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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 Cabinet reshuffle needed

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By Dr Upul Wijayawardhana

It looks as if the government did not realise the need to take drastic action to stem the tide of public disapproval. Even the most optimistic, who were overjoyed at the election of a non-politician President, followed by that of a government with an unexpected thumping majority, are sighing in despair! Although part of it is due to avoidable own-goals, there seems to be an extremely effective anti-government campaign directed by an unseen hand. Even when toxins are detected in imported coconut oil, rather than laying the blame on errant importers, attempts are made to tarnish the image of the government. All this is possible because the government seems to lack an effective communication strategy. One wonders whether the government has a lax attitude because the Opposition is blundering.

The fracas in the Parliament on the issue of Ranjan Ramanayaka losing his seat was the best illustration of a misguided Opposition not fit for purpose. Critics may argue that RR was given an unfairly harsh punishment but their criticism lacks moral authority because they opted to be silent when a Buddhist priest was given a much harsher punishment for the same offence: in fact, they were delighted! RR stated publicly that most judges were corrupt and defended his stance at every possible turn. He also refused all opportunities afforded for clarification. In spite of the Attorney General informing a while ago that RR’s seat should be declared vacant, to his credit the Speaker waited till RR’s petition for appeal was dealt with. Even though the facts were obvious, the Leader of the Opposition accused the Speaker of removing RR on the basis of non-attendance for three months, which he had to correct the following day! Those who blamed the SLPP for staging unruly protests in Parliament in October 2018, did the same on behalf of RR. Is this not laughable?

Once and for all, the question of the authority of the President was settled with the passage of the 20th Amendment and it is high time the President made use of his new powers. The most important thing he can and should do is a cabinet reshuffle, a mechanism often adopted by British Prime Ministers by way of a course correction. It need not be a major reshuffle but a minor one involving some ministers who are obviously underperforming. I have written in the past about the Minister of Health who demonstrated gross irresponsibility by partaking of an untested and unlicensed medicinal product. She is also responsible for not implementing the Jennifer Perera committee report on the disposal of bodies of unfortunate victims of Covid-19? Had this been implemented in December, much of the adverse publicity the country received could have been avoided. Perhaps, the voting during the UNHRC resolution also may have been very different. The Minister of Public Security talking of banning some face coverings did not help either. Pity he did not realize he was talking of this at the wrong time; during an epidemic when face coverings may be useful.

The Minister of Trade, who was an effective critic in the Opposition, has turned out to be totally ineffective. Even the government gazette has become a joke due to his actions. Perhaps, it is time for him to take a back-seat and allow someone else to have a go at the rice-mafia. etc. Perhaps, ex-president Sirisena may be given a chance to see whether brotherly love is more effective than the gazette in controlling the prices of rice.

The biggest failure of this government is on the diplomatic front. What most diplomats consider to be the most important diplomatic assignment, the post of High Commissioner to India remains unfilled for almost a year. Whether we like it or not, India is fast gaining the status of a world power, and not having our representative to deal with officials acknowledged to be of top calibre is a shame.

The way the UNHRC resolution was handled showed total incompetence of the highest order. We withdrew but the Ambassador decided to take part; we lost and claimed victory! To cap it all, the Foreign Minister announced in Parliament that the resolution was illegal. All the time sinister forces are at work, relentlessly, to undermine the country and force the separatist agenda on us and if we are not sharp, we may end up in disaster. For reasons best known to themselves, the government failed to utilize fully the good offices of Lord Naseby. Statements made by the Foreign Secretary no doubt irked the Indian and US governments.

For all these reasons, the need of the day is a complete overhaul of our Foreign Affairs set up, starting with the Minister. It is high time we made use of our career diplomats, who are well trained for the job and stop sending political ambassadors. The practice of utilizing ambassadorial posts as parking lots for retired service chiefs is abhorrent, as it gives the false impression that Sri Lanka has a military government in all but name.

There is still a chance for reversal of fortunes, if the President decides to act swiftly after returning from Sinhala and Tamil New Year celebrations. If not, unfortunately, there may not be much left to celebrate!

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Opinion

Alleviating poverty, the Chinese way

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China has released a white paper on poverty alleviation which outlines the success of policies implemented, the methods employed and her desire to share the unique social experiment with other developing countries. Sri Lanka being a friendly international partner of China should make use of this opportunity to study the programme and plan a scheme and send a team to China to learn the activities conducted under the scheme so that Sri Lanka will be able to handle the fight against poverty, successfully.

“China achieved the largest scale battle against extreme poverty, worldwide, as 98.99 million people had been lifted out of absolute poverty, creating a miracle in human history.” These people were living in 128 ,000 villages all over in China. China through a sustained program was able to achieve its poverty reduction targets set out in UN 2030 agenda, 10 years ahead of its schedule.

A quote from a report released by the BBC outlines the success achieved by China.

:” In 1990, there were more than 750 million people in China, living below the international poverty line – about two-thirds of the population. By 2012, that had fallen to fewer than 90 million, and by 2016 – the most recent year for which World Bank figures are available – it had fallen to 7.2 million people (0.5% of the population). So clearly, even in 2016 China was well on the way to reaching its target This suggests that overall, 745 million fewer people were living in extreme poverty in China than were 30 years ago. World Bank figures do not take us to the present day, but the trend is certainly in line with the Chinese government’s announcement. (“Another large country, India, had 22% of its population living below the international poverty line in 2011 (the most recent data available) …:”}

The people living in extreme poverty suffer from the lack of extremely basic amenities, such as food. safe drinking water, sanitation, health, shelter, and education. It is a fact that those who come under this category are trapped in a vicious circle and for generations they cannot escape the deprivations.

Some of the policies followed by China in achieving the enviable outcome are discussed in the White paper. The most important condition to be fulfilled is the acceptance of the fact that governance of a country starts with the needs of the people and their prosperity is the responsibility of the government. “To achieve success, it is of utmost importance that the leadership have devotion. strong will and determination. and the ruling party and the government assumes their responsibilities to the people. play a leading role, mobilize forces from all quarters and ensure policies are consistent and stable’.

China has provided the poor with the guidance, direction and tools while educating them to have the ambition to emerge from poverty, Through farmers’ night schools, workshops and technical schools create the improvement of skills. The government identifies the economic opportunities in consultation with the people, then provides finances, loans for the selected projects, and strengthens the infra-structure facilities, including the marketing outlets.

While the macro aspects for the poverty alleviation is planned centrally, the activities are executed provincially and locally.

Sri Lankans living under the national poverty line was 4.1% of the population in 2016 (World Data Atlas). The impact of Covid-19 in 2020-21 has dealt a severe blow to the living standards in Sri Lanka and it is assumed that the people living under the poverty line would have reached approximately 8% of the population by 2021.

President Gotabaya Rajapakasa has realised this gloomy truth in his interaction with the poor in the villages on his visits to the remote areas in Sri Lanka. I would request him to study the success story of China and to work out a similar NATIONAL programme in consultation with China. In the White Paper, China says that she is ready to share her experience with other countries who desire to reduce the poverty levels. The President should appoint a TASK FORCE of capable and nationalist-minded individuals to steer the program with given targets as PRIORITY VENTURE. If Sri Lanka can plan a comprehensive programme for poverty alleviation and implement with determination under the capable, dedicated and willing leadership of the President, nearly two million Sri Lankans who live below the poverty line will benefit and would start contributing to the growth of the nation productively.

RANJITH SOYSA

 

 

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Opinion

Need in New Year is to heal the divides

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By Jehan Perera

One of the definitions of reconciliation is to move from a divided past to a shared future.  The arrest of the Jaffna Mayor Visvalingam Manivannan came as a reminder that unhealed issues from the past continue to threaten peace in the present and the future.  According to people I spoke to in Jaffna, this arrest has revived memories that were no longer in the people’s consciousness.  Nearly 11 years after the end of the war, the people were no longer thinking of the LTTE police and the uniform they once wore. The bailing out of the mayor de-escalated the crisis that was brewing in Jaffna following his arrest.  There were reports that a hartal, or shutdown of the city, had been planned to protest against the arrest.

Jaffna Mayor Manivannan was taken into custody by the Jaffna police for allegedly promoting uniforms and iconography of the LTTE, according to the police.  They had found that the Mayor had recruited five individuals to perform traffic duties in Jaffna town in uniforms that resembled those worn by the LTTE’s police during the time when they ran a parallel administration in parts of the north and east. Photos published in the media show a similarity.  Promoting symbols associated with the LTTE, including uniforms is an offence under provisions of the Prevention of Terrorism Act (PTA).

However, the position of the Municipality was that the five individuals had been recruited to a Jaffna Municipal Council task force on a temporary basis to enforce penalties against environmental violations such as littering the streets.  According to Mayor Manivannan, the uniforms were, in fact, the same as those worn by a similar task force run by the Colombo Municipal Council (CMC). Media reported a striking resemblance between the task force uniform and the uniforms worn by the LTTE police but also that a parking meter initiative run by the Colombo Municipal Council has employed staffers who also wear a light blue shirt and pants of a darker shade, vaguely similar to the offending Jaffna outfit. 

 

JAFFNA VISIT

Ironically, a few days prior to this incident, I visited Jaffna to take part in the last rites for Fr Nicholapillai Maria Saveri who had headed the Centre for Performing Arts, in Jaffna, for over four decades.  Under Fr Saveri’s leadership the centre produced an entire generation of artistes who reached out across all barriers of ethnicity and religion and touched the lives of people everywhere.  Through his artistic and cultural productions, Fr Saveri tried to show the interdependence of those who live in the country and need to share it bringing to the fore their different talents, connections and capacities.   He sought to turn the diversity and pluralism in the country away from being a source of conflict into one of strength and mutual enrichment. 

The normalcy I saw in Jaffna, during the short period I was there, made me feel that the ethnic conflict was a thing of the past.  At the hotel I stayed I saw young people come and enjoy a drink at the bar and talking with each other with animation and laughter as young people do.  When I went to the District Secretariat, I was struck by the fact that they played the national anthem at sharp 8.30 am and all work stopped while the anthem played all three verses in the Tamil language and all stood to attention, even inside their rooms.  The Lessons Learnt and Reconciliation Commission (LLRC) appointed by President Mahinda Rajapaksa, in 2011, had recommended that the national anthem be sung in both languages and I was happy to see that in Jaffna this was being implemented a decade later.

At the funeral service for Fr Saveri I met many people and none of them spoke of war and conflict but like people in other parts of the country they spoke of the economy and cost of living.  An administrator from the University of Jaffna spoke about his satisfaction at the large number of Sinhala students at the University and the mixing that was taking place as a result, between the communities.  He said that as the University did not have adequate hostel facilities many of the students from outside of Jaffna, including the Sinhala students, lived with local families.  He said that during the recent graduation ceremony, hundreds of their family members came from the southern parts of the country and joined their children in their places of accommodation which contributed to the inter community mixing.

 

UNIFYING THEME

The situation in Jaffna was so normal to my eyes as a visitor that one of the questions I had and to which I sought answers from those I met, was whether there was a common theme that bound the people together.  Despite my inquiries I could not discern such a common theme that was openly visible or explained to me as such.  It was much like the rest of the country.  At the last general election the people of the north voted for a multiplicity of parties including ones that are part of the present government.  The candidate who got the largest number of votes was one who was affiliated with the government.  At the same time nationalist parties got votes too that saw them enter Parliament and the more moderate parties emerged the largest. 

The arrest of Mayor Visvalingam Manivannan has now supplied a common unifying theme to the politics of the north.  There is distress that the popularly elected Mayor has been treated in such a manner.  If the uniforms that the Municipal workers were wearing too closely resembled those of the LTTE, he could have been informed that this was not appropriate.  It would have been possible to ensure that the uniforms were immediately removed and replaced with ones that were more appropriate while taking into consideration the sensitivities that three decades of war would bring.  As the Mayor is most closely associated with government Minister Douglas Devananda such a request would most certainly have been complied with.  As leader of the EPDP, Minister Devananda was at the forefront of militarily fighting against the LTTE.

The government’s determination to thwart any possible attempt to revive the LTTE can be understood.  The war with the LTTE cost the country enormously in terms of human suffering and economic devastation.  The government won the last election on the promise that it would give priority to national security and also develop the country on that basis.  However, sections of the Tamil Diaspora continue to be openly pro-LTTE and espouse a separatist agenda.  The loss of the vote at the UN Human Rights Council, in which the Tamil Diaspora played a role, would make the government more determined to suppress any attempt to revive the LTTE.  Now that the immediate crisis has been defused due to the release of the Mayor on bail, it would be timely for the government to mitigate the political damage by a multiplicity of means, including by reaching out to the Jaffna Municipal Council about its Municipal law enforcement mechanism.

 

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