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Wednesday, 22 November 2017 00:00 - - {{hitsCtrl.values.hits}}
Prime Minister Ranil Wickremesinghe on Monday made a compelling case why Sri Lanka should further open up and pointed to the apparel sector’s success following the entry of foreign firms in the 1980s.
“In the 1980s when foreign firms were allowed to enter the apparel industry many thought the sector would be foreign-dominated. Today the best of them are locals from Sri Lanka who learnt from foreigners and then overtook them,” the Premier said at the Business Today Awards ceremony.
He also urged the private sector to envision what Asia will be in the next 10-20 years because there are some who believe they can develop themselves through the small domestic market in Sri Lanka.
“No country has developed utilising only its domestic market. China with a billion people, India with a similar status, some years ago could not develop only relying on the domestic market. Every country developed when they integrated with global trade, when they started exporting and allowed imports to come. This was the case whether it was Japan after the war, South Korea, Singapore or China, Thailand or Malaysia. They all opened up to the world allowing investments, imports and also in turn increased exports,” the Premier pointed out.
“This is the way Asia is going. Not only have they opened out, now they are talking of further opening up and integration,” Wickremesinghe said and explained the two key trading initiatives going on in Asia Pacific which he said would lay the foundation for greater liberalisation.
The initiatives are the ASEAN Trading Initiative the Regional Comprehensive Economic Partnership involving ASEAN countries, Japan, China, India, New Zealand and Australia. The other is the Trans-Pacific Partnership which includes East Asia, Canada, Mexico and Chile; although its initiator the US has dropped out, prompting Japan to carry it forward. “Even without the US, the TPP is still a formidable arrangement,” he said.
“So what do we do in Sri Lanka? Do we join these initiatives or do we stay outside and rely on a 23 million population?” the Premier asked. “So here are two great opportunities - the Asia Pacific Comprehensive Regional Comprehensive Economic Partnership and the Trans-Pacific Partnership which we should grasp,” he said, adding that in parallel Sri Lanka had regained EU GSP+ and was working towards FTAs with Singapore and China and deepening ties with India. He assured that FTAs would not destroy Sri Lanka but open up wider opportunities whilst the local private sector would be supported via a long-term trade adjustment package.
“With these trade agreements, and GSP+, what should Sri Lanka do next?” the Premier asked those present at the BT Awards and suggested Sri Lanka must join the Asia Pacific Comprehensive Regional Comprehensive Economic Partnership and thereafter aspire to get observer status in TPP. “This means from India to Canada and Mexico to Chile, Sri Lanka will have access to markets and conversely they will have access to the Lankan market. It works both ways.”
“If we stay outside from capturing opportunities in this market of over three billion people, then it will be the end of Sri Lanka’s industries and the economy in the long term. We need to compete and survive in a global liberal trading system,” the Premier emphasised.
Assuring that the Government would help the local private sector, Wickremesinghe said: “We like the private sector to join us or we like to join you and make the journey together. If we do this we will be more efficient than the Ministry of Crab as Dharshan Munidasa referred to in his acceptance speech of the BT Passionate Award.
“What I say will be bitter for some and sweet for others but Sri Lanka needs to make this transformation,” he said and asked the BT Awards audience, “Where were we in 1948? We were one of the best. Where we were in 1977? We were one of the leading countries in Asia. Where do we want to be by 2030, behind Afghanistan or Laos or Myanmar? We were at the top and have come to the bottom. Are we going to crawl our way back to the top? For me there is only one path, that is to crawl our way to the top. Along this path we will be creating more jobs and more income.”
Earlier on in his speech the Premier referred to Standard and Poor’s (S&P) upgrade of Sri Lanka’s outlook to stable from negative. He said this was because Sri Lanka is keeping the reform momentum and tackling the debt redemption spike.
Whilst welcoming the S&P upgrade, the Premier however said it was not an occasion for a party. He said S&P says the Government’s stabilisation program was working but a lot of people wanted to know what the Government was doing.
The Premier said that when the Government took office the administration didn’t know what the real debt obligations were as part of it were in the Budget and others outside. “It was like looking for dead bodies. And we still haven’t found all the bodies,” he said, adding that last week a bill was received from a Singapore company for work done for part of the northern highway and that there could be many others like this.
“From a country whose revenue was insufficient to meet the debt service we have made some progress with the economy stabilisation programs during the last two years and controlling the debt, reducing the interest rate and stablising the exchange rate determined by the needs of the market,” the Premier said.
“This is not enough. I will be the first to say,” noted the Premier, who echoed what S&P said about the outlook being revised from negative to stable based on the assessment that the nascent strengthening of Sri Lanka’s institutions and governance practices was on a more sustainable footing. This assessment is predicated on not only the passage of the Inland Revenue Act (IRA) in September 2017, but also on the expected adoption of further reforms over the next 12-18 months. This includes the passage of the Liability Management Act, which will allow the Government to proactively address rising sovereign debt maturities in 2019.
“These positive developments are balanced by ongoing rating constraints, which include high external and net general government indebtedness. With GDP per capita estimated to reach approximately $ 4,000 by the end of 2017, Sri Lanka’s economic assessment also represents a rating weakness. This rating constraint weighs against Sri Lanka’s sound growth potential.”
The Premier said this was the challenge before Sri Lanka. “We have stabilised the economy. How do we go forward?” asked Wickremesinghe, adding,” Sri Lanka has growth potential but the challenge is to maximise it and accelerate growth and ensure that the looming debt reduction is done at a shorter time.” “To accelerate growth we have to look to you in the private sector,” he said, adding: “If only the private sector moves the growth will come. That is what we did in 1977.” (NC)
