What will happen? NOTHING!!

    Because this ROTTEN SYSTEM bails ALL criminals out.

    A nation is being wasted.

    The Jathika Hela Urumaya (JHU), a coalition partner of the ruling government, has called for the immediate arrest of Sri Lanka’s Prime Minister for allegedly assisting in the distribution of narcotics in the country.

    At least 131kg of heroin was seized on 30 August hidden in cans packed into a container sent from the Pakistani port of Karachi.

    It had been unloaded at Colombo’s port two months earlier and was addressed to a local recipient, but had been held pending production of documents and cash needed for its import.

    A letter emerged from the prime minister’s office, dated 23 August and signed by a co-ordinating secretary seeking to waive import charges on the container.

    The letter reportedly said it was being imported by a local company which was just launching its business and could not afford heavy duties.

    When the issue was raised in Parliament, Prime Minister D. M. Jayaratne said he wasn’t aware of it and that the letters are written by his staff.

    The Prime Minister told Parliament that he has no time to read the 150 or so letters that pass through his office on a daily basis and that he has not approved such a thing, the Leader of the JHU Ven. Dr. Omalpe Sobitha Thero said.

    He stated that the if the Prime Minister, who is also the Minister of Buddha Sasana and Religious Affairs, is unable to find a trustworthy and educated official to read these letters then he should understand that he can no longer do his duty.

    “If he does not possess the physical and mental ability, the biggest service he should do is to resign from the Premiership,” he said, addressing a ceremony commemorating the 10th death anniversary of Ven. Gangodawila Soma Thero.

    If the secretary has engaged in such an illegal act in violation of the Prime Minister’s orders, why is he not being punished or sacked, Sobitha Thero questioned.

    The leader of the Sinhala nationalist party further said that in comparison to the Prime Minister, the Minister of Public Relations and Public Affairs, Mervyn Silva, somewhat has a policy.

    When certain accusations are being made against his secretaries, Mervyn Silva either says “he is not my secretary” or removes that person. “It seems the Prime Minister doesn’t even have such manners,” he said.

    “How does this fraudster continue to remain as a secretary to the Prime Minister?”

    He stated that assisting in importing heroin will be the “main weapon” for destroying the Buddha Sasana and there is no doubt about it as it goes against the virtue of Buddhism.

    “Therefore with complete responsibility we advise the country’s President to immediately arrest the prime Minister, who is assisting these illegal acts,” Dr. Omalpe Sobitha Thero.”

  8. Ananda-USA Says:

    Restoration of Sri Lanka’s access to cheaper Iranian oil should not DETER Sri Lanka from movingrapidly towards ENERGY INDEPENDENCE based on the indigenous production of renewable energies such as wind and solar.

    Reliance on imported fossil fuels because TEMPORARY access has been restored, would be a MONUMENTAL FOLLY that is contrary to Sri Lanka’s LONG-TERM National Interest!

    Disce’ aut Discede’!

    ……………………………
    Sri Lanka oil bill: ‘We need an alternative’

    ColomboPage News Desk, Sri Lanka.

    Dec 09 (AJ) A jubilant Petroleum Minister Anura Priyadarshana Yapa told a local radio station that Sri Lanka would have a huge advantage if the sanctions on Tehran were eventually lifted.

    Responding to a question by an opposition member about the government’s seeming inability to bring down petrol prices, Yapa told parliament it was due to the fact that the country’s petroleum sector has been badly hit by the sanctions on Iran.

    The nuclear accord between Iran and the six world powers was, therefore, not only good news for Tehran, but also Sri Lanka, a country severely affected by international sanctions imposed on the Islamic republic. Iran accounted for almost 93 percent of the country’s oil needs and had even offered a seven-month credit to Sri Lanka to settle the oil bill.

    Prior to the sanctions, which severely affected Iran’s ability to export its oil, Sri Lanka had been importing 39,000 barrelsa day. After the sanctions were placed, the country’s oil import bill shot up. Sri Lanka’s search for an alternative source of oil, when supplies ran thin, was costly.

    Sanctions’ effect

    Sri Lanka’s only oil refinery at Sapugaskanda, a half-a-century old national asset, had been fine-tuned largely to handle light crude from Iran. Before the crippling sanctions started to bite, Iran, which also provided military aid to Sri Lanka during the civil war, had pledged more than $1bn in aid to modernise and expand the refinery’s capacity.

    Susantha Silva, Managing Director of the state-run Ceylon Petroleum Corporation (CPC) told Al Jazeera, “We have been kind of under US sanctions. Since the sanctions on Iran came into effect, we could not buy oil from Iran. We imported 13 cargoes every year from Iran. But once imposed, we were compelled to reduce the quantity to 9 in keeping with the US sanctions.”

    He said Sri Lanka was also hit by the sanction-driven oil price increase in the world market. Oil imports constituted 25 percent of Sri Lanka’s $20bn import bill last year. The oil bill, more or less, was equal to the foreign exchange Sri Lanka earned through remittances from expatriate workers in the Middle East and elsewhere, last year.

    Given Sri Lanka’s widening trade deficit, any increase in the oil bill was a blow to the economy. It was under such circumstances that the US sanctions hit Sri Lanka like a bolt from the sky, sending the fuel sector into disarray. The US and European Union sanctions also effected Sri Lanka, a country which is trying to rebuild its economy after three decades of civil war.

    Silva said that apart from the global price hike, the CPC also faced numerous problems: “The banking sector refused to open letters of credit. To circumvent this problem, the Iranians agreed to give us loans to buy their oil. But ships, including Sri Lankan vessels, to Iran could not get P&I (protection and indemnity) insurance cover. Iran offered to send crude in its vessels, but our ports were not geared to handle Iran’s large carriers.”

    No substitute for Iranian crude

    Sri Lanka now buys crude and refined products from countries such as Oman, Saudi Arabia, Singapore and Vietnam at a much higher price. But it has not found the right replacement for the Iranian crude, which is low in sulphur. In desperation, the CPC tried Arabian light, but the refinery encountered technical glitches because of the crude’s high sulphur content. Then it tried Oman crude, but the refinery produced more residue than oil. The CPC now runs the refinery with crude from Abu Dhabi National Oil Company but in this instance too, the CPC has to blend it with other crude to obtain the right final product.

    This week the Sapugaskanda oil refinery was functioning smoothly, but no one knows for how long.

    According to Silva, the Sapugaskanda refinery has been closed twice last year and twice this year for want of crude. The last shut down was a month ago. Days before the Commonwealth Heads of Government Meeting (CHOGM) was opened in Colombo, the government had to issue a statement to allay fears of a fuel shortage. The rumours about the fuel shortage spread after the government, acting on US complaints, turned away a ship carrying Iranian oil from a third party source. The US complained during a meeting between its ambassador, Michele Sisson, and President Mahinda Rajapaksa in October.

    Rajapaksa has been a critic of the US sanctions. In February 2012, he told Sri Lanka-based foreign correspondents that the sanctions hit largely small nations like Sri Lanka . “We need an alternative. In the end, they [the U.S. and the West] are not punishing Iran. They are punishing us, small countries,” said Rajapaksa.

    The CPC’s Silva could not agree more. He said his corporation was happy to hear that Iran and world powers had reached an interim deal that might lead to a situation where restrictions on Iran would be lifted and countries like Sri Lanka could find some relief.

  9. Fran Diaz Says:

    Totally agree with Dr Garvin Karunaratne’s statement : “we must have produce and consume as our motto”. SELF SUFFICIENCY as much as possible is the key to well being of any Nation, given the voracious (and sometimes slimy) international methods of marketing goods.

    ‘BUY LANKA’ is a good motto for our times.

    In any Democracy, the Government (the entire Parliament) steps in when there is a dearth of production & employment in the country. It is time that the GoSL stepped in for production and employment, big time. However, to prevent wastage and thieving, private sector methods will have to be employed.

    Generally speaking, the private sector usually cannot deliver on essential services such as food, as it is bent mainly on the PROFIT MOTIVE only, and is not service oriented, unless there is exceptional national minded entrepreneurship, which is rare.

    Removal of the MARKETING DEPARTMENT is one of the great tragedies that befell Lanka. Shouldn’t those who want to help foreign countries more than help Lanka, emigrate to those countries ?

  10. Ananda-USA Says:

    Self-sufficiency in Chillies is GREAT, but NOT ENOUGH!

    We need self-sufficiency in other foods like rice, parippu, maldive fish etc etc.

    But, Self-Sufficiency in ENERGY through massive development of RENEWABLE energy sources (solar, wind, wave, in both concentrated large plants and distributed rooftop systems), of energy STORAGE methods (hydrogen gas using electrolysis of water and generation using fuel cells), and electrification of TRANSPORTATION through complete transformation of Sri Lanka’s vehicle fleet to all-electric and plug-in hybrid electric vehicles should be the HIGHEST PRIORITY!

    ………………………
    Govt on chillie self-sufficiency drive

    by S.M. Wijayaratne, Kurunegala Cor
    SundayObserver.lk
    December 15, 2013

    The annual requirement of dried chillies for the consumption of Sri Lankans is 50,000 metric tonnes. The Government still imports 35,000 metric tonnes of chillies annually to meet the local demand.

    The Department of Agriculture made Sri Lanka self-sufficient in dried chillies during the period from 1970-1980. Now, under the guidance of Director General of Agriculture, Dr. Rohan Wijekoon, a massive program to encourage farmers islandwide towards the cultivation of chillies is to be launched by the Department.

    Agriculture Minister Mahinda Yapa Abeywardena has instructed top officials to allocate funds to motivate farmers islandwide to cultivate chillies locally, to make Sri Lanka self-sufficient in chillies again, President, Kurunegala District Small Farmers’ Association, S.M. Wimalasena told a conference of representatives of small farmers’ societies in the Kurunegala district. He said the Government will invest Rs. 150 million for this purpose. Under the Divi Neguma national development program of the Ministry of Economic Development, 15,000 farmers in the Kurunegala and Puttalam districts of the North Western Province would be encouraged to grow chillies, fruits and vegetables during the next three months.

    Quality chillie and vegetable plants would be provided free to interested farmers by the Government through Divisional Agricultural Instructors, Wimalasena said.

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