Sri Lanka's literacy enhancement key to economic success - Japan

The Japanese professor was delivering a lecture on "Lessons from Economic Development of Japan and Other Asian Economies" last week in Colombo while addressing the private sector in the country.

Commenting on the literacy rate in Sri Lanka, it was observed that there was a need to ensure that the lower and middle classes also obtain higher education.

This would hold good for individuals with a higher education in the country, Prof. Kinoshita said adding that this would mean the evolution of a value and knowledge based society.

He observed that based on the many experiences in Asia - not only in Japan - need to be taken into account in embarking on ensuring a quality nation.

Prof. Kinoshita pointed out the need to not simply engage in the export of raw materials found in the country but to expand on value addition processes.

This is expected to provide for the establishment of a quality society or knowledge based society, he said adding that the private sector need to be able to carry out their work without being at "the mercy of your government."

Using good macro economic management skills was required to forge ahead he explained.

He noted that the modernisation of Japan was enabled through the universally spread education system that resulted in a literacy ratio higher than any of European countries with a higher number of books sold in the market.

Japan's past success was owned especially due to this system that allowed for increased middle-up decision making processes in management.

This he pointed out was "very effective in catching up process, manufacturing, and in particular it provided for a slow and steady process to be adopted.

In this respect, everyone becomes part of the decision making process unlike in the US where it is top to bottom approach quite dissimilar to that adopted in Japan.

The new approach adopted by Japan created for a Functional Hybrid Management that would learn from outside of the country and thereby mature in their management practices, he said.

This flexibility for change with the "Kaizen" mindset provided for an ardent learning from the outside world with modifications depending on own value and craftsmanship resulting in the production of high quality products.

"When the country needed to modernise the economy even farmers could transform themselves to workers due to good education," the Prof. explained.

However, in today's context with technological advancement not only the "Kaizen" mindset but a more innovative thinking process was adopted that meant CEOs had to be able to understand these new ideas.

He also noted that the Board of Investment (BOI) needs to carry out its functions under one roof without having investors to run around from pillar to post.

It was pointed out that, should these matters not be taken into account, investors are likely to be more attracted to more business-friendly destinations.

Prof. Kinoshita noted that an integrated strategy was required to raise the Total Factor Productivity (TFP) while at the same time being careful of the ingredients of labour laws and assertions of trade unions. Co-existence between the two was imperative.

In China the TFP was improving quickly in the past upto 2005 with the currency having moved up marginally against the dollar. In this respect, China is looking at solving this problem by increasing its wages, Prof. Kinoshita observed.

Sri Lanka has the possibility of moving into manufacturing by adopting the Original Equipment Manufacturing (OEM) together with Foreign Direct Investment (FDI) that could eventually be moved into the Original Design Manufacturing (ODM).

Further it was highlighted that with research supply chains of Multinational Enterprises (MNEs) it was imperative that they try to create 'clusters' if possible.

In addition the experiences of Vietnam and Indonesia were to be studied by Sri Lanka in a bid to move ahead in the private sector industry's growth.

Indonesia, Prof. Kinoshita observed, was growing relatively fast at approximately 5-6% per annum under semi-colonial industrial/ structure.

The terms of trade with natural resources were not deteriorating; he said adding that on the other hand coal was rising.

This could be exported in some amounts for which an increased revenue could be obtained.

As such the government would impose taxes on those products and use it for its infrastructure development while at the same time also depending on the growth of India and China for increasing cash on its exports.

In Vietnam on the other hand, there was a full-fledged industrialisation or series of cluster creations that seem extremely difficult under a WTO/FTA regime.