Julie Chung at American Chamber of Commerce

US Ambassador in Sri Lanka Julie Chung last week said that Sri Lanka should continue with reforms, but the people deserve and continue to demand openness, transparency, and accountability from their leaders as the process of reforms moves forward.

In a keynote address at the Amcham CXO Forum themed ‘75 years and Beyond: U.S.– Sri Lankan Business Relations in 2024’ Ambassador Chung said: “Sri Lanka has taken difficult measures to put the country on a long-term sustainable footing and comply with the IMF commitments.  But the people of Sri Lanka deserve and continue to demand openness, transparency, and accountability from their leaders as the process of reforms moves forward.

“It’s important that the government of Sri Lanka carry out reforms.  But it’s also important to explain those reforms to the people in a clear manner.  It makes for slower, but better legislation and reforms.  One example is the Online Safety Bill.

The Centre for Policy Alternatives reported from a poll earlier this month that more than 70 percent of Sri Lankans were unaware of the bill before its passage.  When major global tech companies characterize the bill as “unworkable” and stifling innovation and democracy, instead of actually addressing online crimes, frankly this sends a negative signal in Sri Lanka’s path towards reform and recovery.

“Previous bills, such as the Personal Data Protection Act, took much longer to craft, but did a better job of taking stakeholder feedback into account.  To work on legislation and reforms that will be durable, enforceable, and wise, the Sri Lankan government will need to do better in the future.  This will be key to improving the business climate.

“The new higher VAT rates have been a hit on the average Sri Lankan and your businesses.  We understand that while there may be short term necessary pains, the public deserves to know that such measures are being taken looking at the wholeness of the problem and endemic issues that must be addressed in a structural, sustainable way, fair and transparent to all.  That includes not just raising taxes but eliminating tax loopholes, addressing government inefficiencies, particularly in state owned enterprises.  It means digitalizing customs to raise revenue and reduce corruption.  Creating predictable customs duties and streamlined processes would encourage importers, who want to import more to Sri Lanka but are worried about the uncertainty in the import process.

“Unpredictable customs fees discourage importers and limit the amount of customs revenue the Sri Lankan government can collect.  This shifts the burden of tax revenue further onto the shoulders of the people, who can’t bear much more.  Earlier this week, I met with the National Chamber of Exporters who relayed some of their challenges – red tape, regulatory challenges, and unpredictability that impact their businesses.

“Exports and private sector growth will be the engine of recovery, but they need the space and support to thrive.  As the largest export market for Sri Lanka, the United States can help be part of the solution,” the Ambassador said.