Speech by ADB Sri Lanka Resident Mission Country Director Rita O'Sullivan on 13 July 2012 in Sri Lanka
This is surely a magnificent event. Congratulations PRISL! When I received your invitation to be the GOH at this grand occasion I had no hesitation to accept it. Let me tell you why.
I came to know your industry in last March since my involvement with the City Cluster Economic Development project or CCED. It has fascinated me since I took part in a very educating field tour in Lalan’s excellent rubber plantations and factories just prior to the launch of Sri Lanka Rubber Secretariat on 19th March this year. Your President participated in the launch. During the tour, I saw a cross section of entire rubber industry value chain and now I believe that this industry is contributing immensely to Sri Lanka’s national economy while providing tremendous social and environmental benefits.
It was fascinating to see how you tend to the rubber tree. Beginning from that little lovely seed, through a system of well managed nurseries and plantations to finally taking the latex out of the tree in a very sensitive and subtle manner which you called tapping. The interest so created compelled me to study your industry in more detail. That was easy as many of Sri Lanka’s rubber experts are working with us in CCED. I also interact very closely with your industry leaders through the Sri Lanka Society of Rubber Industry and have gained deep insights to your value adding activities.
Rubber industry links environmentally friendly rural rubber farmers with very sophisticated global consumers through a number of value chains that may be tires, gloves, and thousands of other ubiquitous products that serve diverse markets all over the world. World will stop moving if rubber industry disappears. No doubt about its significance. There are also no doubts about its future potential.
The question I am asking today is whether you are on the path to reach its true potential? Has the rubber industry done the justice by its nation which has entrusted over 110,000 ha of precious land resources to it? May I ponder over this, briefly?
I came to know that rubber industry at present generates a turnover of One Billion dollars annually which means it is a very significant industry at national level. Its annual compounded growth rates are excellent. This, however, is the local picture. How do you compare globally? Rubber in Sri Lanka has a history of over 135 years and Sri Lanka is the cradle of natural rubber in Asia. You could have easily been the number one rubber products marketer in South Asia too. I know your country has limited land and you can never be the world’s number one in rubber production. Where do you stand in terms of productivity or yields? What prevents you becoming the most productive rubber producer? You have the first rubber research institute of the world which is the first agricultural research institute in Asia at your disposal, the RRISL which is run by the government. It has brilliant scientists, I heard.
You are now producing nearly 160,000 tons of rubber. If you can add value to your own natural rubber production at a higher state, say 15,000 dollars per ton instead of 5,000 or 7,000 dollars per ton, you may generate over 2 billion dollars turnover. What about adding more synthetic rubber raw materials to your inputs? I know you are using a little now. When I say a little, I am making a global comparison. If you add value to 100,000 tons of synthetics, I am sure you can add another billion dollars. What about importing more natural rubber to add value as you have limitations of lands to grow rubber? Import another 100,000 tons of natural rubber and you are in for another one billion dollars. If I sum up, by default, you are losing 3 billion dollars per year. That is how we look at from a development perspective.
Hon Minister, I am sure that the government has aims to develop the rubber industry. That is stated in government policy documents and the senior government officials we meet confirm. You may need some help there as that will be not an easy task. We are willing to assist but our approach is to help you if you are serious to help yourselves. The industry has to take the lead in realizing its full potential.
Your journey will start with a great but realistic vision based on industry potential. Rubber industry has different segments and diverse actors. You require comprehensive integrated plans acceptable to all stakeholders and validated by all that creates ownership and commitment. Are such plans available? It is not an easy task to develop sound strategic plans that can be implemented in the field.
Let me explain the relevance of the points I made. I raised a few but important questions that I believe are vital for the future of these young graduates you train. The PRISL attracts educated young to join the industry and train them to be professionals. Unless you attract the best talent and develop their competencies further, adding another few billion dollars to your turnover would be an unrealistic dream. These dynamic youngsters are the ones who will convert your plans into action with results. Can you attract the best talent? Can you retain them for long? Who do you retain? Are they the best? What is their future compared to the future of professionals in other industries? Industry leaders must secure a bright future for their workforce they attract. That is a fiduciary duty.
I do not want to claim that we at ADB have the answers to these questions. I know very little about your industry except that it has not reached its pinnacle yet. You have to look at the constraints collectively and find best solutions acceptable to all. You need to go beyond the horizons of individual firms or your own comfort zones. Please take a broader national view on industry matters. You must form partnerships among yourselves and with the government. Seek external help if required, to be competitive in a sustainable manner. It is only global competitiveness that will help you to reach your true potential. To help you finding answers and to craft a strategy to improve your performance, we are supporting you through CCED. Let me now say something about our intervention.
City Cluster Economic Development is a novel development model promoted by ADB. Our aim is to integrate the competitive growth of industries with the development of sustainable city clusters. Due to its potential, we have selected Sri Lanka’s rubber industry as a pilot. We completed two phases of CCED studies in which some of you have contributed to shape our thinking and we are now into Phase III that will end in December 2012. To implement the 3rd phase, ADB has partnered with the government through two ministries, i.e., Plantation Industries and Industries & Commerce and the private sector through Sri Lanka Society of Rubber Industry. It has worked out to be a solid partnership. Let me explain our objectives that are based on your needs assessed and prioritized during the Phase II.
We have assembled a team of 14 high quality Sri Lankan experts to do the following.
We are very encouraged with the enthusiasm of our project partners. Even before ADB hired the consultants, project partners set up the Sri Lanka Rubber Secretariat purely with private sector funds. We must congratulate the four leading rubber companies which made this happen. You all know them and I think they are here. To support their contributions, ADB will provide essential office equipment so that the Secretariat can be sustained as a productive platform.
Rubber Secretariat is a unique experiment and we are supporting it expecting high value deliverables. All of you are expected to frequent this Secretariat which belongs to you and contribute to the work of ADB consultants at this stage. Our motto is maximum stakeholder participation in making decisions pertaining to the industry. This project needs to be driven by stakeholders, and not by consultants.
As I see the presence of private sector leaders here, let me indicate some of ADB’s future directions. We are now working with a core-group of relevant stakeholders led by the Ministry of Defence to prepare an action plan for implementing a full scale CCED program in Sri Lanka. We also have a $ 40 million Environmentally Sustainable City Development program to begin in 2014 that could be integrated with CCED. So there are many possibilities. My message tonight is, be prepared as a solid team who desire to win the war of global competition, Carve out that 4 billion dollar market niche you deserve. I believe strongly that you deserve. Your nation too deserves that.
I wish a very successful career for the new graduates. Thank you for inviting me tonight. Good night.