Govt., private sector must rekindle spirit of entrepreneurship, innovation: Mangala

Finance Minister Mangala Samaraweera on Wednesday emphasised the need for the private sector to partner with the Government to revive the spirit of entrepreneurship and innovation for which Sri Lanka was famous for in ancient days. 

He made this observation when he addressed business leaders at a forum to introduce the Enterprise Sri Lanka and the rapid rural infrastructure investment scheme ‘Gamperaliya’ at the Hilton Colombo.Following are excerpts from Minister Samaraweera’s speech:

In the Budget speech last November, I presented the ‘Enterprise Sri Lanka’ scheme based on the Government’s 2025 Vision document, to create a new entrepreneur class, recalling our history as a trading and a commercial hub in the ancient times. 

Today, the Finance Ministry is ready to make this vision into a reality and our invitation to you thisevening is to brief you on the launching of this initiative and to seek your support and partnership in making Sri Lanka into an entrepreneur’s paradise. 

Ladies and gentlemen, for the last decade our economic growth was dominated by the domestic sector. Exports reduced to 12% of GDP in 2014 and FDI stagnated. Therefore this economic model resulted in the creation of growing external liabilities whilst external assets and inflows were dwindling. Government revenue was falling for decades to reach one of the lowest in the world. Debt servicing exceeded total Government revenue. The effects of previous borrowing will be felt more severely in the time to come. More than 75% of Government debt servicing during 2019-2022 will be due to maturing or bunching of debt obtained prior to 2015.

While shouldering the burden of waste and mismanagement of the earlier regime, the new Government initiated a series of reforms commenced with a view to rebalancing and stabilising the Sri Lankan economy as per the Vision 2025 Strategy.

Whilst fiscal stability is a major macroeconomic gain, other aspects of the economy have also seen major improvements. Sri Lanka’s official reserves have reached comfortable levels of $ 9.9 billion by end April. Much of this reserve growth has been through more sustainable earned reserves as opposed to borrowed reserves. Inflation has declined significantly to just 1.6% in April 2018. Unemployment in the final quarter of 2017 was down to 4%. The Primary Account is in surplus for the first time since the 1950s. Thus stability has been achieved in external markets, labour market, and in prices.

The benefits of this stabilisation of the economy have been materialised in the external sector as both exports and FDI reached record levels in 2017. FDI of $ 1.9 billion and strong growth in project approvals in Q1 2018 augur well for the continued improvement in non-debt creating capital inflows.

Export growth in 2017 benefitted from GSP + and the Government’s strategy of negotiating FTAs with other key markets including India and China, in addition to the recently signed Singapore FTA, will enable Sri Lankan exports to plug into regional and global value chains. It is clear that the strategy of re-orienting Sri Lanka’s economy to an export and FDI based model, as articulated in the Vision 2025 Strategy, is already showing results. 

As a near-term economic activity the Government has designed a multi-pronged strategy. The key component of this strategy is Enterprise Sri Lanka. Our new approach avoids short term consumption booms through artificial fiscal and monetary stimulus.Instead the Enterprise Sri Lanka loan schemes focuson targeting credit on concessionary terms to drive investment domestically, which will generate growth today and in the future. The scheme offers attractive concessionary financing to stimulate investment and expansion by entrepreneurs, SMEs, and even large business.

Stimulating such domesticprivate investment will create jobs, innovation, and will enable economic expansion across the economy. This will no doubt result in multiplier effects which will create dynamism for the value chains that your companies operate in as well.On 22June, the Enterprise Sri Lanka loan schemeswill be ceremonially launched by the President and the Prime Minister at the BMICH. These schemes will target the most productive investment sectors. It is private enterprise that is created and expanded through these programmes which will drive Sri Lanka’s future growth.

In addition to the revival of private investment driven by Enterprise Sri Lanka, it is necessary for the state to invest directly in the rural economy. Towards this end, the Government will also be introducing the rapid rural infrastructure investment scheme, ‘Gamperaliya’. 

This includes the rehabilitation of over 22,000 rural tanks which will have a major impact on agricultural productivity and agricultural incomes that have suffered during the previous droughts. A ‘Haritha Udyanaya’ or a ‘Green Park’ will bring the ancient Athenian concept of nourishing one’s body, mind and soul to the village. Wi-Fi enabled Haritha Udyanaya will have a building with a library, gymnasium for the young and old, men, women and a roof-garden for meditation, Yoga and other religious spiritual activities. Places of worship in the village will be repaired and the village schools will get playgrounds.

The Government will also invest in the development of rural roads, rural markets, and other public works worth Rs. 80 billion. These measures will collectively inject more cash into the rural economy which will help improve economic activity and kick start broader consumption across the country in a sustainable manner.

The ‘Gamperaliya’ scheme will be the primary focus of the government’s economic agenda over the next 24 months. The first ‘Gamperaliya’ exhibition will be organised in Moneragala on 16August 2018, followed by Anuradhapura and Jaffna. 

The Government is planning a series of exhibitions across the country to take the message of Enterprise Sri Lanka and ‘Gamperaliya’ to the people. Whilst Sri Lanka’s pre-colonial past was one of, robust global trade and entrepreneurial engagement, in recent decades we have recently retreated into a protectionist, neo-socialistmindset. 

Our people have become accustomed to waiting for Government jobs and handouts whilst entrepreneurship has been relegated. These proposed exhibitions will create a platform to change this mind-set. Along with introducing the loan schemes and their features, the Enterprise Sri Lanka exhibitions will provide a platform for guidance, training, and mentorship for potential entrepreneurs. It will create opportunity to connect their business ideas with markets and larger companies in the ecosystem.The Government must take the lead in driving this change in mind-set to enable Sri Lankans to take their economic destiny into their own hands. We must work together to rekindle the spirit of entrepreneurship and innovation that thrived in the hearts of our ancient forefathers. The Enterprise Sri Lanka/‘Gamperaliya’exhibitions will lead the way in taking this message to the people.

Finally, while thanking you for your presence this evening, despite your busy schedules, I trust we will have your support and commitment for this venture for the betterment of Sri Lanka and all Sri Lankans.