Appropriation Bill 2002-Committee Stage Debate on the Ministry of Economic Reform,Science and Technology
(10 April, 2002)

Mr. Chairman, when the Prime Minister appointed me as the Minister for Economic Reform, Science & Technology he issued me with a huge and demanding challenge.

For this Ministry contains that which holds out great prospects for Sri Lanka, but at the same time inspires fear in the minds of many. Therefore, in many ways, it can be the source of much controversy.

Over the past couple of weeks, I have spoken on two occasions during the budget debate about economic reform and all that goes with it. Although I have said it before, I will say it again, without economic reform, our country will continue its decline and we shall fail to prosper, for the old ways no longer work. But much of what we have to do is controversial.

Members of the Opposition could make much of the situation we find ourselves in. They could use the opportunity to attack the Government and to score political points. But would that really benefit them? If they are true believers in a democratic system and are striving to obtain the best for their constituents, then they would want this cycle of blame and scape-goatism to end, so that solutions can be found. For if this cycle continues, there will be no stable polity to rule anymore by any party. Whichever the party in office, they would have to face the same issues and be left with no recourse but to come up with solutions similar to ours. More constructively, members should join us in trying to find a way to create better living standards and more jobs for our people. I believe the people want less political hubris and more of a consensus-based approach from their political leaders.

In the weeks and months ahead, we are going to have to tackle various questions of reform in several areas of our economy. Difficult decisions will have to be taken. However, we cannot run away from reality. We shall have to look closely at de-regulation and privatisation and we shall have to confront issues that for too long politicians have talked about but done little to resolve.

None of us benefit from the way things are at present. Perhaps a few who know how to bleed the system do, but the vast majority, politicians and people alike are suffering.

It is incumbent upon us to show that there is a better way. That grasping on to the little we have is not the right solution and that taking a brave step forward now will be rewarded later. I say this because I know how little support there is for the concept of privatisation in this country. Recent surveys show that only half of the people surveyed had any idea of what privatisation stands for and most were unable to define what it means to them other than in vague terms.

If we are to succeed in our economic reforms, then we need to carry the people with us and to explain to them the benefits of our actions.

I hope that through the Consultative Committee of my Ministry, we shall achieve two aims. The first, is to debate in a transparent, open and honest way the problems and the possible best solutions for all our people. The second, is to explain to every Sri Lankan, the benefits derived from our actions. For if we are to develop new policies, then we have to have the courage to implement them. In my Ministry that will be a reality---for the time for talking, procrastinating and deliberating is over. In this spirit, I am happy to note that the Opposition and government have, at least now, agreed upon appointing the Consultative Committees to ministries so that we can proceed quickly, in a united manner, to work on the critical issues facing our people.

I have an apology to make. Much has occupied my time in the past few months. My work assisting the Prime Minister on the Peace Process and the Policy Reform Process has taken up much of my time. Nevertheless, I feel that I have neglected the Science and Technology portfolio of the Ministry. I would like to have spent more time on these matters. That is why I am devoting the majority of this speech to our vision for science and technology, especially as regards Information Technology.

This Ministry is, as the Americans would describe it, a bit of a "kitchen sink"-- in other words, a real jumble. For within my purview, and apart from economic reform, my ministry oversees over ten scientific institutions ranging from those that cover industrial technology, standards and meteorological matters to the atomic agency. On the other hand, areas covered by PERC, the National lotteries, and sugar companies, the Insurance Corporation, and many other institutions identified for restructuring or privatisation come under my purview.

I should make it clear here and now. I do not approve of the way that many institutions have been created in the past at the drop of a hat, whenever a problem needed redress as if the creation of a new institution is the panacea for all ills. In the wake of this practice, we have been left with a full host of institutions of every stripe, which in turn have become empires unto themselves.

From this past practice, it would appear that we believe that the more empires we create, the closer we come to paradise. If that were so, then judging by the number of empires existing in Sri Lanka today, we should have obtained paradise a long time ago. Of course, we all know that paradise is not reached by building empires. That will have to stop, because our country cannot afford to do this any longer.

In future, the institutions under my Ministry, including the science and technology organisations will be demand driven. They will have to rationalise their links with the private sector and civic society, and they will have to build meaningful partnerships. They must justify their existence. If they are not able to do this, then, we will be forced to dismantle them for they will have revealed themselves to be not capable of meeting the objectives of our society.

Now, I would like to move on to the core of my speech. I want to move on to the prospect of a new Sri Lanka created through information technology. Some of you may view the next few minutes as a dream. But the reality is that if we are to achieve the 10% growth our Prime Minister is targeting, or even a lesser amount of 7%, then we need to fulfil this dream. For, without a commitment to succeed in the field of Information Technology, we have little choice other than to be a backwater forever more.

Chandrababu Naidu achieved his IT miracle in Andra Pradesh against all the odds. He is quoted as saying "what I want to build is a network society. In my parents' day one had to do physical work now only the brain has to work". His words are as true for Sri Lanka as for India.

I hope you will forgive me for speaking not just to this chamber but also to the world at large.

This new Government is in the process of attempting a revolution---a revolution to push our country into the forefront of the world in modern methods whether that be in government, agriculture, industry or technology. We have to instil a new way of thinking, one that is more in line with the ways of the modern world. For us, every idea should be worthy of consideration and every proposal worth testing.

In science, we should examine all aspects of technology---how we best minds to our shores, how we can nurture home-grown talent in a more constructive way, and how we can use the opportunities of research and development, to create new opportunities.

I hope we can change the balance of governance as well in other constructive ways. Shortly after last Christmas, I announced that I would ensure that at least one third of the boards of institutions under my purview would be comprised of women directors. We are well on the way to achieving our target.

Yet, in still other ways, I believe we can change the future prospects for our people. Today, the world community talks of globalisation. But what does that mean. To me it means an opportunity waiting for Sri Lanka. The Internet has revolutionised our lives. This morning I was e-mailing a friend in the US who responded within minutes. Not so long ago such communications would have taken days if not weeks.

Just a few years ago, computers were massive machines the size of rooms tenderly nurtured by technicians in cool environments. Today, you can sling a 5 pound laptop computer of equivalent computing power over your shoulder as you board an aeroplane as you travel to the any end of the world.

But if anyone thinks that we have reached the pinnacle of this particular technology then they are mistaken. The opportunities for growth are unlimited. And we in Sri Lanka can offer the world the chance to create a new centre of excellence.

For, paradoxically, our country which has been ravaged by twenty years of war from which it is now emerging, has as a result no antiquated infrastructure, legacies or limits to tie us down---except, of course, for those imposed upon us by ourselves. Take any country emerging after war---as peace follows war, opportunity follows. It was true of Germany, Japan and Korea. It will be true of Sri Lanka. For we are starting with a clean sheet of paper. The challenge is to make that blueprint for the future the right one.

To that end, my advisors have been working with USAID and also with several local groups to layout a 'roadmap', for information technology. We are also pleased to be welcoming a World Bank delegation next month to discuss IT, especially since the Vice President in charge of IT for the World Bank is a Sri Lankan. And on the 18th I will be meeting with the President of the World Bank in Washington D.C. to encourage them to help us develop our IT dreams as well as to discuss other issues.

Once we have finalised this 'roadmap' we intend to publish our detailed plans. This should be ready towards the end of May. At this time, we shall open up the paper for consultation and discussion. But I do not intend to allow the talking to go on for too long. There have been enough studies and enough talk in the past---but not enough action. I am determined that this will not happen with our IT plans.

Now, I would like to spell out the opportunities open to those who wish to join us in this venture.

First, let me give an overview of some of my thinking. I believe that our aim should not be to remain, as at best, thought of as a tourist guide's 'small tear shaped island stuck off the southern tip of India'. Our aim should be to become an IT hub where East meets West. To do so, we might need to create a strategic authority, somewhere along the lines of Malaysia's MDC or Multi Media Development Corporation, which acts as the nodal authority for something they refer to as the 'multimedia super corridor'. However, our authority should be faster, smaller and more proactive than the MDC.

To match this, we must create the world's best IT environment to harness the full potential of multimedia. We must make it easy for the application of new ideas by creating a single point of contact for all approvals, facilitating knowledge transfer and attracting leading edge and world class companies.

But, we should not just want to attract Microsoft, Dell, Compaq or Hewlett Packard here. We should also aim to nurture the next generation of entrepreneurs that will challenge these companies and accelerate the march of progress even further. We want Sri Lanka to be the magnet for the most innovative minds in the industry. That means allowing unrestricted employment of local and foreign knowledge workers.

It is well known, that Sri Lankans often achieve the highest goals when they leave the shores of Sri Lanka. We have a massive Sri Lankan diaspora. Today, we have to create the proper IT environment to enable Sri Lankans to achieve the same here. We should attempt to reverse this brain drain and help in the creation of our new Sri Lanka. And we should try to help those Sri Lankans living here to have all the opportunities to become world class IT entrepreneurs. In short, we must not only think in terms of making Sri Lanka a paradise on earth --- but an IT paradise as well.

Our Government must be ready to meet that test. The challenge also goes out to the IT and multimedia industries. Are the international IT and multimedia industry prepared to make Sri Lanka a preferred base of operations?

However, let me tell you what else we have to offer. In a word, Mr. Chairman--- nothing. That is what makes Sri Lanka so exciting. For at present we have nothing to 'offer' in the way of infrastructure. Those willing to join us in this venture at the start can help us to mould the type of centre of excellence they want to see. Today, we must let the international IT and multimedia industries know that this government means business---that Sri Lanka is about to become a hot-spot for technology development and investment and that if they are serious players they should consider including Sri Lanka as an integral part of their future growth strategy.

Our aim should be to create a new infrastructure. In telecommunications, we shall need to examine ways in which we can remove entry barriers--- from fibre landing constraints to price controls for international telecommunications providers. We need to look at rationalising spectrum management and consider how licenses can be made uniform for international carriers with standardised local interconnectivity provisions.

In particular, we need to ensure competition and provide quality services at the lowest prices to encourage maximum penetration. To achieve that, we should promote universal licences tied to service and coverage criteria with open access to sharing of the telecom infrastructure.

In addition, we need to create a registration system for other providers such as ISPs offering wireline and wireless local access. We find that as technologies develop and converge, traditional boundaries and paradigms are shifting. Today, your communications, information and entertainment mediums are converging. Tomorrow, the only device which we will require may be a hand phone which will serve as a computer, television, and all-purpose communication device, all rolled up into one.

A recent report on the Indian IT sector, suggested that this sector suffers from a telecom infrastructure that has poor local loops, a lack of a national backbone, low reliability and high costs for international gateways. We do not intend to let the same happen here.

In Malaysia, as they build their multimedia super corridor they are creating a fibre-optic backbone with, as they describe it "an unprecedented 2.5 -10 gigabits per second capacity, with enough network power to support virtual boardrooms, remote CAD/CAM operations and internet broadcasting". That is the standard to which we have to aim if we are to succeed.

Slightly shifting topics, regulation is an important part of the new industry. Internet technologies change rapidly. In fact, one report suggested that companies now have to upgrade their technology every two to three years if they do not wish to be overtaken. Meanwhile, policy makers can take years to draft policy. That must not happen here. That is why the creation of a nimble regulatory authority based on the Malaysian experience is something that we must seriously consider.

Legal reforms covering issues such as digital signatures, digital contracts and digital notorisation, as well as online resolution of disputes, computer crime and intellectual property safeguards will need to be addressed. Accreditation criteria should be modernised, and online company registration developed.

If we are to attract the best brains and the best businesses, then we need to have a tax environment that promotes growth. That means help for those wishing to work here, help for venture capital and help for those wishing to export their services. In short, a low tax regime for the IT industry.

Again, looking at Malaysia, they provide competitive financial incentives including no income tax for up to 10 years or an investment tax allowance, and no duties on the import of multimedia equipment.

We also need to create a living environment that attracts these knowledge workers. That means creating an improved infrastructure, better faster and more reliable services and the best in quality shops and entertainment. Unlike some countries, we should not wish to create just a new software services industry. For us, the whole spectrum of IT Commerce will be important. We have the workforce, but we need to develop its skills, and soon we will have to have technology parks and 'world city' areas. For us, one super corridor will not suffice, for we need to take this revolution all over Sri Lanka---North, South, East and West.

Nor, should we restrict this revolution to ourselves. We should look for partners throughout the world-- IT partners to join with local services, manufacturers prepared to invest in the latest technology---and partners prepared to help us build 'world city' areas which might be privately developed on a build, operate, transfer basis.

In such centres of excellence we should see high tech manufacturing, a new form of Silicon Valley, to take advantage of the competitive environment we must create. There is much potential from such service companies as call centres and business process outsourcing services.

The growth in online training services has only just begun. As we spread the web of e-community centres, our aim must be to connect more than 300 rural communities and 3,000 micro enterprises with new access learning and telework opportunities. So that no matter where we are in Sri Lanka, we will all have the opportunity to join this revolution. And so that no matter where one is in the world, one can gain access to the best trained and most resourceful workforce-no matter where that workforce may be, to complement ones business activities.

Permit me to linger on that last point for just a moment or two longer. As you are aware, we have a high literacy rate. But we need to now ensure that all our youth are provided with an equal opportunity to gain skills in IT and English. Unless we are in a position to fully harness the talents of our youth, we will miss yet another opportunity-which may be our last---to build a strong foundation in this new era of globalisation. In this context, the Prime Minister's initiative to set up a Youth Corps, which will have as one of its objectives the providing of IT and English training, is I believe, a step in the right direction.

In addition, we need to have a competitive and flexible labour force and our rigid and antiquated labour laws must be amended to bring them into line with current universally accepted laws and practices. Yes, there are labour law issues that have to be addressed. In the future, we shall need to have greater flexibility in our working methods. For in the domain of the internet, the world works 24 hours a day 365 days a year. That means creating flexible working hours. But it also means creating huge opportunities for those prepared to be flexible in the way they work.

Soon the thought of someone from Kamburupitiya handling a problem for a client in New York city will not seem so strange.

In all of my speeches I stress that the future of Sri Lanka does not come down to just the politicians or government. Instead it should consist of a partnership. In the field of IT, that translates to mean the government of Sri Lanka, the people of Sri Lanka, the businesses of Sri Lanka and those international companies who see a good investment in the future of our country.

For, growth in the global IT industry will continue unabated for many years to come. Even India with its mighty IT infrastructure is achieving a mere 1.3% share of the total world market at present. Yet, look at the way in which their industry has revolutionised their economy and the lives of tens of thousands of their workers. I believe we can do much better.

By spreading our expertise across a wider spectrum of industry sectors and by looking across the world, in both the East and West, we can capture a greater market share. For in India, 62% of their exports were to North America during the period of 2000-2001. Our pivotal position, with our good links to South East Asia, China and Japan, as well as our historic links with Europe and the United States, can help us achieve much more.

Finally, I would like to touch on the future of IT. This is the fastest moving, most unrelenting industry in the history of mankind. Stand still for just a moment, and you will be steamrollered by your competitor. For us, the future also lies in creating the institutions that will keep us ahead of the pack. That means new cyber-universities where Sri Lankans and others can learn the latest techniques and push the boundaries of their knowledge. It means distance learning, where even the well-qualified continue to learn the latest techniques just as fast as they emerge. It also means creating a premier research and development programme to give those companies working in Sri Lanka the very best of cutting edge technology.

Mr. Chairman, all of this may sound a tall order. How, from a country emerging from war and in economic decline can we hope to achieve such great things? To me the answer is simple. We have to have faith in ourselves, we have to start showing the world the potential of our workforce, we have to be prepared and not afraid to make mistakes and to learn from them, and we have to build on the massive amount of goodwill around the world that this new Government has generated.

The British Prime Minister, Harold Wilson, in the 1960s spoke about what he termed, the 'white heat of technology'. It took him and his party thirty years to harness this. Today, in Sri Lanka, we have to lay out the plans for a new revolution that will place the spotlight on South Asia. Tomorrow, we will have to deliver a new Sri Lanka at the very forefront of the field. However, in closing I will leave you with a quotation from the prize winning Nigerian novelist, Chinua Achebe, who when describing his country's plight, once wrote in exasperation:

"The trouble with Nigeria is simply and squarely a failure of leadership. There is nothing basically wrong with the Nigerian land or climate or water or air or anything else. The Nigerian problem is the unwillingness or inability of its leaders to rise to the responsibility, to the challenge of personal example which are the hallmarks of true leadership."

This, I believe, Mr. Chairman, is the real challenge we all have to face in Sri Lanka.

Thank you.