Post-war Sri Lanka is a success story and outlook is very positive: Dr. PB

Thursday, 3 July 2014 00:47 - - {{hitsCtrl.values.hits}}

Following is the full speech of Dr. P.B. Jayasundera, Treasurer and Secretary to the Ministry of Finance at the Shippers Council Annual General Meeting held last week:

Treasurer and Secretary to the Ministry of Finance Dr. P.B. Jayasundera

Good evening to everybody. Thank you very much for the wonderful opening remarks and I hope the Sri Lankan media will carry your report in full, because this is the kind of news this nation deserves. We are not asking for any propaganda. The country’s economy which is essentially in the hands of the private sector, home-grown private sector, nurtured by the many efforts made by the President in recent times, deserves to have this message going out of Sri Lanka. This message should also get headline stories in our media. The reason I say this is because, although it is true that we have many more concerns to address, that does not mean that what we have done should be undermined by anybody in Sri Lanka or by anybody elsewhere. So since I am speaking in front of the private sector and the media, as a citizen, as a professional, as a career public servant, I sincerely request to forget Sri Lanka wealth. If Sri Lanka needs to grow, the Government can do what it can do but the rest, society must do.

ADB President’s visit

I am saying this because last week, the Asian Development Bank President was here; he came after travelling to many countries and delivered a speech. He lectured at the Miloda Academy of Financial Studies, but he didn’t have visibility in the country, because he didn’t have time to go around the country or talk to anybody or meet anyone, let alone his own staff. After his speech, he would have met with some members of civil society and researchers. The following morning, he had breakfast with the President and discussed matters of concern to him. The President was very frank in the exchanging of views. After breakfast he went to see the economic landscape in Sri Lanka such as the Ports Authority. He noticed that changes had taken place in that space and, on a positive note, he came to Kandy where I met him and he went to the Temple of the Tooth for a brief visit. He travelled with me along the Kandy-Matale Road, which is partly under construction. In the night, he travelled to Kandalama without security. He spent time with me and our team and his delegation. We had dinner at 11 p.m. and then we had a full day after. He said he had meetings on Friday, I don’t know how that can be. Because we don’t have meetings on Fridays. But probably the charismatic Chairman of the council might be sitting here thinking we do have meetings on Fridays as well. We must do shipping! What he saw in newspapers on his way to Colombo, when he travelled on Mihin Air, was not happening on the ground – Aluthgama and various other places. As if the country is on the verge of another chaos. That was all over Hong Kong. But he asked me, ‘Where is it?’ He himself pointed out the Muslim villages. He got up that morning and then only he saw what a world this is, because Kandalama is a place where the environment is blended. From there we went to the Dambulla Temple; and he said he wanted to see the caves. So once he saw those, we came back to Sigiriya. All of his staff was discouraging him from climbing the rock, but he said he really wanted to do it so we climbed with him all the way to the top. From Sigiriya we came to Habarana, where we went to a school and he spoke to the kids there. We went to a village through a carpeted road and spent time there. He noticed all the changes. From there we went to Aliya, a new hotel that was built post-conflict. Many were asking where the 2.5 million tourists were going to stay. This hotel is part of the project. Then from there we went through the Hadawela Road – which was not part of the plan, and from there we went to the A9 road. That section was built by the LTTE, so he got off the vehicle when he saw it. He raised questions as to how resettlements were done when roads were expanded. He was very convinced. The model is a very convenient scale for a country of this development. From there he went to Kalawewa. He then went to Awkena and he asked a series of questions. At Kalawewa he asked if it was built by a Sri Lankan king or by the British. He noticed the changes and from there we came through Jaya Mawatha, to Thambuththegama and other places along the way. By that time it was 9 p.m. and it was late. When I said goodbye to him, he asked me why our people were not proud of our country and he sent me a memo this morning, handwritten, saying that this country will be the next miracle of Asia. So that’s the kind of story, not that somebody has to do it, but someone made an assessment. This story is one that the private sector should share with the world and since you are dealing with a very influential decision-making private sector, they will appreciate it on the same grounds that you articulated the terminal handling charges for many years. I paid my tribute to Lal Fernando, who led this fight in 1988 and we worked together on this matter. It was not easy. I have been saying that is not something that is justifiable, but I don’t know if our own chambers know this. Whatever it is, on the same grounds I would argue, speak loud and clear, including the media.

Stand for the interests of Sri Lanka

There were no human rights violations in Sri Lanka. The Government must speak on this, you must speak on this, because you have seen what not having peace in this country has denied Sri Lanka. Our nation became a lagging economy, our nation was behind everybody. We were not committed to coming up. Now the President has got that legacy right and that’s what we should articulate at the 44th AGM, which is essentially established to secure, though it is said that in the interest of importers and exporters, this $ 30 billion business; it is by listening to this Chairman, that I felt proud as a citizen of Sri Lanka. That he stood for the interests of Sri Lanka. That is the kind of private sector we are looking for it. Apparently you all consist of big business, apparels $ 5 billion business and I am dreaming that this would be among the top 10 in the world in the next few years. Tea, motor vehicles, a lot of ethical practices to be learned, petroleum imports and economy, pharmaceutical businesses. I hope we will have top class pharmaceutical companies coming up. These are big business, but among them there are small fish going around making nonsense also. But shippers and their activities are no longer considered old-fashioned trade. It is shifting to a global supply chain, from transhipment to value creating. Our Government has enabled this.

Poised for new pace of growth

So this 44th AGM is taking place at a time when the country is poised for a new pace of growth with stability in the economic landscape which you can see. In the landscape we were in since independence, technically speaking until the President took charge, we were on a flat growth. That is what is called South Asian growth. You can see it in Pakistan, Bangladesh, and growth is slightly upwards, but that won’t take us anywhere. We can see Indonesia, China and Malaysia with steep growth. Those are economic miracles. This is what the facts say. We will make our economic growth steeper and much more the next year. If Sri Lanka’s growth can be as steep as China, we are the world. So Mr. Chairman you have a task to perform, your community has a task to perform. The Government has performed its tasks. The ball is in your court. The Government during the last eight years, if our economic story is told in terms of facts, all the international and national indicators point to the argument that it is less risks. So that is what the economy management is all about. Our economy has grown over 7%, and 7% per annum growth is much more decent because our population is less than 1%. In many countries, the population is still going through between 1% and 2%, so for their economy to grow, they should reach 8-9%. When I entered this building I got an SMS that June inflation is 2.8%. International rates and by the last five months and this month, our inflation is below 5% – a single digit. So the Government and CB can have a carnival. Monetary policy and financial stability is in place. The exchange rate is flexible, yet foreign exchange reveals that it is stable. Flexibility does not mean several fluctuations. It needs to be predictable. In fact that has come in light. International reserves are there. And we are now $ 9 billion dollar. The dream is 10, since we had that rate. Compare all these numbers with places where banks have collapsed, inflation had gone out of control, all those sorts of problems. Our current account deficient had declined. Tourism is no longer a $ 300 million business, last year it was $ 1.7 billion and this year we are predicting $ 2.7 billion. For those who were questioning the target, the numbers are going up.

Don’t question facts

Now somebody questioned the statistics. I was shocked that these intellectuals question facts. I say don’t question the stats, go to the managers, and ask them the occupancy now. In an off season, the Kandalama owner says he can’t manage. So this is what the economy is all about. Overseas remittance is bigger than yours. Overseas remittances are at $ 6.4 billion; we are looking at 10 billion. My dream is that the apparel business grows parallel to the overseas markets. So I hope this year the business will hit $ 6.4 billion. IT exports, which was a figure that was measurable in 2005, is now a $ 790 million business and is going to become $ 1 billion soon, and the country’s literacy is no longer measured by general measures. IT has gone from 0% to 40%. So take this message out. Take employment; we are no longer talking unemployment. A total of 95.5% of the population is employed. That should be the strategy. My predications are not bad, although I am not economist on these numbers. 95% of the houses have access to electricity. The President gave strict instructions that by the end of 2014 every single household should have electricity. You don’t have power cuts now. You went through turmoil, when there was tension in our minds. But so far no power cuts for the last nine years. I have met you all in different chambers; I remember many asking for diesel generators. Now it no longer comes to the treasurer. We had 100.2% debt, but it has come down. We borrow, we borrow comfortably. Yesterday SriLankan Airlines borrowed at the cheapest rate. But the reason is the Government has created much more decent assets. You don’t create ports and expressways for tomorrow’s use. You create for the next 100 years. I don’t think the majority of the people understand these statistics. Look at the country and its rank as the 21st out of 50 leading locations for delivery of BPO. This may be the soil that may accommodate the next Bangalore or the next Silicon Valley. Housemaid labour is over; now only 33% go. Our healthcare system is quite sophisticated, much better than Obamacare. We have 75 years of life expectancy and multidimensional poverty is declining.

Sri Lanka’s vision

The country has a vision. For several years, the country could not get a vision in place. Without a vision, a country will not have growth. People may have taken it lightly or cynically. But it is happening and it’s here. It was expressed in 10-year goal and now five-year interval. We create unstoppable Sri Lanka 2020. To achieve this vision, infrastructure is critical. It is on this infrastructure that you will see private investments. This is the story, we have a triple AAA economy, animal husbandry, we need to create livelihood among the local economy. The President believes that no country will be successful unless the entire strategy is built on an inclusive strategy and one that is rural centric. Every village has to be sufficiently empowered.

Development is investment

Development is investment. There is no debate over that. It can come from public or private or joint. Some investments are long. You want to build roads, for FTA agreements. There are private investments, you may do water projects; Aqua Fresh, entrepreneurs branded it. Then we have private-public, here is our Port Chairman, JCT, SAATT and whatever other T. This is how we are planning; we had less than 3% public investment. And now we are on a 6.5 journey. Powers of development, roads, connected cities, irrigation, ports, export processing zones, tourism corridors and knowledge-based activities are coming up. Here I am going to run through these slides. Here the energy diversification. You don’t need to import diesel. We have three coal power plants, transmission is being built and we are going further with windmill and solar. These are the projects on the ground. Similarly, expressways; we need roads. You need to travel quickly. Today the whole country has an excellent road network, where all the cities are connected. In 2016, we can just drive anywhere. These roads were never there. Ports, the whole country has a different landscape. If you want transhipment – Colombo; industrial ports – Hambantota. The ports are internally connected to each other. Then all global destinations are connected. Irrigation; the President decided that every un-irrigated land is to be irrigated in some way. No water will be permitted to drop to the sea; it will be circled throughout the country. We need to drink good quality water. From KKS in those days. From all the districts, there’s water. The President decided that in the same way he provided water to each household in Sri Lanka, he likes to see every household having access to quality drinking water by 2016. Connected cities; we have a good number of strategic cities and high value exportation zones. Not only cricket; everything has to happen on this ground. Storage facility, a country needs that. Even inside the country, you all only know the ports but if you go to Anuradhapura we have built huge storage facilities. So having done all this, we would like to see you all use it. Our GDP was 21%, we like you to raise it to 31%. How can this happen? Do all these things. Why should the BOI waste time for $1 billion reserves giving tax investments? We don’t need these kinds of things, we have the facilities. Here is the next landscape; so many property developments will lead to more investments. This is the kind of landscape you will see (points out to the slides). That is the kind of investment needed, everything else will fall in place. If someone builds a road, the restaurants will come up. That is part of it. Look at the industrial strategy and how you invest your money. This was my story to Ashraff (Omar) when I met him so many years ago, we were here and now we are here at this point.

Transition phase

Not only are you all ethical producers, you are also environmentally sound, high tech and high sanitary conditions. Sometimes when you travel and see factories, people ask if it’s an apparel factory or hotel. That is what people are asking. You don’t need cheap labour. That is the journey. Medium low and high technology industries. Now we are in this transition phase. Mangala Yapa retired, but before he did, Dockyard exported two ships. And do you know how I found out? When I was going through the figures at Central Bank, the exports had gone up, so I wondered how. Before Customs exports something, I know. Nobody was able to explain what happened. But we soon found out about the two ships. So this is the kind of export market we are looking at. We need the primary sector to provide the raw materials, no more cheap labour. Skilled human resources. Now we have a skilled education sector to produce thousands of skilled labourers. In many sectors, like tourism, ship building, etc., then we have advanced machinery which we need to import. Then we need to have a good macro economy, research, budgets. You manufacture and sell, not here. Sectors are coming up. See how the labour force is dependent on this sector. See the transhipment activities that are coming up. See the Galle Port, which is providing competition. The Sri Lanka Port Authority is no longer a monopoly; it has to compete with the other ports. We have all these facilities. So that’s why the President, after investing on a systematic basis through many models and reform initiatives, spoke of the way forward. That was to create the Shipping Corporation again. Some of those businesses – such as petroleum and fertilisers – these make another shipping line viable. We are talking about over 10 billion just lying there, so it has to be about exploring the economy. We need a state-of-the-art Ocean University – the President has had this in mind for some time – and the establishment of a Merchant Shipping Authority. On terminal handling charges, I know there are corrupt practices, but it can be changed. Compete on decent grounds. Compete by practicing good standards. We want maritime education, ensure professional skilled development. We have not wasted taxpayers’ money. Tax credit for local suppliers to engage. We will not fully open the shipping industry. We believe that many will graduate to other business.

New investment climate

We have new investment climates and so on. We can accommodate many new things coming up and we accommodate new ideas. We have strategic investment laws to find new players. The China Free Trade Agreement will be signed. We are also looking at Japan and Korea. Here is a world where you are connected. Name anybody and we are in the centre. So now in the President’s vision, we are in the comfort zone. Remember these are not my stats; these are all international, because you all don’t take us seriously. Global Space Index, among them Japan, China, S. Korea. We need not be ahead of America or Europe. They are on the other side of the world. Here they are at the top. Global Service Index, Development Index, we are on top.

Sri Lanka is big

So Sri Lanka is big. The story that Sri Lanka is a little island is wrong. That is what I want to prove. At the time our population grew at 2%. So our potential was smaller. 7.8% growth for this year. What is the consensus that IMF guys come here. We pay their loans now. But they say Sri Lanka has achieved noticeable progress on many fronts. The World Bank says poverty has dropped. ADB says Sri Lanka has achieved remarkable strategy. The UN, except one party, says that progress is remarkable in human development. The outlook is positive. The general consensus is that Sri Lanka is a success story. So ladies and gentleman here is a country that has entered a journey towards becoming a miracle. And that’s because there is a plan, carefully calculated and a strategy based on vision. Now it should be capitalised on. Earlier doubts whether it will work are no longer relevant. The export-import trade which encompasses interests of the Shippers Council is a $ 30 billion economy. A large percentage of global networking is necessary to ensure that Sri Lanka will succeed in the Asian age, which is before us. So with those remarks, let me thank the Shippers Council for inviting me to deliver this speech at the 44th AGM. The 44th AGM should be a new chapter for you to make Sri Lanka a miracle in Asia.