The call of the business community

Sri Lanka's post Independence economic history can be considered in three phases. The first was the period 1948 to 1956 when under UNP governments, the economy based on the three prongs set up by the British-tea, rubber and coconut - continued to flourish.

The second phase can be considered from 1956 to 1977 under both SLFP and UNP regimes. From the colonial capitalist economy there was the shift to a mixed socialist economy. Economic policies vacillated from a left leaning mixed socialist economy under regimes of Mrs. Sirima Bandaranaike to a more capitalist inclined socialist economy of Dudley Senanayake. This was a period of economic stagnation which saw private enterprise declining slowly and surely and the rapid expansion of the state sector. The shifting economic policies of the two political parties resulted in foreign investors giving this country a wide berth. The state owned ventures - most of them proved to be white elephants - had to be subsidized by the state.

The third phase commenced with J.R.Jayewardene 1997 jettisoning socialist policies and committing this country to capitalism. The economy has grown and shrunk in fits and starts amidst two insurrections. Today, the once radical leftist Chandrika Kumaratunga and her socialist comrades of the past have no other choice but to go along with capitalism which they once swore to bury . There are no basic differences in the economic polices of the SLFP and the UNP which is good for the country.

There were much doubts particularly among foreign investors what the policies of the once radical chic Parisian student, Chandrika Bandaranaike would be but now all such fears have been dispelled. There are occasional rumblings such as from the firebrands of Ruhuna and Ratnapura, Mahinda Rajapakse and Vasudeva Nanayakkara but foreign investors are confident that a somersault to socialism is not possible now . But every thing is not hunky- dory and there are rumblings in the business firmament.

Yesterday, The Island carried a report of a declaration made by chambers of commerce and industry, employers organisations and trade associations representing the business community, pointing out that despite successive governments identifying the private sector as the engine of growth and despite the passage of 20 years of capitalism, Sri Lanka has still not achieved the desired level of sustained economic growth.

These commercial and industrial organizations in their suggestions have gone beyond the boundaries concerned with trade, finance and economics but it must be necessarily so because for healthy capitalism to flourish it requires a basic political infrastructure and commitment to fundamentals of democracy such as law and order, independence of the judiciary, police and public service. The crises of the east Asian economic Tigers is a lesson of what happens when authoritarian governments and individuals manipulate the levers of power to their economic advantage and bring about what has been called crony capitalism.

The call of consensus among major political parties on fundamental economic and political policies is the cry of Sri Lankans who have the interests of the nation at heart. Continuity in policy with regard to agriculture, industry, trade and commerce for a minimum period 15 years will obviously be in the national interest and is the practice followed in the developed and developing countries that are doing well.

Even though the communiqu of the business community has not specifically mentioned it, it is essential that in the long term local industries have to be given all the encouragement but unfortunately with the introduction of the open economy , this sector is now on its last legs. Today, the service sector has expanded by leaps and bounds but the manufacturing sector - in the real sense of manufacture - is crumbling. There are manufacturing industries like garments where the only input is labour, the rest of the inputs being imported but if there is an economic crunch this service sector will collapse like a pricked balloon.

There are ominous signs on the horizon with tea sales to Russia which account for 30 percent of our tea exports coming to a halt and rumblings in the garment sector on restriction of import quotas to some countries.

The government has no other choice but to listen to these commercial, industrial and trade organisations and act accordingly. But does the government heed any advice that is being proffered ? The call for political consensus has been made before by many without success. Far reaching measures called for in the communique such as an independent judiciary, public service and police service will receive the usual response: 'Await the new constitution', which now appears to be a distant dream. The best that the business community can hope for are some responses that have to be taken now if they are to survive.