By Uditha Jayasinghe
- Singapore-based World Bank expert ugres Sri Lanka to focus to be competitive
- Five hubs plus tourism too much?
- Need for clear goals, public and private sector should tango
- Encourages transparency and accountability, KPI for Govt.
- Calls to jettison failed policies, champion innovation
Advocating moderation and clarity on Sri Lanka’s five-hub strategy, a top international expert called for clearer goals and stronger collaboration between the Government and private sector, comparing it to a “tango at lockstep”.
Private Sector Development Specialist of the Competitive Industries Practice at the World Bank Group P.S. Tewari in his impressively insightful address posed the question of whether Sri Lanka’s Government had bitten off more than it could chew by selecting five hubs and tourism to spearhead the economy.
“Six could be too much because even one would take immense planning, resources, focus and time.”
Drawing many parallels with Singapore, he pointed out Singapore’s Government took a pragmatic view of its policies and jettisoned ones that did not bring economic benefits. Because Singapore identifies its economic policies proactively, its economy has room to evolve and remain competitive, resulting in a staggering export value of 200% of GDP, a per capita income of US$ 52,000 and economic growth at 10.2% on average for a staggering 50 years.
While making the standard observations that Sri Lanka needs more foreign investment and greater coordination between the public and private sectors, Tewari also called for competitiveness to be evaluated on a range of principles, including smart design, clear rules and transparency and accountability.
“Singapore does not have a single drop of oil, but it is Asia’s biggest oil hub. This is because it has the capacity to design in detail, even to the extent that a separate island is built, to have every single conceivable infrastructure need. If one oil company wants to buy something from another, they just need to open a tap; it’s intricate to that extent. Blueprint design is critical to whether a project will work or not,” he told the gathering.
He called for an apex coordinating body with vision, authority and accountability to be set up where the public and private sector can work together to formulate policies and regulations. “You cannot give the excuse that it cannot be done because it has been done in other countries. An apex body is critical to deliver on industrial roadmaps. Malaysia is a great example of that.”
While macroeconomic fundamentals are important, Tewari also suggested the two sides work to define what each company will have to contribute to the hub concept, thus breaking down the goals of the Government to tangible levels. “Cross pollination” of the two sectors would also fast-track research and development.
“Key Performance Indicators are not just for the private sector, they are also for the Government. They can be honest, weekly indicators. The Government has to honestly decide on its goal. Is Sri Lanka trying to be a shipping hub? Or is the aim to be a great destination for FDI? The goal is not clear.”
Tewari also expressed the idea that existing development projects be evaluated along the criteria of design, regulations, collaborations and accountability to see how they measure up. This would be the true test of competitiveness.
Opportunities and challenges from five hubs - Cabraal
The Government’s five hub strategy would bring opportunities as well as create new challenges for Sri Lanka such as improving productivity, realigning the workforce, job creation and seamless transition to the new sectors, Central Bank chief Ajith Nivard Cabraal said yesterday.
Speaking to the gathering at the Daily FT and Colombo University MBA Alumni Association forum, Cabraal gave exhaustive details on the formulation of the five hub strategy in the ‘Mahinda Chinthana’ as a method of maintaining 8% plus growth as well as navigating Sri Lanka out of the middle income trap.
He said that the five hubs + tourism strategy, a brainchild of President Mahinda Rajapaka is benefiucial as it touches more people enabling them towards prosperity.
“Each hub has tremendous potential to create new value and new economic activity,” Cabraal said.
He recalled that just like the apparel sector has grown in 30 years from about $ 20 million industry to a $ 4 billion industry, the new hubs (which he described as ‘new stars’) have the potential to grow as much or substantially more over the new few years.
“We can now envisage the six hubs taking our economy to new heights in the future,” Central Bank Governor added.
Cabraal in his speech noted that the Government had prepared well to unleash the potential. The first step for the Government was to invest heavily in ending the war and achieving peace. Then political stability was gained and maintained. Subsequently the Government concentrated on rehabilitation and reconstruction projects to shore up the war damaged areas.
“We opened up new avenues of investment. We opened up the T-bills market and encouraged banks to borrow from abroad, new financial instruments were brought in, Private-Public Partnerships were promoted and new investors were encouraged to come into the country. This is all because 33% of GDP was needed as investment for 8% growth. So about 22% comes locally, 5% foreign and 6% from the Government,” he said.
To fulfil this demand for investment, Cabraal emphasised each company has to “create stars” – new avenues to supply new investment. This was the thinking that led to the birth of the five hubs strategy and since tourism already existed it eventually became six.
“Each hub targets great potential we have within this country. IT and BPO has grown from a US$ 83 million industry to US$ 600 million today and the Government has set a target of US$ 2 billion by 2020. Similarly, transport has grown from US$ 70 million to US$ 1.9 billion and will be US$ 6 billion in six years’ time.”
Cabraal went on to say the current trend of growth with low inflation will continue to be the main mantra, especially since the current high-performing export industries such as apparel will continue to evolve alongside the five hubs. Other labour intensive industries such as agriculture will have to double productivity to adjust to the brain drain that will take place as sectors from the five hubs siphon off employees.
The Government is also targeting employment creation for 400,000 new school leavers who join the job market each year. “There is no better way to ‘be inspired’ than to know a job awaits you when you leave school,” he said, punning on the seminar’s theme ‘Be Inspired’.
- Stresses five hubs strategy is beneficial as it touches more people but need to improve productivity, equip workforce, create jobs and ensure seamless transition