Lessons for Sri Lanka from Korea’s Experience in Innovation emphasized at LKI

August 21, 2024    Reading Time: 5 minutes

Reading Time: 5 min read

The Lakshman Kadirgamar Institute of International Relations and Strategic Studies (LKI), in collaboration with the Embassy of Republic of Korea in Sri Lanka hosted a seminar titled, “Economic Security in the Indian Ocean Region; Prospects for Collaboration between Sri Lanka and Republic of Korea” on 21 August 2024. It was attended by Ambassadors and diplomats, representatives of International Organisations, senior officials of the Ministry of Foreign Affairs and other relevant Ministries and agencies, business persons, leading researchers and university students.

Welcoming the gathering, Executive Director of the LKI, Ambassador Ravinatha Aryasinha, said the main purpose of the seminar was to examine the lessons Sri Lanka could learn from ROK’s experience in science and technological innovation. Setting the context for the event, Ambassador Aryasinha highlighted the current shortcomings in the country’s R&D efforts noting that the country’s annual R&D expenditure stands at a low 0.12% of GDP. He hoped that the discussion would address this lacuna and suggest tangible proposals on how to cultivate a more innovative society that values research and development and specific projects that can be operationalised in this regard.

H.E. Miyon Lee, Ambassador of Korea in her opening remarks highlighted Korea’s historical and ongoing efforts in transforming its economy globally, with a focus on economic security to protect supply chains and ensure technological leadership. She identified two critical elements for achieving this transformation: ‘Intellectual Property Rights (IPR) protection’ and the development of an ‘innovation ecosystem’.Ambassador Lee also highlighted the relevance of this discussion for contemporary Sri Lanka, which is emerging from an economic crisis and is seeking to adopt export-oriented policies and attract more Foreign Direct Investments (FDI). She outlined three key aspects of Korea’s economic transformation. First, Korea has greatly benefited from the global liberal market system, rule of law, and democratic values. Second, the private sector and civil society play a crucial role in driving innovation and resilience. Third, effective political leadership and bureaucratic efficiency are essential for implementing necessary policies. She also emphasized Korea’s vision for a free, peaceful, and prosperous Indo-Pacific region.

Dr. Kyungjin Song, Country Representative of the Asia Foundation Korea Office, led the first session of the seminar. Her presentation focused on the evolution of Korean economic statecraft over the past sixty years and explored potential future collaborations between Sri Lanka and South Korea. She highlighted three key elements of Korea’s economic development: institution building and capacity building, innovation, and entrepreneurship. Dr. Song noted that in 1962, when Korea launched its first five-year economic development plan, its major exports included iron ore, tungsten, anthracite, raw silk, and squid. By 2023, ROK’s primary exports had shifted to semiconductors, automobiles, petrochemicals, synthetic resin, auto parts, and ship building. In her presentation, Dr. Song highlighted a crucial moment in Korea’s economic history. She described how, during the late 1960s and early 1970s, as many Korean students were emigrating to the U.S. for higher education, ROK made a strategic move. The establishment of the Korea Development Institute (KDI) was a key initiative by the Korean government to harness global talent. Dr. Song explained that KDI’s leadership, under the president’s direction, traveled abroad to engage with these scholars, experts, and bright minds, persuading them to return to ROK to contribute to ROK’s economic development. This played a crucial role in Korea’s rapid economic transformation. Dr. Song also shared valuable lessons from the 1997 Asian Financial Crisis and the 2008 Global Financial Crisis, and proposed potential areas for collaboration between Sri Lanka and the Republic of Korea. She suggested opportunities in renewable energy investments and noted that Sri Lanka’s graphite, an essential raw material for South Korea’s semiconductor, battery, and automobile industries, could be a valuable resource for future cooperation.

The panel discussion that followed was moderated by Prof. Ajith De Alwis, Chief Innovation Officer of the National Innovation Agency (NIA) and Senior Professor of Chemical and Process Engineering, University of Moratuwa. The four member panel included Dr. Kyungjin Song – Country Representative of the Asia Foundation Korea Office, Prof. (Dr.) Nishantha Sampath Punchihewa – Dean of the Faculty of Law, University of Colombo and former member of the Intellectual Property Advisory Commission, Mr. K.A.Vimalenthirarajah – Director General of the Department of Trade and Investment Policies, Ministry of Finance, and Mr. Anushka Wijesinha – Co-founder/Director of Centre for a Smart Future.

Prof. (Dr.) Nishantha Sampath Punchihewa emphasized the critical role of economic security in driving innovation, noting that Sri Lanka has yet to make significant progress in this area. Drawing on ROK’s success as an innovation-driven economy, he proposed several solutions for Sri Lanka. He urged policymakers to modernize the country’s intellectual property infrastructure, pointing out the low rate of patent registration and recommending the introduction of a utility model system similar to what ROK has to encourage innovation among young minds. Additionally, he highlighted the need for a Geographical Indication (GI) registration system to enhance the value of Ceylon products and stressed the untapped potential of leveraging traditional knowledge to boost tourism. While acknowledging that intellectual property alone cannot solve all challenges, he highlighted its importance as an “additional element for promoting homegrown creativity in the country”.

K.A. Vimalenthirarajah highlighted several key opportunities and challenges that Sri Lanka faces in enhancing its integration into global supply chains. He pointed out that the “country is home to a micro, small and medium enterprises sector (MSME), which accounts for about 75% of enterprises, 20% of total exports, 45% of the employment and 52% of the GDP”, which has significant potential for transformation into export-oriented SMEs. He also noted that Sri Lanka benefits from various trade agreements and preferential market access, such as FTAs with India and Thailand and the EU-GSP Plus. However, he mentioned that these opportunities are underutilized due to supply constraints. Additionally, he highlighted Sri Lanka’s strong human capital foundation, noting its high ranking in South Asia for skills and vocational training according to the Global Competitiveness Index. Mr. Vimalenthirarajah also discussed several bottlenecks hindering Sri Lanka’s global supply chain integration. These include policy inconsistency and unpredictability, anti-export biased border taxation, a focus on domestic market profits, brain drain, inadequate investment in R&D, lack of innovation commercialization, and a poorly diversified export basket. He also mentioned social reluctance to engage in blue-collar jobs in the country, which affects the manufacturing sector, and issues such as unsustainable public expenditure, weaknesses in tax administration, limited entrepreneurship, and an overemphasis on trading over manufacturing.

Anushka Wijesinha, highlighted the importance of strategic decisions for structural economic transformation, particularly through a science and technology approach and greater export-oriented diversification. He said ad hoc policies and political cycle fluctuations hinder progress. Drawing from the Korean development model, he advocated for continuous institutional adjustments to meet evolving economic needs, such as those in science and technology and SME support. He emphasized the need to modernize and realign the public R&D sector, suggesting better allocation of funds, improved researcher remuneration, and a greater focus on enterprise needs. To address brain drain, he proposed creating technology ambassador programs and organizing multi-stakeholder groups to identify R&D priorities and strategic challenges. Additionally, he recommended using diverse financial instruments to de-risk SME and startup lending, while leveraging public funds to attract private investment without competing with it.

The question and answer session that followed centered on several key points: the need for supportive policies to boost business activity in the country, leveraging areas where Sri Lanka has competitive advantages and core competencies, such as traditional knowledge, that require minimal investment. The discussion also highlighted the importance of the private sector investing in R&D rather than waiting for government action. Encouraging the diaspora community to seasonally or remotely contribute to Sri Lanka’s economic processes was suggested as a way to address brain drain. Additionally, the government’s strategy of diversifying markets from western to eastern regions while maintaining western market connections was examined. The session also emphasized the need for consistent policy focus, strong political leadership to promote innovation, and seeking investments in R&D in moving up the value chain in existing sectors rather than pursuing entirely new ones.

Access the Sinhala and Tamil translation here