The ‘Wonder of Asia’: Realising the dream

Our Chief Guest this evening Diarietou Gaye, Country Director of the World Bank for Sri Lanka and the Maldives, excellencies, distinguished invitees, past chairmen, ladies and gentlemen, I would like to begin my address thanking all you of most sincerely for your support, encouragement and guidance during the two years of my tenure as the Chairman of the chamber. That these two years coincided with the first two post-war years of Sri Lanka was indeed my good fortune and a great privilege.

I owe much to the then Standing Committee of Desamanya Deva Rodrigo, Mahen Dayananda and Jayampathy Bandaranayake for inviting me to join the leadership team of the chamber.

All that was achieved by the chamber during the two years of my tenure as Chairman was due entirely to a great team effort by Susantha Ratnayake, Suresh Shah and Jayampathy Bandaranayake along with Harin Malwatte and those highly talented and equally committed ladies and gentlemen of the Secretariat. It was indeed a great pleasure to have worked alongside them.

I hand over the baton of the Chairmanship to Susantha Ratnayake this evening with the utmost confidence that the new and youthful leadership team will be able to achieve much more for the benefit of our nation and the private sector in the ensuing year and beyond.

I do not propose to speak about the specific undertakings and the achievements of the chamber as they are fully articulated in the Annual Report for the year 2010, which is in your hands.

New era of peace

I think, however, that it will be worth our while to pause for a moment from our current pre-occupations and reflect briefly on how we at the chamber approached the beginning of the new era of peace and charted our journey. Such a reflection will be of considerable help in forging ahead building on our successes and at the same time addressing the gaps, if any, in order to ensure sustainable peace and prosperity for Sri Lanka.

The end of the war was seen by us as an opportunity to create the conditions necessary to ensure that we will never again have to experience the violence and the destruction over a three decade period of everything we value. As people who understand markets and business, our commitment was to initially wholeheartedly support the welfare of the displaced and thereafter their speedy resettlement along with the restoration of economic activities in the affected areas.

Our members contributed immensely though silently in these undertakings. In the medium term, the need was to whole heartedly support the building of an economic environment where all people irrespective of their ethnicity, geographic location and any other such division will have a fair and equitable access to emerging economic opportunities. These opportunities may be called, in other words, economic dividends of peace. It was also very clear to us, given the size and scale of these immediate and medium term priorities, and the vast amount of resources required, a speedy growth of the economy was a pre requisite.

Nation building

Nation building has to be supported by several pillars – not only that of economic progress. Given the expertise and the credentials of the chamber our comparative advantage was and remains in the area of business and economics. Without any doubt, this is the area where we can make the best and biggest impact.

During this very short period of time, on economic growth front, the achievements of Sri Lanka have been highly encouraging. If the results achieved so far can be sustained, then, there is no doubt that the dream of fairness and equity of access to economic opportunity and eventual sustainable peace and prosperity is well within our reach.

I need not labour too much to make my point that we have fared exceptionally well on the economic front. Overall growth of the economy by 8%, single digit inflation and much lower interest rates than those of the war years, a stable currency, increased remittances and reserves, reducing budget deficit, improved sovereign ratings, sharply improved results of the listed companies, a step change in tourism, a remarkable surge in infrastructure development, unemployment at a historic low, poverty head count down sharply and much more.

Our future progress will be much stronger and surer, if we are mindful of the challenges along the way. Not to take away or reduce the glory of what has been achieved, but rather to ensure its sustainability. Not to point fingers at any one, but to join hands with all stakeholders to do the right things.

The downside risks I see are of both of domestic and global origin. Today’s world is so complex, I do not, even for a brief moment, want to suggest that what I out line is an exhaustive list. I sincerely hope, though, this will serve as a useful starting point.

Youth unemployment

On the domestic front, my biggest worry is the relatively high rate of youth unemployment. While the overall unemployment rate is a mere 4.5%, 18.1% of our youth between the ages of 15 to 24 years are unemployed, and 10.7% of those qualified with GCE A/L or more are unemployed. At the same time, almost all sectors of the economy are experiencing labour shortages. What a paradox! That youth unemployment was one of the major causes of the north east conflict as well as the several southern uprisings should never be forgotten.

We of the private sector need to find ways of employing the youth meaningfully and in a productive manner. If we leave it to the Government alone, to absorb them to the public sector, then the budget deficit will widen, inflation will revert to where it was, interest rates will rise and the currency will depreciate.

Differences in levels of prosperity

My second big worry is the continuing sharp difference between the level of prosperity of the Western Province and that of the others. While the poverty head count in the Western Province is a mere 4.2%, it is more than 10% in Northern, Eastern, North Western, Uva and Sabaragamuwa Provinces. Again, if the sole responsibility of addressing this is left to the Government, then the same story of widening budget deficit due to direct and indirect subsidies for poverty alleviation, rising inflation along with interest rates, and depreciating currency will recur.

Here we need to find ways and means of building sustainable value chains on a win-win basis with the provinces. Some of our member companies have done a lot in this area – some of them are examples for the whole world. But we need many more of these.

I am not calling for charity. What we need are sustainable, innovative business models, which will increase economic value addition in the provinces thus creating new jobs.

I must mention here with a great deal of satisfaction that 20 regional chambers are now affiliated to the chamber and we have projects of one sort or another with most of them. We are now a truly national chamber and not one merely representing the interests of the metropolis.

The political front

My third worry is on the political front – an area where I have no credentials whatsoever to comment on. A nagging worry, however, is that addressing economic issues alone may not be sufficient for the people of the north and the east to be happy and content. Rapid progress made in resettlement, save a mere 10,000 out of a total in excess of 330,000 people, is commendable. The authorities are committed to complete this arduous task by the end of the year.

The conclusion of the local government elections after a long lapse is also a very good start. Yet there is much more to be done. What we as the business community can do to help this process is to build trust between communities based on mutually beneficial commercial transactions, value chains, investments and creation of job opportunities without discrimination. As a chamber we must represent the interests of the regions more and more.

The global front

On the global front, I worry about potential consequences to us arising from the US and European public debt crises, the on-going ‘re-balancing’ from the West to the East, political upheavals in the Middle East which is an important market for us, and then the volatility of global petroleum and food markets.

We should be able to develop some degree of cover from these developments which are beyond our control by whole heartedly contributing to the domestic supply of energy – which in our case will have to be non thermal – and in food production via agriculture, animal husbandry and fisheries, and exporting more and more to South Asia and then to the rest of the Asia. We can also learn to be more and more self reliant, asking for a level playing field and not for any special concessions. Obviously we do not want special barriers thrown across our path either.

Building much closer economic relations with India has to be an essential part of this effort. We cannot leave all this to the Government to achieve on its own. After all, over 80% of the national output, a similar percentage of investment, 75% of employment and over 95% of exports come from the private sector.

Taking the initiative

What I am proposing is an approach where, we continue to ask the Government for facilitation, but by first taking the initiative to actively demonstrate what is indeed possible. Let us then tell the authorities ‘see what we have done, now help us to do more’.

That way we can call for rapid improvements in the unfinished agenda, such as the ‘Ease of Doing Business,’ the need for ‘logistics performance’ and much more.

The dream of making Sri Lanka the ‘Wonder of Asia’ is realisable – if each of us can contribute what little we can – before asking others to do the same, the totality of what we achieve together will indeed be very large.  I hope these thoughts will be of some use, going forward.

Thank you for your patience and all the very best.