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MSME sector development vital for achieving sustainable development

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Insights during Covid-19 situation

By Dr. Tissa Ravinda Perera

Faculty of Management & Finance

University of Colombo

Email: ravinda@mos.cmb.ac.lk

Nature and Structure of Sri Lankan MSME Sector

The MSME sector is the backbone of any country. It is not because of the number of people employed therein or the value addition to the national economy; it is because this sector helps solve numerous issues. Therefore, any country tries its best to promote and protect its MSMEs through deferent strategic and policy initiatives. Enterprise Sri Lanka was one of them, recently developed and launched by the previous government, which expected to develop 100,000 SMEs under this programme by mainly providing loans to prospective entrepreneurs. Successive governments have had similar programmes. However, they did not yield the desired results due to numerous reasons.

However, the present government has not yet launched a new programme to develop the country’s MSME sector. It can be expected to have a national programmes to develop MSMEs.

According to the Department of Census and Statistics (2013/2014) there are about 1,019,681 businesses in Sri Lanka. Out of them 99.2% are MSMEs. The micro, small and medium businesses account for 91.8%, 7.0% and 1% respectively of the total establishments in Sri Lanka. The employment generation of the MSME sector, in Sri Lanka is 44.6%, 17.6% and 12.9% respectively. The statistics of the Department of Census and Statistics Sri Lanka clearly shows that the contribution of the SME sector to the national economy is around 31.8% when compared to the large-scale business sector in the country. This sector is as important to Sri Lankan economy as the large-scale businesses.

There are important characteristics of this sector. Out of the 1,019,681 business units, many of them are located in the Western Province, and the Gampaha District has the highest number of industrial establishments in this province. According to the census of industries 2003/2004, conducted by the Department of Census and Statistics, Kurunegala, Gampaha, Colombo, Kandy, Kegalle and Katutara, respectively, have the highest number of industrial establishments in the country. Therefore, it clearly shows that there is a disparity in the distribution of MSMEs in the country.

Policymakers must look into this matter when promoting and developing the SME sector in the country.

 

Current Issues and Challenges Faced by the MSME Sector in Sri Lanka

There is no apex body to coordinate the activities of the MSME Sector in Sri Lanka right now. It is really a major issue when it comes to policy decisions related to this sector. Therefore, it could be noticed that there is a tug-of-war over policymaking and policy implementation. The Industrial Development Board and the Samurdhi Movement play a role in coordinating the activities in entrepreneurship development and MSME development. However, their involvement is not that effective and enough, due to the outdated mode of operation and approach. There is no proper data base in Sri Lanka, related to MSMEs and their activities. Sometimes, the data and the data bases available are not up-to-date or reliable. The Department of Census and Statistics of Sri Lanka has some data and data bases. However, they are also not clear and up-to-date to help understand this sector, which is in a pathetic situation today due to the uncoordinated polices. Such policies change from government to government and Minister to Minister. One can’t see any justifiable reason to change such policies as are related to the MSME sector. The previous government implemented the Enterprise Sri Lanka project. Sometime ago, the Divineguma Programme” and the “Wasanthaya Programme” were introduced. What happened to them? Today, they are no more. What has happened to the enterprise Sri Lanka programme? What has happened to the previous programmes? The uncoordinated polices and lack of national policies are the main issues in the Sri Lankan MSME sector. In any country, protection and promotion of MSMEs are the primary responsibility and task of the government. However, in Sri Lanka, it does not seem to be the case. The government tries to apply taxes to MSMEs in the similar way they are been applied to large scale businesses. It is very difficult for an MSME to get a loan even from public banks, which ask for collaterals, etc. Can Sri Lanka encourage MSMEs in this manner? There are many

procedurals to be followed when starting and running a business. Sometimes, the English language is a barrier for the MSME owners. They have to fill documents in English when applying for a loan or completion. They also have to fill many documents when registering their businesses and opening tax files. This type of procedural barriers affect the MSME performance in the country. Unnecessary laws and environmental protections have a high negative impact on the MSMEs, which do not have enough knowledge and funds to meet some legal requirements. During the previous government Sri Lanka was talking about Singapore-Sri Lanka Trade Agreement and the ETCA Agreement between the Sri Lanka and India. There are many other agreements like this. Do they affect the MSME sector in the country? How is the government going to protect them? There are many low-cost imports to the country, mainly from China. Therefore, how is the government going protect our SMEs from the products and services coming to the country under trade agreements and products and services coming to the country as direct imports.

In 1977, Sri Lanka opened up her economy. Many large scale foreign and local businesses came into being. Therefore, value addition especially from small industries, went down since the contribution from large industries went up exponentially. Hence, the emergence of large-scale businesses is a serious challenge for MSMEs in the country in competing with them. The Sri Lankan manufacturing MSMEs are in trouble since many people like to start service industries than manufacturing industries. Many people do not like to take a high risk of staring a manufacturing MSME in Sri Lanka. What can the government do about this? What can the public sector and private sector organisation do? What can the general public do? There are important questions to be raised here.

Globalisation is a great challenge faced by the Sri Lankan MSMEs. The technological advancement, innovations, telecommunication and transportation development are major components thereof. Thus, the MSME sector in Sri Lanka, has to face this phenomenon. The socio-cultural changes in the world and Sri Lanka drastically, can affect the customer preferences as well. These customer preferences affect businesses, mainly the MSMEs in Sri Lanka. Therefore, social cultural changes are also a major challenge for the MSME sector in Sri Lanka. (To be continued)



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They do it differently…

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Michelle and husband Chanitha

Duos are there, aplenty, especially in this pandemic scene, but what Michelle and Chanitha do together, as a husband-and-wife duo, is totally different.

This has, no doubt, paved the way for their success, as entertainers, in the entertainment scene, in the Maldives.

Michelle and Chanitha are from Sri Lanka and have been performing, in the Maldives, for the past two-and-a-half years, and, they say, it has been a very fulfilling experience, especially seeing guests enjoying their music, and complimenting them, as well, for their professionalism.

Right now, they are based in a tourist resort and have been doing that scene for the past two years, as the resort’s house band.

“We had the privilege of entertaining guests at the resort’s Christmas Dinner dance (2019/2020) and also ushered in the New Year at two grand New Year Eve dinner dances (2019/2020), at the same resort,” said Michelle who, incidentally, happens to be the daughter of Melantha Perera.

Michelle went on to say that as their music is wide and varied, they also did the Valentine’s dinner dance (2020/2021), and also functions, connected with Women’s Day, and weddings, as well.

The duo’s repertoire is made up of over 600 songs, and they do pop, jazz, RnB, rock ‘n’ roll, rock, blues, and lots more.

“We both sing, harmonise, and Chanitha plays lead guitar standard solos,” said Michelle, adding that their music has been very much endorsed by guests and the bouquets that have come our way have been very gratifying.

 

 

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Critical thinking and the ‘value’ of university education

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By Harshana Rambukwella

‘Critical thinking’ is a term that has become ubiquitous in both general and higher education discourse. One sees this phrase appear frequently in educational policy statements. Many who speak of education reform see it as a key skill that education needs to foster. Those who see education primarily as a tool of producing a productive workforce or ‘human capital’ also see it as a positive attribute. However, there is little clarity about what ‘critical thinking’ means. For many involved in education policy-making it seems to mean something like problem-solving ability and the ability to make reasoned judgments – a so-called ‘higher order skill’ in Bloom’s Taxonomy (a hierarchical categorisation of skills developed by an educational psychologist in the 1950s and widely utilised worldwide). There is a significant body of scholarly literature on higher education and the need to foster critical thinking. This literature tells us that the ‘industry’ needs critical thinkers and that often our universities and undergraduate programmes are failing to produce such thinkers. Critical thinkers we are told will make better doctors, better engineers, better lawyers and a host of other ‘better’ professionals.

But to be ‘critical’ can and does have many other meanings. If we move from the adjective ‘critical’ to the noun ‘criticality’ things begin to become fuzzier. The dictionary definition suggests that criticality is something of great importance, that it is a point at which a physical material like a chemical becomes unstable, that it is an orientation to life which promotes questioning and criticising what you observe in the world and so on. It is this fuzzier meaning of the word ‘critical’ that interests me. Critical thinking, unfortunately, like many other concepts which have a long, complicated and radical intellectual history have been tamed and domesticated when they enter mainstream education discourse.I have been personally puzzled when educators talk glibly about ‘critical thinking’ when all their actions mark the very absence of such a critical spirit or orientation. For instance, within the University system I have been at many forums where we discuss the ever-increasing student load with little or no matching investment or expansion of human or physical infrastructure. On many occasions these discussions veer toward how we can use innovative teaching methods, alternative assessment strategies and other innovations to bridge the gap between increasing student numbers and the inadequacy of resources. It is very rarely that our faculty boards or senates take this question to the next level. Why are we getting increasingly larger numbers? Why is the state investing less and less in higher education? Why is an institution’s contribution to education measured in terms of student output? Clearly there is a larger fundamental set of questions about the nature and purpose of education that need to be asked. However, these questions often become marked as ‘political’ or ‘ideological’ and many educators see their role as one of avoiding such ‘politics’ or ‘ideologies’ and instead focus on the ‘practical’ aspects of education.

My submission is that a similar evacuation of the political and ideological aspects of critical thinking happens when we bring it into the curriculum and the classroom. The notion of criticality dominant in mainstream education is heavily appropriated by neoliberal thinking. In this version of criticality students are trained to practice a form of emotional self-surveillance that passes as critical thinking. It ultimately leads students to be conformist and feel guilty about their inability to be ‘productive’ members of society. Take for instance, the practice of ‘reflective thinking’ that has gained much currency in teacher education. To be a reflective practitioner in this understanding is to constantly think about how to be a ‘better teacher’. Are my methods adequate? Am I practicing learner-centered approaches? How good are my lesson plans? The casualty of such thinking is often politics and ideology. Very rarely do we compel our students or teachers/lecturers in training (student teachers), to think about how unequal and classed out education systems are. It is rarely that we speak openly or think about the sexism, classism and even racism of what passes as educational content. By reducing the notion of ‘criticality’ to a ‘skill’ (one among many other ‘productive’ skills that are supposed to be given to students to make them employable) ,a delusion is created that critical thinking is being promoted.

As opposed to this commodified and toothless notion of criticality are the meanings of ‘critical’ that lie on the fuzzier margins of the word. In western philosophical thought ‘critical’ is a term that can be traced from the thinking Socrates, for whom it meant a radical questioning of what appears normal and normative, extending through thinkers such as Erasmus, Thomas Moore, Bacon, Descartes, Russell extending into figures like John Dewey whose thinking has also played a major role in contemporary education philosophy. While the names I have invoked cover a vast range of philosophical orientations and what I am doing here is a kind of gross glossing over of different philosophical traditions, one thing in common here is a radical spirit of questioning the normative. This does not mean that all these thinkers rejected the normative or what was accepted in their societies but their understanding of norms was always tempered by a critical spirit that questioned before acceptance.

This brings me to the notion of ‘value’ in the title of this essay. In his 1997 book The University in Ruins, Bill Readings observes that ‘value’ in the new ‘corporate University is determined by accountants rather than philosophers. This pithy statement captures the dilemma of critical thinking I have been outlining above. Appropriated by a mainstream discourse of education, which in turn is heavily informed by neoliberal values, critical thinking has lost it philosophical edge – its value today lies in its ability as a skill that will provide a competitive advantage in the employment market. Reading’s book as a whole is about this neoliberal transformation of the higher education sector. What he outlined in the 1990s was a process that was gathering pace in Euro-America where modern Universities were increasingly turning both in terms of their administrative structure and in what they taught and how they defined themselves. The ‘ruins’ the title refers to is the notion of a classical university as a site of critical philosophical thought – a site from which to question the normative. In Sri Lanka what we see today is a particularly intense form of this emasculation of the notion of the classical university. Sri Lanka is fast becoming what I would call a ‘frontier market’ of higher education. State policy is guided by a highly impoverished vision about producing ‘employable graduates’ and deregulating the higher education sector so that more and more profit-making entities that offer degrees can be established. Value in this new university culture lies in the numbers of graduates that are produced and their prospective employability. Critical thinking, as I have explored in this essay as a whole, is understood in equally impoverished terms. I offer no ‘practical’ solutions to this dilemma but make these observations in a somewhat polemical style to provoke discussion and debate.

Harshana Rambukwella is Professor in English and Director of the Postgraduate Institute of English, the Open University of Sri Lanka.

Kuppi is a politics and pedagogy happening on the margins of the lecture hall that parodies, subverts, and simultaneously reaffirms social hierarchies. 

 

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Teachers’ pay hikes: An unjust call

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By K. L.L. Wijeratne

The current teachers’ protests and trade action jeopardising the education and future of our younger generation need an objective analysis as to whether there are genuine anomalies in relation to respective salaries of principals and reachers.

Let us examine the origin of the purported salary issue affecting the teachers, principals and the members of the Education Administrative Service. Prior to the establishment of the teachers’ service on 06 October, 1994, teachers’ salaries were based on their qualifications as trained teachers, non-trained teachers, honours graduates, general degree holders and diploma holders. As such, there were nearly 25 categories of teachers with five salary scales as follows:

This salary structure did not provide a grading system, or promotional scheme for teachers. Therefore, the need for a Teachers’ Service with a grading system and promotional scheme was deemed reasonable and justifiable.

On September 27, 1994 then Minister of Education and Higher Education, Richard Pathirana in a note to the Cabinet sought approval for issuing a statement on World Teachers’ Day (October 6, 1994) announcing the establishment of the Teachers’ Service with effect from 6/10/1994. The structure and the salary scales of the proposed Teachers’ Service were also included in this note to the Cabinet.

The observations of Chandrika Kumaratunga, the Minister of Finance, Planning, Ethnic Affairs and National Integration, dated October 4, 1994, while accepting, in principle, the establishment of a Teacher Service, noted that the proposed salary scales for the principals and teacher educators, if given, would create anomalies in the Public Service Salary Structure. She further emphasised the need for such proposed salary scales to be examined, in depth, and in comparison to other sectors of the Public Service depending on work norms and other conditions of service.

Teachers work 180 five-hour-days (around 900 hrs) a year. Whereas other public servants work 240 eight-hour-days (around 1900 hrs) a year. In view of the complexity of creating new designations and assigning of new salary scales, the task was to be referred to the Salaries and Cadres Commission for examination and report before decisions were made.

However, irrespective of these observations, the Cabinet Paper 94/14/13 was approved by the Cabinet of Ministers on 28 September 1994, for the establishment of the Sri Lanka Teachers’ Service with effect from 06 October 1994, and for the implementation of the salary scales proposed for the Sri Lanka teachers service with effect from 01 January, 1995.

In response to the above Cabinet Decision, in her Note to Cabinet No: BD/356/86/34(K) dated October 1994, Minister of Finance Chandrika Kumaratunga further sought Cabinet approval for amending the Cabinet decision of 28/9/94 (item 40) by including the words, “it was decided to refer the proposals to the Salaries and Cadres Committee for a comprehensive examination and report before implementing the proposals” as the last sentence after removing the words, “and implement the salary scales proposed for the Sri Lanka Teachers’ Service with effect from 01.01.1995.”

It is significant to note that despite the well considered observations submitted by Kumaratunga as Minister of Finance, on the issues of Teacher Service salaries, the situation changed due to the presidential election held on 06 November 1994. UNP Presidential Candidate Srima Dissanayake issued a full-page notice (ref. Divaina Newspaper of 31 October 1994) promising to implement the proposed salary scale for teachers and re-structure the Principals’ Service, Teacher Educators’ Service and Education Administrative Service.

The other presidential candidate, Kumaratunga, not to be out done, got the Government to issue Gazette Notification 843/4 of 31/10/94 on the same date as the Press Notice on the subject issued by her rival presidential candidate Dissanayake detailing the following:

This was the only instance where a salary scale was gazetted before establishing a Service! Significantly enough, this was the same as that which was proposed to the Cabinet and Kumaratunga had submitted her reservations and observations on previously.

It was only on 03 April, 1995 that a gazette Notice 855/3 was issued establishing the Teachers Service duly giving the above salary scales.

Hence we see that Chandrika Kumaratunga, as a presidential candidate rivalling the promises of her opponent Srima Dissanayake, reneged on her earlier well considered position on the issue of teachers’ salary structure.

Anomalies arose due to this arbitrary manner of fixing teachers’ salaries without giving due consideration to those services in the education sector and other parallel services.

The new salary scales of teachers created serious anomalies with the Principals Service salaries. For example, Principal Grade I was placed on a much lower salary scale than a teacher Cl.2 Gr.II Subsequent legal action initiated by Principals in the Supreme Court (Supreme Court Cases Nos. 453/97, 454/97, 390/99, and 362/99) resulted in the Supreme Court decision to rectify the anomaly by increasing the salaries of the Principals.

This created anomalies between the salaries of Teacher Educators Service and the Sri Lanka Education Administrative Service (SLEAS) with the latter filing their plaint in the Supreme court (Supreme Court Cases No: 305-307/03)

In 2006, the government issued a new National Wage Policy with a salary structure and promotional scheme considering all the grades of the Public Service i.e. from Labour Grade to Senior Executive (Public Administration Circular 6/2006 of 25/4/2006.) This removed the anomalies between the Principals Service and the SLEAS and therefore the Supreme Court proceedings were terminated. It is evident, therefore, that there are no anomalies between the Principals Service, the SLEAS and other Services due to the overall, overarching comprehensive new salary structure and promotional scheme adopted across the entire Public Service. With the active consultation and participation of all trade union representatives, the government decided to maintain a salary ratio between the labour grades and the senior executive grades.

It is significant that the formulation of the new Public Sector Salary Structure introduced through the Public Administration 6/2006 Circular was a mammoth task and hitherto unprecedented achievement.

Prior to 2006 there were 126 salary scales for public servants in Sri Lanka. This was reduced to 37 salary scales with the policy decision of the government to establish an agreed salary ratio of 1:4.2 between the lowest grade in the public service and the highest grade of Secretary to a Cabinet Ministry. This new and revised salary structure was accompanied by various other important benefits for all public servants such as grade-to-grade promotions without any cadre restrictions and nonstagnation in reaching maximum salary point.

Therefore, it is clear that any other Salary Reports such as the B.C. Perera recommendations 1995 (quoted by the teachers), have now been nullified by the new salary structure for all public service categories established in 2006. Any attempt to tamper with the present salary structure for all public servants in favour of a particular group/category of Teachers, Principals, will inevitably open a Pandora’s Box.

In fact, it has been mentioned by the Supreme Court FR No:362 /99 that “it is not only legitimate, but sometimes essential to compare the salary scales of different services in order to determine salary scales (having regard to the required qualifications, knowledge, experience, skills, functions and responsibilities) and salary differentials.”

Moreover, the pensionable salary of all public servants has been increased by more than 100 percent between 2016 to 2020. Currently, these public servants are enjoying the benefits of such salary increases which were given in five instalments. For example, a teacher’s initial pensionable salary in Grade One, which was Rs. 21,750 in 2015 has now been increased to Rs. 44,950 as at 2020. Similarly, it is vital to realise that currently teachers, principals along with other public servants are obtaining more than 100 percent salary increases given by the government. As a result, there will be a tremendous increase in the total pension bill.

Another demand of the teacher unions is that their salaries be increased by declaring theirs as a ‘Closed Service’. It is already a closed service in that teachers cannot be transferred to any other departments or ministries. If the government declares it a closed service with salary increases for such services being granted, that will lead to similar demands from other so-called closed services like the Health Sector, Postal Services, Railway, Customs and Inland Revenue.

The hitherto balanced national salary structure across the public service will be upended with multiple demands being made in all sectors for salary increases.

 

(The writer, K.L.L. Wijeratne, Retd. Sri Lanka Administrative Service, was the Secretary, Salaries and Cadres Commission of Sri Lanka from 2006 to 2009 and Chairman of the Salaries and Cadres Commission from 2016 to 2019)

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