Sri Lanka targets US$ 100 b by 2015

By Rashika Fazali

Sri Lanka is setting its sights on a US$ 100 billion economy by 2015, by increasing savings to 35%, accelerating FDIs, improving the capital market, and introducing what Central Bank Governor tagged as the “productivity factor”.

Central Bank Governor Ajith Nivard Cabraal noted that to move from the current US$ 59 billion to reach the targeted amount will require an annual productivity increase from 2% in the country’s economic agenda and by using materials such as currency carefully by the population.

Speaking at the 40th anniversary celebratory seminar of Institute of Supply and Material Management (ISMM) under the theme ‘Winning Markets through Better Supply Chain Management,’ Cabraal noted that the country could save Rs. 200 billion a year by cautious use of currency notes by the people.

“People sometimes do not know how much goes in to printing currency notes since necessary measures must be taken to have the right size for the note, the right features, etc., to improve longevity of the note.”

He also added that increasing the productivity levels of the country, which is of vital importance to the economy in its long-term growth and development agenda, would result in huge investments. “Huge investment, not in high terms, but in searching for better ways of managing our materials, supply chain and the old managing processes that we have.”

“Since 2004 we have made remarkable progress. Last year, seven years after initially coming to the US$ 1,000 per capita income mark, we reached US$ 2,826. This shows that there has been a rapid improvement in our traditions, the way we have done our business, and in the way Sri Lanka has achieved its economic task.”

Cabraal stated that in order for Sri Lanka to reach the targeted US$ 100 billion, the country would have to ensure that local savings increase from the present 24% to 35% by finding a balance in the markets between GDP growth and savings.

While the likes of FDIS and capital market enhancement along with allowing savings to come into local businesses is important, productivity development also plays a vital role, he said. “Due to this each year, the Government is looking at a totality of 2% improvement in the productivity levels so that the country can move forward.”

He added: “I think there is ample scope in every facet of work in our country for productivity to improve. This is an area where management can play a huge role because of the skills and the ability to fashion some of the processes that can improve productivity, work flow, the way in which the materials are ordered, the way they are sewn, the way they are is transported, the way they are insured. If you search for those improvements carefully, you can make big improvements.”

To achieve the ambition of a US$ 100 billion economy, the Government is now concentrating on the five hub concept, focusing on improving aviation, maritime, knowledge, commercial, and energy sectors of the country. “We are also developing tourism, ICT, and gems and jewellery sectors, while conducting extensive north and the east development, which enables us to enter into varied areas of activities, such as fisheries, education, health and infrastructure.”

Cabraal also acknowledged that among the key business of the Government, its role of creating a cohesive environment for growth was also important.

“The Government’s main business is to provide space for the private sector and for other organisations to work,” Cabraal said. “If we have good roads, people can transport their goods and other materials effectively without incurring higher expenditure. If we have very good telecommunication systems, you can communicate with anyone in Sri Lanka or the world without any difficulty.”

The Governor noted that despite the negative feedback surfacing with the loss of GSP+, the country has managed to move forward successfully. “For two years we prepared. We alerted the businesses to respond to this threat by improving productivity. We helped in whatever way we could, but the response of the trade by improving their productivity levels was key in meeting this challenge head-on and winning.”

However, a lot remains to be done and the country must now look at upgrading infrastructure and processes, he stressed.