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Is government policy on the right track?
The Government is retaining its import restriction initiative adopted after the pandemic hit us last year, and it makes sense that such an approach was adopted. However, this situation has led to certain shortages in specific items – and tyres are one of them. Of course, import restrictions on luxury goods – and even vehicles, make a great deal of sense at a time such as this. Our exports are crippled due to adverse market conditions. Tourism is virtually non-existent. It’s not business as usual.
But yet the tyre crisis is rather curious. It’s questionable as to whether those in government that make policy are fully aware of what’s happening in the tyre resale market in the country. Things are a bit out of whack, to say the least. A lot of the small-time vehicle owners who run for hire and make ends meet with difficulty, are having a hard time replacing their tyres.
That’s not exactly the best fit in terms of messaging, in a recovering economy. Of course people are called upon to make sacrifices. There won’t be any glut of vehicles in the country. All that is good policy. But such good imagery in terms of keeping the economic side of things under good control under trying conditions may be threatened by the bad press created from something like the current “tyre crisis”.
The exact rationale for not importing tyres is not clear. Is it purely because of an import restriction policy, or is there some sort of move to popularise locally manufactured tyres in the domestic market? If cutting tyre imports is purely based upon the motive of import substitution, well that aspect of it is very good economic thinking.
But in the transition to reliance on domestically manufactured tyres, there should not be an interregnum in which there is a shortage of tyres of certain sizes. When that happens, it’s very bad optics for an economy. It gives out the impression that the system is somehow and in some ways, dysfunctional.
Besides, these are times when digitised records – basically the use of computer technology – can foresee any shortage. Everything can be minutely controlled. Under those conditions, the prevailing shortage of certain sizes of tyres is unnecessary. If a certain amount of importation is needed to supplant the local tyre supply of a certain size during the transition to domestic tyre supply, that amount of importation can be done, without allowing for the bad optics of a tyre shortage.
Domestic import substitution is extremely important. Besides the fact that it saves valuable foreign exchange, it’s a policy that gives confidence to industrialists that they can manufacture – and maybe someday expand to capture export markets.
That’s the way to go!
In the process, bad optics can stymie everything. We are a democracy. People can make some sacrifices, but if it’s seen that they are making too many, there are enough elements that would take the chance to sow discontent, and destabilise everything. That’s not bound to help any policy of domestic import substitution – or for that matter any beneficial policy at all.
Controlled import substitution has to be the name of the game – and even a slight whiff of an approach that’s seen to be on the lines of the failed Bandaranaike policies of the ‘70s, undermines confidence in general economic performance, and is bound to have a knock-on effect that’s bad for the economy in general.
It’s not enough to have the heart in the right place. Of course, policymakers that want to make industry grow and create an export-oriented economy have their hearts in the right place. That is the way to go, period. However, to get there, especially in a democracy, careful calibration of all variables is needed. Tyre shortages, even if they may be relatively insignificant, are already creating bad optics in some quarters. Those in government may not be aware of it. They have to address that problem, without derailing the laudable import-substitution economic outlook they have put in place.
This was also the week that saw a key announcement by the President with regard to his “back-to-the-land” policy of banning the import of chemical fertilisers. It’s a laudable move – and outlawing harmful chemicals that get into the food chain is revolutionary.
It helps local enterprise too – and of course keeps our consumables healthy for human consumption. However, it is the blanket ban that’s envisaged that could be somewhat worrying. The President has stated that he will stick to his policy no matter who says what. He is most probably referring to the various lobbyists who are bound to coax him to reverse his initiative. These lobbyists would be representing the chemical fertiliser importers and others who are key players in that industry.
He should not listen to them. He is being decidedly revolutionary, and when there is that kind of ambition to affect change, there must be an individual with his iron resolve at the top. That’s not the issue here.
The problem may be that a blanket ban could have the same effect for crops – or at least certain crops – that the import restriction on tyres has on the market availability of tyres. Certain produce may at certain times need a quick infusion of fertiliser, and one wonders whether the organic fertiliser supply would be able to meet these exigency situations. There could be a controlled and very limited supply of chemical fertilisers that are made available in the market to meet these exigencies.
Life is paradoxical, and sometimes new processes lead to greater yields, but in the process they take down other valuable, more traditional methodologies and traditional resource bases. High-yielding new varieties of rice are credited with having averted hunger. But over reliance on these, caused the depletion of our gene banks – for example, the multitudes of varieties of rice we had that were consumed for various purposes including medicinal purposes. But very few people would say that we should have foregone the use of high-yielding rice varieties that were developed in labs. As stated, those averted hunger.
Of course, on the other hand there would have been high-yielding rice varieties in the gene pools that we lost, but we didn’t have the research to find those and propagate those – so the quicker fix was to introduce high-yielding lab-discovered seedlings to avert hunger on the short run.
There has been a good side to modern scientific discoveries and methods in agriculture, though we lost something in the process. Chemical fertilisers are damaging to the environment; they are toxic and that toxicity sometimes seeps into the food we eat and so, the “back-to-the-land” policy of the President is well intentioned. But if it’s enforced too rigidly, there could be a dearth of yields in some situations. Any shortages and scarcities would also trigger off bad vibes. The other aspect of this total ban is that government subsidies are envisaged. The Government will step in to “provide all the necessary facilities for farmers to produce organic fertiliser”, it has been announced.
This could lead to state interference in privately managed plantations, which is not necessarily a good recipe for success in the long term. The State cannot go back to a situation of a command economy. The free market has to operate, be it with tyres or with fertilisers. It’s true that the free market cannot co-exist with policies of import substitution. But substitution could be handled under a semi-free market model.
No foreign tyres at all or no foreign fertilisers at all could be too extreme. For certain specific soil conditions and under-controlled supply, chemical fertilisers could still be used, obviating the necessity for the State to get involved in privately owned agricultural enterprise. Change has to be accompanied by flexibility. Blanket bans are never very popular, and could make us go from a free market to too much of a command economy. While the organic fertiliser policy is great, the State should perhaps encourage it, while taking care not to impose any blanket bans in the bargain.
(The writer is a former Editor-in-Chief of three national English language publications and a practicing Attorney-at-Law. He is an Editors’ Guild award-winning columnist, and contributing writer and columnist for the Nikkei Asian Review and South China Morning Post, while his editorials have been published in The Australian)