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Serving Sri Lanka

This web log is a news and views blog. The primary aim is to provide an avenue for the expression and collection of ideas on sustainable, fair, and just, grassroot level development. Some of the topics that the blog will specifically address are: poverty reduction, rural development, educational issues, social empowerment, post-Tsunami relief and reconstruction, livelihood development, environmental conservation and bio-diversity. 

Wednesday, November 08, 2006

Public sector corruption in Lanka worsens

Daily Mirror: 08/11/2006"

The latest corruption perceptions index launched by Transparency International (TI) shows a steady increase in public sector corruption in Sri Lanka this year as compared to the last two years.

On a scale from zero to ten, with zero indicating high levels of perceived corruption and ten indicating low levels of perceived corruption Sri Lanka has been slapped with 3.1 for this year in contrast to 3.2 last year and 3.5 the previous year.

Sri Lanka occupied the 84th place among 163 countries.

The 2006 corruption perceptions index is a composite index that draws on multiple expert opinion surveys that poll perceptions of public sector corruption in several countries around the world, the greatest scope of any CPI to date, TI said at the release of the index report in Berlin.

“Corruption traps millions in poverty,” said Transparency International Chairman Huguette Labelle. “Despite a decade of progress in establishing anti-corruption laws and regulations, today’s results indicate that much remains to be done before we see meaningful improvements in the lives of the world’s poorest citizens.”

Almost three-quarters of the countries in the latest CPI score below five (including all low-income countries and all but two African states) indicating that most countries in the world face serious perceived levels of domestic corruption.

Seventy-one countries - nearly half - score below three, indicating that corruption is perceived as rampant. Haiti has the lowest score at 1.8; Guinea, Iraq and Myanmar share the penultimate slot, each with a score of 1.9. Finland, Iceland and New Zealand share the top score of 9.6.

TI said the weak performance of many countries indicates that the facilitators of corruption continue to assist political elites to launder, store and otherwise profit from unjustly acquired wealth, which often includes looted state assets.

The presence of willing intermediaries – who are often trained in or who operate from leading economies -- encourages corruption; it means the corrupt know there will be a banker, accountant, lawyer or other specialist ready to help them generate, move or store their illicit income, TI added. (ER)

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Tuesday, November 07, 2006

A vibrant natural rubber policy needed to meet potential challenges

Daily News: 07/11/2006" Dr. N. Yogaratnam, Consultant, National Institute of Plantation Management

RUBBER: The rubber industry of the country, like all other NR producing countries, is currently enjoying a bonanza in the form of record rubber prices, although the rubber products sector in particular, the medium and small scale industries, are in a state of confusion.

The factors that contributed to the unprecedented rise in the prices are quite well-known and have been discussed in details in previous articles.

The key factor being the extent of the demand-supply gap. Both the demand and supply depend on large number of factors, many of which are easy to identify.

Increased output resulting from favourable weather and political stability in leading rubber producing countries and revival of abandoned rubber plantings due to continued high prices and on the demand side, slowing down of the GDP growth following sharp rises in oil prices and related aspects are some aspects that are bound to have an impact on the long-term stability of rubber prices.

The NR shock may also promote the tendency of NR consuming countries to go for more and more SR in place of the high-cost NR component in their products and the growing demand for reclaimed rubber and the hunt for alternatives to NR are also matters of great concern for NR producers.

Triggered by the unprecedented NR price rise, hunt for alternatives to NR has gained a renewed vigour across the rubber consuming countries in the world.

In fact attempts are being made to retrace the trails of past developments on a variety of plants and shrubs, known to have rubber content in them, which may serve as economically viable natural alternatives to the Hevea brasiliensis (Rubber tree).

In the hunt for NR alternatives, it had been the desert shrub Guayule that came to the centre stage in the wake of NR short supply, whenever it happens. The major hurdle in the way of its commercial exploitation had been the comparatively higher processing costs and cheaper availability of NR.

But it appears that the situation has changed today with the NR prices sky-rocketing and creating shock waves in the global rubber industry. It is believed that Guayule has also the distinct advantages of not having any protein allergy problem and many products like tyres can also be made out of it.

Another potential alternative is an annual plant, Taraxacum kok-saghyz or Russian dandelion, conveniently known as TKS, has the latex sap in its roots and can be densely cultivated.

Harvesting the sap can be automated and the annual crop supply can be adjusted to demand, unlike the perennial tree Hevea. It is estimated that about one million pounds of rubber could be produced annually with 10,000 acres of TKS crop.

The by products of the extraction is reported to be about 2.3 million gallons of ethanol, an alterative fuel that could be sold to offset the cost.

In any case, it has been reported that it requires significant amount of agronomic work before commercialisation. Sunflower and rubber producing tobacco plants are also emerging as potential challengers to NR.

The foregoing discussion indicates the possibility of wide fluctuations in the price of NR, though it may not be in the near future. Sri Lanka, accounts for less than 2% of global production and supply of NR. Therefore Government's ability to influence world prices is extremely difficult.

Yet there is much the government can do to safeguard the domestic rubber industry. One big question is; are we prepared for any violent fluctuations in prices and a repeat of the crisis that triggered the rubber price to fall to a 30- year low in 1999. In Malaysia, under the 9th Malaysian Plan (9MP) launched recently, the Government has identified rubber as a strategic crop. Adequate replanting funds have been allocated to ensure that the annual replanting target is achieved.

This, they believe is one way to prevent rubber prices from fluctuating too much. In, Sri Lanka, we have already seen latex crepe that was fetching Rs. 400/= per kg in forward sales in July this year, going down to about Rs. 215/= per kg in mid September.

The NR industry therefore needs a national dynamic policy to ensure its long term viability and to meet the growing demand of the domestic rubber products sector which is currently reeling under the NR shock.

In Sri Lanka, the total rubber planted areas has declined from about 270,000 ha. in early 60s to reach about 115,000 ha. in 2005.

The rubber production that was in the region of 155,000 mt in 1978, also declined steadily to reach a level of about 90,000 mt in the mid 90's. Although there has been an upward trend since 1993, the South East Asia financial crisis again exposed the weaknesses in our industry strategies, plans and operations.

Nevertheless, with the economic recovery in Asia/Pacific and Asia once again emerging as a dynamic region, and NR prizes becoming very attractive, Sri Lanka's rubber industry also showed signs of growth, recording a total production of 104,000 mt in year 2005 with a productivity of about 1000 kg/ha.

From a global perspective, the problem with a perennial crop like rubber is that the supply cannot be regulated on annual basis according to changing market conditions. Sri Lanka should therefore, adopt a national rubber production policy.

This should take into account all aspects linked to production like planting, harvesting, processing, manufacturing, marketing etc. The accepted National Rubber Production Policy should be strictly adopted by all those who are partners in the development of the Sri Lankan NR industry.

The estate sector with about 30% of the rubber extent under their management should also fall in line.

One of the important strategies that should be adopted under this policy is to identify technologies for bridging the gap between the present national productivity level of about 1000 kg/ha and the achievable productivity level of about 2500 kg/ha, year and ensure adoption of such technologies by the estates as well as the smallholder sector.

First step in this strategy should be a national survey to identify the plantings/holdings with low productivity levels and also to identify the cause for low productivity in such plantings/holdings. These may be due to individual, organisational or technological deficiencies.

Having identified these, the next step would be motivation and skills development/training and advisory services for effective adoption of modern, accepted production technologies, that are relevant to the identified needs for enhanced productivity.

The mature yields and harvest index may be increased by technologies related to exploitation. The advent of Ethephon as a yield stimulant has also enabled earlier exploitation of trees at girths smaller than conventional girths. A minimum of 50 cm was for long considered the norm before exploitation could commence.

The current thinking is that commercial areas could be exploited at smaller girths provided adequate management input are supplied. In fact with controlled use of low concentration of ethephon, trees of a girth of 42 cm or over are being exploited economically in some countries.

Exploitation devices such as "PRIMEFLOW" effectively used in some countries can be used at least in low productivity rubber plantings until a firm policy on its use in Sri Lanka is worked out.

A policy of phased out national replanting programme should be formulated and strictly enforced. The estate sector is expected to follow an annual 3% replanting programme, but this does not happen.

This sector has a huge backlog for replanting. As the prices are attractive, there is a tendency to prolong the replanting cycle.

A 30-year span is considered as the economic life of a tree. Let us not deviate from this for short term benefits.

This is the time for the Government to enforce and encourage the growers to go for the much needed replanting. Planting materials with yield potential in the region of 2,500 to 3,000 kg/ha/yr are available in Sri Lanka. If these can replace the old trees, the average productivity can be raised from about 1000 kg/ha to about 2,500 kg/ha.

Moreover, the newer clones are more vigorous in growth and tappability can be achieved 12 to 18 months earlier than was seen with older clones. Therefore, this should be considered as a national programme and adequate replanting funds allotted to cover the entire replanting cost and phased out replanting should be made mandatory.

The next important strategy needed in the national NR policy is the expansion of rubber cultivation in non-traditional areas since new areas suitable for successful rubber are no longer available in the traditional rubber growing tracts for large scale production.

The potential replanting areas some regional plantation company's management have gone into oil palm.

The Southern province has large extents of land with vast potential for rubber growing viz. the Moneragala, Bibile and Hambantota. The Moneragala Rubber Development Project that has already been set in motion aims at bringing 40,000 hectare unused and abandoned land under rubber cultivation based on smallholder farm model with private sector support, phased over a 10 - year period.

This is expected to provide additionally above 80,000 mt of rubber per year. Annual targets of 5,000 hectares that has been fixed requires sorting out of action plan and implementation to achieve targets. With the present extent of 115,000 ha, the planned planting of 40,000 ha in Moneragala brings the total extent to 155,000 ha by year 2016.

Still, there is a deficit of about 115,000 ha if we are to regain our position of 270,000 ha in early 60's, when Sri Lanka had been the 4th leading global rubber producer. We have long way to go from the present 9th position. Uneconomical Tea lands in the low and mid-country are also potential areas for rubber planting.

The success of any business depends on productivity in all areas of its focus. Land and human productivity in rubber plantings/holdings depend heavily on new knowledge, technology and people skills.

Technology adopted by our competitors change rapidly and skill levels of competing countries are quite high. In respect of productivity, India with similar agro-climatic conditions as in Sri Lanka occupies the leading position in global rubber productivity, productivity achieved in 2005-2006 being 1,796 kg/ha.

The problem in Sri Lanka is lack of new knowledge, appropriate skills and application of modern technologies in a systematic manner.

Therefore, there is a need to develop adequate mechanism to assess the skills requirement of the workforce, regularly. Adequate training opportunities will have to be provided in all sectors of the rubber industry and for all levels of skills to meet the development needs of the industry. Unfortunately, many of our policy makers and industrialists do not appear to give training the priority it deserves. Training is only given when there are spare resources.

When business picks up, training takes a backseat. Training of human resources of all ages and discipline involved in rubber development must therefore be included as an integral part of the government's national policy for rubber.

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Sunday, November 05, 2006

Need for Lanka’s rural economy to grow

Sunday Times: 05/11/2006"

The real challenge for Sri Lanka is to boost its rural economic growth to the level of the western province and create an institutional framework that is conducive to business, according to a top World Bank official.

The World Bank Sri Lanka Country Director, Naoko Ishii addressing a corporate gathering at the Federation of Chambers of Commerce and Industry (FCCISL)-organised ‘Key Persons’ Forum’ recently said that the stable economic growth in Sri Lanka has not trickled down to the regions and as a result the poverty alleviation measures have been less effective.

“For the past decade Sri Lanka has enjoyed a notable growth of five to six percent, but the growth during the last decade is concentrated in the Western Province. Between 1990 and 2002 expenditure in the Western province grew by 40 percent, but in the other regions the growth has only been half of what it is in the Western Province,” she explained, adding that in some regions poverty has also increased, with an alarming increase in the level of disparity.

“Therefore it is important for policy makers to integrate the rural economies into the growth path experienced by the western province,” she reiterated.

Ishii pointed out that despite the plus points the country is close to India and South East Asia with a long coastal line, an educated and healthy human capital, Sri Lanka’s rural sector economic growth has not kept pace with the western region.

“Sri Lanka’s economy has transformed from one that is a ‘primary’ export led system to a ‘manufacturing’ led one and regional integration is becoming more important and a truism,” she added.

She said that a recent joint survey done by the World Bank and the Asian Development Bank stated that electricity, macro economic stability, exchange rates, access to finance and international market conditions are the key requisites for urban business development.

“However, rural businesses are afflicted by the lack of access to finance, the lack of trained human resources, high utility charges and poor transport,” she said, adding that it is important for the government to focus on resolving these issues that restrict the business development in the rural sector. “Infrastructure is also a real constraint in taking development to the regions. Electricity is the most serious obstacle to doing business in Sri Lanka. Less than 70 percent of rural enterprises use electricity from the national grid. Sri Lankan businesses also pay much more for electricity than their Asian neighbours. Transport quality and accessibility is another constraint. Lack of transport results in long delivery times, low productivity and absenteeism,” she added.

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