Economic Bridge between North and South has not been created since and this needs to be done urgently

By Cassandra Mascarenhas

The end of a long period of conflict brings many factors that need to be addressed. The multitude of issues that arise in a post-conflict situation is not easy to manage and requires time.

Road Construction in Kilinochchi-pic:

Failure to address these adequately and speedily can result in agitation from the public and drive away potential investors.

International Centre for Political Violence and Terrorism Research Head Dr. Rohan Guneratne as one of the keynote speakers for the second plenary session praised the country’s efforts at successfully providing humanitarian assistance to the influx of civilians who required rehabilitation, providing ample rehabilitation for Tamil Tigers by harnessing the private sector and other communities and for giving vocational training to assist them in going back to leading normal lives.

However, he urged the entrepreneurs who braved the conflict in the south to go to the north and the east.

“The economic bridge between the north and south has not been created yet and this needs to be done urgently. The Government faces many challenges in the area of political stability. The TNA is still sectarian party. It is important to groom a new set of young Tamil leaders and I believe that this is one of biggest challenges that the country faces because many of the bright and brilliant Tamils were killed by the LTTE,” he stated.

Guneratne called for the Government to encourage young Tamil professionals to join political parties and encourage the formation of more political parties in order to maintain long-term political stability.

“Sri Lanka still faces many challenges other than creating a mainstream Tamil leadership. We need to fight corruption which has been a feature of South Asian lives. Rule of law is essential and there is a need for more investment in this sphere. As we move towards reconciling the hearts and minds if the people in the country, let us not forget that while the people in the North suffered the most, the people in the South suffered too and I feel that we need to invest more in reconciliation and the organisations that work towards furthering it and start creating that bridge between the North and the South,” he added.

Up next, the second keynote speaker for the session High Commission of the Republic of Rwanda High Commissioner William Nkurunziza first shared Rwanda’s own experience of rehabilitation after the conflict they suffered from.

How do you reconstruct and rebuild for prosperity without the requisite resources? Managing a post conflict state is complicated, made more so by the presence of external involvement.

For Rwandans who lived through the nightmare, who saw their nation and lives reduced to rubble, the fall of the genocidal regime in 1994 was momentous but it also presented monumental challenges such as how do you turn around a failed state, how do you secure your peace while the genocidal forces are regrouping across the border with the support of their traditional friend, how do you heal without fomenting revenge, how do you rebuild institutions without capacity and how do you reconstruct and rebuild for prosperity without resources.

“Managing a post-conflict state is complicated not only by internal contradictions but also by the crisis of confidence in the external environment about the suitability and sustainability of internal efforts. A country under reconstruction tends to become a target of the subjective, often uniformed, ranting of non-state actors, who have the resources and network to sway both media and public opinion in foreign capitals. This tends to dampen early efforts at international relations,” he cautioned.

Nkurunziza went on to list out a couple of points to keep in mind in the process of rehabilitation and reconciliation:

• No adversity is too huge handle or too complex to solve if people work together.

• Effective post-conflict management must be internally owned. No one else will fix your rot. While outsiders may have a view or hold out a hand of support, you, as a people, must put your shoulders against the wheel and break the first sweat. Be masters of the lives, not visitors in life!

• You must build your peace on the foundation of restorative and not punitive justice. Indeed, peace in a necessary condition for economic development.

• In a post-conflict condition, you must seek consensus to heal and build, instead of confrontation to wreck up old wounds. In our case, the politics of confrontation would have driven us into a vicious circle of recrimination and potentially down the path of self-annihilation.

• You must empower people, especially the young as the inheritors of your collective future, and make them agents of governance and not subjects to be governed, and finally,

• Your must define your narrative, your vision, and articulate it together.

“The new Rwanda leadership focused more on what needs to be done internally, in particular before you talk you must first do enough in your own country to use as a basis for your own narrative. Emphasis was placed on ensuring that survivors of the genocide will be attended to at times to ensure that their voices were heard and through systems of governance set to empower the people. Moving from conflict to rehabilitation you need to empower the private sector to be the engine of growth,” the high commissioner said.

Panel discussion

The two speeches were followed by a panel discussion featuring the keynote speakers along with High Commissioner of the Republic of South Africa Geoffrey Quinton M. Doidge, Ceylon Chamber of Commerce Past Chairman Deva Rodrigo and Ministry of External Affairs Director General Ahamed Lebbe Sabarullah Khan and was moderated by Ceylon Chamber of Commerce Secretary General/CEO Harin Malwatte

Q: How important are the implementations of the LLRC recommendations and what challenges may we face in the implementation?

Rodrigo: The LLRC is a good first step although there was apprehension about its composition overseas. The governments that criticised it are now calling for its implementation. I think at the private sector level, we establish relationships with people overseas and these have become very strong bonds and through that we can spread the word of what is happening in the country now. The chambers get to communicate with very influential people in other countries and as for embassies, there is a commercial person from the private sector and they are able while promoting trade and investment, to talk about our reconciliation efforts.

Malwatte: We have to be sensitive about the local situation. If we hurry, we may lose important opportunities and we have to take every step carefully. I’m confident that the current government is strong enough to bring about the needed reconciliation. The processes are going on at their own pace which appear to be satisfying but at the same time we have to be mindful of the local situation.

Guneratne: LLRC is the best roadmap available for Sri Lanka to move forward and I believe that it has given a very fair hearing to everyone. There may be some areas that will be difficult to implement in the short term. The LLRC provides a step by step guide to bring about long term stability to Sri Lanka but there are some recommendations that can’t be implemented in the short term and therefore this will reuire a lot of time.

Q: Can you tell us about the truth and reconciliation settlement?

Doidge: In it, it is outlawed to discriminate against anyone on the basis of race, culture etc. and that was the first cornerstone of reconciliation in South Africa. The LLRC has not dealt with the issue of accountability whereas the TRC dealt with far more aspects and we are offering to share the TRC with the Government of Sri Lanka but you must also that as businesses remember that you are part of the global community.

You have a Diaspora that is a reality. We engage regularly with the African Diaspora and you need to ask yourselves if you are dealing with them. Long after the TRC closed its books, its recommendations are still being implemented. Move beyond the suspicion that exists and consider yourself as a global player as I believe that Sri Lanka has the potential for it – you need to face some of your realities. Don’t waste time defending yourself, get on with the recommendations.

Q: Do you feel there is sufficient space for engagement for the private sector?

Rodrigo: We can do a lot ourselves first by engaging with the people who were isolated and divided due to the war by giving them employment. The civil society orgs can do a great deal. The private sector can also tell the Government what more that can be done. We have to come to terms with the past – we have to recognise the atrocities, respect the dead – which is not happening.

Q: A lot of our diplomats are political appointees – are they qualified to do the job entrusted to them?

Khan: The appointing authority is the President and he has a good idea of what role has to be played by the appointees and I have faith in them.

Q: What are your thoughts on building a Sri Lankan identity?

Rodrigo: It should be a sincere effort coming right from the top and should permeate to various levels of Government, the private sector and all people. Then only will the people in the North who are not convinced that this is not a genuine reconciliation effort will be assured that their lives will be protected and will be offered equal opportunities. I think this is key to move on beyond the conflict.

Q: Sri Lanka has done well but the international community doesn’t seem to accept this position?

Guneratne: The Government failed miserably in countering the anti-Government propaganda which is mostly misinformation. Part of that responsibility perhaps rests in the failure of the President to appoint appropriate people to head our diplomatic missions. The failure of the Government to counter the misinformation has really affected Sri Lanka.

Opportunities in emerging markets

With the emerging economies expected to play a more dominant role in the global economy in the future the third plenary session focused on emerging market economies and Sri Lanka’s need to identify opportunities to diversify our exports to these markets and strengthening investments. The keynote address was delivered by Lee Kuan Yew School of Public Policy Association Association Professor Dr. Razeen Sally who expressed some rather controversial views.

“It strikes me that Sri Lankan policies are kind of cock-eyed. Sri Lanka should build up good relations with the West and Indian rather than starting with China. Some commentators talked about Sri Lanka’s weak and stagnating trade and FDI performance and this has a lot to do with government policy going in the wrong direction under this Government,” he stated.

“We have seen deliberalisation, the tariff structure is much more complicated and therefore we have a bigger and much more differentiated tax on imports. In addition to that there are all sorts of domestic regulations. The climate for investment has arguably got worse rather than better,” Sally observed.

The response from the Government has been that imports are too high and should be restricted and has introduced policies all in tandem in boosting exports in targeted areas which Sally said was a recipe for failure. A tax on imports is a tax on exports, he explained. “You shift your tradables to the non tradables and by association you tax your exports – it is economic nonsense and illiteracy. What will work is some liberalisation. Sri Lanka has too little economic freedom.”

Sri Lanka seems to be trending back to its wartime rate of growth that of course does not mean collapse but the main cost of it is foregone growth. While some may continue to do well the chances of most people will not improve significantly and there will not be enough people entering the middle class and a burgeoning middle class is needed to push better politics better governance and real rule of law.

“If these are Sri Lanka’s prospects, I see that while a handful of companies will continue to be world class in a few narrow industries, the vast potential that is out there will continue to be unexploited.”

Sally also shared a broad perspective on the current global economic situation, noting that with a few exceptions, the West seems to be having an anaemic recovery. In broad terms, the policy outlook remains pretty gloomy for the West and pretty optimistic for the emerging markets although we have seen an economic slowdown in the key emerging markets.

Emerging markets including those in this part of the world are suffering from a growth slowdown because of the West’s slowdown. Medium term issues which are much more structural and are more on the supply side than the demand side, he stated.

“There are continued repressed business climates across emerging markets. The really big Asian markets tend to do very badly in terms of their domestic business climates. Most Asian countries do pretty badly except for some small minorities who do much better,” he said.

In the economic freedom index noticeable that there are only two Asian countries in the top 20 – Hong Kong and Singapore which are exceptional because they are city states.

“Asia is still coupled to the West. We see an above average increase of trade among emerging markets but this is growing from a low base and in the medium term, it is not a replacement for the West. Asian emerging markets and their exports have to cope somehow with their reliance on the West despite the growth slowdown in the West,” Sally observed.

Panel discussion

The panel discussion featured the keynote speaker along with Hayleys Agriculture Holdings Managing Director Rizvi Zaheed, Department of Commerce Director General P. D. Fernando, Orange Electric Managing Director Kushan Kodituwakku, Brandix Lanka Chairman Ashroff Omar and Expolanka Holdings PLC CEO Hanif Yusoof and was moderated by Nithya Partners Precedent Partner Ariththa Wikramanayake

Q: You were dismissive about emerging markets – are you saying we should stick to our traditional markets?

Omar: I would rather focus on the EU, US and Japan in terms of apparel. In the markets in the West, our penetration is about two per cent in the States and just over one per cent in the EU so I think that there is much more that we can do there. My advice is that it’s a waste of time to focus on emerging markets where apparel is concerned. Even in plastics, the biggest markets again are the West. All the emerging markets are our competitors.

Q: Do you agree with these views?

Yusoof: My perspectives come from the retail fashion and export sectors. The customers were Western years ago and that will not change. I strongly believe is that brands are not going to disappear due to the current economic trends – they will simply divert to the emerging markets where the middle classes are growing. I also do business in Africa and sometimes I think that the risks people talk about are overstated when it comes to Africa. Africa is a place where the middle classes are expanding and there is a lot of potential there.

Q: What made you enter emerging markets and what problems did you encounter?

Kodituwakku: When we switched from Clipsal to Orange, we were primarily focusing on the Sri Lankan market but we then decided to forge partnerships with international markets. We set up joint ventures to export to countries like the US and Australia but it was not branded Orange, we were making them for someone else. We wanted to take Orange out but couldn’t penetrate the developed markets so entered the emerging markets.

We entered Singapore even though we knew we would lose money there but being there made it easier to enter other markets and from there we entered Maldives, Bangladesh, Pakistan and Nepal. Resources for this expansion were not difficult to find – it’s about finding people who share your vision and being there at the right time. We had to be in those markets for a couple of years before we began to see positive results.

Q: How important are trade agreements to penetrate emerging markets?

Sally: One issue is the strength of these trade agreements. Ideally, the default option is to go down the bilateral and regional route. If it’s an agreement often between neighbouring countries that is strong in terms of eliminating tariffs but goes beyond that in opening the doors to investment, then it could have a significant impact on intraregional trade but they are positive all around. A problem arises with most FTAs – it is done for foreign policy and a photo opportunity rather than to further trade itself and it doesn’t have a very positive impact on the overall economy.

The problem with SAFTA and even the Indo-Lanka FTA, it is shot full of holes and exceptions and it is by no means a proper free trade agreement. Having a deeper FTA with India that does extend to services and promote better integration would be a good thing but it is not a substitute for unilateral liberation by the Government here.

What drives trade is what governments do on their own and not so much trade agreements. Relying on FTAs and using that as an excuse for not liberalising at home will do no good.

Q: Can you explain what’s happening with CEPA?

Fernando: With CEPA, we have had a problem in 2008 when the negotiations came to a halt especially because it covered services. Lack of understanding of the liberalisation process led to these issues. We have been trying our best to clarify matters but what is currently happening is that the Cabinet appointed a committee and so far we have done the merchandise trade part and services section but the investment chapter is undergoing some work right now and the revised agreement will be submitted to Cabinet.

Q: What needs to be done by the Government to encourage moving into emerging markets?

Yusoof: Look at the Department of Exchange Control – there aren’t clear policies on how Sri Lankan businesses can go overseas.

Omar: It has already been done in the last budget but some guidelines are due which are to come soon.

Zaheed: I think it is very important to have access to information especially with emerging markets. The chambers and other institutions need to promote these information flows and need to encourage partnerships in these emerging markets. COURTESY:FINANCIAL TIMES