{"id":94496,"date":"2019-10-29T17:33:29","date_gmt":"2019-10-30T00:33:29","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=94496"},"modified":"2019-10-29T17:33:29","modified_gmt":"2019-10-30T00:33:29","slug":"sri-lanka-its-development-and-pitfalls-industries","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2019\/10\/29\/sri-lanka-its-development-and-pitfalls-industries\/","title":{"rendered":"Sri Lanka: Its Development and Pitfalls: Industries"},"content":{"rendered":"

Garvin Karunaratne<\/em><\/span><\/h2>\n\n\n

I am prompted to write about what was achieved in development since Sri Lanka achieved independence because some of our presidential aspirants have said that Sri Lanka had no development from the time we got independence 71 years ago.\u00a0 It is sad to note that some of our presidential aspirants happen to be that ignorant. <\/p>\n\n\n\n

Industrial Development began in the early Fifties. It was a two-pronged programme with the Ministry of Industries pursuing large scale industries like Cement, Paper, etc, while the newly established Department of Rural Development and Cottage Industries established\u00a0 Handloom Training Centers in rural areas with the idea of training womenfolk in handlooms. With the appointment of\u00a0 Demonstrators in Handlooms, this Programme took off with many women taking to have handlooms in their homes. Instructions were also provided in traditional crafts. This activity was supervised by the Rural Development Officers and by the Divisional Secretaries. As the Additional Government Agent at Kegalla and as the Government Agent at Matara I have been in charge of\u00a0 the Department of Rural Development..<\/p>\n\n\n\n

This industrial activity got a shot in the arm  when the\nsmall industry functions of the Department of Rural Development and Cottage\nIndustries were taken over by a new Department of Small Industries. I\nworked as a Deputy Director of Small Industries in 1970. This Department\nprovided foreign exchange allocations to small industrialists to import any\nrequirement for their production. At that time imports were restricted and\nspecial allocations were required to import.. This Department also imported\nyarn and gave it to handloomers..  The handloomers made bespoke textiles\nlike sarees as well as elegant textiles for general sales and these were sold\nby Cooperatives.. The establishment of  Lak Sala, a sales outlet run by\nthe Department of Small Industries, with branches in many cities,  gave a\nboost to the sale of small industrial items made by small industrialists. <\/p>\n\n\n\n

This effort to create incomes in rural areas got a boost with the\nestablishment of  Powerlooms in the Sixties by the Department of Small\nIndustries. These powerlooms were brought down from China and installed in many\nrural arreas. These functioned as cooperatives, managed by the Divisional\nRevenue Officers and these Powerlooms were helped in all technical matters by\nVelona a research and technical  institute based in Moratuwa. The Power\nlooms produced all sorts of textiles. The textiles produced were of high\nquality. Sri Lankans who had settled down in Britain, when they came to Sri\nLanka for holidays were searching to buy suiting material made at the Hakmana\nPowerloom.<\/p>\n\n\n\n

The Department of Small Industry had a few wood work training\ncenters where furniture was made while also training youths to handle machinery\nfor wood work.. Similarly there were a few ceramic centers which made\nporcelainware., In fact the ceramic centers produced high quality items which\nmade me when I was Deputy Director try to embark on making cups, saucers,\nplates etc. This was not approved because the kilns at these centers were not\nfiring to the required high degree  to make tableware.<\/p>\n\n\n\n

In large scale industry  the Ministry of Industries pursued\nthe establishment of many industries. A Paper Factory was imported and\nestablished at Valachchenai in Batticaloa District, It was meant to use illuk\ngrass as a basic raw material. However as illuk ran out, our scientists did\nfind the method of using straw as a base and in its heyday the Valachenai Paper\nMill was functioning making around half the amount of paper that Sri Lanka\nneeded. It was so successful that a second factory was established at\nEmbilipitiya.  Both Valachenai and Embilipitiya succumbed, the first due\nto the insurrection by the LTTE while Embilipitiya succumbed due to\nmismanagement. Industries were established to make high quality bricks and\ntiles. In Ceramics a Ceramic Corporation was established which initially made a\nhost of ceramicware, like toilets and wash basins. However later on this\nCeramic Corporation lost ground. In the private sector Noritaki came in and\nestablished a tableware factory, producing very high quality tableware that was\nsold worldwide. However in this case, it functioned on a tax holiday and paid\nno taxes to Sri Lanka but produced elegant ceramic items using our deposits.\nThe country benefited only from the employment the industry created. Later the\nGovernment set up a Ceramic Factory at Dankotuwa which too turned out elegant\ntableware. <\/p>\n\n\n\n

The Government also established a number of  Textile\nFactories making textiles out of imported yarn. The Textile Factory\nestablished in the Sixties at Tulhiriya was hailed as a State of the Art\nIndustry, the best  in South Asia. By the Seventies Sri Lanka was making\nall its textiles..<\/p>\n\n\n\n

 The State Hardware Corporation made many hardware\ngoods like knives, forks etc. <\/p>\n\n\n\n

 A Tyre Factory was installed with aid from\nRussia.  This made  tyres for local use.<\/p>\n\n\n\n

Cement was made at the Kankesanturai Factory till it was taken over by\nthe LTTE. A few other industries were established at Paranthan which too ceased\nafter the LTTE took over the area.<\/p>\n\n\n\n

In the rural areas the Department of Small Industries was able to\nencourage entrepreneurs to establish small scale  industries making\ntraditional items. Many industrialists made items which enabled the country to\nreduce imports. Import substitution industries were a success.<\/p>\n\n\n\n

In the Seventies the Divisional Development Councils\nProgramme(DDCP) was established to provide employment for the youth.. Many\nsmall industrial units were established  under the DDCP  which\nenabled employment to youths.  Of significance were the Mechanized\nBoatyard making 40 foot seaworthy boats, a Paper Factory at Kotmale\nin the Nuwara Eliya District, a Crayon Factory at Morawaka in the Matara\nDistrict. In addition there were many Smithys making tools, many small units\nlike Batic and Sewing Centers. In detail, the Boatyard was established\nat Matara, making 40 foot inboard motor boats. This was the first attempt to\nestablish a cooperative industry making seaworthy boats. Till then it was a\nstray carpenter making a boat and that happened all over the country. \nThis was a great success making around thirty boats per year. The boats were\nsold to Fishery Cooperatives and was instrumental in increasing the fishery\nboat fleet. <\/p>\n\n\n\n

Special mention  is due of the Crayon Factory, established at\nMorawaka in the Matara District. This is important because of the sophisticated\nnature of the manufacture as well as its success. It was begun as a protest\nagainst the decision of the Ministry of Plan Implementation not to approve\nimport substitutions type of industry. I instructed my Planning Officer a\nchemistry graduate to conduct experiments to unearth the art of making Crayons.\nThe Science Laboratory at Rahula College the leading secondary school was\nobtained after hours. My Planning Officer aided by some of the science teachers\nat the Rahula College tried to find the art of making crayons every evening\nfrom six to around mid night. Even after attending to experiments for around\nfive hours a day for two months we never got anywhere near making a good\ncrayon. Then the Planning Officer decided to seek the assistance of the\nDepartment of Chemistry at the University of Colombo, from which he had\ngraduated a year earlier. The Planning Officer beseeched his lecturers and\nprofessors for three days and was turned away, telling him that they had no\ntime. We then sat down to continue our own experiments with greater zeal and finally\nfound the art of making crayons of high quality.  <\/p>\n\n\n\n

Then the question of establishing the industry cropped up. As the\nGovernment Agent though I had a number of Departments under me I had no\nauthority in anyone of them to establish an industry. I finally selected the\nmost efficient Cooperative Union in the District, the Morawaka Korale\nCooperative Union to finance and establish the crayon industry as a\ncooperative. It so happened that this Cooperative Union was headed by\nSumanapala Dahanayake, the member of parliament for Deniyaya who was \nefficient  and could be trusted. The Crayon Factory was established at\nMorawaka in three weeks\u2019 time working day and night. The Minister of Industries\nMr TB Subasinghe was surprised at the quality of the crayons and readily\nagreed  to open sales. In a few months Coop Crayon was sold islandwide.<\/p>\n\n\n\n

Currently Sri Lanka imports almost everything. Many doubt whether\nwe can make import substitution type of industry. Making a  Crayon is a\nsophisticated  task and my Planning Officer succeed in it. It is a\nforegone conclusion therefore  that we can make almost everything we\nimport. <\/p>\n\n\n\n

Import substitution type of industries serves to save foreign\nexchange. To make crayons, dyes have to be used and dyes are imported. Our\nCrayon industry was denied an allocation of foreign exchange to import by the\nMinistry of Industry because ours was a cooperative. At that time, the Import\nControl Department allowed allocations of foreign exchange to import crayons\nfor sale. Sumanapala Dahanayake and I decided to meet the Controller of\nImports  Harry Guneratne. It did not take long for Harry to figure\nout  that by giving us an allocation of foreign exchange he could stop the\nimport of crayons, saving valuable foreign exchange. He wanted us to get the\napproval of the Minister of Imports, Mr Illangaratne, who readily agreed. Harry\nwas able to stop the import of crayons and Coop Crayon was sold islandwide.<\/p>\n\n\n\n

In the late Fifties and Sixties paddy production was increasing\nand the Government had to attend to the milling of paddy. The Government\nthen imported a few rice mills and established them in certain areas. I was in\ncharge of the Ambalantota Rice Mill one of the three largest rice mills\nestablished. These were state of the art rice mills. Re the Rice milling\nindustry I was in charge of rice milling for over five years working as an\nAssistant Commissioner for Development of Marketing.  A few of us Assistant\nCommissioners were trusted more than the Rice Milling Expert from Australia. By\n1970 Rice Milling was a fully developed industry in the public sector-the\nDepartment of Agrarian Services and later the Paddy Marketing Board.. <\/p>\n\n\n\n

In addition, the Department drafted plans and specifications to\nestablish rice mills  and invited applications from local investors. Many\npeople submitted  applications and were given allocations of foreign\nexchange to import the machinery and the entrepreneurs had to construct the buildings \naccording to the specifications that were laid down by the Department. In the\nSouthern Province which I covered there were some one hundred and ninety\nentrepreneurs who established rice mills under my supervision. This was done\nvery quickly  and the rice mills established were very successful in\nmilling  paddy.  This is in contrast to President Jayawardena handing\nover wheat milling to Prima, a foreign company. In the case of Prima, the full\nprofit in wheat milling goes out of the country to Singapore, while in Rice\nMilling the full profit comes to local millers and they pay taxes while Prima\nworks on a tax holiday. Many rice millers became industrial magnates.\nHarischandras is one of them.<\/p>\n\n\n\n

Long ago in the late Forties and early Fifties, Sri Lanka was making\nall its lorries and bus bodies. Then we imported chasis of buses and\nlorries and thousands of carpenters were involved at the bus depots. At\nRatmalana where the South Western Bus Company had its workshop the rattling and\nreverting noise could be heard for an easy quarter mile. At Moratuwa the\nRailway Workshop made all its coaches on imported chasis. There was a state of\nthe art workshop at Werahera, Maharagama where buses were made. \nNever were any buses, rail coaches  or lorries imported.<\/p>\n\n\n\n

The Marketing Department established a Cannery that enabled Sri\nLanka to become self sufficient in making fruit preparations like Jam and\nJuice. This will be dealt with later under Agricultural Marketing<\/p>\n\n\n\n

Industries were pursued to the maximum and thousands were found\nemployment.<\/p>\n\n\n\n

Even though Governments changed hands, industries continued to be\nconcentrated on. <\/p>\n\n\n\n

The death knell of industrial development came to Sri Lanka with\nthe IMF. When the government of President Jayawardena requested the IMF for\nfinancial assistance in 1978, the IMF insisted that Sri Lanka had to follow the\nStructural Adjustment Programme provisions. <\/p>\n\n\n\n

The policies enforced under the Structural Adjustment\nProgramme  included the provision that the Government should not attend to\nany commercial undertakings. This meant that all Government commercial\nundertakings had to be either abolished or privatized. With this decision out\nwent most of the industries that had been established with great care at a\ntremendous cost. In detail, the functions of the Small Industries Department\nimporting yarn and having a technical support service in the Department at\nVelona was axed. Out went the 98,000 handloomers and the Powerlooms. The\ncountry was flooded with textiles from imports.<\/p>\n\n\n\n

. The Crayon Factory that was run by the Morawaka Cooperative\nUnion was a pain in the neck of the UNP Government. It was the best industry\nestablished by the DDCP and had to be discredited. The Government sent a Deputy\nDirector of Cooperatives, A.T. Ariyaratne on a special mission to find fault\nwith the Crayon Factory and to discredit the MP Sumanapala Dahanayake who\nestablished and guided it. The Deputy Director after days of fact finding had\nto conclude that the industry was well run and all documents were found\nperfect.  Once in the Eighties when I went back to see the Ambalantota\nRice Mill. I could not believe my eyes. I saw the five acre land in\ntatters, apportioned to a few Departments strewn with parts of the rice mill\nmachinery which we had carefully maintained. It was a sorry sight that moved\nme. In its heyday it provided employment for over a hundred and milled 4000\nbushels of paddy a day. That was also the fate of other Rice Mills at\nAnuradhapura and Amparai.  In making rail coaches the Railway Workshop\nIndustry at Moratuwa was closed down and thousands lost their jobs.\nThenceforth till today all rail coaches are imported. In  making buses\nand coaches, the Werahera Factory was shut  down and its\nprecious machinery was sold for a song and thousands were laid off. Henceforth\nbusses were imported.  The Hardware Corporation was closed down and\nI have seen knives and other metal products imported from as far as Mexico. The\nWeaving and Textiles Mills were privatized. The Tulhiriya Mill, once the\nbest in South Asia was sold to Kabool a Pakistani firm that ran it to death and\ndecamped leaving unpaid bank loans. The Tyre Factory donated to us by\nRussia, was privatized and now it is managed by CEAT an Indian\nmultinational.  Hector Perera the  Chief Chemist who was trained in\nRussia, who established it once told me that the  Tyre factory had the capacity to make all the\ntyres Sri Lanka needed. It is sad that though we produce the best rubber in the\nworld we do not yet make all our tyres.<\/p>\n\n\n\n

Following the IMF\u2019s advice thousands were laid off, their lives\nwere ruined and the State of the Art Machinery was neglected and left to \nbe ruined. The full effort of administrators and technocrats to make Sri lanka\nself sufficient in industrial products and find employment for thousands\nachieved in three decades from 1947 to 1978 was totally sacrificed.. <\/p>\n\n\n\n

It is a sad story of losses and imports taking their place.  Being\nvery conversant with rice milling machinery and having handled major\nconstruction work I can figure out that the lost industries can never  be\nreplaced even if the funds are found. <\/p>\n\n\n\n

 I happened to have played a\nfairly major role in the planning and execution of a part of this great\nprogramme.  In every case the machinery was built up over decades in a\nmost painstaking manner by our administrators and engineers.. I was  \nan essential part of the saga of industrial development  and can assure\nthat the industries worked efficiently. I can state emphatically and with\ncertainty that there is no one on earth who can re establish  the lost\nindustries.<\/p>\n\n\n\n

That is unfortunately the legacy of pillage and plunder President\nJayawardena\u2019s UNP Government left for our country. For the IMF and the\nSuperpowers it was their victory to ruin our industries so that we have to\nimport from them, become indebted so that we become \u2018colonies\u2019 once\nagain.  It is a burden that a country cannot bear, a burden to which we\nhave to succumb. <\/p>\n\n\n\n

A comparative assessment  can be made with India and\nBangladesh. I think that in Sri Lanka we did better in industry till the IMF\ncame on the scene in 1978. But we totally succumbed to the IMF from 1978, while\nBangladesh and India did not accept the Structural Adjustment Programme of the\nIMF. The IMF tried to get hold of Bangladesh to adopt the Structural Adjustment\nProgramme in 1986 and again in 2007 but was totally rejected by the Government.\nIn India some provisions of the Structural Adjustment Programme have been\nfollowed in 1991, but the full provisions have not been accepted as yet. In\n1976, Sri Lanka was not an indebted country. Working on the IMF\u2019s tutelage we\nhave run up an international debt of around $ 56 to 60 billion due to\ncurtailing local production, sacrificing our industries and getting in imports\nand liberalizing the use of foreign exchange which India and Bangladesh did not\ndo. They continued to manage their economies with low interest rates-helping\nentrepreneurs, creating employment for their people with import controls and\nnational planning. Sri lanka gave up its national planning in 1978. .  In\nthe early 1970s before the IMF stepped into Sri Lanka our currency the Rupee\nwas on a par with the Indian Rupee and the Bangladeshi Taka. Today after\nfollowing the IMF\u2019s prescriptions, the Sri Lankan Rupee  is devalued at Rs.\n182 to the dollar while the Bagladeshi Taka is valued at  Taka 85 to the\ndollar and the Indian Rupee is valued at Rs. 71 to the dollar. <\/p>\n\n\n\n

 It is a sad conclusion that the IMF ruined Sri lanka\u2019s\neconomy  with Sri Lanka\u2019s Government under President JR Jayawardena\nplaying poodle, as documented in my Book: How the IMF Ruined Sri Lanka and\nAlternative Programmes of Success. (Godages) <\/p>\n\n\n\n

 2006.<\/p>\n\n\n\n

Garvin Karunaratne, former Government Agent Matara, Ph.D. Michigan State University Author of How the IMF Sabotaged Third World Development (Kindle\/Godages, 2017)<\/p>\n\n\n\n

29\/10\/2019<\/p>\n","protected":false},"excerpt":{"rendered":"

Garvin Karunaratne I am prompted to write about what was achieved in development since Sri Lanka achieved independence because some of our presidential aspirants have said that Sri Lanka had no development from the time we got independence 71 years ago.\u00a0 It is sad to note that some of our presidential aspirants happen to be […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[57],"tags":[],"class_list":["post-94496","post","type-post","status-publish","format-standard","hentry","category-by-garvin-karunaratne"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/94496","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=94496"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/94496\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=94496"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=94496"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=94496"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}