SRI LANKA MUST FALL IN LINE
Shiran Fernando notes the role of Industry 4.0 in driving Sri Lanka’s economic growth engine
Sri Lanka has experienced a slowdown in economic growth over the last few years. Climatic impacts on the agriculture sector, policy uncertainty, political gridlock and the Easter Sunday terrorist attacks appear to have put growth on the back burner.
There’s been much debate about bringing growth back on track through structural changes in the economy or ‘big bang reforms,’ which have failed to materialise. This stems from a lack of political will to see some of the more difficult tasks through.
It follows that issues such as those concerning state owned enterprises continue to pose challenges to the economic system and this has been a topic of discussion for the past decade or more.
INDUSTRY 4.0 BRIEF Against this backdrop of reviving growth, global developments may often be overlooked. The evolution of ‘Industry 4.0’ – a term coined by Klaus Schwab, the founder and Chairman of the World Economic Forum (WEF) – is a major event in this regard.
AI, industrial IoT, augmented reality, big data analytics, autonomous robots and additive manufacturing are some of the main technologies driving Industry 4.0. What’s concerning about these emerging technologies is whether they would displace human labour through automation.
However, as with past industrial revolutions, the human element is usually required. It’s how humans adapt to these technologies and improve their productivity that will result in gains for industry – and indeed, the country.
Emerging and developing nations in the Gulf region and Southeast Asia are making the most of this revolution. The likes of Malaysia, Vietnam, Brazil and Mexico are preparing strategies to leverage on Industry 4.0 to take their nations forward.
Nations that do not adapt to the new order risk being left behind and won’t be able to leapfrog their per capita incomes to a higher trajectory while ensuring that living standards improve.
In this revolution, developed nations enjoy a first-mover advantage but the divide can be bridged by their developing counterparts as technologies become widely adopted and more cost-effective.
THE SRI LANKAN STORY For its part, Sri Lanka has certain policies that aim to strategically take advantage of this revolution. It has in place an innovation and entrepreneurship strategy, a digital economy strategy, an IoT road map, and a proposed artificial intelligence policy, which is being mooted by the Sri Lanka Association of Software and Service Companies (SLASSCOM).
The vital element in all these policies is whether they’re coordinated and properly implemented, and synchronise with the overall growth objectives of the nation.
THE CASE OF INDIA However, there’s more that Sri Lanka needs to do in the digital space. It can learn from India, which adopted technology to drive inclusiveness.
Through the use of India Stack, the country has been able to develop a digital ID (Aadhaar), electronic know your customer (e-KYC), eSign and DigiLocker among other applications that are revolutionising the financing space in India.
As a result of this digital transformation, India is now able to bring on board customers through e-KYC in four minutes over one day. India is transforming itself from being data poor into data rich while also benefitting from improvements in economic growth.
It has benefitted from Digital India initiatives, India Stack and GST reforms to facilitate a major improvement in the ease of doing business – India climbed from 142nd place in 2014 to 77th in the Doing Business rankings this year, and recorded a 40 percent annual increase in registered taxpayers and 560 million internet users in 2018 compared to 57 million 10 years ago.
Moreover, these technologies are implemented while preserving privacy and enabling users to provide electronic consent to unlock data.
KEY LEARNINGS Sri Lanka has much to learn from India’s example and given that it has a fraction of its neighbour’s population, implementation is not as complex in terms of the numbers. However, there’s been a delay owing to various factors.
The introduction of Sri Lanka’s digital ID is a case in point. Similar to other models in India and Estonia, our country could build its capability to provide digital IDs while connecting services such as healthcare, banking and payment of taxes.
Such conveniences would not only boost productivity among the public but also facilitate indicators such as tax revenue to meet predetermined goals. There’s scope for digitalisation in the state sector to improve efficiency and services to the public.
Likewise, there are opportunities for the private sector in adapting to Industry 4.0 and digitalisation to remain competitive both regionally and globally. The technology and innovation horizontal has the potential to enable Sri Lanka to leapfrog from its present per capita GDP, and avoid being stuck in the middle income trap.