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Wednesday, 31 May 2017 00:04 - - {{hitsCtrl.values.hits}}
By Uditha Jayasinghe
Seeking a holistic approach to economic management, Finance Minister Mangala Samaraweera yesterday outlined his ambitious plan to focus on robust democratisation and growth in tandem to achieve sustainable development in Sri Lanka.
Delivering the keynote address at the ‘Sri Lanka Investment & Business Conclave 2017: Growth through Partnerships’, organised by the Ceylon Chamber of Commerce, he gave the first extensive outline of his vision and plans for the economy.
“The journey that the country embarked upon since the election of President Maithripala Sirisena is a challenging one in many ways. However, I strongly believe that this is Sri Lanka’s moment to unite in its diversity and work with determination to churn this challenge in opportunities for the benefit of all our people.
“At the time Sri Lanka gained independence our country was looked upon by the entire world as one that held much promise. Yet this was not to be. Through this pain and agony we arrive once again at a promising point in our nation’s journey and this is perhaps the best opportunity we have had to ensure our nation’s economy grows and we achieve sustainable peace. It is the best opportunity that we have to learn from our past mistakes and ensure that the tragedies of the past are never repeated. We have an unprecedented window of opportunity before us.”
He pointed out that in keeping with Sri Lanka’s age-old persona the country has once again renewed relations with the region and beyond as well as with international organisations building and fostering partnerships for the mutual benefit of the people.
“The self-imposed isolation Sri Lanka went through for nine years is now over. Sri Lanka is now right in the centre of the international stage.”
For Sri Lanka to break free from middle income country status, towards a higher income category country it is essential that we not only build physical infrastructure but set up corresponding globally recognised regulatory mechanisms and investment practices that meet Sri Lanka’s aspirations to become a regional hub for financial services for international trade, he added.
“Most of you would have studied the economic policy plan unveiled by Prime Minister Ranil Wickremesinghe in Parliament. This policy plan gives an initial outline as to how Sri Lanka plans to achieve sustainable economic development with a view to integrating Sri Lanka into a regional economy and an international value chain.
“To support these efforts, together with my Cabinet colleagues, I have worked during the last two years or so as the Foreign Affairs Minister to create the best possible enabling environment for Sri Lanka to attract more business, trade and investment. Now in my new portfolio I will work closely with all of you as well as with the international community and all stakeholders to work even harder to realise the economic development democratisation and the reconciliation agenda of the national unity government for the benefit of all our people. In fact this is where reconciliation comes in. Without reconciliation and durable peace, without guarantees of non-reoccurrence Sri Lanka cannot exceed on its successes. That is the very reason that the Ministry of Reconciliation has been given the highest priority and it is a subject under the President.”
He went on to say that human rights, democracy, good governance and rule of law are all elements of stability and in turn foster development. Reconciliation and development are intertwined.
“Without reconciliation and a stable foundation economic progress would once again evade our nation. In fact this is why a new Constitution is important, a Constitution that would celebrate the diversity of Sri Lanka as a multi-ethnic, multi-religious, multi-lingual country. The national unity government focuses on a three-pillared agenda that is essential in this context.
“Democratisation, which includes strengthening good governance and the rule of law. Reconciliation, which is truth-seeking, reparation, accountability and guarantees of non-recurrence. The third pillar being sustainable and equitable development with employment generation that transmits the benefits of growth widely are critical. The private sector and partnerships are key. The growth model Sri Lanka evolves would need to be private sector driven with exports and FDI as key pillars,” he said.
“As you all know in the years after the conflict the main growth impulses in our economy came from public investment in infrastructure, which was largely financed by foreign commercial borrowings. This growth model was ill-conceived and no longer has headroom due to the country’s widening budget deficit and public debt dynamics.”
The Government resolves to take new measures to improve the investment climate and investment promotion as well as strengthening trade policy and trade facilitation besides working on deepening and broadening the FTA with India from goods to services, investment, technology and training. Steps are also being taken to address some of the shortcomings of the existing FTAs with the Pakistan FTA being reinvigorated, Samaraweera noted.
“Similar agreements are also being negotiated with Singapore and China. I believe the Singaporean agreement I was told would be able to be completed before the end of the year, before the expected visit of the Singaporean Prime Minister in December. The restoration of the GSP+ facility earlier this month was a remarkable expression of confidence in Sri Lanka by the European Union. If all works well by end 2017 Sri Lanka would have preferential access to a market of nearly 3 billion people,” he said.
“I want to assure all of you that all these agreements will indeed be negotiated carefully with positive and negative lists, safeguard agreements and dispute settlement mechanisms, which pursue Sri Lanka’s interests. Given the lack of fiscal space much of the investment of major programs will have to come from private investment, both domestic and foreign, which is why the formal establishment of the PPP Unit of the Finance Ministry is so important.”
The intention is to seek investment from both the local and foreign private sector to drive the Sri Lankan economic agenda. I would like to reiterate our Government’s commitment to build a strong, stable, prosperous Sri Lanka united in its diversity. I invite all of you to join hands with us at this historic moment to ensure the success of our development strategies and bring about the reforms to achieve our dream. Let the 70th birthday of our Independence next year be a new beginning for Sri Lanka.
“If this result confirms the country’s potential for investment achieved in the past few years it does not necessarily mean that this potential has fully materialised yet. In fact levels of FDI remain relatively low. In 2016 foreign investment accounted for less than 1% of GDP, well below the rate for South Asian countries which the World Bank says is about 1.8% on average,” said fDi Magazine Deputy Editor Jacopo Dettoni presenting the official certificate of the ‘Island Economies of the Future Rankings’ to President Sirisena.
“For a country to fulfill its FDI and perhaps one day become the ‘Switzerland of the East’, our data suggests that further steps have to be taken in terms of improving infrastructure and governance, in terms of developing a rich and diverse business climate and upgrading the framework to enable local as well as foreign investment. Initiatives such as the launch of this new PPP Unit are definitely a step in this direction and it is our hope that our rankings can provide policymakers with a useful tool to benchmark Sri Lanka against other island economies all over the globe and come up with refined policymaking that will increase the country’s attractiveness for foreign investment. Also these rankings reiterate a message to investors all over the globe that Sri Lanka has got great potential for foreign investment moving forward,” he added.
Special Assignments Minister Dr. Sarath Amunugama, addressing investors on behalf of the President, highlighted its many attributes and called for stronger investor interest.
“Sri Lanka is one of the safest places in the world today. You can travel to any part and even though there is a flood it is possible to go about and see the city and its developments. Sri Lanka is one of the most strategically located islands in the world. We are in the middle of the Middle East and the Far East. A large amount of the oil shipments pass by Sri Lanka. Just a few feet from Sri Lanka is the fastest-growing economy in the world with a population set to exceed China in the next five years. To the south of Sri Lanka is an expanse of ocean that does not have severe conflicts.”
In a world where there are tensions over oceans, the Indian Ocean is one of the most peaceful, he pointed out.
“At the recent One Belt One Road Conference in China, the Chinese President referred to Sri Lanka as the pearl of the belt. We also have significant advantages in the form of FTAs with India and Pakistan and proposed trade agreements with a slew of countries. On top of that we have GSP+ status from the EU so there are few countries in the world that has so many tariff concessions from so many global members. We also have a well-trained workforce, largely due to free education and healthcare and other subsidies, which will give investors a contended workforce.”
The Minister claimed a recent study by JICA has shown that Sri Lankan middle managers can learn faster and handle machines better than others.
“So invest in Sri Lanka. It is a sure bet! The people who are the first to invest in Sri Lanka will find they are welcomed. A short walk from this hotel is the Colombo Port City, which is one of the largest land reclamations in this part of the world, and will be the financial centre that will provide financial services that even India currently does not have.”
We are already contacting companies to come to Hambantota to invest. So Sri Lanka is on the move and this is a good time to invest. Look into the facilities that we offer and invest in a competitively advantageous situation. A new tax law and investment law is in the offing and any investors will be able to recoup their investment in a tax-free environment. That is an incentive that few countries would offer. “
- Pix by Upul Abayasekera
