Global Financial markets have turned their attention to the emerging split among monetary policy makers towards policy rate cuts. The Federal Reserve Bank of the United States reduced its policy rate by 25 basis points, but indicated further rate reductions could be on the card as members split on what to do next. Reduced its benchmark overnight lending rate range from 2-2.5 PCT to 1.75-2 PCT
The US President Donald Trump has gone on record that Federal Reserve Bank is risking US competitiveness by keeping interest rates substantially higher than most of the developed countries.
Oil Prices Back to near normal
Brent Crude price which soared to near USD 70/bbl after the attack on Aramco oil facility declined to near USD 60/bbl when Saudi Arabia announced that they will ensure no shortage in medium term. In the background of slowdown in global economy, the attack on Aramco oil infrastructure facility did not reflect sustained pressure on the market demand. The surprised drone strike at the Saudi oil facility on 14th September halt the oil production impacting nearly 5 million barrels of crude processing a day which is 5 PCT of world’s daily production. The US blamed Iran for the attack.
US-China Trade Tension
Us and China delays further tariff increase pending high level talks between the two countries.
The Wall Street journal on 19th September reported that the World economic growth remain low in 2020 and possibly beyond if trade conflict spills over into other aspects of two country economic relationships. OECD expressed its worry over sliding economic growth among major trading partners. Slowing trade flows and business investments are signs that the trade disputes are taking a toll on global growth. The US-China official are due to meet in the third week of September to hold talks ahead of high level trade talks in October. Several rounds of tariffs have been levied by two countries on a larger percentage of commodities traded between two countries.
US Hit USD 1 trillion budget deficit
The US budget deficit passes USD 1 trillion mark for 2019. Reuters reported that the US government posted a USD 200 Bn budget deficit in August 2019 raising the eight-month budget deficit towards USD 1 trillion.
Pure, natural, and hygienic drinking water bottled under the brand name Aquafresh by Access Natural Water (Pvt) Ltd. which extracts its supplies from deep ground water sources in a rain forest in the Labugamkanda mountains, like all modern health trends is gaining rapid popularity among people seeking a healthier addition to their lifestyles. The unique water with no added chemicals whatsoever contains all natural mineral balances and the bottling company relatively enjoys various standards from accredited authorities which have guided the company to uplift its quality of work.
BiZnomics met Access Natural Water (Pvt) Ltd. Managing Director Christopher Joshua who started. “We launched our company in the year 2000 at a time marketing bottled water in Sri Lanka was unthinkable as it was freely available, and in addition there were a few bottled water manufacturers in operation as well”. The Access Group identifying the need for pure, good quality drinking water, in its quest found an aquifer – a layer of soil which retains water – the perfect source in fine deep springs in Labugamkanda in a geologically unique rain forest. The natural springs 200 feet below surface are protected by impermeable upper and lower confining layers, making the aquifer water pure as nature intended it to be.
Continued Managing Director Christopher Joshua, “We put up an environmental friendly factory and bottling plant in the location of the springs from where pure water is extracted, avoiding contamination through surface contact”. Yet in keeping with manufactory requirements to purify bottled water through a certified process before marketing, the company invested in a biological purification process adopting the four steps: aeration, slow sand filtering, micron filtering, and UV treatment which preserves the natural mineral balance at the aquifer.
The company was meticulous in selection of its stainless-steel machinery to ensure that rust and corrosion do not rise. The machines which are oil and grease free have been manufactured at optimum level on schedules in conformity to the company’s certifications and standards: SLS 894, ISO 9001, ITQI Brussels that specify requirements to consistently provided products and services that meet customer and regulatory requirements. The ISO 22000 certification and the Dutch HACCP encourage the organization to identify hazards which might occur in the food products process and to take stringent action to prevent same. Meanwhile the American FDA allows the company to sell water in the European market.
Following the success of the 5 gallon polycarbonate dispenser bottle introduced to the market in 2001 the iconic range of PET bottles came on four years later. The 200 ml bottles in contrast to the 5 gallons are not re-filled. Washing of bottles before re-filling is a fully automated process with the adoption of high pressure nozzles, disinfectants, hot water, chlorine water and lastly drinking water. Managing Director Christopher Joshua says, “The unique design of the PET bottle, which is a first in
the country, revolutionized the bottle industry. Bottled water regulations require drinking water in transparent bottles. Tetrapack (paper) is not allowed although a few glass bottles are in use”. The bottling method for both PET and FG (five gallon) is fully automated and so is the labelling.
The client base of Aquafresh is over 5000 comprising both domestic consumers and corporates including the United Nations’ Organization office, Sri Lankan Airlines, Nestle, Kingsbury, Softlogic, and international chains such as Subway, Burger King, Coffee Bean, Gloria Jean’s Coffees and Bread Talk all which have opted for the superior quality, smooth and refreshing taste, exclusive packaging and the exceptional service that enhances its value – attributes that have garnered Aquafresh Sri Lanka to be the undisputed leader in the local bottled water industry.
The company engages in advertising campaigns on cable TV, radio, newspapers and magazines. In addition, based on a consumer educative concept, its Lorries travel across the island, are branded. Monthly promotions on selected locations in the Western Province and social media campaigns of Facebook and Instagram are also carried out. This propaganda consistently communicates the quality standards, certification and accolades of Aquafresh water.
In a move to repay nature for her bounty of pure water, the staff of Access Natural Water (Pvt) Ltd has planted trees around the area, established herb gardens which are diligently maintained and cared for, in accordance with environmental laws and regulations. But their gratitude to nature goes far beyond that. Since the area of its bottling plant is of great importance in maintaining the forest surrounding, the company deeply cares for its environment and strives to do what is best for it always.
Aquafresh is the only Sri Lankan brand of alkaline drinking water in the market. Alkaline water in known to contain many health benefits with the key element being that it works against acidifies in the body, contributing towards prevention of illness and disease. Director/Chief Operating Officer Shanil Perera states: “The uniqueness of Aquafresh is many. We have invested in the mechanisms required to provide the nature’s gift of pure water to our customers. We live by our slogan and intention; ‘bringing nature to life’. The natural vital minerals in Aquafresh, iron, calcium carbonate, magnesium carbonate, sodium, potassium, sulphates, and silicon bring health benefits and goodness in every sip.
Seeking business ventures in uncertain times requires exertion of new super human strength of the organization’s director. Aquafresh of the Access Group of the companies has led a new course of sustainability while navigating changes in the now fast moving bottled water industry.
Demand is growing as a result with rising consumer confidence. Consumers see brands as a social status symbol; they want aspirational brands which create a window of opportunity for Aquafresh. All these factors make the market extremely attractive for the immediate future for Access Natural Water (Pvt) Ltd.
The current pandemic is an unprecedented crucial episode in the modern world, in the developed and developing nations, with so many dead, infected, out of work, businesses closing their doors, brought the affected nations in a downward spiral to an economic standstill or even significant economic downtown. Most nations that depend significantly on imports for their daily needs as well as those nations that depend significantly on export markets to support the country’s liquidity and foreign exchange reserves are the most affected by the COVID-19 pandemic. Now is time for these nations take a hard look at the dependence of imports and exports in light of external factors such as the current pandemic, wars, destabilization of global commerce, energy and food security and other factors that affect the normal daily lives of its citizens.
The current pandemic is a grim reminder and has given the opportunity for policymakers in each country to assess the vulnerability of the country’s economic stability to the various external and internal factors that contribute significantly to the everyday life of its populous. Most countries in Asia with an abundance of high-quality labor pool had historically concentrated in such industries with opportune markets in the west. Often these opportunities have been mostly in the low-tech manufacturing with only marginal value-added benefits. It is time to rethink the class of goods and services, Asian countries should provide in the global marketplace.
The concept of globalization should work in both directions. Nations can and should trade with each other yet there needs to be an understanding between trading partners for equitable transactions. It is easier to establish equitable transactions for these value-added products and services when these come from being innovative, IP protected or proprietary, having an edge thereof, and thereby providing an exclusive market opportunity for the exporter.
Innovations need two basic components, capital, and skill.
The developing countries, in general, are short in both these components. Along with these two basic parameters, the other key ingredient for innovation is the universal “innovative mindset”. That means, “let’s not do what others have done” mindset, but do things that are new, disruptive, and innovative. If a nation gets used to following the products and services of other nations, who create destructive commercially viable concepts, it is unlikely that the nation will build a disruptive workforce capable of innovation and will learn to depend on developed and innovative third parties. Often it is easier money-making trap to import and sell the products after adding a profit margin. If the product or service is essential, there is a very low risk to the trader. This behavior works totally counter to true economic growth, innovation-based, or otherwise and traps the country into foreign dependency. Although in some instances the dependence of products from other nations is because of the cost-effectiveness due to low labor costs in those countries, the long-term crystallization of this mindset will lead to hampering innovation. Especially for the developing countries innovation is essential and will be the savior and the driving force of economic activity and would be especially true in the post-pandemic era.
When I describe a new concept to my friends and colleagues, I am often asked whether this idea is in practice in the United States. While I answer their questions politely, I feel sad to see the mindset of the person asking this question. During the pandemic, the normal life in many countries was disrupted dramatically in the world including the western countries, due to the lack of locally produced food and medicine, including the much needed, personal protective equipment.
Policymakers should take bold steps to encourage and facilitate local production of essentials, such as food, medicines, hospital supplies, and energy. In doing so, the local manufacturers and producers need to have enough profits to counter the desire for low-cost imports. A system should be established for the buyer, and in some cases – the government, to purchase the farmers or local producers’ production before the farmer plants his seeds or the producer buys his raw material. This is known as the futures market place, where the farmer has a
guaranteed buyer and a purchase contract for his future production. He can then optimize his costs accordingly and produce it with certainty, rather than uncertainty while barring any unforeseen weather or disruption, for which he can purchase insurance.
In this article, I use agriculture products and farmers as an example to illustrate the concepts. However, these concepts are equally applicable to other areas as well. As most farmers are relatively small entities, unlike in the United States, farmers often do not possess resources for mechanized and scientifically managed farming. With the help of the government, farmers should organize into cooperatives so that they can receive the services of the farming machines, fertilizer, water, technology, and other necessities without having to pay a premium to intermediaries for these services to minimize their production expenses. University students should be encouraged with course credits to spend time in small farms, working with and educating the small farmer on scientific methodologies, while been exposed to the hardships and problems the small farmer encounters. Policymakers and government bodies have to play an integral role in helping the farmers in their needs such as giving them tax incentives. Most countries have incentives in place to promote export-oriented businesses, both in manufacturing as well as in the service industry. Such incentives should also be granted to businesses that can replace the import of high value-added products, such as food items, medicines, and hospital supplies, electronic devices, etc. Whenever products are imported, and when such imported items can be replaced with locally manufactured products, providing tax incentives for such activity, tax-free importation of raw materials and machinery required to manufacture those products should also be the government’s policy. Governments should establish and publish the quality and quantity requirements for those import substitutes in order to produce these products meeting international standards. Countries should adopt the concept of Notified Bodies as they have specialized skills in approving the product as well as its processes used in manufacturing those products. Most countries often evaluate the finished product in the approval process and such evaluations are totally inadequate in determining the fit for use of the product.
Government-approved Notified Bodies should be receiving the authority to approve the sale of these products, meeting quality standards, along with oversight of their manufacturing process. Notified Bodies are independent agencies that evaluate the usability of the product for the intended use and this process is referred to as CE marking in the European product approval system. It would even be advantageous to use existing European Notified Bodies limiting local representation for this process, so as to avoid bias or influence in the product approval process.
The skill base:
To enable local production of goods, both import substitutes, as well as export-oriented goods, requires an able and substantial skill base in the country. This is even more significant for the development and production of disruptive concepts. Therefore, although it cannot be achieved instantly, a plan and conscientious process should be established to develop those skills in the nation’s workforce.
Skills development in science, technology, engineering, and medicine (STEM) require serious consideration and obviously will be extensively debated due to the entrenched cultural believes in education. Education, artificially limited in numbers unfortunately has gotten into an exclusive status. The policymakers should ignore such bias and should be bold and face such opposition for the overall benefit of its citizens. The percentage of the workforce educated in STEM subjects is in single digits and cannot provide the driving force for innovative technologies. Build the base to develop the country by promoting STEM education, producing the necessary workforce with useful skills. What would even be interesting for us would be to examine the type of education in countries of equal size such as Israel, Taiwan, and South Korea, to learn about those policies, that have allowed these countries, not only to establish a strong manufacturing base but also how they have greatly enhanced their ability to innovate.
When it comes to innovation there is no argument that the United States has led the world in innovations since the end of World War II. What can we learn from this system? While the United States does not rank high in mass education, including STEM subjects, compared to countries like South Korea Singapore, or Taiwan, the US system continues to provide a healthy stream of destructive thinkers year after year.And why is that? is the question I have asked myself over the many years I have lived and worked in the United States. In over four decades of working with my employees, colleagues, and also interacting with students as an educator in the United States, I find that the innovative skills of the US worker are directly related to their education culture focused on critical thinking and their ability to ask questions. Unfortunately, I have not found this character in the students and workers, in many other countries, that I had the opportunity to work with, such as, while working as President of a medical device company in the UK and later as the president of a medical device company in China. Questions always stimulate the discussion, there are no bad questions and there are no stupid questions as such questions should be encouraged to stimulate the discussion. As one of the two primary ingredients to kick start an innovation-based post COVID economy, policymakers should look carefully into skills-based education, at all levels – from the kindergarten to university.
While creating a skills-based education cannot be done instantly, actions need to be initiated in a top-down manner by preparing the skill-base graduates who can be skillful in their chosen field and be disruptive in their thinking. The top-down approach will provide faster results and can be achieved by making the necessary changes to the university level and progressing down to the kindergarten.What I have noticed during my visits to the country during the past 10 years is that there is a huge short supply of educators in STEM subjects at the local universities, especially those with some overseas education. I have also noticed that in universities, just about all of the university educators are of local origin. If one would look at the science, engineering, medicine departments of a university in the United States, or even in a university in Singapore or Hong Kong, the constitution of the faculty is a mixture of local and international educators. This blend of educators undoubtedly enriches the learning process of the students as they get exposed to multiple problem-solving cultures. Education from kindergarten to the University should be a “learning process” rather than a “teaching process”. This can be accomplished by student-centric engagement in the learning process through problem-solving, teamwork, and incentivizing questioning while encouraging research. The responsibility of learning should be transferred from the teacher “teaching” to the student “learning” the material. Education should be broad. Countries should get away from the two-three subject, concentrated and narrow curriculums and encourage a broad base curriculum that consists of science, mathematics, technology, commerce, and humanities throughout their formative and university education.
In educating the nation, the division of students into various streams such as arts, commerce, biological and physical sciences in the 9th or 10th grade is counter to the best interest of the student as well as the nation. Most students excel only after high school and in some instances only after completing university education and therefore early division into streams is counter to the development of their innate skills. Even where such divisions are entrenched, the study curriculums should include a verity of subjects outside their major. Free education should be the gold standard in any nation developed or developing. In some countries, education is free throughout the student’s education process, while is some others it is free until high school such as in the United States, and in some, even primary and secondary education is not free. But in most progressive countries, students receive either free education or education loans to supplement their education.
Although people know and understand that free education is essential in elevating the livelihood of the populous, it is plagued and have a “closed eye” by the back door paid-education as in the excessive and destructive process of tuition in preparing the student for public selective examinations. In other words, while education is free on face value, in reality, it is not so as the wealthy families and urban population has an undue advantage to higher education through the tuition pathway. The tuition system prepares the student to artificially score high in selective examinations without actually determining his true skills in the subject which is totally counterproductive for the student as well as for national progress. In many countries, the examination process has not evolved with the advancements in education delivery and evaluations. Often questions are simply based on testing students’ knowledge of “facts” rather than his ability for “critical thinking”. Examination papers to determine student skill sets based on ten or so questions and a few multiple-choice questions is hardly an indicator of the student’s skills in solving problems or for admission to universities.
It is high time to abandon this process. A consorted effort to rework the selection of students and promote in the learning process is absolutely the underpinning criteria for the technological progress of the nation and will help to
cultivate a workforce that is used in problem-solving and therefore help develop a progressive disruptive mindset in university graduates. When such practice is in place, university students following this concept will learn the necessary skills to innovate and become entrepreneurs providing economic growth and employment for the nation.
Branding the Country in Technological Leadership:
Global Standing in a few Mastered Technologies
In order to make a mark in the global technology space weather in IT, biology, engineering or medicine, it is absolutely necessary to pick a few fields that the workforce has the right skill set to lead the world in those chosen fields. Focus and excel in these areas to become global technological leaders in those fields in the world.
While some areas of technology such as IT, manufacturing, electronics have been carved out by countries like India, China, Taiwan, and South Korea, there are still many fields, the country can focus on, that can provide goods and services to other nations, starting with products in the “low hanging fruits” ( such as in healthcare) opportunities to more challenging objectives as the country builds the confidence level in the innovation ecosystem. Disruptive and innovative businesses require funding and talent pool to get these ideas off the ground. Based on the local raw materials and the skill base, the country should prioritize the areas that would provide the biggest bang for the buck. Policymakers and technologists should come together to formulate these plans and layout the pathways for such efforts, which may include, training and education, start-up space, funding sources, and foreign collaborations so as to give a head start to the entrepreneurs in these chosen ventures. In this process, the government should play a major role in promoting such efforts by bringing in legislation to help advance such activities. Make importation of raw materials, machines, and foreign collaborations easier, with lower import tax rates and income tax holidays for such activities, providing tax incentives for established larger companies for them to invest in the start-up companies. Provide a clean and efficient legal basis to protect both the investor and the innovator. In my opinion, the fields of education and medicine and all the different components of it can be a very lucrative field for the country to specialize in. The government and the private sector can establish STEM universities and hospitals and other medical services for foreign patients, even to attract students and patients from the western world. Many Asian countries such as India and Thailand have very established medical care systems to provide such services in many elective procedures, famously know as medical tourism.
Additionally, areas like machine learning and artificial intelligence (AI), robotics, molecular medicine, drug development, hospital and medical supplies, require considerably low investments for achieving the “proof of concept” stage compared to robust areas like energy, aerospace, shipbuilding or communications, and therefore will provide good opportunities to bring the country into the Global Standing, in those areas. While providing excellent health care to foreign patients, another area the country can master very quickly is in health delivery to its own citizens. With an outstanding medical care system in the country, with well trained and capable physicians and nurses, the opportunity exists in bringing medical care to the masses by using the Internet of Things (IoT), using machine learning and AI in diagnosis, by installing Intelligent Patient Care (IPC) and using a Universal Electronic Medical Record systems. Such developments will be more useful than telemedicine alone. The patient care is presently heavily focused in major cities, with patients flocking into out-patient clinics in those national-level hospitals. The travel and wait time can be eliminated by modernizing this by developing a system based on machine learning and AI, whereby when the remote patient has convenient access to the specialized doctors in the national hospitals without leaving their village.
It is absolutely critical that a consorted effort is made to develop an innovative mindset in the young in achieving these goals. From the lower grades in the school to the university education, the education system must make a conscious effort to drill this into the student’s mind by energizing the student through mandatory practical development projects, enticing the character of questioning, encouraging the desire to learn outside the textbooks and syllabus, broad-based learning, throughout the learning process.
One way to create room for such efforts is to provide all the content for subjects online and in a web-based learning environment. Various subjects at the “O” level and “A” level and university level, from anatomy to zoology can be presented online by a few acclaimed educators using the latest technology for the entire nation. Students can go over the material multiple times in this process as against face to face class settings and then effectively using the face to face classes to discuss the key points of the subject. This will simply make the tuition process unattractive, as the information is freely available on the web. Furthermore, the goal of any nation should be to educate it’s populous and is not to test and eliminate the student from higher education. Education should be inclusive, and not exclusive. Every child has a specific skill. Educator’s responsibility is to help the child mature his areas of strength, and is not to test the child on irrelevant matters, he or she has no inclination of success, and eliminate him or her from higher education. If we accept this policy, it is relevant that all possible questions in the examinations for a given subject be shared with the student and let the student practice these problems which will help him or her to learn the material, and shouldn’t that should be the goal of the country?
Online education should be complemented with face-to-face classroom dialogue, yes, a dialogue. Because for the most part education in the face-to-face classroom setting, unfortunately, is a monologue and doesn’t promote the character of questioning. All qualifying examinations throughout the country should be common irrespective of which university the student attends. For example, in basic subjects like anatomy, physiology, calculus, economics, etc., students from all different universities in the country should take the same examination. This is a fair system without bias and is easy to establish using a computer-based testing system.
This system exists in the United States and in some other countries. In medical education, students take several tests (USMLE- United States Medical Licensing Examination) administered throughout the country irrespective of which university they attend. The same is true in engineering where students take a common examination, after completing their degree, in the state he or she is working, known as EIT and PE (Engineer in Training and Professional Engineer) thereby bringing everybody to be measured by the same measuring stick. In its fairness, even any foreign graduates in medicine or engineering also are allowed to take the same examination removing any bias or discrimination against foreign-educated graduates. This is a very fair system and the country should adopt a similar system to help to fulfill the inadequacy in the numbers of professionals skilled in science, engineering, and medicine regardless of the university they graduated from.
Start-up culture and innovation ecosystem:
Along with reformulating education, another ingredient to building a foundation for innovation basic economy is the need for start-up culture. The start-up culture involves people working together in close proximity to each other, commonly known as incubators, which helps in building the “innovation energy”, a phrase we use to mean “charged-up” by each other, for a synergistic development climate. It is a great incentive for each other to work together building the innovation energy either in separate groups or in teamed-up groups at incubators where the entrepreneurs can share ideas, skills, contacts, and methods.
If at least 10 incubators can be built with relevant infrastructure in the country either within or near universities, yet independent of the university system, then the entrepreneurs would benefit from the academic knowledge accessibility while also keeping the initial development cost low due to affordable pre-existing infrastructure. Such incubators should entice the larger companies to bring their technical problems to be solved by the entrepreneurs due to the ready access to the knowledge base and facilities normally readily available in the university environment. University academics should be allowed to participate in these start-up ventures without having any obligations to the university, when such is carried out in their own time. Such incubators should be promoting participation not only by the students from the university but also those entrepreneurs outside the university system, as it would add immensely to any project carried out in the incubator by bringing forks from all different educational backgrounds, experiences, and outlooks under one roof. This is very common in the United States, where a number of incubators, specializing in different fields are available both within and outside the university campuses where participants come from all different educational backgrounds, both national and international.
As mentioned earlier, innovation-based economic development needs two key ingredients skills and capital. So far, we have discussed the importance of the need for appropriate skills and skillsets and how such skills can be developed in the country through appropriate education and cultural development. Funding is the other challenge. Typically, most start-up investments are risky and therefore the traditional investors, looking for high returns for their investments, are quite shy to invest in high-risk ventures. While the government can play a significant role in the funding process, by providing a guaranteed purchase agreement for any items that are currently imported in volume as long as the local products meet the same quality standards, consuming significant drain in foreign exchange, the private sector should also readily participate in funding these start-up companies.These governmental collaborations will significantly reduce the risks associated with establishing the new venture. The best and least painful way to fund start-up companies is to develop private funds that are left in private equity portfolios or even traded in the marketplace. The advantage of these funds is that the public can invest in these funds with only a few thousand and therefore has very minimum exposure while benefiting the diversity of the companies within the portfolio. As such, the investor minimizes his risk by investing in a mutual fund without having the exposure to one type of technology or one company. These funds eventually should provide high returns, and therefore the success depends on the judgment of the portfolio managers who invest in the technology of the start-up. This activity should be under governmental supervision meeting the normal reporting criteria of a publicly-traded funds and managed by professional fund managers. Therefore, it is quite important, that the country provides the environment for many different types of funds, governmental, public and private, or even funds that are public-private partnerships as well as government bonds in certain areas that directly contribute to the public interest. These and other means should be established to provide an injection of capital to qualified start-up companies.
The country should seriously examine the ingredients needed to kick start the economy in the post-pandemic era. There are two basic requirements, capital, and skill. Proper education with practical engagements during the matriculation of the populous will reshape the mindset to make the workforce practical and skillful. The government should layout plans to promote the development of disruptive technologies locally in order to develop branded products while providing guarantees when imported high value-added items are produced locally. In addition, a simple and efficient legal system must be established to promote investments without having to go over long and dragged on conflict resolution.
It would be an opportune time to assemble a key group of local and expatriate scientists, engineers, physicians, academics, business leaders, and entrepreneurs to assess, formulate and set in motion ways and means to lead in innovative and disruptive areas to brand the country to global leadership.