Budget Debate: Committee State - 10th Day

"The industrial policy of the PA Govt has had adverse effects on the textile industry"

Parliament met at 9.30 a.m. Wednesday 2nd, December 1998 with Speaker K. B. Ratnayake in the Chair.

After announcements were made by the Speaker, reports presented by ministers, petitions presented and oral questions answered House sat in Committee to consider Votes of the Ministry of Industrial Development.

Ranjith Madduma Bandara (UNP, Moneragala District) Moved a cut of Rs. 10 from the Votes of the Ministry of Industrial Development.

He said: The industrial policy of the PA Government has had adverse effects on the garment industry and the textile industry of the country.

Sri Lanka upto 1994 produced 90 per cent of the textiles that the country required. This is approximately 223 million metres.

But the withdrawal of the 35 per cent duty on textile imports led to the collapse of the local textile industry, which employed about 50,000 workers.

Veyangoda Textile Mills has suffered a loss of Rs. 87 million. Operations of this major textile mill came to a halt the previous day. The losses of Pugoda Textile Mills has reached Rs. 165 million. It is now not operating.

You appointed a competent authority to the Pugoda Textile Mills. You have been paying a total sum of Rs. 165 million as wages to its workers. Now you are going to retrench the workers by paying them three months salary as compensation.

The irony is that while you are planning to retrench workers you have increased the salaries of top executives of the dying Pugoda textiles industry by Rs. 15,000.

Out of the 39 textile mills only 18 are operating. The total debt of the 39 textile mills is about Rs. 6.5 billion.

There are no bidders for the Pugoda Mill which is to be sold. You are going to give facilities to any new textile industries if a minimum of Rs. 5 million is invested. This will force all small scale textile mills to be closed down.

This is the sad state of the local textile industry, as a result of your industrial policy.

The Board of Investment has more executives than required. They use Volvos. They are not content with Benz and BMW cars. A Volvo culture has been born. There is a Rs. 147,000 bill paid by the BOI for alcoholic drinks. There is also an instant where a liquor bill for Rs. 5600 has been altered by substituting the word "soda" for the word "liquor".

There is corruption in the industrial set up. A relation of the Competent Authority for Pugoda Mills has obtained free of charge a state owned building in Colombo.

Today the handloom industry too is in doldrums.

C. V. Gooneratne (Minister of Industrial Development): The UNP that followed privatisation now talks of protectionism. The Hingurana Sugar Factory was one of many that went bankrupt. That is why we created a public investment fund to bail these companies out of bankruptcy.

There has never been any quota frauds in our government. The frauds were stopped with the intervention of a Presidential Commission. Why did you close 400 handloom industries? We created an autonomous, independent body for the distribution of textile quotas without political interference. We resurrected the textile industry.

The budget deficit has been brought down and will remain below 7.

If the UNP remained in power we could not have averted a financial crisis we took care of bad debts. Financial profligacy was stopped. The mission and vision of the President has made the economy secure.

While the unemployement rate is increasing in the region its coming down in Sri Lanka. The dependence on monoculture of hydropower has been reduced from 85 per cent to 60 per cent. We have developed the telecommunications which has a three fold increased capacity now. Prestigious P and O is undertaking a major development project. The largest single industrial development project is being completed at Seethawaka. 400 acres of land will provide employment to 70,000 youth.

Dambulla Economic Zone to be completed next year will be a boon to farmers. 14 industrial cities will be established throughout the country. The fifty garment factory programme has been more successful than the 200 garment factory program under the UNP.

850 large and medium industrial projects have commenced since 1994. The fortune five hundred companies contribute to Sri Lanka's success and proof of foreign investors trust in us. We have received recognition internationally as an integrated economy. Four economic delegations will visit Sri Lanka during the next few months.

Under the SMI development programme we have visited all electorates. The IDB has done 225 training programmes. The IDB has helped set up self employment schemes. The Mineralogical Department has undertaken to prepare a detailed map of Sri Lanka's resources.

Industrial exports have developed by 64 per cent. The importation of machinery and equipment have increased. We have declared a decade of productivity. There is a greater emphasis on productivity and quality than before.

H. R. Wimalasiri (UNP, Matara District) said: The budding industrial sector which had its roots in pre-independence was stifled by the nationalisation programme undertaken by the 1956 government.

The 1977 government of J. R. Jayewardene again revived the industrial sector by introducing the open market system of economy. There were garment factories coming up.

You talk about the Seethawaka Industrial Park. Only one factory has been put up. This is the only factory that has come up during the whole period of your rule. In the proposed industrial park at Telijjawila there are only boards. Some of the factories in Koggala have been closed down.

The Southern Development Authority operate 18 vehicles. Its chairman is paid a salary of over Rs. 100,000. But the authority does not do any work.

Reggie Ranatunga (Deputy Minister of Ports and Rehabilitation): There was a significant development in the industrial sector with large sugar and tyre factories at the forefront during the 70-77 period.

The UNP did not have a systematic industrial development policy. The government has a proper quota system, that gives quota after a proper assessment. The irregular quota system of the previous government has led to the closure of a number of textile factories. We have concentrated on providing employment to males in textile factories. The 6-year industrial plan will ensure development and generate more employment.

Indika Gunawardana (Minister of Housing and Urban Development): The government has secured the industries despite forebodings by the UNP that predicted industrial closures and loss of investment, in the backdrop of economic turmoil, in the region.

Our textile industry is competitive in a world of high tech design and fashions.

It was the SLFP that brought Noritake technology to Sri Lanka in 1976 under the initiative of the then Minister of Industries T. B. Subasinghe. The SLFP government brought in foreign expertise and investment.

The present government has given many concessions to investors and contractors to the construction industry.

The Seethawaka Industrial Park is the nucleus of 4 districts. This Park is using high technology to prevent pollution. The number of industrialists coming in to this park is increasing. This will change the UNP policy of confining industrial development to the western province. Eighty per cent of productivity and 70 per cent of employment was confined to the western province. The minister has revolutionised the once limited industrial development.

Y. Balachandran (DPLF - Vanni District) said: You must start industrial parks in the North-East too. Priority should be given to areas such as Vavuniya and Mannar where many wives have been widowed and children orphaned due to war.

Loans should be made available to small scale industries in the Mannar and Vavuniya districts.

U. L. M. Mohideen (PA - SLMC - National List) said: The Seethawaka Industrial Park is an outstanding achievement of the People's Alliance. The industries that are coming up there will utilize local raw material. The undertaking will bring about vast changes in the economy of three district - Ratnapura, Moneragala and Kegalle.

The exploration of local raw material was a concept subscribed to by many Buddhist leaders, such as Anagarika Dharmapala, G. P. Malalasekera, Ven. Narada Thera.

Tyronne Fernando: You seem to remember many names. Do you remember the name of Ranil Wickremasinghe who first started the Seethawaka Industrial Park project?

U. L. M. Mohideen: I said I remember the names of Buddhist leaders.

Lionel Gunawardane (PA - Gampaha District) said: Late S. W. R. D. Bandaranaike who created a revolution in the economy of this country was a pioneer of the garment industry.

Thulhiriya, Veyangoda and other textile factories came up during the time of the United Front Government of Sirimavo Bandaranaike.

There was a resurgent industrial sector, but the open market economy introduced in 1977 by the UNP changed the thinking of the people and this had a devastating effect on the up coming local industries.

Today the government is again making an attempt to give a new life to local industries. Those who want to start industries on a smaller scale should have access to low interest loans. Interest should be brought down to about 8 percent.

P. Harrison (UNP, Polonnaruwa district) said:

The government is accusing us of spreading rumours. Can you deny the reports of 125 industrial closures?

The last period of industrial growth was from 1993-1994. This is what your BOI Chairman said.

Have you signed the Eppawela Phosphate mine contract? Why are you concealing your deals? The Presidential Committee that was appointed has advised against the sale of this mineral resource to a foreign company as he domestic industry could gain more profits than from an American company.

An area of 56 kilometers including the Anuradhapura Sri Maha Bodhi will be under foreign influence. Can you control the foreign company from over exploiting?

Who got the 100 million contract for this? The government has acted irresponsibly. The people of Anuradhapura will never allow the foreign company to set foot in the area.

Minister interrupting - Present the facts, I will inquire immediately.

The phosphate mine protection committee has sought your assistance but you have completely ignored their appeals. I request you to protect this national resource from commission hawks.

S. Sivathasan (EPDP - Jaffna District) said: People of Vadirai in the North-East have been engaged in making leather products such as footware and bags. Tools and other assistance promised to a team of young people who went through a course of making leather products in the village, have not been received by them.

People from Vadirai are engaged in making footware and other leather products in Colombo Maradana.

Apart from the training given to a group of youth from Vadirai in the manufacture of leather products no other industrial development project is envisaged for the North.

I urge the re-opening of the Kankesanthurai Cement Factory. Also the Paranthan Chemical Factory should be re-opened.

Minister C. V. Gooneratne: We are working on the implementation of an industrial programme for North. Though the factories are not working the employees are paid. An investor must turn up to take the two factories and you must wait till that happened. There is no inaction on our part.

Sivathasan: The government has paid the salaries of the workers of the Kankesanthurai Cement Factory for 1995. I urge the government to obtain Cabinet approval to pay for 1996 too.

Kabir Hashim (UNP - Kegalle District) said: When Ranil Wickremasinghe was Minister of Industries of the last UNP government there was a clear industrial policy. When your government took over from us you took four years to put a policy in place.

But your industrial policy is anti-national. During our time though we opened up the economy we had some selective controls on the crucial sectors of the economy.

The trouble with your government is that the investor does not have confidence in your government. Therefore no investors are coming. Though you promise them incentives they don't believe you.

If you had a clear cut industrial policy you could have achieved higher growth rate in the industrial production by now.

I would like the Minister to make a statement to the House about re-structuring of the loan scheme for textile manufacturers.

You destroyed the local textile industry by removing the 35 percent duty on textiles import.

The private sector should be in an advisory capacity. They should not be allowed to sit the Textile Quota Board.

Textile quotas have been over allocated by the Textile Quota Board (TQB). The bigger factories that have a huge impact on the industry must be represented in the TQB. The foreign buyers have lost confidence because quotas have been over allocated. Hundred of factories are closing down with 50,000 people on the roads. If the minister can't take steps to allocate fair quotas the Cabinet should take a collective decision.

Tilak Karunaratna (UNP-Kalutara district) said: How can you fund industrial development when budgetary allocations are reduced.

You often make misleading statements. You are reported to have said that 700,000 jobs were generated by your government when regional employment is dropping. We would be happy if it was really done. Without the investors the industries cannot take off.

Raw material purchases have dropped. Raw material producers are feeling the pinch. With regard to the Seethawaka Industrial Park this government went ahead with the original plan of the UNP. We had to approve 700 million because you delayed it for one year. If the UNP was in power this project would have been completed by March 1997.

You are building industrial parks for garments when there are garments everywhere. Will the industrialists in Colombo be willing to relocate in the outstations? What will happen to their employees if as the government claims, the industrialists are willing to move out of Colombo.

A. M. D. Rajan (CWC-Colombo district) said: Industries should be developed to tap local resources and provide employment. Some of the land taken over for industrial estates has affected many people. When you provide employment in these parks these people should be given special consideration.

Athula Nimalasiri Jayasinghe (Deputy Minister of Industrial Development) said: There were complaints from the opposition that the PA government was very slow in implementing its industrial policy.

It is common knowledge that it takes time for industrial programmes to show results. Industrialists must come gradually.

The allegation that a show room of a state concern in Colombo has been given to relation of the competent authority. There is no truth in this statement. It is true the building is being occupied by a tenant illegally. Action has been initiated to evict the tenant. This tenant has no relationship to the Competent Authority of the Pugoda Textiles Company.

The votes were passed.

Votes of the Ministry of Fisheries And Aquatic Resources

We have taken steps to turn fishermen into entrepreneurs in a bid to stop them being exploited
- Fisheries Minister

H. R. Wimalasiri (UNP - Matara District) moved a cut of Rs. 10 from the Votes of the Ministry of Fisheries and Aquatic Resources.

Mahinda Rajapaksha, Minister of Fisheries and Aquatic Resources) said:

The development of environment friendly fishing methods, employment generation, improving the nutrition levels of he population, improving conditions for fishermen, forming regional alliances development of freshwater fisheries and aquaculture development have been the main aims of our ministry.

We have received a grant of 375 million rupees from the Japanese government for a housing scheme of 15,000 houses to provide houses for those living in make shift houses along the coastline.

The fisheries villages will not be confined to coastal areas. Vavunia, Mutukandiya, Kandy, Polonnaruwa and Anuradhapura fisheries villages will be built. An environment education and development programme will be launched along with these fisheries villages to educate the people of the area about the use of resources and alternative self employment methods.

We have taken steps to turn fishermen into entrepreneurs in a bid to stop the exploitation of fishermen by business men.

The deep sea fishermen have become shareholders of fisheries companies. The funds that were misused by businessmen are now used by fishermen, under this scheme. Graduates have been appointed as directors to these companies.

A coastal guard force has been set up by the Ministry to stop the use of dynamite fishing, coral reef mining, coastal erosion and illegal fishing by foreigners. The first batch of coast guards have been trained under this programme.

The Ministry provided navigation and radio equipment to fishing trawlers with Korean aid to the Southern province.

A programme to improve the quality of exports has been initiated, under Sweden and ADB aid. A bill to set up a Fisheries, Navigation and engineering higher education centre is now with the Attorney General. Fishermen who are arrested and lose their way will be the responsibility of the investigation unit that functions independently.

Use of satellite technology to detect fishing resources is another aim of the ministry.

The Coast Conservation Department has spent 59 million rupees for conserving areas under threat like Lunawa, Seenigama and Payagala.

Supermarkets with all facilities will be opened soon in every district by the Fisheries Corporation. Fillet fish is now available in the market with the modernisation of the Minneriya Fillet Industry.

NARA has undertaken to make use of mineral deposits in coastal areas. NARA has held training programmes for the development of ornamental fish industry and done much work for the development of the prawn resources.

A Nylon fishing nets factory in Gurunagar in Jaffna will be opened soon. Low cost diesel engines for fishing has been provided.

A ferry service on the waterways in and around Colombo will be initiated soon. This will provide transport facilities.

A fisheries museum will be set up soon. Improvement of storage facilities with foreign aid is one of the concerns of the Ministry. The report on the proposed aquarium will be finalised shortly. The ministry has several programmes to improve the living standards of fisher families.

In a country that can lay claim to an area of sea eight times its size of land. I seek your support to create a "Blue Revolution".

H. R. Wimalasiri said: Fishing is regarded by some young people as an occupation of which one can be proud of. So this social stigma attached to it should be removed if more and more young people are to be attracted to this occupation.

The proposals to build cold rooms in fishing areas have not become a reality so far.

The Ministry must devise some scheme to give relief to the families of fishermen who die in disasters in sea or go missing after going to sea.

There is also the need to formulate a programme to obtain quick release of fishermen who fall into the hands of coast guards in other countries due to being drifted into territorial waters of those countries.

The Minister must also pursue discussions with security authorities for the purpose of obtaining clearance for the use of outboard motors on fishing boats.

Fishing boats entering fisheries harbour have been asked to pay certain fees on a monthly basis. The fees vary according to size and other facilities of the boat concerned. The fees are also subject to GST. Some boats have to pay as much as Rs. 800 per month. This is a disincentive to the fishermen.

Minister Rajapakse: These fees have been decided upon in consultation with the fishing community. The fees are being charged to defray the costs of facilities provided to fishing boats while at see, by the fishing harbour concerned.

Ediriweera Premaratna (PA-Kalutara district) The Beruwala fisheries harbour has been developed to protect the fishery resources and increase the yield.

The government is totally committed to improve the living conditions of the fishermen and their families. The initiatives for higher education for the fishermen has been a prime concern of the Ministry.

Douglas Devananda (EPDP-Jaffna District) said: The ban on fishing in Jaffna has adverse effects on the population there. Thousands of families dependent on fishing have been rendered destitute.

A vast majority of fishing families moved to Vanni from Jaffna. They have resettled in their old homes but they have not been able to get back to their livelihood. The fishing families suffer from malnutrition. Many of the returnees from Vanni have been affiliated with Madurai.

Yooses Peiris (PA-Puttalam district) said: We are still not tapping our deep sea fisheries resources adequately. It is the view of the scientists that deep seas are still dependable source of fish.

Perhaps, the Minister of Fisheries, aware of the truth is now planning to set up a university give advanced knowledge on the deep sea resources and the technology for tapping them.

Imitias Bakeer Markar (UNP-Kalutara district) said: Ediriweera Premaratne mentioned about the work going on at the Beruwala fisheries harbour. I want to remind him that the work on the Beruwala fisheries harbour was initiated by the UNP government with ADB assistance.

The Coast Conservation Department should take serious note of a report published by the press about Galle Fort ramparts facing due to sea erosion.

You have reduced the dry ration provided to affected fisheries communities. There is also 30 percent deduction of the subsidy paid to acquire fishing boats.

Asoka Weerasinghe (PA-Galle district) said: We cannot for a moment forget the fact that the ongoing war is seriously affecting our fisheries industry. Without ending the war immediately neither the industry nor the people depending on it can expect any improvement.

A. Adaikkalanathan (DPLF-Vanni district) said: The relief given to the Mannar fishermen should be increased. They are allowed to go fishing only for a few restricted hours. This has affected their income and life has become difficult for them.

I would urge the government to extend the present 2 kilometre fishing area to at least five or six kilometres.

Sarath Gunawardane (UNP-Galle district) said: The private sector is not investing in the fishing industry because from the very start your government discouraged the private sector from investing in the fishing industry.

The sea is getting polluted due to garbage and effluent from industries being discharged into the sea. Fish too perish due to the industrial effluent.

This year 73,900 MTs of fish were imported. My question is why are you importing fish? You are importing dry fish and canned fish in addition.

The Fisheries Corporation must buy fish from small scale fishermen and store them in cold rooms. Today the fish mudalalis are exploiting the poor fishermen.

At the Galle peer GST is charged whenever the fees for any services to fishermen, are made.

Chandrasiri Gajadeera (Deputy Minister of Vocational Training and Rural Industries) The fishermen are a section of society relegated to the lowest levels of society. The Minister's main intention has been to elevate the living standards of the fishing community.

One of the main functions of coastal guard force is to protect the country's coastal areas from erosion, that has eaten away most of the coastal belt. If a new map of Sri Lanka is drawn it would be in the shape of Australia, I think.

S. Selvarasa (TULF-Batticaloa district) said: The subsidies given to the North and East fishermen are being reduced. At least two million rupees should be granted to Batticaloa. Many for scholarships and pension facilities for fishermen has to be granted. I thank you for providing a cold room for fishermen in Batticaloa.

R. Yogarajan (CWC-Colombo district) said: Jaffna is rich in fish resources. Prawns are available at cheap rates. Before flights between Colombo and Jaffna stopped the fishermen were able to sell their catch at good prices. This helped them.

While congratulating the Minister for the work he has done I request him to extend the activities to Uva and Central areas also.

Joseph Michael Perera (UNP-Gampaha district) The children of fishermen should be given equal opportunities for education. There are occasions when the children are rejected from schools.

Minister Rajapaksa: If they complain a human rights violation petition can be filed. We should get together to stop this. The minister should take steps to send these children to schools, and provide them with equal opportunities.

ADB projects are carried out successfully by the Ministry. The government should know that we initiated most of these projects. One ADB project to identify fishing resources completed its first phase. After this study the ADB will provide necessary assistance to utilise the resources identified by the project. I wish to bring this to the attention of the Minister specially because this project is of vital importance to develop the fishing industry.

The fishing industry should be developed through co-operative societies. The co-operative societies should be utilised as in the past to provide assistance to fishermen. What consequences will the Negombo highway have on the fishing resources, specially the lagoon in the area?

Milroy Fernando (Deputy Minister of Fisheries and Aquatic Resources Development) said: If the People's Alliance government did not come into power in 1994, it is most likely that the Ministry of Fisheries would not have been there today. There was nothing to be done. Because you had stopped the inland fisheries section. The Fisheries Corporation was planned to be privatised. The CeyNor too would have been gone with that. There would not be any ice plants either. So there would not have been anything to be done by a ministry.

I appeal to the minister to provide some relief to the fishing community that was affected by the recent incident at Kokilai.

The Pesalai Cold Room is being repaired and provisions will be made by the minister to construct a new cold room.

Minister Mahinda Rajapakse winding up said that the ADB-government agreement definitely provided for gradual reduction of subsidies for purchase of multi-day boats and others.

The votes were passed.