Could you briefly give our readers some background information on the plantation industry in terms of its development in the last couple of years, and what is the current status of this sector today?
Untill the year 1972, all the states in this country were owned by foreigners as well as locals, the extent of which were more than 50 million acres. The government assumed management in the year 1972 of all this land. In the year 1979 all these estates were handed over to private companies for management. From one end it went to the other end. There were 32 estates, which the private companies said they did not want as they felt they could not make profits. Therefore, the government agency was entrusted with the task of administering those 32 estates. The balance lands, which covered tea, rubber and coconut fields, they were handed over to 23 private companies. They were given 5-year leases in the year 1979. When we came into power, we realized that those private companies not invested in the properties due to the short leases they had. We decided to give them long leases instead (60 year leases). It was after this that we saw the investment coming into the estate sector by the private sector. Nobody will invest unless some assurance is given that one will be able to recover at least what was invested within a given period of time. An estate is not such if it has been neglected, especially tea, it will take at least 3 years to bring it back to normal. If the lease is only for 5 years, within the next 2 years they will not be able to even cover the investment. This is how the estate sector works. After taking over in 1999, we gave them long leases. At the time we took over, all the private companies were making loses. Not a single company was making profits. At the moment, out of the 23 companies, there are only 22 companies. At present, 14 are making profits and the other 8 are about to take the turn over to the green side - making profits. One company failed completely and that company informed our ministry that they couldn't manage any longer. We took the 11 estates, which were managed by that particular company and handed them to the agency under my ministry, which is called the Janatha Estates Development Board. That is one aspect of the plantation industry. On the other hand, if you take tea, companies own 60%, while 40% is owned by small holders. A small holder is a person who owns less than 10 acres of land. These small holders have taken over the private companies in the field of production within the last few years. Out of the production in this country, the small holders who own 40% of the land produce 60% of the tea. Small holders have been more productive, and more successful than the companies. If you ask me the reason why, there are so many reasons to be given that I could not pin point a single one. In the small holders case, family members themselves work together and don't get laborers from outside. They are the employers and the employees. They have their own insurance schemes, which have nothing to do with the government. They have a movement called "ape shakthy" which is the only agricultural society movements in the world and which has also been recognized by the World Bank and the Asian Development Bank. We have 11,331 societies in the tea smallholder sector. They have all got together on a voluntarily basis and contributed to a fund called "Ape shakthy" where contribution at the rate of Rupees 100 are made a month which gathers Rupees 1200 a year and has run into millions now. It is this fund, which is funding insurance schemes, their own transport, and enabled them to purchase vehicles. They own 11 tea factories, and 21 are under construction. They just opened a Tractor Assembly Unit and are making arrangements with the Russian government to have a fertilizer plant here, all confided to tea small holders. They are planning to have their own radio station, for which permission has been obtained already. They have their own loan system that is similar to the banks. They have developed in a large scale, very strong, very viable, and ask us only for guidance on technical matters. For e.g. if there were a particular disease spreading, they would consult us on that matter. Other wise they are independent. The same applies to rubber. The small holders own 85% of the land on the production. The companies own only 15% of the land on the production. That is because rubber is planted only in the west zone. West zone is mainly three districts, Colombo, Galle, and Matara. Rubber does not grow for production in the other districts due to the dry climate. Rubber needs water. In coconut, small holders covers 89%. Coconuts are grown only in three districts. The main coconut belt is Gampaha and Kurunegala districts. Having learned the experiences of the tea small holders, gained experience in that field, seen the advancement that they have made, I have decided to introduce the same concept to rubber and coconut. In tea "Ape Shakthi" in rubber "Thuru saviya". Sorry I cannot give an English translation as it is connected with our language. For coconut "Kapu". These are voluntary organizations that come under small holders. The government does not fund them but they have entered into contracts with other countries to export. We always encourage them to go into value added products. We don't encourage them to export anything in raw form. Raw materials should not go from here. That is our concern. Please feel free to ask me any questions as I have given you a brief background history.
What are your plans to cope with the future demands for tea exporters and to pressure the prices into the competitive markets?
Fortunately, Sri Lanka has a name for tea. I don't think anywhere in the world you can find a blend as in Sri Lanka. This in itself is an added qualification. We have 48 mixtures to offer to the market. We have grouped Sri Lankan tea growing areas into 48 groups. For e.g if you ask for Uva teas, it will offer you a special blend. In England, Uva blend is the most favorite and it will fetch in local currency Rupees 340 or 430 per kilo. Similarly we have so many other blends. Therefore we are in a position to compete. We have no fears of other countries coming into competition and trying to over take us. We have found that the trend in the world is turning away from beverages. The younger generations we are told by the scientists are getting away from beverages and getting on to tea as a health drink. As such our orders from abroad have increased. We had a very good market in the past with the Soviet Union but due to their economy crashing we lost that market, but fortunately Russia has come into play again and we are selling the same amount to Russian now.
| Do you have any specific plans on to improve the exports of rubber?
We have been exporting Rubber until two years ago, 68% of the production in raw form, as a raw material. The government decided as a matter of policy that it should stop. Rubber should also go in for in-products through various bank loans and other incentives. In the past two years there were only 4 factories manufacturing in-products in this country. Today we have about 38 factories producing a wide variety of things for export. We are presently utilizing 72% of the local production for in-products. Within the next two years the entire production will be used for in-products. Our main buyers are England, Germany, France, and Australia. Competition is limited in rubber. Coconut unfortunately has a very big competitor, namely the Philippines. However, we have been able to manage our production and have sold what we have produced but with some fears as we are aware that in the next 3 months a sharp competition will begin. Our main buyers are the Middle East. The Philippines has a big stock in hand for the next 3 months. They cannot afford to reduce the price and sell. Although we are aware of this factor I cannot divulge what we are going to do about that as in the business world we have to compete and sometime undercut in order to sell our produce and have decided to use a particular mechanism. In coconut the in-products are limited. We can go in for desiccated coconut, which is mainly used in the Middle East and Europe to manufacture chocolate and sweets. We also have coconut oil. This is a big problem as there is a school of thought who says that coconut oil has cholesterol while the other says that coconut oil does not contain cholesterol. We had a forum of scientists meeting in Colombo who came from various parts of the world. We invited them to have an open discussion and invited them to tell us whether coconut oil contains cholesterol or not. Ultimately the only scientific body in this country, which can issue a legal document certifying whether coconut oil contains cholesterol or not has issued a certificate stating that coconut oil, does not contain cholesterol. As a result we have undertaken to do a lot of propaganda to promote coconut oil and to state that it contains no cholesterol. After this there has been a rise for the coconut oil market. In order to cut down other imported oils in this country we have imposed a tax of 135% in order to save the coconut industry.
There has been a recent trend of plantation workers moving into the cities, as more and better paid jobs have been made available to them. Can you tell us how are you planning to cope with this shortage of workers and do you have any specific goals to achieve that?
If you take all the estates in this country, we will be able to classify certain estates with exact number of labour and able to classify certain other estates with less labour. I will go by district by district. In the Ratnapura district there is excess labour but in the district of Matara there is less labour. We plan to work out a scheme where there is excess labour, and to get plants planted in the areas where there is less labour. Naturally a scheme of incentives will have to be offered. When a family is used to a particular environment and when one establishes contact with other families in that area, you become a family within that circle. In order to get them to go to another area, naturally certain incentives have to be given. I agree that the children of the estate workers generally do not want work on the estates and they prefer to go to urban areas, to move out and work perhaps in a clerical field.
How would you describe the investment climate in Sri Lanka and what can you offer to attract investors into the country? More specifically what are the attractive points in the plantation industry that will compel investors to invest in this sector?
I do not know how foreign investors can come and invest in the estate sector as there are no openings but they can certainly invest in the areas that use the produce of raw materials like rubber. The Board Of Investments is the central organization that gives all the incentives. When you compare Sri Lanka with the other countries in this part of the world, I believe Sri Lanka offers a very good package for foreign investors more than local investors with the tax exemptions, tax holidays etc. Therefore there is scope for foreign investors in the field of manufacture of in products in rubber. In the field of tea already the local companies have taken over. Therefore for tea and coconut I don't see any prospects for foreign investment.
How do you see the plantation sector and its future developments as well as the whole economy of Sri Lanka in the next couple of years?
The plantation sector at a certain stage in this country was the largest foreign exchange earner. Then it became second to the garment industry. Then it became third as a result of foreign employment. Now we have come to second place again as we have beaten the garment industry. Number one is manpower, which is sold, second is plantations and number three is garments. I have a strong feeling that in another three years time, we will come first. This is because the trend not to send human beings for foreign employment is gaining ground due to the fact that many deaths have taken place and in most cases the entire family has fallen apart. These particular lines of thought might get solidified and lead to fewer ladies going abroad for employment. In which case the plantation industries will be the first largest foreign exchange earner in the country again.
Since you are the Prime minister of Sri Lanka as well as Minister of Plantation Industries, could you tell us more about your self and your background. Moreover, what has been the biggest achievement since you have been appointed as Prime Minister and Minister of Plantation?
The plantation sector is nothing new to me. I was a minister in the 1977 cabinet and was also the minister of plantation at the time. It was I who started in the year 1975 the concept of tea small holders, which commenced in the year 1975. After 1977 when the government failed they did away with that. As such my greatest achievement is the setting up of "apeshakthi" which has organized all the tea small holders in the country, and includes over a million families throughout the country. They are self-sufficient and I'm witnessing the same concept taking place the in rubber and coconut sectors, which is working very well. This has been my greatest achievement yet as it's a movement amongst the people and the government that has produced a lot of interaction.
What is your final message to our readers who are potential investors in Sri Lanka?
There is a school of thought that one should not invest in this country due to the prevailing situation. This particular aspect is confined to two separate districts. Can you tell me if there is a single country in the world that does not experience explosions of a bomb etc., it happens all over. As far as the rest of the country is concerned there is absolute safety for any investments and I must say that the largest industrial estate so far commenced in this country is in my electorate and consists of 1132 acres which is mainly opened for foreign investments and commenced about a year ago. My message is that there is nothing to fear for any foreign investments or for foreign investor as the Board Of Investments is giving all possible concessions. Furthermore, our cultural background is such that we Sri Lankan's always have smiling faces and are very cordial their relations with others. This is the ideal business climate for anyone who is interested in coming and invest in our country.
NOTE: World Investment News Ltd cannot be made responsible for the content of unedited transcriptions.
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