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New govt. to fast-track export-led growth strategy

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By Jayampathy Molligoda

It is common knowledge that Sri Lanka never had a consistent export -led growth strategy. For decades, it has become a buzz word without having a proper infrastructure- both physical as well as soft skill- and much needed foreign and domestic investments. With frequent change of governments, export strategies have been changed and no determined efforts made to promote potential export products, marketing destinations and reap the benefits of positives of globalisation to link up with the global value chain (GVC).

Implement truly export led growth strategy:

It is recommended to appoint a high powered ‘economic advisory committee’ under the Presidential secretariat, comprising key officials of the government, drawn from the Treasury, Central Bank and other relevant institutions, together with a team of experts from private sector thus sharing the same vision and ideology of the new government.

It is suggested that the above mentioned economic advisory committee should pick up acceptable proposals without scrapping the already prepared export strategy and give leadership to effectively implement and monitor same through an efficient economic task force. Whilst supporting traditional exports, time is opportune to concentrate simultaneously for a diversified export portfolio such as newer exportable products as technology-based components, raw materials for chemical industries, bunkering product etc. As far as export of services are concerned, train and upgrade skills of Sri Lanka’s human resource at professional levels, such as nursing and health care services, technology-based services, skilled armed services, maritime and navel services, BPO ICT, etc. This will eventually minimise over- dependence of migrating unskilled labour to the Middle East thus creating unnecessary social issues to their families, children and society at large.

Strictly enforce much needed

fiscal discipline:

The already widened fiscal deficit has been further deteriorated by the recently announced relief measures to meet the COVID-19 packages by the government. Nevertheless, the forthcoming Budget should reflect further austerity measures. It is essential that budgetary allocations are restricted on foreign travel for non-essential purposes for some time and save foreign exchange. Current expenditure should be reviewed regularly and prioritize expenses until such time the economy gets back on track. As for state owned institutions, detailed action plans along with winning strategies should be implemented to minimize losses.

More transparent and equitable pricing formulas will have to be introduced for public goods. Purchase of paddy stocks by the government should be at a reasonable minimum price that covers the farmers cost of production and some element of profit. In order to determine price payable to paddy farmers, it is suggested to introduce a similar scheme such as a reasonable price payable to tea small holders under the Tea Control Act of 1957 as amended, could be used thus stemming from the retail price of rice varieties at the market.

Underprivileged, needy communities can be given subsidies. Indian method of transferring subsidies to underprivileged and bypassing the middlemen through banking system using ‘Aadhar programme’ should be studied and must be adapted to suit Sri Lanka. It is essential to prevent leakages of subsidy as it amounts to a huge drain to the treasury financing.

Link strategy to develop SMEs to global value chain:

It is of paramount importance that the government must revisit and re-activate the financial and banking system loan schemes and provide more wholistic assistance to SME’s, establish SME centres and to provide the necessary guidance and support services which include the following areas;

=Start a programme to promote SME exports linking with global value chain (Select 500 SMEs and support for export as quick starter)

=Engage with DFI’s who have done similar projects – IFC, ADB, JICA

=Encourage SME sector to move up in the value chain

=Give incentives for Sri Lankan expatriate with business ideas to come to Sri Lanka to set up enterprises

=Incentivize setting up of venture capital and Private Equity businesses to support these ideas

=Help Sri Lankan SMEs to find joint venture partners for technology transfer. Set up a fund to support research and Development in SME sector

=Create incubators close to- may be universities to encourage setting up of businesses.

=Restructure banking sector and have a separate window for SMEs in the designated banks.

Re-visit existing subsidies

including fertiliser:

As for fertiliser subsidy scheme, time is opportune to revise same to mitigate negative effects of such schemes. If the present subsidy scheme continues, the Government may not be able to achieve its production targets in the agricultural sub- sectors and the farmers will continue to criticize the Government’s policy implementation. Special cultivation calendar shall be introduced based on resource availability in each Agro- Ecological Zone (AEZ). Improve infrastructure facilities such as laboratories, consultation services, extension on recommending site specific fertilizer application. The strategy should be to export high variety crops in addition to maintain food security and replace unnecessary imported food items.

The government needs to ensure that fertilizer is available to the farmers at the correct time and at a revised level of subsidized price where ‘large-scale estate’ owners also get subsidized fertilizer. We need to educate farmers on the proper usage of fertilizer to suit the soil conditions, minimizing wastage and environmental damage. It goes without saying that the system must provide the optimum quantity of fertilizer at reasonable price in time. It is important to identify farm level factors that influence the adoption of straight fertilizers and it would help in promoting the use of straight fertilizers at the farm level. More investment on R&D as well as private sector involvement are needed for manufacture of fertilizers using locally available raw materials.

The following additional points are also recommended:

a. Oligopoly of present fertilizer importers should be taken away and the government should encourage small- scale importers/farmers/RPCs to enter in to the market to import or produce locally. This will resolve issues related to malpractices, fertilizer availability, etc.

b. There shall be no subsidy given to importers, however a ‘ceiling price’ based on the market rate of fertilizer as determined could be fixed taking into account the CIF price of importers. The Subsidy, being the difference between the ceiling price and the subsidized rate, should be given only to the selected beneficiaries and be paid in cash to their bank accounts.

c. Fertilizer will then be freely available in the market and the selling price could be monitored by the relevant agencies and if there is a requirement of controlling the fertilizer prices at the market, then the ‘ceiling price’ could be used by the government. The present subsidized rate should be increased from – Zero for paddy and/or Rs. 10,000 per metric ton (MT) to say, Rs 12,500 and for other crops, the fertilizer mixtures could be increased from the present Rs. 23,000 to say Rs 35,000/ per MT.

d. Government shall encourage farmers (higher subsidy) for “Site Specific Fertilizer Usage and Organic Fertilizer” and required technology shall be given through crop research institutions. Subsidy should be given only for Urea, MOP, TSP and SA. Subsidy on all other straight fertilizers/mixtures should be removed and encouraged to use only where necessary.

e. It is necessary to clear the outstanding subsidy payments to the suppliers of fertilizer by the treasury leaving no room for ‘blame assigning’ by the private sector.

This will enable the government to reduce the burden on the treasury for additional government expenditure on subsidy (at present Rs 50 Billion per annum) at least by 30%.

(1) Invite FDI under the Chinese led “Belt and Road Initiative” (BRI):

To increase foreign exchange earnings, it is important to enhance port and port services by expediting the already planned development activities. The new Government has already approved the installing three gantry cranes to the JCT and the contract to deepen the JC. There is nothing wrong in entering into JVs based on ‘PPP models’ as articulated under the agreement between the GOSL and ADB on Colombo break-water financing. Geo-political realities and the popular public sentiments on the concept of nationalism should not be construed as strictures for decision making ability for economic growth and the writer is confident the next government under the leadership of President Gotabaya Rajapaksa is capable of maintaining a balance between the two in order to fast track economic growth activities.

It is essential to resort to a full-scale effective drive towards getting FDIs for long term projects in a transparent manner and such FDIs should be used only for revenue yielding projects from which, at least part of the borrowing can be met. It will be useful to revert to the marine and maritime activities and Aviation hub concept and ensure that appropriate projects are listed under these two hubs as early as possible and invite FDI under the Chinese led “Belt and Road Initiative” (BRI) and also link up with the ASEAN supply chain trough BRI as Sri Lanka is not a member of the ASEAN.

Conclusion:

Sri Lanka has already demonstrated its ability to combat COVID-19 successfully and the need of the hour is to fast track domestic economic activities, thus enabling Sri Lanka to record a faster recovery than other countries to improve economic growth. A more pragmatic nationalistic ideology – socialist oriented market based economic development model, coupled with an Executive Presidential system of governance would be more suitable to implement inclusive economic development programme to improve quality of life of the people of this country.

(Writer acknowledges the contribution made by Dr Ranee Jayamaha and Mrs Thusitha Molligoda)

 



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Opinion

A change of economic policies for Sri Lanka

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Millions of Sri Lankans are anxiously waiting to see what actions will be taken to make life bearable again.If we follow the example of successful countries we see them exploit their opportunities, and use the wealth created, not to import cars and go on luxury trips abroad, but to re-invest the money proceeds in further projects to bring in even more money. They proceed in this way until their citizens have good standard of living. Probably, the best example of that compounding of wealth is Singapore.

Singapore exploited its geographic advantages. It provided cruise ships with bunkering services and repair, later they provided airlines with refueling and expanded that to one night free stop- overs for passengers to buy luxury goods at their glamorous, tax-free shopping malls. The Japanese were making wonderful new gadgets: cameras, music players, portable radio cassette players, binoculars, all available in the malls and sold tax free!! Lee Kuan Yu forbade the ladies to wear denim jeans, and to wear dresses with hem lines coming down two inches below the knee! He even instructed the ladies to smile! No man could have long hair for fear of arrest. Littering was prohibited, so was chewing gum and smoking butts on the roads and pavements. The place was kept clean!

They used the proceeds arising from all this commercial activity to build housing blocks, develop new roads and other beneficial projects. (Individuals were not allowed to walk away with the profits, just to fritter them away.) Sentosa Island had installed a communications dish antenna connecting it with New York and the financial markets. This was an example of intelligent seizing of opportunities. I account for this intelligent development as due to the high educational and knowledge of Singapore’s progressive management. The result is a firm currency, holding its value.

Something similar has happened to Russia. Russia is rich. It is under progressive intelligent management. Stalin had developed the railway network across the full eleven time zones. But many areas remained to be connected. Putin found the finances to develop coal mines, develop oil and gas deposits and build railway bridges and tunnels for better access to markets and their demand for Russian products. Even as you read this, trains of 70 plus trucks, each with 70 tons of coal are grinding their way to China, day and night. Gas is flowing through an extensive network of pipelines, both east to China and west to friendly countries in Southern Europe. Mr. Putin and his men have succeeded in getting Russia fully functional. And the more Russians there are to spend money, so the more demand for goods and services: shops, etc., providing multiplying employment in Russia.

Mr. Putin wants to build a road and rail link south through Iran to India. A design plan is in the works. It is being discussed with Iran and India. Putin is displaying initiative for the benefit of Russia and its citizens. Putin cares for the citizens of Russia and is creating both wealth and jobs too. Architects are designing attractive living spaces and buildings which provide a better environment for Russians and contractors are building it. Education of Russian citizens is playing a big part in Mr. Putin’s thinking, too. Russia needs a talented workforce.

The result is that the currency, the Ruble is strong and does not devalue. It keeps its value.Belarus, Russia’s neighbour, can also be praised for outstanding development. The population in the big towns is cossetted with amenities and facilities which provides a luxurious way of life for townspeople especially those with industrial jobs. However, it must be admitted, the standard of life for the minority 30% population living in the countryside has yet to catch up. The administration is strict and everyone is law abiding. For example, you can leave your hand phone at your seat while you visit the toilet conveniences and it will remain undisturbed until you return.

Belarus, being a mostly agricultural country has a big tractor manufacturing plant, it has a fertiliser mining and producing plant, it has a commercial vehicle plant, DK MAZ which produces industrial trucks such as fire extinguishing trucks and also produces the most comfortable, bright, low step buses and so on, and of course, Belarus makes its own industrial vehicle tyres. The towns are prosperous and clean and Minsk, the capital is a beautifully laid out city. Town apartment blocks are multi-storied living spaces, but are so well designed and fitted as to provide pleasant living spaces for its people. These reduce urban sprawl across the wooded countryside.

What are Sri Lanka’s strengths? It is a small island thus making communications short and sweet. Its location in the Indian Ocean is a plus, its scenic beauty is a plus allowing a thriving tourist trade for people from colder climates, and its soil and climate allows almost anything to be grown. Therefore its agriculture is a great strength. Its long coastline can provide fish if the fisherised. It has deposits of graphite and phosphates which can be exploited to produce profits for further investment in development projects. It has its illiminite sands which are an extremely valuable asset but need to be controlled and exploitation expanded. It has a whole gem mining industry which need to be managed in way beneficial to the government. It has several government owned businesses which need to be overhauled and modernized to convert losses to profits. The rupee in 1948 was equal to the English pound, now it is around 450 rupees to the Pound. That gives a good description of Sri Lankan past governance.

Profits from projects need to be ploughed back into further projects to bring about a higher standard of living for all its inhabitants. Then the Lankan reputation of being a paradise island with happy people will be restored.

Priyantha Hettige

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Opinion

Sapugaskanda: A huge challenge for RW

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It will be interesting to see if anything fruitful will come of the so-called “investigation” announced by the Minister-in-charge, about what seemed like an outrageous overtime payment to the petroleum refinery workers.While waiting for the outcome of that investigation, I thought of highlighting again the real and central issue that cuts across all loss-making government undertakings in Sri Lanka, such as the CPC, CEB, SriLankan Airlines, etc. that have been mercilessly sucking off tax-payer’s money into them like “blackholes”.

These organisations have been typically sustaining a mutual understanding with corrupt or inept politicians. “Sahana milata sewaya” (service at a concessionary price) was the catchphrase used by them to cover up all their numerous irregularities, wanton wastage, gravy trains, jobs for the boys and massive corruption, mostly with direct and indirect blessings of the politicians.

Here, I’d like to bring out just one example to help readers to get an idea of the enormity of this crisis built up over the past few decades. You’ll only have to look at what seemed like gross over-staffing levels of the CPC’s Sapugaskanda refinery, compared to international standards as shown below:

* Sapugaskanda Refinery – 50,000 Barrels Per Day (BPD); 1,100 employees Superior Refinery, Wisconsin, USA – 40,000 BPD; 180 employees

* Louisiana Refinery (including a fairly complex petrochemicals section), USA – 180,000 BPD; 600 employees

* Hovensa Refinery (now closed) – US Virgin Islands; 500,000 BPD; 2,100 employees.

These are hard facts available on the Internet for anyone to see, but I’m open to being corrected. I doubt if any sensible private investor would even dream of allowing such a level of gross over-staffing in their businesses.

As everyone knows, this is the position in all government business undertakings, as well as in most other government agencies in Sri Lanka. One can say that Sri Lankans have been willingly maintaining a crop of GOWUs (Govt Owned Welfare Undertakings), primarily for the benefit of the “hard-working” employees of these organisations, but at an unconscionably enormous cost to the rest. Obviously, this “party” couldn’t have gone forever!

Will Ranil be up to this challenge? I doubt very much.

UPULl P Auckland

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Opinion

Edward Gunawardena: ‘The IGP the country never had’

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On a seemingly fine Friday afternoon, day two of the England v India second Test of the LV Insurance Series (that turned out to be a day five thriller), oblivious to how his day would tragically pan out, our dad, retired Senior Deputy Inspector General (DIG) of Police, Edward Gunawardena, was glued to his television enjoying the contest between the two cricket giants. As time passed by that afternoon, he felt uncomfortable, weak and had minor discomfort in breathing. Our family doctor, Dr Lakshan Fernando, swiftly visited home and on strict instructions to bed rest, our dad enjoyed his chicken soup for dinner that was prepared by his beloved wife, our mum.

Later that night tragically he took the last breath of his life, and he completed the last heartbeat of his life in the presence of two of his most trusted people, our mum and our family doctor.

This day was that dreaded “Friday the Thirteenth” – in the month of August last year. Our tragedy was upon us.A year has passed, by but the loss is still deep rooted, although it was comforting that his passing was peaceful knowing that he had the assurance of having Dr Lakshan beside him, who in fact rushed him from our home to Central Hospital in Colombo that night in his own vehicle in the midst of the Covid-19 pandemic, ever so determined to save our dad’s life. It was a blessing to know that our dad had our mum and Dr Lakshan beside him as much as it was possible.

Edward Gunawardena had a successful journey starting his early years through St Joseph’s College, Colombo, Peradeniya University, Michigan State University, USA through sheer determination to succeed, despite him and his three brothers losing their mum when he was at a tender age of just four years. He served our country for nearly three decades in the Police Service in various capacities, including as the Director of Intelligence, Director of Presidential Security, DIG Metropolitan and Senior DIG Administration; and continued his services as the Special Advisor to the Chancellor at the University Grants Commission, Chairman of the National Lotteries Board and in the Board of Directors at the Lake House Newspapers Corporation.

Most would consider retirement in the ripe old age of sixties, but our dad was blessed to have joined JF&I Printing and Packaging Company, an international company with the head office close to our home. This enterprise was owned and led by renowned late Dr Neville Fernando and his son Neomal Fernando. Edward Gunawardena found his renewed passion and purpose of working with such a talented and committed group of colleagues, where he thrived in making a significant difference to a spectrum of many individuals with a common goal. There was a family atmosphere with abundance of gratitude whilst professionalism was being maintained. The feelings were mutual, and this was evident at a time when our dad was unwell and required a blood transfusion – seven of the junior colleagues at JF&I showed their willingness and donated their blood with heartfelt love and gratitude towards him. Knowing that such generosity and love existed in a working environment was a sincerely humble attitude. This is a true reflection of our dad’s character and personality of giving where reciprocation was demonstrated.

Patriotism and loyalty were two of his strengths. His dedication and professionalism in the Police Service were commendable. This was once clearly expressed by the late Professor Carlo Fonseka at the launch of our dad’s second novel “.. Edward was the IGP (Inspector General of Police) that the country never had”. A truly inspiring and a remarkable Officer and a Gentleman.

His generosity and care extended way beyond his professional arena. One of his many philanthropic contributions was the resurrection of the village Buddhist temple’s school ‘Daham Pasala’ with the support from the late Deshamanya H K Dharmadasa well known as ‘Nawaloka Mudalali’, the founder of the Nawaloka Group. Our extended family and many thousands of youth in the Battaramulla area have benefited and continue to imbibe the doctrine of Buddhism, thanks to the dedicated committee led by it’s Chief Monk, Jinarathana Himi.

As an enthusiastic writer and a passionate citizen, he wrote many thought provoking and fearless articles to the newspapers, which were very well received by the readers. He was not afraid to speak the truth and to stand up for those who did not have a voice, and he became a respected contributor maintaining honesty and integrity. One of his most poignant articles we recall was days after the tragic Easter Sunday bombings, titled “The Unpardonable Blunder” bravely challenging the chain of command and with deep sorrow on the devastating destruction, loss of lives and many innocent people maimed and scarred for their entire lives.

Today, we are relieved that he didn’t have to witness the dismal state of affairs our country is going through as a consequence of decades of poor leadership, mismanagement, and most of all, unprecedented levels of corruption in the recent era of respective governments.

As our dad, we are immensely proud of who he was, his achievements and most of all for how he has bettered many lives throughout his life, with his generosity, professionalism and willingness to help, advise, guide, nurture and mentor all with a selfless attitude. We believe that his legacy has been passed on through many who he has had close connections with. We are thankful that his writing legacy would also continue through his creations of the two novels “Blood and Cyanide” and “Memorable Tidbits…”.

Even until his last days and hours he was sharing his experience and wisdom with everyone around him, that was the calibre of the gentleman. His humble stories of meeting President Nixon at the Fulbright Scholar Dinner at the White House, meeting the 124th Emperor of Japan, Emperor Hirohito at the Akasaka Palace, and his conversations with the great Arthur C Clarke, will always be fondly remembered by us. One of the famous quotes that our dad hilariously shared was the quote from Benjamin Disraeli, 1st Earl of Beaconsfield, the former Prime Minister of the United Kingdom about his political nemesis, the former and the predecessor Prime Minister, William Ewart Gladstone. “The difference between a misfortune and a calamity is this: if Gladstone fell into the Thames it would be a misfortune, but if someone dragged him out again that would be a calamity.”

Our dad was and will continue to be our hero and mentor. Today, we wish to extend our utmost appreciation to each and every one of you who had a close bond with him and made his life purposeful, joyful and complete. We thank them sincerely.

His last day of life was instrumental to the creation of the Edward Gunawardena Memorial Trust that is being organically grown, currently sponsoring medical students at the Rajarata University who are striving to become medical professionals, and as with Dr Lakshan, who was taking care of our dad, these students will have the opportunity to potentially treat and care for many deserving people and make their lives better, and also save many lives.

Whilst we take this opportunity to once again thank all those who were in his life,we would love to hear and treasure all the memories they shared with him. We welcome your recollections, your thoughts and your appreciations of Edward Gunawardena and please do send them via the email

My sister and I would value and appreciate the stories that you have had the pleasure of experiencing with him and of him.

With gratitude,
ERANGA

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